Sendas Distributor S.A. (Form: 20FR12B, Received: 01/25/2021 06:03:38)

As filed with the Securities and Exchange Commission on January 22, 2021.

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 20-F

☒

REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

☐

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

☐

SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number:

Sendas Distribuidora S.A.

(Exact Name of Registrant as Specified in Its Charter)

Sendas Distributor S.A.		The Federative Republic of Brazil
(Translation of Registrant’s Name into English)		(Jurisdiction of Incorporation or Organization)

Avenida Ayrton Senna, No. 6,000, Lote 2, Pal 48959, Anexo A

Jacarepaguá

22775-005 Rio de Janeiro, RJ, Brazil

(Address of Principal Executive Offices)

Daniela Sabbag Papa, Chief Financial Officer

Avenida Ayrton Senna, No. 6,000, Lote 2, Pal 48959, Anexo A

Jacarepaguá

22775-005 Rio de Janeiro, RJ, Brazil

Telephone: +55 11 3411 5042

Email: ri.assai@assai.com.br

(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)

Copies to:

John P. Guzman, Esq.

Era Anagnosti, Esq.

White & Case LLP

1221 Avenue of the Americas

New York, NY 10020

Telephone: +1 (212) 819-8200

Securities registered or to be registered pursuant to section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange on which Registered

Common Shares, without par value, each represented by American Depositary Shares

New York Stock Exchange

Securities registered or to be registered pursuant to Section 12(g) of the Act: None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act: None

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.

Not applicable

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. Yes ☐ No ☐

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☐ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☐ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

	Large accelerated filer ☐	Accelerated filer ☐	Non-accelerated filer	☒
			Emerging growth company	☐

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

U.S. GAAP ☐	International Financial Reporting	Other ☐
	Standards as issued by the International
	Accounting Standards Board ☒

If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ☐ Item 17 ☐ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☐

TABLE OF CONTENTS

			Page
INTRODUCTION			ii
PRESENTATION OF FINANCIAL AND OTHER INFORMATION			iv
CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS			vi
THE SPIN-OFF			1

PART I			7
	Item 1.	Identity of Directors, Senior Management and Advisers	7
	Item 2.	Offer Statistics and Expected Timetable	7
	Item 3.	Key Information	7
	Item 4.	Information on the Company	39
	Item 4A.	Unresolved Staff Comments	60
	Item 5.	Operating and Financial Review and Prospects	60
	Item 6.	Directors, Senior Management and Employees	83
	Item 7.	Major Shareholders and Related Party Transactions	94
	Item 8.	Financial Information	99
	Item 9.	The Offer and Listing	102
	Item 10.	Additional Information	105
	Item 11.	Quantitative and Qualitative Disclosures about Market Risk	132
	Item 12.	Description of Securities Other Than Equity Securities	132
PART II			146
	Item 13.	Defaults, Dividend Arrearages and Delinquencies	146
	Item 14.	Material Modifications to the Rights of Security Holders and Use of Proceeds	146
	Item 15.	Controls and Procedures	146
	Item 16.	[Reserved]	146
	Item 16A.	Audit Committee Financial Expert	146
	Item 16B.	Code of Ethics	146
	Item 16C.	Principal Accountant Fees and Services	146
	Item 16D.	Exemptions from the Listing Standards for Audit Committees	146
	Item 16E.	Purchases of Equity Securities by the Issuer and Affiliated Purchasers	146
	Item 16F.	Change in Registrant’s Certifying Accountant	146
	Item 16G.	Corporate Governance	146
	Item 16H.	Mine Safety Disclosure	146
PART III			147
	Item 17.	Financial Statements	147
	Item 18.	Financial Statements	147
	Item 19.	Exhibits	147
SIGNATURES			149

INTRODUCTION

Except where the context otherwise requires, in this registration statement, “Sendas” refers to Sendas Distribuidora S.A., and “we,” “our,” “us,” “our company” or like terms refer to Sendas and its consolidated subsidiaries.

We have prepared this registration statement to register the common shares of Sendas (the “Sendas common shares”), each represented by American depositary shares (“ADSs”), under the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), in connection with the trading of the Sendas ADSs on the New York Stock Exchange (“NYSE”) as a result of the Spin-Off (as defined below).

The Spin-Off is required under Brazilian law to be approved by the shareholders of Sendas’ parent company, CBD (as defined below). On December 31, 2020, the extraordinary general shareholders’ meetings of CBD and Sendas approved the proposed Spin-Off. As a result of this approval, for purposes of Brazilian law, Sendas is technically no longer a subsidiary of CBD. Currently, the Sendas common shares are being held by CBD on behalf of the shareholders of CBD pending regulatory approvals of the Spin-Off in Brazil and the United States. Once the conditions to the Spin-Off are satisfied, including this registration statement being declared effective, CBD will distribute the Sendas common shares to its shareholders and the Spin-Off will be completed.

The disclosures in this registration statement continue to depict Sendas as a subsidiary of CBD to properly reflect the relationship between Sendas and CBD as presented in the financial statements for the required periods included in this registration statement.

In addition, unless otherwise indicated or the context otherwise requires, all references to:

●

“B3” or “São Paulo Stock Exchange” are to B3 S.A. – Brasil, Bolsa, Balcão;

●

“Brazil” are to the Federative Republic of Brazil;

●

“Brazilian Corporate Law” are to Brazilian Law No. 6,404/76, as amended;

●

“Brazilian government” are to the federal government of Brazil;

●

“Casino” are to Casino, Guichard-Perrachon S.A., a French corporation (société anonyme). Casino is our indirect controlling shareholder. It is ultimately controlled by Mr. Jean-Charles Naouri, the chairman of our board of directors. For more information about Mr. Naouri, see “Item 6. Directors, Senior Management and Employees.” For more information about our direct and indirect shareholders, see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders”;

●

“Casino Group” are to Casino and its subsidiaries;

●

“CBD” are to Companhia Brasileira de Distribuição, a corporation (sociedade anônima) incorporated under the laws of Brazil. As of the date of this registration statement, Sendas is a wholly-owned subsidiary of CBD. For more information about the principal shareholders of CBD, see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders”;

●

“CBD ADSs” are to ADSs, each representing one common share of CBD;

●

“CBD ADS Custodian” are to Banco Itaú Corretora de Valores S.A., the Brazilian custodian of the CBD common shares underlying the CBD ADSs;

●

“CBD common shares” are to common shares of CBD;

●

“CBD Deposit Agreement” are to the Third Amended and Restated Deposit Agreement, dated as of September 22, 2015, between CBD and the CBD Depositary and the owners and holders from time to time of CBD ADSs issued thereunder;

●

“CBD Depositary” are to JPMorgan Chase Bank N.A., the depositary for the CBD ADSs;

●

“Central Bank” are to the Central Bank of Brazil (Banco Central do Brasil);

●

“Corporate Reorganization” are to, collectively, the series of internal corporate transactions completed by CBD and Sendas on December 31, 2020. For more information about the Corporate Reorganization, see “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off”;

●

“CVM” are to the Brazilian Securities Commission (Comissão de Valores Mobiliários);

●

“Éxito” are to Almacenes Éxito S.A., a Colombian corporation;

●

“Éxito Acquisition” are to our acquisition of 96.57% of the shares of Éxito through a cash tender offer on the Colombian Securities Exchange. The Éxito Acquisition was completed on November 27, 2019. For more information, see “Item 4. Information on the Company—A. History and Development of the Company—History—Éxito Acquisition”;

●

“Éxito Group” are to Éxito and its consolidated subsidiaries;

●

“FIC” are to Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento, a Brazilian financial services company;

●

“SEC” or the “Commission” are to the U.S. Securities and Exchange Commission;

●

“Sendas ADSs” are to ADS, each representing one Sendas common share;

●

“Sendas ADS Custodian” are to Banco Itaú Corretora de Valores S.A., the Brazilian custodian of the Sendas common shares underlying the Sendas ADSs;

●

“Sendas Deposit Agreement” are to the deposit agreement to be entered into between Sendas and the Sendas Depositary and the owners and holders from time to time of Sendas ADSs issued thereunder;

●

“Sendas Depositary” means JPMorgan Chase Bank N.A., the depositary for the Sendas ADSs;

●

“Separation” refers to our separation from CBD. On December 14, 2020, we entered into a Separation Agreement with CBD to provide a framework for our relationship with CBD following the Separation and the Spin-Off. For more information about the Separation Agreement, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Agreements Related to the Spin-Off”; and

●

“Spin-Off” are to the proposed distribution of substantially all of the issued and outstanding Sendas common shares to holders of CBD common shares, including the CBD ADS Custodian, on a pro rata basis for no consideration. For more information about the Spin-Off, see “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off.”

We are furnishing this registration statement solely to provide information to holders of CBD common shares and CBD ADSs who will receive Sendas common shares or Sendas ADSs in the Spin-Off. You should not construe this registration statement as an inducement or encouragement to buy, hold or sell any of our securities or any securities of CBD. We believe that the information contained in this registration statement is accurate as of the date set forth on the cover. Changes to the information contained in this registration statement may occur after that date, and neither we nor CBD undertakes any obligation to update the information except in the normal course of our respective public disclosure obligations and practices.

This registration statement does not constitute a proxy statement. Neither CBD nor Sendas is asking you for a proxy, and you are requested not to send CBD or Sendas a proxy.

iii

PRESENTATION OF FINANCIAL AND OTHER INFORMATION

All references herein to “real,” “reais” or “R$” are to the Brazilian real, the official currency of Brazil. All references to “U.S. dollars,” “dollars” or “US$” are to U.S. dollars.

Financial Statements

Historical Financial Statements

We maintain our books and records in reais. This registration statement includes financial information derived from:

●

our unaudited interim historical condensed consolidated financial statements as of September 30, 2020 and for the nine-month periods ended September 30, 2020 and 2019, and the related notes thereto, which are included in this registration statement. We refer to these financial statements and the related notes thereto collectively as our “unaudited interim condensed consolidated financial statements;” and

●

our audited historical consolidated financial statements as of December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017, and the related notes thereto, which are included in this registration statement. We refer to these financial statements and the related notes thereto collectively as our “audited consolidated financial statements.

We have prepared our unaudited interim condensed consolidated financial statements and our audited consolidated financial statements in accordance with the International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board, or the IASB. Our audited consolidated financial statements have been audited in accordance with auditing standards of the Public Company Accounting Oversight Board.

In addition, our unaudited interim condensed consolidated financial statements have been prepared in accordance with IAS 34 - Interim Financial Reporting, issued by the IASB, as well as the standards issued by the CVM, applicable to the preparation of interim financial information.

Adoption of IFRS 16 - Leases

Effective on January 1, 2019, we adopted IFRS 16 – Leases, which sets out the principles for the recognition, measurement, reporting and disclosure of leasing operations, and requires lessees to account for all leases according to a single model on their balance sheets, similar to accounting for finance leases pursuant to IAS 17. We have adopted IFRS 16 – Leases using the full retrospective method of adoption, with the date of initial application of January 1, 2019. An additional balance sheet as of January 1, 2018, is presented in our audited consolidated financial statements. For more information, see note 4 to our audited consolidated financial statements.

The Spin-Off

We have prepared this registration statement to register the Sendas common shares, each represented by ADSs, under the Exchange Act, in connection with the trading of the Sendas ADSs on the NYSE as a result of the Spin-Off. In connection with the Spin-Off, substantially all of the issued and outstanding Sendas common shares will be distributed to holders of CBD common shares, including the CBD ADS Custodian, on a pro rata basis for no consideration. For more information about the Spin-Off, see “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off.”

On December 31, 2020, CBD completed a corporate reorganization pursuant to which we transferred all of our equity interest in Éxito to CBD, and CBD transferred certain assets to us. We refer to these internal corporate transactions collectively as the “Corporate Reorganization.” For more information about the Corporate Reorganization, see “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off—Corporate Reorganization.” In addition, on December 14, 2020, we entered into a Separation Agreement with CBD to effect our separation from CBD, which we refer to as the “Separation,” and provide a framework for our relationship with CBD following the Separation and the Spin-Off. For more information about the Separation Agreement, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Agreements Related to the Spin-Off.”

This registration statement includes the unaudited pro forma condensed balance sheet of Sendas as of September 30, 2020 and the unaudited pro forma condensed statements of operations of Sendas for the nine-month period ended September 30, 2020 and for the year ended December 31, 2019. The unaudited pro forma condensed balance sheet gives pro forma effect to the Corporate Reorganization and the Separation as if they had taken place on September 30, 2020. The unaudited pro forma condensed statements of operations give pro forma effect to the Corporate Reorganization and the Separation as if they had taken place on January 1, 2019. See “Item 3. Key Information—A. Selected Financial Data—Unaudited Pro Forma Condensed Financial Information.”

Translation of Reais into U.S. Dollars

We have translated certain amounts included in this registration statement from reais into U.S. dollars. The exchange rate used to translate such amounts was R$5.6407 to US$1.00, which was the commercial selling rate at closing for the purchase of U.S. dollars on September 30, 2020, as reported by the Central Bank. The U.S. dollar equivalent information included in registration statement is provided solely for convenience of investors, it is not in accordance with generally accepted accounting principles and should not be construed as implying that the real amounts represent, or could have been or could be converted into, U.S. dollars at such rates or at any other rate.

Market and Industry Data

We obtained the statistical data and information relating to the markets where we operate from reports prepared by government agencies and other publicly-available sources, including the Brazilian Supermarket Association (Associação Brasileira de Supermercados) and the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística). While we are not aware of any misstatements regarding any market, industry or similar data presented herein, such data involves risks and uncertainties and is subject to change based on various factors, including those discussed under “Cautionary Statement with Respect to Forward-Looking Statements” and “Item 3. Key Information—D. Risk Factors.”

Brands

This registration statement includes trademarks, trade names and trade dress of other companies. Use or display by us of other parties’ trademarks, trade names or trade dress or products is not intended to and does not imply a relationship with, or endorsement or sponsorship of us by, the trademark, trade name or trade dress owners. Solely for the convenience of investors, in some cases we refer to our brands in this registration statement without the ^® symbol, but these references are not intended to indicate in any way that we will not assert our rights to these brands to the fullest extent permitted by law.

Rounding

We have made rounding adjustments to reach some of the figures included in this registration statement. As a result, numerical figures shown as totals in some tables may not be arithmetic aggregations of the figures that precede them.

CAUTIONARY STATEMENT WITH RESPECT TO FORWARD-LOOKING STATEMENTS

This registration statement includes forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, principally in “Item 3. Key Information—D. Risk Factors,” “Item 4. Information on the Company—B. Business Overview” and “Item 5. Operating and Financial Review and Prospects.” We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends affecting our business. These forward-looking statements are subject to risks, uncertainties and assumptions including, among other things:

●

the economic, financial, political and social effects of the COVID-19 pandemic (or other pandemics, epidemics and similar crises) particularly in Brazil and in other Latin American countries where we operate, and to the extent that they continue to cause serious negative macroeconomic effects, thus prompting and exacerbating the risks described under “Item 3. Key Information—D. Risk Factors;”

●

global economic conditions and their impact on consumer spending patterns, particularly in Brazil (including, but not limited to, unemployment rates, interest rates, monetary policies and inflation rates);

●

the impacts of the COVID-19 pandemic on customer demand, as well as on our expected results of operations, financial condition and cash flows our ability to sustain or improve our performance;

●

competition in the sectors in which we operate;

●

Brazilian government regulation and tax matters;

●

adverse legal or regulatory disputes or proceedings;

●

our ability to implement our strategy, including our digital transformation initiatives;

●

credit and other risks of lending and investment activities;

●

our ability to expand our operations outside of our existing markets; and

●

other risk factors as set forth under “Item 3. Key Information—D. Risk Factors.”

The words “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect” and similar words are intended to identify forward-looking statements. We undertake no obligation to update publicly or revise any forward-looking statements because of new information, future events or otherwise. In light of these risks and uncertainties, the forward-looking information, events and circumstances discussed in this registration statement might not occur. Our actual results and performance could differ substantially from those anticipated in our forward-looking statements.

THE SPIN-OFF

The following provides only a summary of the Spin-Off and certain questions relating to the terms of the Spin-Off. You should read the section entitled “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off” in this registration statement for a more detailed description of the matters identified below.

Overview

CBD is the largest traditional retailer in the food segment in Brazil. It operates retail stores under a variety of banners and historically has operated in two business segments: the food retail segment and the cash and carry segment. Currently, Sendas operates CBD’s cash and carry business in Brazil under the Assaí banner On December 31, 2020, as described below, CBD completed a corporate reorganization pursuant to which Sendas transferred all of its equity interest in Éxito, which included Éxito’s food retail businesses in Colombia, Uruguay and Argentina, to CBD. As a result of this internal corporate reorganization, our primary focus is our cash and carry business. The Separation of Sendas from CBD and the distribution of the Sendas common shares described in this registration statement are intended to provide CBD shareholders with equity investments in two separate, independent publicly-traded companies that will be able to focus on each of their respective businesses. CBD and Sendas expect that the Spin-Off will result in enhanced long-term performance of each business for the reasons discussed in “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off—Reasons for the Spin-Off.”

On December 31, 2020, CBD completed the internal corporate transactions described below, which we refer to collectively as the “Corporate Reorganization”:

●

Sendas engaged in an exchange transaction with CBD (the “Exchange Transaction”) in which certain assets of CBD were transferred to Sendas in exchange for an equivalent value of the shares of Éxito held by Sendas (corresponding to 8.77% of the total outstanding shares of Éxito). The assets of CBD transferred to Sendas consisted of:

50% of the shares of Bellamar Empreendimentos e Participações Ltda., or Bellamar, a holding company that holds an investment in 35.76% of the shares of FIC, in the amount of R$769 million; and

five parcels of real estate (the “Real Estate Assets”), in the aggregate amount of R$146 million, which may be developed as sites for new stores in the future.

●

Following and contemporaneously with the Exchange Transaction, Sendas distributed to CBD the remaining shares of Éxito held by Sendas (corresponding to 87.80% of the total outstanding shares of Éxito).

●

Sendas distributed certain assets to CBD in the net amount of R$20 million.

●

CBD conducted the following capital contributions:

CBD transferred to Sendas the net assets of stores that may be developed by Sendas in the future, with a residual value of R$45 million;

CBD contributed intercompany receivables to Sendas for an amount of R$140 million; and

CBD contributed R$500 million in cash to Sendas.

In addition, on December 14, 2020, we entered into a Separation Agreement with CBD, which provides a framework for our relationship with CBD following the Separation and the Spin-Off. For more information about the Separation Agreement, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Agreements Related to the Spin-Off.” Pursuant to the Separation Agreement, Sendas will recognize certain assets and liabilities related to contingencies and their related judicial deposits for which the parties have agreed to be responsible following the Separation, in a net amount of R$114 million.

Set forth below are simplified structure charts showing CBD and its relevant subsidiaries, including Sendas and Éxito, and equity interests: (1) immediately prior to the Corporate Reorganization; and (2) immediately following the Corporate Reorganization.

Pre-Corporate Reorganization

Post-Corporate Reorganization

Upon receiving the necessary regulatory and stock exchange approvals, CBD expects to complete the Spin-Off, pursuant to which substantially all of the issued and outstanding Sendas common shares will be distributed to holders of CBD common shares, including the CBD ADS Custodian, on a pro rata basis for no consideration.

Set forth below is a structure chart showing CBD and Sendas and their relevant subsidiaries immediately following the Spin-Off:

Post Spin-Off

For additional information on the share capital of Sendas following the Spin-Off, see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders” and “Item 10. Additional Information—A. Share Capital.”

Completion of the Spin-Off is subject to the satisfaction of a number of conditions. See “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off” for more detail.

Questions and Answers about the Spin-Off

Q: What is the Spin-Off?

A: The Spin-Off refers to the proposed distribution of substantially all of the issued and outstanding Sendas common shares to holders of CBD common shares, including the CBD ADS Custodian, on a pro rata basis for no consideration. Following the Spin-Off, Sendas will be an independent, publicly traded company, and we expect that CBD will retain ownership of approximately 0.06% of our capital stock. See “Item 10. Additional Information—A. Share Capital.” For more information about the expected principal shareholders of CBD immediately following the Spin-Off, see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders.” We have applied to list the Sendas common shares on the Novo Mercado listing segment of the B3, and we intend to apply to list the Sendas ADSs on the NYSE.

Q: Who is entitled to receive Sendas common shares or Sendas ADSs in the Spin-Off?

A: Holders of CBD common shares and CBD ADSs as of the Record Date (as defined below) will be entitled to receive Sendas common shares and Sendas ADSs, respectively, in connection with the Spin-Off.

Each holder of CBD common shares, including the CBD ADS Custodian, will receive one Sendas common share for each CBD common share held as of p.m. São Paulo time on , 2021 (the “Record Date”). Each holder of CBD ADSs will be entitled to receive one newly-issued Sendas ADS for each CBD ADS held as of the Record Date.

Q: What is the expected date of completion of the Spin-Off?

A: The distribution of Sendas common shares is expected to occur on , 2021 (the “Spin-Off Date”). The distribution of Sendas ADSs is expected to occur on or about the Spin-Off Date.

See “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off—When and How You Will Receive Sendas common shares and Sendas ADSs” for more information.

Q: How will fractional shares and ADSs be treated in the Spin-Off?

A: The Spin-Off will not result in fractional entitlements of Sendas common shares or Sendas ADSs.

Q: What do I have to do to participate in the Spin-Off?

A: If you hold CBD common shares or CBD ADSs as of the Record Date, you will not be required to take any action, pay any cash, deliver any other consideration, or surrender any existing CBD common shares or CBD ADSs in order to receive Sendas common shares or Sendas ADSs in the Spin-Off, except that if you hold CBD ADSs through DTC, you will be required to pay an issuance fee of US$0.03 per Sendas ADS issued to the Sendas Depositary in order to receive the Sendas ADSs. See “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off—When and How You Will Receive Sendas Common Shares and Sendas ADSs” for more information.

This registration statement does not constitute a proxy statement. Neither CBD nor Sendas is asking you for a proxy, and you are requested not to send CBD or Sendas a proxy.

The Spin-Off will not affect the number of outstanding CBD common shares or CBD ADSs or any rights of CBD shareholders, although it may affect the market value of each outstanding CBD common share and CBD ADS. See “—Will the Spin-Off affect the trading price of my CBD common shares or CBD ADSs?” below.

We expect that the Spin-Off will be completed on or about , 2021, provided that certain conditions shall have been satisfied. For more information, see “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off—Conditions to the Spin-Off.”.

Q: If I sell my CBD common shares or CBD ADSs on or before the Spin-Off Date, will I still be entitled to receive Sendas common shares or Sendas ADSs in the Spin-Off with respect to the sold shares or ADSs?

A: To receive Sendas common shares or Sendas ADSs in connection with the Spin-Off, you must hold CBD common shares or CBD ADSs on the Record Date.

Immediately following the Record Date, the CBD common shares will trade “ex-distribution.” This means that if you purchase CBD common shares following the Record Date, you will not receive Sendas common shares in connection with the Spin-Off. Similarly, if you hold CBD common shares as of the Record Date and you subsequently sell or otherwise dispose of your CBD common shares, up to and including through the Spin-Off Date, you will still receive the Sendas common shares that you would be entitled to receive in respect of your ownership, as of the Record Date, of the CBD common shares that you sold.

With respect to CBD ADSs, because trades settle in two business days, CBD ADSs will begin to trade “ex-distribution” one business day prior to the Record Date. We refer to this date as the “ADS ex-distribution date.” This means that if you purchase CBD ADSs on or following the ADS ex-distribution date, you will not receive Sendas ADSs in connection with the Spin-Off because you will not hold CBD ADSs on the Record Date. Similarly, if you sell or otherwise dispose of your CBD ADSs on or following the ADS ex-distribution date, , you will still receive the Sendas ADSs that you would be entitled to receive in respect of your ownership, as of the Record Date, of the CBD ADSs that you sold.

Q: When will Sendas common shares and Sendas ADSs begin to trade on a standalone basis?

A: We expect that Sendas common shares and Sendas ADSs will commence “regular-way” trading on a standalone basis on the B3 and the NYSE, respectively, at market open on , 2021 (10:00 a.m. São Paulo time on the B3 and 9:30 a.m. New York City time on the NYSE). There will not be any trading of Sendas ADSs on a “when-issued” basis. See also “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off—Listing and Trading of Sendas Common Shares and Sendas ADSs.”

Q: What will be the ticker symbol of the Sendas common shares and Sendas ADSs?

A: We have applied to list the Sendas common shares on the Novo Mercado listing segment of the B3 under the ticker symbol “ASAI.” We intend to apply to list the Sendas ADSs on the NYSE under the ticker symbol “ASAI.”

Q: Will the CBD Depositary suspend the issuance and cancellation of CBD ADSs in connection with the Spin-Off?

A: Yes. The CBD Depositary will suspend the issuance and cancellation of CBD ADSs from until . This means that during this time, you will not be able to convert your CBD ADSs into CBD common shares or vice-versa, surrender your CBD ADSs and receive underlying CBD common shares, or deposit your CBD common shares and receive CBD ADSs. However, the closing of the issuance and cancellation books does not impact trading, and you may continue to trade your CBD ADSs during this period.

Q: How many Sendas common shares are expected to be outstanding immediately following the Spin-Off?

A: Based on 268,351,567 issued shares of CBD as of January 15, 2021 and the application of the distribution ratio, Sendas will have 268,351,567 Sendas common shares issued and outstanding immediately following the Spin-Off. For additional information on the share capital of Sendas following the Spin-Off, see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders” and “Item 10. Additional Information—A. Share Capital.”

Q: What will happen to the listing of CBD common shares and CBD ADSs?

A: After the Spin-Off, CBD common shares will continue to trade on the B3 under the symbol “PCAR3” and CBD ADSs will continue to trade on the NYSE under the symbol “CBD.”

Q: Will the number of CBD common shares or CBD ADSs I own change as a result of the Spin-Off?

A: No, the number of CBD common shares or CBD ADSs you own will not change as a result of the Spin-Off.

Q: Will the spin-off affect the trading price of my CBD common shares or CBD ADSs?

A: Yes. The trading price of the CBD common shares and the CBD ADSs immediately following the Spin-Off could be lower than immediately prior to the Spin-Off because the trading price will no longer reflect the value of Sendas and its subsidiaries. We cannot provide you with any assurance regarding the price at which the CBD common shares and CBD ADSs will trade following the Spin-Off. See “Item 3. Key Information—D. Risk Factors—Risks Relating to the Spin-Off—Sendas and CBD’s equity values after the Spin-Off may not accurately reflect the value of the underlying entities, and equity values may fluctuate significantly” for more detail.

Q: What are the conditions to the Spin-Off?

A. We expect that the Spin-Off will be completed on or about , 2021, provided that the following conditions shall have been satisfied:

●

the SEC declaring effective, under the Exchange Act, this registration statement, with no stop order in effect or pending before or threatened by the SEC with respect to this registration statement;

●

the B3 approving the listing of the Sendas common shares;

●

the NYSE approving the listing of the Sendas ADSs; and

●

no order, injunction or decree issued by any governmental authority of competent jurisdiction or other legal or administrative restraint or prohibition preventing consummation of the Separation or the Spin-Off being in effect, and no other event outside the control of CBD having occurred or failed to occur that prevents the consummation of the Separation or the Spin-Off.

CBD and Sendas cannot assure you that any or all of the conditions to the Spin-Off will be met. See also “—Can CBD decide to cancel the Spin-Off of Sendas common shares even if all the conditions are met?” below and “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off—Conditions to the Spin-Off.”

Q: Can CBD decide to cancel the Spin-Off of CBD common shares even if all the conditions are met?

A: No. The Spin-Off is subject to the satisfaction of certain conditions. However, if all such conditions have been satisfied in a timely manner, CBD will not have the right to subsequently terminate the planned distribution without the approval of its shareholders. See also “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off—Conditions to the Spin-Off.”

Q: What are the tax consequences to me of the Spin-Off?

A: See “Item 10. Additional Information—E. Taxation—Material U.S. Federal Income Tax Consequences.” and “— Material Brazilian Tax Consequences” for more information regarding the material tax consequences of the Spin-Off.

Q: What will the relationship between CBD and Sendas be following the Spin-Off?

A: On December 14, 2020, we entered into a Separation Agreement with CBD related to the Separation and the Spin-Off. The Separation Agreement provides a framework for our relationship with CBD following the Separation and the Spin-Off. See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Agreements Related to the Spin-Off” for more detail.

Q: Are there risks associated with owning Sendas common shares and Sendas ADSs?

A: Yes. Ownership of Sendas common shares is subject to both general and specific risks relating to our business, the industry in which we operate and our status as a separate, publicly traded company. Ownership of Sendas common shares and Sendas ADSs is also subject to risks relating to the Spin-Off. Accordingly, you should carefully read the information set forth under “Item 3. Key Information—D. Risk Factors” in this registration statement.

Q: Where can I get more information?

A: Before the Spin-Off, if you have any questions relating to the business performance of CBD or Sendas or the Spin-Off, you may contact the investor relations departments of CBD or Sendas at:

Sendas Distribuidora S.A.

Investor Relations Department

Avenida Ayrton Senna, No. 6,000, Lote 2, Pal 48959, Anexo A

Jacarepaguá

22775-005 Rio de Janeiro, RJ, Brazil

Telephone: +55 11 3411 5042

Email: ri.assai@assai.com.br

Companhia Brasileira de Distribuição

Investor Relations Department

Avenida Brigadeiro Luiz Antonio, No. 3142
01402-901 São Paulo, SP, Brazil

Telephone: +55 11 3886-0421

Email: gpa.ri@gpabr.com

After the Spin-Off, if you have any questions relating to Sendas’s business performance, you may contact the investor relations department of Sendas at:

Sendas Distribuidora S.A.

Investor Relations Department

Avenida Ayrton Senna, No. 6,000, Lote 2, Pal 48959, Anexo A

Jacarepaguá

22775-005 Rio de Janeiro, RJ, Brazil

Telephone: +55 11 3411 5042

Email: ri.assai@assai.com.br

If you hold CBD ADSs and have any questions with respect to the mechanics of the Spin-Off as they relate to your CBD ADSs, you may contact the CBD Depositary’s transfer agent, EQ, at:

JPMC Call Center at EQ

Telephone: +1 800 990 1135 (from inside the U.S.) / +1 651 453 2128 (from outside the U.S.)

PART I

ITEM 1.

IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Directors and Senior Management

For information regarding our directors and senior management, see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management.”

Advisers

Our Brazilian legal counsel is Machado, Meyer, Sendacz & Opice Advogados, Avenida Brigadeiro Faria Lima, 3144, 11th floor, 01451-000, São Paulo, SP, Brazil. Our U.S. legal counsel is White & Case LLP, 1221 Avenue of the Americas, New York, New York 10020.

Auditors

Ernst & Young Auditores Independentes S.S. (“EY”), an independent registered public accounting firm, has acted as our auditor with respect to our consolidated financial statements as of December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017. The address for EY is Av. Presidente Juscelino Kubitcheck, 1909, Torre Norte, n/a, Vila Olímpia, 04543-011, São Paulo, SP, Brazil. EY is registered with the Public Company Accounting Oversight Board.

ITEM 2.

OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.

KEY INFORMATION

Selected Financial Data

Selected Financial and Operating Data

The following selected financial and operating data have been derived from our consolidated financial statements prepared in accordance with IFRS as issued by the IASB. The selected financial data as of September 30, 2020 and for the nine-month periods ended September 30, 2020 and 2019 have been derived from our unaudited interim condensed consolidated financial statements included in this registration statement. The selected financial data as of December 31, 2019 and 2018 and for the years ended December 31, 2019, 2018 and 2017 have been derived from our audited consolidated financial statements included in this registration statement. The selected financial data as of December 31, 2017, 2016 and 2015 and for the years ended December 31, 2016 and 2015 have been derived from our consolidated financial statements that are not included in this registration statement.

Effective on January 1, 2019, we adopted IFRS 16 – Leases, which sets out the principles for the recognition, measurement, reporting and disclosure of leasing operations, and requires lessees to account for all leases according to a single model on their balance sheets, similar to accounting for finance leases pursuant to IAS 17. We have disclosed the retrospective effects of our adoption of IFRS 16 – Leases on our financial statements as of and for the year ended December 31, 2018. However, our consolidated financial statements and financial data as of December 31, 2017, 2016 and 2015 and for the years ended December 31, 2016 and 2015 have not been retroactively restated to adjust for IFRS 16 – Leases. Accordingly, the following selected financial data as of December 31, 2017, 2016 and 2015 and for the years ended December 31, 2016 and 2015 may be of limited comparability with the selected financial data for subsequent dates and periods.

The following selected financial and operating data should be read in conjunction with our audited consolidated financial statements and the related notes thereto and the sections of this registration statement captioned “Item 5. Operating and Financial Review and Prospects” and “Presentation of Financial and Other Information.”

	For the nine-month period ended September 30,									For the year ended December 31,
	2020			2020			2019			2019			2019			2018			2017			2016			2015
	(in millions of US$, except as otherwise indicated)⁽¹⁾			(in millions of R$, except as otherwise indicated)						(in millions of US$, except as otherwise indicated)⁽¹⁾			(in millions of R$, except as otherwise indicated)
Statement of Operations and Comprehensive Income Data:
Net operating revenue		7,266			40,983			20,088			5,360			30,232			23,017			18,544			15,923			4,371
Cost of sales		(5,861	)		(33,059	)		(16,685	)		(4,413	)		(24,891	)		(18,845	)		(15,578	)		(13,376	)		(3,250	)
Gross profit		1,405			7,924			3,403			947			5,341			4,172			2,966			2,547			1,121
Selling expenses		(734	)		(4,141	)		(1,647	)		(493	)		(2,782	)		(1,908	)		(1,563	)		(1,602	)		(828	)
General and administrative expenses		(168	)		(949	)		(284	)		(29	)		(166	)		(275	)		(235	)		(240	)		(112	)
Depreciation and amortization		(158	)		(889	)		(288	)		(80	)		(454	)		(313	)		(239	)		(152	)		(59	)
Share of profit and loss of associates		3			18			—			(1	)		(5	)		—			—			16			48
Other operating expenses, net		(52	)		(295	)		(21	)		(37	)		(206	)		(3	)		(79	)		(71	)		(17	)
Total operating expenses, net		(1,109	)		(6,256	)		(2,240	)		(641	)		(3,613	)		(2,499	)		(2,116	)		(2,049	)		(968	)
Operating profit		296			1,668			1,163			306			1,728			1,673			850			498			153
Net financial result		(119	)		(671	)		(18	)		(46	)		(257	)		(120	)		(142	)		(89	)		37
Income before income taxes		177			997			1,145			261			1,471			1,553			708			409			190
Income tax and social contribution		(30	)		(167	)		(371	)		(73	)		(411	)		(477	)		(211	)		(105	)		(48	)
Net income for the year/period		147			830			774			188			1,060			1,076			497			304			142
Net income for the year/period attributable to:
Controlling shareholders		126			712			774			186			1,047			1,076			497			304			142
Non-controlling interest		21			118			—			2			13			—			—			—			—
		147			830			774			188			1,060			1,076			497			304			142
Exchange rate variations of foreign investments		363			2,046			—			39			220			—			—			—			—
Foreign investments hedge		(1	)		(5	)		—			—			—			—			—			—			—
Cash flow hedge		(0	)		(2	)		(52	)		1			5			—			—			—			—
Income taxes related to other comprehensive income		—			—			17			—			—			—			—			—			—
Total other comprehensive income for the year/period		361			2,039			(35	)		40			225			—			—			—			—
Total comprehensive income for the year/period		509			2,869			739			228			1,285			1,076			497			304			142
Total comprehensive income for the year/period attributable to:
Controlling shareholders		400			2,259			739			214			1,209			—			—			—			—
Non-controlling interest		108			610			—			13			76			—			—			—			—
		509			2,869			739			228			1,285			1,076			497			304			142
Earnings per share (weighted average for the year/period):
Common shares – basic and diluted (in reais)		0.47			2.65			4.40			0.69			4.06			6.21			3.02			2.01			1.47
Weighted average shares outstanding (in millions of shares):
Common shares – basic and diluted⁽²⁾		268			268			176			268			258			173			164			151			97

(1)

Solely for the convenience of the reader, Brazilian real amounts have been translated into U.S. dollars at an exchange rate of R$5.6407 per US$1.00, which was the commercial selling rate for U.S. dollars in effect on September 30, 2020, as reported by the Central Bank. The real/U.S. dollar exchange rate should not be construed as implying that the real amounts represent, or could have been or could be converted into, U.S. dollars at such rates or at any other rate as of that or any other date.

(2)

Applies the reverse stock split ratio of approximately 12-to-1 that was approved by CBD as sole shareholder on November 10, 2020 to the historical weighted average shares outstanding for each year/period. For more information about the reverse stock split, see “Item 4. Information on the Company—History and Development of the Company—Recent Developments—Reverse Stock Split.”

	As of September 30,				As of December 31,
	2020		2020		2019		2019		2018		2017		2016		2015
	(in millions of US$, except as otherwise indicated)⁽¹⁾		(in millions of R$, except as otherwise indicated)		(in millions of US$, except as otherwise indicated)⁽¹⁾		(in millions of R$, except as otherwise indicated)
Balance Sheet Data:
Cash and cash equivalents		691		3,898		891		5,026		1,411		891		589		565
Property and equipment		3,068		17,303		2,598		14,652		4,655		3,725		2,786		586
Total assets		7,087		39,973		6,365		35,905		10,933		8,184		6,419		2,945
Current borrowings and financing		337		1,903		56		316		676		22		194		1
Current debentures		319		1,799		205		1,156		—		—		—		—
Noncurrent borrowings and financing		263		1,482		110		622		102		451		137		5
Noncurrent debentures		836		4,716		1,193		6,727		—		—		—		—
Shareholders’ equity		2,251		12,698		1,720		9,701		4,092		3,024		2,259		1,349
Capital stock		842		4,749		784		4,421		2,351		2,252		1,896		1,073

(1)

	For the nine-month period ended September 30,									For the year ended December 31,
	2020			2020			2019			2019			2019			2018			2017			2016			2015
	(in millions of US$, except as otherwise indicated)⁽¹⁾			(in millions of R$, except as otherwise indicated)						(in millions of US$, except as otherwise indicated)⁽¹⁾			(in millions of R$, except as otherwise indicated)
Other Financial Data:
Net cash generated by (used in):
Operating activities		(114	)		(642	)		327			560			3,159			1,545			1,102			1,062			84
Investing activities		(122	)		(690	)		(876	)		(775	)		(4,370	)		(926	)		(739	)		(349	)		(199	)
Financing activities		(40	)		(224	)		8,428			836			4,715			(99	)		(61	)		(689	)		(598	)
Dividends declared and interest on shareholders’ capital per share:
Common shares (in R$ or US$, as the case may be)		0.02			0.09			0.02			0.02			0.09			0.05			0.04			0.08			0.43
Capital expenditures⁽²⁾		(212	)		(1,198	)		(877	)		(250	)		(1,409	)		(948	)		(740	)		(506	)		(91	)

(1)

(2)

Capital expenditures are comprised of cash used in purchases of property, equipment and intangible assets (principally software and commercial rights), as reflected in the consolidated statement of cash flows.

The operating data presented below excludes information relating to the Éxito Group.

	As of and for the nine-month period ended September 30,						As of and for the year ended December 31,
	2020		2020		2019		2019		2019		2018		2017		2016		2015
	(in US$, except as otherwise indicated)⁽¹⁾		(in R$, except as otherwise indicated)				(in US$, except as otherwise indicated)⁽¹⁾		(in R$, except as otherwise indicated)
Operating Data:
Number of employees at period end(2)				38,589		32,736				36,045		29,922		26,375		21,083		16,626
Total square meters of selling area at year/period end				761,179		647,826				712,614		597,988		505,737		420,826		372,763
Number of stores at period end(3)				176		153				166		144		126		107		95
Net operating revenue per employee(2)		116,020		654,435		604,961		136,718		771,183		765,277		699,146		687,156		628,748
Net operating revenue for Assaí stores (in millions of R$ or US$, as the case may be)		4,491		25,330		20,088		4,928		27,797		22,899		18,440		14,487		10,453
Average monthly net operating revenue per square meter(4)		684		3,861		3,575		651		3,671		3,574		3,430		3,107		2,578
Average ticket amount		34		194		162		29		165		158		157		156		146
Average number of tickets per month (in millions)				10.9		10.2				14.1		12.1		9.8		7.7		5.9

(1)

(2)

Based on the full-time equivalent number of employees, which is the product of the number of all retail employees (full- and part-time employees) and the ratio of the average monthly hours of all retail employees to the average monthly hours of full-time employees.

(3)

Excludes gas stations.

(4)

Calculated using the average of square meters of selling area on the last day of each month in the period.

Unaudited Pro Forma Condensed Financial Information

The unaudited pro forma condensed balance sheet gives pro forma effect to the Corporate Reorganization and the Separation as if they had taken place on September 30, 2020. The unaudited pro forma condensed statements of operations give pro forma effect to the Corporate Reorganization and the Separation as if they had taken place on January 1, 2019.

The historical consolidated financial information has been adjusted to give effect to the events that are directly attributable to the Corporate Reorganization and the Separation, factually supportable, and, with respect to the pro forma condensed statements of income, expected to have a continuing impact on the pro forma results.

The Sendas pro forma financial information has been presented for informational purposes. The Sendas pro forma financial information does not purport to represent what the actual results of operations or the position of Sendas would have been if the Corporate Reorganization and the Separation had occurred on the dates indicated, nor is it necessarily indicative of future consolidated results of operations or consolidated financial position.

The Sendas pro forma financial information has been derived from:

(1)

our unaudited interim condensed consolidated financial statements included in this registration statement;

(2)

our audited consolidated financial statements included in this registration statement; and

(3)

the books and records of CBD as of and for the nine-month period ended September 30, 2020 and for the year ended December 31, 2019.

The pro forma adjustments are based upon currently available information and certain estimates and assumptions, as described in the accompanying notes to the Sendas pro forma financial information, and actual results may differ from the pro forma adjustments. However, we believe that these estimates and assumptions provide a reasonable basis for presenting the significant effects of the contemplated transaction and that the pro forma adjustments are factually supportable and give appropriate effect to those estimates and assumptions.

The Sendas pro forma financial information was prepared on a recurring basis. Accordingly, it does not include potential non-recurring income or expenses related to the Corporate Reorganization and the Separation.

Sendas Distribuidora S.A.

Unaudited Pro Forma Condensed Balance Sheet

As of September 30, 2020

(in millions of reais)

			Pro Forma Adjustments
			Corporate Reorganization
	Sendas Distribuidora S.A. Historical		Distribution of Éxito Group and other assets			Assets Acquired in Exchange Transaction		Capital Increases		Separation Agreement		Pro Forma
			Note 2.1(a)			Note 2.1(b)		Note 2.1(c)		Note 2.1(d)
Assets

Current assets
Cash and cash equivalents		3,898		(1,621	)		—		500		—		2,777
Trade receivables		472		(282	)		—		—		—		190
Other accounts receivable		252		(221	)		—		—		—		31
Inventories		6,383		(3,071	)		—		—		—		3,312
Recoverable taxes		1,090		(511	)		—		—		—		579
Derivative financial instruments		90		—			—		—		—		90
Assets held for sale		31		(31	)		—		—		—		—
Other current assets		202		(167	)		—		—		—		35
Total current assets		12,418		(5,904	)		—		500		—		7,014

Noncurrent assets
Trade receivables and other accounts receivable		53		(53	)		—		—		—		—
Recoverable taxes		868		(1	)		—		—		—		867
Derivative financial instruments		12		(1	)		—		—		—		11
Related parties		91		(68	)		—		—		151		174
Restricted deposits for legal proceedings		114		(2	)		—		—		41		153
Other noncurrent assets		85		(84	)		—		—		—		1
Investments in associated entities		452		(452	)		769		—		—		769
Investment properties		3,624		(3,624	)		—		—		—		—
Property and equipment, net		17,303		(10,388	)		146		45		—		7,105
Intangible assets, net		4,953		(3,917	)		—		—		—		1,036
Total noncurrent assets		27,555		(18,591	)		915		45		192		10,116
Total assets		39,973		(24,495	)		915		545		192		17,130

The accompanying notes form an integral part of the Unaudited Pro Forma Condensed Financial Information

Sendas Distribuidora S.A.

Unaudited Pro Forma Condensed Balance Sheet

As of September 30, 2020

(in millions of reais)

			Pro Forma Adjustments
			Corporate Reorganization
	Sendas Distribuidora S.A. Historical		Distribution of Éxito Group and other assets			Assets Acquired in Exchange Transaction		Capital Increases			Separation Agreement			Pro Forma
			Note 2.1(a)			Note 2.1(b)		Note 2.1(c)			Note 2.1(d)

Liabilities and Shareholders’ Equity

Liabilities

Current liabilities
Trade payables, net		8,138		(4,196	)		—		—			—			3,942
Borrowings and financing and debentures		3,702		(1,597	)		—		—			—			2,105
Payroll and related taxes		775		(375	)		—		—			—			400
Lease liabilities		498		(341	)		—		—			—			157
Related parties		226		(75	)		—		(140	)		41			52
Taxes and social contributions payable		464		(186	)		—		—			—			278
Deferred revenues		202		(91	)		—		—			—			111
Dividends payable		277		(13	)		—		—			—			264
Acquisition of non-controlling interest		581		(581	)		—		—			—			—
Other current liabilities		311		(175	)		—		—			—			136
Total current liabilities		15,174		(7,631	)		—		(140	)		41			7,444

Noncurrent liabilities
Borrowings and financing and debentures		6,198		(518	)		—		—			—			5,680
Deferred income tax and social contribution		1,029		(928	)		—		—			59			160
Provision for contingencies		375		(124	)		—		—			(22	)		229
Lease liabilities		4,458		(2,066	)		—		—			—			2,392
Deferred revenues and other noncurrent liabilities		41		(33	)		—		—			—			8
Total noncurrent liabilities		12,101		(3,669	)		—		—			37			8,469

Shareholders’ Equity

Attributable to controlling shareholders		9,548		(10,045	)		915		685			114			1,216
Attributable to non-controlling interest		3,150		(3,150	)		—		—			—			—
Total shareholders’ equity		12,698		(13,195	)		915		685			114			1,216
Total liabilities and shareholders’ equity		39,973		(24,495	)		915		545			192			17,130

The accompanying notes form an integral part of the Unaudited Pro Forma Condensed Financial Information

Sendas Distribuidora S.A.

Unaudited Pro Forma Condensed Statement of Operations

For the Nine-Month Period Ended September 30, 2020

(in millions of reais)

				Pro Forma Adjustments
				Corporate Reorganization
	Sendas Distribuidora S.A. Historical			Distribution of Éxito Group and other assets			Assets Acquired in Exchange Transaction		Capital Increases			Separation Agreement			Pro Forma
				Note 2.2(a)			Note 2.2(b)		Note 2.2(c)			Note 2.2(d)

Net operating revenue		40,983			(15,723	)		—		—			—			25,260
Cost of sales		(33,059	)		11,881			—		—			—			(21,178	)
Gross profit		7,924			(3,842	)		—		—			—			4,082
Selling expenses		(4,141	)		2,165			—		—			—			(1,976	)
General and administrative expenses		(949	)		645			—		—			—			(304	)
Depreciation and amortization		(889	)		529			—		(1	)		—			(361	)
Share of profit and loss of associates		17			(17	)		44		—			—			44
Other operating expenses, net		(294	)		137			—		—			0			(157	)
Operating profit		1,668			(384	)		44		(1	)		—			1,327
Net financial result		(671	)		254			—		—			5			(413	)
Income before income taxes		997			(130	)		44		(1	)		5			915
Income tax and social contribution		(167	)		(8	)		—		—			(2	)		(176	)
Net income for the period		830			(138	)		44		(1	)		3			738
Net income for the period attributable to:
Controlling shareholders		712			(20	)		44		(1	)		3			738
Non-controlling interest		118			(118	)		—		—			—			—
		830			(138	)		44		(1	)		3			738

Earnings per share (weighted average for the year/period):
Common shares – basic and diluted (in reais)		2.6532														2.7520
Weighted average shares outstanding:
Common shares – basic and diluted⁽¹⁾		268,352,221														268,352,221

(1)

Applies the reverse stock split ratio of approximately 12-to-1 that was approved by CBD as sole shareholder on November 10, 2020 to the historical weighted average shares outstanding for the period. For more information about the reverse stock split, see “Item 4. Information on the Company—History and Development of the Company—Recent Developments—Reverse Stock Split.”

The accompanying notes form an integral part of the Unaudited Pro Forma Condensed Financial Information

Sendas Distribuidora S.A.

Unaudited Pro Forma Condensed Statement of Operations

For the Year Ended December 31, 2019

(in millions of reais)

				Pro Forma Adjustments
				Corporate Reorganization
	Sendas Distribuidora S.A. Historical			Distribution of Éxito Group and other assets			Assets Acquired in Exchange Transaction		Capital Increases			Separation Agreement			Pro Forma
				Note 2.2(a)			Note 2.2(b)		Note 2.2(c)			Note 2.2(d)

Net operating revenue		30,232			(2,279	)		—		—			—			27,953
Cost of sales		(24,891	)		1,663			—		—			—			(23,228	)
Gross profit		5,341			(617	)		—		—			—			4,724
Selling expenses		(2,782	)		516			—		—			—			(2,266	)
General and administrative expenses		(166	)		(186	)		—		—			—			(352	)
Depreciation and amortization		(454	)		68			—		(1	)		—			(387	)
Share of profit and loss of associates		(5	)		5			51		—			—			51
Other operating expenses, net		(206	)		34			—		—			—			(172	)
Operating profit		1,728			(179	)		51		(1	)		—			1,598
Net financial result		(257	)		68			—		—			6			(183	)
Income before income taxes		1,471			(111	)		51		(1	)		6			1,415
Income tax and social contribution		(411	)		31			—		(0	)		(2	)		(382	)
Net income for the period		1,060			(81	)		51		(1	)		4			1,033
Net income for the period attributable to:
Controlling shareholders		1,047			(68	)		51		(1	)		4			1,033
Non-controlling interest		13			(13	)		—		—			—			—
		1,060			(81	)		51		(1	)		4			1,033

Earnings per share (weighted average for the year/period):
Common shares – basic and diluted (in reais)		4.0624														4.0079
Weighted average shares outstanding:
Common shares – basic and diluted⁽¹⁾		257,730,518														257,730,518

(1)

Applies the reverse stock split ratio of approximately 12-to-1 that was approved by CBD as sole shareholder on November 10, 2020 to the historical weighted average shares outstanding for the year. For more information about the reverse stock split, see “Item 4. Information on the Company—History and Development of the Company—Recent Developments—Reverse Stock Split.”

The accompanying notes form an integral part of the Unaudited Pro Forma Condensed Financial Information

Sendas Distribuidora S.A.

Notes to the Unaudited Pro Forma Condensed Financial Information

(in millions of reais)

Description of the Transaction

On December 31, 2020, the extraordinary general shareholders’ meetings of CBD and Sendas approved the proposed Spin-Off of Sendas.

The Spin-Off refers to the proposed distribution of substantially all of the issued and outstanding Sendas common shares to holders of CBD common shares, including the CBD ADS Custodian, on a pro rata basis for no consideration. Following the Spin-Off, Sendas will be an independent, publicly traded company, and we expect that CBD will retain ownership of approximately 0.06% of our capital stock. See “Item 10. Additional Information—A. Share Capital.” For more information about the expected principal shareholders of CBD immediately following the Spin-Off, see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders.” We have applied to list the Sendas common shares on the Novo Mercado listing segment of the B3, and we intend to apply to list the Sendas ADSs on the NYSE.

On December 31, 2020, CBD completed the internal corporate transactions described below:

●

Sendas engaged in the Exchange Transaction with CBD in which certain assets of CBD were transferred to Sendas in exchange for an equivalent value of the shares of Éxito held by Sendas (corresponding to 8.77% of the total outstanding shares of Éxito). The assets of CBD transferred to Sendas consisted of:

50% of the shares of Bellamar, a holding company that holds an investment in 35.76% of the shares of FIC; and

the Real Estate Assets, consisting of five parcels of real estate, which may be developed as sites for new stores in the future.

●

Sendas distributed certain assets to CBD in the net amount of R$20.

●

CBD conducted the following capital contributions:

CBD transferred to Sendas the net assets of stores that may be developed by Sendas in the future;

CBD contributed intercompany receivables to Sendas; and

CBD contributed cash to Sendas.

Pro Forma Adjustments

The Sendas pro forma financial information includes the following adjustments:

2.1

Adjustments to the unaudited pro forma condensed balance sheet as of September 30, 2020:

(a)

Adjustments to eliminate Éxito Group historical balance sheet amounts resulting from the distribution of our equity interest in Éxito to CBD, as described in note 1 above.

(b)

The recognition of the assets received through the Exchange Transaction, as described in note 1 above. The assets consist of a 50% equity interest in Bellamar capital in the amount of R$769 and the Real Estate Assets in the aggregate amount of R$146, in accordance with IAS 28 – Investments in Associates (“IAS 28”) and Joint Ventures and IAS 16 – Property, Plant and Equipment, respectively. These assets are being recognized at the amounts agreed upon by Sendas and CBD, which approximate their respective fair values. In addition, in relation to the 50% of the shares of Bellamar, in accordance with IAS 28, the pro forma adjustments include a preliminary purchase price allocation, which may ultimately change. We believe that such potential changes would not significantly impact the information provided in the Sendas pro forma financial information.

(c)

Refers to the capital contribution as described in note 1 above, of the following (i) fixed assets for future development with a residual value of R$45; (ii) intercompany receivables for an amount of R$140; and (iii) R$500 in cash.

(d)

Refers to the recognition by Sendas of certain assets and liabilities related to contingencies and their related judicial deposits for which the parties have agreed to be responsible following the Separation, in a net amount of R$114.

2.2

Adjustments to the unaudited pro forma condensed statements of operations for the nine-month period ended September 30, 2020 and for the year ended December 31, 2019:

(a)

Adjustment to eliminate the income statement line items of Éxito: (i) for the nine-month period ended September 30, 2020, with respect to the unaudited pro forma condensed statement of operations for the nine-month period ended September 30, 2020; and (ii) for the period from November 27, 2019 (date of the Éxito Acquisition) to December 31, 2019, with respect to the unaudited pro forma condensed statement of operations for the year ended December 31, 2019.

(b)

Adjustment to recognize the share of profit in the 50% investment in Bellamar.

	For the year ended December 31, 2019		For the nine-month period ended September 30, 2020

Share of profit of 50% of Bellamar		51		44

(c)

Adjustment to recognize the amortization expense of the assets to be contributed by CDB as described in note 2.1(c) above.

						Pro forma depreciation adjustments
	Historical cost		Annual depreciation rate			For the year ended December 31, 2019			For the nine-month period ended September 30, 2020

Land		15		N/A			—			—
Building		16		2.50	%		(0	)		(0	)
Improvements		20		4.17	%		(1	)		(1	)
Installation		1		8.19	%		(0	)		(0	)
Total		53					(1	)		(1	)

(d)

Adjustment to recognize monetary adjustment on the indemnification asses that Sendas will receive from CBD as described in note 2.1(d) above.

	Indemnification Asset						Monetary adjustment
	As of January 1, 2019		As of December 31, 2019		As of September 30, 2020		For the year ended December 31, 2019		For the nine-month period ended September 30, 2020

Tax contingency		97		101		105		4		4
Civil/labor contingency		65		67		68		2		1
Total		162		168		173		6		5

Capitalization and Indebtedness

The following table sets forth our consolidated capitalization and indebtedness as of September 30, 2020 on:

●

an actual historical basis; and

●

an as adjusted basis to give effect to the pro forma adjustments set forth in “—A. Selected Financial Data—Unaudited Pro Forma Condensed Financial Information.”

The “as adjusted” information below is not necessarily indicative of what our capitalization and indebtedness would have been had the events described above been completed as of September 30, 2020. Investors should read the information in this table together with our unaudited interim condensed consolidated financial statements appearing elsewhere in this registration statement, as well as the sections of this registration statement captioned “Presentation of Financial and Other Information,” “Item 3. Key Information—A. Selected Financial Data” and “Item 5. Operating and Financial Review and Prospects.”

	As of September 30, 2020
	Actual				As Adjusted⁽²⁾
	(in millions of US$)⁽¹⁾		(in millions of R$)		(in millions of US$)⁽¹⁾		(in millions of R$)

Current borrowings and financing and debentures:
Secured		5		31		—		—
Unsecured		651		3,671		373		2,105
Total current borrowings and financing and debentures		656		3,702		373		2,105
Non-current borrowings and financing and debentures:
Secured		5		28		—		—
Unsecured		1,094		6,170		1,007		5,680
Total non-current borrowings and financing and debentures		1,099		6,198		1,007		5,680
Total borrowings and financing and debentures		1,755		9,900		1,380		7,785
Shareholders’ equity attributable to:
Controlling interest		1,693		9,548		216		1,216
Non-controlling interest		558		3,150		—		—
Total shareholders’ equity		2,251		12,698		216		1,216
Total capitalization⁽³⁾		3,350		18,896		1,223		6,896

(1)

(2)

As adjusted to give effect to the pro forma adjustments set forth in “—A. Selected Financial Data—Unaudited Pro Forma Condensed Financial Information.”

(3)

Total capitalization is the sum of total non-current borrowings and financing and debentures and total shareholders’ equity.

Reasons for the Offer and Use of Proceeds

Not applicable.

Risk Factors

You should carefully consider the risks described below, together with all of the other information included in this registration statement, in evaluating our company, the Sendas common shares and the Sendas ADSs. The following risk factors could adversely affect our business, financial condition, results of operations and the price of the Sendas common shares and the Sendas ADSs.

Risks Relating to the Spin-Off

The Spin-Off may not be successful and as an independent, publicly traded company, we will not enjoy the same benefits that we did as a subsidiary of CBD.

Upon completion of the Spin-Off, we will be a standalone public company. The process of becoming a standalone public company may distract our management from focusing on our business and strategic priorities. Further, we may not be able to issue debt or equity on terms acceptable to us and we may not be able to attract and retain employees as desired. We also may not fully realize the anticipated benefits of the Separation and of being a standalone public company, or the realization of such benefits may be delayed, if any of the risks identified in this “Risk Factors” section, or other events, were to occur.

As a separate public company, we will be a smaller and less diversified company than CBD, and we may not have access to financial and other resources comparable to those available to CBD prior to the Separation and the Spin-Off. We cannot predict the effect that the Spin-Off will have on our relationship with partners or employees or our relationship with government regulators. Furthermore, as a less diversified company, we may be more likely to be negatively impacted by changes in global market conditions, regulatory reforms and other industry factors, which could have a material adverse effect on our business, prospects, financial condition and results of operations.

We may not achieve some or all of the expected benefits of the Spin-Off, and the Spin-Off may adversely affect our business.

We may not be able to achieve the full strategic and financial benefits expected to result from the Spin-Off, or such benefits may be delayed or not occur at all. The Spin-Off is expected to provide the following benefits, among others:

●

permit each of the separate companies to increase their strategic focus on their businesses as each company operates in a different market with different opportunities and business models;

●

improve the operational efficiencies of each of the separate companies by eliminating the inefficiencies of the current holding company structure and permit CBD to focus on the quality of products and services, customer convenience and the overall customer experience, while permitting Sendas to focus on supply chain issues, reduction in the number of stock-keeping units, or SKUs, and basic service needs;

●

improve the resource allocation by the separate companies and permit each company to achieve more attractive financing terms as investors are better able to understand each stand-alone business; and

●

create value for stakeholders as the intrinsic value of each separate company is recognized by investors based on the attributes and performance of the separate companies.

We may not achieve these and other anticipated benefits for a variety of reasons, including, among others:

●

the Separation will require significant amounts of management’s time and effort, which may divert management’s attention from operating and growing our business;

●

following the Separation and the Spin-Off, we may be more susceptible to market fluctuations and other adverse events than if we were still a part of CBD; and

●

following the Spin-Off, our business will be less diversified than the CBD business prior to the Spin-Off.

In addition, CBD and Sendas have expended and will continue to expend significant management time and resources and have incurred and will continue to incur significant expenses due to legal, advisory and accounting services fees related to the Spin-Off. These expenses must be paid regardless of whether the Spin-Off is completed. Any such conditions or changes could have the effect of delaying completion of the Spin-Off and otherwise reduce the anticipated benefits of the Spin-Off.

If we fail to achieve some or all of the benefits expected to result from the Spin-Off, or if such benefits are delayed, our business, financial conditions and results of operations could be adversely affected.

The Spin-Off may not be completed on the terms or timeline currently contemplated, or at all.

The completion of the Spin-Off is subject to numerous conditions, including obtaining the necessary regulatory and stock exchange approvals. See “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off—Conditions to the Spin-Off.” There is no assurance that the Spin-Off will be completed on the terms or timeline currently contemplated, or at all.

Our historical and pro forma financial information is not necessarily representative of the results we would have achieved as a standalone public company and may not be a reliable indicator of our future results.

Our historical and pro forma financial information may not fully reflect the increased costs associated with operating as a standalone public company or the effects of our financial strategy, which is distinct from the strategy employed by CBD. In addition, for certain of the periods covered by our historical financial statements, our business was operated within legal entities which hosted portions of other CBD businesses, such as the Éxito Group. We urge you to carefully consider the basis on which our historical and pro forma financial information included herein was prepared and presented as such results may not be a reliable indicator of our future performance, or the performance of any of our businesses.

Our ability to operate our business effectively may suffer if we do not, quickly and cost effectively, establish our own administrative and support functions necessary to operate as a standalone public company.

As a subsidiary of CBD, we historically relied on financial (including financial and compliance controls) and certain legal, administrative and other resources of CBD to operate our business. In particular, CBD historically provided us with services across the following service domains: treasury, legal, financial controlling and accounting, human resources operations and real estate. For more information, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Other Related Party Transactions—Agreements with CBD—Cost Sharing Agreement.”

In connection with the Spin-Off, we are creating our own financial, administrative, corporate governance and listed company compliance and other support systems, including for the services CBD had historically provided to us, or may be required to contract with third parties to replace CBD systems that we are not establishing internally. This process may be complex and time consuming. In addition, we are also establishing or expanding our own tax, treasury, internal audit, investor relations, corporate governance and listed company compliance and other corporate functions.

These corporate functions fall beyond the scope of the operational service domains formerly provided by CBD and will require us to develop new standalone corporate functions. We expect to incur one-time costs to replicate, or outsource from other providers, these corporate functions to replace the additional corporate services that CBD historically provided us prior to the Spin-Off. CBD will continue to provide support for certain administrative functions after the Spin-Off for approximately one year pursuant to the Separation Agreement we entered into with CBD. Any failure or significant downtime in our own financial, administrative or other support systems or in the CBD financial, administrative or other support systems during the transitional period in which CBD provides us with support could negatively impact our results of operations or prevent us from paying our suppliers and employees, executing business combinations and foreign currency transactions or performing administrative or other services on a timely basis, which could negatively affect our results of operations.

In particular, our day-to-day business operations rely on our information technology systems. For example, a significant portion of the communications among our personnel, customers and suppliers take place on our information technology platforms. We expect the separation of our information technology systems from CBD to be complex, time consuming and costly. There is also a risk of data loss in the process of separating information technology. As a result of our reliance on information technology systems, the cost of such information technology integration and transfer and any such loss of key data could have an adverse effect on our business, financial condition and results of operations.

Further, as a standalone public company, we will incur significant legal, accounting and other expenses that we did not incur as a subsidiary of CBD. The Sarbanes-Oxley Act of 2002, or Sarbanes-Oxley, as well as rules subsequently adopted by the SEC and the NYSE, have imposed various requirements on public companies, including setting forth rules regarding corporate governance practices. For example, Sarbanes-Oxley requires, among other things, that we maintain and periodically evaluate our internal control over financial reporting and disclosure controls and procedures. In particular, we and our managers will have to perform system and process evaluation and testing of our and their internal control over financial reporting to allow management and our independent registered public accounting firm to report on the effectiveness of our internal control over financial reporting, as required by Section 404 of Sarbanes-Oxley.

We currently test our internal controls over financial reporting on a regular basis, in accordance with the financial reporting practices and policies of CBD. However, doing so as a standalone entity may require our management and other personnel to devote a substantial amount of time to comply with these requirements and also increase our legal and financial compliance costs. In particular, compliance with Section 404 of Sarbanes-Oxley will require a substantial accounting expense and significant management efforts. We cannot be certain at this time that all of our controls will be considered effective and our internal control over financial reporting may not satisfy the regulatory requirements when they become applicable to us.

Furthermore, the listing of our shares on the B3 and the NYSE will require us to comply with the listing, reporting and other regulations for each exchange. Compliance with two sets of regulations, which may have different standards and requirements, will require more time and effort from management.

The transitional services CBD has agreed to provide us may not be sufficient for our needs. In addition, we or CBD may fail to perform under various transaction agreements that will be executed as part of the Separation or we may fail to have necessary systems and services in place when certain of the transaction agreements expire.

In connection with the Spin-Off, we entered into a Separation Agreement and other related agreements with CBD. See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Agreements Related to the Spin-Off.” The Separation Agreement provides for the performance of key business services by CBD for our benefit for a period of time after the Spin-Off, including services performed by the following departments: treasury, insurance, human resources, marketing/media and information technology, among others. All expenses and costs incurred by the parties in relation to the shared resources, including full labor costs and social security charges, depreciation charges for fixed assets and general expenses will be periodically allocated between the parties in proportion to the shared resources effectively used according to the criteria agreed between the parties. The costs and expenses are calculated, approved and charged on a quarterly basis. These services may not be sufficient to meet our needs and the terms of such services may not be equal to or better than the terms we may have received from unaffiliated third parties, including our ability to obtain redress.

We will rely on CBD to satisfy its performance and payment obligations under these agreements. If CBD is unable to satisfy its obligations under these agreements, including its indemnification obligations, we could incur operational difficulties or losses. If we do not have in place our own systems and services, or if we do not have agreements with other providers of these services once certain transitional agreements expire, we may not be able to operate our business effectively and this may have an adverse effect on our business, financial condition and results of operations. In addition, after our agreements with CBD expire, we may not be able to obtain these services at as favorable prices or on as favorable terms.

Sendas and CBD’s equity values after the Spin-Off may not accurately reflect the value of the underlying entities, and equity values may fluctuate significantly.

The trading price of the CBD common shares and the CBD ADSs immediately following the Spin-Off could be lower than immediately prior to the Spin-Off because the trading price will no longer reflect the value of Sendas and its subsidiaries. Furthermore, until the market has fully analyzed the value of CBD without all of its historical businesses, the trading price of the CBD common shares and the CBD ADSs may fluctuate significantly. We cannot assure you that, following the Spin-Off, the combined trading prices of the CBD common shares and the Sendas common shares will equal or exceed what the trading price of CBD common shares would have been in the absence of the Spin-Off or that the combined trading prices of the CBD ADSs and the Sendas ADSs will equal or exceed what the trading price of the CBD ADSs would have been in the absence of the Spin-Off. It is possible that after the Spin-Off, CBD’s and Sendas’s combined equity value will be less than CBD’s equity value before the Spin-Off.

The Spin-Off could result in substantial U.S. tax liability for you.

In order for the Spin-Off to qualify as a tax-free distribution to U.S. Holders under the U.S. tax rules, the Spin-Off must meet numerous requirements. We expect to take the position that the Spin-Off more likely than not will qualify as a tax-free distribution to U.S. Holders. U.S. Holders (as defined in “Item 10. Additional Information—E. Taxation—Material U.S. Federal Income Tax Consequences”) of CBD common shares or CBD ADSs are not expected to recognize any gain or loss for U.S. federal income tax purposes as a result of the Spin-Off, except for any gain or loss attributable to the receipt of cash in lieu of fractional shares of Sendas common shares or Sendas ADSs. However, there can be no assurance that the IRS will not successfully assert that the Spin-Off is a taxable transaction, and that a court will not sustain such assertion, which could result in tax being incurred by U.S. Holders of CBD common shares or CBD ADSs upon receipt of Sendas common shares or Sendas ADSs pursuant to the Spin-Off.

See “Item 10. Additional Information—E. Taxation—Material U.S. Federal Income Tax Consequences” for more information regarding the potential tax consequences to you of the Spin-Off, including the tax consequences if the Spin-Off were to be treated as a taxable transaction for U.S. federal income tax purposes.

Risks Relating to our Industry and Us

For purposes of this section entitled “Risks Relating to our Industry and Us,” we have not included information regarding the risks relating to the Éxito Group, which was transferred by us to CBD in connection with the Corporate Reorganization on December 31, 2020. For more information about the Corporate Reorganization, see “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off—Corporate Reorganization.”

We face significant competition and pressure to adapt to changing consumer habits, which may adversely affect our market share and net income.

We operate in the cash and carry (atacado de autosserviço) sector of the Brazilian retail industry, which are highly competitive. We compete with other retailers based on price, product mix, store location and layout and services. Consumer habits are constantly changing and we may not be able to anticipate and quickly respond to these changes. We face intense competition from small and regional retailers, especially from those that operate in the informal segment of the Brazilian economy. We also compete with large chains in the cash and carry sector. In addition, in our markets, and particularly in the São Paulo and Rio de Janeiro metropolitan areas, we compete in the food retail sector with a number of large multinational retail food, general merchandise and cash and carry chains, as well as local supermarkets and independent grocery stores. See “Item 4. Information on the Company—B. Business Overview—Competition.” Acquisitions or consolidations within the industry may also increase competition and adversely affect our market share and net income.

If we are unable to compete successfully in our target markets (including by adapting our store format mix or layout, identifying locations and opening stores in preferred areas, and quickly adjusting our product mix or prices) or otherwise adjust to changing consumer habits and preferences, such as shopping on mobile devices, we may lose market share, which would adversely affect our financial condition and results of operations.

We face increasing competition from internet sales, which may negatively affect sales through traditional channels, and we might not have an effective response to this competition.

In recent years, sales of food, clothing and home appliances over the internet have increased significantly in Brazil, and we expect this trend to continue as more traditional retailers enter into the online retail field or expand their existing infrastructure related to internet sales. For example, Amazon recently announced that it would focus more resources on its Brazilian business. Internet retailers are able to sell directly to consumers, reducing the importance of traditional distribution channels such as cash and carry stores, supermarkets and retail stores. Certain internet food retailers have significantly lower operating costs than traditional hypermarkets and supermarkets because they do not rely on an expensive network of retail points of sale or a large workforce. As a result, internet food retailers are able to offer their products at lower costs than we do and in certain cases are able to bypass intermediaries in the cash and carry segment and deliver products directly to consumers. We believe that our customers are increasingly using the internet to shop electronically for food and other retail goods, and that this trend is likely to continue, especially as a result of the COVID-19 pandemic.

Additionally, technology employed in retail sales of food and home appliances evolves constantly as part of a modern digital culture. We may not be able to adapt to these changes quickly enough to meet our customers’ demands and preferences, as well as standards of the industry in which we operate.

We cannot provide any assurance that our strategy will be successful in meeting customer demands or maintaining our market share in light of our competitors’ internet businesses. If internet sales in Brazil continue to grow, consumers’ reliance on traditional distribution channels such as our retail stores could be materially diminished, which could have a material adverse effect on our financial condition and results of operations.

The Brazilian cash and carry industry is sensitive to decreases in consumer purchasing power and unfavorable economic cycles.

Historically, the Brazilian cash and carry industry have experienced periods of economic slowdown that led to declines in consumer expenditures. The success of operations in the cash and carry sector depends on various factors related to consumer expenditures and consumer income, including general business conditions, interest rates, inflation, consumer credit availability, taxation, consumer confidence in future economic conditions, employment and salary levels. Reductions in credit availability and more stringent credit policies adopted by us and credit card companies may negatively affect our sales, especially for home appliances. Unfavorable economic conditions in Brazil, or unfavorable economic conditions worldwide reflected in the Brazilian economy, may significantly reduce consumer expenditure and available income, particularly for lower income classes, who have less access to credit than higher income classes, more limited debt refinancing conditions and more susceptibility to be affected by increases in the unemployment rate. These conditions may have a material adverse effect on our financial condition and results of operation.

Restrictions of credit availability to consumers in Brazil and Brazilian government rules and interventions affecting financial operations may adversely affect our sales volumes and operations, and we are exposed to risks related to customer financing and loans.

Sales in installments are an important component of the result of operations for Brazilian non-food retailers. The increase in the unemployment rate combined with relatively high interest rates have resulted in an increased restriction of credit availability to consumers in Brazil. The unemployment rate reached 11.6% in October 2020 and 11.9% in 2019, compared to 12.3% in 2018 and 12.7% in 2017. These circumstances have not been noticeably improved by gradual reductions in the basic interest rate in Brazil, the SELIC rate, which went from 2.4%, 4.5%, 6.5% and 7.0% in October 2020 and December 2019, 2018 and 2017, respectively.

Our sales volumes, particularly for non-food products, and, consequently, our results of operations may be adversely affected if the credit availability to consumers is reduced, or if Brazilian government policy restricts the granting of credit to consumers.

Additionally, we are involved through FIC in extending credit to customers through our partnership with Itaú Unibanco Holding S.A., or Itaú Unibanco, one of the largest privately-owned financial institutions in Brazil. FIC exclusively offers credit cards, financial services and insurance coverage at our stores. For more information on FIC, see “Item 4. Information on the Company—B. Business Overview—FIC.”

FIC is subject to the risks normally associated with providing financing services, including the risk of default on the payment of principal and interest and any mismatch of cost and maturity of our funding in relation to the cost and maturity of financing to customers, which could have a material adverse effect on us.

Furthermore, FIC is a financial institution regulated by the Central Bank and is therefore subject to extensive regulation. The regulatory structure of the Brazilian financial system is continuously changing. Existing laws and regulations may be amended, and their application or interpretation may also change, and new laws and regulations may be adopted. FIC and, therefore, we, may be adversely affected by regulatory changes, including those related to:

●

minimum capital requirements;

●

requirements for investment in fixed capital;

●

credit limits and other credit restrictions;

●

accounting requirements;

●

intervention, liquidation and/or temporary special management systems; and

●

interest rates.

Brazilian government rules and intervention may adversely affect our operations and profitability more than those of a competitor without financial operations.

We are dependent on credit card sales. Any changes in the policies of merchant acquirers may adversely affect us.

We are dependent on credit card sales. For the nine-month period ended September 30, 2020 and the year ended December 31, 2019, 47% and 50%, respectively, of our pro forma net operating revenue was represented by credit sales, principally in the form of credit card sales. In order to offer credit card sales to our customers, we depend on the policies of merchant acquirers, including fees charged by acquirers. Any change in the policies of acquirers, including, for example, their merchant discount rate, may adversely affect us.

Our business depends on our strong brands. We may not be able to maintain and enhance our brands, or we may receive unfavorable customer complaints or negative publicity, which could adversely affect our brands.

We believe that our brands, such as Assaí, contribute significantly to the success of our business. The Assaí brand was ranked the 19th most valuable brand in Brazil, according to a study entitled “Most Valuable Brazilian Brands 2020” published by global brand consultant Interbrand in 2020. According to this study, the Assaí brand is valued at approximately R$580 million. We were also named the most admired company in Brazil by popular vote in the 2020 edition of Exame magazine’s “Melhores e Maiores” (“Best and Biggest”) survey. Exame magazine’s annual survey ranks more than 1,000 Brazilian companies under various categories. “Melhores e Maiores” is considered one of the most prestigious corporate awards in Brazil. We also believe that maintaining and enhancing those brands is critical to expanding our base of customers, which depends largely on our ability to continue to create the best customer experience, based on our competitive pricing and our large assortment of products.

Customer complaints or negative publicity about our product offerings or services could harm our reputation and diminish consumer confidence in us. A diminution in the strength of our brands and reputation could adversely affect our business, financial condition and operating results.

The global outbreak of the novel coronavirus disease (COVID-19) could disrupt our operations and could have an adverse impact on our business, financial condition, results of operations or prospects.

Since December 2019, a novel strain of coronavirus known as COVID-19 has spread in China and other countries. In 2020, the COVID-19 outbreak has compelled governments around the world, including in Brazil, to adopt temporary measures to contain the spread of COVID-19, such as lockdowns of cities, restrictions on travel and public transportation, business and store closures, and emergency quarantines, among others, all of which have caused significant disruptions to the global economy and normal business operations across a growing list of sectors and countries. The measures adopted to combat the COVID-19 outbreak have adversely affected and will continue to adversely affect business confidence and consumer sentiment, and have been, and may continue to be, accompanied by significant volatility in financial and commodity markets as well as stock exchanges worldwide.

A detailed discussion of the measures taken by the Brazilian government to combat the health and economic impacts of COVID-19, as well as the impacts of the COVID-19 pandemic on our business and results of operations, can be found See in “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Current Conditions and Trends in our Industry—COVID-19.” for a detailed discussion of the impacts of COVID-19 on our business and results of operations.

While we have not experienced significant disruptions thus far from the COVID-19 outbreak, we are unable to accurately predict the future impact that COVID-19 will have due to numerous uncertainties, including: (1) the severity and duration of the pandemic, including whether there are new waves caused by additional periods of increases or spikes in the number of COVID-19 cases, future mutations or related strains of the virus in areas in which we operate; (2) evolving macroeconomic factors, including general economic uncertainty, unemployment rates, and recessionary pressures; (3) unknown consequences on our business performance and initiatives stemming from the substantial investment of time and other resources to the pandemic response; and (4) the long-term impact of the pandemic on our business, including consumer behaviors. Accordingly, our business may be adversely impacted by the fear of exposure to uncertainties related to or actual effects of COVID-19 or similar disease outbreak.

In addition, the COVID-19 pandemic may negatively impact our business by causing or contributing to, among other things, the following, each of which could adversely affect our business, results of operations, financial condition and cash flows:

●

To the extent that the emergency aid offered by the Brazilian government to informal workers, independent small businesses and the unemployed from April 2020 to December 2020 to combat the economic crisis caused by the COVID-19 pandemic is not extended, that may generate some reduction in customers’ average ticket, especially those dependent of such government aid, which may reduce our revenues.

●

We cannot assure you that the emergency health measures we have adopted will continue to be effective or that we will not have to adopt new protective measures, including work from home policies, which may divert our management’s attention and increase our operating costs.

●

If individual states and municipalities continue to implement different COVID-19 preventative measures, we may be required to expend additional time to implement them, which may increase our operating costs. In addition, we cannot assure you that we will be able to fully comply with these measures, which may negatively impact the way we operate our stores.

●

In case we face a worsening in the pandemic situation in the future, which will require some investments with additional temporary workers or new adaptations in our stores, which may increase our operating costs.

●

If new restrictions are imposed that again impact the production capacity of some of our suppliers, we might face new shortages in the future, in which case we may have to seek alternate sources of supply which may be more expensive, may not be available or may result in delays in shipments to us and subsequently to our customers.

These and other impacts of the COVID-19 pandemic could also have the effect of heightening many of the other risk factors described herein, including but not limited to “—We face significant competition and pressure to adapt to changing consumer habits, which may adversely affect our market share and net income”, “—We face increasing competition from internet sales, which may negatively affect sales through traditional channels, and we might not have an effective response to this competition”, “The Brazilian cash and carry industry is sensitive to decreases in consumer purchasing power and unfavorable economic cycles”, “Some categories of products that we sell are principally acquired from a few suppliers and changes in this supply chain could adversely affect our business”.

We may not be able to protect our intellectual property rights.

Our future success depends significantly on our ability to protect our current and future brands and to defend our intellectual property rights, including trademarks, patents, domain names, trade secrets and know-how. We have been granted numerous trademark registrations covering our brands and products and have filed, and expect to continue to file, trademark and patent applications seeking to protect newly developed brands and products. We cannot guarantee that trademark and patent registrations will be issued with respect to any of our applications. There is also a risk that we could inadvertently fail to renew a trademark or patent on a timely basis or that our competitors will challenge, invalidate or circumvent any existing or future trademarks and patents issued to, or licensed by, us. Although we have put in place appropriate actions to protect our portfolio of intellectual property rights (including trademark registration and domain names), we cannot be certain that the steps we have taken will be sufficient or that third parties will not infringe upon or misappropriate our proprietary rights. Any failure in our ability to protect our proprietary rights against infringement or misappropriation could adversely affect our business, results of operations, cash flows or financial condition, and in particular, on our ability to develop our business.

We may not be able to renew or maintain our stores’ lease agreements on acceptable terms, or at all, and we may be unable to obtain or renew the operational licenses of our stores or distribution centers in a timely manner.

Most of our stores are leased. The strategic location of our stores is key to the development of our business strategy and, as a result, we may be adversely affected in the event that a significant number of our lease agreements is terminated and we fail to renew these lease agreements on acceptable terms, or at all. In addition, in accordance with applicable law, landlords may increase rent periodically, usually every three years. A significant increase in the rent of our leased properties may adversely affect our financial position and results of operations.

Our stores and distribution centers are also subject to certain operational licenses. Our inability to obtain or renew these operational licenses may result in the imposition of fines and, as the case may be, in the closing of stores or distribution centers. Given that smooth and uninterrupted operations in our stores and distribution centers are a critical factor for the success of our business strategy, we may be negatively affected in the case of their closing as a result of our inability to obtain or renew the necessary operational licenses.

Our product distribution is dependent on a limited number of distribution centers and we depend on the transportation system and infrastructure in Brazil to deliver our products, and any disruption at one of our distribution centers or delay related to transportation and infrastructure could adversely affect our supply needs and our ability to distribute products to our stores and customers.

Approximately 33% of our products are distributed through our 10 distribution centers and warehouses located in the Southeastern, Midwestern and Northeastern regions of Brazil. The transportation system and infrastructure in Brazil are underdeveloped and need significant investment to work efficiently and to meet our business needs.

Any significant interruption or reduction in the use or operation of transportation infrastructure in the cities where our distribution centers are located or in operations at one of our distribution centers, as a result of natural disasters, fire, accidents, systemic failures, strikes (such as the May 2018 Brazilian truckers’ strike) or other unexpected causes, may delay or affect our ability to distribute products to our stores and may decrease our sales, which may have a material adverse effect on us.

Our growth strategy includes the opening of new stores which may require the opening of new distribution centers or the expansion of the existing ones to supply and meet the demand of additional stores. Our operations may be negatively affected if we are not able to open new distribution centers or expand our existing distribution centers in order to meet the supply needs of these new stores. For more information on our distribution and logistics operations, see “Item 4. Information on the Company—B. Business Overview—Distribution and Logistics.”

Our systems are subject to cyberattacks and security and privacy breaches, which could cause a material adverse effect on our business and reputation.

We, like all business organizations in the digital world, have been subject to a broad range of cyber threats, including attacks, with varying levels of sophistication. These cyber threats are related to the confidentiality, availability and integrity of our systems and data, including our customers’ confidential, classified or personal information.

We maintain what we believe to be reasonable and adequate technical security controls, policy enforcement mechanisms, monitoring systems and management oversight to address these threats. While these measures are designed to prevent, detect and respond to unauthorized activity in our systems, certain types of attacks, including cyberattacks, may occur.

Furthermore, some of our suppliers and service providers have significant access to confidential and strategic data collected by our systems, including confidential information regarding our customers.

Any unauthorized access to, or release or violation of our systems and data or those of our customers, suppliers or service providers could disrupt our operations, particularly our digital retail operations, cause information losses and cause us to incur significant costs, including the cost of retrieving lost information, which could have a material adverse effect on our business and reputation.

Our information systems may suffer interruptions due to factors beyond our control, such as natural disasters, hacking, failures in telecommunication and computer viruses, among other factors. Any of these types of interruption may adversely affect our operations, thereby impacting our cash generation and our financial condition.

Failure to protect our database, which contains the personal data of our clients and employees, and developments in data protection and privacy laws, could have an adverse effect on our business, financial condition or results of operations.

We maintain a database of information about our suppliers, employees and customers, which mainly includes, but is not limited to, data collected when customers sign up for our loyalty programs. If we experience a breach in our security procedures that affect the integrity of our database, including unauthorized access to any personal information of our customers, we may be subject to new legal proceedings that could result in damages, fines and harm to our reputation.

Currently, the processing of personal data in Brazil is regulated by a series of laws, such as the Federal Constitution, the Consumer Protection Code (Law No. 8,708/90) and the Internet Civil Registry (Law No. 12,965/14). Failure to comply with provisions of these laws, especially in connection with: (1) providing clear information on the data processing operations performed by us; (2) respect for the purpose of the original data collection; (3) legal deadlines for the storage of user data; and (4) the adoption of legally required security standards for the preservation and inviolability of the personal data processed, can give rise to penalties, such as fines and even temporary or permanent suspension of our personal data processing activities.

The General Data Protection Act (Law No. 13,709/18), or GDPA, became effective on September 18, 2020, except for the administrative sanctions provided thereunder, which will become effective on August 1, 2021. The GDPA establishes a new legal framework to be observed in the processing of personal data, including that of our customers, suppliers and employees. The GDPA establishes, among other things, the rights of personal data owners, the legal basis applicable to the protection of personal data, requirements for obtaining consent, obligations and requirements relating to security incidents, data leaks and data transfers, as well as the creation of the National Data Protection Authority (Autoridade Nacional de Proteção de Dados), or ANPD. In the event of non-compliance with the GDPA, we may be subject to administrative penalties, including blockage or elimination of the personal data to which the infraction relates, the suspension or blockage of activities relating to personal data and fines of up to R$50 million, as well as legal proceedings, which may materially adversely affect us, including damage to our reputation. The ANPD may revise data protection standards and proceedings based on the GDPA in the future, and the public prosecutor’s office, consumer protection agencies and the judiciary will have significant roles in the interpretation and application of the GDPA.

In preparation for our compliance with the GDPA, we have reviewed our internal policies and procedures. However, given its recent effectiveness, the lack of regulation of critical aspects of the GDPA by the ANPD and the uncertainty about the possible interpretations of the GDPA by different agents, we cannot guarantee that we will not be exposed to litigation or subject to sanctions with respect to the GDPA in the future.

The Casino Group has the ability to direct our business and affairs.

We are a wholly-owned subsidiary of CBD. As of January 15, 2021, the Casino Group is the beneficial owner of 41.17% of the total capital stock of CBD. The Casino Group has the power, through CBD, to: (1) appoint the majority of the members of our board of directors, who, in turn, appoint our executive officers; and (2) determine the outcome of the vast majority of actions requiring shareholder approval. Accordingly, the Casino Group is considered to be our controlling shareholder pursuant to Brazilian Corporate Law. The Casino Group’s interests and business decisions may prevail over those preferred by our other shareholders or ADS holders.

Unfavorable decisions in legal or administrative proceedings could have a material adverse effect on us.

We are party to legal and administrative proceedings related to civil, regulatory, tax and labor matters. We cannot assure you that pending legal proceedings will be decided in our favor. We have made provisions for proceedings in which the chance of loss has been classified as probable by our management in consultation with external legal advisors. Our provisions may not be sufficient to cover the total cost arising from unfavorable decisions in legal or administrative proceedings. If all or a significant number of these proceedings have an outcome unfavorable to us, our business, financial condition and results of operations may be materially and adversely affected. In addition to financial provisions and the cost of legal fees associated with the proceedings, we may be required to post bonds in connection with the proceedings, which may adversely affect our financial condition. See “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Legal and Administrative Proceedings,” note 20 to our unaudited interim condensed consolidated financial statements and note 21 to our audited consolidated financial statements included in this registration statement for a description of our material litigation contingencies.

We may be unable to attract or retain key personnel.

In order to support and develop our operations, we must attract and retain personnel with specific skills and knowledge. We face various challenges inherent to the administration of a large number of employees over a wide geographical area. Key personnel may leave us for a variety of reasons and the impact of these departures is difficult to predict, which may hinder the implementation of our strategic plans and adversely affect our results of operations.

We could be materially adversely affected by violations of the Brazilian Anti-Corruption Law, the U.S. Foreign Corrupt Practices Act, the Sapin II Law and similar anti-corruption laws.

Law No. 12,846, of August 1, 2013, or the Brazilian Anti-Corruption Law, the U.S. Foreign Corrupt Practices Act of 1977, or the FCPA, and similar anti-corruption laws in other jurisdictions generally prohibit companies and their intermediaries from making improper payments to government officials or other persons for the purpose of obtaining or retaining business. Recent years have seen a substantial increase in anti-corruption law enforcement activity, with more frequent and aggressive investigations and enforcement proceedings by both the U.S. Department of Justice and the SEC increased enforcement activity by non-U.S. regulators, and increases in criminal and civil proceedings brought against companies and individuals.

The Brazilian Anti-Corruption Law, introduced the concept of strict liability for legal entities involved in harmful acts against the public administration, subjecting the violator to penalties both in administrative and civil law. The Brazilian Anti-Corruption Law considers that an effective implementation of a compliance program may be used to mitigate the administrative penalties to be applied as a consequence of a harmful act against the public administration.

Additionally, French Law No. 1,691, of December 2016, or the Sapin II Law, relates to transparency, preventing corruption and the modernization of economic activity, and stipulates that companies must establish an anti-corruption program to identify and mitigate corruption risks. Under the Sapin II Law, among others, any legal entity or individual may be held criminally liable for offering a donation, gift or reward with the intent to induce a foreign public official to abuse their position or influence to obtain an undue advantage. The Sapin II Law is applicable to companies belonging to a group whose parent company is headquartered in France and whose workforce includes at least 500 employees worldwide. As such, the Sapin II Law applies to us. The key anti-corruption provisions of the Sapin II Law have been in force since June 1, 2017.

Our policies mandate compliance with these anti-corruption laws. We cannot assure you that our internal control policies and procedures will protect us from reckless or criminal acts committed by our employees, the employees of any of our businesses, or third party intermediaries. In the event that we believe or have reason to believe that our employees or agents have or may have violated applicable anti-corruption laws, including the FCPA, we may be required to investigate or have outside counsel investigate the relevant facts and circumstances, which can be expensive and require significant time and attention from senior management.

Failure to comply with anti-corruption laws to which we are subject or any investigations of misconduct, or enforcement actions may result in criminal or civil sanctions, inability to do business with existing or future business partners (either as a result of express prohibitions or to avoid the appearance of impropriety), injunctions against future conduct, profit disgorgements, disqualifications from directly or indirectly engaging in certain types of businesses, the loss of business permits or other restrictions which could disrupt our business and have a material adverse effect on us and our reputation.

We cannot guarantee that our service providers or suppliers do not engage in irregular practices.

Given the decentralization and outsourcing of our service providers’ operations and our suppliers’ production chains, we cannot guarantee that they will not have issues regarding working conditions, sustainability, outsourcing the provision or production chain and improper safety conditions, or that they will not engage in these irregular practices to lower service or product costs. If a significant number of our service providers or suppliers engage in these practices, our reputation may be harmed and, as a consequence, our customers’ perception of our products may be adversely affected, causing a reduction in net revenue and results of operations as well as in the trading price of the Sendas common shares and the Sendas ADSs.

Some categories of products that we sell are principally acquired from a few suppliers and changes in this supply chain could adversely affect our business.

Some categories of products that we sell are principally acquired from a few suppliers. Notably, we procure our beverage and meat products mainly from five suppliers. The products provided by these suppliers represented approximately 10% of our total sales for the nine-month period ended September 30, 2020. If any of these suppliers is not able to supply the products in the quantity and at the frequency that we normally acquire them, and we are not able to replace the supplier on acceptable terms or at all, we may be unable to maintain our usual level of sales in the affected category of product, which may have a material adverse effect on our business and operations and, consequently, on our results of operations.

In addition, some of our principal suppliers are currently involved in Lava Jato investigation and developments in the related investigations or possible convictions of such suppliers may adversely affect their ability to supply products to us and, consequently, our sales levels for such products. For more information, see “—Risks Relating to Brazil— Political instability has adversely affected and may continue to adversely affect our business, results of operations and the trading price of the Sendas common shares and the Sendas ADSs” below.

We may be held responsible for consumer incidents involving adverse reactions after consumption of products sold by us.

Products sold in our stores may cause consumers to suffer adverse reactions. Incidents involving these products may have a material adverse effect on our operations, financial condition, results of operations and reputation. Legal or administrative proceedings related to these incidents may be initiated against us, with allegations, among others, that our products were defective, damaged, adulterated, contaminated, do not contain the properties advertised or do not contain adequate information about possible side effects or interactions with other chemical substances. Any actual or possible health risk associated with these products, including negative publicity related to these risks, may lead to a loss of confidence among our customers regarding the safety, efficacy and quality of the products sold in our stores. Any allegation of this nature made against our brands or products sold in our stores may have a material adverse effect on our operations, financial condition, results of operations and reputation.

We are subject to environmental laws and regulations and any non-compliance may adversely affect our reputation and financial position.

We are subject to a number of federal, state and municipal laws and regulations relating to the preservation and protection of the environment. Among other obligations, these laws and regulations establish environmental licensing requirements and standards for the release of effluents, gaseous emissions, management of solid waste and protected areas. We incur expenses for the disposal and handling of wastes at our stores and distribution centers. Any failure to comply with those laws and regulations may subject us to administrative and criminal sanctions, in addition to the obligation to remediate or indemnify others for the damages caused. We cannot ensure that these laws and regulations will not become stricter. If they do, we may be required to increase, perhaps significantly, our capital expenditures and costs to comply with these environmental laws and regulations. Unforeseen environmental investments may reduce available funds for other investments and could materially and adversely affect us.

Our indebtedness could adversely affect our business.

As of September 30, 2020, we had total pro forma borrowings and financing and debentures of R$7,785 million, of which R$2,105 million was classified as current borrowings and financing and debentures and R$5,680 million was classified as non-current borrowings and financing and debentures. If we are unable to repay or refinance our current or non-current borrowings and financing and debentures as they mature, this would have a material adverse effect on our financial condition. Our combined indebtedness may:

●

make it difficult for us to satisfy our obligations, including making interest payments on our debt obligations;

●

limit our ability to obtain additional financing to operate our business;

●

require us to dedicate a substantial portion of our cash flow to serve our debt, reducing our ability to use our cash flow to fund working capital, capital expenditures and other general corporate requirements;

●

limit our flexibility to plan for, and react to, changes in our business and the industry in which we operate;

●

place us at a competitive disadvantage relative to some of our competitors that have less debt than us;

●

make us more vulnerable to increases in interest rates, resulting in higher interest costs in respect of our floating rate debt; and

●

increase our vulnerability to general adverse economic and industry conditions, including changes in interest rates, lower cattle and hog prices or a downturn in our business or the economy.

In addition, any business that we acquire by borrowing additional funds may increase our leverage and make it more difficult for us to satisfy our obligations, limit our ability to obtain additional financing to operate our business, require us to dedicate a substantial portion of our cash flow to payments on our debt, reducing our ability to use our cash flow to fund working capital, capital expenditures and other general corporate requirements, and place us at a competitive disadvantage relative to some of our competitors that have less debt than us.

Certain of our debt instruments contain covenants that could limit our ability to operate our business and have other adverse consequences.

Certain of our debt instruments contain financial covenants that require us to maintain specified financial ratios, measured on a quarterly basis. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness—Long-Term Indebtedness” for more information. Complying with these financial covenants may require that we take action to reduce debt or to act in a manner contrary to our business objectives. Events beyond our control, including changes in general business and economic conditions, may affect our ability to meet these financial ratios. We may not meet these ratios, and our creditors may not waive any failure to meet them. In addition, the instruments governing our first issue of debentures contain restrictive covenants that limit our ability to distribute dividends in excess of the legally required minimum dividend.

Our failure to comply with any of these covenants could result in an event of default under the relevant credit facility, and any such event of default or resulting acceleration under such credit facilities could result in an event of default under other debt agreements. Our assets or cash flow may not be sufficient to fully repay borrowings under our outstanding debt agreements if accelerated upon an event of default, and there is no guarantee that we would be able to repay, refinance or restructure the payments on those debt agreements.

Risks Relating to Brazil

The outbreak of communicable diseases around the world, including COVID-19, may lead to higher volatility in the global capital markets and recessionary pressure on the Brazilian economy. Any outbreak in Brazil could directly affect our operations, each of which may materially and adversely affect our business, financial condition and results of operations.

The outbreak of communicable diseases on a global scale may affect investment sentiment and result in higher volatility in global capital markets and may have a recessionary effect on the Brazilian economy. Since December 2019, a novel strain of coronavirus that causes the disease known as COVID-19 has spread in China and other countries. In 2020, the COVID-19 outbreak has compelled governments around the world, including in Brazil, to adopt temporary measures to contain the spread of COVID-19, such as lockdowns of cities, restrictions on travel and public transportation, business and store closures, and emergency quarantines, among others, all of which have caused significant disruptions to the global economy and ordinary course of business operations across a growing list of sectors and countries. The measures adopted to combat the COVID-19 outbreak have adversely affected and will continue to adversely affect business confidence and consumer sentiment, and they have been, and may continue to be, accompanied by significant volatility in financial and commodity markets as well as stock exchanges worldwide.

In Brazil, reflecting the scale of investor’s risk aversion, the stock market triggered several automatic suspensions, known as circuit breaker, and the benchmark index of about 70 stocks traded on the B3, or the Ibovespa index, fell 36.9% from January 1, 2020 to March 31, 2020, following the trend of international stock markets. From January 1, 2020 to October 31, 2020, the Ibovespa index decreased 18.8%.

The spread of COVID-19, especially if the measures to curb the spread of the virus lingers, may have broader macroeconomic implications, including reduced levels of economic growth and possibly a global recession, the effects of which could be felt well beyond the time the spread of infection is contained. Many countries are implementing relief plans to reduce the effects of COVID-19 in the local and world economy. Due to the uncertainties related to the length of this novel virus, we cannot estimate the additional impacts that COVID-19 may cause on the price and performance of our securities. Any material change in the Brazilian and international financial markets or the Brazilian economy as a result of these events or any developments may materially and adversely affect our business, financial condition and results of operations.

The Brazilian government has exercised, and continues to exercise, significant influence over the Brazilian economy. Brazilian political and economic conditions may adversely affect us and the trading price of the Sendas common shares and the Sendas ADSs.

The Brazilian government has frequently intervened in the Brazilian economy and has occasionally made significant changes to monetary, credit, tariff, tax and other policies and regulations. The Brazilian government’s actions to control inflation have often involved, among other measures, increases and decreases in interest rates, changes in tax and social security policies, price controls, currency exchange and remittance controls, devaluations, capital controls and limits on imports. Our business, financial condition, results of operations and the trading price of the Sendas common shares and the Sendas ADSs may be adversely affected by changes in Brazilian policy or regulations at the federal, state or municipal level involving or affecting various factors, such as:

●

economic, political and social instability;

●

increases in the unemployment rate;

●

interest rates and monetary policies (such as restrictive consumption measures that could affect the income of the population and government measures that may affect the levels of investment and employment in Brazil);

●

significant increases in inflation or strong deflation in prices;

●

currency fluctuations;

●

import and export controls;

●

exchange controls and restrictions on remittances abroad (such as those that were imposed in 1989 and early 1990s);

●

modifications to laws and regulations according to political, social and economic interests;

●

efforts to reform labor, tax and social security policies and regulation (including the increase of taxes, both generally and on dividends);

●

energy and water shortages and rationing;

●

liquidity of domestic capital and lending markets;

●

public health, including as a result of epidemics and pandemics, such as the COVID-19 pandemic; and

●

other political, diplomatic, social and economic developments in or affecting Brazil.

Uncertainty over whether the Brazilian government will implement changes in policy or regulation affecting these or other factors in the future may contribute to economic uncertainty in Brazil and to heightened volatility in the Brazilian securities markets and securities issued abroad by Brazilian companies. These uncertainties and other future developments in the Brazilian economy may adversely affect our business activities, and consequently our results of operations, and may also adversely affect the trading price of the Sendas common shares and the Sendas ADSs.

Such factors are compounded as Brazil emerges from a prolonged recession after a period of a slow recovery, with only meager gross domestic product, or GDP, growth in 2019, 2018 and 2017. Brazil’s GDP growth rates were 1.1% in 2019, 1.1% in 2018 and 1.0% in 2017. Our results of operations and financial condition have been, and will continue to be, affected by the weakness of Brazil’s GDP. Developments in the Brazilian economy may affect Brazil’s growth rates and, consequently, the demand for our products and services, which may adversely affect the trading price of the Sendas common shares and the Sendas ADSs.

Political instability has adversely affected and may continue to adversely affect our business, results of operations and the trading price of the Sendas common shares and the Sendas ADSs.

The Brazilian economy has been and continues to be affected by political events in Brazil, which have also affected the confidence of investors and the public in general, adversely affecting the performance of the Brazilian economy and increasing the volatility of securities issued by Brazilian companies.

Brazilian markets have experienced heightened volatility due to uncertainties from ongoing investigations into money laundering and corruption conducted by the Brazilian Federal Police and the Office of the Brazilian Federal Prosecutor, including the Lava Jato investigation. These investigations adversely affected the Brazilian economy and political scenario. The effects of the Lava Jato investigation and other investigations of corruption had and continue to have an adverse impact on the image and reputation of the implicated companies, and on the general market perception of the Brazilian economy, political environment and capital markets. We have no control over and cannot predict whether the ongoing investigations or allegations will result in further political and economic instability, or if new allegations against government officials and/or companies will arise in the future.

In addition, any difficulty by the Brazilian government in obtaining a majority in the national congress could result in congressional deadlock, political unrest and demonstrations or strikes, which could adversely affect us. Uncertainties relating to the implementation by the government of changes related to monetary, fiscal and social security policies, as well as to related laws may contribute to economic instability. These uncertainties and additional measures may heighten the volatility of the Brazilian securities market, including in relation to the Sendas common shares and the Sendas ADSs.

Brazilian government efforts to combat inflation may hinder the growth of the Brazilian economy and could harm us and the trading price of the Sendas common shares and the Sendas ADSs.

Historically, Brazil has experienced high inflation rates. Inflation and certain actions taken by the Brazilian government to curb it, including the increase of the SELIC rate established by the Central Bank, together with the speculation about governmental measures to be adopted, have materially and adversely affected the Brazilian economy and contributed to economic uncertainty in Brazil, heightening volatility in the Brazilian capital markets and adversely affecting us. Brazil’s annual inflation, as measured by the general price index (Índice Geral de Preços – Mercado), was 7.31% in 2019, 7.54% in 2018, 0.53% in 2017 and 7.19% in 2016. Brazil’s Broad Consumer Price Index (Índice Nacional de Preços ao Consumidor Amplo) recorded inflation of 2.95%, 3.75% and 4.31% in 2017, 2018 and 2019, respectively, according to IBGE.

Tight monetary policies with high interest rates have restricted and may restrict Brazil’s growth and the availability of credit. Conversely, more lenient government and Central Bank policies and interest rate decreases have triggered and may trigger increases in inflation, and, consequently, growth volatility and the need for sudden and significant interest rate increases, which could negatively affect our business and increase the payments on our indebtedness. In addition, we may not be able to adjust the prices we charge our customers to offset the effects of inflation on our cost structure.

Recently, the Brazilian Monetary Policy Committee (Comitê de Política Monetária) decreased official interest rates, which have reached historical record lows. We cannot assure that interest rates will remain at current low levels in the future. Any future measures adopted by the Brazilian government, including further reduction in interest rates, intervention in the exchange market and the implementation of mechanisms to adjust or determine the value of the Brazilian real may trigger inflation, adversely affecting the overall performance of the Brazilian economy.

Furthermore, interest rate decreases may affect our ability to maintain interest margins we charge on installment sales, which could have a negative effect on net operating revenue. Brazilian government measures to combat inflation that result in an increase in interest rates may have an adverse effect on us, as our indebtedness is indexed to the interbank deposit certificate (Certificados de Depósito Interbancário), or CDI, rate. Inflationary pressures may also hinder our ability to access foreign financial markets or lead to government policies to combat inflation that could harm us or adversely affect the trading price of the Sendas common shares and the Sendas ADSs.

Any further downgrading of Brazil’s credit rating may adversely affect the trading price of the Sendas common shares and the Sendas ADSs.

Credit ratings affect investors’ perceptions of risk and, as a result, the yields required on debt issuances in the financial markets. Rating agencies regularly evaluate Brazil and its sovereign ratings, taking into account a number of factors including macroeconomic trends, fiscal and budgetary conditions, indebtedness and the prospect of change in these factors.

Standard & Poor’s initially downgraded Brazil’s sovereign debt credit rating from BBB-minus to BB-plus in September 2015 and subsequently downgraded it to BB in February 2016, maintaining its negative outlook, citing Brazil’s fiscal difficulties and economic contraction as signs of a worsening credit situation. On January 11, 2018, Standard & Poor’s further downgraded Brazil’s credit rating from BB to BB-minus. In February 2019, Standard & Poor’s affirmed Brazil’s sovereign credit rating at BB-minus with a stable outlook. In December 2019, Standard & Poor’s affirmed Brazil’s sovereign credit rating at BB-minus with a positive outlook, further maintaining the sovereign credit rating at BB-minus, but revising the outlook on this rating from positive to stable in April 2020.

Moody’s placed Brazil’s Baa3 sovereign debt credit rating under review in December 2015 and downgraded it to Ba2 with a negative outlook in February 2016, citing the prospect for further deterioration in Brazil’s debt indicators, taking into account the low growth environment and the challenging political scenario. In April 2018, Moody’s maintained Brazil’s sovereign debt credit rating at Ba2, but changed its prospect from negative to stable, maintaining it in September 2018, citing the expected new government spending cuts. In May 2019, Moody’s affirmed Brazil’s sovereign credit rating at Ba2 and changed the outlook to stable, which rating and outlook were further reaffirmed by Moody’s in May 2020.

Fitch initially downgraded Brazil’s sovereign credit rating to BB-plus with a negative outlook in December 2015, citing the country’s rapidly expanding budget deficit and worse-than-expected recession and subsequently downgraded it to BB with a negative outlook in May 2016. In February 2018, Fitch downgraded Brazil’s sovereign credit rating again to BB-minus, citing, among other reasons, fiscal deficits, the increasing burden of public debt and an inability to implement reforms that would structurally improve Brazil’s public finances. In November 2019, Fitch maintained Brazil’s sovereign credit rating at BB-minus, citing the risk of tax and economic reforms and political instability. In May 2020, Fitch reaffirmed Brazil’s sovereign credit rating at BB-minus and revised the outlook on this rating to negative as a result of the impact of the COVID-19 pandemic.

Any further downgrade of Brazil’s credit rating could heighten investors’ perception of risk and, as a result, increase the cost of debt issuances and adversely affect the trading price of our securities.

Exchange rate volatility may adversely affect the Brazilian economy and us.

The real has historically experienced frequent and substantial variations in relation to the U.S. dollar and other foreign currencies. In 2017, the real depreciated against the U.S. dollar, reaching R$3.308 per US$1.00 as of December 31, 2017. In 2018, the real further depreciated against the U.S. dollar in comparison to 2017, reaching R$3.875 per US$1.00 as of December 31, 2018. In 2019, the real further depreciated against the U.S. dollar in comparison to 2019, reaching R$4.0301 per US$1.00 as of December 31, 2019. In May 2020, prompted by the COVID-19 crisis, the Brazilian real depreciated significantly in relation to the U.S. dollar, reaching to R$5.9372 to US$1.00 on May 14, 2020. On January 15, 2021, the real/U.S. dollar exchange rate was R$ 5.2714 per US$1.00. There can be no assurance that the real will not depreciate further against the U.S. dollar. Depreciation of the real against the U.S. dollar could create inflationary pressures in Brazil and cause increases in interest rates, which negatively affects the growth of the Brazilian economy as a whole, curtails access to foreign financial markets and may prompt government intervention, including recessionary governmental policies. Depreciation of the real against the U.S. dollar has also, including in the context of an economic slowdown, led to decreased consumer spending, deflationary pressures and reduced growth of the economy as a whole. Depreciation would also reduce the U.S. dollar value of distributions and dividends and the U.S. dollar equivalent of the trading price of the Sendas common shares and the Sendas ADSs. As a result, we may be materially and adversely affected by real/U.S. dollar exchange rate variations.

Developments and the perception of risk in other countries may adversely affect the price of securities of Brazilian issuers, including the Sendas common shares and the Sendas ADSs.

The market value of securities of Brazilian issuers is affected to varying degrees by economic and market conditions in other countries, including developed countries such as the United States and certain European and emerging market countries. Investors’ reactions to developments in these countries may adversely affect the market value of securities of Brazilian issuers, including the Sendas common shares and the Sendas ADSs. Trading prices on B3, for example, have been historically affected by fluctuation in interest rates applicable in the United States and variation in the main U.S. stock indices. Any increase in interest rates in other countries, especially the United States, may decrease global liquidity and the interest of investors in the Brazilian capital markets, adversely affecting the ADSs and our common shares. Moreover, crises or significant developments in other countries and capital markets may diminish investors’ interest in securities of Brazilian issuers, including the Sendas common shares and the Sendas ADSs, and their trading price, limiting or preventing our access to capital markets and to funds to finance our future operations at acceptable terms.

Risks Relating to the Sendas Common Shares and the Sendas ADSs

The volatility and illiquidity of the Brazilian securities markets and of the Sendas common shares may substantially limit your ability to sell the Sendas common shares underlying the Sendas ADSs at the price and time you desire.

Investing in securities that are traded in emerging markets, including in Brazil, often involves greater risk and are generally considered to be more speculative in nature than investing in securities traded in the securities markets of more developed countries. These investments are subject to certain economic and political risks, including: (1) changes in the regulatory, tax, economic and political environment that may affect the ability of investors to obtain a total or partial return on their investments; and (2) restrictions on foreign investment and return of capital invested.

The Brazilian securities market is substantially smaller, less liquid, more volatile and more concentrated than major international securities markets, including the securities market of the United States. B3 had a market capitalization of R$4.9 trillion as of December 31, 2019. The ten most traded stocks by volume on B3 during 2019 accounted for approximately 51.6% of total trading on B3 during that period. Conversely, the NYSE had a market capitalization of approximately US$41.0 trillion as of December 31, 2019. Furthermore, the regulations of B3 may differ from what foreign investors are accustomed to seeing in other international exchanges. The characteristics of the Brazilian securities market may substantially limit the ability of holders of the Sendas common shares underlying the Sendas ADSs to sell them at the time and price they desire and, consequently, may adversely affect the market price of the Sendas common shares and the Sendas ADSs. If a liquid and active trading market is not developed or maintained, the trading price of the Sendas common shares and the Sendas ADSs may be negatively affected.

We cannot assure you that an active trading market will develop or be sustained for the Sendas common shares or the Sendas ADSs or that we will be able to maintain our listing on the B3 or the NYSE. The trading volume of the Sendas common shares and the Sendas ADSs may be volatile, and holders of the Sendas common shares and the Sendas ADSs may not be able to sell their respective securities following the Spin-Off.

Currently, no public market exists for the Sendas common shares or the Sendas ADSs. We have applied to list the Sendas common shares on the Novo Mercado listing segment of the B3, and we intend to apply to list the Sendas ADSs on the NYSE. The listing of the Sendas common shares and the Sendas ADSs on the B3 and the NYSE, respectively, does not guarantee that a market for the Sendas common shares or the Sendas ADSs will develop or be sustained or that we will be able to maintain our listing on the B3 or the NYSE. No assurance can be provided as to the demand for or trading price of the Sendas common shares or the Sendas ADSs following the completion of the Spin-Off.

The trading price of and demand for the Sendas common shares and the Sendas ADSs following completion of the Spin-Off and the development and continued existence of a market and favorable price for the Sendas common shares and the Sendas ADSs will depend on a number of conditions, including:

●

the risk factors described in this registration statement;

●

general economic conditions internationally and in Brazil, including changes in interest and exchange rates;

●

actual or anticipated fluctuations in our quarterly and annual results and those of our competitors;

●

our businesses, operations, results and prospects;

●

future mergers and strategic alliances;

●

market conditions in the Brazilian cash and carry industry;

●

changes in government regulation, taxes, legal proceedings or other developments;

●

shortfalls in our operating results from levels forecasted by securities analysts;

●

investor sentiment toward the stock of companies in our industry in general;

●

announcements concerning us or our competitors;

●

maintenance of acceptable credit ratings or credit quality; and

●

the general state of the securities markets.

Any of these factors may impair the development or sustainability of a liquid market for the Sendas common shares or the Sendas ADSs and the ability of investors to sell the Sendas common shares or the Sendas ADSs at an attractive price. These factors also could cause the market price and demand for the Sendas common shares and the Sendas ADSs to fluctuate substantially, which may negatively affect the price and liquidity of the Sendas common shares and the Sendas ADSs. Many of these factors and conditions are beyond our or our shareholders’ control.

If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about us or our businesses, the price and trading volume of Sendas common shares and Sendas ADSs could decline.

The trading market for the Sendas common shares and the Sendas ADSs will depend in part on the research and reports that securities or industry analysts publish about us or our businesses. While securities and industry analysts currently cover CBD, securities and industry analysts do not currently cover us, and may never publish research on us. If no securities or industry analysts commence coverage of us, the trading price for the Sendas common shares and the Sendas ADSs would likely be negatively impacted. In the event securities or industry analysts initiate coverage, if one or more of the analysts who cover us downgrade our securities or publish inaccurate or unfavorable research about our businesses, the price of the Sendas common shares and the Sendas ADSs would likely decline. If one or more of these analysts cease coverage of us or fail to publish reports on us regularly, demand for the Sendas common shares and the Sendas ADSs could decrease, which might cause the price and trading volume of the Sendas common shares and the Sendas ADSs to decline.

Future sales, or the perception of future sales, of substantial amounts of the Sendas common shares on the B3 or the Sendas ADSs on the NYSE, or the anticipation of these sales, could adversely affect the market price of the Sendas common shares and the Sendas ADSs prevailing from time to time or their liquidity and could impair our ability to raise capital through the sale of equity securities.

The market price of the Sendas common shares and the Sendas ADSs could decline significantly as a result of sales (or anticipated sales), including by the Casino Group, of a large number of shares of the Sendas common shares on the B3 or the Sendas ADSs on the NYSE. The perception that these sales might occur could depress the market price of the Sendas common shares or the Sendas ADSs prevailing from time to time or adversely affect their liquidity. These sales, or the possibility that these sales may occur, also might make it more difficult for us to sell equity securities in the future at a time and at a price that we deem appropriate. For more information about our principal shareholders, see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders.” As a result of, and immediately following, the Spin-Off, the shareholders of CBD will become shareholders of Sendas.

If you exchange the Sendas ADSs for Sendas common shares, as a result of Brazilian regulations you may risk losing the ability to remit foreign currency abroad.

Holders of Sendas ADSs will benefit from the electronic certificate of foreign capital registration obtained by the Sendas ADS Custodian in Brazil for the Sendas common shares underlying the Sendas ADSs, which will permit the Sendas ADS Custodian to convert dividends and other distributions with respect to the Sendas common shares into U.S. dollars and remit the proceeds abroad. If you surrender your Sendas ADSs and withdraw Sendas common shares, you will be entitled to continue to rely on the Sendas ADS Custodian’s electronic certificate of foreign capital registration for only five business days from the date of withdrawal. Thereafter, upon the disposition of or distributions relating to the Sendas common shares, you will not be able to remit abroad non-Brazilian currency unless you obtain your own electronic certificate of foreign capital registration or you qualify under Brazilian foreign investment regulations that entitle some foreign investors to buy and sell common shares on Brazilian stock exchanges without obtaining separate electronic certificates of foreign capital registration. If you do not qualify under the foreign investment regulations, you will generally be subject to less favorable tax treatment of dividends and distributions on, and the proceeds from any sale of, the Sendas common shares.

If you attempt to obtain your own electronic certificate of foreign capital registration, you may incur expenses or suffer delays in the application process, which could delay your ability to receive dividends or distributions relating to our common shares or the return of your capital in a timely manner. The depositary’s electronic certificate of foreign capital registration may also be adversely affected by future legislative changes. See “Item 10. Additional Information—D. Exchange Controls.”

Holders of Sendas ADSs are not entitled to attend shareholders’ meetings and may only vote through the Sendas Depositary.

Under Brazilian law, only shareholders registered as such in Sendas’s corporate books may attend Sendas’s shareholders’ meetings. All Sendas common shares underlying the Sendas ADSs are registered in the name of the Sendas Depositary. Consequently, a holder of Sendas ADSs is not entitled to attend Sendas’ shareholders’ meetings. Holders of Sendas ADSs may exercise the voting rights with respect to Sendas common shares only in accordance with the deposit agreement relating to the Sendas ADSs. There are practical limitations upon the ability of holders of Sendas ADSs to exercise their voting rights due to the additional steps involved in communicating with holders of Sendas ADSs. For example, Sendas is required to publish a notice of Sendas’s shareholders’ meetings in certain newspapers in Brazil. To the extent that holders of Sendas common shares are entitled to vote at a shareholders’ meeting, they will be able to exercise their voting rights by attending the meeting in person or voting by proxy. By contrast, holders of Sendas ADSs will receive notice of a shareholders’ meeting by mail from the Sendas Depositary following Sendas’s notification to the Sendas Depositary of the shareholders’ meeting and Sendas’s request that the Sendas Depositary inform holders of Sendas ADSs of the shareholders’ meeting. To exercise their voting rights, holders of Sendas ADSs must instruct the Sendas Depositary on a timely basis. This voting process will take longer for holders of Sendas ADSs than for holders of Sendas common shares. If the Sendas Depositary fails to receive timely voting instructions for all or part of the Sendas ADSs, the Sendas Depositary will assume that the holders of those Sendas ADSs are instructing it to give a discretionary proxy to a person designated by us to vote their Sendas ADSs, except in limited circumstances.

We cannot assure you that holders of Sendas ADSs will receive the voting materials in time to ensure that such holders can instruct the Sendas Depositary to vote the Sendas common shares underlying their Sendas ADSs. In addition, the Sendas Depositary and its agents are not responsible for failing to carry out voting instructions of the holders of Sendas ADSs or for the manner of carrying out those voting instructions. Accordingly, holders of Sendas ADSs may not be able to exercise voting rights, and they will have no recourse if the Sendas common shares underlying their Sendas ADSs are not voted as requested.

Holders of Sendas ADSs may not be entitled to a jury trial with respect to claims arising under the Sendas Deposit Agreement, which could result in less favorable outcomes to the plaintiff(s) in any such action.

The Sendas Deposit Agreement provides that, to the fullest extent permitted by law, holders of Sendas ADSs irrevocably waive, to the fullest extent permitted by applicable law, the right to a jury trial with respect to any claim that they may have against us or the Sendas Depositary arising out of or relating to the Sendas common shares, the Sendas ADSs or the Sendas Deposit Agreement, including any claim under the U.S. federal securities laws.

If we or the Sendas Depositary opposed a jury trial demand based on the waiver, the court would determine whether the waiver was enforceable based on the facts and circumstances of that case in accordance with the applicable state and federal law. To our knowledge, the enforceability of a contractual pre-dispute jury trial waiver in connection with claims arising under the federal securities laws has not been finally adjudicated by the United States Supreme Court. However, we believe that a contractual pre-dispute jury trial waiver provision is generally enforceable, including under the laws of the State of New York, which govern the Sendas Deposit Agreement, by a federal or state court in the City of New York, which has exclusive jurisdiction over matters arising under the Sendas Deposit Agreement with respect to any legal suit, action or proceeding brought by the holders of Sendas ADSs against or involving us or the Sendas Depositary. In determining whether to enforce a contractual pre-dispute jury trial waiver provision, courts will generally consider whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. We believe that this is the case with respect to the Sendas Deposit Agreement and the Sendas ADSs. It is advisable that you consult your legal counsel regarding the jury waiver provision before entering into the Sendas Deposit Agreement.

If you or any other holders or beneficial owners of Sendas ADSs bring a claim against us or the Sendas Depositary in connection with matters arising under the Sendas Deposit Agreement or the Sendas ADSs, including claims under federal securities laws, you or such other holder or beneficial owner may not be entitled to a jury trial with respect to such claims, which may have the effect of limiting and discouraging lawsuits against us or the Sendas Depositary. If a lawsuit is brought against us or the Sendas Depositary under the Sendas Deposit Agreement, it may be heard only by a judge or justice of the applicable trial court, which would be conducted according to different civil procedures and may result in different outcomes than a trial by jury would have had, including results that could be less favorable to the plaintiff(s) in any such action.

Nevertheless, if this jury trial waiver provision is not permitted by applicable law, an action could proceed under the terms of the Sendas Deposit Agreement with a jury trial. No condition, stipulation or provision of the Sendas Deposit Agreement or the Sendas ADSs serves as a waiver by any holder or beneficial owner of Sendas ADSs or by us or the Sendas Depositary of compliance with any substantive provision of the U.S. federal securities laws and the rules and regulations promulgated thereunder.

You might be unable to exercise preemptive rights with respect to the Sendas common shares underlying the Sendas ADSs, as a result of which your investment may be diluted.

You will not be able to exercise the preemptive rights relating to the Sendas common shares underlying the Sendas ADSs unless a registration statement under the United States Securities Act of 1933, as amended, or the Securities Act, is effective with respect to the securities to be issued upon the exercise of those rights, or an exemption from the registration requirements of the Securities Act is available. We are not obligated to file a registration statement or to take any action to make preemptive rights available to holders of Sendas ADSs. Unless we file a registration statement or an exemption from registration applies, you may receive only the net proceeds from the sale of your preemptive rights by the Sendas Depositary or, if the preemptive rights cannot be sold, they will lapse and you will not receive any value for them. In addition, we may issue a substantial number of common shares as consideration for future acquisitions or for any other fundraising needs, and we may choose not to extend preemptive rights to holders of Sendas ADSs.

To the extent that you are not able (or choose not) to exercise pre-emptive rights granted in connection with an issue of Sendas common shares, your proportional shareholding in our company would be diluted.

Holders of Sendas common shares and Sendas ADSs may not receive any dividends.

According to our bylaws, we must pay our shareholders at least 25% of our annual net income as dividends, as determined and adjusted under the Brazilian Corporate Law. This adjusted income may be used to absorb losses or otherwise be appropriated as permitted by the Brazilian Corporate Law and may not be available to be paid as dividends. We may not pay dividends to our shareholders in any particular fiscal year if our board of directors determines that such distributions would be inadvisable in view of our financial condition. For further information, see “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividends and Dividend Policy” and “Item 10. Additional Information—B. Memorandum and Articles of Association—Allocation of Net Profits and Distribution of Dividends—Distribution of Dividends” and “—Interest on Shareholders’ Equity.”

U.S. securities laws do not require us to disclose as much information to investors as a U.S. issuer is required to disclose, and you may receive less information about us than you might otherwise receive from a comparable U.S. company.

We are a “foreign private issuer” under U.S. securities laws. Accordingly, the corporate disclosure requirements applicable to us may not be equivalent to the requirements applicable to a U.S. company and, as a result, you may receive less information about us than you might otherwise receive in connection with a comparable U.S. company. We are subject to the periodic reporting requirements of the Exchange Act that apply to foreign private issuers. The periodic disclosure required of foreign private issuers under the Exchange Act is more limited than the periodic disclosure required of U.S. issuers. For example, we are required only to file an annual report on Form 20-F, but we are not required to file any quarterly reports. A U.S. registrant must file an annual report on Form 10-K and three quarterly reports on Form 10-Q. In addition, we are required to file current reports on Form 6-K, but the information that we must disclose in those reports is governed primarily by Brazilian law disclosure requirements and may differ from Form 8-K’s current reporting requirements imposed on a U.S. issuer. Finally, we are not subject to the proxy requirements of Section 14 of the Exchange Act and our officers, directors and principal shareholders are not subject to the short swing insider trading reporting and recovery requirements under Section 16 of the Exchange Act.

Our status as a foreign private issuer exempts us from certain of the corporate governance standards of the NYSE limiting the protections afforded to investors.

As a foreign private issuer, we will be entitled to rely on exceptions from certain corporate governance requirements of the NYSE. Under the NYSE listing rules, a foreign private issuer may elect to comply with the practice of its home country and not to comply with certain NYSE corporate governance requirements, including the requirements that: (1) a majority of the board of directors consist of independent directors; (2) a nominating and corporate governance committee be established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities; (3) a compensation committee be established that is composed entirely of independent directors and has a written charter addressing the committee’s purpose and responsibilities; and (4) an annual performance evaluation of the nominating and corporate governance and compensation committees be undertaken. Therefore, holders of Sendas ADSs do not have the same protections afforded to shareholders of companies that are subject to all NYSE corporate governance requirements.

For example, as a foreign private issuer, we will rely on an exemption under Rule 10A-3(c)(3) of the Exchange Act with respect to our audit committee. For a further discussion of our statutory audit committee and the audit committee exemption, see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management—Board Committees—Audit Committee.”

Holders of Sendas common shares and Sendas ADSs may face difficulties in serving process on or enforcing judgments against us and other persons.

Sendas is incorporated as a corporation under the laws of Brazil, and substantially all of our assets are located in Brazil. In addition, all of our directors and executive officers reside outside the United States and all or a significant portion of the assets of such persons may be located outside the United States. As a result, it may not be possible for holders of Sendas common shares or Sendas ADSs to effect service of process within the United States or other jurisdictions outside Brazil upon such persons, or to enforce against such persons judgments of U.S. courts, including judgments predicated upon the civil liability provisions of the U.S. federal securities laws or the laws of such other jurisdictions. Further, it is unclear if original actions against us, our directors or our officers predicated on civil liabilities based solely upon U.S. federal securities laws may be brought in courts outside the United States, including Brazil. In addition, payment must be made in reais in proceedings brought before the Brazilian courts seeking to enforce obligations against us and any judgment rendered in Brazilian courts in respect of any payment obligations would be payable in reais.

Holders of Sendas common shares are required to resolve disputes with us, our senior management and holders of Sendas common shares only through arbitration in Brazil.

In accordance with our bylaws, all disputes or claims based on our bylaws, the Brazilian Corporate Law or other relevant laws or administrative rules, and concerning matters between holders of Sendas common shares, us, or our directors or officers, must be submitted for arbitration at the Market Arbitration Chamber (Câmara de Arbitragem do Mercado) of the B3. The governing law for any such disputes or claims is Brazilian law. Accordingly, shareholders would be required to initiate such arbitration proceedings in Brazil, which could have the effect of discouraging shareholders located outside Brazil from bringing such claims. In addition, arbitration proceedings in Brazil are known to be costlier than other dispute resolution methods, such as court proceedings.

The protections afforded to minority shareholders in Brazil are different, and may be more difficult to enforce, than those in the United States and some European countries.

The protections afforded to minority shareholders in Brazil are different from those in the United States and some European countries. In particular, jurisprudence with respect to shareholder disputes is less developed in Brazil than in the United States and some European countries and there are different procedural requirements for bringing shareholder lawsuits, including shareholder derivative suits. There is also a substantially less active plaintiffs’ bar for the enforcement of shareholders’ rights in Brazil than there is in the United States. As a result, it may be more difficult in practice for our minority shareholders to enforce their rights against us, our directors or executive officers than it would be for shareholders of a U.S. or European company.

Acquisition, ownership and disposal of Sendas common shares or Sendas ADSs could result in substantial U.S. tax liability for you.

You may be subject to U.S. federal income taxation in connection with the acquisition, ownership and disposal of Sendas common shares or Sendas ADSs. For more information, see “Item 10. Additional Information—E. Taxation—Material U.S. Federal Income Tax Consequences.”

We may be classified as a passive foreign investment company, which could result in adverse U.S. federal income tax consequences to U.S. holders of the Sendas common shares and the Sendas ADSs.

A non-U.S. corporation will be classified as a passive foreign investment company, or PFIC, for U.S. federal income tax purposes in any taxable year in which the corporation satisfies either of the following requirements:

●

at least 75% of its gross income is “passive income”; or

●

at least 50% of the average gross fair market value of its assets is attributable to assets that produce “passive income” or are held for the production of “passive income.”

Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions. There can be no assurance that we will not be considered to be a PFIC for any particular year. If we were considered to be a PFIC for any taxable year during which a U.S. Holder (as defined in “Item 10. Additional Information—E. Taxation—Material U.S. Federal Income Tax Consequences”) owned our common shares or ADSs, such U.S. Holder could be subject to significant adverse tax consequences. U.S. Holders should consult their tax advisers regarding the application of the PFIC rules to their investment in our common shares or ADSs. For more information, see “Item 10. Additional Information—E. Taxation—Material U.S. Federal Income Tax Consequences—Passive Foreign Investment Company.”

Acquisition, ownership and disposal of Sendas common shares or Sendas ADSs could result in substantial Brazilian tax liability for you.

You may be required to pay Brazilian capital gains or other taxes in connection with the acquisition, ownership and disposal of Sendas common shares or Sendas ADSs. For more information, see “Item 10. Additional Information—E. Taxation—Material Brazilian Tax Consequences.”

ITEM 4. INFORMATION ON THE COMPANY

History and Development of the Company

General Corporate Information

Sendas Distribuidora S.A. is a corporation (sociedade anônima) organized under the laws of Brazil and registered with the Brazilian corporate taxpayers’ registry (CNPJ/ME) under registration number 06.057.223/0001-71. Sendas was formed on December 18, 2003 for an indefinite duration.

Sendas is domiciled in Rio de Janeiro, Brazil, and our headquarters are currently located in Rio de Janeiro, Brazil at the following address: Avenida Ayrton Senna, No. 6,000, Lote 2, Pal 48959, Anexo A, Jacarepaguá, 22775-005, Rio de Janeiro, RJ, Brazil. Our telephone number is +55 11 3411 5042.

History

We were founded in 1974, with the opening of the first Assaí Atacadista store, a wholesaler with a focus on supplying small businesses. In 2007, we were partially acquired by CBD, which is controlled by the Casino Group, a French conglomerate and world leader in food retail. In 2011, we became a wholly-owned subsidiary of CBD. Prior to CBD’s acquisition of us in 2007, we operated exclusively in the state of São Paulo. Following CBD’s acquisition, we began to expand geographically within Brazil. By the end of 2008, we expanded our operations to 28 stores in the states of São Paulo, Rio de Janeiro and Ceará, and by the end of 2011, we operated 59 stores in the states of São Paulo, Rio de Janeiro, Ceará, Tocantins, Pernambuco, Goiás and Federal District.

In 2011, we began to invest in a new store format, with a larger assortment of goods, self-checkout and improved ambiance including covered parking, in-store Wi-Fi, air conditioning and natural lighting. By 2017, we became Casino’s largest brand worldwide (in terms of gross revenue), and in 2018 and 2019 we were named one of Brazil’s Top 25 Brands by Interbrand.

In 2016, CBD underwent a corporate reorganization as a result of which CBD transferred all of its cash and carry stores to us, and we transferred our retail stores to CBD. Following this corporate reorganization, CBD’s cash and carry operations were concentrated in our company.

In 2017, we launched Cartão Passaí, a branded credit card associated with the Assaí banner and began to offer financial services in our stores.

In 2020, we launched Maquininha Passaí, a point of sale, or POS, machine with a focus on face-to-face service (sale and after-sale) combined with a loyalty program with a 10% cashback on purchases to use in our stores. Our POS machines accept the Central Bank’s new PIX instant payment system. In 2020, we also entered into partnerships with digital services providers to bring innovation to the cash and carry market, including payments via QR code and cashback offers. We constantly seek to develop new financial services and products that respond to the needs of our growing and evolving customer base.

Éxito Acquisition

In 2019, the Casino Group underwent a reorganization to simplify its corporate structure in Latin America. In connection with this reorganization, on November 27, 2019, we acquired 96.57% of the shares of Éxito, a food retailer operating in Colombia, Uruguay and Argentina, through the settlement of a cash tender offer for any and all of the outstanding shares of Éxito conducted through the Colombian Securities Exchange. We refer to this acquisition as the “Éxito Acquisition.” At the time of the Éxito Acquisition, Éxito was a publicly-held company located in Colombia, with Casino as its controlling shareholder. Casino tendered all of its shares of Éxito (representing a 55.3% equity interest in Éxito) to us in the public tender offer. The total purchase price for the shares of Éxito in the tender offer was 7,780.6 billion Colombian pesos, equivalent to approximately R$9.5 billion at the time of the acquisition.

As a result of the Éxito Acquisition, we began to carry out retail operations in Colombia, Uruguay and Argentina, through the following banners: (1) Viva Malls, Éxito, Carulla, Surtimayorista, Surtimax and Super Inter in Colombia, (2) Devoto, Disco and Géant in Uruguay, and (3) Libertad, Mini Libertad and Paseo Libertad Malls in Argentina.

On December 31, 2020, CBD completed the Corporate Reorganization pursuant to which Sendas transferred all of its equity interest in Éxito to CBD. As a result of the Corporate Reorganization, our primary focus is our cash and carry business. For more information, see “—The Spin-Off—Corporate Reorganization.”

The Spin-Off

Background

Corporate Reorganization

On December 31, 2020, CBD completed the Corporate Reorganization, consisting of the internal corporate transactions described below:

●

50% of the shares of Bellamar, a holding company that holds an investment in 35.76% of the shares of FIC, in the amount of R$769 million; and

the Real Estate Assets, consisting of five parcels of real estate, in the aggregate amount of R$146 million, which may be developed as sites for new stores in the future.

●

Sendas distributed certain assets to CBD in the net amount of R$20 million.

●

CBD conducted the following capital contributions:

CBD transferred to Sendas the net assets of stores that may be developed by Sendas in the future, with a residual value of R$45 million;

CBD contributed intercompany receivables to Sendas for an amount of R$140 million; and

CBD contributed R$500 million in cash to Sendas

Pre-Corporate Reorganization

Post-Corporate Reorganization

Set forth below is a structure chart showing CBD and Sendas and their relevant subsidiaries immediately following the Spin-Off:

Post Spin-Off

Reasons for the Spin-Off

We believe that the Spin-Off will provide a number of benefits to our shareholders, including:

●

permit each of the separate companies to increase their strategic focus on their businesses as each company operates in a different market with different opportunities and business models;

●

improve the resource allocation by the separate companies and permit each company to achieve more attractive financing terms as investors are better able to understand each stand-alone business; and

●

create value for stakeholders as the intrinsic value of each separate company is recognized by investors based on the attributes and performance of the separate companies.

Neither CBD nor Sendas can assure you that, following the Spin-Off any of the benefits described above or otherwise in this registration statement will be realized to the extent or at the time anticipated or at all. See also “Item 3. Key Information—D. Risk Factors.”

Number of Sendas Common Shares and Sendas You Will Receive

Holders of CBD common shares and CBD ADSs as of the Record Date will be entitled to receive Sendas common shares and Sendas ADSs, respectively, in connection with the Spin-Off. Each holder of CBD common shares, including the CBD ADS Custodian, will receive one Sendas common share for each CBD common share held as of the Record Date, which is p.m. São Paulo time on , 2021. Each holder of CBD ADSs will be entitled to receive one newly-issued Sendas ADS for each CBD ADS held as of the Record Date.

When and How You Will Receive Sendas Common Shares and Sendas ADSs

The distribution of Sendas common shares is expected to occur on the Spin-Off Date, which is expected to be , 2021. The distribution of Sendas ADSs is expected to occur on or about the Spin-Off Date.

This registration statement does not constitute a proxy statement. Neither CBD nor Sendas is asking you for a proxy, and you are requested not to send CBD or Sendas a proxy.

If you hold CBD common shares or CBD ADSs as of the Record Date, you will not be required to take any action, pay any cash, deliver any other consideration, or surrender any existing CBD common shares or CBD ADSs in order to receive Sendas common shares or Sendas ADSs in the Spin-Off, except that if you hold CBD ADSs through DTC, you will be required to pay an issuance fee of US$0.03 per Sendas ADS issued to the Sendas Depositary in order to receive the Sendas ADSs.

If You Hold CBD Common Shares

To receive Sendas common shares in connection with the Spin-Off, you must hold CBD common shares on the Record Date.

This section applies to you if you are a non-resident of Brazil who holds CBD common shares directly or indirectly through the facilities of the B3 Central Depositary (Central Depositária da B3) on the Record Date. If you are a resident of Brazil, you should refer to the Notice to Shareholders (Aviso aos Acionistas) to be published by CBD prior to the Spin-Off.

On the Spin-Off Date your B3 custody account will be credited with the whole number of Sendas common shares you are entitled to receive in the Spin-Off. At that time, you should be able to commence trading the Sendas common shares you are allotted on the B3. The allocation of Sendas book-entry shares to your B3 custody account is expected to settle two business days following the Spin-Off Date.

If you own your CBD common shares in book-entry form beneficially through a broker or other securities intermediary, please contact your broker or other securities intermediary for further information about your account and when you will be able to begin trading your Sendas common shares.

If You Hold CBD ADSs

To receive Sendas ADSs in connection with the Spin-Off, you must hold CBD ADSs on the Record Date.

Because trades settle in two business days, , CBD ADSs will trade “ex-distribution” one business day prior to the Record Date. We refer to this date as the “ADS ex-distribution date.” This means that if you purchase CBD ADSs on or following the ADS ex-distribution date, you will not receive Sendas ADSs in connection with the Spin-Off because you will not hold CBD ADSs on the Record Date. Similarly, if you sell or otherwise dispose of your CBD ADSs on or following the ADS ex-distribution date, , you will still receive the Sendas ADSs that you would be entitled to receive in respect of your ownership, as of the Record Date, of the CBD ADSs that you sold.

Holders of CBD ADSs through DTC

Following its receipt of the Sendas common shares, the Sendas Depositary will instruct DTC to credit your custody account with the whole number of Sendas ADSs you are entitled to receive in the Spin-Off and collect from you an issuance fee of US$0.03 per Sendas ADS issued. Once your custody account is credited, you should be able to commence trading the Sendas ADSs on the NYSE. The allocation of Sendas ADSs to your custody account will settle via the DTC system in two business days.

If you hold CBD ADSs in a securities account with a financial institution that is a participant in DTC (a “DTC Participant”), the DTC Participant through which you hold your CBD ADSs will allocate the Sendas ADSs to your broker or other securities intermediary’s account, and your broker or other securities intermediary will credit the number of Sendas ADSs to which you are entitled to your account and charge your account the issuance fee of $0.03 per Sendas ADS issued. Please contact your broker or other securities intermediary for further information about your account and when you will be able to begin trading your Sendas ADSs.

Registered Holders of CBD ADSs

If your CBD ADSs are registered with the CBD Depositary, the Sendas Depositary will distribute a book entry statement to you. You will be unable to transfer your Sendas ADSs until you receive this statement.

Suspension of Issuance and Cancellation of CBD ADSs

The CBD Depositary will suspend the issuance and cancellation of CBD ADSs from until . This means that during this time, you will not be able to convert your CBD ADSs into CBD common shares or vice-versa, surrender your CBD ADSs and receive underlying CBD common shares, or deposit your CBD common shares and receive CBD ADSs. However, the closing of the issuance and cancellation books does not impact trading, and you may continue to trade your CBD ADSs during this period.

Treatment of Fractional Shares and ADSs

The Spin-Off will not result in fractional entitlements of Sendas common shares or Sendas ADSs.

Results of the Spin-Off

After the Spin-Off, Sendas will be a standalone publicly-traded company. Based on 268,351,567 issued shares of CBD as of January 15, 2021 and the application of the distribution ratio, Sendas will have 268,351,567 Sendas common shares outstanding immediately following the Spin-Off. For additional information on the share capital of Sendas following the Spin-Off, see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders” and “Item 10. Additional Information—A. Share Capital.”

The Spin-Off will not affect the number of outstanding CBD common shares or CBD ADSs or any rights of holders of any outstanding CBD common shares or CBD ADSs.

Listing and Trading of Sendas Common Shares and Sendas ADSs

As of the date of this registration statement, we are a wholly owned subsidiary of CBD. Accordingly, no public market for the Sendas common shares or the Sendas ADSs currently exists. We have applied to list the Sendas common shares on the Novo Mercado listing segment of the B3 under the ticker symbol “ASAI.” We intend to apply to list the Sendas ADSs on the NYSE under the ticker symbol “ASAI.”

We expect that Sendas common shares and Sendas ADSs will commence “regular-way” trading on a standalone basis on the B3 and the NYSE, respectively, at market open on , 2021 (10:00 a.m. São Paulo time on the B3 and 9:30 a.m. New York City time on the NYSE). There will not be any trading of Sendas ADSs on a “when-issued” basis.

We intend to use a specialist firm to make a market in the Sendas ADSs on the NYSE to facilitate sufficient liquidity and maintain an orderly market in Sendas ADSs throughout normal NYSE trading hours.

In addition, the trading price of the CBD common shares and the CBD ADSs immediately following the Spin-Off could be lower than immediately prior to the Spin-Off because the trading price will no longer reflect the value of Sendas and its subsidiaries. We cannot provide you with any assurance regarding the price at which the CBD common shares and CBD ADSs will trade following the Spin-Off. See “Item 3. Key Information—D. Risk Factors— Risks Relating to the Spin-Off—Sendas and CBD’s equity values after the Spin-Off may not accurately reflect the value of the underlying entities, and equity values may fluctuate significantly” for more detail.

The Sendas ADSs distributed to CBD ADS holders will be freely transferable, except for Sendas ADSs received by individuals who are our affiliates. Individuals who may be considered our affiliates after the Spin-Off include individuals who control, are controlled by or are under common control with us, as those terms generally are interpreted for U.S. federal securities law purposes. These individuals may include some or all of our directors and executive officers. Individuals who are our affiliates will be permitted to sell their Sendas ADSs only pursuant to an effective registration statement under the Securities Act or an exemption from the registration requirements of the Securities Act, such as those afforded by Section 4(a)(1) of the Securities Act or Rule 144 thereunder.

Conditions to the Spin-Off

We expect that the Spin-Off will be completed on or about , 2021, provided that the following conditions shall have been satisfied:

●

the SEC declaring effective, under the Exchange Act, this registration statement, with no stop order in effect or pending before or threatened by the SEC with respect to this registration statement;

●

the B3 approving the listing of the Sendas common shares;

●

the NYSE approving the listing of the Sendas ADSs; and

●

CBD and Sendas cannot assure you that any or all of the conditions to the Spin-Off will be met. However, if all such conditions have been satisfied in a timely manner, CBD will not have the right to subsequently terminate the planned distribution without the approval of its shareholders.

Certain Legal and Regulatory Matters

Except as otherwise disclosed in this registration statement, we are not aware of any material Brazilian federal or state, or foreign, regulatory requirements with which we must comply in connection with the Spin-Off. Should any such approval or other action be required, we currently contemplate that such approval or other action will be sought. We are unable to predict whether such approval or other action, or steps required to seek such approval or take such other action, may require us to delay the Spin-Off pending the outcome of any such matter. There can be no assurance that any such approval or other action, if needed, would be obtained or would be obtained without substantial conditions or that if such approvals were not obtained or such other actions were not taken adverse consequences might not result to CBD’s or our business or the Spin-Off.

Tax Consequences of the Spin-Off

See “Item 10. Additional Information—E. Taxation” for more information regarding the material tax consequences of the Spin-Off.

Reason for this Registration Statement

This registration statement does not constitute a proxy statement. Neither CBD nor Sendas is asking you for a proxy, and you are requested not to send CBD or Sendas a proxy.

Additional Information

Before the Spin-Off, if you have any questions relating to the business performance of CBD or Sendas or the Spin-Off, you may contact the investor relations departments of CBD or Sendas at:

Sendas Distribuidora S.A.

Investor Relations Department

Avenida Ayrton Senna, No. 6,000, Lote 2, Pal 48959, Anexo A

Jacarepaguá

22775-005 Rio de Janeiro, RJ, Brazil

Telephone: +55 11 3411 5042

Email: ri.assai@assai.com.br

Companhia Brasileira de Distribuição

Investor Relations Department

Avenida Brigadeiro Luiz Antonio, No. 3142
01402-901 São Paulo, SP, Brazil

Telephone: +55 11 3886-0421

Email: gpa.ri@gpabr.com

After the Spin-Off, if you have any questions relating to Sendas’s business performance, you may contact the investor relations department of Sendas at:

Sendas Distribuidora S.A.

Investor Relations Department

Avenida Ayrton Senna, No. 6,000, Lote 2, Pal 48959, Anexo A

Jacarepaguá

22775-005 Rio de Janeiro, RJ, Brazil

Telephone: +55 11 3411 5042

Email: ri.assai@assai.com.br

If you hold CBD ADSs and have any questions with respect to the mechanics of the Spin-Off as they relate to your CBD ADSs, you may contact the CBD Depositary’s transfer agent, EQ, at:

JPMC Call Center at EQ

Telephone: +1 800 990 1135 (from inside the U.S.) / +1 651 453 2128 (from outside the U.S.)

Recent Developments

Reverse Stock Split

On September 30, 2020, our capital stock was represented by 3,269,992,034 common shares. On November 10, 2020, CBD as our sole shareholder voted to approve a reverse stock split of Sendas common shares at a ratio of approximately 12-to-1. As a result of this reverse stock split, our capital stock is currently represented by 268,351,567 common shares.

Meeting of Debenture Holders

At a meeting held on November 19, 2020, holders of our first issuance of non-convertible debentures agreed to, among other resolutions:

●

amend the instrument governing the debentures to provide that the Spin-Off will not constitute an event of default thereunder;

●

release CBD as guarantor of the debentures upon the conclusion of the Spin-Off;

●

amend the interest rates charged for each series of debentures, as described in “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness—Debentures;” and

●

amend certain financial covenants under each series of debentures, effective upon the conclusion of the Spin-Off, as described in “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness—Long-Term Indebtedness.”

For more information about our non-convertible debentures, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness—Debentures.”

Meeting of Promissory Note Holders

At a meeting held on November 19, 2020, holders of our commercial promissory notes agreed to, among other resolutions:

●

amend each promissory note to provide that the Spin-Off will not constitute an event of default thereunder and approve a waiver fee to be paid to the promissory note holders in connection with such amendment, in the amount of 0.73% per annum of the outstanding amount under the promissory notes, payable semi-annually;

●

release CBD as guarantor of the promissory notes upon the conclusion of the Spin-Off; and

●

amend certain financial covenants under each series of promissory notes, effective upon the conclusion of the Spin-Off, as described in “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness—Long-Term Indebtedness.”

For more information about our commercial promissory notes, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness—Promissory Notes.”

Capital Expenditures and Investment Plan

Our capital expenditures and investment plan for 2020, which was developed prior to the COVID-19 pandemic, contemplates capital expenditures and investments of R$1.4 billion for our operations in Brazil and R$300.0 million for our Éxito Group operations, in each case primarily relating to opening of new stores, store conversions and store renovations. In the nine-month period ended September 30, 2020, we invested R$1,198 billion in our consolidated operations, an increase of 36.6% compared to R$0.9 billion in the corresponding period in 2019. This increase was principally due to the opening of new stores and consolidation of Éxito operations. In addition, we entered into several sale and leaseback transactions pursuant to which between May and July 2020, we sold 12 properties located in the states of São Paulo, Mato Grosso do Sul, Goiás, Bahia and Paraíba, for the total amount of R$551 million, to certain funds managed by TRX Gestora de Recursos Ltda. We subsequently entered into long-term lease agreements with respect to these properties.

As part of our capital expenditures and investment plans for 2017, 2018 and 2019, we invested R$3.1 billion in our consolidated operations in the three years ended December 31, 2019. Despite a macroeconomic environment marked by a slow and incomplete recovery, we maintained a high level of capital expenditures in our operations in 2019 of R$1.4 billion, an increase of 48.5% compared to R$0.9 billion in 2018, which reinforced our confidence in the execution of our business strategy and in the improvement of the Brazilian economy. These 2019 investments principally related to the expansion of the Assaí banner, store renovations and store conversions.

Our investments since January 1, 2017 have included:

Opening of new stores – From January 1, 2017 to September 30, 2020, we organically opened or converted 70 Assaí stores in Brazil. For more information about our stores, see “Item 4. Information on the Company—B. Business Overview—Sales Channels—Our Stores.”

Renovation of existing stores – We usually remodel a number of our stores every year. Through our renovation program, we updated refrigeration equipment in our stores, created a more modern, customer-friendly and efficient environment and outfitted our stores with advanced information technology systems.

Improvements to information technology – We view technology as an important tool for efficiency and security in the flow of information among stores, distribution centers, suppliers and corporate headquarters. We have made significant investments in information technology in the last three years. For more information on our information technology, see “—B. Business Overview—Information Technology.”

Improvements to distribution facilities and others – We own and lease distribution centers and warehouses located in the Southeastern, Midwestern and Northeastern regions of Brazil. The improvement in storage space enables us to further centralize purchasing for our stores and, together with improvements to our information technology, improve the overall efficiency of our inventory flow.

The following table provides a summary description of our principal capital expenditures for the periods indicated:

	For the Nine-Month Periods Ended September 30,					For the Year Ended December 31,
	2020			2019		2019		2018			2017
	(in millions of R$)
Brazil:
Opening of new stores		774			675		1,058		680			511
Renovation of existing stores		93			79		118		197			80
Information technology		40			38		63		62			36
Distribution facilities and other		51			30		61		68			50
Non-cash effects:
Financing assets		(2	)		55		29		(59	)		63
Total investments Brazil		956			877		1,329		948			740
Éxito Group		242			—		80		—			—
Total investments		1,198			877		1,409		948			740

We have historically financed our capital expenditures and investments principally with cash generated from our operations and, to a lesser extent, third-party funds, including bank financing and capital markets transactions, including the issuance of debentures and promissory notes. For more information about our indebtedness, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness.”

We believe that existing resources and operating income will be sufficient for our capital expenditures and investment plan and to meet our liquidity requirements. However, our capital expenditures and investment plan is subject to a number of contingencies, many of which are beyond our control, including the continued growth and stability of the Brazilian economy, including the continuing effects of the COVID-19 pandemic on the Brazilian economy and our business and operations. We cannot assure you that we will successfully complete all or any portion of our capital expenditures and investment plan. In addition, we may participate in acquisitions or divest asset that are not budgeted in the capital expenditures and investment plan and we may modify the plans.

Public Information

The SEC maintains an internet site (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including us. See “Item 10. Additional Information—H. Documents on Display.”

Our website is www.assai.com.br. Information contained on or obtainable through our website is not incorporated into, and does not constitute a part of, this registration statement.

Business Overview

For purposes of this section “4B. Business Overview,” unless otherwise noted, we assume that the Corporate Reorganization, the Separation and the Spin-Off have occurred and present historical financial and operating information on a pro forma basis, as if these transactions had occurred on January 1, 2019.

For more information about the Corporate Reorganization, the Separation and the Spin-Off, see “—A. History and Development of the Company—The Spin-Off,” “Item 3. Key Information—A. Selected Financial Data—Unaudited Pro Forma Condensed Financial Information” and “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Agreements Related to the Spin-Off.”

Overview

We are the largest pure cash and carry player in Brazil in terms of consolidated gross revenue. For the nine-month period ended September 30, 2020, our pro forma net operating revenue totaled R$25.3 billion. Our cash and carry operations involve sales of more than 8,000 items of grocery, food, perishable, beverage, wrapping, hygiene and cleaning products, among others. Our customers include prepared food retailers (including restaurants, pizzerias and snack bars), end users (including schools, small businesses, religious institutions, hospitals and hotels), conventional retailers (such as grocery stores and neighborhood supermarkets) and individuals. We sell our products at our brick-and-mortar stores and via telesales (in-store pick-up).

As of September 30, 2020, we operated a total of 176 stores under the Assaí banner, having a total selling area of approximately 761 thousand square meters. Our stores are located throughout 22 Brazilian states and the Federal District. In addition, we have a logistics infrastructure that is supported by 10 distribution centers and warehouses across Brazil.

We are evolving in our digital transformation through the development of a seamless buying experience. We are currently investing in: (1) Wi-Fi infrastructure in all of our stores; (2) self check-out; (3) sales through digital applications; and (4) shipping through our telesales channel.

We also hold an indirect minority equity interest in FIC, a Brazilian company that operates financial services in our stores and CBD’s stores with exclusive rights to offer credit cards, financial services and insurance policies (except for extended warranties).

Principal Markets

We generate all of our operating revenue in Brazil. Prior to the Corporate Reorganization, we also generated a portion of our operating revenue from our retail operations in Colombia, Argentina and Uruguay, as a result of the Éxito Acquisition on November 27, 2019. For more information about the Éxito Acquisition, see “—A. History and Development of the Company—History—Éxito Acquisition.” On an actual historical basis, for the nine-month period ended September 30, 2020, we generated R$25,330 million in net operating revenue, or 61.8% of our total net operating revenue, from our cash and carry operations in Brazil, and R$15,653 million in net operating revenue, or 38.2% of our total net operating revenue, from the Éxito Group’s operations in Colombia, Argentina and Uruguay. As a result of the Corporate Reorganization, we no longer hold an equity interest in the Éxito Group. For more information about the Corporate Reorganization, see “—A. History and Development of the Company—The Spin-Off—Corporate Reorganization.”

Sales Channels

Our Stores

As of January 15, 2021, we operated a total of 184 stores under the Assaí banner in Brazil.

We are constantly evolving our Assaí standard stores, aiming to improve our customers’ purchase experience, by investing in lighting, air conditioning, improved ambiance and location. Our stores are strategically located in Brazil and are characterized by wide aisles, high ceilings and larger cold rooms, which facilitate loading and increase up to six times the storage capacity for goods, allowing for more accessible prices and lower operational costs. Other characteristic features of these standard stores include a larger assortment of goods, larger parking and in-store Wi-Fi. In addition, our in-store processes are automated, lowering our operating costs, allowing a better inventory management and breakdown levels.

We operate in different store formats, tailored to different regions and customer profiles, accommodating our business to local practices and customs. Of the 176 stores we operated as of September 30, 2020, 37 stores ranged from 1 square km to 3 square km of selling area, a format we believe is best suited to enable our food service provider customers to quickly replace their supplies; 77 stores ranged from 3 to 5 square km of selling area, a format we believe is best suited to big families in urban centers; and 62 stores ranged from 5 to 8 square km of selling area, a format we believe is best suited for bulk purchases.

The table below sets forth same store sales growth for the periods indicated. Same store sales are sales made in stores opened for at least 12 consecutive months and which have not been closed or remained closed for a period of seven or more consecutive days.

	2014			2015			2016			2017			2018			2019

Same store sales		9.1	%		12.0	%		19.1	%		11.4	%		8.3	%		6.3	%

The table below sets forth our average monthly gross revenue per square meter for the period indicated:

	For the year ended December 31,												For the nine-month period ended September 30,
	2014		2015		2016		2017		2018		2019		2019		2020
	(in R$ thousands)
Average monthly gross revenue per square meter		2.7		3.0		3.5		3.8		4.0		4.1		3.9		4.2

Number of Stores

The following table sets forth the evolution of our Assaí stores for the periods indicated:

	Number of Stores
As of December 31, 2016		107
During 2017:
Opened		5
Closed		(1	)
Converted to		15
As of December 31, 2017		126
During 2018:
Opened		16
Closed		—
Converted to		2
As of December 31, 2018		144
During 2019:
Opened		21
Closed		—
Converted to		1
As of December 31, 2019		166
During the first nine months of 2020:
Opened		8
Closed		—
Converted to		2
As of September 30, 2020		176

From September 30, 2020 to January 15, 2021, we opened nine new Assaí stores and closed one Assaí store.

The following tables set forth the number of stores, the total selling area, the average selling area per store and the total number of employees for our Assaí stores as of the dates indicated:

As of September 30, 2020

Number of
Stores

Total Selling
Area

Average Selling
Area per Store

Total Number of
Employees⁽¹⁾

(in square meters)

Assaí stores

176

761,179

4,325

38,589

(1)

Based on the full-time equivalent number of employees, which is the product of the number of food retail employees (full- and part-time) and the ratio of the average monthly hours of food retail employees to the average monthly hours of full-time employees.

As of December 31, 2019

Number of
Stores

Total Selling
Area

Average Selling
Area per Store

Total Number of
Employees⁽¹⁾

(in square meters)

Assaí stores

166

712,613

4,293

36,045

(1)

In addition, the nine new Assaí stores we opened between September 30, 2020 and January 15, 2021 have a total selling area of 50,420 square meters and the one Assaí store we closed in the same period had a total selling area of 2,548 square meters.

Geographic Distribution of Stores

Our stores are located throughout 22 Brazilian states and the Federal District. We operate mainly in the Southeast region of Brazil, in states of São Paulo, Rio de Janeiro and Minas Gerais. The Southeast region accounted for 56.9% and 59.4% of our pro forma net operating revenue for the nine-month period ended September 30, 2020 and the year ended December 31, 2019, respectively, while the other Brazilian regions (North, Northeast, Midwest and South), in the aggregate, accounted for 43.1% and 40.6% of our pro forma net operating revenue for the nine-month period ended September 30, 2020 and the year ended December 31, 2019, respectively.

The following table sets forth the number of our Assaí stores by region as of the dates indicated:

	As of September 30,		As of December 31,
	2020		2019
North		11		10
Midwest		17		17
Southeast		97		92
Northeast		46		42
South		5		5
Total		176		166

In addition, the nine new Assaí stores we opened between September 30, 2020 and January 15, 2021 are located in the Midwest, Southeast and Northeast regions of Brazil, and the one Assaí store we closed in the same period was located in the Southeast region of Brazil.

Telesales (In-Store Pick-Up)

Our telesales channel is predominantly aimed at serving corporate customers, which allows our customers, when purchasing larger volumes, to directly negotiate better prices, volumes and payment terms. Selected products are separated and available for in-store pick-up. This channel represented approximately 8.9% and 8.7% of our total sales for the nine-month period ended September 30, 2020 and the year ended December 31, 2019, respectively.

Credit Sales

For the nine-month period ended September 30, 2020 and the year ended December 31, 2019, 47% and 50%, respectively, of our pro forma net operating revenue was represented by credit sales, principally in the form of credit card sales, as described below:

Credit card sales. All of our stores accept payment for purchases with major credit cards, such as MasterCard, Visa, Diners Club, American Express and co-branded credit cards issued by FIC. Our stores also accept virtual credit cards through methods such as Apple Pay. Sales to customers using credit cards accounted for 47% and 50% of our pro forma net operating revenue for the nine-month period ended September 30, 2020 and the year ended December 31, 2019, respectively. Of this total, sales through our FIC co-branded credit cards accounted for 10% of our pro forma net operating revenue for each of the nine-month period ended September 30, 2020 and the year ended December 31, 2019. An allowance for doubtful accounts is not required for these transactions as credit risks are assumed by the relevant credit card companies or issuing banks.

FIC

FIC is a Brazilian company that operates financial services in our stores and CBD’s stores with exclusive rights to offer credit cards, financial services and insurance policies, except for extended warranties. FIC has been operating for more than ten years and as of September 30, 2020 and December 31, 2019 had a portfolio of 3.2 million and 3.6 million credit card accounts, respectively, from customers (including the portfolio of Cartão Extra, Cartão Pão de Açúcar, Cartão Passaí and Cartão Ponto Frio). Cartão Passaí is a branded credit card associated with the Assaí banner that offers cash and carry pricing on products for individual customers. As of September 30, 2020, more than 1.2 million Cartão Passaí credit cards had been issued.

The table below sets forth the accumulated number of Cartão Passaí credit cards issued as of the dates indicated:

	As of December 31,						As of September 30,
	2017		2018		2019		2020
	(in thousands)
Number of accounts		102		613		1,048		1,197

We and CBD each hold 50% of Bellamar, a holding company the only asset of which is an investment in 35.76% of the shares of FIC. Itaú Unibanco and Via Varejo S.A. (a former subsidiary of CBD) hold 50% and 14.24%, respectively, of the shares of FIC. Itaú Unibanco determines the financial and operational policies of FIC and appoints the majority of its officers.

For the nine-month period ended September 30, 2020 and the year ended December 31, 2019, we recorded R$44 million and R$51 million in pro forma profit (loss) from associates with respect to FIC’s operations.

We maintain our strategy to increase the share of FIC’s credit cards and financial services at our stores as an important loyalty tool and mechanism to increase sales and additional profitability. FIC’s credit cards offer payment options for the cardholders at our stores, aiming to provide them with benefits and convenience.

Our Customers

Our customers include prepared food retailers (including restaurants, pizzerias and snack bars), end users (including schools, small businesses, religious institutions, hospitals and hotels), conventional retailers (such as grocery stores and neighborhood supermarkets) and individuals. We sell our products at our brick-and-mortar stores and via telesales (in-store pick-up).

We had approximately 168.8 million customers as of December 31, 2019, an increase of 177% from December 31, 2014.

The table below sets forth our total number of customers for the periods indicated:

	For the year ended December 31,												For the nine-month period ended September 30,
	2014		2015		2016		2017		2018		2019		2020
	(in millions)
Total number of customers		60.9		71.4		92.6		117.5		145.1		168.8		128.5

Among our customers, approximately 61% are classified as income Class C, 25% as income Class A and B and 14% as income Class D and E. For more information about the different income level classifications of Brazilian households, see “—Industry.”

Marketing

Our marketing strategy aims to retain our customers and attract new customers through our value proposition focused on competitive prices, a pleasant shopping experience and a significant assortment of products tailored to the regions where our stores are located. To this end, we promote integrated marketing campaigns aimed at our target audience of traders, processors, large users and end consumers.

Our marketing teams are composed of specialists in branding, media, planning, promotions, events, market intelligence, sustainability and trade marketing. They are dedicated to developing quality offline and digital marketing campaigns.

For the nine-month period ended September 30, 2020 and the year ended December 31, 2019, we spent R$78 million and R$143 million, respectively, on advertising.

Suppliers

Our purchasing of products is generally decentralized, with purchases being made directly from a large number of unrelated suppliers. As a result, we are not dependent on any single supplier.

Distribution and Logistics

To support the growth of our cash and carry business, we employ different store models adapted to operate in regions with challenging logistical realities in a country of continental dimensions such as Brazil. These models include stores whose products are entirely supplied directly by suppliers, as well as stores, usually in large urban centers, with 60% of their volume supplied by distribution centers. Accordingly, approximately 70% of our total product volume is supplied directly while 30% of our total product volume is supplied by our 10 distribution centers located in six Brazilian states. Our distribution centers are strategically located within these states to allow us to supply low turnover items. These advantages are sustained by our distribution centers’ total storage area of 150,000 square meters.

Seasonality

We have historically experienced seasonality in our results of operations, principally due to traditionally stronger sales in the fourth quarter holiday season and “Black Friday” promotions, which are relatively new in Brazil and help to boost fourth quarter sales. We also experience strong seasonality in our results for the months of March or April as a result of the Easter holiday, when we offer specialized products for the occasion, as well as during the month of our banner anniversary, when there is an increase in sales.

Information Technology

We invested R$40 million and R$63 million in information technology in the nine-month period ended September 30, 2020 and the year ended December 31, 2019, respectively, in connection with our Brazilian operations. We are identifying opportunities and mapping efficiency gains by integrating services and functions across our operating segments, focusing on governance and our customers.

Intellectual Property

We consider our various brands to be one of our most valuable assets and we have worked extensively to define the characteristics of the Assaí banner with respect to the expectations, consumption patterns and purchasing power of the different types of customers and income levels in Brazil. We believe that Brazilian customers associate the Assaí banner with a specific combination of products, services and price levels.

In Brazil, it is necessary to officially register a trademark with the National Industrial Property Institute (Instituto Nacional de Propriedade Industrial), or INPI, in order to acquire trademark rights. This registration gives the owner the exclusive right to use the trademark throughout Brazil for a specific period of time, which may be renewable.

As of September 30, 2020 and December 31, 2019, our most important trademark (Assaí) was duly registered with INPI, and we had various other trademarks registered or in the process of being registered in Brazil and abroad. We did not have any registered patents as of September 30, 2020 or December 31, 2019.

Our business relies on intellectual property that includes the content of our websites, our registered domain names and our registered and unregistered trademarks.

Industry

The cash and carry sector was created in order to serve customers within a market niche that was reached neither by self-service retail nor by direct wholesale.

According to the Brazilian Supermarket Association (Associação Brasileira de Supermercados), or ABRAS, the Brazilian retail food industry represented approximately 5.2% of Brazil’s GDP in 2019, and the food retail industry in Brazil recorded gross revenues of approximately R$378 billion in 2019, representing a 6.4% nominal increase compared to approximately R$356 billion in 2018.

According to data published in October 2020 by ABRAS, the volume of sales in the food retail sector increased by 4.4% in August 2020 compared to August 2019.

According to the IBGE, the total population of Brazil was approximately 212 million in July 2020, representing a 0.77% growth since July 2019. Given that more than 84% of the population lives in urban areas (where most of our operations are located) and the urban population has been increasing at a greater rate than the population as a whole, our business is particularly well positioned to benefit from Brazil’s urban growth and economies of scale related to urban growth. According to an IBGE survey, in 2020, the city of São Paulo had an estimated population of 12.3 million and the city of Rio de Janeiro had an estimated population of 6.7 million. These are the two largest cities in Brazil. The state of São Paulo has an estimated total population of 46 million, representing 21.9% of the Brazilian population and is our largest consumer market, with 75 stores as of September 30, 2020. The state of Rio de Janeiro is our second largest consumer market, with 19 stores as of September 30, 2020.

During 2019, private consumption in Brazil increased 1.7% while the country’s GDP increased 1.1%. This GDP increase was mainly due to growth in the services segment, especially with respect to the performance of the retail and real estate sectors.

The following table sets forth the different income levels of Brazilian households, according to the 2020 Consumption Potential Index (Índice de Potencial de Consumo), or IPC Maps 2020, published by IPC Marketing Editora.

	Average Monthly Income
		(in R$)
Income Level:
A		25,554
B1		11,279
B2		5,641
C1		3,085
C2		1,749
D/E		720

According to a study by IPC Maps 2019, Class A households account for only 2.1% of all households, Classes B1 and B2 collectively represent 20.9% of all households, Classes C1 and C2, the most representative in Brazil, collectively represent 48.7% of all urban households and Classes D and E collectively represent 28.3% of all households. In recent years, the average purchasing power and number of Class C, D and E urban households have increased.

We expect that increased consumption by the lower income levels will occur over time as a result of gradual salary increases and a steadily growing population. The Brazilian monthly minimum wage increased 4.7% from R$998 in January 2019 to R$1,045 in February 2020.

For more information on the Brazilian economic environment, see “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Brazilian Economic Environment and Factors Affecting Our Results of Operations.”

Competition

The Brazilian cash and carry industry is highly competitive and has grown over the past few years. This development has taken place through important investments made by existing chains, as well as the conversion of supermarkets and hypermarkets into cash and carry stores. For more information about risks related to competition, see “Item 3. Key Information—D. Risk Factors—Risks Relating to our Industry and Us—We face significant competition and pressure to adapt to changing consumer habits, which may adversely affect our market share and net income.”

Our main competitors are Atacadão, Maxxi, Makro, Fort, Tenda and Roldão, as well as various regional players.

Regulatory Overview

We are subject to a wide range of governmental regulation and supervision generally applicable to companies engaged in business in Brazil, including federal, state and municipal regulation, such as labor laws, public health and environmental laws. In order to open and operate our stores, we need a business permit and site approval and an inspection certificate from the local fire department, as well as health and safety permits. Our stores are subject to inspection by city authorities. We believe that we are in compliance in all material respects with all applicable statutory and administrative regulations with respect to our business. In addition, we have internal policies that in some instances go beyond what is required by law, particularly with respect to environmental and sustainability requirements and social and community matters.

Our business is primarily affected by a set of consumer protection rules regulating matters such as advertising, labeling and consumer credit. We believe we are in compliance in all material respects with these consumer protection regulations.

Environmental and Social Matters

We are committed to building a more sustainable future and strengthening networks that generate value for all of our stakeholders. Over the past few years, we have worked to improve and innovate our business model and to build a more responsible and inclusive society. Led by our sustainability department, we work to develop and implement the global sustainability guidelines established by the Casino Group, which are based on the following six pillars:

●

Transforming the value chain;

●

Conscientious consumption and supply;

●

Managing environmental impact;

●

Engaging society;

●

Integrated management and transparency; and

●

Valuing our people.

Transforming the Value Chain and Conscientious Consumption and Supply

In 2018, we evaluated our supply chain considering social and environmental risks. After prioritizing specific supply chains and product categories, we defined an action plan, which included the following actions:

●

Animal welfare. In April 2019, we held a training workshop with our egg suppliers to address the general aspects of egg production and hen welfare. We also began communicating more information to our customers to generate awareness about the various types of egg production. We have also worked to develop suppliers to expand supplies and ensure their availability. As of September 30, 2020, we had expanded our portfolio of cage-free, free-range and organic eggs to 99% of our stores.

●

Commitment to combat illegal deforestation. By September 2020, for our suppliers that buy cattle directly from farms, we reached 100% of the volume of meat sold in our stores with a geomonitoring system, ensuring that the meat we sell is not sourced from deforested or indigenous areas or produced using forced labor. Suppliers who do not comply with our social and environmental beef purchasing policy are subjected to sanctions. We have canceled our purchase agreements with four suppliers due to non-compliance with such policy.

Managing Environmental Impact

We continue to invest in projects to improve the energy efficiency of our stores, which has allowed us to reduce our energy consumption per square meter over the past few years. We are also committed to investing in clean energy. In the last three years, we have deployed eight solar plants on the roofs of our stores, which have generated approximately 9.3 thousand MWh of electricity. In addition, we have started to purchase electricity in the free market in Brazil, which allows us to purchase electricity generated from clean sources such as wind and solar, among others. In 2019, 11% of our total electricity consumption came from renewable sources. We also substantially reduced the consumption of diesel oil in our stores by 29.5% between 2019 and 2020.

We also encourage greater sustainability practices by our customers. To that end, we have we expanded the number of recycling stations in our stores, reaching 31 stores. We have also installed battery collection stations in all of our stores and light bulb collection stations in 75 stores.

We have also expanded our partnerships with food banks. In 2019, we donated a total of more than 1,400 tons of food from 100 stores, reducing the amount of food sent to landfills.

Engaging Society

GPA Institute, CBD’s social investment arm, is responsible for determining and implementing our strategy for social investments. During the nine-month period ended September 30, 2020, several actions of the GPA Institute had a major impact on society, highlighting:

●

Academia Assaí Bons Negócios (Assaí Good Business Academy). The training program for micro and small entrepreneurs, which certified more than 2,200 entrepreneurs in the nine-month period ended September 30, 2020, with more than 767 thousand connections to the platform. Since the beginning of the program, more than 5 thousand entrepreneurs have been certified.

●

Solidarity agenda. Our annual program of actions to encourage our customers to demonstrate solidarity and donate food in our stores was amplified in 2020 due to the COVID-19 pandemic. During the nine-month period ended September 30, 2020, more than 416 tons of food items were donated by our customers in 21 Brazilian states. We also donated more than 450 tons of food items in 21 Brazilian states and the Federal District, benefitting 53 thousand families.

●

Institutional support for entrepreneurship. In 2019, we formed partnerships with various organizations in Brazil that promote entrepreneurship, such as Preta Hub, which promotes the largest Black entrepreneurship conference in Latin America; Redes da Maré, which facilitates women’s professional development in gastronomy fields in the community of Maré in Rio de Janeiro; and Vale do Dendê, which develops innovation and entrepreneurship ecosystems the food sector in Salvador, Bahia.

Diversity and Inclusion

We are strengthening our focus on diversity and inclusion, with a strategic agenda on promoting inclusion, respecting and valuing diversity and combating all forms of violence and discrimination. In this respect, we highlight the following initiatives:

●

Diversity and Human Rights Policy. In 2020 we launched our Diversity and Human Rights Policy, with the aim of establishing guidelines related to these themes, bringing transparency about our positioning and directions in the search for a an environment free from discrimination, which promotes and values respect and equal opportunities.

●

Diversity Program. Since 2018, we have had a structured program with the objective of promoting inclusion, respectful dialogue and the appreciation of diversity, with a focus on gender, race, people with disabilities, LGBTQI+ and generations.

●

Dialogues about Diversity. Since 2019, we have hosted annual diversity events that are aimed to bring awareness, understanding and visibility to historically excluded groups. Programs include internal and external communications, videos, lectures and other events that promote diversity and inclusion. In 2020, we hosted our fourth Diversity Week.

●

Women’s Week. Since 2019, we have held a women’s week, during which we host forums with external specialists, leaders and employees on topics that address gender issues and women’s empowerment, including domestic violence, race, careers and maternity issues, among others.

●

Diversity Group: Composed of leaders from different areas, its mission is to support, promote and sustain the guidelines described in our Diversity and Human Rights Policy.

●

Workshop with private security service providers: Since 2019, we have held a workshop on diversity and inclusion at our offices in São Paulo with all our specialized service providers in private security (surveillance). The purpose of this meeting was to reinforce to companies which we engage as service providers, our values, strategic guidelines, as well as the improvement of the processes in assisting our customers. We also discussed our commitment to promote and respect human rights and how we work to foster diversity, respect and inclusion in the workplace.

●

Prevention and safety workshops. Continuing our commitment to improving processes to ensure the best experience for everyone who regularly visit our stores, since 2015 we have held prevention and safety workshops for employees who lead our loss prevention departments across the country, with the aim of fostering diversity, respect and inclusion in the workplace.

●

Hiring and promoting women. Hiring and promoting women for leadership positions is part of our internal policies.

●

Inclusive leadership and unconscious bias training. In 2020, we provided inclusive leadership and unconscious bias training, which we developed in partnership with a specialized consulting firm, for all human resources employees, as well as all managers, sub-managers and department heads in our stores and distribution centers.

In 2019, 30% of high leadership positions were held by women and 21.2% of leadership positions (management and above) were held by women. In addition, 5.4% of our employees are people with disabilities.

Organizational Structure

See “—A. History and Development of the Company—The Spin-Off” for our simplified corporate structure charts as of immediately prior to and following the Corporate Reorganization and immediately following the Spin-Off. For information about our shareholders, see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders.”

Property, Plant and Equipment

For purposes of this section “4D. Property, Plant and Equipment,” we have not included information regarding the property, plant and equipment owned and leased by the Éxito Group, which was transferred by us to CBD in connection with the Corporate Reorganization on December 31, 2020. For more information about the Corporate Reorganization, see “—A. History and Development of the Company—The Spin-Off—Corporate Reorganization.”

As of September 30, 2020, we owned 24 stores and two parcels of real estate that may be developed as sites for new stores in the future. As of September 30, 2020, and we leased the remaining 152 stores and the 10 distribution centers and warehouses we operate in Brazil and the real estate where our headquarters are located. Leases are usually for a term of five to twenty-five years, and provide for monthly rent payments based on a percentage of sales above an agreed minimum value and fixed monthly payments. We do not have any leases expiring by the end of 2020 and one lease expiring in 2021, which is scheduled to expire in July 2021. This lease is subject to an automatic 10-year renewal unless we decide to terminate it prior to its expiration. We do not expect to terminate this lease agreement. Based on our prior experience and Brazilian law and leasing practices, we do not anticipate any material change in the general terms of our leases or any material difficulty in renewing them. Based on our management’s experience and knowledge of the Brazilian market, our management believes that our leases follow market standards.

The following tables set forth the number and total selling area of our owned and leased stores, and the number and total storage area of our owned and leased warehouses as of the dates indicated:

	As of September 30, 2020
	Owned				Leased				Total
	Number		Area		Number		Area		Number		Area
			(in square meters)				(in square meters)				(in square meters)
Assaí stores		24		107,362		152		653,817		176		761,179
Warehouses		0		0		10		164,849		10		164,849
Total		24		107,362		162		818,666		186		926,028

	As of December 31, 2019
	Owned				Leased				Total
	Number		Area		Number		Area		Number		Area
			(in square meters)				(in square meters)				(in square meters)
Assaí stores		33		140,533		133		572,081		166		712,613
Warehouses		1		3,700		8		146,228		9		149,928
Total		34		144,233		141		718,309		175		862,541

Since September 30, 2020, we have leased nine new stores, with a total selling area of 50,420 square meters, and closed one store with a total selling area of 2,548 square meters.

ITEM 4A.

UNRESOLVED STAFF COMMENTS

Not applicable.

ITEM 5.

OPERATING AND FINANCIAL REVIEW AND PROSPECTS

You should read this discussion in conjunction with our unaudited interim condensed consolidated financial statements and our audited consolidated financial statements prepared in accordance with IFRS and the other financial information included in this registration statement.

Operating Results

Brazilian Economic Environment and Factors Affecting Our Results of Operations

Since substantially all of our operations, other than the operations of the Éxito Group, are in Brazil, our results of operations are affected by macroeconomic conditions in Brazil, including inflation rates, interest rates, Brazilian GDP growth, employment rates, wage levels, consumer confidence and credit availability. Substantially all of the operations of the Éxito Group, which we acquired on November 27, 2019 and distributed to CBD in the Corporate Reorganization on December 31, 2020, are in Colombia, Argentina and Uruguay.

Although the Brazilian economy has shown signs of recovery, the economic environment remained challenging for our operations during the nine-month period ended September 30, 2020 and during 2019. During the nine-month period ended September 30, 2020, Brazilian GDP, as published by the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística), or the IBGE, decreased by 5.0%, as compared to the corresponding period in 2019, and increased by 1.1% during 2019, 1.1% during 2018, and 1.0% during 2017. The rate of growth of Brazilian GDP has a direct effect on consumer demand, which we believe affects demand for our products and services and, consequently, our net operating revenue.

In addition, our results of operations are affected by the level of Brazilian unemployment. As of September 30, 2020, Brazilian unemployment, as measured by the monthly National Household Sample Survey (Pesquisa Nacional por Amostra de Domicílios Contínua), or PNAD, published by the IBGE, was 14.4%, compared to 11.0% as of December 31, 2019, 11.6% as of December 31, 2018 and 12.7% as of December 31, 2017, which was the highest rate since the IBGE started publishing the PNAD in 2012. As with GDP, the level of Brazilian unemployment has a direct effect on consumer demand, which we believe affects demand for our products and services and, consequently, our net operating revenue.

During the nine-month period ended September 30, 2020, Brazilian inflation, as measured by the General Market Price Index (Índice Geral de Preços - Mercado), or IGP-M, published by Fundação Getúlio Vargas, or FGV, a private organization, increased to 17.94%, compared to 7.32% during 2019, 7.55% during 2018 and (0.53)% during 2017. During the nine-month period ended September 30, 2020, Brazilian inflation, as measured by the Broad Consumer Price Index (Índice Nacional de Preços ao Consumidor Ampliado), or IPCA, published by the Brazilian Institute of Geography and Statistics (Instituto Brasileiro de Geografia e Estatística), or IBGE, increased to an annualized rate of 1.34%, compared to 4.31% during 2019, 3.75% during 2018 and 2.95% during 2017. Brazilian inflation has a direct effect on the final prices we charge our customers when they acquire our products, as well as effects on the cost to us of many of these products that we source in Brazil, our operating costs (in particular personnel costs), and our leasing costs as many of our lease agreements are partially indexed to Brazil’s national inflation indexes.

Our results of operations are affected by changes in the exchange rates of the real against the U.S. dollar. During the nine-month period ended September 30, 2020, the real depreciated against the U.S. dollar by 35.5%, following depreciation of 4.0% during 2019, 17.5% during 2018 and 1.5% during 2017. The depreciation of the real against the U.S. dollar may create inflationary pressures in Brazil, particularly in the category of food products. In periods of significant inflation, we may not be able to pass through our increased cost of goods to our customers to our customers and demand for our products may contract. As we do not have any indebtedness denominated in U.S. dollars, fluctuations in exchange rates do not have a direct impact on the carrying costs of our indebtedness or the cost of servicing our indebtedness.

A substantial portion of our indebtedness bears interest at rates linked to the CDI rate. As of September 30, 2020, the CDI rate was 2.00%, reflecting a decline from the CDI rate of 4.40% as of December 31, 2019, 6.40% as of December 31, 2018 and 6.89% as of December 31, 2017, following substantial declines compared to previous years. Fluctuations in the CDI rate have direct effects on our debt service costs, as well as indirect effects on the Brazilian economy as a whole and consumer demand for our products and services.

An economic recession and growth of the unemployment rate, including as a result of COVID-19, could lead to a decline in household consumption which could adversely affect our results of operations and financial condition. In order to mitigate this risk, since the beginning of 2020, we have emphasized the adaptation of our stores’ mix of products in order to offer our customers products in line with the evolving economic environment.

The following table sets forth data on real GDP growth, inflation and interest rates, and the U.S. dollar exchange rate for the indicated periods:

	As of and for the nine-month period ended September 30,			As of and for the year ended December 31,
	2020			2019			2018			2017			2016			2015

GDP growth (%) ⁽¹⁾		(5.0	)		1.1			1.1			1.0			(3.3	)		(3.5	)
Unemployment (%) ⁽²⁾		14.4			11.9			12.3			12.7			11.3			8.5
Inflation (IGP-M) (%) ⁽³⁾		17.9			7.3			7.5			(0.5	)		7.1			10.5
Inflation (IPCA) (%) ⁽⁴⁾		1.3			4.3			3.7			2.9			6.3			10.7
CDI (%) ⁽⁵⁾		3.5			5.9			6.4			9.9			14.0			13.2
(Depreciation) appreciation of the real against the U.S. dollar (%)		(35.5	)		(4.4	)		(18.5	)		(1.5	)		(17.0	)		(47.0	)
Exchange rate (closing) of the real to the U.S. dollar ⁽⁶⁾		5.640			4.031			3.875			3.308			3.259			3.905
Average exchange rate the real to the U.S. dollars ⁽⁶⁾		5.078			3.946			3.656			3.193			3.484			3.339

(1)

Source: IBGE.

(2)

Source: IBGE

(3)

Source: FGV.

(4)

Source: IBGE.

(5)

Source: Central Bank.

(6)

Source: Central Bank.

Current Conditions and Trends in our Industry

The following discussion is based largely upon our current expectations about future events, and trends affecting our business. Actual results for our industry and performance could differ substantially. For further information related to our forward-looking statements, see “Cautionary Statement with Respect to Forward-Looking Statements” and for a description of certain factors that could affect our industry in the future and our own future performance, see “Item 3. Key Information—D. Risk Factors.”

COVID-19

In Brazil, the federal system permits individual states the autonomy to impose regional restrictions, which has led to disparate COVID-19 policy outcomes among different states. In the state of São Paulo, for example, where more than 40% of our stores are located, statewide lockdowns were in place from March 24, 2020 to June 15, 2020. All non-essential establishments, including restaurants, bars, schools and daycare centers were closed during that time. Since mid-June 2020, commerce in the state of São Paulo has gradually reopened, operating under a color-coded reopening plan. Although cash and carry stores are considered an essential public service and therefore have remained open throughout the COVID-19 pandemic, including during the period of general lockdown, our business operations were affected by the restrictive measures imposed by the Brazilian government and state governments of Brazil.

When the lockdown restrictions were first implemented, we experienced a large number of customers going to our stores in order to stock up on essential products driven by worries of potential shortages of basic products. While the frequency of customer trips to our stores decreased during this period, we observed an increase in the average ticket. This effect was observed especially in the second half of April 2020.

With the closing of commercial and educational institutions such as restaurants, bars, schools and daycare centers in the states where a majority of our stores are located, including São Paulo and Rio de Janeiro, we started to experience a significant shift in our customer profile, from corporate clients to more individuals, especially with the introduction by the Brazilian government of its COVID-19 emergency financial assistance in April of 2020.

The effects of the restrictive measures on our business were alleviated by this emergency aid offered by the Brazilian government beginning in April 2020 to combat the economic crisis caused by the COVID-19 pandemic. This emergency aid targeted informal workers, independent small businesses and the unemployed, who were able to purchase goods in cash and carry and retail stores. The amount of assistance was R$600 per month from April to August 2020 and R$300 per month from September to December 2020. In total, the Brazilian government released an R$273 billion in COVID-19 aid, benefitting approximately 68 million individuals. Of this amount, R$105 billion was allocated to the Southeast region, where we operate our largest number of stores.

The Brazilian government is currently evaluating the possibility of extending the COVID-19 emergency aid. To the extent that the emergency aid is not extended, that may generate some reduction in customers’ average ticket, especially those dependent of such government aid. However, as the operational restrictions to small businesses have started to ease by most of the states, we believe that any decline in average ticket of individual customers will be matched or outweighed by the increase of corporate customer to our stores. If restrictions are imposed again to our corporate customers, without an additional emergency aid program by the government, our sales may be impacted.

To reduce the risk of COVID-19 spreading, meet the demand of our customers and provide a safe environment for our customers and employees, we implemented emergency protective health measures at our stores, hired temporary employees to keep our stores operational and invested in additional training, which caused a temporary increase in our operating costs. Beginning in April 2020, we also hired almost 1,500 temporary workers in order to substitute some of our employees who could not return to work due to health concerns or to avoid putting high-risk group persons even at a higher risk.

We cannot assure you that we will not have to adopt new protective measures in case we face a worsening in the pandemic situation in the future, which will require some investments with additional temporary workers or new adaptations in our stores. We believe, however, that the experience we acquired in trying to prevent and address the effects of COVID-19 in 2020, will enable us to quickly respond in taking the necessary measure to avoid any negative impacts to our business and results of operations.

Moreover, our administrative office and other facilities were affected as we adopted a remote work policy in March 2020 for our administrative and back-office personnel. We have been gradually returning our employees to the office, but we cannot guarantee that we will not have to implement this policy once again in the event of new restrictive measures imposed as a response to a new COVID-19 wave. At the beginning of the COVID-19 outbreak we imposed a home office policy, for almost 3 months (between April and July 2020), with no relevant impact to our operations. Some adaptations were necessary in our offices in order to allow our administrative employees to return to our office safely. If new restrictions are necessary in the future we have already a structure for the remote work with no impact to the operations.

We may also face supply chain risks, including scrutiny or embargoing of goods produced in infected areas, in addition to failures of third parties, including our suppliers, contract manufacturers, contractors, commercial banks, joint venture partners and external business partners to meet their obligations, or significant disruptions to their ability to do so, which may adversely affect us. During 2020, we experienced certain COVID-19 related supply chain issues. Some industries suffered from product shortages as problems arose in a number of packaging suppliers due to a shortage of cardboard and aluminum as packaging materials and the lack of production capacity, as the demand for some products (e.g.: alcoholics beverages) recovered faster than the industry had the capacity to ramp up production of those products. We expect this trend to be normalized in the first months of 2021. However, if new restrictions are imposed that again impact the production capacity of some of our suppliers, we might face new shortages in the future.

The extent to which COVID-19 and/or other diseases affect us will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and/or other diseases and the actions to contain them or treat their impact, among others.

For more information on the risks relating to the COVID-19 pandemic on our business, see “Item 3. Key Information—D. Risk Factors—Risks Relating to our Industry and Us—The global outbreak of the novel coronavirus disease (COVID-19) could disrupt our operations and could have an adverse impact on our business, financial condition, results of operations or prospects.”

Financial Presentation and Accounting Policies

Presentation of Financial Statements

We have prepared our unaudited interim condensed consolidated financial statements and our audited consolidated financial statements in accordance with IFRS as issued by the IASB. Our audited consolidated financial statements have been audited in accordance with auditing standards of the Public Company Accounting Oversight Board.

Business Segments and Presentation of Segment Financial Data

We evaluate and manage business segment performance based on information prepared in accordance with IFRS. Historically, we have reported our results as a single segment. As a result of the Éxito Acquisition, we have consolidated the results of the Éxito Group and its subsidiaries into our financial statements as from December 1, 2019. Following our acquisition of the Éxito Group, we implemented a new organizational structure that we believe reflects our business activities and corresponds to our principal business activities. As a result, we have two business units and report our results in two corresponding segments to reflect this organizational structure:

●

Cash and Carry – this segment includes our legacy business in Brazil, primarily conducted under the “Assaí” banner; and

●

Éxito Group – this segment includes the businesses of the Éxito Group in Colombia, Argentina and Uruguay, which we conduct under the “Éxito,” “Surtimax,” “Super Inter,” and “Carulla” banners.

Critical Accounting Policies and Estimates

The preparation of our consolidated financial statements, in accordance with IFRS as issued by the IASB requires our management to make judgments, estimates and assumptions that affect the reported amounts of revenues, expenses, assets and liabilities, and the accompanying disclosures, as well as the disclosure of contingent liabilities, at the end of the reporting period. However, uncertainty about these assumptions and estimates could result in outcomes that require a material adjustment to the carrying amount of assets or liabilities affected in future periods.

We discuss below key assumptions and judgments concerning the future, and other key sources of uncertain estimates at the reporting date that have a significant risk of causing a material impact to the carrying amounts of assets or liabilities within the next financial year. For further details on critical accounting policies, see note 6 of our consolidated financial statements included elsewhere in this registration statement.

Impairment of Financial Asset

IFRS 9 replaces the incurred loss model of IAS 39 with an expected credit losses model. The new impairment loss model applies to financial assets measured at amortized cost, contractual assets and debt instruments measured at fair value through other comprehensive income, but does not apply to investments in equity instruments (shares) or financial assets measured at fair value through profit or loss.

We measure provisions for losses from accounts receivable and other receivables and contractual assets at an amount that equals the credit loss expected for the full lifetime of the same receivable or contractual asset. We use the same measurement for trade accounts receivable, whose portfolio of receivables is fragmented, rents receivable and wholesale accounts receivable. The practical expedient was applied through the adoption of a matrix of losses for each maturity range.

When determining whether the credit risk of a financial asset increased significantly since its initial recognition and while estimating the expected credit losses, we take into account reasonable and sustainable information that is relevant and available free of cost or excessive effort. This includes quantitative and qualitative information and analysis, based on our historical experience, during credit appraisal and considering information about projections. We consider that the credit risk of a financial asset increased significantly if the asset is overdue for more than 90 days. For additional information, see notes 8.2 and 20.6 to our audited consolidated financial statements included elsewhere in this registration statement.

Annual Impairment Test of Goodwill and Intangibles

We test annually whether goodwill is impaired, in accordance with the accounting policy stated in note 17.1 to our audited consolidated financial statements included elsewhere in this registration statement and international accounting standards, or IAS, IAS 36 – Impairment of Assets. Other intangible assets, the useful lives of which are indefinite, such as brands and licenses, are submitted to impairment tests on the same basis as goodwill.

As of December 31, 2019, we calculated the recoverable amount of goodwill arising from past acquisitions, for the purpose of evaluating its recoverability and potential impairment resulting from events or changes in economic, operating and technological conditions that might indicate impairment.

For impairment testing purposes, intangible assets with indefinite useful lives are not amortized, but tested for impairment at the end of each reporting period or whenever there are indications that their carrying amount may be impaired either individually or at the level of the cash-generating unit. The assessment is reviewed annually to determine whether the indefinite life assumption remains reasonable. Otherwise, the useful life is changed prospectively from indefinite to definite.

The recoverable amount allocated to each segment was defined based on the value in use of the assets based on cash flow projections arising from financial budgets approved by senior management for the next three years. The discount rate applied to cash flow projections was 8.4% per annum and cash flows exceeding three years are extrapolated by the expected long-term growth rate of 4.5%. Based on this analysis, no impairment loss was identified.

Commercial rights are intangible assets which are amounts paid to former owners of commercial locations. To test for impairment of these assets, we allocated the amounts of identifiable commercial rights by store and we test them together with the fixed assets of the store as described in notes 16.1 and 17.2 to our audited consolidated financial statements included elsewhere in this registration statement.

Inventories

Inventories are carried at the lower of cost or net realizable value. The cost of inventories purchased is recorded at average cost, plus warehouse and handling costs related to bringing each product to its present location and condition, less rebates received from suppliers.

Net realizable value is the estimated selling price in the ordinary course of business, less estimated costs to sell.

The value of inventory is reduced by an allowance for losses and breakage, which is periodically reviewed and evaluated as to its adequacy.

Recoverable Taxes

We pay tax on services and sales, known as Imposto Sobre Circulação de Mercadorias e Serviços, or ICMS, which is a state level value-added tax levied on the sale of goods and the provision of services at each phase of production and sales. In the Brazilian states where we operate, and for most of the products in our sales mix, the ICMS tax substitution regime applies. Under the tax substitution regime, the responsibility for paying upfront taxes due on the entire production and sales chain for certain products is primarily that of the manufacturers and, in some cases (depending on the tax system applicable in each state and for each product) can be our responsibility. In the tax substitution regime, the tax is collected on the sale of the products and transferred to the government. We record the taxes paid upfront under the tax substitution regime in accordance with the accrual basis in our cost of goods resold.

We also have recoverable tax credits related to social security contribution (Contribuição para o Financiamento da Seguridade Social), or COFINS, and social integration (Programa de Integração Social), or PIS, taxes.

The estimate of future recoverability of these tax credits is made based on growth projections and subsequent offset with debts deriving from its operations. For details of credits and compensation, see note 11 to our audited consolidated financial statements included elsewhere in this registration statement.

Fair Value of Derivatives and Other Financial Instruments

When the fair value of financial assets and liabilities recorded in the financial statements cannot be observed in active markets, it is determined according to the hierarchy set forth by IFRS 13, which sets certain valuation techniques including the discounted cash-flow model. The inputs to these models are taken from observable markets where possible or from information on comparable operations and transactions in the market. The judgments include analyses of data, such as liquidity risk, credit risk and volatility. Changes in assumptions regarding these factors may affect the reported fair value of financial instruments.

The fair value of financial instruments that are actively traded on organized markets is determined based on market quotes, at the end of the reporting period. For financial instruments that are not actively traded, the fair value is based on valuation techniques defined by us and compatible with usual market practices. These techniques include the use of recent market arm’s length transactions, benchmarking of the fair value of similar financial instruments, analyses of discounted cash flows or other valuation models.

Provision for Contingencies

We are a party to several proceedings at the judicial and administrative levels in the ordinary course of its business. Provisions for legal claims are recognized for all cases representing reasonably estimated probable losses. The assessment of the likelihood of loss takes into account available evidence, the hierarchy of laws, former court decisions and their legal significance, as well as legal counsel’s opinion. For details on legal proceedings, see note 21 to our audited consolidated financial statements included elsewhere in this registration statement.

Income Taxes

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Given the nature and complexity of our business, differences arising between the actual results and the assumptions made, or future changes to those assumptions, could require future adjustments to tax benefits and expenses already recorded. We recognize provisions, based on reasonable estimates, for consequences of audits by the tax authorities of the respective jurisdictions in which we operate. The amount of these provisions is based on various factors, such as our experience of previous tax audits and differing interpretations of tax regulations by the taxable entity and the responsible tax authority. Differences of interpretation may arise on a wide variety of issues depending on the conditions prevailing in the respective entity’s jurisdiction.

Deferred income tax and social contribution assets are recognized for all unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgment is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax-planning strategies.

We have recognized deferred tax assets related to tax loss carryforwards amounting to R$338 million as of September 30, 2020 as compared to R$253 million as of December 31, 2019, R$0 million as of December 31, 2018 and R$14 million as of December 31, 2017. These losses do not expire and as of September 30, 2020 and December 31, 2019 they relate to subsidiaries that have tax-planning opportunities available to support this balance. The use of tax loss carry forwards is limited by law to 30% of taxable income in a single fiscal year.

Share-Based Payments

The cost of transactions with employees eligible for share-based compensation is measured based on the fair value of the equity instruments on the grant date. Estimating the fair value of share-based payment transactions requires determining the most appropriate valuation model, which depends on the terms and conditions of the specific grant. This estimate also requires determining the most appropriate inputs for the valuation model, including the expected useful life of the stock options, volatility and dividend yield, as well as making assumptions about them. The assumptions and models used to estimate the fair value of share-based payment transactions are disclosed in note 25 to our audited consolidated financial statements included elsewhere in this registration statement.

Business Combination and Goodwill

According to IFRS 3, business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the sum of the consideration transferred, measured at fair value on the acquisition date, and the remaining amount of non-controlling interest in the acquired company. For each business combination, the acquirer measures the non-controlling interest in the acquiree at fair value or by the proportionate share in the acquiree’s identifiable net assets, according to our accounting policy. The acquisition costs incurred are treated as an expense and included in administrative expenses.

Goodwill is initially measured at cost and is the excess between the consideration transferred and the fair value of assets acquired and assumed liabilities, including any non-controlling interests. If the consideration transferred is lower than the fair value of the acquirer’s net assets, we recognize a gain on bargain purchase in profit or loss.

Leases

According to IFRS 16, we assess the agreements we enter into to evaluate whether it is or contains a lease provision. We understand that an agreement is, or contains, a lease when it transfers the right to control the use of a given asset for a specified period in exchange for consideration.

We lease equipment and commercial spaces, including stores and distribution centers, under cancellable and non-cancellable lease agreements. The terms of the lease agreements to support these transactions varies between five and 20 years.

For additional information on the assessment of our lease agreements and the adoption of IFRS 16, see notes 4 and 22 to our audited consolidated financial statements included elsewhere in this registration statement.

Lessee

When we act as lessees in the lease agreements we entered into, we assess our lease agreements in order to identify the term of the lease agreement according to the term the lessee has the control of the use of a given asset, considering extension and termination options. According to IFRS 16, we do not consider in our assessment agreements with terms lower than twelve months and with an individual asset value below US$5,000.

The agreements are recorded as of the date they were entered into and when the related asset is ready to be used, through the recognition of a lease liability and a corresponding right of use asset. The lease liability is calculated at the present value of the minimum lease payments, using the incremental borrowing rate for similar assets.

Payments made are segregated between financial charges and reduction of the lease liability, in order to obtain a constant interest rate on the liability balance. Financial charges are recognized as financial expenses for a given period.

The right-of-use assets are amortized over the lease agreement term. Capitalizations for improvements, improvements and renovations carried out in stores are amortized over their estimated useful life or the expected term of use of the asset, which might be limited if there is evidence that the lease will not be extended.

Variable rents are recognized as expenses in the years in which they are incurred.

Lessor

When we act as lessors in the lease agreements we entered into, we assess the transfer of risks and benefits to the lessees. Leases in which we do not substantially transfer all the risks and benefits of the ownership of the asset are classified as operating leases. The initial direct costs of negotiating operating leases are added to the book value of the leased asset and recognized over the term of the agreement, on the same basis as rental income.

Variable rents are recognized as income in the years in which they are earned.

Overview

Primarily as a result of the Éxito Acquisition, our consolidated net income increased by 104.0% to R$40,983 million during the nine-month period ended September 30, 2020 from R$20,088 million during the corresponding period of 2019. As discussed below, our consolidated net income increased by 7.2% to R$830 million during the nine-month period ended September 30, 2020 from R$774 million during the corresponding period of 2019.

Despite a challenging economic scenario in which consumption was sharply affected by high unemployment rates, the net operating revenue of our cash and carry segment, which represent substantially all of our operations excluding the Éxito Group, increased by 26.1% to R$25,330 million during the nine-month period ended September 30, 2020 from R$20,088 million during the corresponding period of 2019. As discussed below, the net income of our cash and carry segment declined by 8.0% to R$712 million during the nine-month period ended September 30, 2020 from R$774 million during the corresponding period of 2019.

Our consolidated net operating revenue increased by 31.3% to R$30,232 million during 2019 from R$23,017 million during 2018, and, as discussed below, our consolidated net income, declined by 1.5% to R$1,060 million during 2019 from R$1,076 million during 2018.

During the nine-month period ended September 30, 2020, we continued to see a strong growth of our cash and carry segment, demonstrated by an increase of 26.1% in net operating revenue to R$25,330 million, from R$20,088 million during the corresponding period of 2019. This growth was driven by the outstanding performance of the 23 stores we opened in the year ended September 30, 2020, consisting of 21 new stores and two store conversions, the maturation of stores opened in prior years, and a 12% growth in same store sales. Same store sales are sales made in stores opened for at least 12 consecutive months and which have not been closed or remained closed for a period of seven or more consecutive days. As of September 30, 2020, our total sales area was 761,179 square meters. Management expects stores to mature between three and five years depending on the region in which the store is located.

Results of Operations for Nine-Month Periods Ended September 30, 2020 and 2019

We evaluate and manage business segment performance based on information prepared in accordance with IFRS. As a result of the Éxito Acquisition, we have reported our results in two segments for the nine-month period ended September 30, 2020. For a reconciliation of the results of our segments to our consolidated results, see note 31 of our unaudited interim condensed consolidated financial statements. In addition to the following analysis of our consolidated results of operations, we have also provided below an analysis of our legacy cash and carry segment; we have not provided an analysis of the results of our Éxito Group segment as this segment was not included in our consolidated results of operations during the nine-month period ended September 30, 2019, since the Éxito Acquisition was completed in November 2019. In addition, as result of the Corporate Reorganization which occurred on December 31, 2020, the results of the Éxito Group will cease to be included in the Company’s consolidated results of operations beginning on January 1, 2021.

The following table sets forth the components of our consolidated income statement, as well as the percentage of revenue represented by each component and the change from the prior year, for the periods presented.

	For the nine-month period ended September 30,
	2020						2019						% change
	(in millions of R$)			% of net operating revenue			(in millions of R$)			% of net operating revenue

Net operating revenue		40,983			100.0			20,088			100.0			104.0
Cost of sales		(33,059	)		(80.7	)		(16,685	)		(83.1	)		98.1
Gross profit		7,924			19.3			3,403			16.9			132.9
Selling expenses		(4,141	)		(10.1	)		(1,647	)		(8.2	)		151.4
General and administrative expenses		(949	)		(2.3	)		(284	)		(1.4	)		234.2
Depreciation and amortization		(889	)		(2.2	)		(288	)		(1.4	)		208.7
Share of profit (loss) of associates		18			0.0			—			0.0			n.m.
Other operating expenses, net		(295	)		(0.7	)		(21	)		(0.1	)		n.m.
		(6,256	)		(15.3	)		(2,240	)		(11.2	)		179.3
Operating profit		1,668			4.1			1,163			5.8			43.4
Net financial result		(671	)		(1.6	)		(18	)		(0.1	)		n.m.
Income before taxes		997			2.4			1,145			5.7			(12.9	)
Income tax and social contribution		(167	)		(0.4	)		(371	)		(1.8	)		(55.0	)
Net income		830			2.0			774			3.9			7.2

n.m. Not meaningful.

Net operating revenue. Net operating revenue increased by 104.0%, or R$20,895 million, to R$40,983 million during the nine-month period ended September 30, 2020 from R$20,088 million during the corresponding period of 2019, reflecting: (1) the R$15,653 million contribution to net operating revenue of our Éxito Group segment; and (2) the R$5,242 million increase in net operating revenue of our cash and carry segment described below in our analysis of the results of this segment.

Gross profit. Gross profit increased by 132.9%, or R$4,521 million, to R$7,924 million during the nine-month period ended September 30, 2020 from R$3,403 million during the corresponding period of 2019, reflecting: (1) the R$3,835 million contribution to gross profit of our Éxito Group segment; and (2) the R$686 million increase in gross profit of our cash and carry segment described below in our analysis of the results of this segment. Gross margin increased by 2.4 percentage points, to 19.3% during the nine-month period ended September 30, 2020 from 16.9% during the corresponding period of 2019.

Selling expenses. Selling expenses increased by 151.4%, or R$2,494 million, to R$4,141 million during the nine-month period ended September 30, 2020 from R$1,647 million during the corresponding period of 2019, reflecting: (1) the R$2,157 million contribution to selling expenses of our Éxito Group segment; and (2) the R$337 million increase in selling expenses of our cash and carry segment. As a percentage of the net operating revenue, selling expenses increased to 10.1% during the nine-month period ended September 30, 2020 from 8.2% during the corresponding period of 2019.

General and administrative expenses. General and administrative expenses increased by 234.2%, or R$665 million, to R$949 million during the nine-month period ended September 30, 2020 from R$284 million during the corresponding period of 2019, reflecting: (1) the R$645 million contribution to general and administrative expenses of our Éxito Group segment; and (2) the R$20 million increase in general and administrative expenses of our cash and carry segment. As a percentage of the net operating revenue, general and administrative expenses increased to 2.3% during the nine-month period ended September 30, 2020 from 1.4% during the corresponding period of 2019.

Depreciation and amortization. Depreciation and amortization increased by 208.7%, or R$601 million, to R$889 million during the nine-month period ended September 30, 2020 from R$288 million during the corresponding period of 2019, reflecting: (1) the R$552 million contribution to depreciation and amortization of our Éxito Group segment; and (2) the R$79 million increase in depreciation and amortization of our cash and carry segment.

Other operating expenses, net. Other operating expenses, net, increased by R$274 million, to R$295 million during the nine-month period ended September 30, 2020 from R$21 million during the corresponding period of 2019, mainly as a result of: (1) expenses of R$125 million related to restructuring expenses in our cash and carry segment’s operations and expenses in connection with the Éxito Acquisition; and (2) incremental expenses of R$116 million related to the purchase of individual protection and store adaptation items, overtime expenses, expenses with internal and external communication, incremental expenses with transportation and cleaning services and sanitation due to the COVID-19 pandemic.

Operating profit. Operating profit increased by R$505 million, to R$1,668 million during the nine-month period ended September 30, 2020 from R$1,163 million during the corresponding period of 2019, mainly as a result of: (1) the R$3,835 million contribution to gross profit of our Éxito Group segment; and (2) the R$686 million increase in gross profit of our cash and carry segment described below in our analysis of the results of this segment, which was partially offset primarily by R$125 million related restructuring expenses in our cash and carry segment’s operations and expenses in connection with the Éxito Acquisition and R$116 million related to the purchase of individual protection and store adaptation items, overtime expenses, expenses with internal and external communication, incremental expenses with transportation and cleaning services and sanitation due to the COVID-19 pandemic.

Net financial results. Net financial results increased by an expense of R$653 million, to R$671 million during the nine-month period ended September 30, 2020 from R$18 million during the corresponding period of 2019, mainly as a result of: (1) a R$276 million increase in cost of debt, primarily as a result of our issuance of our first issue of debentures in order to finance the Éxito Acquisition; (2) a R$205 million increase in interest on lease liabilities, primarily related to leases of the Éxito Group; and (3) an increase of R$136 million in losses on monetary correction (correção monetária) of assets and liabilities related to the Éxito Acquisition, which was partially offset by an increase of R$71 million of cash and cash equivalents profitability related to the Éxito Acquisition.

Profit before income tax and social contribution. As a result of the foregoing, profit before income tax and social contribution declined by 12.9%, or R$148 million, to R$997 million during the nine-month period ended September 30, 2020 from R$1,145 million during the corresponding period of 2019.

Income tax and social contribution. Our effective tax rate was 16.8% during the nine-month period ended September 30, 2020 compared to 32.4% during the corresponding period of 2019, resulting in a decline of income tax and social contribution of 55.0%, or R$204 million, to R$167 million during the nine-month period ended September 30, 2020 from R$371 million during the corresponding period of 2019. Our effective tax rate declined primarily as a result of: (1) an increase in the effects of interest on equity, which reduced our effective tax rate by 10.5% during the nine-month period ended September 30, 2020 compared to a reduction of 5.7% during the corresponding period of 2019; and (2) an increase in the effects of other permanent difference, which reduced our effective tax rate by 2.7% during the nine-month period ended September 30, 2020 compared to a reduction of 0.6% during the corresponding period of 2019.

Net income. As a result of the foregoing, net income increased by 7.2%, or R$56 million, to R$830 million during the nine-month period ended September 30, 2020 from R$774 million during the corresponding period of 2019.

Results of Cash and Carry Segment for Nine-Month Periods Ended September 30, 2020 and 2019

The following table sets forth the components of the net income of our cash and carry segment, as well as the percentage of revenue represented by each component and the change from the prior year, for the periods presented.

	For the nine-month period ended September 30,
	2020						2019						% change
	(in millions of R$)			% of net operating revenue			(in millions of R$)			% of net operating revenue

Net operating revenue		25,330			100.0			20,088			100.0			26.1
Cost of sales		(21,241	)		(83.9	)		(16,685	)		(83.1	)		27.3
Gross profit		4,089			16.1			3,403			16.9			20.2
Selling, general and administrative and other operating expenses, net		(2,445	)		(9.7	)		(1,952	)		(9.7	)		(25.3	)
Depreciation and amortization		(367	)		(1.4	)		(288	)		(1.4	)		27.4
Share of profit (loss) of associates		26			0.1			—			0.0			n.m.
		(2,786	)		(11.0	)		(2,240	)		(11.2	)		(24.4	)
Operating profit		1,303			5.1			1,163			5.8			12.0
Net financial result		(416	)		(1.6	)		(18	)		(0.1	)		n.m.
Income before taxes		887			3.5			1,145			5.7			(22.5	)
Income tax and social contribution		(175	)		(0.7	)		(371	)		(1.8	)		(52.8	)
Net income		712			2.8			774			3.9			(8.0	)

n.m.: Not meaningful.

Net operating revenue. Net operating revenue of our cash and carry segment increased by 26.1%, or R$5,242 million, to R$25,330 million during the nine-month period ended September 30, 2020 from R$20,088 million during the corresponding period of 2019, mainly as a result of: (1) a 12% increase in same store sales, primarily due to an increase in average ticket despite a decline in store traffic; and (2) an increase in sales volume due to our opening of new stores during the twelve-month period ended September 30, 2020. Same store sales were positively impacted by an increase in average ticket, which was largely driven by price inflation during the second and third quarters of 2020 as a result of COVID-19. Although traffic in stores declined in 2020 due to capacity restrictions and regulations related to COVID-19, we observed an increase in the number of items per ticket from customers who avoided recurring store visits.

Gross profit. Gross profit of our cash and carry segment increased by 20.2%, or R$686 million, to R$4,089 million during the nine-month period ended September 30, 2020 from R$3,403 million during the corresponding period of 2019, mainly as a result of the maturation of stores opened in prior years. Gross margin of our cash and carry segment declined by 0.8 percentage points, to 16.1% during the nine-month period ended September 30, 2020 from 16.9% during the corresponding period of 2019, mainly as a result of the large portfolio of our stores that are still in the process of maturation, which means they have not yet achieved their full profitability potential.

Selling, general and administrative expenses and other operating expenses, net. Selling, general and administrative expenses and other operating expenses, net, of our cash and carry segment increased by 25.3%, or R$493 million, to R$2,445 million during the nine-month period ended September 30, 2020 from R$1,952 million during the corresponding period of 2019, due to: (1) the increase of R$337 million in selling expenses, principally due to expenses of R$296 million resulting from the opening of additional stores during the nine-month period ended September 30, 2020; (2) the increase of R$136 million in other operating expenses, net, principally due to (i) expenses of R$67 million related to restructuring expenses in our cash and carry segment and expenses related to the Éxito Acquisition and (ii) incremental expenses of R$66 million related to purchases of individual protection and store adaptation items, overtime expenses, expenses with internal and external communication, incremental expenses with transportation and cleaning services and sanitation due to the COVID-19 pandemic; and (3) the increase of R$20 million in general and administrative expenses, principally due to inflation and the growth of our cash and carry operations. As a percentage of the net operating revenue of our cash and carry segment, selling, general and administrative expenses and other operating expenses, net, increased to remained stable at 9.7% during the nine-month period ended September 30, 2020 and the corresponding period of 2019.

Depreciation and amortization. Depreciation and amortization of our cash and carry segment increased by 27.4%, or R$79 million, to R$367 million during the nine-month period ended September 30, 2020 from R$288 million during the corresponding period of 2019, mainly as a result of the increase in our depreciable property and equipment as a result of the opening and the conversion of an additional 13 stores during the last quarter of 2019 and the opening and conversion of additional 10 stores during the nine-month period ended September 30, 2020.

Operating profit. Operating profit of our cash and carry segment increased by R$140 million, to R$1,303 million during the nine-month period ended September 30, 2020 from R$1,163 million during the corresponding period of 2019, mainly as a result of the R$686 million increase in gross profit, which was partially offset primarily by the increase of R$493 million in selling, general and administrative expenses and other operating expenses, net, in each case as described above.

Net financial results. Net financial results of our cash and carry segment increased by an expense of R$398 million to R$416 million during the nine-month period ended September 30, 2020 from R$18 million during the corresponding period of 2019, primarily as a result of: (1) our issuance of our first issue of debentures in order to finance the Éxito Acquisition in an aggregate amount of R$235 million; and (2) and an increase of R$58 million in interest on lease liabilities resulting from new stores leased during the period.

Profit before income tax and social contribution. As a result of the foregoing, profit before income tax and social contribution of our cash and carry segment declined by 22.5%, or R$258 million, to R$887 million during the nine-month period ended September 30, 2020 from R$1,145 million during the corresponding period of 2019.

Income tax and social contribution. The effective tax rate of our cash and carry segment was 19.7% during the nine-month period ended September 30, 2020 compared to 32.4% during the corresponding period of 2019, resulting in a decline of income tax and social contribution of our cash and carry segment of 52.8%, or R$196 million, to R$175 million during the nine-month period ended September 30, 2020 from R$371 million during the corresponding period of 2019. The effective tax rate of our cash and carry segment declined primarily as a result of the tax impact of R$105 million related to the interest on shareholders equity paid to CBD of R$ 310 million.

Net income. As a result of the foregoing, net income of our cash and carry segment declined by 8.0%, or R$62 million, to R$712 million during the nine-month period ended September 30, 2020 from R$774 million during the corresponding period of 2019.

Results of Operations for Years Ended December 31, 2019 and 2018

	For the year ended December 31,
	2019						2018						% change
	(in millions of R$)			% of net operating revenue			(in millions of R$)			% of net operating revenue

Net operating revenue		30,232			100.0			23,017			100.0			31.3
Cost of sales		(24,891	)		(82.3	)		(18,845	)		(81.9	)		32.1
Gross profit		5,341			17.7			4,172			18.1			28.0
Selling expenses		(2,782	)		(9.2	)		(1,908	)		(8.3	)		45.8
General and administrative expenses		(166	)		(0.5	)		(275	)		(1.2	)		(39.6	)
Depreciation and amortization		(454	)		(1.5	)		(313	)		(1.4	)		45.0
Share of profit (loss) of associates		(5	)		0.0			—			0.0			n.m.
Other operating expenses, net		(206	)		(0.7	)		(3	)		0.0			n.m.
		(3,613	)		(12.0	)		(2,499	)		(10.9	)		44.6
Operating profit		1,728			5.7			1,673			7.3			3.3
Net financial result		(257	)		(0.9	)		(120	)		(0.5	)		114.2
Income before taxes		1,471			4.9			1,553			6.7			(5.3	)
Income tax and social contribution		(411	)		(1.4	)		(477	)		(2.1	)		(13.8	)
Net income		1,060			3.5			1,076			4.7			(1.5	)

n.m.

Not meaningful.

Net operating revenue. Net operating revenue increased by 31.3%, or R$7,215 million, to R$30,232 million during 2019 from R$23,017 million during 2018, reflecting: (1) the R$5,065 million increase in net operating revenue of our cash and carry segment described below in our analysis of the results of this segment; and (2) the R$2,150 million contribution to net operating revenue of our Éxito Group segment.

Gross profit. Gross profit increased by 28.0%, or R$1,169 million, to R$5,341 million during 2019 from R$4,172 million during 2018, reflecting: (1) the R$608 million contribution to gross profit of our Éxito Group segment; and (2) the R$561 million increase in gross profit of our cash and carry segment described below in our analysis of the results of this segment. Gross margin declined 0.4 percentage points, to 17.7% during 2019 from 18.1% from 2018.

Selling expenses. Selling expenses increased by 45.8%, or R$874 million, to R$2,782 million during 2019 from R$1,908 million during 2018, reflecting: (1) the R$365 million increase in selling expenses of our cash and carry segment; and (2) the R$509 million contribution to selling expenses of our Éxito Group segment. As a percentage of the net operating revenue, selling expenses increased to 9.2% during 2019 from 8.3% during 2018.

General and administrative expenses. General and administrative expenses declined by 39.6%, or R$109 million, to R$166 million during 2019 from R$275 million during 2018, reflecting: (1) the R$77 million increase in general and administrative expenses of our cash and carry segment; and (2) the R$186 million decline related to the contribution to general and administrative expenses of our Éxito Group segment. As a percentage of the net operating revenue, general and administrative expenses increased to 0.5% during 2019 from 1.2% during 2018.

Depreciation and amortization. Depreciation and amortization increased by 45.0%, or R$141 million, to R$454 million during 2019 from R$313 million during 2018, reflecting: (1) the R$82 million increase in depreciation and amortization of our cash and carry segment; and (2) the R$59 million contribution to depreciation and amortization of our Éxito Group segment.

Other operating expenses, net. Other operating expenses, net, increased by R$203 million, to R$206 million during 2019 from R$3 million during 2018, mainly as a result of expenses relating to the integration of the Éxito Group.

Operating profit. Operating profit increased by R$55 million, to R$1,728 million during 2019 from R$1,673 million during 2018, mainly as a result of: (1) the R$602 million contribution to gross profit of our Éxito Group segment; and (2) the R$561 million increase in gross profit of our cash and carry segment described below in our analysis of the results of this segment, which was partially offset primarily by the R$442 million increase in selling general and administrative expenses of our cash and carry segment and the R$323 million contribution to selling general and administrative expenses of our Éxito Group segment.

Net financial results. Net financial results increased by 114.2%, or an expense of R$137 million, to R$257 million during 2019 from R$120 million during 2018, mainly as a result of our issuance of our first issue of debentures in order to finance the Éxito Acquisition, which caused an increase of interest expenses and monetary correction (correção monetária) of liabilities of Éxito Group, which was partially offset primarily by: (1) an increase of R$98 million in cash and cash equivalents profitability; and (2) an increase of R$146 million due to the monetary correction (correção monetária) of assets, specifically tax credit related to exclusion of ICMS from the calculation basis of PIS and COFINS.

Profit before income tax and social contribution. As result of the foregoing, profit before income tax and social contribution declined by 5.3%, or R$82 million, to R$1,471 million during 2019 from R$1,553 million during 2018.

Income tax and social contribution. Our effective tax rate was 27.9% during 2019 compared to 30.7% during 2018, resulting in a decline of income tax and social contribution of 13.8%, or R$66 million, to R$411 million during 2019 from R$477 million during 2018. Our effective tax rate declined primarily as a result of an increase in the effects of interest on equity, which reduced our effective tax rate by 5.7% during 2019 compared to a reduction of 2.5% during 2018.

Net income. As a result of the foregoing, net income declined by 1.5%, or R$16 million, to R$1,060 million during 2019 from R$1,076 million during 2018.

Results of Cash and Carry Segment for Years Ended December 31, 2019 and 2018

	For the year ended December 31,
	2019						2018						% change
	(in millions of R$)			% of net operating revenue			(in millions of R$)			% of net operating revenue

Net operating revenue		28,082			100.0			23,017			100.0			22.0
Cost of sales		(23,349	)		(83.1	)		(18,845	)		(81.9	)		23.9
Gross profit		4,733			16.9			4,172			18.1			13.4
Selling, general and administrative and other operating expenses, net		(2,797	)		(10.0	)		(2,186	)		(9.5	)		28.0
Depreciation and amortization		(395	)		(1.4	)		(313	)		(1.4	)		26.2
Share of profit (loss) of associates		78			0.3			—			0.0			n.m.
		(3,114	)		(11.1	)		(2,499	)		(10.9	)		24.6
Operating profit		1,619			5.8			1,673			7.3			(3.2	)
Net financial result		(200	)		(0.7	)		(120	)		(0.5	)		66.7
Income before taxes		1,419			5.1			1,553			6.7			(8.6	)
Income tax and social contribution		(372	)		(1.3	)		(477	)		(2.1	)		(22.0	)
Net income		1,047			3.7			1,076			4.7			(2.7	)

n.m.

Not meaningful.

Net operating revenue. Net operating revenue of our cash and carry segment increased by 22.0%, or R$5,065 million, to R$28,082 million during 2019 from R$23,017 million during 2018, mainly as a result of: (1) a 6% increase in same store sales, primarily due to increases in traffic and average ticket; and (2) an increase in sales volume due to our opening of 22 stores during 2019, consisting of 21 organic expansions and one conversion, increasing our total selling area from 597,988 as of December 31, 2018 to 712,614 square meters as of December 31, 2019.

Gross profit. Gross profit of our cash and carry segment increased by 13.4%, or R$561 million, to R$4,733 million during 2019 from R$4,172 million during 2018, mainly as a result of the maturation of stores opened in prior years. Gross margin of our cash and carry segment declined by 1.2 percentage points to 16.9% during 2019 from 18.1% during 2018 as a result of the reversion of ICMS tax-related provision of R$369 million during 2018.

Selling, general and administrative expenses and other operating expenses, net. Selling, general and administrative expenses and other operating expenses, net, of our cash and carry segment increased by 28.0%, or R$611 million, to R$2,797 million during 2019 from R$2,186 million during 2018, due to: (1) the increase of R$365 million in selling expenses, principally due to expenses resulting from the opening of additional stores in 2019; (2) the increase of R$169 million in other operating expenses, net, principally due to restructuring expenses and expenses related to the Éxito Acquisition; (3) the increase of R$77 million in general and administrative expenses, principally due to inflation and growth in our operations. As a percentage of the net operating revenue of our cash and carry segment, selling, general and administrative expenses and other operating expenses, net, increased to 10.0% during 2019 from 9.5% during 2018.

Depreciation and amortization. Depreciation and amortization of our cash and carry segment increased by 26.2%, or R$82 million, to R$395 million during 2019 from R$313 million during 2018, mainly due to the increase in our depreciable property and equipment as a result of the opening of additional stores in 2019.

Operating profit. Operating profit of our cash and carry segment declined by R$54 million, to R$1,619 million during 2019 from R$1,673 million during 2018, mainly as a result of the R$611 million increase in selling, general and administrative expenses and other operating expenses, net, which was partially offset primarily by the R$561 million increase in gross profit, in each case as described above.

Net financial results. Net financial results of our cash and carry segment increased by 66.7%, or R$80 million, to R$200 million during 2019 from R$120 million during 2018, mainly as a result of our issuance of our first issue of debentures in order to finance the Éxito Acquisition, which caused an increase of interest expenses, which was partially offset primarily by: (1) an increase of R$53 million in cash and cash equivalents profitability; and (2) an increase of R$146 million due to the monetary correction (correção monetária) of assets, specifically tax credit related to exclusion of ICMS from the calculation basis of PIS and COFINS.

Profit before income tax and social contribution. As result of the foregoing, profit before income tax and social contribution of our cash and carry segment declined by 8.6%, or R$134 million, to R$1,419 million during 2019 from R$1,553 million during 2018.

Income tax and social contribution. The effective tax rate of our cash and carry segment was 26.2% during 2019 compared to 30.7% during 2018, resulting in a decline of income tax and social contribution of our cash and carry segment of 22.0%, or R$105 million, to R$372 million during 2019 from R$477 million during 2018. The effective tax rate of our cash and carry segment declined primarily as a result of the tax impact of R$ 84 million related to the interest on shareholders equity paid to CBD of R$248 million.

Net income. As a result of the foregoing, net income of our cash and carry segment declined by 12.7%, or R$29 million, to R$1,047 million in 2019 from R$1,076 million in 2018.

Results of Operations for Years Ended December 31, 2018 and 2017

	For the year ended December 31,
	2018						2017						% change
	(in millions of R$)			% of net operating revenue			(in millions of R$)			% of net operating revenue

Net operating revenue		23,017			100.0			18,544			100.0			24.1
Cost of sales		(18,845	)		(81.9	)		(15,578	)		(84.0	)		21.0
Gross profit		4,172			18.1			2,966			16.0			40.7
Selling expenses		(1,908	)		(8.3	)		(1,563	)		(8.4	)		22.1
General and administrative expenses		(275	)		(1.2	)		(235	)		(1.3	)		17.0
Depreciation and amortization		(313	)		(1.4	)		(239	)		(1.3	)		31.0
Other operating expenses, net		(3	)		0.0			(79	)		(0.4	)		(96.2	)
		(2,499	)		(10.9	)		(2,116	)		(11.4	)		18.1
Operating profit		1,673			7.3			850			4.6			96.8
Net financial result		(120	)		(0.5	)		(142	)		(0.8	)		(15.5	)
Income before taxes		1,553			6.7			708			3.8			119.4
Income tax and social contribution		(477	)		(2.1	)		(211	)		(1.1	)		126.1
Net income		1,076			4.7			497			2.7			116.5

Net operating revenue. Net operating revenue increased by 24.1%, or R$4,473 million, to R$23,017 million during 2018 from R$18,544 million during 2017, mainly as a result of: (1) an 8% increase in same store sales, primarily due to increases in traffic and average ticket; and (2) an increase in sales volume due to our opening of 18 stores during 2018, consisting of 16 organic expansions and two conversions, increasing our total selling area from 505,737 as of December 31, 2017 to 597,988 square meters as of December 31, 2018.

Gross profit. Gross profit increased by 40.7%, or R$1,206 million, to R$4,172 million during 2018 from R$2,966 million during 2017, mainly as a result of: (1) the maturation of stores opened in prior years; and (2) the return related to food inflation. Gross margin increased by 2.1 percentage points to 18.1% during 2018 from 16.0% during 2017, as a result of a reversion of ICMS tax-related provision of R$369 million during 2018.

Selling expenses. Selling expenses increased by 22.1%, or R$345 million, to R$1,908 million during 2018 from R$1,563 million during 2017, mainly due to the opening of 18 stores in 2018. As a percentage of our net operating revenue, selling expenses declined to 8.3% during 2018 from 8.4% during 2017.

General and administrative expenses. General and administrative expenses increased by 17.0%, or R$40 million, to R$275 million during 2018 from R$235 million during 2018, mainly due to inflation and the growth of our cash and carry operations. As a percentage of our net operating revenue, selling, general and administrative expenses declined to 1.2% during 2018 from 1.3% during 2017.

Depreciation and amortization. Depreciation and amortization increased by 31.0%, or R$74 million, to R$313 million during 2018 from R$239 million during 2017, mainly due to the increase in our depreciable property and equipment as a result of the opening of additional stores in 2018.

Other operating expenses, net. Other operating expenses, net, declined by R$76 million, to R$3 million during 2018 from R$79 million during 2017, mainly as a result of a reversal of provision for contingencies of R$40 million during 2018 compared to a provision for contingencies of R$35 million during 2017.

Operating profit. Operating profit increased by 96.8%, or R$823 million, to R$1,673 million during 2018 from R$850 million during 2017, mainly as a result of the R$1,206 million increase in gross profit, which was partially offset primarily by the R$345 million increase in selling expenses, in each case as described above.

Net financial results. Net financial results declined by 15.5%, or an expense of R$22 million, to R$120 million during 2018 from R$142 million during 2017. This decline was mainly due to the overall lower interest in 2018 as the average CDI rate declined to 6.5% during 2018 from 9.9% during 2017.

Profit before income tax and social contribution. As a result of the foregoing, profit before income tax and social contribution increased by 119.4%, or R$845 million, to R$1,553 million during 2018 from R$708 million during 2017.

Income tax and social contribution. Our effective tax rate was 30.7% during 2018 compared to 29.8% during 2017, resulting in an increase of income tax and social contribution by 126.1%, or R$266 million, to R$477 million during 2018 from R$211 million during 2017. Our effective tax rate increased as a result of higher interest on shareholders’ equity declared (R$115 million in 2018 compared with R$81 million in 2017).

Net income. As a result of the foregoing, net income increased by 116.5%, or R$579 million, to R$1,076 million during 2018 from R$497 million during 2017.

Liquidity and Capital Resources

Our principal cash requirements have historically consisted of the following:

●

working capital requirements;

●

servicing of our indebtedness;

●

capital expenditures related to the expansion of our network of stores; and

●

dividends on our shares, including in the form of interest attributable to shareholders’ equity.

In addition, we raised a significant amount of indebtedness in 2019 to finance our acquisition of Éxito Group.

Our consolidated cash and cash equivalents of R$3,898 million as of September 30, 2020 and R$5,026 million as of December 31, 2019. We had working capital (consisting of current assets less current liabilities) of R$(2,756) million as of September 30, 2020 and R$(1,648) million as of December 31, 2019.

Management believes that our cash position and operating cash flows from the cash and carry segment will be enough to meet our short-term obligations as well to finance our capital expenditures aligned with our investment plan primarily related to the opening of new stores and store renovations. Additionally, as part of our cash management strategy, we can enter into factoring transactions and discount a portion of our credit card receivables with financial institutions in order to improve our working capital, without recourse or related obligation.

We anticipate that we will be required to spend approximately R$4,184 million to meet our long-term contractual obligations and commitments during the years ending December 31, 2021 and 2022.

Cash Flows

The following table sets forth certain information about our consolidated cash flows for the periods presented.

	For the nine-month period ended September 30,						For the years ended December 31,
	2020			2019			2019			2018			2017
	(in millions of R$)
Net cash generated (used) in operating activities		(642	)		327			3,159			1,545			1,102
Net cash generated (used) in investing activities		(690	)		(876	)		(4,370	)		(926	)		(739	)
Net cash generated (used) in financing activities		(224	)		8,428			4,715			(99	)		(61	)
Net increase (decrease) in cash and cash equivalents		(1,556	)		7,879			3,504			520			302
Cash and cash equivalents at the beginning of the period		5,026			1,411			1,411			891			589
Exchange rate variation on cash and cash equivalents		428			—			111			—			—
Cash and cash equivalents at the end of the period		3,898			9,290			5,026			1,411			891

Nine-Month Period Ended September 30, 2020

Net cash used in operating activities was R$(642) million during the nine-month period ended September 30, 2020 compared to net income of R$830 million for the period, primarily due to a net reduction of accounts payable to suppliers of R$2,444 million and a net increase in inventory of R$693 million, the effects of which were partially offset by our incurrence of non-cash depreciation and amortization charges of R$1,002 million and our incurrence of non-cash interest and monetary variation charges of R$638 million.

Net cash used in investment activities was R$690 million during the nine-month period ended September 30, 2020. During the nine-month period ended September 30, 2020, our primary use of cash for investment activities was related to the purchases of property and equipment of R$1,138 million related to our expansion of our network of stores, offset by proceeds from the sale of property and equipment of R$551 million related to our sale of 12 properties located in the states of São Paulo, Mato Grosso do Sul, Goiás, Bahia and Paraíba to certain funds managed by TRX Gestora de Recursos Ltda. We subsequently entered into long-term lease agreements with respect to these properties.

Net cash used in financing activities was R$224 million during the nine-month period ended September 30, 2020. During the nine-month period ended September 30, 2020, we incurred R$2,782 million of loans and financing, principally consisting of bank loans, and repaid R$2,321 million of loans and financings, including the first series of our first issuance of debentures, the first series of our first issuance of promissory notes and bank loans. In addition, we made payments of R$549 million with respect to our leasing liabilities.

Nine-Month Period Ended September 30, 2019

Net cash provided by operating activities was R$327 million during the nine-month period ended September 30, 2019 compared to net income of R$774 million for the period, primarily due to: (1) a net reduction of accounts payable to suppliers of R$342 million; (2) a net increase in inventory of R$310 million; (3) a net increase in recoverable taxes of R$282 million; and (4) a net reduction in anticipated revenues of R$108 million. The effects of these factors were partially offset by: (1) our incurrence of non-cash depreciation and amortization charges of R$304 million; (2) our incurrence of non-cash interest and monetary variation charges of R$202 million; and (3) a net increase in taxes and contributions payable of R$113 million.

Net cash used in investment activities was R$876 million during the nine-month period ended September 30, 2019. During the nine-month period ended September 30, 2019, our primary use of cash for investment activities was related to the purchases of property and equipment of R$842 million and intangible assets of R$35 million related to our expansion of our network of stores.

Net cash provided by financing activities was R$8,428 million during the nine-month period ended September 30, 2019. During the nine-month period ended September 30, 2019, we incurred loans and financings and debentures of R$8,909 million, primarily consisting of our first issuance of debentures and first issuance of promissory notes. In addition, during the nine-month period ended September 30, 2019, we: (1) repaid R$262 million of loans and financings; (2) made payments of R$169 million with respect to our leasing liabilities; and (3) paid interim dividends of R$50 million.

Year Ended December 31, 2019

Net cash provided by operating activities was R$3,159 million during the year ended December 31, 2019 compared to net income of R$1,060 million for the period, primarily due to: (1) a net increase in accounts payable to suppliers of R$1,671 million; (2) our incurrence of non-cash depreciation and amortization charges of R$484 million; (3) our incurrence of non-cash interest and monetary variation charges of R$431 million; and (4) our incurrence of non-cash deferred income tax and social contribution of R$162 million. The effects of these factors were partially offset by: (1) a net increase in recoverable taxes of R$326 million; (2) a net increase in inventory of R$153 million; (3) a net reduction in anticipated revenues of R$153 million; and (4) a net reduction in income taxes and social contributions paid of R$131 million.

Net cash used in investment activities was R$4,370 million during the year ended December 31, 2019. During 2019, our primary uses of cash for investment activities were related to: (1) our acquisition of the Éxito Group, net of cash acquired, of R$3,311 million; and (2) the purchases of property and equipment of R$1,357 million and intangible assets of R$52 million related to our expansion of our network of stores, the effects of which were partially offset by proceeds from the sale of property and equipment of R$362 million mainly related to our sale of 7 properties located in São Paulo, Paraná, Bahia, Tocantins, Alagoas e Bahia to SPCV S.A.

Net cash provided by financing activities was R$4,715 million during the year ended December 31, 2019. During 2019, we incurred loans and financings and debentures of R$9,395 million, primarily consisting of our first issuance of debentures, first issuance of promissory notes and bank loans, and received proceeds of R$2,003 million as the result of the capitalization of the Advance for Future Capital Increase, without issuing new shares. In addition, during 2019, we: (1) repaid R$6,124 million of loans and financings, primarily consisting of indebtedness of the Éxito Group that was outstanding at the time of our acquisition of the Éxito Group; (2) paid interim dividends and interest on shareholders’ equity of R$50 million and R$247 million, respectively; and (3) made payments of R$260 million with respect to our leasing liabilities.

Year Ended December 31, 2018

Net cash provided by operating activities was R$1,545 million during the year ended December 31, 2018 compared to net income of R$1,076 million for the period, primarily due to: (1) a net increase in accounts payable to suppliers of R$779 million; (2) our incurrence of non-cash depreciation and amortization charges of R$341 million; (3) our incurrence of non-cash deferred income tax and social contribution of R$175 million; and (4) our incurrence of non-cash interest and monetary variation charges of R$171 million. The effects of these factors were partially offset by: (1) a net increase in inventory of R$477 million; (2) our incurrence of a non-cash reversal of tax loss provision of R$369 million; (3) a net reduction in income taxes and social contributions paid of R$244 million; and (4) a net increase in recoverable taxes of R$161 million.

Net cash used in investment activities was R$926 million during the year ended December 31, 2018. During 2018, our primary use of cash for investment activities was related to the purchases of property and equipment of R$907 million and intangible assets of R$41 million related to our expansion of our network of stores.

Net cash used in financing activities was R$99 million during the year ended December 31, 2018. During 2018, we incurred loans and financings of R$417 million, primarily consisting of bank loans. In addition, during 2018, we: (1) repaid R$201 million of loans and financings; (2) made payments of R$200 million with respect to our leasing liabilities; and (3) paid interest on shareholders’ equity of R$115 million.

Year Ended December 31, 2017

Net cash provided by operating activities was R$1,102 million during the year ended December 31, 2017 compared to net income of R$497 million for the period, primarily due to: (1) a net increase in accounts payable to suppliers of R$673 million; (2) our incurrence of non-cash depreciation and amortization charges of R$263 million,; and (3) our incurrence of non-cash interest and monetary variation charges of R$127 million. The effects of these factors were partially offset by: (1) a net increase in inventory of R$284 million; (2) a net increase in recoverable taxes of R$174 million; and (3) a net reduction in income taxes and social contributions paid of R$113 million.

Net cash used in investment activities was R$739 million during the year ended December 31, 2017. During 2017, our primary use of cash for investment activities was related to the purchases of property and equipment of R$717 million and intangible assets of R$23 million related to our expansion of our network of stores.

Net cash used in financing activities was R$61 million during the year ended December 31, 2017. During 2017, we incurred loans and financings of R$338 million, primarily consisting of bank loans, and received proceeds of R$68 million as the result of the capitalization of the Advance for Future Capital Increase, without issuing new shares. In addition, during 2017, we: (1) repaid R$216 million of loans and financings; (2) made payments of R$170 million with respect to our leasing liabilities; and (3) paid interest on shareholders’ equity of R$81 million.

Indebtedness

On a consolidated basis, our indebtedness was R$9,900 million as of September 30, 2020, and R$8,821 million as of December 31, 2019. As of September 30, 2020, 76% of our indebtedness was denominated in reais, 22% was denominated in Colombian pesos and 2% was denominated in U.S dollars, swapped to real-denominated loans. As of December 31, 2019, 96% of our indebtedness was denominated in reais and 4% was denominated in Colombian pesos.

As of September 30, 2020, our real-denominated indebtedness bore interest at an average rate of 3.8% per annum, our Colombian peso-denominated debt bore interest at an average rate of 5.9% per annum and our U.S. dollar-denominated debt bore interest at an average rate of 2.5% per annum. As of September 30, 2020, 99.5% of our indebtedness bore interest at floating rates.

As a result of the Corporate Reorganization, we are no longer an obligor in connection with any debt incurred by the Éxito Group. With respect to all of our other material indebtedness, we will remain an obligor immediately following the Spin-Off. For more information regarding the nature and amount of our indebtedness as of September 30, 2020, as adjusted to give pro forma effect to the Corporate Reorganization and the Separation, see “—F. Tabular Disclosure of Contractual Obligations.”

Short-Term Indebtedness

Our short-term debt was R$3,702 million as of September 30, 2020 (or 37.4% of our total indebtedness) and R$1,472 million as of December 31, 2019 (or 16.7% of our total indebtedness).

Long-Term Indebtedness

Our principal long-term borrowings and financings are:

●

debentures issued in the Brazilian market;

●

promissory notes issued in the Brazilian market;

●

a working capital facility incurred by the Éxito Group; and

●

a working capital facility incurred by Sendas.

Prior to the Spin-Off, our first issue of debentures and first issue of promissory notes require that CBD maintained the following ratios on a quarterly basis:

●

consolidated net debt (defined as debt minus cash and cash equivalents and trade accounts receivable)/shareholders’ equity ratio lower than 1; and

●

consolidated net debt/EBITDA ratio lower than 3.25.

Upon the conclusion of the Spin-Off, our first issue of debentures and first issue of promissory notes will require that we maintain the following ratios on a quarterly basis:

●

consolidated net debt (defined as debt minus cash and cash equivalents and trade accounts receivable)/shareholders’ equity ratio lower than or equal to 4.5 for the fourth quarter of 2020, 5.0 for each of the first, second and third quarters of 2021, 3.0 for the fourth quarter of 2021, 3.5 for each of the first, second and third quarters of 2022, 2.0 for the fourth quarter of 2022, 2.5 for each of the first, second and third quarters of 2023 and 2.0 for the fourth quarter of 2023.

●

consolidated net debt/EBITDA ratio lower than or equal to 3.0 for the fourth quarter of 2020, 3.25 for the first, second and third quarters of 2021, 2.5 for the fourth quarter of 2021, 2.75 for each of the first, second and third quarters of 2022, 2.0 for the fourth quarter of 2022, 2.25 for each of the first, second and third quarters of 2023 and 2.0 for the fourth quarter of 2023.

In addition, the instruments governing our first issue of debentures contain restrictive covenants that limit our ability to distribute dividends in excess of the legally required minimum dividend. During the nine-month period ended September 30, 2020 and the year ended December 31, 2019, we were in compliance with these covenants.

None of our significant long-term debt instruments are secured by pledges of our assets. For more information about our secured and unsecured indebtedness, see “Item 3. Key Information—B. Capitalization and Indebtedness.”

The table below sets forth our principal long-term borrowings and financings and debentures as of September 30, 2020 and December 31, 2019.

As of
September 30,
2020

As of
December 31,
2019

Maturity

Interest Rate

(in millions of R$)

First issue of debentures:

1^st series

—

1,001

August 2020

CDI + 1.60%

2^nd series

1,753

2,044

August 2021

CDI + 1.74%

3^rd series

2,008

2,045

August 2022

CDI + 1.95%

4^th series

2,009

2,046

August 2023

CDI + 2.20%

First issue of promissory notes:

1^st series

—

July 2020

CDI + 0.72%

2^nd series

July 2021

CDI + 0.72%

3^rd series

July 2022

CDI + 0.72%

4^th series

265

258

July 2023

CDI + 0.72%

5^th series

212

206

July 2024

CDI + 0.72%

6^th series

212

206

July 2025

CDI + 0.72%

Sendas working capital facilities

899

500

CDI + 1.96%

Éxito Group working capital facilities

2,056

—

IBR 3M + 3.7%

The following discussion briefly describes certain of our significant outstanding indebtedness.

Debentures

In August 2019, our shareholders approved our first issuance and public offering of non-convertible debentures in four series in Brazil. Substantially all of the proceeds of this issuance of debentures was used to finance the acquisition of the Éxito Group. These debentures are guaranteed by CBD. As approved by the debenture holders at a meeting held on November 19, 2020, the CBD guarantee will terminate upon the conclusion of the Spin-Off. At that meeting, the debenture holders also approved amendments to the interest rates charged for each series of debentures as of November 24, 2020, as follows:

●

Second series: CDI + 2.34%

●

Third series: CDI + 2.65%; and

●

Fourth series: CDI + 3.00%.

For more information about the meeting of debenture holders, see “Item 4. Information on the Company—A. History and Development of the Company—Recent Developments—Meeting of Debenture Holders.”

The proceeds of the first series of these debentures was R$2,000 million. This series accrued interest at the average CDI rate plus 1.60% per annum, payable semi-annually. The principal of this series was repaid in two equal installments in December 2019 and August 2020.

The proceeds of the each of the other series of these debentures was R$2,000 million. Each of the other series of these debentures accrues interest at the rates set forth in the table above, payable semi-annually through the maturities set forth in the table above.

Promissory Notes

In June 2019, our officers approved the first issuance of commercial promissory notes in six series for public distribution with restricted efforts in Brazil. Substantially all of the proceeds of this issuance of promissory notes was used to acquire agricultural inputs and goods. These promissory notes are guaranteed by CBD. As approved by the promissory note holders at a meeting held on November 19, 2020, the CBD guarantee will terminate upon the conclusion of the Spin-Off. We will be required to pay a waiver fee to the promissory note holders in connection with amendments to the promissory notes approved at that meeting, in the amount of 0.73% per annum of the outstanding amount under the promissory notes, payable semi-annually. For more information about the meeting of promissory note holders, see “Item 4. Information on the Company—A. History and Development of the Company—Recent Developments—Meeting of Promissory Note Holders.”

The proceeds of the first series of these promissory notes was R$50 million. This series accrued interest at the average CDI rate plus 0.72% per annum, payable at maturity in July 2020.

Each of the other series of these promissory notes accrues interest at the rates set forth in the table above, payable at the maturities set forth in the table above in the following principal amounts:

●

Second series: R$50 million;

●

Third series: R$50 million;

●

Fourth series: R$250 million;

●

Fifth series: R$200 million; and

●

Sixth series: R$200 million.

Sendas Working Capital Facilities

We have borrowed funds for working capital pursuant to credit facilities with several financial institutions, including a R$500 million facility with Banco do Brasil and a R$250 million facility with Banco Safra. Loans under these facilities accrue interest at a rate of CDI + 1.96% and contain the same financial and non-financial covenants as the debentures and promissory notes described above. As of September 30, 2020, the aggregate principal amount outstanding under these working capital facilities was R$899 million.

Éxito Group Working Capital Facilities

The Éxito Group has borrowed funds for working capital pursuant to credit facilities with several financial institutions, including Banco Davivienda, Banco de Bogotá, Banco Occidente and Banco de Cordoba. Loans under these facilities accrue interest at a rate of IBR + 3.7% As of September 30, 2020, the aggregate principal amount outstanding under these working capital facilities was R$2,056 million. As a result of the Corporate Reorganization, Sendas no longer consolidates these debt facilities on its balance sheet.

Research and Development, Patents and Licenses, Etc.

We do not have any significant research and development activities.

Trend Information

Please see “—A. Operating Results—Current Conditions and Trends in our Industry” and “Item 4. Information on the Company—B. Business Overview” for trend information.

Off-Balance Sheet Arrangements

We do not maintain any off-balance sheet transactions, arrangements, obligations or other relationships with unconsolidated entities or others that are reasonably likely to have a material current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources.

Tabular Disclosure of Contractual Obligations

The following tables summarize our significant contractual obligations and commitments as of the dates indicated, on a historical basis.

	As of September 30, 2020
	Payments Due by Period
Contractual obligations	Less than 1 year		1 to 3 years		4 to 5 years		More than 5 years		Total
	(in millions of R$)
Non-current borrowings and financing:
Principal		1,748.9		783.9		648.0		58.9		3,239.7
Accrued interest⁽¹⁾		78.7		—		—		—		78.7
Projected interest⁽²⁾		37.5		150.7		34.8		15.8		238.8
Total non-current borrowings and financing		1,865.2		934.6		682.8		74.7		3,557.3
Non-current debentures:
Principal		1,796.7		4,300.0		400.0		—		6,496.8
Accrued interest⁽¹⁾		26.5		18.0		24.0		—		68.5
Projected interest⁽²⁾		232.8		452.1		198.5		—		883.3
Total non-current debentures		2,056.1		4,770.0		622.5		—		7,448.6
Total		3,921.3		5,704.6		1,305.3		74.7		11,005.9

(1)

Accrued and unpaid interest as of September 30, 2020.

(2)

Future interest includes estimated interest to be incurred from September 30, 2020, through the respective contractual maturity dates, based on outstanding principal amounts at September 30, 2020, and projected market interest rates (especially the Brazilian CDI rate) for our variable rate debt obligations.

	As of December 31, 2019
	Payments Due by Period
Contractual obligations	Less than 1 year		1 to 3 years		4 to 5 years		More than 5 years		Total
	(in millions of R$)
Non-current borrowings and financing:
Principal		285.8		80.9		523.2		17.8		907.7
Accrued interest⁽¹⁾		3.5		—		—		—		3.5
Projected interest⁽²⁾		61.3		87.9		45.2		10.3		204.6
Total non-current borrowings and financing		350.6		168.8		568.4		28.1		1,115.9
Non-current debentures:
Principal		1,050.0		4,100.0		2,450.0		200.0		7,800.0
Accrued interest⁽¹⁾		139.7		3.1		13.8		6.2		162.7
Projected interest⁽²⁾		282.6		747.1		316.2		106.3		1,452.2
Total non-current debentures		1,472.3		4,850.1		2,780.0		312.5		9,415.0
Total		1,822.9		5,018.9		3,348.4		340.6		10,530.9

(1)

Accrued and unpaid interest as of December 31, 2019.

(2)

Future interest includes estimated interest to be incurred from December 31, 2019, through the respective contractual maturity dates, based on outstanding principal amounts at December 31, 2019, and projected market interest rates (especially the Brazilian CDI rate) for our variable rate debt obligations.

The following supplemental table summarizes our significant contractual obligations and commitments as of September 30, 2020, as adjusted to give effect to the pro forma adjustments set forth in “Item 3. Key Information—A. Selected Financial Data—Unaudited Pro Forma Condensed Financial Information”:

	As of September 30, 2020
	Payments Due by Period
Contractual obligations	Less than 1 year		1 to 3 years		4 to 5 years		More than 5 years		Total
	(in millions of R$)
Non-current borrowings and financing:
Principal		220.9		431.9		522.0		18.9		1,193.7
Accrued interest⁽¹⁾		9.7		—		—		—		9.7
Projected interest⁽²⁾		33.5		86.7		11.9		0.8		132.8
Total non-current borrowings and financing		264.2		518.5		533.9		19.7		1,336.3
Non-current debentures:
Principal		1,796.8		4,300.0		400.0		—		6,496.8
Accrued interest⁽¹⁾		26.5		18.0		24.0		—		68.5
Projected interest⁽²⁾		232.8		452.1		198.5		—		883.3
Total non-current debentures		2,056.1		4,770.0		622.5		—		7,448.6
Total		2,320.3		5,288.5		1,156.4		19.7		8,784.9

(1)

Accrued and unpaid interest as of September 30, 2020.

(2)

Safe Harbor

See “Cautionary Statement with Respect to Forward-Looking Statements.”

ITEM 6.

DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

Directors and Senior Management

Pursuant to our bylaws and the Brazilian Corporate Law, we are managed by a board of directors (conselho de administração) and a board of executive officers (diretoria). Our bylaws also provide for the establishment of an audit committee (comitê de auditoria) to advise our board of directors. Our board of directors may at any time create additional advisory committees to assist in the performance of its duties. As of the date of this registration statement, our board of directors has approved the creation the following additional committees: human resources, culture and compensation committee; finance committee; corporate governance and sustainability committee; and strategy and investments committee.

Board of Directors

Our board of directors is the decision-making body responsible for determining the guidelines and general policies of our business, including our overall long-term strategy as well as controlling and overseeing our performance. Our board of directors is also responsible for, among other matters, supervising the activities of our executive officers.

Pursuant to our bylaws, our board of directors must be composed of three to nine members. The members of our board of directors are elected at a general shareholders’ meeting and serve two-year terms. They may be reelected, and they are subject to removal at any time by our shareholders. The board of directors shall have a Chairman and one Vice-Chairman, all appointed by the annual shareholders’ meeting. According to the Novo Mercado regulations, at least two or 20.0%, whichever is greater, of the members of the board of directors must be independent directors. Furthermore, the Novo Mercado regulations do not permit the same individual to simultaneously hold the positions of chairman of the board of directors and chief executive officer (or comparable position). See “Item 9. The Offer and Listing—C. Markets—Corporate Governance Practices.”

For more information about our board of directors, see “Item 10. Additional Information—B. Memorandum and Articles of Association—Board of Directors.”

The following table sets forth the name, title, date of last election and date of birth for each current member of our board of directors:

Name	Title	Date of Last Election	Date of Birth
Jean-Charles Henri Naouri	Chairman	October 5, 2020	March 8, 1949
Ronaldo Iabrudi dos Santos Pereira	Vice-Chairman	October 5, 2020	May 14, 1955
Luiz Nelson Guedes de Carvalho⁽¹⁾	Director	October 5, 2020	November 18, 1945
Christophe José Hidalgo	Director	December 31, 2020	October 25, 1967
Philippe Alarcon	Director	December 31, 2020	March 22, 1958
David Julien Emeric Lubek	Director	December 31, 2020	May 15, 1973
Josseline Marie-José Bernadette de Clausade	Director	December 31, 2020	February 19, 1954
José Flávio Ferreira Ramos⁽¹⁾	Director	December 31, 2020	June 5, 1958
Geraldo Luciano Mattos Júnior⁽¹⁾	Director	December 31, 2020	March 8, 1963

(1)

Independent director (as defined under the Novo Mercado regulations).

The term of office of all of our directors will expire at the annual shareholder´s meeting to be held in 2023. None of our directors and officers is party to an employment agreement providing for benefits upon termination of employment, except for those benefits provided by Brazilian labor law.

The following is a summary of the business experience of our directors:

Jean-Charles Henri Naouri. Mr. Naouri has been the chairman of our board of directors since October 2020. He has been a member of the board of directors of CBD since 2005 and its chairman since 2013. Mr. Naouri has also been the chairman and chief executive officer of Casino and president of Casino’s parent company, Euris S.A.S., since 2002. He also serves as chairman of the board of directors of Rallye S.A., chairman of the Euris Foundation, vice-chairman of the Casino Group Corporate Foundation and member of the board of directors of F. Marc de Lacharrière (Fimalac) S.A. He had served as chairman and chief executive officer of Casino Finance until 2017, chairman of the board of directors of CNova N.V. until 2015, chairman of the board of directors of Wilkes Participações until 2015, chief executive officer of Rallye S.A. until 2013, as chairman, chief executive officer, and chairman of the supervisory board of Monoprix S.A. until 2013 and member of the supervisory board of Monoprix S.A. until 2014. In 2013, Mr. Naouri was appointed by France’s Ministry of Foreign Affairs to be a special representative for economic relations with Brazil. From 1982 to 1986, Mr. Naouri served as chief of staff for the Minister of Social Affairs and National Solidarity of France and the Minister of Economy, Finance and Budget of France. Mr. Naouri is a Finance Inspector (Inspecteur des Finances) for the French government. Mr. Naouri holds degrees from École Normale Supérieure and École Nationale d’Administration, a Ph.D. in mathematics, and has studied at Harvard University.

Ronaldo Iabrudi dos Santos Pereira. Mr. Iabrudi has been the vice-chairman of our board of directors since October 2020. He has been a member of the board of directors of CBD since 2016 and its co-vice chairman since 2018. Mr. Iabrudi is also vice-chairman of the board of directors of Cnova and vice-chairman of the board of directors of Cdiscount in the Netherlands. From January 2014 to April 2018, Mr. Iabrudi served as chief executive officer of CBD. Previously, he was the chairman of the boards of directors of Via Varejo S.A., Lupatech S.A., Contax S.A. and Oi/Telemar, and a member of the board of directors of Estácio, Magnesita Refratários S.A., or Magnesita, Cemar, Oi/Telemar, RM Engenharia and Ispamar. He was also chief executive officer of Magnesita from 2007 to 2011 and from 1999 to 2006 he worked for Grupo Telemar, where he held several posts, including chief executive officer of Oi/Telemar and Contax S.A. From 1997 to 1999, Mr. Iabrudi was chief executive officer of FCA (Ferrovia Centro-Atlântica) and from 1984 to 1997, he was chief financial and administrative officer and chief human resources officer at the Gerdau group. Mr. Iabrudi earned a degree in psychology from Pontifícia Universidade Católica de Minas Gerais, a master’s degree in organizational development from Université Paris 1 Panthéon-Sorbonne and a master’s degree in change management from Université Paris Dauphine.

Luiz Nelson Guedes de Carvalho. Mr. Carvalho has been an independent member of our board of directors since October 2020. He has been an independent member of the board of directors of CBD since 2017 and the coordinating member of CBD’s audit committee since 2014, as the accounting and finance specialist. Mr. Carvalho is a Senior Professor at the School of Economy, Business Administration and Accounting (Faculdade de Economia, Administração e Contabilidade) of the Universidade de São Paulo, or FEA USP. He is an advisor of the Brazilian Accounting Pronouncements Committee (Comitê de Pronunciamentos Contábeis), or CPC, and he was a representative of the CPC in the Emerging Economies Group of IASB. He is the former chairman of the board of directors of Petrobrás, having served from September 2015 to December 2018. He was also member of the board of directors of the B3 until March 2019 and chair of its audit committee until March 2018, as its accounting and finance specialist He also served as an independent member of the B3’s sustainability committee. Mr. Carvalho is also a member of the Brazilian Accounting Academy (Academia Brasileira De Ciências Contábeis) and chairs the fiscal council (conselho fiscal) of Fundação Amazonas Sustentável, or FAS, an NGO aiming to protect the Amazon rainforest. He is also a trustee of Fundação Instituto de Pesquisas Contábeis, Atuariais e Financeiras, a not-for-profit academic research organization. He also is a co-arbitrator at the Brazil – Canada Chamber of Commerce (São Paulo) and at the International Chamber of Commerce (Paris). He is a litigation expert in matters involving Financial Accounting, International Accounting, Corporate Governance, Risk Management and Auditing. Previously, Mr. Carvalho has been: chairman of the Committee on Capacity Building in the area of International Financial Reporting of the Intergovernmental Group of Experts in International Standards of Accounting and Reporting, a branch of UNCTAD, United Nations, in Geneva, Switzerland; an independent member of the banking self-regulation committee of the Brazilian Federation of Banks (Federação Brasileira de Bancos); member of the board of directors of FAS, where he currently chairs the fiscal council; a member of the International Integrated Reporting Council (Conselho Internacional para Relatórios Integrados) led by the Prince of Wales; vice-president “at large” of the International Association for Accounting Education and Research - IAAER; he was also a member of the Financial Crisis Advisory Group set out by the U.S. Financial Accounting Standards Board and the IASB in 2008; the first independent chairman of the Standards Advisory Council (Conselho Consultivo de Normas) of the IASB; member of the consultative and advisory group of the International Federation of Accountants (Federação Internacional de Contadores – IFAC); vice-director of the Interamerican Accounting Association; member of the board of directors of Banco Nossa Caixa S.A., Caixa Econômica Federal, Banco Bilbao Vizcaya Argentaria Brasil – BBVA, Banco de Crédito Real de Minas Gerais, Grupo ORSA (pulp and paper), Companhia Müller de Bebidas, Vicunha Têxtil S.A., and Banco Fibra S.A.; he was a member of the audit committees of Banco Nossa Caixa and Vicunha Têxtil; and a member of the internal controls committee of Banco Fibra. Mr. Carvalho was also the regional president of the International Association of Financial Executives Institutes for Central and South America and head of banking supervision at the board of directors of the Central Bank and a commissioner at the CVM. Mr. Carvalho holds bachelor’s degrees in economics from FEA USP and in accounting from Faculdade São Judas Tadeu and master’s and Ph.D. degrees in accounting and controllership from FEA USP.

Christophe José Hidalgo. Mr. Hidalgo has been a member of our board of directors since December 2020. H has as served as CBD’s chief financial officer since 2012, and as CBD’s chief financial officer and investor relations officer since April 2020. Mr. Hidalgo has also been CBD’s corporate services officer since 2012. He joined the Casino Group in 2000, where he has held several positions in finance and controllership, including chief financial officer of Éxito Group from 2010 to 2012. From 1996 to 2000, he served as the chief financial officer of Castorama. Mr. Hidalgo holds a bachelor’s degree in law and a master’s degree in finance and accounting from the Université de Bordeaux.

Philippe Alarcon. Mr. Alarcon has been a member of our board of directors since December 2020. He has been a member of the board of directors of CBD since 2019. Mr. Alarcon has been Casino Group’s international coordinating director since 2011 and has held various positions in Casino Group since joining the Casino Group in 1983. After holding the position of administrator in Casino Group’s Finance Department, he held various positions such as chief financial officer in various subsidiaries of the Group, including industrial subsidiaries, supermarkets and restaurants. He began his international career in Poland, where he held the position of chief financial officer of Casino Poland for 8 years, and then held the position of CEO of Real Estate. In 2015, he returned to France to hold the position of general manager of the Casino Group real estate business until 2011, when he became the Casino Group’s international director. He has also been a member of the board of directors of Éxito Group since 2012, member of the Green Yellow Supervisory Committee and CEO of Mayland Real State in Poland.

David Julien Emeric Lubek. Mr. Lubek has been a member of our board of directors since December 2020. He holds the title of Inspecteur des Finances (Finance Inspector). A graduate of École Polytechnique, he joined the French Ministry of Finance in 2000, holding a variety of management positions in the Budget Department over several years. In 2010, he was named General Audit Director at Groupama. In 2013, he joined the Casino Group as head of Group Controlling Officer, later becoming Deputy Chief Financial Officer.

Josseline Marie-José Bernadette de Clausade. Ms. Clausade has been a member of our board of directors since December 2020. She has also served on the board of directors of Casino Group since 2012. Ms. Clausade’s professional experience includes serving as a member of the Conseil d’Etat, France’s highest administrative body, chief of staff of Georges Kiejman, former junior minister of foreign affairs of France, advisor to the permanent representation of France before the European Union, advisor to Hubert Védrine, former minister of foreign affairs of France, in charge of cultural and scientific matters, and former consul-general of France in Los Angeles. Since 2008, Mr. Clausade has been an executive officer and member of the board of directors of Areva.

José Flávio Ferreira Ramos. Mr. Ramos has been an independent member of our board of directors since December 2020. He worked at Citigroup for 23 years, leaving the bank in 2008. At Citigroup, he served as executive director responsible for the treasury and capital markets groups. From 1998 to 2001, he was an executive director at Citibank Colombia, responsible for treasury and fixed income. In 2008 Mr. Ramos joined the Safra Group as chief executive officer of the Family Office of Mr. Joseph Safra. He was responsible for the Safra family's investments in currencies, fixed income and variable income globally. He was also responsible for the Safra family’s investments in private equity and real estate in Brazil. In 2012, Mr. Ramos joined BR Partners as a senior partner. He was responsible for the implementation of the investment bank acquired by the group in 2012. He became chief executive officer of BR Partners Banco de Investimento S.A. in 2014. In April 2016, Mr. Ramos co-founded ULBREX Asset Management, an investment company dedicated to real estate fund management. He left the company in January 2019 to become chief financial officer of BNDES, Brazil’s National Bank for Economic and Social Development. As chief financial officer of BNDES, he was responsible for the finance and treasury department, the credit department, accounting and controllership areas and the back office. He also served as acting president of the bank. Mr. Ramos left BNDES in September 2019. Currently, Mr. Ramos is Chairman of the Supervisory Board of BSM, the Market Supervision Exchange of the B3 and Independent Board Member of BR Advisory Partners S.A. He also served as a member and chairman of the Board of Directors of BR Properties from 2009 to 2015; a member of the Board of Directors of BMFBOVESPA from 2004 to2007; and Director of ANBIMA (National Association of Capital Markets) from 2002 to 2005. Mr. Ramos holds a bachelor’s degree in business administration with a specialization in finance. He also holds a degree from Centro Universitário UNA in Belo Horizonte.

Geraldo Luciano Mattos Júnior. Mr. Mattos Júnior has been an independent member of our board of directors since December 2020. He worked at the M. Dias Branco Group between 1995 and 2019, having served as Vice-President of Investments and Controllership and Investor Relations Officer. He joined the group in 1995 as Equatorial Bank's Financial Director. In 2000, Mr. Mattos Júnior became Advisor to the Board of Directors of M. Dias Branco, a position he held until 2003, when he was appointed Finance Director. At M. Dias Branco, he coordinated all company acquisition processes, led the company’s 2006 initial public offering on the Novo Mercado segment of the B3 and helped structure the company’s corporate governance. From 1977 to 1995, Mr. Mattos Júnior worked at Banco do Nordeste do Brasil - BNB, where, among other positions, he served as Advisor to the President, Head of the Capital Market Department and Executive Director of Caixa Pension Plan for BNB Employees. From 1994 to 1995, he was seconded to the Government of the State of Ceará, where he worked as Financial and Exchange Director of the Bank of the State of Ceará. Mr. Mattos Júnior serves the board of directors of HAPVIDA and Portobello Ceramics and the advisory council of USIBRAS. Previously, he served on the board of directors of Companhia Industrial de Cimento Apodi, Cotegipe Port Terminal and Companhia de Agua e Esgoto do Ceará - CAGECE. He chairs the HAPVIDA Mergers and Acquisitions Committee. Mr. Mattos Júnior also teaches finance at higher education institutions and private companies. He holds a degree in business administration from the State University of Ceará – UECE, a degree in law from the University of Fortaleza - UNIFOR, and a master’s degree in business administration from the Federal University of Rio de Janeiro (COPPEAD).

Executive Officers

According to our bylaws, our board of executive officers must be composed of three to eight officers, each of whom must be a resident of Brazil, as required by law, but need not own any of our shares. Our executive officers are elected at a meeting of our board of directors for two-year terms, reelection being permitted. Our board of directors may elect to remove officers at any time. Furthermore, the Novo Mercado listing rules do not permit the same individual to simultaneously hold the positions of chairman of the board of directors and chief executive officer (or comparable position). See “Item 9. The Offer and Listing—C. Markets—Corporate Governance Practices and the Novo Mercado.”

For more information about our executive officers, see “Item 10. Additional Information—B. Memorandum and Articles of Association—Executive Officers.”

The following table sets forth the name, title, date of last appointment and date of birth for each of our current executive officers:

Name	Title	Date of Last Appointment	Date of Birth
Belmiro de Figueiredo Gomes	Chief Executive Officer	October 5, 2020	November 8, 1971
Daniela Sabbag Papa	Chief Financial Officer and Investor Relations Officer	October 5, 2020	April 10, 1975
Wlamir dos Anjos	Chief Commercial Officer	October 5, 2020	July 8, 1970
Anderson Barres Castilho	Chief Operating Officer	October 5, 2020	April 21, 1976

The term of office of all of our executive officers will expire at the annual shareholder´s meeting to be held in 2022. None of our executive officers is party to an employment agreement providing for benefits upon termination of employment, except for those benefits provided by Brazilian labor law.

The following is a summary of the business experience of our executive officers.

Belmiro de Figueiredo Gomes. Mr. Gomes has been our chief executive officer since February 2011. Previously, he served as our commercial director. Mr. Gomes has also been an executive officer of CBD and head of its cash and carry business since 2012. He joined CBD in 2010. He has also served as a commercial executive officer and worked in several areas of Atacadão for 22 years. In 2007, Mr. Gomes coordinated the purchase of Atacadão by Carrefour. Since January 2016, Mr. Gomes has served as vice-president of the Brazilian Cash and Carry Association (ABAAS – Associação Brasileira dos Atacadistas de Autosserviço). He studied accounting at Instituto de Educação Estadual de Maringá.

Daniela Sabbag Papa. Ms. Sabbag has been our chief financial officer and investor relations officer since October 2019. She worked at CBD for 27 years, where she served as Investor Relations Officer, director of strategic planning, M&A and new business and a member of the finance team. Ms. Sabbag holds a bachelor’s degree in business administration from Fundação Getúlio Vargas (FGV), a post-graduate degree in management from Universidade de São Paulo and an MBA from FGV.

Wlamir dos Anjos. Mr. dos Anjos has been our chief commercial officer since May 2011. He has more than 32 years of experience in the wholesale sector, having served as regional director of Atacadão from December 1988 to May 2011. Mr. dos Anjos studied marketing management at UNIP – Universidade Paulista and human resources management at FGV.

Anderson Barres Castilho. Mr. Castilho has been our chief operating officer since November 2012. He has more than 28 years of experience in the cash and carry sector, having served as store manager, regional manager and commercial manager for the states of Rio de Janeiro, Espírito Santo, Mato Grosso e Rondônia. Mr. Castilho worked at Atacadão from January 1992 to March 2012. Mr. Castilho studied business management at UNIP – Universidade Paulista.

Board Committees

As of the date of this registration statement, our board of directors has approved the creation of the following five advisory committees: (1) audit committee; (2) human resources, culture and compensation committee; (3) finance committee; (4) corporate governance and sustainability committee; and (5) strategy and investments committee. The responsibilities of our committees are set by their respective internal regulations. The members of each committee will be appointed by our board of directors, and the board of directors also designates the chairman of each advisory committee. The committees may include one member who is external and independent, except for the audit committee, which has specific rules described below. Each special committee is composed of at least three and up to five members for a term of office of two years, reelection being permitted. In addition to these committees, the board of directors may create other committees with special roles.

Audit Committee

Brazilian publicly-held companies may, pursuant to CVM Rule 308, as amended from time to time, adopt a statutory audit committee (comitê de auditoria). According to CVM Rule 308, the audit committee is an advisory body of the board of directors and must have at least three members who shall be appointed by the board of directors, including at least one member who is also a member of the board of directors and not a member of management. A majority of the members must be independent, according to the independence requirements of the CVM. Members of our audit committee are appointed by our board of directors for two-year terms, re-election being permitted, and must meet certain requirements set forth by our bylaws, the audit committee’s internal regulation and the CVM rules.

The main functions of our audit committee are to: (1) suggest amendments to its internal regulation by submitting the proposal to our board of directors; (2) propose the appointment of independent auditors as well as their replacement, being responsible for, at least, (a) giving its opinion on the appointment of the independent auditor to provide any other service to us; and (b) supervising the activities of the independent auditors, in order to assess (i) their independence; (ii) the quality of services provided; and (iii) the suitability of the services provided to our needs; (3) evaluate our quarterly information, financial statements and management report, making the recommendations it deems necessary to our board of directors, being responsible for, at least: (a) monitoring the quality and integrity of the quarterly information, the interim financial statements and the financial statements; and (b) monitoring the quality and integrity of the information and measurements disclosed based on adjusted accounting data and non-accounting data that may add elements not provided for in the usual financial statements reports; (4) monitor the activities of our internal audit and internal controls department; (5) evaluate and monitor our exposure to risk and request detailed information related to (a) management’s compensation; (b) utilization of our assets; and (c) expenses incurred in our behalf; (6) verify if its recommendations are being followed; (7) evaluate the compliance by our management of the recommendations made by the independent and internal audits; (8) evaluate, monitor, and recommend to our board of directors the correction or improvement of our internal policies, including the policy of transactions with related parties; (9) prepare a summarized annual report, to be presented together with the financial statements, which must be kept at our headquarters and available to the CVM, for a period of five years,, including, at least, the following information: (a) meetings held and the main issues that were discussed; (c) description of the recommendations presented to our management and evidence of their implementation; (d) evaluation of the effectiveness of the independent and internal audits; (e) evaluation of the quality of the financial, internal control and risk management reports; and (f) any situations in which there is any significant divergence between our management, the independent auditors and the committee in relation to our financial statements; (10) have the means to receive and handle information regarding non-compliance with legal and regulatory provisions adopted by us, including internal regulation; (11) evaluate and monitor the control and verification mechanisms for compliance with the Brazilian anticorruption law; and (12) opine on any other matters submitted to it by our board of directors, as well as on those that it considers relevant.

Our audit committee is not equivalent to or comparable with a U.S. audit committee. Pursuant to Exchange Act Rule 10A-3(c)(3), which provides for an exemption under the rules of the SEC regarding the audit committees of listed companies, a foreign private issuer, such as us, is not required to have an audit committee equivalent to or comparable with a U.S. audit committee, if the foreign private issuer has a body established and selected pursuant to home country legal or listing provisions expressly requiring or permitting such a body, and if the body meets the requirements that: (1) it be separate from the full board; (2) its members not be elected by management; (3) no executive officer be a member of the body; and (4) home country legal or listing provisions set forth standards for the independence of the members of the body.

As a foreign private issuer, we will to rely on an exemption under Rule 10A-3(c)(3) of the Exchange Act with respect to our audit committee, and we believe that our audit committee complies with the aforementioned exemption requirements.

Because Brazilian corporate law does not permit the board of directors to delegate responsibility for the appointment, retention and compensation of the external independent auditors and does not provide the board of directors with the authority to resolve disagreements between management and the external auditors regarding financial reporting, our audit committee cannot fulfill these functions. Therefore, our audit committee may only make recommendations to the board of directors with respect to these matters.

The following table sets forth the name, title, date of last appointment and date of birth for each member of our audit committee:

Name	Title	Date of Last Election	Date of Birth
Luiz Nelson Guedes de Carvalho⁽¹⁾	Chairman	January 14, 2021	November 18, 1945
Philippe Alarcon	Member	January 14, 2021	March 22, 1958
José Flávio Ferreira Ramos⁽¹⁾	Member	January 14, 2021	June 5, 1958
Heraldo Gilberto de Oliveira	Member	January 14, 2021	May 4, 1964

(1)	Independent member of our board of directors.

The term of office of all of our audit committee members will expire at the annual shareholder´s meeting to be held in 2022.

The following is a summary of the business experience of the members of our audit committee.

Luiz Nelson Guedes de Carvalho. Mr. Carvalho has been a member of our audit committee since January 2021. Please see “—Board of Directors” for his biography.

Philippe Alarcon. Mr. Alarcon has been a member of our audit committee since January 2021. Please see “—Board of Directors” for his biography.

José Flávio Ferreira Ramos. Mr. Ramos has been a member of our audit committee since January 2021. Please see “—Board of Directors” for his biography.

Heraldo Gilberto de Oliveira. Mr. Oliveira has been a member of our audit committee since January 2021. He is an accounting expert and consultant specializing in accounting and tax matters. Currently, Mr. Oliveira holds the following positions: project coordinator of FIPECAFI – Institute of Accounting, Actuarial and Financial Research Foundation (FIPECAFI - Fundação Instituto de Pesquisas Contábeis, Atuariais e Financeiras) since 2014; Central Bank-qualified independent member of the board of directors and chairman of the audit committee of China Construction Bank (Brazil) Banco Múltiplo S.A. since 2009; member of the fiscal councils of Suzano Holding S.A. and IPLF Holding S.A. since 2015; member of the fiscal council of TEVEC Sistemas S.A. since 2016; member of the fiscal council of S.A. Correio Braziliense since 2016; member of the fiscal council of ANEPI - National Association for Research and Development of Innovative Companies (ANPEI - Associação Nacional de Pesquisa e Desenvolvimento das Empresas Inovadoras) since 2016; Mr. Oliveira holds a degree in administration and accounting sciences and a master’s degree in accounting and controllership from the School of Economics, Management, Accounting and Actuarial Sciences at the University of São Paulo (FEA – USP).

Human Resources, Culture and Compensation Committee

Our human resources, culture and compensation committee must be composed of at least three and up to five members. Members are appointed by our board of directors for two-year terms, re-election being permitted, and must meet certain requirements set forth by the committee’s internal regulation.

The main functions of our human resources, culture and compensation committee are to: (1) suggest amendments to its internal regulation by submitting the proposal to our board of directors; (2) discuss and propose to our board of directors our organizational structure; (3) evaluate and propose to our board of directors management and personnel development policies, as well as guidelines for attracting and retaining talent; (4) identify, including within our subsidiaries, potential future leaders and monitor the development of their respective careers; (5) evaluate and discuss the recruitment and hiring methods adopted by us and by our subsidiaries, using similar Brazilian companies as a parameter; (6) analyze the candidates to be elected to as a member of our board of directors and as a member of the board of director’s advisory committees, including independent members, based on their professional experience, technical training, as well as economic, social and cultural representativeness; (7) examine and recommend to our board of directors the candidates selected for our management; (8) evaluate and discuss the compensation policy for members of our management by proposing to our board of directors the criteria for compensation, benefits and other programs, including stock option plans; (9) periodically present to our board of directors its assessment of the effectiveness of the compensation policies adopted by us; (10) discuss and propose to our board of directors the criteria for the annual assessment of our management’s performance, using similar Brazilian companies as a parameter; and (11) other duties that may be designated by our board of directors.

Our human resources, culture and compensation committee is currently composed of Ronaldo Iabrudi dos Santos Pereira (chairman), Christophe José Hidalgo, and José Flávio Ferreira Ramos all of whom are members of our board of directors. Please see “—Board of Directors” for their biographies.

Finance Committee

Our finance committee must be composed of at least three and up to five members. Members are appointed by our board of directors for two-year terms, re-election being permitted, and must meet certain requirements set forth by the committee’s internal regulation.

The main functions of our finance committee are to: (1) suggest amendments to its internal regulation by submitting the proposal to our board of directors; (2) recommend and monitor the adoption of the best economic and financial standards and the process of implementing and maintaining such standards by proposing changes, updates and improvements to our board of directors; (3) analyze and review our budget; (4) analyze and review the economic and financial viability of our investment plans and programs; (5) analyze, review and recommend measures and actions related to any merger and acquisition or any similar transaction involving us or any of our subsidiaries; (6) monitor any transaction and negotiations mentioned in item (5) above; (7) analyze and review the economic and financial ratios, cash flow and indebtedness policy, and suggest changes and adjustments whenever deemed necessary; (8) monitor the average cost of our capital structure and suggest changes, whenever deemed necessary, as well as evaluate and discuss alternatives for attracting new investments; (9) analyze and recommend opportunities in relation to financing transactions that may improve our capital structure, in addition to analyzing and discussing working capital needs and their impacts on our capital structure; (10) assist our board of directors and management in the analysis of the Brazilian and global economic situation and its potential impact on our financial position, as well as in the preparation of scenarios and trends, in the assessment of opportunities and risks and in the definition of strategies to be adopted by us with respect to our financial policy; (11) monitor the trading patterns of our securities in the Brazilian and U.S. markets, as well as the opinions of the main investment analysts; and (12) other duties that may be designated by our board of directors.

Our finance committee is currently composed of Christophe José Hidalgo (chairman), Ronaldo Iabrudi dos Santos Pereira, David Julien Emeric Lubek, Luiz Nelson Guedes de Carvalho, and Geraldo Luciano Mattos Júnior, all of whom are members of our board of directors. Please see “—Board of Directors” for their biographies.

Corporate Governance and Sustainability Committee

Our corporate governance and sustainability committee must be composed of at least three and up to five members. Members are appointed by our board of directors for two-year terms, re-election being permitted, and must meet certain requirements set forth by the committee’s internal regulation.

The main functions of our corporate governance and sustainability committee are to: (1) suggest amendments to its internal regulation by submitting the proposal to our board of directors; (2) recommend and monitor the adoption of the best corporate governance and sustainability practices, as well as coordinate the process of implementing and maintaining such practices and analyze the effectiveness of the corporate governance and sustainability processes, proposing changes, updates and improvements when required; (3) ensure the proper functioning of our board of directors, management and the advisory committees of our board of directors and the relationship between such entities and between them and our shareholders, and, accordingly, periodically review and recommend to our board of directors changes with respect to their corresponding operation and duties; (4) periodically prepare or review, as the case may be, our bylaws, codes and policies, the committee’s internal regulation, as well as any other documents related to our corporate governance; (5) keep our board of directors informed and updated with respect to laws and regulations, as well as monitor the implementation of regulations and recommendations in force and practiced in the market, including in relation to the rules that may be created and that could impact our corporate and capital market activities; (6) draft, submit to our board of directors and periodically review our transactions with related parties policy, as well as all other policies necessary for the adoption of the best management and corporate governance practices; (7) advise our board of directors on all aspects related to sustainability, including with regard to actions aimed at promoting conscious consumption by our customers, suppliers and employees; (8) advise and recommend the adoption of waste management programs, encouraging small producers and food security; (9) acknowledge and analyze the transactions with related parties; (10) opine, at the request of our board of directors or management, with respect to situations that may possibly be considered as conflicts of interest; (11) ensure the operationalization of our risk management; (12) advise our board of directors on the application of our risk management; (13) give support to our board of directors in defining the risks we are able to undertake and their priorities; (14) give support to our board of directors in the analysis and approval of the risk management strategy; (15) advise the audit committee and our board of directors on the levels of risk exposures; (16) evaluate the effectiveness of the risk management process; (17) identify the risks arising from the strategic changes and directives determined by our board of directors; and (18) opine on any other matters submitted to it by our board of directors, as well as on those that it considers relevant.

Our corporate governance and sustainability committee is currently composed of Ronaldo Iabrudi dos Santos Pereira (chairman), Christophe José Hidalgo, Philippe Alarcon and Josseline Marie-José Bernadette de Clausade, all of whom are members of our board of directors. Please see “—Board of Directors” for their biographies.

As of the date of this registration statement, our board of directors has not yet appointed any members to our corporate governance and sustainability committee. Once these members are appointed, we will provide a summary of the business experience of each member.

Strategy and Investments Committee

Our strategy and investments committee must be composed of at least three and up to five members. Members are appointed by our board of directors for two-year terms, re-election being permitted, and must meet certain requirements set forth by the committee’s internal regulation.

The main functions of our strategy and investments committee are to: (1) suggest amendments to its internal regulation by submitting the proposal to our board of directors; (2) recommend and monitor the adoption of the best innovation practices, as well as coordinate the process of implementing and maintaining such practices and analyze the effectiveness of the innovation processes, proposing changes, updates and improvements when required; (3) periodically prepare or review, as the case may be, any documents related to our innovation process; (4) assist our board of directors in the analysis of technological trends and innovations, as well as evaluate our current projects, initiatives and investment proposals; and (5) opine on any other matters submitted to it by our board of directors, as well as on those that it considers relevant.

Our strategy and investments committee is currently composed of Christophe José Hidalgo (chairman), Ronaldo Iabrudi dos Santos Pereira, David Julien Emeric Lubek and Geraldo Luciano Mattos Júnior, all of whom are members of our board of directors. Please see “—Board of Directors” for their biographies.

Fiscal Council

Under the Brazilian Corporate Law, a fiscal council (conselho fiscal) is a separate governance body, independent of management and the independent auditors. The primary responsibility of the fiscal council is to review management’s activities and financial statements and to report their findings to shareholders. The fiscal council is a non-permanent body that, according to our bylaws, may be formed with a minimum of three and a maximum of five members, who must all be residents of Brazil, regardless of whether they are shareholders or not. The fiscal council is required to be appointed at a shareholders’ meeting upon the request of shareholders representing at least 10.0% of our outstanding common shares. As of the date of this registration statement, we have not installed a fiscal council. For more information about the fiscal council, see “Item 10. Additional Information—B. Memorandum and Articles of Association—Fiscal Council.”

Compensation

For the year ended December 31, 2019, the aggregate compensation expense for our executive officers was R$29.8 million (R$15.7 million in fixed compensation, R$8.4 million in variable compensation and R$5.7 million in share-based compensation). Our executive officers receive a package of benefits in line with market practices, including health and dental insurance, biannual medical check-ups, pension plan, life insurance, meal vouchers and purchase discounts. We did not have a board of directors prior to October 2020.

For the year ended December 31, 2020, the aggregate compensation expense for our directors and officers is expected to be R$29.8 million, composed of R$1.0 million for our directors (in fixed compensation) and R$28.8 million for our executive officers (R$13.3 million in fixed compensation, R$10.5 million in variable compensation and R$4.9 million in share-based compensation).

Profit Sharing Plan

CBD has established a profit sharing plan for its management and management of its subsidiaries. The plan and its rules have been approved by CBD’s board of directors, but is not applicable to them. Under the terms of the plan, each member of our management (including our executive officers) who is a beneficiary of the plan is assigned annually a base amount for computation of payments under the profit sharing plan. The individual amount of the profit sharing payment is based on: (1) the consolidated results of Sendas; (2) the results of the business segment or the department, as the case may be and to which the individual belongs; and (3) the individual’s performance. The final amount is determined by multiplying the individual amount by an index applicable to all participants. This index depends on our operating performance. For the year ended December 31, 2019, our executive officers received R$8.4 million in compensation relating to this profit sharing plan.

We expect that following the Spin-Off, our board of directors will approve a similar profit sharing plan for our management, at which time our management will no longer be subject to the CBD profit sharing plan.

Share-Based Compensation

Sendas Share-Based Compensation Plans

At an extraordinary general shareholders’ meeting held on December 31, 2020, CBD, as sole shareholder of Sendas, voted to: (1) approve the creation of a stock option plan, or the Sendas Stock Option Plan; and (2) create a compensation plan for employees based on stock options, or the Sendas Compensation Plan. The Sendas Stock Option Plan and Sendas Compensation Plan are substantially similar to the CBD share-based compensation plans described below under “—CBD Stock Option Plans.”

In addition, in connection with the Spin-Off, each CBD stock option will entitle its holder to receive one Sendas stock option.

General Terms and Conditions

Sendas Stock Option Plan

The Sendas Stock Option Plan is administered by the human resources, culture and compensation committee of our board of directors, which defines the plan’s eligibility criteria and selects recipients based on their functions, responsibilities and performance. Each grant cycle under the Sendas Stock Option Plan is designated with a serial number beginning with the letter “C.”

Our employees and executive managers, as well as the employees and executive managers of our subsidiaries who are considered “key executives,” are eligible to participate in the Sendas Stock Option Plan, subject to the approval of the human resources, culture and compensation committee. Participation in the Sendas Stock Option Plan is independent of other forms of compensation, such as wages and benefits.

Sendas Compensation Plan

The Sendas Compensation Plan is administered by the human resources, culture and compensation committee of our board of directors, which defines the plan’s eligibility criteria and selects recipients based on their functions, responsibilities and performance. Each grant cycle under the Sendas Compensation Plan is designated with a serial number beginning with the letter “B.”

Our employees and executive managers, as well as the employees and executive managers of our subsidiaries who are considered “key executives,” are eligible to participate in the Sendas Compensation Plan, subject to the approval of the human resources, culture and compensation committee. Participation in the Sendas Compensation Plan is independent of other forms of compensation, such as wages and benefits.

Maximum Number of Shares and Options

The total aggregate number of options that may be granted under each of the Sendas Stock Option Plan and the Sendas Compensation Plan, must not exceed 2% of the total number of common shares issued by Sendas, subject to adjustments resulting from stock splits, reverse stock splits and bonuses.

Exercise Price

The exercise price per Sendas common share granted under the Sendas Compensation Plan will correspond to R$0.01.

For each series of options granted under the Sendas Stock Option Plan, the exercise price of each stock option will correspond to 80% of the average of the closing price of the Sendas common shares, in the prior 20 trading sessions of the B3 prior to the date of the meeting of the human resources, culture and compensation committee, in which such options are granted.

Vesting

In general, the stock options granted under the Sendas Stock Option Plan will vest beginning in the 37^th month, following the granting of the stock options.

The options granted under the stock option plans may be exercised in whole or in part.

Restrictions on Transferring Shares

Under the Sendas Stock Option Plan, for a period of 180 days from the date of payment by the participant, the participant will be prohibited from, directly or indirectly, selling, assigning, exchanging, disposing, transferring, granting an option or entering into any instrument or agreement that results or may result in the direct or indirect, onerous or gratuitous, disposition of any or all of such shares. There is no such transfer restriction for the Sendas Compensation Plan.

Outstanding Stock Options

As of the date of this registration statement, no stock options have been granted.

CBD Stock Option Plans

Members of our senior management have been granted equity awards under CBD’s stock options plans described below. Following the conclusion of the Spin-Off, Sendas employees will remain entitled to exercise any CBD stock options they hold pursuant to the terms of each plan.

At an extraordinary general shareholders’ meeting held on May 9, 2014, CBD’s shareholders voted to: (1) approve the creation of a new stock option plan, or the New Stock Option Plan; and (2) create a compensation plan for employees based on stock options, or the Compensation Plan. The New Stock Option Plan and the Compensation Plan originally granted options to purchase preferred shares of CBD (which were recently converted into common shares). The New Stock Option Plan and the Compensation Plan were further amended as a result of the resolutions approved at CBD’s annual and special shareholders’ meeting held on April 24, 2015, April 25, 2019 and December 31, 2019. The December 31, 2019 amendment reflected the changes relating to the conversion of CBD’s preferred shares into common shares, as a result of CBD’s migration to the Novo Mercado listing segment of B3, as approved by CBD’s shareholders on December 31, 2019. Accordingly, as of December 31, 2019, the New Stock Option Plan and the Compensation Plan grant the option to purchase common shares to our employees, including to members of CBD’s board of directors.

General Terms and Conditions

New Stock Option Plan

The New Stock Option Plan is administered by the human resources and compensation committee of CBD’s board of directors, which defines the plan’s eligibility criteria and selects recipients based on their functions, responsibilities and performance. Each grant cycle under the New Stock Option Plan is designated with a serial number beginning with the letter “C.” As of September 30, 2020, the outstanding series of stock options under the New Stock Option Plan were Series C4, C5, C6 and C7.

CBD’s employees and executive managers, as well as the employees and executive managers of our subsidiaries, including our company, who are considered “key executives,” are eligible to participate in the New Stock Option Plan, subject to the approval of the human resources and compensation committee. Participation in the New Stock Option Plan is independent of other forms of compensation, such as wages and benefits.

Compensation Plan

The Compensation Plan is administered by the human resources and compensation committee of CBD’s board of directors, which defines the plan’s eligibility criteria and selects recipients based on their functions, responsibilities and performance. Each grant cycle under the Compensation Plan is designated with a serial number beginning with the letter “B.” As of September 30, 2020, the outstanding series of stock options under the Compensation Plan were Series B4, B5, B6 and B7.

CBD’s employees and executive managers, as well as the employees and executive managers of CBD’s subsidiaries, including our company, who are considered “key executives,” are eligible to participate in the Compensation Plan, subject to the approval of the human resources and compensation committee. Participation in the Compensation Plan is independent of other forms of compensation, such as wages and benefits.

Maximum Number of Shares and Options

The total aggregate number of options that may be granted under each of the New Stock Option Plan and the Compensation Plan, must not exceed 2% of the total number of common shares issued by CBD, subject to adjustments resulting from stock splits, reverse stock splits and bonuses.

Exercise Price

The exercise price per CBD common share granted under the Compensation Plan will correspond to R$0.01.

For each series of options granted under the New Stock Option Plan, the exercise price of each stock option will correspond to 80% of the average of the closing price of the CBD common shares, in the prior 20 trading sessions of the B3 prior to the date of the meeting of the human resources and compensation committee, in which such options are granted. Provided that the exercise price of any CBD stock options issued pursuant to the New Stock Option Plan held by employees of Sendas following the Spin-Off will be adjusted such that the sum of the adjusted exercise price of the CBD stock options and the exercise price of the Sendas stock options shall be equal to the original exercise price of the CBD stock options.

Vesting

In general, the stock options granted under the New Stock Option Plan will vest beginning in the 37^th month, following the granting of the stock options.

The options granted under the stock option plans may be exercised in whole or in part.

Restrictions on Transferring Shares

Under the New Stock Option Plan, for a period of 180 days from the date of payment by the participant, the participant will be prohibited from, directly or indirectly, selling, assigning, exchanging, disposing, transferring, granting an option or entering into any instrument or agreement that results or may result in the direct or indirect, onerous or gratuitous, disposition of any or all of such shares. There is no such transfer restriction for the Compensation Plan.

Outstanding Stock Options

The chart below details the outstanding stock options for the members of our senior management as of September 30, 2020:

Series B4

Series C4

Series B5

Series C5

Series B6

Series C6

Grant date

May 31, 2017

May 31, 2018

May 31, 2019

Number of options granted

45,004

41,673

43,528

Deadline for the options to become exercisable

June 1, 2020

June 1, 2021

June 1, 2022

Deadline for the exercise of the options

November 30, 2020

November 30, 2021

November 30, 2022

Lock-up period

N/A

180 days

N/A

180 days

N/A

180 days

Average weighted exercise price of each of the following groups of shares:

Outstanding in the beginning of the year (in R$ per share)

0.01

56.78

0.01

62.61

0.01

70.62

Lost during the year (R$ per share)

N/A

Exercised during the year (R$ per share)

0.01

56.78

0.01

62.61

0.01

70.62

Expired during the year (R$ per share)

N/A

Fair value of the options on the grant date (in R$ per share)

68.97

30.74

78.52

35.66

82.39

31.50

Potential dilution in case of exercise of the options

N/A

Stock Options Exercised and Shares Delivered

In 2019, 371,102 stock options were exercised by, and an equal number of shares were delivered to, our executive officers.

For the year ended December 31, 2019, our executive officers received R$5.7 million in compensation relating to CBD’s stock option plans.

Pension Plan

In July 2007, CBD established a supplementary private pension plan of defined contribution to its employees, including employees of Sendas, and engaged the financial institution Brasilprev Seguros e Previdência S.A. for management purposes. Sendas provides monthly contributions on behalf of its employees based on services rendered to Sendas. Contributions made by Sendas with respect to employees of Sendas in the year ended December 31, 2019, amounted to R$350 thousand and employees’ contributions amounted to R$160 thousand with four participants as of December 31, 2019. Following the Spin-Off, our employees will continue to participate in this pension plan.

Insurance

CBD maintains officers’ and directors’ liability insurance, covering all of its managers against damages attributed to them in the good faith exercise of their functions, up to a maximum liability of R$134 million. The policy is automatically extended to the management of CBD’s subsidiaries, including our company.

Board Practices

For information about our board practices, including our board committees, see “—A. Directors and Senior Management.”

Employees

As of September 30, 2020, we had 44,712 employees (calculated on a full-time employee equivalent basis) in Brazil. The following table sets forth the number of our employees as of the dates indicated:

	As of September 30,		As of December 31,
	2020		2019		2018		2017
Operational		40,278		36,623		31,551		27,504
Administrative⁽¹⁾		3,973		3,653		3,052		2,792
Technical		461		436		476		222
Total		44,712		40,712		35,079		30,518

(1)

Includes officers, managers and other leaders.

All of our employees are covered by union agreements. The agreements are renegotiated annually as part of industry-wide negotiations between a management group representing the major participants in the food industry, including our management, and unions representing employees in the food industry. Our management believes that our relations with our employees and their unions are good.

We believe we compensate our employees on a competitive basis, and we have developed incentive programs to motivate our employees and reduce employee turnover, which has been reduced from 71.2% in 2011 to 26.2% in 2019. Our turnover rates for the nine-month periods ended September 30, 2020 and the years ended December 31, 2019, 2018 and 2017 were 17.2%, 29.9%, 28.0% and 26.6%, respectively.

We offer our employees more than 300 professional development courses through Assaí University. We also have an online learning platform that offers free courses, skills development and strengthening programs and training in sales, financial management and production, among others. In 2019, we invested R$11.4 million and 2.0 million hours in employee training.

Share Ownership

For information about the share ownership of our directors and officers, see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders.”

ITEM 7.

MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

Major Shareholders

Prior to the Spin-Off

As of the date of this registration statement, we are a wholly-owned subsidiary of CBD.

The following table sets forth information relating to the beneficial ownership of the capital stock of CBD as of January 15, 2021, by each person known by us to beneficially own 5% or more of the CBD common shares.

Shareholder	Common Shares				Total Shares
	Number		%		Number		%
Casino Group:
Wilkes Participações S.A.		94,019,178		35.04		94,019,178		35.04
Geant International B.V.		9,423,742		3.51		9,423,742		3.51
Segisor S.A.S.		5,600,050		2.09		5,600,050		2.09
King LLC		852,000		0.32		852,000		0.32
Helicco Participações Ltda.		581,600		0.22		581,600		0.22
Casino		2		0.00		2		0.00
Total Casino Group⁽¹⁾		110,476,572		41.17		110,476,572		41.17
Nuveen LLC		13,495,892		5.03		13,495,892		5.03
BlackRock, Inc.		13,396,829		4.99		13,396,829		4.99
Treasury shares		239,060		0.09		239,060		0.09
Others		130,743,214		48.72		130,743,214		48.72
Total		268,351,567		100.00		268,351,567		100.00

(1)

The Casino Group is ultimately controlled by Jean-Charles Henri Naouri. Mr. Naouri is the chairman of the board of directors of CBD and Sendas. See “Item 6. Directors, Senior Management and Employees—Directors and Senior Management.”

As of January 15, 2021, CBD had 23,682 record holders in Brazil. On January 15, 2021, 37,995,059 of CBD’s common shares were held in the form of ADSs, representing 14.16% of the total of CBD’s common shares.

As of January 15, 2021, the Casino Group is the beneficial owner of 41.17% of the total capital stock of CBD. See “Item 3. Key Information—D. Risk Factors—Risk Relating to our Industry and Us—The Casino Group has the ability to direct our business and affairs.”

None of our major shareholders have different voting rights.

Following the Spin-Off

The following table sets forth the holders of Sendas common shares and their respective shareholdings immediately following the completion of the Spin-Off, assuming the shareholding structure of CBD immediately prior to the Spin-Off will be the same as its shareholding structure as of January 15, 2021.

Shareholder	Common Shares				Total Shares
	Number		%		Number		%
Casino Group:
Wilkes Participações S.A.		94,019,178		35.04		94,019,178		35.04
Geant International B.V.		9,423,742		3.51		9,423,742		3.51
Segisor S.A.S.		5,600,050		2.09		5,600,050		2.09
King LLC		852,000		0.32		852,000		0.32
Helicco Participações Ltda.		581,600		0.22		581,600		0.22
Casino		2		0.00		2		0.00
Total Casino Group⁽¹⁾		110,476,572		41.17		110,476,572		41.17
Nuveen LLC		13,495,892		5.03		13,495,892		5.03
BlackRock, Inc.		13,396,829		4.99		13,396,829		4.99
Directors and Officers⁽²⁾		691,295		0.26		691,295		0.26
Others		130,290,979		48.55		130,290,979		48.55
Total		268,351,567		100.00		268,351,567		100.00

(1)

(2)

Refers to the amount of Sendas common shares that our directors, including chairman of the board Jean-Charles Henri Naouri, and officers own directly. Mr. Naouri is the ultimate controlling shareholder and beneficial owner of the Casino Group. For more information about our directors and officers, see “Item 6. Directors, Senior Management and Employees—Directors and Senior Management.”

Related Party Transactions

Agreements Related to the Spin-Off

Following the Spin-Off, we and CBD will operate separately, each as an independent public company. In connection with the Spin-Off, we entered into a Separation Agreement and several other agreements with CBD to effect the Separation and provide a framework for our relationship with CBD following the Separation and the Spin-Off. These agreements govern the relationship between CBD and us subsequent to the completion of the Spin-Off and provide for the separation of our assets, employees, liabilities and obligations (including investments, property and employee benefits and tax liabilities) from CBD and are attributable to periods prior to, at and after the Separation.

The material agreements described below have been filed as exhibits to this registration statement. These summaries below are qualified in their entirety by reference to the full text of the applicable agreements.

Separation Agreement

On December 14, 2020, we entered into a Separation Agreement with CBD. The Separation Agreement sets forth our arrangements with CBD regarding the principal actions to be taken in connection with the Separation and the Spin-Off, and matters regarding the operation of the CBD and Sendas businesses post Spin-Off.

Transfer of Assets and Assumption of Liabilities. The Separation Agreement identifies the assets to be transferred, liabilities to be assumed and contracts to be assigned, terminated and/or duplicated to each of CBD and us as part of the internal transactions to be effected prior, during and after the Spin-Off, the purpose of which is to ensure that, as at the time of the Spin-off, each of CBD and Sendas holds the assets which it requires to fully operate.

The Separation Agreement provides for a general description for when and how such transfers, assumptions and assignments will occur, and should be read and constructed together with its ancillary agreements and the Spin-Off protocols, all of which are the legal framework for the transfer of assets and liabilities under Brazilian law.

Conditions. The Separation Agreement will be automatically terminated, pursuant to its terms, if the Spin-Off does not occur by June 30, 2021, and also provides certain conditions to be met for the consummation of the Spin-Off.

Common Agreements. All agreements, arrangements, commitments and understandings with third-parties that contemplate both CBD and us as parties, beneficiaries, guarantors and/or in any way create an obligation to both CBD and us, will terminate as soon as practically feasible after the completion of the Spin-Off, except where such termination could create losses for CBD and us, and therefore will be addressed by the Transition Committee (as defined therein).

Intercompany Arrangements. All agreements, arrangements, commitments and understandings, including most intercompany accounts payable or accounts receivable, between us, on the one hand, and CBD, on the other hand, will be terminated effective as of completion of the Spin-Off, except for specified agreements and arrangements that are intended to survive completion of the separation that are either transaction in nature, at arm’s length or depend of a transitional period due to its complexity.

Transition Committee. Up to 15 days following approval of the Spin-Off at the extraordinary shareholders’ meeting of CBD, CBD and us will create a Transition Committee to deal with matters related to the separation of both businesses, which will be composed of three members appointed by CBD and three members appointed by us. The Transition Committee will have authority to decide on matters relating to the Separation that do not need to be approved by the companies’ board of directors and/or shareholders.

Representations and Warranties. We and CBD each provide customary warranties as to our respective capacity to enter into the Separation Agreement. Except as expressly set forth in the Separation Agreement or any ancillary agreement, neither we nor CBD will make any representation or warranty as to the assets, business or liabilities transferred or assumed as part of the separation, or as to the legal sufficiency of any assignment, document or instrument delivered to convey title to any asset or thing of value to be transferred in connection with the Spin-Off. Except as expressly set forth in the Separation Agreement and certain other ancillary agreements or as provided under the applicable law, all assets will be transferred on an “as is”, “where is” basis.

Indemnification. We and CBD each agree to indemnify the other and each of the other’s directors, officers, managers, members, agents and employees against certain liabilities incurred in connection with the Spin-Off and our and CBD respective businesses. The Separation Agreement provides for indemnification in relation to breaches of the agreement, violation or incorrectness of representation and warranties and in relation to certain other assets and liabilities that are specified for in the Separation Agreement.

Release of Claims. We and CBD each agree to release the other affiliates, successors and assigns, and all persons that prior to completion of the Spin-Off have been the other’s directors, officers, managers, members, agents or employees and their respective heirs, successors and assigns, from any claims against them that arise out of or relate to acts, facts or omissions occurred before the Spin-Off and any acts, facts or omissions that relate to the Separation.

Term/Termination. Prior to the completion of the Spin-Off, CBD will have the unilateral right to terminate the Separation Agreement. Neither we nor CBD may rescind the Separation Agreement in any circumstances whatsoever following the completion of the Spin-Off.

Other Matters. Other matters governed by the Separation Agreement include, without limitation, insurance arrangements, confidentiality, data protection, mutual assistance and information exchange after completion of the Spin-Off, treatment and replacement of cross-guarantees, conduct of litigation and tax matters after the Spin-Off, and transfer of and post-Separation access to certain books and records.

Governing Law. The Separation Agreement is governed by the laws of Brazil.

Employee Matters Agreement

On December 17, 2020, we entered into an Employee Matters Agreement with CBD. The Employee Matters Agreement sets forth our arrangements with CBD, as part of the operational separation in connection with the Spin-Off, regarding the transfer of employees to each of CBD and us, the amendment to CBD’s stock options plan and the creation of new stock options plans for our officers and employees, as well as the arrangements concerning agreements, understandings and/or representations with unions.

Cross-Management Agreement

On December 17, 2020, we entered into a Cross-Management Agreement with CBD. The Cross-Management Agreement sets forth our arrangements with CBD regarding persons that will be part of the board of directors of both companies and sets forth certain indemnity provisions to those individuals in relation to the exercise of their duties within CBD or our management.

Data Protection Agreement

On December 17, 2020, we entered into a Data Protection Agreement with CBD. The Data Protection Agreement sets forth our arrangements with CBD regarding the fulfillment of data protection rules by both parties, the sharing of data between CBD and us and indemnification rules relating to any penalties, damages and/or losses that might result from the non-compliance of data protection rules by any party.

Third-Party Stores Management Agreement

On January 12, 2021, we entered into a Third-Party Stores Management Agreement with CBD. The Third-Party Stores Management sets forth our commitment with CBD regarding the engagement of a subsidiary of CBD to manage certain real estate owned or leased by us which we lease or sublease for different stands within our sites.

Spin-Off Protocols

On December 9, 2020, we entered into the following agreements with CBD, which detail the steps of the Corporate Reorganization, the Separation and the Spin-Off:

●

Partial Spin-Off Protocol of Sendas with Merger of the Spun-Off Portion into CBD, or the Sendas Protocol; and

●

Partial Spin-Off Protocol of CBD with Merger of the Spun-Off Portion into Sendas, or the CBD Protocol. The Sendas Protocol and the CBD Protocol are referred to collectively as the “Spin-Off Protocols.”

Pursuant to the Spin-Off Protocols, we and CBD have agreed to pursue the Corporate Reorganization, the Separation and the Spin-Off, which are subject to certain conditions, as further described in this registration statement. See “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off—Conditions to the Spin-Off” for more detail.

Other Related Party Transactions

From time to time we have entered into transactions with the Casino Group, CBD and other related parties in the ordinary course of our business on an arm’s length basis. The following discussion summarizes certain of the significant agreements and arrangements among us and our related parties. We have a Related Party Transactions Policy which requires that such transactions be at arm’s length and in the interest of our company.

For further details regarding our related party transactions, see note 11 to our unaudited interim condensed consolidated financial statements and note 12 to our audited consolidated financial statements included in this registration statement.

Agreements with the Casino Group

Cost Sharing Agreement

On October 28, 2020, we signed the second amendment to the cost sharing agreement dated August 1, 2014, as amended, among CBD and certain companies of the Casino Group, pursuant to which we have agreed to reimburse the Casino Group for expenses incurred by their employees in connection with activities involving the transfer of “know-how” to us to support our development. These activities involve administrative, financial, advertising, strategic, planning and budgeting aspects, among others. This agreement has an indefinite term and may be terminated by any party thereto with 60 days’ prior written notice.

Agency Agreements

On December 20, 2004, we entered into an agency agreement, later amended on February 23, 2017, with CBD and Casino International S.A., an affiliate of Casino, to regulate the terms pursuant to which Casino International S.A. renders international retail and trade services to us (i.e., negotiation of commercial services with international suppliers).

On July 25, 2016, as amended on January 24, 2017, we, CBD and Groupe Casino Limited, an affiliate of Casino, entered into an agency agreement to regulate the terms under which Groupe Casino Limited renders global sourcing services to us (i.e., procurement of global suppliers and mediation in purchases). We also entered into an agreement with the original counterparties of the agency agreement, pursuant to which Groupe Casino Limited reimbursed us for an amount necessary to provide for margin equalization due the reduction of gains as a result of promotions carried out by us in our stores during 2018.

Agreements with CBD

Cost Sharing Agreement

On December 15, 2016, we entered into a cost sharing agreement with CBD, as amended on December 10, 2018, pursuant to which the terms for sharing infrastructure and human resources between Sendas and CBD were established, including treasury, legal, financial controlling and accounting, human resources operations and real estate. This agreement will expire on December 10, 2021, after which it will be automatically renewed every 12 months absent 90 days’ prior written notice by any party to the contrary. We expect that the functions of this cost sharing agreement will be in large part replaced by the cost sharing agreement with the Casino Group described under “—Agreements with the Casino Group—Cost Sharing Agreement.”.

Agreements with GreenYellow

Photovoltaic Equipment Lease and Maintenance Agreements

We have entered into various agreements with GreenYellow do Brasil Energia e Serviços Ltda., or GY, a Brazilian company controlled by Casino, pursuant to which GY provided for the installation and maintenance of photovoltaic equipment at eight of our Assaí stores. These agreements usually have a term of 25 years. For the lease and rendering of services, GY is remunerated according to a formula that is based on the energy savings generated at each store.

Electric Energy Purchase

On December 31, 2019, we entered into two agreements with Greenyellow Serviços e Comercialização de Energia Ltda., or GY Energia, for the purchase of a total of 275.7 MW of electric energy, for a period of 15 years. GY Energia is remunerated on a monthly basis, according to the amount of energy used by us. On July 29, 2020, these agreements were amended and restated.

Interests of Experts and Counsel

Not applicable.

ITEM 8.

FINANCIAL INFORMATION

Consolidated Statements and Other Financial Information

Reference is made to Item 19 for a list of all financial statements filed as part of this registration statement.

Legal and Administrative Proceedings

For purposes of this section entitled “Legal and Administrative Proceedings,” unless otherwise noted, we have not included information regarding the legal proceedings of the Éxito Group, which were transferred by us to CBD in connection with the Corporate Reorganization on December 31, 2020. For more information about the Corporate Reorganization, see “Item 4. Information on the Company—A. History and Development of the Company—The Spin-Off—Corporate Reorganization.”

We are party to legal and administrative proceedings that are incidental to the normal course of our business. These include general civil, tax and labor litigation and administrative proceedings. We cannot estimate the amount of all potential costs that we may incur or penalties that may be imposed on us other than those amounts for which we have made provisions. See note 20 to our unaudited interim condensed consolidated financial statements and note 21 to our audited consolidated financial statements included in this registration statement.

Based on the advice of our external legal counsel, we have identified and made provisions for the following probable losses that may result from legal and administrative proceedings to which we are a party as of the dates indicated.

	As of September 30, 20		As of December 31,
	2020⁽¹⁾		2019⁽¹⁾
	(in millions of R$)

Tax proceedings⁽²⁾		234		221
Labor proceedings		92		75
Civil proceedings		49		53
Total		375		349

(1)

Includes Éxito Group.

(2)

Includes tax claims related to PIS and COFINS.

Tax Proceedings

Tax proceedings are subject to monthly monetary correction (correção monetária), which involves adjusting the amount of provisions for litigation in accordance with the indexing rates used by each tax jurisdiction. The indexing is required by law for all tax amounts, including the provision for judicial deposits. In certain cases, we are also subject to fines in connection with these proceedings. We have made provisions for interest charges and fines, when applicable.

We are party to tax proceedings that were deemed probable losses by our legal counsel, including: (1) a 2011 disagreement regarding the non-application of Accident Prevention Factor (Fator Acidentário de Prevenção); and (2) a disagreement with the Finance Department of the Brazilian federal government regarding the tax rate of state value added tax known as ICMS, calculated on electricity bills. As of September 30, 2020, we had provisioned R$234 million (R$221 million as of December 31, 2019) with respect to our tax proceedings.

We are also party to several legal and administrative tax proceedings with a possible risk of loss for which we have not recorded provisions. For more information, see “—Contingent Liabilities for Which There Are No Provisions.”

Exclusion of ICMS from the Calculation Basis of PIS and COFINS

We have requested the right to exclude the ICMS amount from the calculation basis of our PIS and COFINS tax liability. On March 15, 2017, the Brazilian Supreme Court (Supremo Tribunal Federal), or STF, ruled in our favor, in accordance with the thesis we presented to the court. Since the judgment of the STF, the procedural steps have been in line with what our legal advisors anticipated.

The prosecution has filed an appeal (embargos de declaração) to this decision and such appeal is still pending judgment. We and our external legal counsel estimate that the final decision related to the application of the effects will not limit the right of the judicial claim proposed by us. Nevertheless, the elements which are still pending a final decision do not allow us to recognize the asset related to the tax credits since the original claim began in 2003. As of September 30, 2020, we estimate a potential tax credit in the amount of R$117 million in connection with this proceeding.

Labor Proceedings

We are party to numerous lawsuits involving disputes with our employees, primarily arising from layoffs in the ordinary course of business. As of September 30, 2020, we had provisioned R$92 million (R$75 million as of December 31, 2019) with respect to our labor proceedings.

Civil Proceedings

We are party to numerous lawsuits involving civil, regulatory, consumer and real estate matters. As of September 30, 2020, we had provisioned R$49 million (R$53 million as of December 31, 2019) with respect to our civil proceedings, including the lawsuits described below.

We file and respond to various lawsuits requesting the review of lease amounts. In these lawsuits, the judge determines a provisional lease amount, which is then paid by the stores until the final lease amount is defined. We recognize a provision for the difference between the original amount paid by the stores and the amounts requested by the opposing party (owner of the property) in the lawsuit, when internal and external legal advisors agree on the likelihood of a change to the lease paid by the entity. As of September 30, 2020, we had recorded provisions for these lawsuits in the amount of R$25 million (R$28 million as of December 31, 2019)

We are party to lawsuits relating to penalties applied by municipal, state and federal regulatory agencies, including the Consumer Protection Agency (Procuradoria de Proteção e Defesa do Consumidor) and National Institute of Metrology, Standardization and Industrial Quality (INMETRO), as well as discussions relating to the termination of agreements with our suppliers. We, with the aid of or internal and external legal advisors, record provisions for the probable cash disbursement we will have to make according to the outcome of these legal proceedings. As of September 30, 2020, we had recorded provisions for these lawsuits in the amount of R$8 million (R$8 million as of December 31, 2019).

Contingent Liabilities for Which There Are No Provisions

We are defendants in several legal and administrative proceedings for which the probability of loss is deemed possible. Accordingly, we do not record provisions in connection with these proceedings, As of September 30, 2020, the aggregate amount involved in our legal and administrative proceedings with a possible risk of loss was R$2,459 million (R$2,406 million as of December 31, 2019). For more information about these legal and administrative proceedings, see note 20.4 to our unaudited interim condensed consolidated financial statements and note 21.4 to our audited consolidated financial statements included in this registration statement.

100

Dividends and Dividend Policy

General

Pursuant to the Brazilian Corporate Law, Brazilian corporations are required to hold an annual shareholders’ meeting in the first four months of each fiscal year to resolve the allocation of the results of operations in any year and the distribution of an annual dividend. Under Brazilian corporate law, shareholders of a Brazilian corporation have the right to receive, as a mandatory dividend for each fiscal year, a part of the corporation’s net profits as established under its bylaws or, if not provided under such bylaws, an amount equal to 50% of the company’s adjusted net profits, calculated pursuant to Brazilian Corporate Law. Currently, Brazilian Corporate Law generally requires that each Brazilian corporation distribute, as a mandatory dividend, an aggregate amount equal to at least 25% of the adjusted net profits, adjusted according to Brazilian Corporate Law. Pursuant to Brazilian Corporate Law, in addition to the mandatory dividend, the board of directors may recommend the payment of interim dividends and payment of dividends from other legally available funds to shareholders. Also pursuant to Brazilian Corporate Law, a Brazilian company is allowed to suspend the distribution of mandatory dividends in any year in which its management reports at its shareholders’ general meeting that the distribution would be incompatible with the company’s financial condition.

Pursuant to our bylaws, we may prepay our dividend distribution on a quarterly basis, subject to approval by our board of directors, at meetings usually held during the first quarter of each fiscal year. At the end of each fiscal year, we pay our shareholders the minimum mandatory dividend, calculated in accordance with Brazilian Corporate Law and our bylaws, less the dividend payments paid in advance during the year. For each of the years ended December 2017, 2018 and 2019, we paid dividends to our shareholders. The approved payments were charged to the minimum mandatory dividend related to the respective fiscal years. See “—History of Payments of Dividends and Interest on Shareholders’ Equity” below.

According to Brazilian Corporate Law and our bylaws, we must pay declared dividends within 60 days after the approval of the distribution of dividends in the shareholders’ meeting.

For further information, see “Item 10. Additional Information—B. Memorandum and Articles of Association—Allocation of Net Profits and Distribution of Dividends—Distribution of Dividends” and “—Interest on Shareholders’ Equity.”

In addition, the instruments governing our first issue of debentures contain restrictive covenants that limit our ability to distribute dividends in excess of the legally required minimum dividend. For further information, see “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources—Indebtedness—Long-Term Indebtedness.”

History of Payments of Dividends and Interest on Shareholders’ Equity

The table below summarizes our history of payments of dividends and interest on shareholders’ equity for the periods indicated. There can be no assurance that we will be able to distribute dividends or interest on shareholders’ equity in the future. See “Item 3. Key Information—D. Risk Factors—Risks Relating to the Sendas Common Shares and the Sendas ADSs—Holders of Sendas common shares and Sendas ADSs may not receive any dividends.”

	For the nine- month period ended September 30,		For the Year Ended December 31,
	2020		2019		2018		2017
	(in millions of R$)
Total dividends distributed		—		247		115		81
Total interest on shareholders’ equity distributed		310		—		—		—

Shareholders who are not residents of Brazil must generally register with the Central Bank to have dividends and/or interest on shareholders’ equity, sales proceeds or other amounts with respect to their shares eligible to be remitted in foreign currency outside of Brazil. See “Item 10. Additional Information—D. Exchange Controls.” The Sendas common shares underlying the Sendas ADSs will be held in Brazil by the Sendas ADS Custodian, as agent for the Sendas Depositary, the registered owner on the records of the Sendas ADS Custodian for the Sendas common shares underlying the Sendas ADSs.

101

Payments of cash dividends and distributions, if any, will be made in Brazilian reais to the Sendas ADS Custodian on behalf of the Sendas Depositary, which will then convert the payments from Brazilian reais into U.S. dollars and thereafter will cause the U.S. dollars to be delivered to the Sendas Depositary for distribution to holders of Sendas ADSs as described above. In the event that the Sendas ADS Custodian is unable to immediately convert the Brazilian reais received as dividends and/or interest on shareholders’ equity into U.S. dollars, the amount of U.S. dollars payable to holders of Sendas ADSs may be adversely affected by any devaluation of the Brazilian real that occurs before the distributions are converted and remitted. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Brazil—Exchange rate volatility may adversely affect the Brazilian economy and us.” Dividends and interest on shareholders’ equity in respect to the shares paid to shareholders, including holders of Sendas ADSs, are subject to the tax treatment outlined in “Item 10. Additional Information—E. Taxation—Material Brazilian Tax Consequences.”

Significant Changes

Other than as disclosed in this registration statement under “Item 4. Information on the Company—A. History and Development of the Company—Recent Developments,” no significant change has occurred since September 30, 2020.

ITEM 9.

THE OFFER AND LISTING

Offer and Listing Details

There is currently no public market for the Sendas common shares or the Sendas ADSs. We have applied to list the Sendas common shares on the Novo Mercado listing segment of the B3 under the ticker symbol “ASAI.”

In connection with the listing of the Sendas common shares on the B3, we will enter into a Novo Mercado Participation Agreement (Contrato de Participação no Novo Mercado) with the B3. Pursuant to the Novo Mercado Participation Agreement, we will undertake to comply with all requirements related to the corporate governance practices set forth by the B3 in order to meet the listing requirements for the listing of the Sendas common shares on the Novo Mercado segment of that exchange, which we refer to as the “Novo Mercado regulations.”

We intend to apply to list the Sendas ADSs on the NYSE under the ticker symbol “ASAI.”

We do not have any other equity securities outstanding apart from our common shares.

Plan of Distribution

Not applicable.

Markets

Trading on the B3

The B3, formerly BM&FBOVESPA, is a Brazilian publicly held company formed in 2008 through the merger of the São Paulo Stock Exchange (Bolsa de Valores de São Paulo) and the Brazilian Mercantile and Futures Exchange (Bolsa de Mercadorias & Futuros). The B3 is one of the largest exchanges in the world in terms of market capitalization, the second in the Americas and the leader in Latin America.

Trading on the B3 is conducted on an automated system known as the PUMA (Plataforma Unificada Multiativos) Trading System every business day, from 10:00 a.m. to 6:00 p.m. or from 11:00 a.m. to 5:00 p.m. during daylight savings time in the United States. Trading is also conducted between 5:30 p.m. and 6:00 p.m., or between 6:30 p.m. and 7:00 p.m. during daylight savings time in the United States, in an “aftermarket” trading session, which is connected to traditional and online brokers. Trading on the “aftermarket” is subject to regulatory limits on price volatility and on the volume of shares transacted through Internet brokers.

102

When investors trade shares on the B3, settlement occurs two business days after the trade date, with no adjustments for inflation. Generally, the seller is expected to deliver the shares to the B3 on the second business day after the trading date. Delivery and payment of shares are made through the facilities of a clearinghouse, the B3 Central Depositary (Central Depositária da B3), which handles the multilateral central counterparty settlement of both financial obligations and transactions involving securities.

To better control the excess of volatility in market conditions, B3 has adopted a “circuit breaker” pursuant to which trading sessions may be suspended for a period of 30 minutes or one hour whenever the stock exchange broad based index falls below the limits of 10% and 15%, respectively, compared to the close of trading of the previous trading session. In the event the stock exchange index falls below the limit of 20% in comparison to the previous trading session, the B3 may suspend trading for a certain period of time to be defined at its sole discretion. The exchange has also adopted single stock trading halts to deal with certain high volatility situations.

Trading on B3 by non-residents of Brazil is subject to certain limitations under Brazilian foreign investment and tax legislation.

Regulation of the Brazilian Securities Markets

The Brazilian securities market is regulated and supervised by the CVM (which has general authority over the stock exchanges and securities markets) as provided for by Law 6,385, dated December 7, 1976, or the Brazilian Securities Exchange Act, and the Brazilian Corporate Law. The Brazilian National Monetary Council (Conselho Monetário Nacional), or CMN, is responsible for supervising the CVM’s activities, granting licenses to brokerage firms to govern their incorporation and operation, and regulating foreign investment and exchange transactions, as provided for by the Brazilian Securities Exchange Act and Law No. 4,595 of December 31, 1964. These laws and regulations provide for, among other things, disclosure requirements to issuers of securities listed on stock exchanges, criminal sanctions for insider trading and price manipulation, protection of minority shareholders, the procedures for licensing and supervising brokerage firms and the governance of Brazilian stock exchanges.

Under Brazilian Corporate Law, a company is either public (companhia aberta), like us, or private (companhia fechada). All public companies are registered with the CVM, and are subject to periodic reporting requirements and the public disclosure of material facts. A company registered with the CVM may have its securities traded either on the B3 or on the Brazilian over-the-counter market. The shares of a company listed on the B3 may also be traded privately, subject to certain limitations. To be listed on the B3, a company must apply for registration with the CVM and with the B3. Trading of securities of a public company on the B3 may be suspended at the request of such company in anticipation of a material announcement. Trading may also be suspended upon the initiative of the B3 or the CVM, based on or due to, among other reasons, a belief that a company has provided inadequate information regarding a material event or has provided inadequate responses to inquiries made by the CVM or the B3.

The Brazilian Securities Exchange Act, Brazilian Corporate Law and the laws and regulations issued by the CVM, the CMN, and the Central Bank provide for, among other matters, disclosure requirements applicable to issuers of traded securities, restrictions on insider trading and price manipulation, protection of minority shareholders, licensing procedures, supervision of brokerage firms, and the governance of the Brazilian stock exchanges.

Corporate Governance Practices

In 2000, the BM&FBOVESPA, currently known as B3, introduced three special listing segments, known as Level 1 (Nível 1) and Level 2 (Nível 2) of differentiated Corporate Governance Practices and the New Market (Novo Mercado), which were amended in April 2011 and, in the case of the Novo Mercado, again in October 2017. These stock market segments have the purpose of prompting public companies to: (1) disclose information to the market and their shareholders in connection with their business in addition to other disclosures required by law; and (2) adopt corporate governance practices, such as best practices for management, transparency standards and protection of minority shareholders. On June 23, 2017, the B3 announced that companies listed on Novo Mercado have approved a proposal to amend the current Novo Mercado regulations. The reform is part of the evolution process of the B3’s special segments, seeking to maintain the value of listed companies in line with currently accepted international corporate governance practices. The new Novo Mercado regulations, approved by the CVM on September 5, 2017, entered into effect in January 2018.

103

Companies listed on the Novo Mercado are voluntarily subject to stricter rules than those provided for under Brazilian Corporate Law, such as requirements to: (1) issue common shares only; (2) maintain a free float of at least 25.0% of their outstanding common shares or at least 15.0% of their outstanding shares for companies that have an average daily trading volume of at least R$25.0 million considering the 12 previous months; (3) provide additional information in their financial statements; (4) agree to adopt and publish (a) a code of conduct that establishes the principles and values that guide the company, (b) a trading policy that applies to the issuer, its controlling shareholder, the members of its board of directors, board of executive officers and fiscal council, as well as the members of other corporate bodies that have a technical or consultative role as may be created from time to time by the company’s bylaws and any employees and third parties hired by the company that have permanent or sparse access to relevant information; (c) a related party transactions policy, (d) a risk management policy, (e) a compensation policy, and (f) a policy that determines the criteria and the proceedings to nominate the management of the Company, and (g) resolve and require the issuer, its shareholders, members of its board of directors, board of executive officers and fiscal council to resolve any and all disputes among them by arbitration before the Chamber of Market Arbitration (Câmara de Arbitragem do Mercado).Moreover, at least two or 20.0%, whichever is greater, of the members of the board of directors must be independent directors. Furthermore, the Novo Mercado regulations do not permit the same individual to simultaneously hold the positions of chairman of the board of directors and chief executive officer (or comparable position), except in the event of a vacancy. Should such vacancy occur, a company must: (1) disclose the accumulation of responsibilities of chairman and chief executive officer in the same person on the business day subsequent to the occurrence of the vacancy; and (2) disclose, within 60 days of the vacancy, the measures taken to fill the position.

In addition, prior to taking office, newly-elected members of the board of directors, board of executive officers and fiscal council (and their respective alternates) of companies listed on the Novo Mercado must adhere to arbitration clauses set forth in the company’s bylaws.

Disclosure Requirements

According to Brazilian Corporate Law and CVM regulations, a public company must submit certain periodic information to the CVM and the B3, including financial statements, quarterly information, management discussion and analysis and independent audit reports. This legislation also requires us to file our shareholders’ agreements, notices of shareholders’ meetings and copies of the related minutes and communications regarding material acts or facts with the CVM and the B3.

The CVM rules also provide for requirements regarding the disclosure and use of information related to material acts or facts, including the disclosure of information in the trading and acquisition of securities issued by publicly held companies.

Such requirements include provisions that:

●

establish the concept of a material act or fact that gives rise to reporting requirements. Material acts or facts include decisions made by the controlling shareholders, resolutions of the general shareholders’ meeting or of the company’s management, or any other political, administrative, technical, financial or economic acts or facts related to the company’s business (whether occurring within the company or otherwise somehow related thereto) that may influence the price of its publicly traded securities, or the decision of investors to trade or maintain such securities or to exercise any of such securities’ underlying rights;

●

specify examples of acts or facts that are considered to be material, which include, among others, the execution of agreements providing for the transfer of control of a public company, the entry or withdrawal of shareholders that maintain any managing, financial, technological or administrative function with or contribution to the company, and any corporate restructuring undertaken among related companies;

104

●

oblige the public company to disclose material acts or facts to the CVM, to the B3 and through the publication of such acts in the newspapers or websites usually utilized by such company;

●

require the acquirer of a controlling stake in a public company to publish a material event, including its intentions as to whether or not to de-list the corporation’s shares within one year;

●

require management, members of the fiscal council, if active, or of any technical or advising body of a public company, to disclose to the company, to the CVM and to the B3 the number, type and form of trading of securities issued by the company, its subsidiaries and controlling public companies that are held by them or by persons closely related to them, and any changes in their respective ownership positions;

●

require that any person who increases or decreases participation in our share capital directly or indirectly by more than 5.0%, 10.0%, 15.0% and so forth of our share capital must disclose information regarding such acquisition or disposition; and

●

forbid trading on the basis of insider information.

Under the terms of CVM Instruction No. 358, dated January 3, 2002, as amended, we may, under exceptional circumstances, submit a request for confidential treatment to the CVM concerning a material act or fact when our controlling shareholders or management consider that such disclosure will pose a risk to the company’s legitimate interest.

Selling Shareholders

Not applicable.

Dilution

Not applicable.

Expenses of the Issue

Not applicable.

ITEM 10.

ADDITIONAL INFORMATION

Share Capital

Pursuant to the Novo Mercado regulations and for so long as we are listed on the Novo Mercado, our share capital must consist exclusively of common shares.

On September 30, 2020, our capital stock was represented by 3,269,992,034 common shares with no par value. On November 10, 2020, CBD as our sole shareholder voted to approve a reverse stock split of Sendas common shares at a ratio of approximately 12-to-1. As a result of this reverse stock split, our capital stock was represented by 268,351,567 common shares.

In connection with the Corporate Reorganization, CBD conducted certain capital increases, as a result of which a total of 18,661,368 Sendas common shares were issued to CBD, resulting in 287,012,935 Sendas common shares issued and outstanding. Following these capital increases, CBD approved a reverse stock split of Sendas common shares such that we currently have 268,351,567 common shares issued and outstanding. In connection with the Spin-Off, all of the issued and outstanding Sendas common shares will be distributed to the holders of CBD common shares, including the CBD ADS Custodian, on a pro rata basis for no consideration, provided that CBD will retain ownership of approximately 165,000 Sendas common shares, representing approximately 0.06% of our capital stock, which is equivalent to the number of CBD common shares expected to be held by CBD in treasury immediately prior to the Spin-Off. For more information about the expected principal shareholders of CBD immediately following the Spin-Off, see “Item 7. Major Shareholders and Related Party Transactions—A. Major Shareholders.”

105

Our board of directors is authorized to increase our capital stock up to the limit of 400,000,000 shares, regardless of any amendment to our bylaws, upon resolution of the board of directors, which will establish the terms and conditions.

Memorandum and Articles of Association

Below is a brief summary of certain significant provisions of our bylaws and the Brazilian Corporate Law. This description does not purport to be complete and is qualified by reference to our bylaws (an English translation of which is attached as an exhibit to this registration statement) and to the Brazilian Corporate Law.

Corporation Objects and Purposes

We are a publicly held corporation with our principal place of business and jurisdiction in the city and state of Rio de Janeiro, Brazil, governed by Brazilian laws (including the Brazilian Corporate Law), CVM and SEC regulations and our bylaws.

Our main business purpose is to sell manufactured, semi-manufactured and natural products of both Brazilian and foreign origin, of any and all kinds and description, nature or quality, provided that they are not forbidden by law. Furthermore, we may also engage in a wide range of activities as set forth in article 2 of our bylaws.

Common Shares

We have applied to list our common shares on the Novo Mercado listing segment of the B3, the highest level of corporate governance of B3.

Pursuant to our bylaws and the Novo Mercado Participation Agreement that will enter into with the B3, we cannot issue shares without voting rights or with restricted voting rights. In addition, our bylaws and the Brazilian Corporate Law provide that holders of our common shares are entitled to dividends or other distributions made in respect of our common shares ratably in accordance with their respective participation in the total amount of our issued and outstanding common shares. See “—Allocation of Net Profits and Distribution of Dividends—Interest on Shareholders’ Equity” for a more complete description of payment of dividends and other distributions on our common shares. In addition, upon our liquidation, holders of our common shares are entitled to share our remaining assets, after payment of all of our liabilities, ratably in accordance with their respective participation in the total amount of our issued and outstanding common shares. Holders of our common shares are not obligated to subscribe to future capital increases and are generally entitled to preemptive rights to subscribe for new shares as provided by the Brazilian Corporate Law. See “—Preemptive Rights on Increases in Share Capital.”

Allocation of Net Profits and Distribution of Dividends

Allocation of Net Profits

At each annual shareholders’ meeting, our board of executive officers and our board of directors is required to recommend how to allocate our net profit, if any, from the preceding fiscal year. This allocation is subject to deliberation by our shareholders.

The Brazilian Corporate Law defines “net profit” for any fiscal year as the net profit of the relevant fiscal year after income and social contribution taxes for that fiscal year, net of any accumulated losses from prior fiscal years and any amounts allocated to employees’ and management’s participation in our net profit in that fiscal year pursuant to our profit sharing plans. Our bylaws allow us to implement a profit-sharing plan for employees and managers and a stock option plan. The amount to be paid in connection with both plans is determined by our board of directors and must not exceed an amount equal to 15% of our net profit. Under the Brazilian Corporate Law, this profit sharing may only be paid to managers with respect to a fiscal year in which the mandatory dividend has been declared.

106

Our calculation of “net profits” and allocations to reserves for any fiscal year are determined on the basis of our financial statements. Our management’s and our shareholders’ discretion to determine the allocation of our net profit is limited by certain rules that determine whether such net profit should be distributed as dividends or allocated to certain profit reserves or carried forward to future fiscal years, as follows:

Mandatory Minimum Dividend. Under the Brazilian Corporate Law and our bylaws, we must allocate a specified percentage of our net income as a mandatory minimum dividend to be paid with respect to all shares of our capital stock. Our bylaws establish the minimum percentage at 25% of our adjusted net profit. The mandatory dividend may be made in the form of dividends or interest attributable to shareholders’ equity, which may be deducted by us in calculating our income and social contribution obligations. Adjusted net profit is net profit following the addition or subtraction of:

●

amounts allocated to the formation of a legal reserve account; and

●

amounts allocated to the formation of a contingency reserve account and the return of any amounts in any contingency reserve accounts deposited in previous years.

The payment of our mandatory dividends may be limited to the profits actually realized in the fiscal year, if the portion of the profits not realized is allocated to the unrealized income reserve account (as described below). The balance of the reserve accounts, except for the contingency reserve account and unrealized profit reserve account, may not exceed our share capital. If this occurs, a shareholders’ meeting must resolve whether the excess will be applied to pay in the subscribed and unpaid capital, to increase and pay in the subscribed share capital or to distribute dividends.

Under the Brazilian Corporate Law, however, we are allowed to suspend the distribution of the mandatory dividends for any year in which our management reports at our shareholders’ general meeting that the distribution would be incompatible with our financial condition. The fiscal council, if in place, must issue its opinion in relation to the suspension. In addition, our management must file a justification for such suspension with the CVM within five days from the date of the relevant general shareholders’ meeting. If the mandatory dividend is not paid, the unpaid amount must be attributed to a special reserve account and, if not absorbed by subsequent losses, those funds must be paid out as dividends as soon as our financial condition permits.

Legal reserve account. Under the Brazilian Corporate Law and our bylaws, we are required to maintain a legal reserve to which we must allocate 5% of our net profit for each fiscal year until the aggregate amount of our legal reserve equals 20% of our share capital. Our legal reserve may only be used to increase our share capital or to offset accumulated losses, if any. We are not required to make any allocations to our legal reserve for any fiscal year in which such reserve, when added to our capital reserves, exceeds 30% of our share capital. The legal reserve account is not available for the payment of dividends.

Contingency reserve account. A portion of our net profit may also be allocated to a contingency reserve for an anticipated loss that is deemed probable in future years. Any amount so allocated in a prior year must either be reversed in the fiscal year for which the loss was anticipated if the loss does not occur or be charged off if the anticipated loss occurs.

Tax incentives reserve account. Our shareholders’ meeting, upon a justified proposal of our board of directors or board of executive officers or according the rules of the benefit granted, may decide to allocate a percentage of our net profit resulting from government donations or subventions for investment purposes to a tax incentives reserve account.

107

Statutory Reserve. Under the Brazilian Corporate Law, our bylaws may create reserves provided that the purpose of the reserve is determined along with the allocation criteria and the maximum amount to be maintained in it. Currently, our bylaws provide for an expansion reserve (reserva de expansão) which will be made of up to 100% of the remaining adjusted net profit after the establishment of the legal reserve account, contingency reserve account and the payment of the mandatory dividend. The total amount of this reserve may not exceed an amount to our share capital. Our shareholders may amend our bylaws in order to establish other discretionary reserves. The allocation of our net profit to discretionary reserve accounts may not be made if it prevents the distribution of our mandatory dividends.

Unrealized profit reserve account. The portion of the mandatory dividends that exceeds the net profit actually realized in any year may be allocated to the unrealized profit reserve account. Unrealized profit is profit resulting from investments measured by the equity method and/or the profits of earnings of any transaction, the financial satisfaction of which takes place in the subsequent fiscal year. The unrealized profit reserve account, when realized, must be used first to offset accumulated losses, if any, and the remaining portion must be used for the payment of mandatory dividends.

Retained profit reserve. Our shareholders can decide to retain a portion of the net profit provided that such portion has been contemplated in the capital budget previously approved by the shareholders.

Distribution of Dividends

Under the Brazilian Corporate Law and our bylaws, we may pay dividends only from:

●

our “net profit” earned in a given fiscal year, which is our results from the relevant fiscal year, reduced by accumulated losses of prior fiscal years; provisions for income tax and social contribution for such fiscal year; and amounts allocated to employees’ and managers’ participation in the results in such fiscal year pursuant to our profit sharing plans. Our bylaws allow us to implement a profit-sharing plan for employees and managers and a stock option plan. The amount to be paid in connection with both plans is determined by our board of directors and must not exceed an amount equal to 15% of our net profit. Under the Brazilian Corporate Law, this profit sharing may only be paid to managers with respect to a fiscal year in which the mandatory dividend has been declared;

●

our net profits accrued in previous fiscal years or in any six-month and/or quarterly interim period of a fiscal year; or

●

our profit reserves set aside in previous fiscal years or in the first six months of a fiscal year. For these purposes, “profit reserves” means any discretionary reserve account, contingency reserve account, amounts allocated to our capital expenditure budget approved by our shareholders’ resolution or unrealized profit reserve account, not including the legal reserve account.

Dividends are generally to be declared at general shareholders’ meetings in accordance with the board of directors’ recommendation. Our board of directors may declare interim dividends to be deducted from the accrued profit recorded in our annual or semiannual financial statements. In addition, our board of directors may pay dividends from the net profit based on our unaudited quarterly financial statements. The interim dividends may be declared and debited to the profit reserve amount registered at the most recent annual or semiannual financial statement. These semiannual or quarterly interim dividends may not exceed the amounts accounted for in our capital reserve accounts. Any payment of interim dividends may be set off against the amount of mandatory dividends relating to the net profit earned in the year the interim dividends were paid.

Under the Brazilian Corporate Law and our bylaws, dividends must be available to the shareholders within 60 days after the date the dividends were declared. The amount is subject to monetary correction (correção monetária), if so, determined by our board of directors.

A shareholder has a three-year period following the dividend payment date to claim a dividend with respect to its shares. After the expiration of that period, we are no longer liable for the payment of such dividend.

108

Interest on Shareholders’ Equity

We are allowed to pay interest on shareholders’ equity as an alternative form of payment to shareholders. We may treat these payments as deductible expenses for income tax and social contribution purposes. Payments of interest on shareholders’ equity may be made at the discretion of our board of directors, subject to the approval of our shareholders in a shareholders’ meeting. The amount distributed to our shareholders as interest on shareholders’ equity, net of any withholding tax, may be included as part of the mandatory distribution. This rate applied in calculating interest attributable to shareholders’ equity cannot exceed the daily pro rata variation of the Long-Term Interest Rate (Taxa de Juros de Longo Prazo), or TJLP, a long-term interest rate, as determined by the Central Bank, from time to time, and cannot exceed, for tax purposes, the greater of (1) 50% of net profit (after deduction of social contribution on net profits, but before taking into account the provision for corporate income tax and the amount of the interest on shareholders’ equity) for the year with respect to which the payment is made; or (2) 50% of the sum of retained profit and profit reserves in the beginning of the period with respect to which the payment is made.

Any payment of interest on common shares to shareholders, whether Brazilian residents or not, including holders of Sendas ADSs, is subject to Brazilian withholding tax at the rate of 15% or at the rate of 25% if the beneficiary is resident or domiciled in a Low or Nil Taxation Jurisdiction (generally a country or location that does not impose income tax or where the maximum income tax rate is lower than 20%, or 17% if certain requirements are met or where the local legislation imposes restrictions on disclosing the shareholding composition or the ownership of the investment). See “—E. Taxation—Material Brazilian Tax Consequences—Material Brazilian Tax Consequences for Non-Resident Holders of Sendas Common Shares and Sendas ADSs—Distribution of Interest on Shareholders’ Equity.” The amount distributed to shareholders as interest on shareholders’ equity, net of any withholding tax, may be included as part of the minimum mandatory dividend. In accordance with applicable law, we are required to pay to shareholders an amount sufficient to ensure that the net amount they receive in respect of interest attributable to shareholders’ equity, after payment of any applicable withholding tax, plus the amount of declared dividends is at least equivalent to the mandatory dividend amount.

Board of Directors

Our board of directors is the main decision-making body responsible for determining the direction of our business operations. Our bylaws outline the general attributes of our board of directors. The members of our board of directors are elected at our shareholders’ meeting. They may be reelected and are subject to removal at any time by our shareholders.

Our board of directors shall ordinarily meet at least six times a year, to review the financial and other results of our company and to review and follow-up of the annual operating plan, and shall extraordinarily meet whenever necessary.

Decisions of the board of directors are made by an affirmative vote of the majority of its members present at a meeting. In accordance with Brazilian Corporations Law, a member of the board of directors is prohibited from voting in any meeting, or participating in any business operation or activity, in which such member has a conflict of interest with the company.

Election of Members of Our Board of Directors

According to the Novo Mercado regulations, at least two or 20.0%, whichever is greater, of the members of the board of directors must be independent directors, meaning that none of these directors: (1) is, directly or indirectly, our controlling shareholder; (2) is subject to the provisions relating to voting rights under a shareholders’ agreement in respect of our Company; (3) has been an employee or director of our Company or of our controlling shareholder; or (4) is a spouse or at least second-degree relative of a controlling shareholder, any executive of our Company or any executive of the controlling shareholder. Furthermore, the Novo Mercado regulations do not permit the same individual to simultaneously hold the positions of chairman of the board of directors and chief executive officer (or comparable position).

109

Brazilian Corporations Law permits the adoption of cumulative voting upon a request by shareholders representing at least 10.0% of our voting capital, according to which each share receives a number of votes corresponding to the number of members of the board of directors. Shareholders holding, individually or jointly, at least 10.0% of our common shares are entitled to vote separately to appoint one director. As prescribed by CVM Instruction No. 282/1998, the threshold to trigger cumulative voting rights may vary from 5.0% to 10.0% of the total voting share capital. Taking into consideration our current capital, shareholders representing 5.0% of our voting share capital may request the adoption of cumulative voting to elect the members of our board of directors. If cumulative voting is not requested, our directors will be elected by the majority vote of the holders of our common shares, in person or represented by a proxy.

In addition, in accordance with the Novo Mercado regulations, prior to taking office, newly-elected members of our board of directors must adhere to arbitration clauses set forth in our bylaws.

Conflict of Interest

Brazilian Corporations Law prohibits any member of our board directors or our executive officers from:

●

performing any charitable act at our expense, except for such reasonable charitable acts for the benefit of our employees or of the community in which we participate, upon approval by the board of directors;

●

receiving, by virtue of his or her position, any direct or indirect personal benefit from third parties without authorization in our bylaws or in a shareholders’ meeting;

●

taking part in a corporate transaction in which he or she has an interest that conflicts with our interests or in the deliberations undertaken by our directors on the matter;

●

borrowing money or property from us or use our property, services or credit for his or her own benefit or for the benefit of a company or third party in which he or she has an interest, without the prior approval at a shareholders’ meetings or of our board of directors;

●

taking advantage of any business opportunity for his or her own benefit or for the benefit of a third party at the expense of the company when he or she learned of such opportunity through his or her position as a director;

●

neglecting to protect our rights by failing to disclose a business opportunity in our interests with a view to exploiting the opportunity for personal gain, or for the benefit of a third party; and

●

acquiring, in order to resell for profit, a good or right that is essential to our business operations, or that we intend to acquire for ourselves.

The compensation of our directors is determined by our shareholders at the annual shareholders’ meeting that approves the previous fiscal year’s financial statements.

In addition, in accordance with the Novo Mercado regulations, prior to taking office, newly-elected board members must adhere to arbitration clauses set forth in our bylaws.

For more information about our board of directors, see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management—Board of Directors.”

Executive Officers

Our executive officers are our legal representatives, and are mainly responsible for our day-to-day management and for implementing the policies and general guidelines established by our board of directors. According to our bylaws, our board of executive officers must be composed of three to eight officers, each of whom must be a resident of Brazil, as required by law. Our executive officers are elected at a meeting of our board of directors for two-year terms, reelection being permitted. Our board of directors may elect to remove officers at any time.

110

In addition, in accordance with the Novo Mercado regulations, prior to taking office, newly-elected executive officers must adhere to arbitration clauses set forth in our bylaws.

For more information about our executive officers, see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management—Executive Officers.”

Fiscal Council

The Brazilian Corporate Law requires our fiscal council (conselho fiscal) to be independent of management and our external independent auditors. The primary responsibility of the fiscal council is to supervise our management’s activities and financial statements and to report their findings to shareholders.

Our fiscal council is a non-permanent body that can be formed with three to five members, and an equal number of alternates, who must all be residents of Brazil.

According to the Brazilian Corporate Law, our fiscal council is required to be appointed at a shareholders’ meeting upon the request of shareholders representing at least 10.0% of our outstanding common shares, and its term ends at the first annual shareholders meeting following its creation. As prescribed by CVM Instruction No. 324/2000, this percentage may be reduced to 8.0% to 2.0% of each company’s voting capital, depending on the company’s capital stock. Taking into consideration our current capital, shareholders representing 2.0% of our voting share capital may request the appointment of the fiscal council. The request to install a fiscal council can be submitted during any shareholders’ meeting, at which time the election of members of the fiscal council would occur.

The fiscal council may not include executive officers or members of the board of directors, or employees of a subsidiary or a company that forms part of the same economic group, or spouses or relatives of any member of our management. Moreover, according to Brazilian Corporate Law, fiscal council members are entitled to at least 10.0% of the average compensation paid to executive officers, excluding benefits, representation fees and profit sharing.

Our fiscal council will be constituted at the request of our shareholders. As of the date of this registration statement, we have not installed a fiscal council.

Board Committees

Audit Committee

Our bylaws provide for a statutory audit committee (comitê de auditoria), which is an advisory body directly associated to our board of directors. The main functions of our audit committee will be to: (1) analyze and monitor the quality and integrity of our quarterly information, financial statements and management report; (2) evaluate the effectiveness and sufficiency of our internal control structure and internal and independent audit processes; (3) acknowledge and analyze transactions with related parties; (4) evaluate and monitor our exposure to risk; (5) propose the appointment of independent auditors as well as their replacement; and (5) prepare the annual report, to be presented jointly with the financial statements. According to our bylaws, our audit committee must be composed of at least three members who shall be appointed by the board of directors, including at least one member who is also a member of the board of directors and not a member of management. A majority of the members must be independent, according to the independence requirements of the CVM.

For more information about our statutory audit committee, see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management—Board Committees—Audit Committee.”

Other Committees

Our board of directors may at any time create additional advisory committees to assist in the performance of its duties. As of the date of this registration statement, our board of directors has approved the creation the following additional committees: (1) human resources, culture and compensation committee; (2) finance committee; (3) corporate governance and sustainability committee; and (4) strategy and investments committee.

111

For more information about our board committees, see “Item 6. Directors, Senior Management and Employees—A. Directors and Senior Management—Board Committees.”

Voting Rights

At our shareholders’ meetings, each common share entitles the holder thereof to one vote. Pursuant to our bylaws and the Novo Mercado Participation Agreement that we will enter into with the B3, we cannot issue shares without voting rights or with restricted voting rights. In addition, our bylaws and the Brazilian Corporate Law provide that holders of our common shares are entitled to dividends or other distributions made in respect of our common shares ratably in accordance with their respective participation in the total amount of our issued and outstanding common shares. See “—Allocation of Net Profits and Distribution of Dividends” for a more complete description of payment of dividends and other distributions on our common shares. In addition, upon our liquidation, holders of our common shares are entitled to share our remaining assets, after payment of all of our liabilities, ratably in accordance with their respective participation in the total amount of our issued and outstanding common shares. Holders of our common shares are not obligated to subscribe to future capital increases and are generally entitled to preemptive rights to subscribe for new shares as provided by the Brazilian Corporate Law. See “—Preemptive Rights on Increases in Share Capital.”

According to the Brazilian Corporate Law, holders of our common shares that are not controlling shareholders and represent at least 10% of our total voting stock will have the right to elect one member of our board of directors. Only shareholders that can prove that they have held the common shares for at least three continuous months immediately prior to the respective general shareholders’ meeting may exercise such right.

The Brazilian Corporate Law permits the adoption of cumulative voting upon a request by shareholders representing at least 10% of our voting capital. CVM Instruction No. 282, of June 26, 1998, allows the minimum voting capital percentage required for the adoption of the cumulative vote in publicly held companies to be reduced from 10% to as low as 5% depending on the value of the company’s capital stock. Taking into consideration our current capital stock, shareholders representing 5% of the voting capital may request the adoption of cumulative voting to elect the members of our board of directors.

According to the Brazilian Corporate Law, neither our bylaws nor actions taken at a shareholders’ meeting may deprive a shareholder of the following rights:

●

the right to participate in the distribution of profits;

●

the right to participate equally and ratably in any remaining residual assets in the event of liquidation of our company;

●

preemptive rights in the event of the issuance of shares, convertible debentures or warrants, except in certain specific circumstances under Brazilian law described under “—Preemptive Rights on Increases in Share Capital;”

●

the right to supervise our management in accordance with the provisions of the Brazilian Corporate Law; and

●

the right to withdraw from our company in the cases specified in the Brazilian Corporate Law, which are described under “—Withdrawal Rights.”

Shareholders’ Meetings

Pursuant to the Brazilian Corporate Law, our shareholders are generally empowered at our shareholders’ meetings to take any action relating to our corporate purposes and to pass resolutions that they deem necessary to our interests and development at duly called and convened general meetings. Shareholders at our annual shareholders’ meeting, which is required to be held during the first four months following the end of our fiscal year, have the exclusive right to approve our audited financial statements and to determine the allocation of our net profits and the distribution of dividends with respect to the fiscal year ended immediately prior to the relevant shareholders’ meeting and to elect the members of our board of directors and fiscal council, as the case may be.

112

An extraordinary shareholders’ meeting may be held concurrently with the annual shareholders’ meeting and at other times during the year whenever necessary. Pursuant to our bylaws and the Brazilian Corporate Law, the following actions, among others, may be taken only at a shareholders’ meeting:

●

the amendment of our bylaws;

●

the appointment or removal of members of our board of directors;

●

the appointment or removal of the Chairman or the Co-Vice Chairmen of our board of directors;

●

the approval of annual management’s accounts and our annual financial statements;

●

the approval of any issuance of shares, bonuses, debentures convertible into our shares or securities or other rights or interests which are convertible or exchangeable into or exercisable for our shares, without limiting the authorization granted to our board of directors to approve such issuances within the limit of our authorized capital (400,000,000 common shares);

●

the approval of any appraisals of assets offered by a shareholder in consideration for the subscription of shares of our capital stock;

●

the approval of any proposal to change our corporate, amalgamate, merge our company with or into another company, spin-off or split our company, or any other form of restructuring of our company;

●

the approval of any proposal for the dissolution or liquidation of our company, or for the appointment or replacement of the liquidator;

●

the approval of the accounts of the liquidator; and

●

the establishment of the global annual compensation of the members of our board of directors and board of executive officers.

Call of Shareholders’ Meeting

The Chairman of our board of directors may call shareholders’ meetings. In his absence, the meeting may be called by any of the Co-Vice Chairmen of our board of directors or, in their absence, by an Officer appointed by the Chairman of our board of directors. Pursuant to the Brazilian Corporate Law, shareholders’ meetings also may be called by:

●

any shareholder, if our management fails to call a shareholders’ meeting within 60 days after the date which it is required to do so under applicable law and our bylaws;

●

shareholders holding at least five percent of our shares, if our management fails to call a meeting within eight days after receipt of a justified request to call the meeting by those shareholders indicating the proposed agenda;

●

shareholders holding at least five percent of our shares if our management fails to call a meeting within eight days after receipt of a request to call the meeting for the creation of the fiscal council; and

●

our fiscal council, if one is created, if our management fails to call an annual shareholders’ meeting within one month after the date it is required to do so under applicable law and our bylaws. The fiscal council may also call an extraordinary general shareholders’ meeting if it believes that there are important or urgent matters to be addressed.

113

Notice of our Shareholders’ Meetings

Under the Brazilian Corporate Law, notice of our shareholders’ meetings must be published at least three times in the Diário Oficial do Estado do Rio de Janeiro, the official newspaper of the state of Rio de Janeiro, and in another widely circulated newspaper in the same state, which is currently Monitor Mercantil. Such notice must contain the agenda for the meeting and, in the case of an amendment to our bylaws, a summary of the proposed amendment. The first notice must be published no later than 15 days before the date of the meeting on the first call, and no later than eight days before the date of the meeting on the second call. However, in certain circumstances, the CVM may require that the first notice be published no later than 30 days before the date of the meeting. In addition, upon request of any shareholder, the CVM may suspend for up to 15 days the required prior notice of an extraordinary shareholders’ meeting so that the CVM may become familiar with and analyze the proposals to be voted upon at the meeting and, as the case may be, inform our company at the end of this period the reasons that any proposal submitted to the shareholder violates applicable legislation.

Conditions of Admission to Shareholders’ Meeting

Shareholders attending a shareholders’ meeting must produce proof of their status as shareholders and proof that they hold the common shares that they intend to vote. A shareholder may be represented at a shareholders’ meeting by a proxy appointed less than a year before, which must be a shareholder, a corporate officer, a lawyer or a financial institution. An investment fund must be represented by its investment fund officer or a proxy.

Quorum and Voting at Shareholders’ Meeting

Generally, the Brazilian Corporate Law provides that the quorum for our shareholders’ meetings consists of shareholders representing at least 25% of our issued and outstanding common shares on the first call and, if that quorum is not reached, any percentage on the second call. If a shareholders’ meeting is called to amend our bylaws, a quorum at that shareholders’ meeting consists of shareholders representing at least two-thirds of our issued and outstanding common shares on the first call and any percentage on the second call.

As a general rule, the affirmative vote of shareholders representing at least the majority of our issued and outstanding common shares present in person or represented by proxy at a shareholders’ meeting is required in order to ratify any proposed action, and abstentions are not taken into account. However, the affirmative vote of shareholders representing more than one-half of our issued and outstanding common shares is required in order to, among other things:

●

reduce the percentage of mandatory dividends;

●

change our corporate purpose;

●

consolidate with or merge our company with or into another company;

●

spin off a portion of our assets or liabilities;

●

approve our participation in a group of companies (as defined in the Brazilian Corporate Law);

●

apply for cancellation of any voluntary liquidation;

●

merge all of our shares into another Brazilian company, so that we become a wholly-owned subsidiary of such company; and

●

approve our dissolution.

114

Remote Voting

In accordance with CVM Instruction No. 561, dated April 7, 2015, upon becoming a category “A” publicly-held company in Brazil, we plan to allow our shareholders to submit voting ballots before each shareholders’ meeting. Pursuant to CVM Instruction No. 481, as amended, dated December 17, 2009, we must receive a shareholder’s remote voting ballot (boletim de voto à distância) up to seven days before the applicable shareholders’ meeting. We will inform each shareholder within three days of receipt of the remote voting ballot whether the documents received are sufficient for the vote to be considered valid.

Preemptive Rights on Increases in Share Capital

Under the Brazilian Corporate Law, each shareholder has a general preemptive right to subscribe for shares in any capital increase, in proportion to its shareholding, except in the event of the grant and exercise of any option to acquire shares of our capital stock under our stock option plans. A shareholder has a general preemptive right to subscribe for debentures convertible into our shares and subscription warrants that we may issue. A minimum period of 30 days following the publication of the notice of a capital increase must be respected to exercise this right, except if otherwise determined by the bylaws or a shareholders’ meeting. This right is negotiable.

Our board of directors is authorized to eliminate preemptive rights with respect to the issuance of shares, debentures convertible into shares and subscription warrants, provided that the distribution of such shares is effected (i) through a stock exchange or in a public offering; or (ii) through an exchange of shares in a public offering, the purpose of which is to acquire control of another company.

In the event of a capital increase, which maintains or increases the proportion of capital, holders of ADSs may, under the circumstances described above, exercise preemptive rights to subscribe for newly issued shares. In the event of a capital increase which would reduce the proportion of capital, holders of ADSs may, under the circumstances described above, have preemptive rights to subscribe for shares in proportion to their shareholdings. For risks associated with preemptive rights, see “Item 3. Key Information—D. Risk Factors—Risks Relating to the Sendas Common Shares and the Sendas ADSs—You might be unable to exercise preemptive rights with respect to the Sendas common shares underlying the Sendas ADSs, as a result of which your investment may be diluted.”

Withdrawal Rights

Our common shares are not redeemable. Any of our shareholders who dissent from certain actions taken by our shareholders in a shareholders’ meeting have the right to withdraw from our company and to receive the value of their common shares. According to the Brazilian Corporate Law, the withdrawal rights of a dissenting shareholder may be exercised in the event that the shareholders’ meeting approves the following matters:

●

a reduction in the percentage of mandatory dividends;

●

a change in our corporate purposes;

●

the merger of all of our shares into another Brazilian company, so that we become a wholly-owned subsidiary of such company or vice versa;

●

our merger into or with another company, including if we are merged into one of our controlling companies, or are consolidated with another company;

●

our participation in a group of companies as defined under the Brazilian Corporate Law and subject to the conditions set forth therein;

●

the conversion of our company to another corporate form; and

115

●

a spin-off of our company if it entails (1) a change in our corporate purpose, (2) a reduction in mandatory dividends, or (3) our participation in a group of companies as defined under the Brazilian Corporate Law.

Withdrawal rights may not be exercised in the event of:

●

the merger of all of our shares into another Brazilian company, so that we become a wholly-owned subsidiary of such company or vice versa;

●

our merger into or with another company, including if we are merged into one of our controlling companies, or are consolidated with another company; and

●

our participation in a group of companies as defined under the Brazilian Corporate Law and subject to the conditions set forth therein,

if our shares (1) are “liquid,” which means that they are part of the IBOVESPA Index or another traded stock exchange index, as defined by the CVM, and (2) are widely held, such that our controlling shareholders and their affiliates hold less than 50% of the type or class of shares that are being withdrawn.

Dissenting shareholders also have a right of withdrawal in the event that the entity resulting from (1) a merger of all of our shares into another company so that we become a wholly-owned subsidiary of such company; (2) a spin-off; or (3) a merger or a consolidation of a Brazilian publicly listed company, fails to become a Brazilian publicly listed company within 120 days of the general shareholders’ meeting in which such decision was taken.

The right to withdraw lapses 30 days after publication of the minutes of the relevant shareholders’ meeting. We are entitled to reconsider any action giving rise to withdrawal rights within 10 days following the expiration of this period if we determine that the withdrawal of shares of dissenting shareholders would jeopardize our financial stability.

Any shareholder that exercises withdrawal rights is entitled to receive book value for its shares, based on our most recent audited balance sheet approved by our shareholders. However, if the resolution giving rise to the withdrawal rights is adopted more than 60 days after the date of our most recent audited approved balance sheet, a shareholder may request that its shares be valued on the basis of a special balance sheet dated no more than 60 days prior to the date of the adoption of the resolution. In such case, we are obligated to immediately pay 80% of the book value of the shares according to our most recent audited approved balance sheet, and the balance must be paid within 120 days after the date of the resolution of the shareholders’ meeting that gave rise to withdrawal rights.

Form and Transfer of Shares

Our shares are in book-entry form, and the transfer of such shares is made by the registrar in our books, by debiting the share account of the transferor and crediting the share account of the transferee. We maintain book entry form services with a custodian, which performs all of the services of safekeeping and transfer of our shares and related services.

Transfer of shares by a foreign investor is made in the same way and is requested by the investor’s local agent on the investor’s behalf. If the original investment is registered with the Central Bank pursuant to CMN Resolution 373, the foreign investor should also seek amendment of the electronic registration to reflect the new ownership through its local agent, if necessary.

The B3 has a department responsible for clearing (Central Depositária B3), which is also responsible for settlement and custody of the shares. The payment of dividends, bonuses and other corporate events is also managed by the Central Depositary (Central Depositária).

116

Other Dispositions

In addition to the provisions already described in this registration statement, the Brazilian Corporate Law, our bylaws, and current regulations set forth, among others, that:

●

upon a sale of control, the acquirer is required to launch a tender offer to purchase all minority voting shares at a price equal to at least 100% of the control price;

●

if provided for in the bylaws, as it is our case, disputes among shareholders will be subject to arbitration;

●

upon the occurrence of a tender offer aiming at delisting our company or through which our controlling shareholders acquire more than one-third of the float shares, the purchase price will be equal to the fair value of the shares taking into account the total number of outstanding shares;

●

members of our board of directors elected by the non-controlling shareholders will have the right to veto the choice of the independent auditor made by the members elected by the controlling shareholders;

●

the chairman of any shareholders’ or board of directors’ meeting may disregard any vote that is rendered against provisions of any shareholders’ agreement if that shareholders’ agreement has been duly filed with us.

We are required to be represented either: (i) jointly by two executive officers; (ii) by two attorneys-in-fact; (iii) by one executive officer and one attorney-in-fact; or (iv) by one executive officer or one attorney-in-fact, in special circumstances and always in accordance with the powers provided to each.

In case of acts that entail any kind of acquisition, sale, disposal or creation of any lien on any of our assets, including any real estate, as well as, for the granting of powers-of-attorney for the practice of such acts, we are required to be represented either: (i) jointly by two executive officers; (ii) by two attorneys-in-fact; (iii) by one executive officer and one attorney-in-fact of whom one must always be the chief executive officer; or (iv) an attorney-in-fact duly appointed by two executive officers of whom one must be the chief executive officer.

Sale of Control of Our Company

In the event of a sale of our company’s corporate control directly or indirectly, through single or successive transactions, the acquirer must conduct a public tender offer to buy all of the shares held by the remaining shareholders in order to assure equal treatment of all shareholders (tag-along right). The tender offer will be subject to the terms and conditions terms set forth under applicable laws and the rules of the Novo Mercado.

Acquisition of a Significant Equity Interest in our Company

Our bylaws contain provisions that have the effect of avoiding concentration of our shares in the hands of a small group of investors, in order to promote more widespread ownership of our shares. These provisions require any person, shareholder or Group of Shareholders (as defined in Article 40 of our bylaws) that acquires, whether through a single transaction or through a series of transactions:

●

direct or indirect ownership more than 25% of our shares (excluding treasury shares); or

●

any other shareholders rights, including usufructuary enjoyment or establishment of a trust, concerning more than 25% of our shares (excluding treasury shares) (each, a “Significant Equity Interest”)

to, within 30 days from the date of such acquisition, commence a public tender offer to purchase any and all of our outstanding shares in accordance with the regulations of the CVM and B3 and our bylaws. The purchase price offered in the tender offer must be not less than the greater of:

●

the economic value of our company, determined pursuant to Article 40 of our bylaws;

117

●

the highest price paid by the acquiring person, shareholder or Group of Shareholders during the 12 months prior to the acquisition of the Significant Equity Interest; and

●

125% of the weighted average unit price of the common shares during the period of 120 trading sessions prior to the commencement of the tender offer.

The obligation to commence a tender offer will not apply to a person, shareholder or Group of Shareholders that acquires a Significant Equity Interest:

●

as a result of a merger of our company with another company or a merger of shares of another company into our company;

●

if our company purchases another company through a private increase in corporate capital or subscription of shares by primary offering by any person who has pre-emption rights;

●

if our company purchases another company through a private increase in corporate capital or subscription of shares by primary offering due to the lack of full payment by any person who has pre-emption rights or did not have enough interested parties in the respective offer; or

●

in the event of a public offering (including a public offering with restricted selling efforts).

Involuntary increases of equity interest resulting from cancellation of treasury shares, repurchases of shares by our company or capital reductions with cancellation of shares will not be considered in the calculation of a Significant Equity Interest.

The commencement of a public tender offer by the holder of a Significant Equity Interest does not prevent any other person from commencing a competing public tender offer in accordance with applicable regulations.

The obligation of the holder of a Significant Equity Interest to commence a public tender offer may be waived in a general shareholders’ meeting by the affirmative vote of a majority of our outstanding shares present in such meeting, excluding shares held by the holder of a Significant Equity Interest. The quorum requirement for a general shareholders’ meeting called to deliberate on such a waiver is a minimum of 2/3 of our outstanding shares, excluding shares held by the holder of a Significant Equity Interest, on first call, and any number of our outstanding shares on a subsequent call.

Arbitration

In accordance with our bylaws, we, our shareholders, directors, officers and members of our fiscal council, effective or alternates, if any, agree to resolve through arbitration before the Market Arbitration Chamber (Câmara de Arbitragem do Mercado) of the B3 any disputes or controversies that may arise between us relating to or arising from our status as issuer, shareholders, directors, officers or members of the fiscal council, especially arising from the provisions established in the Law 6,385, of December 7, 1976, in the Brazilian Corporate Law, in our bylaws, in the regulation issued by the CMN, the Central Bank and the CVM, as well as in any regulation applicable to the operation of capital markets in general, in addition to those contained in the Novo Mercado regulations, other regulations of the B3, and the Novo Mercado Participation Agreement.

118

Material Contracts

Cost Sharing Agreement with Casino

For information regarding our cost sharing agreement with Casino, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions––Other Related Party Transactions—Agreements with the Casino Group—Cost Sharing Agreement.”

Cost Sharing Agreement with CBD

For information regarding our cost sharing agreement with CBD, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions––Other Related Party Transactions—Agreements with CBD—Cost Sharing Agreement.”

Agreements with GreenYellow

For information regarding our photovoltaic equipment lease and maintenance agreements and our electric energy purchase agreements with GreenYellow, see “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions––Other Related Party Transactions—Agreements with GreenYellow.”

Exchange Controls

The ownership of common shares by individuals or legal entities domiciled outside Brazil is subject to certain conditions established under Brazilian law.

The right to convert dividend payments and proceeds from the sale of common shares into foreign currency and to remit those amounts outside Brazil is subject to exchange control restrictions and foreign investment legislation which generally requires, among other things, obtaining an electronic registration with the Central Bank.

CMN Resolution No. 4,373, dated as of September 29, 2014, provides for the issuance of depositary receipts in foreign markets with respect to shares of Brazilian issuers.

An electronic registration is issued in the name of the depositary with respect to the ADSs and is maintained by the custodian on behalf of the depositary.

This electronic registration is carried out through the Central Bank’s system (Sistema do Banco Central), or SISBACEN, a database of information provided by financial institutions to the Central Bank. Pursuant to the electronic registration, the custodian is able to convert dividends and other distributions, with respect to the common shares represented by the ADSs, into foreign currency and remit the proceeds outside Brazil. In the event that a holder of ADSs exchanges those ADSs for common shares, that holder will be entitled to continue to rely on the depositary’s electronic registration for only five business days after that exchange, after which time that holder must seek to obtain its own electronic registration. Thereafter, unless the common shares are held pursuant to CMN Resolution No. 4,373, a holder of common shares who applies for and obtains a new electronic registration may not be able to obtain and remit abroad U.S. dollars or other foreign currencies upon disposal of the common shares, or distributions with respect thereto, and generally will be subject to less favorable tax treatment on the proceeds arising from any sale of common shares. In addition, if the foreign investor is domiciled in a Low or Nil Taxation Jurisdiction (as defined under “—E. Taxation—Material Brazilian Tax Consequences”), the investor will also be subject to less favorable tax treatment, even if its registry before the Central Bank is in accordance with the provisions of CMN Resolution No. 4,373. See “—E. Taxation—Material Brazilian Tax Consequences.”

Under CMN Resolution No. 4,373, foreign investors may invest in almost all financial assets and engage in almost all transactions available in the Brazilian financial and capital markets, provided that the requirements described below are fulfilled. In accordance with CMN Resolution 4,373, the definition of foreign investor includes individuals, legal entities, mutual funds and other collective investment entities domiciled or headquartered outside Brazil.

119

Pursuant to CMN Resolution No. 4,373, foreign investors must fulfill the following requirements before engaging in financial transactions:

●

appoint at least one representative in Brazil with powers to perform actions relating to the foreign investment;

●

appoint an authorized custodian in Brazil for the investments, which must be a financial institution duly authorized by the Central Bank and the CVM;

●

complete the appropriate foreign investor registration form;

●

through its representative, register as a foreign investor with the CVM; and

●

In addition, an investor operating under the provisions of CMN Resolution No. 4,373 must be registered with the Brazilian Internal Revenue Service (Receita Federal do Brasil) pursuant to Normative Ruling No. 1,863/2018, as amended, which also provides specific obligations regarding the disclosure of information on individuals authorized to legally represent a foreign investor in Brazil as well as the chain of corporate interest up to the individual deemed as their ultimate beneficiary or up to one of the entities mentioned in the corresponding legislation, which includes publicly-held companies domiciled in Brazil.

This registration process is undertaken by the investor’s legal representative in Brazil. Non-Brazilian investors should consult their own tax advisors regarding the consequences of Normative Ruling No. 1,863/2018.

Securities and other financial assets held by foreign investors pursuant to CMN Resolution No. 4,373 must be registered or maintained in deposit accounts or under the custody of an entity duly licensed by the Central Bank or the CVM. In addition, securities trading is restricted to transactions carried out on stock exchanges or through organized over-the-counter markets licensed by the CVM, except for subscription, bonification, conversion of debentures into common shares, securities indexes, purchase and sale of investment funds quotas and, if permitted by the CVM, going private transactions, canceling or suspension of trading, public offerings of securities, etc., as detailed by CVM Instruction No. 560, dated March 27, 2015. Moreover, the offshore transfer or assignment of the securities or other financial assets held by foreign investors pursuant to CMN Resolution No. 4,373 is prohibited, except for transfers resulting from a corporate reorganization, or occurring upon the death of an investor by operation of law or will.

Investors under CMN Resolution No. 4,373 who are not resident in a Low or Nil Taxation Jurisdiction (i.e., a country that does not impose income tax or where the maximum income tax rate is lower than 20%) are entitled to favorable tax treatment.

Foreign investors may also invest directly under Law No. 4,131/1962, and may sell their shares in both private and open market transactions, but these investors are subject to less favorable tax treatment on gains than investors under CMN Resolution No. 4,373. A foreign direct investor under Law No. 4,131/1962 must: (1) register as a foreign direct investor with the Central Bank; (2) obtain a Brazilian identification number from the Brazilian tax authorities; (3) appoint a tax representative in Brazil; and (4) appoint a representative in Brazil for service of process in respect of suits based on Brazilian Corporate Law. For additional information on Brazilian tax consequences of investing in the Sendas common shares, see “—E. Taxation—Material Brazilian Tax Consequences.”

Taxation

The following discussion contains a description of the material Brazilian and U.S. federal income tax consequences of the Spin-Off, as well as the acquisition, ownership and disposition of the Sendas common shares or the Sendas ADSs. The following discussion is not intended to constitute a complete analysis of all tax consequences relating to the Spin-Off or the acquisition, ownership and disposition of our common shares. You should consult your own tax advisor concerning the tax consequences of your particular situation, as well as any tax consequences that may arise under the laws of any state, local, foreign or other taxing jurisdiction.

120

Material Brazilian Tax Consequences

The following discussion describes the material Brazilian tax consequences relating to: (1) the Spin-Off for (i) persons that are not domiciled in Brazil for tax purposes (“Non-Resident Holders”) and (ii) persons that are domiciled in Brazil for tax purposes, as defined by the applicable Brazilian tax legislation (“Brazilian Resident Holders”); and (2) the purchase, ownership and disposal of Sendas common shares and Sendas ADSs by Non-Resident Holders.

It does not purport to be a comprehensive discussion of all the tax consequences that may be relevant to these matters, and it is not applicable to all categories of investors, some of which may be subject to special tax rules not specifically addressed herein. It is based upon the tax laws of Brazil, in effect as of the date of this registration statement, which are subject to change and to differing interpretations. Any change in the applicable Brazilian laws and regulations may impact the consequences described below.

The tax consequences described below do not take into account tax treaties entered into by Brazil and other countries. The discussion also does not address any tax consequences under the tax laws of any state or locality of Brazil, except if otherwise stated herein.

Although there is presently no income tax treaty between Brazil and the United States, the tax authorities of the two countries have had discussions that may culminate in such a treaty. No assurance can be given, however, as to whether or when a tax treaty will enter into force or how such a treaty would affect a U.S. holder of Sendas common shares or Sendas ADSs.

You are advised to consult your own tax advisor with respect to the Spin-Off or an investment in Sendas common shares or Sendas ADSs in light of your particular investment circumstances.

Material Brazilian Tax Consequences Relating to the Spin-Off

In connection with the Spin-Off, Non-Resident Holders and Brazilian Resident Holders of CBD common shares will receive Sendas common shares, and Non-Resident Holders of CBD ADSs will receive Sendas ADSs in return of the spun-off equity of CBD.

Based on Brazilian legislation, as the Spin-Off will be implemented by CBD at book value, no income tax should apply to Non-Resident Holders or Brazilian Resident Holders of CBD common shares that receive Sendas common shares as a consequence of the Spin-Off. In addition, no income tax should apply to Non-Resident Holders of CBD ADSs that receive Sendas ADSs as a consequence of the Spin-Off.

In this context, considering the value of the spun-off equity compared to the current equity value of CBD, Non-Resident Holders and Brazilian Resident Holders would allocate part of their acquisition cost in CBD common shares or CBD ADSs to Sendas common shares or Sendas ADSs, as the case may be, reducing their acquisition cost on CBD common shares or CBD ADSs, as the case may be. Despite the above interpretation, given the lack of precedent on the matter and in light of the general and unclear scope of regulations dealing with the subject, it is not possible to predict which position will ultimately prevail in the courts of Brazil.

With respect to Non-Resident Holders of CBD ADSs, there are arguments to sustain that no capital gain should be imposed in Brazil for the Non-Resident Holder of CBD ADSs as CBD ADSs could not fall into the concept of assets located in Brazil. As such, the law in Brazil on non-taxation of such an asset is not clear in the legislation and a different interpretation might be taken by the authorities and the courts of Brazil.

Non Resident Holders and Brazilian Resident Holders should consult their own tax advisors with respect to all income tax implications on the Spin-Off, including the detailed rules related to its imposition and form of calculation and collection, as well as any other tax effect that might apply as a result of any particular circumstance.

121

Material Brazilian Tax Consequences for Non-Resident Holders of Sendas Common Shares and Sendas ADSs

The following discussion summarizes the main Brazilian tax consequences applicable to the purchase, ownership and disposal of Sendas common shares or Sendas ADSs by a Non-Resident Holder.

Taxation of Dividends

Dividends paid by a Brazilian corporation, such as the us, to a Non-Brazilian Holder of common shares or ADSs are currently not subject to withholding income tax (“WHT”) in Brazil to the extent that such amounts are related to profits generated on or after January 1, 1996. Dividends paid from profits generated before January 1, 1996 may be subject to WHT at variable rates, according to the tax legislation applicable to each corresponding year.

Law No. 11,638, dated December 28, 2007 (“Law No. 11,638”) significantly changed the Brazilian Corporate Law in order to align Brazilian generally accepted accounting principles with IFRS. Nonetheless, Law No. 11,941, dated May 27, 2009, introduced the Transitory Tax Regime (“RTT”), in order to render neutral, from a tax perspective, all the changes provided by Law No. 11,638. Under the RTT, for tax purposes, legal entities should observe the accounting methods and criteria that were effective on December 31, 2007.

Profits determined pursuant to Law No. 11,638 (“IFRS Profits”), may differ from the profits calculated pursuant to the accounting methods and criteria as effective on December 31, 2007 (“2007 Profits”).

While it was general market practice to distribute exempted dividends with reference to the IFRS Profits, Rule No. 1,397, issued by the Brazilian tax authorities on September 16, 2013, established that legal entities should observe the 2007 Profits in order to determine the amount of profits that could be distributed as exempted income to their beneficiaries.

Any profits paid in excess of said 2007 Profits (“Excess Dividends”), should, in the tax authorities’ view and in the specific case of Non-Resident Holders, be subject to the following rules of taxation: (1) 15.0% WHT, in case of beneficiaries domiciled abroad, but not in a Low or Nil Tax Jurisdiction, and (2) 25.0% WHT, in the case of beneficiaries domiciled in a Low or Nil Tax Jurisdiction.

In order to mitigate potential disputes on the subject, Law No. 12,973, dated May 13, 2014 (“Law No. 12, 973”), in addition to revoking the RTT, introduced a new set of tax rules (the “New Brazilian Tax Regime”), including new provisions with respect to Excess Dividends. Under these new provisions: (1) Excess Dividends related to profits assessed from 2008 to 2013 are exempt; (2) potential disputes remain concerning the Excess Dividends related to 2014 profits, since Law No. 12,973 has not expressly excluded those amounts from taxation and Rule No. 1,492, issued by the Brazilian tax authorities on September 17, 2014, established they are subject to taxation when distributed by companies which have not elected to apply the New Brazilian Tax Regime in 2014; and (3) as of 2015, as the New Brazilian Tax Regime is mandatory and has completely replaced the RTT, dividends calculated based on IFRS Profits should be considered fully exempt.

Finally, there is currently legislation pending before the Brazilian Congress discussing the taxation of dividends. It is not possible to predict if the taxation of dividends will be effectively approved by the Brazilian Congress and how such taxation would be implemented.

Distribution of Interest on Shareholders’ Equity

Law No. 9,249, dated December 26, 1995, as amended, allows a Brazilian corporation, such as us, to make payments to shareholders of interest on shareholders’ equity as an alternative to carrying out dividend distributions and treat those payments as a deductible expense for the purposes of calculating Brazilian corporate income tax and social contribution on net income.

122

For tax purposes, this interest is limited to the daily variation of the pro rata variation of the long term interest rate as determined by the Central Bank from time to time applied to certain equity accounts, and the amount of the distribution may not exceed the greater of:

●

50% of net income (after the deduction of the social contribution on net income and before taking into account the provision for corporate income tax and the amounts attributable to shareholders as interest on shareholders’ equity) for the period in respect of which the payment is made; or

●

50% of the sum of retained profits and profits reserves for the year prior to the year in respect of which the payment is made.

Payments of interest on shareholders’ equity to a Non-Resident Holder are subject to WHT at the rate of 15.0%, or 25.0% if the Non-Resident Holder is domiciled in a Low or Nil Tax Jurisdiction.

These payments may be included, at their net value, as part of any mandatory dividend. To the extent that such payments are accounted for as part of the mandatory dividend, under current Brazilian law, we are obliged to distribute to shareholders an additional amount sufficient to ensure that the net amount received by the shareholders, after payment by us of applicable WHT, plus the amount of declared dividends, is at least equal to the mandatory dividend. The distribution of interest on shareholders’ equity must be proposed by our board of directors and is subject to subsequent ratification by the shareholders at the shareholders’ meeting.

Capital Gains

Sale of Sendas ADSs

According to Law No. 10,833, dated December 29, 2003 (“Law No. 10,833”), capital gains earned on the disposal of assets located in Brazil by a Non-Resident Holder, whether to another Non-Resident Holder or to a Brazilian Resident Holder are subject to taxation in Brazil.

Our understanding is that ADSs do not qualify as assets located in Brazil for the purposes of Law No. 10,833 because they represent securities issued and renegotiated in an offshore exchange market and, therefore, should not be subject to the Brazilian WHT. However, considering the lack of any judicial court ruling in respect thereto, we cannot assure you of how tax authorities and Brazilian courts would interpret the definition of assets located in Brazil in connection with the taxation of gains realized by a Non-Resident Holder on the disposal of Sendas ADSs to another Non-Resident Holder. If the Sendas ADSs are deemed to be assets located in Brazil, gains recognized by a Non-Resident Holder from the sale or other disposition to either a non-resident or a resident in Brazil may be subject to income tax in Brazil as further described below.

Conversion of Sendas ADS into Sendas Common Shares

Although there is no clear regulatory guidance, the cancellation of Sendas ADSs and receipt of the underlying Sendas common shares should not subject a Non-Resident Holder to Brazilian tax. Non-Resident Holders may cancel their Sendas ADSs, receive the underlying Sendas common shares, sell such Sendas common shares on a Brazilian stock exchange and remit abroad the proceeds of the sale, according to the regulations of the Central Bank.

Upon receipt of the underlying Sendas common shares upon the cancellation of Sendas ADSs, a Non-Resident Holder may also elect to register with the Central Bank the U.S. dollar value of such Sendas common shares as a foreign portfolio investment under Resolution No. 4,373, which will entitle them to the tax treatment described below.

Alternatively, a Non-Resident Holder is also entitled to register with the Central Bank the U.S. dollar value of such Sendas common shares as a foreign direct investment under Law No. 4,131/62, in which case the respective sale would be subject to the tax treatment applicable to transactions carried out of by a Non-Resident Holder that is not registered before Brazil’s Central Bank and CVM in accordance with Resolution No. 4,373.

123

Sale of Sendas Common Shares

Capital gains assessed on a Non-Resident Holder on the disposition of Sendas common shares carried out on a Brazilian stock exchange are:

●

exempt from income tax when realized by a Non-Resident Holder that: (1) has registered its investment in Brazil with the Central Bank under the rules of CMN Resolution No. 4,373(a “4,373 Holder”); and (2) is not resident or domiciled in a Low or Nil Tax Jurisdiction;

●

subject to income tax at a rate of 15.0% in the case of gains realized by a Non-Resident Holder that: (1) is a 4,373 Holder; and (2) is resident or domiciled in a Low or Nil Tax Jurisdiction. In this case, a withholding income tax of 0.005% of the sale value shall be applicable and withheld by the intermediary institution (i.e., a broker) that receives the order directly from the Non-Resident Holder, which can be later offset against any income tax due on the capital gain earned by the Non-Resident Holder; or

●

subject to income tax at a rate of up to 25.0% in the case of gains realized by a Non-Resident Holder that: (1) is not a 4,373 holder; and (2) is resident or domiciled in a Low or Nil Tax Jurisdiction. In this case, a withholding income tax of 0.005% of the sale value shall be applicable and withheld by the intermediary institution (i.e., a broker) that receives the order directly from the Non-Resident Holder, which can be later offset against any income tax due on the capital gain earned by the Non-Resident Holder.

Any other gains assessed on a sale or disposition of Sendas common shares that is not carried out on a Brazilian stock exchange are subject to: (1) income tax at a rate ranging from 15.0% up to 22.5% when realized by a Non-Resident Holder that (A) has registered its investment as a foreign direct investment under Law No. 4,131/62 (a “4,131 Holder”); and (B) is not resident or domiciled in a Low Tax Jurisdiction; and (2) income tax at a rate of 25.0% when realized by a 4,131 Holder that is domiciled or resident in a Low Tax Jurisdiction. If these gains are related to transactions conducted on the Brazilian non-organized over-the-counter market with intermediation, a WHT of 0.005% on the sale value will also apply and can be used to offset the income tax due on the capital gain.

Under Brazilian legislation, there are legal grounds to support that the disposition of shares of a Brazilian entity by a 4,373 Holder outside the Brazilian stock exchange should be subject to a rate of 15.0%. This is mainly because Section 81 of Law No. 8,981, dated January 20, 1995, as extended by Section 16 Provisional Measure 2,189-49/01, provides for a Special Tax Regime to 4,373 Holders by means of which: (1) capital gains earned by 4,373 Holders are exempt, to the extent capital gains are considered to be the positive results obtained from transactions carried out on the stock exchange; and (2) in all other cases applies the taxation at the 15.0% WHT rate. Notwithstanding, Brazilian custodian agents usually do not accept this view and require the tax treatment applicable to 4,131 Holders (i.e., progressive WHT rates ranging from 15.0% up to 22.5%) on disposition of Brazilian assets carried out outside the stock exchange. There is a Ruling surrounding the matter, but it still leaves room for interpretation. Administrative and judicial precedents are inexistent.

Any exercise of preemptive rights relating to Sendas common shares or Sendas ADSs will not be subject to Brazilian withholding income tax. Any gain on the sale or assignment of preemptive rights relating to Sendas common shares by the Sendas Depositary on behalf of holders of Sendas ADSs will be subject to Brazilian income taxation according to the same rules applicable to the sale or disposal of Sendas common shares.

In the case of a redemption of common shares or a capital reduction by a Brazilian corporation, such as us, the positive difference between the amount received by a Non-Resident Holder and the acquisition cost of the common shares redeemed, including common shares underlying common ADSs, is treated as a capital gain derived from the sale or exchange of shares not carried out on a Brazilian stock exchange market, and is therefore subject to income tax at the specific rates detailed above, depending on the nature of the investment and the location of the investor.

As a general rule, the gains realized as a result of the disposal of common shares, including these underlying common ADSs, is the positive difference between the amount realized on the sale or exchange of the common shares and their acquisition cost.

There is no assurance that the current preferential treatment for a Non-Resident Holder of Sendas ADSs and a 4,373 Holder of Sendas common shares will continue or that it will not change in the future.

124

Conversion of Sendas Common Shares into Sendas ADSs

The deposit of Sendas common shares into the Sendas ADS program and issuance of Sendas ADSs may subject a Non-Resident Holder to Brazilian income tax on capital gains if the amount previously registered with the Central Bank as a foreign investment in Sendas common shares or, in the case of other market investors under Resolution No. 4,373, the acquisition cost of the Sendas common shares, as the case may be, is lower than:

●

the average price per Sendas common share on the B3 on the day of deposit; or

●

if no Sendas common shares were sold on that day, the average price on the B3 during the 15 preceding trading sessions.

The difference between the amount previously registered, or the acquisition cost, as the case may be, and the average price of the Sendas common shares, calculated as set forth above, is considered a capital gain.

Discussion on Low or Nil Taxation Jurisdictions

On June 4, 2010, the Brazilian tax authorities enacted Normative Ruling No. 1,037 listing: (1) the countries and jurisdictions considered as Low or Nil Taxation Jurisdictions or where the local legislation does not allow access to information related to the shareholding composition of legal entities, to their ownership or to the identity of the effective beneficiary of the income attributed to non-residents; and (2) the privileged tax regimes, which definition is provided by Law No. 11,727, of June 23, 2008 (“Law No. 11,727”).

A Low or Nil Taxation Jurisdiction is a country or location that: (1) does not impose taxation on income; (2) imposes income tax at a maximum rate lower than 20.0%; or (3) imposes restrictions on the disclosure of shareholding composition or the ownership of the investment. A regulation issued by the Brazilian tax authorities on November 28, 2014 (Ordinance No. 488, of 2014) decreased, from 20.0% to 17.0%, the minimum threshold for certain specific cases. The reduced 17.0% threshold applies only to countries and regimes aligned with international standards of fiscal transparency in accordance with rules to be established by the Brazilian tax authorities. Although Ordinance No. 488 has lowered the threshold rate, Normative Ruling No. 1,037, which identifies the countries considered to be Low or Nil Tax Jurisdictions and the locations considered as privileged tax regimes, has not been amended yet to reflect such threshold modification.

Law No. 11,727 created the concept of “privileged tax regimes,” which encompasses the countries and jurisdictions that: (1) do not tax income or tax it at a maximum rate lower than 20.0%; (2) grant tax advantages to a non-resident entity or individual (a) without the need to carry out a substantial economic activity in the country or jurisdiction, or (b) conditioned to the non-exercise of a substantial economic activity in the country or jurisdiction; (3) do not tax or tax proceeds generated abroad at a maximum rate lower than 20.0%; or (4) restrict the ownership disclosure of assets and ownership right or restrict disclosure about economic transactions carried out. Although we believe that the best interpretation of the current tax legislation is that the above mentioned “privileged tax regime” concept should apply solely for purposes of Brazilian transfer pricing and thin capitalization rules, among other rules that make express reference to the concepts, we can provide no assurance that tax authorities will not interpret the rules as applicable also to a Non-Resident Holder on payments of interest on shareholders’ equity.

Currently, the understanding of the Brazilian tax authorities is that the rate of 15.0% of WHT applies to payments made to beneficiaries resident in privileged tax regimes (Answer to Advance Tax Ruling Request COSIT No. 575, of December 20, 2017). In any case, if Brazilian tax authorities determine that payments made to a Non-Resident Holder under a privileged tax regime are subject to the same rules applicable to payments made to Non-Resident Holders located in a Low or Nil Tax Jurisdictions, the withholding income tax applicable to such payments could be assessed at a rate up to 25.0%.

We recommend investors to consult their own tax advisors from time to time to verify any possible tax consequence arising from Normative Ruling No. 1,037 and Law No. 11,727. If the Brazilian tax authorities determine that payments made to a Non-Resident Holder are considered to be made under a “privileged tax regime,” the WHT applicable to such payments could be assessed at a rate of up to 25.0%.

125

Other Brazilian Taxes

There are no Brazilian federal inheritance, gift or succession taxes applicable to the ownership, transfer or disposal of Sendas common shares or Sendas ADSs by a Non-Resident Holder. Gift and inheritance taxes, however, may be levied by some states on gifts made to or inheritances bestowed by the Non-Resident Holder on individuals or entities resident or domiciled within such states in Brazil. There is no Brazilian stamp, issue, registration or similar taxes or duties payable by a Non-Resident Holder of Sendas common shares or Sendas ADSs.

Taxation of Foreign Exchange Transactions (IOF/Exchange)

Pursuant to Decree No. 6,306/07, the conversion into foreign currency or the conversion into Brazilian currency of the proceeds received or remitted by a Brazilian entity from a foreign investment in the Brazilian securities market, including those in connection with the investment by a Non-Resident Holder in common shares and common ADSs, may be subject to the Tax on Foreign Exchange Transactions (“IOF/Exchange”). Currently, the applicable rate for almost all foreign currency exchange transactions is 0.38%. Currently, foreign currency exchange transactions carried out for the inflow of funds in Brazil for investment in the Brazilian financial and capital market made by a foreign investor (including a Non-Resident Holder, as applicable) are subject to IOF/Exchange at a 0% rate. The IOF/Exchange rate will also be 0% for the outflow of resources from Brazil related to these types of investments, including payments of dividends and interest on shareholders’ equity and the repatriation of funds invested in the Brazilian market. Furthermore, the IOF/Exchange is currently levied at a 0% rate for the conversion of ADSs into common shares held by foreign investors under the 4,373 Holders regime. In any case, the Brazilian government is permitted to increase the rate to a maximum of 25% at any time, with respect to future transactions. Any increase in the rate would not apply retroactively.

Tax on Bonds and Securities Transactions (IOF/Bonds)

Pursuant to Decree 6,306/07, the Tax on Bonds and Securities Transactions (“IOF/Bonds”), may be imposed on any transaction involving bonds and securities even if the transactions are performed on a Brazilian stock exchange. The rate of this tax for transactions involving common shares is currently 0%, but the Brazilian government may increase such rate up to 1.5% per day, with respect to future transactions. Currently, the issuance of depositary receipts traded outside of Brazil which underlying shares are issued by a Brazilian company and listed on a Brazilian stock exchange are also subject to IOF/Bonds at the 0% rate. Any increase in the rate would not apply retroactively.

Material U.S. Federal Income Tax Consequences

In General

The following is a discussion of the material U.S. federal income tax consequences generally applicable to U.S. Holders (as defined below) of: (1) the Spin-Off; and (2) owning and disposing of the Sendas common shares or the Sendas ADSs (the “Sendas Shares”) received in the Spin-Off, based on the description of the Transaction set forth herein. This discussion is based on the U.S. Internal Revenue Code of 1986, as amended (the “Code”), the U.S. Treasury Regulations promulgated thereunder, administrative guidance and court decisions, in each case as of the date hereof, all of which are subject to change, possibly with retroactive effect, and to differing interpretations. This discussion addresses only those holders that hold their CBD common shares or CBD ADSs (the “CBD Shares”), and will hold their Sendas Shares received in the Spin-Off, as “capital assets” within the meaning of Section 1221 of the Code (generally, property held for investment). This discussion does not address any aspect of non-U.S. tax law or U.S state, local, alternative minimum, estate, gift or other tax law that may be applicable to a holder. This discussion does not constitute tax advice and does not address all aspects of U.S. federal income taxation that may be relevant to particular holders of CBD Shares or Sendas Shares in light of their personal circumstances, or to any holders subject to special treatment under the Code, such as:

●

banks, mutual funds and other financial institutions;

●

real estate investment trusts and regulated investment companies;

126

●

traders in securities who elect to apply a mark-to-market method of accounting;

●

tax-exempt organizations or governmental organizations;

●

insurance companies;

●

dealers or brokers in securities or foreign currency;

●

individual retirement and other deferred accounts;

●

U.S. Holders whose functional currency is not the U.S. dollar;

●

U.S. expatriates and former citizens or long-term residents of the United States;

●

“passive foreign investment companies” or “controlled foreign corporations,” and corporations that accumulate earnings to avoid U.S. federal income tax;

●

persons subject to the alternative minimum tax;

●

U.S. Holders who own or are deemed to own 10% or more (by vote or value) of CBD’s or Sendas’s voting stock;

●

persons who hold their shares as part of a straddle, hedging, conversion, constructive sale or other risk reduction transaction;

●

persons who purchase or sell their shares as part of a wash sale for tax purposes;

●

“S corporations,” partnerships or other entities or arrangements classified as partnerships for U.S. federal income tax purposes, or other pass-through entities (and investors therein); and

●

persons who received their shares through the exercise of employee stock options or otherwise as compensation or through a tax-qualified retirement plan.

For purposes of this discussion, a “U.S. Holder” means a beneficial owner of CBD Shares or, after the completion of the Spin-Off, Sendas Shares, that for U.S. federal income tax purposes is:

●

an individual who is a citizen or resident of the United States;

●

a corporation (or other entity taxable as a corporation for U.S. federal income tax purposes) created or organized in the United States, any state thereof or the District of Columbia;

●

an estate the income of which is subject to U.S. federal income taxation regardless of its source; or

●

a trust if (i) a court within the United States is able to exercise primary supervision over the administration of the trust and one or more U.S. persons have the authority to control all substantial decisions of the trust, or (ii) the trust has a valid election in effect under applicable U.S. Treasury Regulations to be treated as a U.S. person for U.S. federal income tax purposes.

If a partnership, including for this purpose any arrangement or entity that is treated as a partnership for U.S. federal income tax purposes, holds CBD Shares or, after the completion of the Spin-Off, Sendas Shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. A holder that is a partnership for U.S. federal income tax purposes and the partners in such partnership are urged to consult their tax advisors about the U.S. federal income tax consequences of the Spin-Off and the ownership and disposition of Sendas Shares.

127

In order for the Spin-Off to qualify as a tax-free distribution to U.S. Holders under the U.S. tax rules, the Spin-Off must meet numerous requirements. CBD intends to take the position, and this discussion assumes, that the Spin-Off more likely than not will qualify as a tax-free distribution to U.S. Holders for U.S. federal income tax purposes. CBD does not intend to request any ruling from the IRS as to the U.S. federal income tax consequences of the Spin-Off. No assurance can be given that the IRS will not challenge the conclusions reflected herein or that a court would not sustain such a challenge. This discussion addresses the consequences to a U.S. Holder if the Spin-Off qualifies as a tax-free distribution or if the Spin-Off does not qualify as a tax-free distribution.

This discussion is for informational purposes only and is not tax advice. Holders of CBD Shares or, after the completion of the Spin-Off, Sendas Shares should consult their tax advisors with respect to the U.S. federal income tax consequences to them of the Spin-Off and the ownership and disposition of Sendas Shares in light of their particular circumstances, as well as any tax consequences of such matters arising under the U.S. federal tax laws other than those pertaining to income tax, including estate or gift tax laws, or under any state, local or non-U.S. tax laws or under any applicable income tax treaty.

U.S. Federal Income Tax Consequences of the Spin-Off

Assuming that the Spin-Off qualifies as a tax-free distribution, the distribution of Sendas Shares to U.S. Holders of CBD Shares will result in the following tax consequences:

●

Except for any cash received in lieu of fractional shares of Sendas Shares, a U.S. Holder will not recognize any income, gain or loss as a result of the receipt of Sendas Shares in the Spin-Off.

●

The aggregate tax basis in the CBD Shares and Sendas Shares in the hands of each U.S. Holder of CBD Shares immediately after the Spin-Off will be the same as the aggregate tax basis of the CBD Shares held by such holder immediately before the Spin-Off, allocated between the shares of CBD Shares and Sendas Shares (including fractional shares) in proportion to their relative fair market values immediately following the Spin-Off.

●

A U.S. Holder’s holding period in the Sendas Shares received in the Spin-Off will include the holding period of the CBD Shares with respect to which the Sendas Shares were received.

●

The receipt of cash in lieu of fractional shares of Sendas Shares generally will be treated as a sale of the fractional shares of Sendas Shares, and a U.S. Holder will recognize gain or loss equal to the difference between the amount of cash received and such holder’s basis in the fractional shares of Sendas Shares, as determined above. The gain or loss will be long-term capital gain or loss if the holding period for the fractional shares of Sendas Shares, as determined above, is more than one year. Long-term capital gains of non-corporate taxpayers are generally eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain or loss generally will be treated as U.S. source gain or loss.

U.S. Holders of CBD Shares that have acquired different blocks of CBD Shares at different times or at different prices should consult their tax advisors regarding the allocation of their aggregate tax basis in, and their holding period in, the Sendas Shares distributed with respect to blocks of CBD Shares.

If the Spin-Off were determined not to qualify as a tax-free distribution, each U.S. Holder of CBD Shares who receives Sendas Shares in the Spin-Off would generally be treated as receiving a taxable distribution equal to the fair market value of the Sendas Shares (determined at the time of the Spin-Off) received by such holder in the Spin-Off (including fractional shares). In such event, such distribution will be treated as a taxable dividend to each U.S. Holder of CBD Shares, but only to the extent that such distribution is paid out of CBD’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). To the extent that the amount of the distribution exceeds CBD’s current and accumulated earnings and profits (as determined under U.S. federal income tax principles), such excess would be treated first as a tax-free return of a U.S. Holder’s tax basis in such holder’s CBD Shares, and then, to the extent such excess amount exceeds such holder’s tax basis in such CBD Shares, as capital gain. CBD, however, does not calculate its earnings and profits under U.S. federal income tax principles. Therefore, a U.S. Holder should expect that the distribution of Sendas Shares would be reported as a dividend even if such distribution would otherwise be treated as a tax-free return of capital or as capital gain under the rules described above. The distribution of Sendas Shares would not be eligible for either the dividends-received deduction generally available to U.S. corporations under the Code or for the lower rates applicable to “qualified dividend income” for non-corporate U.S. Holders.

128

Backup Withholding and Information Reporting

Payments of cash in lieu of fractional shares of Sendas Shares to a U.S. Holder pursuant to the Spin-Off may, under certain circumstances, be subject to information reporting and backup withholding, unless the holder provides proof of an applicable exemption or, in the case of backup withholding, furnishes its taxpayer identification number and otherwise complies with all applicable requirements of the backup withholding rules. Backup withholding is not an additional tax and generally will be allowed as a refund or credit against the holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

U.S. Federal Income Tax Consequences of Owning and Disposing of Sendas Shares Received in the Spin-Off

Distributions on Sendas Shares

Subject to the discussion below under “—Passive Foreign Investment Company,” the gross amount of any distribution that Sendas makes to a U.S. Holder with respect to Sendas Shares (including the amount of any taxes withheld therefrom) will generally be includible in such holder’s gross income, in the year actually or constructively received, as dividend income, but only to the extent that such distribution is paid out of Sendas’s current or accumulated earnings and profits (as determined under U.S. federal income tax principles). To the extent that the amount of the distribution exceeds Sendas’s current and accumulated earnings and profits (as determined under U.S. federal income tax principles), such excess will be treated first as a tax-free return of a U.S. Holder’s tax basis in such holder’s Sendas Shares, and then, to the extent such excess amount exceeds such holder’s tax basis in such Sendas Shares, as capital gain. Sendas, however, may not calculate its earnings and profits under U.S. federal income tax principles. In that case, a U.S. Holder should expect that any distribution Sendas makes will be reported as a dividend even if such distribution would otherwise be treated as a tax-free return of capital or as capital gain under the rules described above. Dividends paid by Sendas will not be eligible for the dividends-received deduction allowed to corporations in respect of dividends received from other U.S. corporations under the Code or for the lower rates applicable to “qualified dividend income” for non-corporate U.S. Holders.

Subject to certain conditions and limitations, non-U.S. taxes withheld, if any, from dividends on the Sendas Shares may be treated as foreign taxes eligible for a credit against the U.S. federal income tax liability of a U.S. Holder. For purposes of calculating the foreign tax credit, dividends paid on the Sendas Shares will be treated as income from sources outside the United States and will generally constitute passive category income. Further, in certain circumstances, if a U.S. Holder holds its Sendas Shares for less than a specified minimum period, the U.S. Holder will not be allowed a foreign tax credit for non-U.S. taxes imposed, if any, on dividends paid on its shares. The rules governing the foreign tax credit are complex. U.S. Holders should consult their own tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

Dispositions of Sendas Shares

Subject to the discussion below under “—Passive Foreign Investment Company,” a U.S. Holder will generally recognize capital gain or loss on any sale, exchange, redemption, or other taxable disposition of its Sendas Shares in an amount equal to the difference between the amount realized for the Shares and such U.S. Holder’s tax basis in the Shares (as determined above). Any such capital gain or loss will be long-term if the U.S. Holder’s holding period in the shares exceeds one year. Long-term capital gains of non-corporate taxpayers are generally eligible for reduced rates of taxation. The deductibility of capital losses is subject to limitations. Any gain or loss generally will be treated as U.S. source gain or loss.

129

Passive Foreign Investment Company

●

at least 75% of its gross income is “passive income”; or

●

at least 50% of the average gross fair market value of its assets is attributable to assets that produce “passive income” or are held for the production of “passive income.”

Passive income for this purpose generally includes dividends, interest, royalties, rents and gains from commodities and securities transactions. In addition, there is a look-through rule for investments in subsidiary corporations. Under this rule, if a non-U.S. corporation owns (directly or indirectly) at least 25% of another corporation, the non-U.S. corporation is treated as owning its proportionate share of the assets of the other corporation and earning its proportionate share of the income of the other corporation for purposes of determining if the non-U.S. foreign corporation is a PFIC.

There can be no assurance that Sendas will not be considered to be a PFIC for any particular year because PFIC status is factual in nature, depends upon factors not wholly within Sendas’s control, generally cannot be determined until the close of the taxable year in question, and is determined annually. If Sendas were a PFIC for any taxable year during which a U.S. Holder owned the Sendas Shares, gains recognized by such U.S. Holder on a sale or other disposition of the Shares would be allocated ratably over the U.S. Holder’s holding period for such Sendas Shares. The amount allocated to the taxable year of the sale or other disposition and to any year before Sendas became a PFIC would be taxed as ordinary income. The amount allocated to each other taxable year would be subject to tax at the highest rate in effect for individuals or corporations, as appropriate, and an interest charge would be imposed on the amount allocated to each such taxable year. Further, any distribution on the Sendas Shares in excess of 125% of the average of the annual distributions on such units or the underlying shares received by a U.S. Holder during the preceding three years or the U.S. Holder’s holding period, whichever is shorter, would be subject to taxation in the same manner as gain, as described immediately above. If Sendas is classified as a PFIC in any year that a U.S. Holder is a shareholder, Sendas generally will continue to be treated as a PFIC for that U.S. Holder in all succeeding years, even if Sendas ceases to satisfy the requirements of being a PFIC. If a U.S. Holder holds the Sendas Shares during any taxable year in which Sendas is a PFIC, that holder generally will be required to file an annual IRS Form 8621. Significant penalties are imposed for failure to file IRS Form 8621, and the failure to file such form may suspend the running of the statute of limitations. U.S. Holders should consult their tax advisers regarding the application of the PFIC rules to their investment in the Sendas Shares.

Backup Withholding and Information Reporting

Payments of dividends to a U.S. Holder and proceeds from the sale or other disposition of Sendas Shares may, under certain circumstances, be subject to information reporting and backup withholding, unless the holder provides proof of an applicable exemption or, in the case of backup withholding, furnishes its taxpayer identification number and otherwise complies with all applicable requirements of the backup withholding rules. Backup withholding is not an additional tax and generally will be allowed as a refund or credit against the holder’s U.S. federal income tax liability, provided that the required information is timely furnished to the IRS.

Foreign Asset Reporting

Certain U.S. Holders are required to report information relating to an interest in the Sendas Shares, subject to certain exceptions (including an exception for Shares held in accounts maintained by certain financial institutions) by filing IRS Form 8938 (Statement of Specified Foreign Financial Assets) with their U.S. federal income tax return. U.S. Holders are urged to consult their tax advisors regarding their information reporting obligations, if any, with respect to their ownership and disposition of Sendas Shares.

130

Dividends and Paying Agents

The dividend paying agent for shareholders is Banco Itaú Corretora de Valores S.A. For additional detail, see “—Memorandum and Articles of Association—Allocation of Net Profits and Distribution of Dividends—Distribution of Dividends” and “Item 8. Financial Information—A. Consolidated Statements and Other Financial Information—Dividends and Dividend Policy.”

Statement by Experts

The consolidated financial statements of Sendas Distribuidora S.A. as of December 31, 2019 and 2018 and each of the three years in the period ended December 31, 2019, appearing in this registration statement have been audited by Ernst & Young Auditores Independentes S.S., independent registered public accounting firm, as set forth in their report thereon appearing elsewhere herein, and are included in reliance upon such report given on the authority of such firm as experts in accounting and auditing.

Documents on Display

Once this registration statement becomes effective, we will become subject to the informational requirements of the Exchange Act. Accordingly, we will be required to file reports and other information with the SEC, including annual reports on Form 20-F and periodic reports on Form 6-K. You may read and copy our periodic reports at the SEC’s public reference room in Washington, D.C. Please call the SEC at 1-800-SEC-0330 for further information. Our SEC filings are also available to the public from commercial document retrieval services. Some of our SEC filings are also available at the website maintained by the SEC at www.sec.gov. Except as otherwise expressly indicated herein, any such information does not form part of this registration statement on Form 20-F.

We intend to apply to list the Sendas ADSs on the NYSE under the ticker symbol “ASAI.” You may inspect any periodic reports and other information filed with or furnished to the SEC by us at the offices of the New York Stock Exchange, 20 Broad Street, New York, New York 10005.

As a foreign private issuer, we are exempt from the rules under the Exchange Act which prescribe the furnishing and content of proxy statements, and our officers, directors and principal shareholders are exempt from the reporting and “short-swing” profit recovery provisions contained in Section 16 of the Exchange Act.

We also file financial statements and other periodic reports with the CVM, including the Formulário de Referência, which is an annual report that is prepared and filed in accordance with CVM Instruction No. 480/09 and can be accessed through www.cvm.gov.br. Information from that website is not incorporated by reference into this document.

We have appointed JPMorgan Chase Bank N.A. to act as depositary for the Sendas ADSs. JPMorgan Chase Bank N.A. will, as provided in the Sendas Deposit Agreement, arrange for the mailing of summaries in English of such reports and communications to all record holders of the Sendas ADSs. Any record holder of the Sendas ADSs may read such reports and communications or summaries thereof at JPMorgan Chase Bank N.A.’s office located at 383 Madison Avenue, Floor 11, New York, NY 10179.

Copies of our annual reports on Form 20-F and documents referred to in this registration statement and our bylaws will be available for inspection upon request at our headquarters at: Avenida Ayrton Senna, No. 6,000, Lote 2, Pal 48959, Anexo A, Jacarepaguá, 22775-005, Rio de Janeiro, RJ, Brazil.

Our website is located at www.assai.com.br. This URL is intended to be an inactive textual reference only. It is not intended to be an active hyperlink to our website. The information on our website, which might be accessible through a hyperlink resulting from this URL is not, and shall not be deemed to be, incorporated into this registration statement.

Subsidiary Information

Not applicable.

131

ITEM 11.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are exposed to market risks from changes in foreign currency and interest rates. Market risk is the potential loss arising from adverse changes in market rates, such as foreign currency exchange rates and interest rates.

We have a treasury policy designed to manage financial market risk, principally by swapping a substantial part of our U.S. dollar-denominated liabilities to obligations denominated in reais. We engage in cross-currency interest rate swaps under which we enter into an agreement typically with the same counter-party which provides the original U.S. dollar-denominated financing. A separate financial instrument is signed at the time the loan agreement is consummated, under which we are effectively then liable for amounts in reais and interest based on the CDI rate. Amounts are normally consummated with the same financial institutions and the same maturity periods. See “Item 5. Operating and Financial Review and Prospects—B. Liquidity and Capital Resources.”

We use derivative financial instruments, usually cross-currency interest rate swaps, to mitigate risk caused by fluctuating currency and interest rates. We enter into cross-currency interest rate swaps to protect foreign currency exposure. Decisions regarding swap contracts are made on a case-by-case basis, taking into consideration the amount and duration of the exposure, market volatility, and economic trends. Our realized and unrealized gains and losses on these contracts are included within “financial income” and “financial expense,” respectively.

We use interest rate swap agreements to manage interest costs and risks associated with changing rates. The differential to be paid or received is accrued as interest rates change and is recognized in interest expense over the life of the agreements.

We have a policy of entering into contracts only with parties that have high credit ratings. The counter-parties to these contracts are major financial institutions. We do not expect a credit loss from counter-party non-performance.

For more information about our market risks and the sensitivity analyses of these risks, see note 19.1 to our unaudited interim condensed consolidated financial statements and note 20.7 to our audited consolidated financial statements included in this registration statement.

ITEM 12.

DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Debt Securities

Not applicable.

Warrants and Rights

Not applicable.

Other Securities

Not applicable.

American Depositary Shares

Description of American Depositary Shares

American Depositary Receipts

JPMorgan Chase Bank, N.A. (“JPMorgan”), as Sendas Depositary will issue the Sendas ADSs which you will be entitled to receive in connection with the Spin-Off. Each Sendas ADS will represent an ownership interest in a designated number or percentage of Sendas common shares which we will deposit with the Sendas ADS Custodian, as agent of the depositary, under the deposit agreement among ourselves, the depositary, yourself as an American depositary receipt holder (“ADR holder”), and all other ADR holders, and all beneficial owners of an interest in the ADSs evidenced by ADRs from time to time. In the future, each ADS will also represent any securities, cash or other property deposited with the depositary but which they have not distributed directly to you. Unless certificated ADRs are specifically requested by you, all ADSs will be issued on the books of our depositary in book-entry form and periodic statements will be mailed to you which reflect your ownership interest in such ADSs. In this “Description of American Depositary Shares,” references to American depositary receipts or ADRs shall mean ADRs evidencing Sendas ADSs and shall include the statements you will receive which reflect your ownership of Sendas ADSs. In addition, in this “Description of American Depositary Shares,” “ADSs” will refer to the Sendas ADSs, “shares” will refer to Sendas common shares, “depositary” will refer to the Sendas Depositary and “custodian” will refer to the Sendas ADS Custodian.

132

The depositary’s office is located at 383 Madison Avenue, Floor 11, New York, NY 10179.

You may hold ADSs either directly or indirectly through your broker or other financial institution. If you hold ADSs directly, by having an ADS registered in your name on the books of the depositary, you are an ADR holder. This description assumes you are an ADR holder and hold your ADSs directly. If you have a beneficial ownership interest in ADSs but hold the ADSs through your broker or financial institution nominee, you are a beneficial owner of ADSs and must rely on the procedures of such broker or financial institution to assert the rights of an ADR holder described in this section. You should consult with your broker or financial institution to find out what those procedures are. If you are a beneficial owner, you will only be able to exercise any right or receive any benefit under the deposit agreement solely through the ADR holder which holds the ADR(s) evidencing the ADSs owned by you, and the arrangements between you and such ADR holder may affect your ability to exercise any rights you may have. For all purposes under the deposit agreement, an ADR holder is deemed to have all requisite authority to act on behalf of any and all beneficial owners of the ADSs evidenced by the ADR(s) registered in such ADR holder’s name. The depositary’s only notification obligations under the deposit agreement shall be to the ADR holders, and notice to an ADR holder shall be deemed, for all purposes of the deposit agreement, to constitute notice to any and all beneficial owners of the ADSs evidenced by such ADR holder’s ADRs.

As an ADR holder or beneficial owner, we will not treat you as a shareholder of ours and you will not have any shareholder rights. Brazilian law governs shareholder rights. Because the depositary or its nominee will be the shareholder of record for the shares represented by all outstanding ADSs, shareholder rights rest with such record holder. Your rights are those of an ADR holder or of a beneficial owner. Such rights derive from the terms of the deposit agreement to be entered into among us, the depositary and all registered holders and beneficial owners from time to time of ADSs issued under the deposit agreement and, in the case of a beneficial owner, from the arrangements between the beneficial owner and the holder of the corresponding ADRs. The obligations of our company, the depositary and its agents are also set out in the deposit agreement. Because the depositary or its nominee will actually be the registered owner of the shares, you must rely on it to exercise the rights of a shareholder on your behalf. The deposit agreement, the ADRs and the ADSs are governed by New York law. Under the deposit agreement, as an ADR holder or a beneficial owner of ADSs, you agree that any legal suit, action or proceeding against or involving us or the depositary, arising out of or based upon the deposit agreement, the ADSs or the transactions contemplated thereby, may only be instituted in a state or federal court in New York, New York, and you irrevocably waive any objection which you may have to the laying of venue of any such proceeding and irrevocably submit to the exclusive jurisdiction of such courts in any such suit, action or proceeding.

The following is a summary of what we believe to be the material terms of the Sendas Deposit Agreement. Notwithstanding this, because it is a summary, it may not contain all the information that you may otherwise deem important. For more complete information, you should read the entire deposit agreement and the form of ADR which contains the terms of your ADSs. You can read a copy of the deposit agreement which is filed as an exhibit to the most recent Form F-6 registration statement (or amendment thereto) filed with the SEC. You may also obtain a copy of the form of deposit agreement at the SEC’s Public Reference Room which is located at 100 F Street, NE, Washington, DC 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-732-0330. You may also find the registration statement and the attached deposit agreement on the SEC’s website at http://www.sec.gov.

133

Share Dividends and Other Distributions

How will I receive dividends and other distributions on the shares underlying my ADSs?

We may make various types of distributions with respect to our securities. The depositary has agreed that, to the extent practicable, it will pay to you the cash dividends or other distributions it or the custodian receives on shares or other deposited securities, after converting any cash received into U.S. dollars (if it determines such conversion may be made on a reasonable basis) and, in all cases, making any necessary deductions provided for in the deposit agreement. The depositary may utilize a division, branch or affiliate of JPMorgan to direct, manage and/or execute any public and/or private sale of securities under the deposit agreement. Such division, branch and/or affiliate may charge the depositary a fee in connection with such sales, which fee is considered an expense of the depositary. You will receive these distributions in proportion to the number of underlying securities that your ADSs represent.

Except as stated below, the depositary will deliver such distributions to ADR holders in proportion to their interests in the following manner:

●

Cash. The depositary will distribute any U.S. dollars available to it resulting from a cash dividend or other cash distribution or the net proceeds of sales of any other distribution or portion thereof (to the extent applicable), on an averaged or other practicable basis, subject to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or impracticable with respect to certain ADR holders, and (iii) deduction of the depositary’s and/or its agents’ expenses in (1) converting any foreign currency to U.S. dollars to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or U.S. dollars to the United States by such means as the depositary may determine to the extent that it determines that such transfer may be made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer, which is obtainable at a reasonable cost and within a reasonable time and (4) making any sale by public or private means in any commercially reasonable manner. If we advise the depositary that any such conversion, transfer or distribution can be effected only with the approval or license of the Brazilian government or any agency thereof or the depositary becomes aware of any other governmental approval or license required, the depositary may, in its discretion, apply for such approval or license, as we or our Brazilian counsel may reasonably instruct in writing or as the depositary may deem desirable including, without limitation, Central Bank registration. If exchange rates fluctuate during a time when the depositary cannot convert a foreign currency, you may lose some or all of the value of the distribution.

●

Shares. In the case of a distribution in shares, the depositary will issue additional ADRs to evidence the number of ADSs representing such shares. Only whole ADSs will be issued. Any shares which would result in fractional ADSs will be sold and the net proceeds will be distributed in the same manner as cash to the ADR holders entitled thereto.

●

Rights to receive additional shares. In the case of a distribution of rights to subscribe for additional shares or other rights, if we timely provide evidence satisfactory to the depositary that it may lawfully distribute such rights, the depositary will distribute warrants or other instruments in the discretion of the depositary representing such rights. However, if we do not timely furnish such evidence, the depositary may:

(i)

sell such rights if practicable and distribute the net proceeds in the same manner as cash to the ADR holders entitled thereto; or

(ii)

if it is not practicable to sell such rights by reason of the non-transferability of the rights, limited markets therefor, their short duration or otherwise, do nothing and allow such rights to lapse, in which case ADR holders will receive nothing and the rights may lapse. We have no obligation to file a registration statement under the United States Securities Act of 1933, as amended (“Securities Act”) in order to make any rights available to ADR holders.

●

Other Distributions. In the case of a distribution of securities or property other than those described above, the depositary may either (i) distribute such securities or property in any manner it deems equitable and practicable or (ii) to the extent the depositary deems distribution of such securities or property not to be equitable and practicable, sell such securities or property and distribute any net proceeds in the same way it distributes cash.

134

●

Elective Distributions. In the case of a dividend payable at the election of our shareholders in cash or in additional shares, we will notify the depositary at least 30 days prior to the proposed distribution stating whether or not we wish such elective distribution to be made available to ADR holders. The depositary shall make such elective distribution available to ADR holders only if (i) we shall have timely requested that the elective distribution is available to ADR holders, (ii) the depositary shall have determined that such distribution is reasonably practicable and (iii) the depositary shall have received satisfactory documentation within the terms of the deposit agreement including any legal opinions of counsel that the depositary in its reasonable discretion may request. If the above conditions are not satisfied, the depositary shall, to the extent permitted by law, distribute to the ADR holders, on the basis of the same determination as is made in the local market in respect of the shares for which no election is made, either (x) cash or (y) additional ADSs representing such additional shares. If the above conditions are satisfied, the depositary shall establish procedures to enable ADR holders to elect the receipt of the proposed dividend in cash or in additional ADSs. There can be no assurance that ADR holders or beneficial owners of ADSs generally, or any ADR holder or beneficial owner of ADSs in particular, will be given the opportunity to receive elective distributions on the same terms and conditions as the holders of shares.

If the depositary determines in its discretion that any distribution described above is not practicable with respect to any specific ADR holder, the depositary may choose any method of distribution that it deems practicable for such ADR holder, including the distribution of foreign currency, securities or property, or it may retain such items, without paying interest on or investing them, on behalf of the ADR holder as deposited securities, in which case the ADSs will also represent the retained items.

Any U.S. dollars will be distributed by checks drawn on a bank in the United States for whole dollars and cents. Fractional cents will be withheld without liability and dealt with by the depositary in accordance with its then current practices.

The depositary is not responsible if it fails to determine that any distribution or action is lawful or reasonably practicable.

There can be no assurance that the depositary will be able to convert any currency at a specified exchange rate or sell any property, rights, shares or other securities at a specified price, nor that any of such transactions can be completed within a specified time period. All purchases and sales of securities will be handled by the depositary in accordance with its then current policies, which are currently set forth in the “Depositary Receipt Sale and Purchase of Security” section of https://www.adr.com, the location and contents of which the depositary shall be solely responsible for.

Deposit, Withdrawal and Cancellation

How does the depositary issue ADSs?

The depositary will issue ADSs if you or your broker deposit shares or evidence of rights to receive shares with the custodian and pay the fees and expenses owing to the depositary in connection with such issuance. In the case of the ADSs to be issued under this registration statement, we will deposit such shares.

Shares deposited in the future with the custodian must be accompanied by certain delivery documentation and shall, at the time of such deposit, be registered in the name of JPMorgan, as depositary for the benefit of ADR holders or in such other name as the depositary shall direct.

The custodian will hold all deposited shares (including those being deposited by or on our behalf in connection with the Spin-Off to which this registration statement relates) for the account and to the order of the depositary, in each case for the benefit of ADR holders, to the extent not prohibited by law. ADR holders and beneficial owners thus have no direct ownership interest in the shares and only have such rights as are contained in the deposit agreement. The custodian will also hold any additional securities, property and cash received on or in substitution for the deposited shares. The deposited shares and any such additional items are referred to as “deposited securities”.

135

Deposited securities are not intended to, and shall not, constitute proprietary assets of the depositary, the custodian or their nominees. Beneficial ownership in deposited securities is intended to be, and shall at all times during the term of the deposit agreement continue to be, vested in the beneficial owners of the ADSs representing such deposited securities. Notwithstanding anything else contained herein, in the deposit agreement, in the form of ADR and/or in any outstanding ADSs, the depositary, the custodian and their respective nominees are intended to be, and shall at all times during the term of the deposit agreement be, the record holder(s) only of the deposited securities represented by the ADSs for the benefit of the ADR holders. The depositary, on its own behalf and on behalf of the custodian and their respective nominees, disclaims any beneficial ownership interest in the deposited securities held on behalf of the ADR holders.

We and the depositary, the custodian shall comply with Brazil’s National Monetary Council (Conselho Monetário Nacional) Resolution No. 4,373, dated as of September 29, 2014, in the third article, paragraph three, of the Regulation Annex V, and agree to furnish to the Central Bank and the CVM, whenever required, information or documents related to the ADRs and the deposit agreement, the deposited securities and distributions thereon and, under the terms of the deposit agreement, the depositary and the custodian are authorized to release such information or documents and any other information as required by local regulation, law or regulatory body request. The depositary has the right to terminate the deposit agreement on at least 30 days’ notice to ADR holders and us in the event that the depositary or the custodian reasonably could be subject to criminal or material civil liabilities if we have failed to provide such information or documents reasonably available only by us.

Upon each deposit of shares, receipt of related delivery documentation and compliance with the other provisions of the deposit agreement, including the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the depositary will issue an ADR or ADRs in the name or upon the order of the person entitled thereto evidencing the number of ADSs to which such person is entitled. All of the ADSs issued will, unless specifically requested to the contrary, be part of the depositary’s direct registration system, and an ADR holder will receive periodic statements from the depositary which will show the number of ADSs registered in such ADR holder’s name. An ADR holder can request that the ADSs not be held through the depositary’s direct registration system and that a certificated ADR be issued.

How do ADR holders cancel an ADS and obtain deposited securities?

When you turn in your ADR certificate at the depositary’s office, or when you provide proper instructions and documentation in the case of direct registration ADSs, the depositary will, upon payment of certain applicable fees, charges and taxes, deliver the underlying shares to you or upon your written order. Delivery of deposited securities in certificated form will be made at the custodian’s office. At your risk, expense and request, the depositary may deliver deposited securities at such other place as you may request.

The depositary may only restrict the withdrawal of deposited securities in connection with:

●

temporary delays caused by closing our transfer books or those of the depositary or the deposit of shares in connection with voting at a shareholders’ meeting, or the payment of dividends;

●

the payment of fees, taxes and similar charges; or

●

compliance with any U.S. or foreign laws or governmental regulations relating to the ADRs or to the withdrawal of deposited securities.

136

This right of withdrawal may not be limited by any other provision of the deposit agreement.

Record Dates

The depositary may, after consultation with us if practicable, fix record dates (which, to the extent applicable, shall be as near as practicable to any corresponding record dates set by us) for the determination of the ADR holders who will be entitled (or obligated, as the case may be):

●

to receive any distribution on or in respect of deposited securities;

●

to give instructions for the exercise of voting rights at a meeting of holders of shares;

●

to pay any fees, charges or expenses assessed by, or owing to the depositary; or

●

to receive any notice or to act or be obligated in respect of other matters;

all subject to the provisions of the deposit agreement.

Voting Rights

How do I vote?

If you are an ADR holder and the depositary asks you to provide it with voting instructions, you may instruct the depositary how to exercise the voting rights for the shares which underlie your ADSs. As soon as practicable after receiving notice from us of any meeting at which the holders of shares are entitled to vote, or of our solicitation of consents or proxies from holders of shares or other deposited securities, the depositary shall fix the ADS record date in accordance with the provisions of the deposit agreement, provided that if the depositary receives a written request from us in a timely manner and at least 30 days prior to the date of such vote or meeting, the depositary shall, at our expense, distribute to the ADR holders a notice stating (i) final information particular to such vote and meeting and any solicitation materials, (ii) that each ADR holder on the record date set by the depositary will, subject to any applicable provisions of Brazilian law, be entitled to instruct the depositary to exercise the voting rights, if any, pertaining to the shares underlying such ADR holder’s ADSs and (iii) the manner in which such instructions may be given, including instructions to give a discretionary proxy to a person designated by us. Each ADR holder is solely responsible for the forwarding of such notices to the beneficial owners of ADSs registered in such ADR holder’s name. Following actual receipt by the ADR department responsible for proxies and voting of ADR holders’ instructions (including, without limitation, instructions of any entity or entities acting on behalf of the nominee for DTC), the depositary shall, in the manner and on or before the time established by the depositary for such purpose, endeavor to vote or cause to be voted the shares represented by the ADSs evidenced by such ADR holders’ ADRs in accordance with such instructions insofar as practicable and permitted under the provisions of or governing our shares.

ADR holders and beneficial owners of ADSs are strongly encouraged to forward their voting instructions to the depositary as soon as possible. For instructions to be valid, the ADR department of the depositary that is responsible for proxies and voting must receive them in the manner and on or before the time specified, notwithstanding that such instructions may have been physically received by the depositary prior to such time. The depositary will not itself exercise any voting discretion. Notwithstanding anything contained in the deposit agreement or any ADR, the depositary may, to the extent not prohibited by any law, rule or regulation, or by the rules and/or requirements of the stock exchange or market on which the ADSs are listed or traded, in lieu of distribution of the materials provided to the depositary in connection with any meeting of, or solicitation of consents or proxies from, holders of deposited securities, distribute to the ADR holders a notice that provides such ADR holders with, or otherwise publicizes to such ADR holders, instructions on how to retrieve such materials or receive such materials upon request (i.e., by reference to a website containing the materials for retrieval or a contact for requesting copies of the materials).

There is no guarantee that ADR holders and beneficial owners of ADSs generally, or any ADR holder or beneficial owner of ADSs in particular, will receive voting materials in time to instruct the depositary to vote and it is possible that you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have the opportunity to exercise a right to vote.

137

See “Item 3. Key Information—D. Risk Factors—Risks Relating to the Sendas Common Shares and the Sendas ADSs—Holders of Sendas ADSs are not entitled to attend shareholders’ meetings and may only vote through the Sendas Depositary.”

Reports and Other Communications

Will ADR holders be able to view our reports?

The depositary will make available for inspection by ADR holders at the offices of the depositary and the custodian the deposit agreement, the provisions of or governing deposited securities, and any written communications from us which are both received by the custodian or its nominee as a holder of deposited securities and made generally available to the holders of deposited securities.

Additionally, if we make any written communications generally available to holders of our shares, and we furnish copies thereof (or English translations or summaries) to the depositary, it will distribute the same to ADR holders.

Fees and Expenses

What fees and expenses will I be responsible for paying?

The depositary may charge each person to whom ADSs are issued, including, without limitation, issuances against deposits of shares, issuances in respect of share distributions, rights and other distributions, issuances pursuant to a stock dividend or stock split declared by us or issuances pursuant to a merger, exchange of securities or any other transaction or event affecting the ADSs or deposited securities, and each person surrendering ADSs for withdrawal of deposited securities or whose ADSs are cancelled or reduced for any other reason, $5.00 for each 100 ADSs (or any portion thereof) issued, delivered, reduced, cancelled or surrendered, or upon which a share distribution or elective distribution is made or offered, as the case may be. The depositary may sell (by public or private sale) sufficient securities and property received in respect of a share distribution, rights and/or other distribution prior to such deposit to pay such charge.

The following additional charges shall also be incurred by the ADR holders and beneficial owners of ADSs, by any party depositing or withdrawing shares or by any party surrendering ADSs and/or to whom ADSs are issued (including, without limitation, issuance pursuant to a stock dividend or stock split declared by us or an exchange of stock regarding the ADSs or the deposited securities or a distribution of ADSs), whichever is applicable:

●

a fee of up to US$0.05 per ADS held upon which any cash distribution made pursuant to the deposit agreement or in the case of an elective cash/stock dividend, upon which a cash distribution or an issuance of additional ADSs is made as a result of such elective dividend;

●

an aggregate fee of up to US$0.05 per ADS per calendar year (or portion thereof) for services performed by the depositary in administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be assessed against ADR holders as of the record date or record dates set by the depositary during each calendar year and shall be payable in the manner described in the next succeeding provision);

●

a fee for the reimbursement of such fees, charges and expenses as are incurred by the depositary and/or any of its agents (including, without limitation, the custodian and expenses incurred on behalf of ADR holders in connection with compliance with foreign exchange control regulations or any law, rule or regulation relating to foreign investment) in connection with the servicing of the shares or other deposited securities, the sale of securities (including, without limitation, deposited securities), the delivery of deposited securities or otherwise in connection with the depositary’s or its custodian’s compliance with applicable law, rule or regulation (which fees and charges shall be assessed on a proportionate basis against ADR holders as of the record date or dates set by the depositary and shall be payable at the sole discretion of the depositary by billing such ADR holders or by deducting such charge from one or more cash dividends or other cash distributions), including, without limitation, any amounts charged by any governmental authorities or other institutions such as the B3 S.A. – Brasil, Bolsa, Balcão, the stock exchange on which the Sendas shares are registered for trading;

138

●

a fee for the distribution of securities (or the sale of securities in connection with a distribution), such fee being in an amount equal to the $0.05 per ADS issuance fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities (treating all such securities as if they were shares) but which securities or the net cash proceeds from the sale thereof are instead distributed by the depositary to those ADR holders entitled thereto;

●

fees and expenses for conversion of foreign currency;

●

stock transfer or other taxes and other governmental charges;

●

SWIFT, cable, telex and facsimile transmission and delivery charges incurred at your request in connection with the deposit or delivery of shares, ADRs or deposited securities;

●

transfer or registration fees for the registration of transfer of deposited securities on any applicable register in connection with the deposit or withdrawal of deposited securities; and

●

fees of any division, branch or affiliate of the depositary utilized by the depositary to direct, manage and/or execute any public and/or private sale of securities under the deposit agreement.

To facilitate the administration of various depositary receipt transactions, including disbursement of dividends or other cash distributions and other corporate actions, the depositary may engage the foreign exchange desk within JPMorgan Chase Bank, N.A. (the “Bank”) and/or its affiliates in order to enter into spot foreign exchange transactions to convert foreign currency into U.S. dollars (“FX Transactions”). For certain currencies, FX Transactions are entered into with the Bank or an affiliate, as the case may be, acting in a principal capacity. For other currencies, FX Transactions are routed directly to and managed by an unaffiliated local custodian (or other third party local liquidity provider), and neither the Bank nor any of its affiliates is a party to such FX Transactions.

The foreign exchange rate applied to an FX Transaction will be either (a) a published benchmark rate, or (b) a rate determined by a third party local liquidity provider, in each case plus or minus a spread, as applicable. The depositary will disclose which foreign exchange rate and spread, if any, apply to such currency on the “Disclosure” page (or successor page) of www.adr.com (as updated by the depositary from time to time, “ADR.com”). Such applicable foreign exchange rate and spread may (and neither the depositary, the Bank nor any of their affiliates is under any obligation to ensure that such rate does not) differ from rates and spreads at which comparable transactions are entered into with other customers or the range of foreign exchange rates and spreads at which the Bank or any of its affiliates enters into foreign exchange transactions in the relevant currency pair on the date of the FX Transaction. Additionally, the timing of execution of an FX Transaction varies according to local market dynamics, which may include regulatory requirements, market hours and liquidity in the foreign exchange market or other factors. Furthermore, the Bank and its affiliates may manage the associated risks of their position in the market in a manner they deem appropriate without regard to the impact of such activities on us, the depositary, ADR holders or beneficial owners of ADSs. The spread applied does not reflect any gains or losses that may be earned or incurred by the Bank and its affiliates as a result of risk management or other hedging related activity. Notwithstanding the foregoing, to the extent we provide U.S. dollars to the depositary, neither the Bank nor any of its affiliates will execute an FX Transaction as set forth herein. In such case, the depositary will distribute the U.S. dollars received from us.

Further details relating to the applicable foreign exchange rate, the applicable spread and the execution of FX Transactions will be provided by the depositary on ADR.com. We and by holding an ADS or an interest therein, ADR holders and beneficial owners of ADSs will each be acknowledging and agreeing that the terms applicable to FX Transactions disclosed from time to time on ADR.com will apply to any FX Transaction executed pursuant to the deposit agreement.

139

The fees and charges you may be required to pay may vary over time and may be changed by us and by the depositary. ADR holders will receive prior notice of the increase in any such fees and charges. The right of the depositary to charge and receive payment of fees, charges and expenses as provided above shall survive the termination of the deposit agreement.

The depositary may make available to us a set amount or a portion of the depositary fees charged in respect of the ADR program or otherwise upon such terms and conditions as we and the depositary may agree from time to time. The depositary collects its fees for issuance and cancellation of ADSs directly from investors depositing shares or surrendering ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash distributions, or by directly billing investors, or by charging the book-entry system accounts of participants acting for them. The depositary will generally set off the amounts owing from distributions made to ADR holders. If, however, no distribution exists and payment owing is not timely received by the depositary, the depositary may refuse to provide any further services to ADR holders that have not paid those fees and expenses owing until such fees and expenses have been paid. At the discretion of the depositary, all fees and charges owing under the deposit agreement are due in advance and/or when declared owing by the depositary.

Payment of Taxes

ADR holders or beneficial owners must pay any tax or other governmental charge payable by the custodian or the depositary on any ADS or ADR, deposited security or distribution. If any taxes or other governmental charges (including any penalties and/or interest) shall become payable by or on behalf of the custodian or the depositary with respect to any ADR, any deposited securities represented by the ADSs evidenced thereby or any distribution thereon, such tax or other governmental charge shall be paid by the applicable ADR holder to the depositary and by holding or owning, or having held or owned, an ADR or any ADSs evidenced thereby, the ADR holder and all beneficial owners of such ADSs, and all prior registered holders of such ADRs and prior beneficial owners of such ADSs, jointly and severally, agree to indemnify, defend and save harmless each of the depositary and its agents in respect of such tax or governmental charge. Each ADR holder and beneficial owner of ADSs, and each prior ADR holder and beneficial owner of ADSs, by holding or having held an ADR or an interest in ADSs, acknowledges and agrees that the depositary shall have the right to seek payment of any taxes or governmental charges owing with respect to the relevant ADRs from any one or more such current or prior ADR holder or beneficial owner of ADSs, as determined by the depositary in its sole discretion, without any obligation to seek payment of amounts owing from any other current or prior ADR holder or beneficial owner of ADSs. If an ADR holder owes any tax or other governmental charge, the depositary may (i) deduct the amount thereof from any cash distributions, or (ii) sell deposited securities (by public or private sale) and deduct the amount owing from the net proceeds of such sale. In either case the ADR holder remains liable for any shortfall. If any tax or governmental charge is unpaid, the depositary may also refuse to effect any registration, registration of transfer, split-up or combination of deposited securities or withdrawal of deposited securities until such payment is made. If any tax or governmental charge is required to be withheld on any cash distribution, the depositary may deduct the amount required to be withheld from any cash distribution or, in the case of a non-cash distribution, sell the distributed property or securities (by public or private sale) in such amounts and in such manner as the depositary deems necessary and practicable to pay such taxes and distribute any remaining net proceeds or the balance of any such property after deduction of such taxes to the ADR holders entitled thereto.

As an ADR holder or beneficial owner, you will be agreeing to indemnify us, the depositary, its custodian and any of our or their respective officers, directors, employees, agents and affiliates against, and hold each of them harmless from, any claims by any governmental authority with respect to taxes, additions to tax, penalties or interest arising out of any refund of taxes, reduced rate of withholding at source or other tax benefit obtained. These obligations survive any transfer or surrender of ADSs or the termination of the deposit agreement.

140

Reclassifications, Recapitalizations and Mergers

If we take certain actions that affect the deposited securities, including (i) any change in par value, split-up, consolidation, cancellation or other reclassification of deposited securities or (ii) any distributions of shares or other property not made to ADR holders or (iii) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all of our assets, then the depositary may choose to, and shall if reasonably requested by us:

●

amend the form of ADR;

●

distribute additional or amended ADRs;

●

distribute cash, securities or other property it has received in connection with such actions;

●

sell any securities or property received and distribute the proceeds as cash; or

●

none of the above.

If the depositary does not choose any of the above options, any of the cash, securities or other property it receives will constitute part of the deposited securities and each ADS will then represent a proportionate interest in such property.

Amendment and Termination

How may the deposit agreement be amended?

We may agree with the depositary to amend the deposit agreement and the ADSs without your consent for any reason. ADR holders must be given at least 30 days’ notice of any amendment that imposes or increases any fees or charges on a per ADS basis (other than stock transfer or other taxes and other governmental charges, transfer or registration fees, SWIFT, cable, telex or facsimile transmission costs, delivery costs or other such expenses), or otherwise prejudices any substantial existing right of ADR holders or beneficial owners of ADSs. Such notice need not describe in detail the specific amendments effectuated thereby, but must identify to ADR holders and beneficial owners a means to access the text of such amendment. If an ADR holder continues to hold an ADR or ADRs after being so notified, such ADR holder and the beneficial owner of the corresponding ADSs are deemed to agree to such amendment and to be bound by the deposit agreement as so amended. No amendment, however, will impair your right to surrender your ADSs and receive the underlying securities, except in order to comply with mandatory provisions of applicable law.

Any amendments or supplements which (i) are reasonably necessary (as agreed by us and the depositary) in order for (a) the ADSs to be registered on Form F-6 under the Securities Act or (b) the ADSs or shares to be traded solely in electronic book-entry form and (ii) do not in either such case impose or increase any fees or charges to be borne by ADR holders, shall be deemed not to prejudice any substantial rights of ADR holders or beneficial owners of ADSs. Notwithstanding the foregoing, if any governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment or supplement of the deposit agreement or the form of ADR to ensure compliance therewith, we and the depositary may amend or supplement the deposit agreement and the form of ADR (and all outstanding ADRs) at any time in accordance with such changed laws, rules or regulations, which amendment or supplement to the deposit agreement in such circumstances may become effective before a notice of such amendment or supplement is given to ADR holders or within any other period of time as required for compliance.

Notice of any amendment to the deposit agreement or form of ADRs shall not need to describe in detail the specific amendments effectuated thereby, and failure to describe the specific amendments in any such notice shall not render such notice invalid, provided, however, that, in each such case, the notice given to the ADR holders identifies a means for ADR holders and beneficial owners to retrieve or receive the text of such amendment (i.e., upon retrieval from the SEC’s, the depositary’s or our website or upon request from the depositary).

141

How may the deposit agreement be terminated?

The depositary may, and shall at our written direction, terminate the deposit agreement and the ADRs by mailing notice of such termination to the ADR holders at least 30 days prior to the date fixed in such notice for such termination; provided, however, if the depositary shall have (i) resigned as depositary under the deposit agreement, notice of such termination by the depositary shall not be provided to ADR holders unless a successor depositary shall not be operating under the deposit agreement within 60 days of the date of such resignation, and (ii) been removed as depositary under the deposit agreement, notice of such termination by the depositary shall not be provided to ADR holders unless a successor depositary shall not be operating under the deposit agreement on the 60^th day after our notice of removal was first provided to the depositary. Notwithstanding anything to the contrary herein, the depositary may terminate the deposit agreement without notifying us, but subject to giving 30 days’ notice to the ADR holders, under the following circumstances: (i) in the event of our bankruptcy or insolvency, (ii) if the Shares cease to be listed on an internationally recognized stock exchange, (iii) if we effect (or will effect) a redemption of all or substantially all of the deposited securities, or a cash or share distribution representing a return of all or substantially all of the value of the deposited securities, or (iv) there occurs a merger, consolidation, sale of assets or other transaction as a result of which securities or other property are delivered in exchange for or in lieu of deposited securities. After the date so fixed for termination, the depositary and its agents will perform no further acts under the deposit agreement and the ADRs, except to receive and hold (or sell) distributions on deposited securities and deliver deposited securities being withdrawn. As soon as practicable after the date so fixed for termination, the depositary shall use its reasonable efforts to sell the deposited securities and shall thereafter (as long as it may lawfully do so) hold in an account (which may be a segregated or unsegregated account) the net proceeds of such sales, together with any other cash then held by it under the deposit agreement, without liability for interest, in trust for the pro rata benefit of the ADR holders who have not theretofore surrendered their ADRs. After making such sale, the depositary shall be discharged from all obligations in respect of the deposit agreement and the ADRs, except to account for such net proceeds and other cash. After the date so fixed for termination, we shall be discharged from all obligations under the deposit agreement except for our obligations to the depositary and its agents.

Limitations on Obligations and Liability to ADR holders

Limits on our obligations and the obligations of the depositary; limits on liability to ADR holders and beneficial owners of ADSs

Prior to the issue, registration, registration of transfer, split-up, combination, or cancellation of any ADRs, or the delivery of any distribution in respect thereof, and from time to time in the case of the production of proofs as described below, we or the depositary or its custodian may require:

●

payment with respect thereto of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or registration fees in effect for the registration of transfers of shares or other deposited securities upon any applicable register and (iii) any applicable fees and expenses described in the deposit agreement;

●

the production of proof satisfactory to it of (i) the identity of any signatory and genuineness of any signature and (ii) such other information, including without limitation, information as to citizenship, residence, exchange control approval, beneficial or other ownership of, or interest in, any securities, compliance with applicable law, regulations, provisions of or governing deposited securities and terms of the deposit agreement and the ADRs, as it may deem necessary or proper; and

●

compliance with such regulations as the depositary may establish consistent with the deposit agreement and any regulations which the depositary is informed of in writing by us which are required by the depositary, ourselves or the Custodian to facilitate compliance with any applicable rules or regulations of the Central Bank or CVM.

The issuance of ADRs, the acceptance of deposits of shares, the registration, registration of transfer, split-up or combination of ADRs or the withdrawal of shares, may be suspended, generally or in particular instances, when the ADR register or any register for deposited securities is closed or when any such action is deemed advisable by the depositary; provided that the ability to withdraw shares may only be limited under the following circumstances: (i) temporary delays caused by closing transfer books of the depositary or our transfer books or the deposit of shares in connection with voting at a shareholders’ meeting, or the payment of dividends, (ii) the payment of fees, taxes, and similar charges, and (iii) compliance with any laws or governmental regulations relating to ADRs or to the withdrawal of deposited securities.

142

The deposit agreement expressly limits the obligations and liability of the depositary, ourselves and each of our and the depositary’s respective agents, provided, however, that no provision of the deposit agreement is intended to constitute a waiver or limitation of any rights which ADR holders or beneficial owners of ADSs may have under the Securities Act or the United States Securities Exchange Act of 1934, as amended (the “Exchange Act”), to the extent applicable. In the deposit agreement it provides that neither we nor the depositary nor any such agent will be liable to ADR holders or beneficial owners of ADSs if:

●

any present or future law, rule, regulation, fiat, order or decree of the United States, Brazil or any other country or jurisdiction, or of any governmental or regulatory authority or securities exchange or market or automated quotation system, the provisions of or governing any deposited securities, any present or future provision of our charter, any act of God, war, terrorism, nationalization, epidemic, pandemic, expropriation, currency restrictions, work stoppage, strike, civil unrest, revolutions, rebellions, explosions, computer failure or circumstance beyond our, the depositary’s or our respective agents’ direct and immediate control shall prevent or delay, or shall cause any of them to be subject to any civil or criminal penalty in connection with, any act which the deposit agreement or the ADRs provide shall be done or performed by us, the depositary or our respective agents (including, without limitation, voting);

●

it exercises or fails to exercise discretion under the deposit agreement or the ADRs including, without limitation, any failure to determine that any distribution or action may be lawful or reasonably practicable;

●

it performs its obligations under the deposit agreement and ADRs without gross negligence or willful misconduct;

●

it takes any action or refrains from taking any action in reliance upon the advice of or information from legal counsel, accountants, any person presenting shares for deposit, any ADR holder, or any other person believed by it to be competent to give such advice or information, or in the case of the depositary only, our company; or

●

it relies upon any written notice, request, direction, instruction or document believed by it to be genuine and to have been signed, presented or given by the proper party or parties.

The depositary shall not be a fiduciary or have any fiduciary duty to ADR holders or beneficial owners of ADSs. Neither the depositary nor its agents have any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities, the ADSs or the ADRs. We and our agents shall only be obligated to appear in, prosecute or defend any action, suit or other proceeding in respect of any deposited securities, the ADSs or the ADRs, which in our opinion may involve us in expense or liability, if indemnity satisfactory to us against all expense (including fees and disbursements of counsel) and liability is furnished as often as may be required. The depositary and its agents may fully respond to any and all demands or requests for information maintained by or on its behalf in connection with the deposit agreement, any ADR holder or holders, any ADRs or otherwise related to the deposit agreement or ADRs to the extent such information is requested or required by or pursuant to any lawful authority, including without limitation laws, rules, regulations, administrative or judicial process, banking, securities or other regulators. The depositary shall not be liable for the acts or omissions made by, or the insolvency of, any securities depository, clearing agency or settlement system. Furthermore, the depositary shall not be responsible for, and shall incur no liability in connection with or arising from, the insolvency of any custodian that is not a branch or affiliate of JPMorgan. Notwithstanding anything to the contrary contained in the deposit agreement or any ADRs, the depositary shall not be responsible for, and shall incur no liability in connection with or arising from, any act or omission to act on the part of the custodian except to the extent that any ADR holder has incurred liability directly as a result of the custodian having (i) committed fraud or willful misconduct in the provision of custodial services to the depositary or (ii) failed to use reasonable care in the provision of custodial services to the depositary as determined in accordance with the standards prevailing in the jurisdiction in which the custodian is located. The depositary and the custodian(s) may use third party delivery services and providers of information regarding matters such as, but not limited to, pricing, proxy voting, corporate actions, class action litigation and other services in connection with the ADRs and the deposit agreement, and use local agents to provide services such as, but not limited to, attendance at any meetings of security holders. Although the depositary and the custodian will use reasonable care (and cause their agents to use reasonable care) in the selection and retention of such third party providers and local agents, they will not be responsible for any errors or omissions made by them in providing the relevant information or services. The depositary shall not have any liability for the price received in connection with any sale of securities, the timing thereof or any delay in action or omission to act nor shall it be responsible for any error or delay in action, omission to act, default or negligence on the part of the party so retained in connection with any such sale or proposed sale.

143

The depositary has no obligation to inform ADR holders or beneficial owners of ADSs about the requirements of any laws, rules or regulations or any changes therein or thereto.

Additionally, none of us, the depositary or the custodian shall be liable for the failure by any ADR holder or beneficial owner of ADSs to obtain the benefits of credits or refunds of non-U.S. tax paid against such ADR holder’s or beneficial owner’s income tax liability. The depositary is under no obligation to provide ADR holders or beneficial owners of ADSs, or any of them, with any information about the tax status of our company. Neither we nor the depositary shall incur any liability for any tax or tax consequences that may be incurred by ADR holders or beneficial owners of ADSs on account of their ownership or disposition of the ADRs or ADSs.

Neither the depositary nor its agents will be responsible for any failure to carry out any instructions to vote any of the deposited securities, for the manner in which any such vote is cast, or for the effect of any such vote. The depositary may rely upon instructions from us or our counsel in respect of any approval or license required for any currency conversion, transfer or distribution. The depositary shall not incur any liability for the content of any information submitted to it by us or on our behalf for distribution to ADR holders or for any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the deposited securities, for the validity or worth of the deposited securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms of the deposit agreement or for the failure or timeliness of any notice from us. The depositary shall not be liable for any acts or omissions made by a successor depositary whether in connection with a previous act or omission of the depositary or in connection with any matter arising wholly after the removal or resignation of the depositary. Neither the depositary nor any of its agents shall be liable to ADR holders or beneficial owners of ADSs for any indirect, special, punitive or consequential damages (including, without limitation, legal fees and expenses) or lost profits, in each case of any form incurred by any person or entity (including, without limitation, ADR holders and beneficial owners of ADSs), whether or not foreseeable and regardless of the type of action in which such a claim may be brought.

The depositary and its agents may own and deal in any class of securities of our company and our affiliates and in ADSs.

Disclosure of Interest in ADSs

To the extent that the provisions of or governing any deposited securities may require disclosure of or impose limits on beneficial or other ownership of deposited securities, other shares and other securities and may provide for blocking transfer, voting or other rights to enforce such disclosure or limits, ADR holders and beneficial owners of ADSs agree to comply with all such disclosure requirements and ownership limitations and to comply with any reasonable instructions we may provide in respect thereof. We reserve the right to instruct ADR holders (and through any such ADR holder, the beneficial owners of ADSs evidenced by the ADRs registered in such ADR holder’s name) to deliver their ADSs for cancellation and withdrawal of the deposited securities so as to permit us to deal directly with the ADR holder and/or beneficial owner of ADSs as a holder of shares and, by holding an ADS or an interest therein, ADR holders and beneficial owners of ADSs will be agreeing to comply with such instructions.

Books of Depositary

The depositary or its agent will maintain a register for the registration, registration of transfer, combination and split-up of ADRs, which register shall include the depositary’s direct registration system. ADR holders may inspect such records at the depositary’s office at all reasonable times, but solely for the purpose of communicating with other ADR holders in the interest of the business of our company or a matter relating to the deposit agreement. Such register (and/or any portion thereof) may be closed at any time or from time to time, when deemed expedient by the depositary.

The depositary will maintain facilities for the delivery and receipt of ADRs.

144

Appointment

In the deposit agreement, each ADR holder and each beneficial owner of ADSs, upon acceptance of any ADSs (or any interest therein) issued in accordance with the terms and conditions of the deposit agreement will be deemed for all purposes to:

●

be a party to and bound by the terms of the deposit agreement and the applicable ADR or ADRs, and

●

appoint the depositary its attorney-in-fact, with full power to delegate, to act on its behalf and to take any and all actions contemplated in the deposit agreement and the applicable ADR or ADRs, to adopt any and all procedures necessary to comply with applicable laws and to take such action as the depositary in its sole discretion may deem necessary or appropriate to carry out the purposes of the deposit agreement and the applicable ADR and ADRs, the taking of such actions to be the conclusive determinant of the necessity and appropriateness thereof.

Each ADR holder and beneficial owner of ADSs is further deemed to acknowledge and agree that (i) nothing in the deposit agreement or any ADR shall give rise to a partnership or joint venture among the parties thereto nor establish a fiduciary or similar relationship among such parties, (ii) the depositary, its divisions, branches and affiliates, and their respective agents, may from time to time be in the possession of non-public information about our company, the ADR holders, the beneficial owners of ADSs and/or their respective affiliates, (iii) the depositary and its divisions, branches and affiliates may at any time have multiple banking relationships with us, ADR holders, beneficial owners of ADSs and/or the affiliates of any of them, (iv) the depositary and its divisions, branches and affiliates may, from time to time, be engaged in transactions in which parties adverse to us or the ADR holders or beneficial owners of ADSs may have interests, (v) nothing contained in the deposit agreement or any ADR(s) shall (A) preclude the depositary or any of its divisions, branches or affiliates from engaging in such transactions or establishing or maintaining such relationships, or (B) obligate the depositary or any of its divisions, branches or affiliates to disclose such transactions or relationships or to account for any profit made or payment received in such transactions or relationships, and (vi) the depositary shall not be deemed to have knowledge of any information held by any branch, division or affiliate of the depositary and (vii) for purposes of the deposit agreement and the ADRs, notice to an ADR holder is deemed to constitute notice to any and all beneficial owners of the ADSs evidenced by the holder’s ADRs.

Governing Law and Consent to Jurisdiction

The deposit agreement and the ADRs are governed by and construed in accordance with the laws of the State of New York. In the deposit agreement, we have submitted to the jurisdiction of the courts of the State of New York and appointed an agent for service of process on our behalf.

By holding an ADS or an interest therein, ADR holders and beneficial owners of ADSs each irrevocably agree that any legal suit, action or proceeding against or involving us or the depositary, arising out of or based upon the deposit agreement, the ADSs or the transactions contemplated thereby, may only be instituted in a state or federal court in New York, New York, and each irrevocably waives any objection which it may have to the laying of venue of any such proceeding, and irrevocably submits to the exclusive jurisdiction of such courts in any such suit, action or proceeding.

Jury Trial Waiver

The deposit agreement provides that, to the fullest extent permitted by applicable law, each party thereto (including, for avoidance of doubt, each ADR holder and beneficial owner and/or holder of interests in ADSs) irrevocably waives, to the fullest extent permitted by applicable law, the right to a jury trial in any suit, action or proceeding against us or the depositary directly or indirectly arising out of or relating to our shares or other deposited securities, the ADSs, the ADRs, the deposit agreement, or any transaction contemplated therein, or the breach thereof (whether based on contract, tort, common law or other theory), including any suit, action or proceeding under the U.S. federal securities laws. If we or the depositary were to oppose a jury trial demand based on such waiver, the court would determine whether the waiver was enforceable in the facts and circumstances of that case in accordance with applicable state and federal law, including whether a party knowingly, intelligently and voluntarily waived the right to a jury trial. The waiver to right to a jury trial of the deposit agreement is not intended to be deemed a waiver by any ADR holder or beneficial owner of ADSs of our or the depositary’s compliance with the Securities Act or the Exchange Act, to the extent applicable.

145

PART II

ITEM 13.

DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

Not applicable

ITEM 14.

MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Not applicable.

ITEM 15.

CONTROLS AND PROCEDURES

Not applicable.

ITEM 16.

[RESERVED]

Not applicable.

ITEM 16A.

AUDIT COMMITTEE FINANCIAL EXPERT

Not applicable.

ITEM 16B.

CODE OF ETHICS

Not applicable.

ITEM 16C.

PRINCIPAL ACCOUNTANT FEES AND SERVICES

Not applicable.

ITEM 16D.

EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not applicable.

ITEM 16E.

PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

Not applicable.

ITEM 16F.

CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G.

CORPORATE GOVERNANCE

Not applicable.

ITEM 16H.

MINE SAFETY DISCLOSURE

Not Applicable.

146

PART III

ITEM 17.

FINANCIAL STATEMENTS

We have responded to Item 18 in lieu of responding to this item.

ITEM 18.

FINANCIAL STATEMENTS

Reference is made to Item 19 for a list of all financial statements filed as part of this registration statement.

ITEM 19.

EXHIBITS

(a)

Financial Statements

Sendas Distribuidora S.A.

Interim Condensed Consolidated Statements of Operations and Comprehensive Income for the nine-month periods ended September 30, 2020 and 2019		F-2
Interim Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019		F-3
Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity for the nine-month periods ended September 30, 2020 and 2019		F-5
Interim Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2020 and 2019		F-7
Notes to the Interim Condensed Consolidated Financial Information		F-9

Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements		F-49
Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2019, 2018 and 2017		F-50
Consolidated Balance Sheets as of December 31, 2019 and 2018		F-51
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2019, 2018 and 2017		F-53
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017		F-55
Notes to the Consolidated Financial Statements		F-56

(b)

List of Exhibits

Exhibit No.		Description
1.1		Bylaws (Estatuto Social) of Sendas Distribuidora S.A. (English translation).
2.1*		Form of Deposit Agreement, among Sendas Distribuidora S.A., JPMorgan Chase Bank N.A., as Depositary, and all Owners and Holders from time to time of American Depositary Shares issued thereunder (incorporated by reference to Exhibit to the Form F-6 Registration Statement under the Securities Act of 1933 of Sendas Distribuidora S.A. (File No. ) filed with the Securities and Exchange Commission on ).
2.2*		Form of American Depositary Receipt representing American Depositary Shares representing common shares of Sendas Distribuidora S.A. (included in Exhibit 2.1).
2.3		Private Debenture Deed Relating to the First Issuance of Unsecured Simple, Non-Convertible Debentures issued by Sendas Distribuidora S.A., dated as of August 9, 2019, by and among Sendas Distribuidora S.A., Pentágono S.A. Distribuidora de Títulos e Valores Mobiliários and Companhia Brasileira de Distribuição (English translation).
2.4		First Amendment, dated as of November 19, 2020, by and among Sendas Distribuidora S.A., Pentágono S.A. Distribuidora de Títulos e Valores Mobiliários and Companhia Brasileira de Distribuição, to the Private Debenture Deed Relating to the First Issuance of Unsecured Simple, Non-Convertible Debentures issued by Sendas Distribuidora S.A., dated as of August 9, 2019, by and among Sendas Distribuidora S.A., Pentágono S.A. Distribuidora de Títulos e Valores Mobiliários and Companhia Brasileira de Distribuição (English translation).

147

4.1†		Separation Agreement, dated as of December 14, 2020, between Companhia Brasileira de Distribuição and Sendas Distribuidora S.A. (English translation).
4.2		Employee Matters Agreement, dated as of December 17, 2020, between Companhia Brasileira de Distribuição and Sendas Distribuidora S.A. (English translation).
4.3		Cross-Management Agreement, dated as of December 17, 2020, between Companhia Brasileira de Distribuição and Sendas Distribuidora S.A. (English translation).
4.4		Data Protection Agreement, dated as of December 17, 2020, between Companhia Brasileira de Distribuição and Sendas Distribuidora S.A. (English translation).
4.5		Third-Party Stores Management Agreement, dated as of January 12, 2021, between Companhia Brasileira de Distribuição and Sendas Distribuidora S.A. (English translation).
4.6		Partial Spin-Off Protocol of Sendas Distribuidora S.A. with Merger of the Spun-Off Portion into Companhia Brasileira de Distribuição, dated December 9, 2020, by and between Sendas Distribuidora S.A. and Companhia Brasileira de Distribuição (English translation) (incorporated by reference to Exhibit 99.5 to the Form 6-K/A of Companhia Brasileira de Distribuição (File No. 001-14626) furnished to the Securities and Exchange Commission on December 16, 2020).
4.7		Partial Spin-Off Protocol of Companhia Brasileira de Distribuição with Merger of the Spun-Off Portion into Sendas Distribuidora S.A., dated December 9, 2020, by and between Sendas Distribuidora S.A. and Companhia Brasileira de Distribuição (English translation) (incorporated by reference to Exhibit 99.6 to the Form 6-K/A of Companhia Brasileira de Distribuição (File No. 001-14626) furnished to the Securities and Exchange Commission on December 16, 2020).
4.8		Cost Sharing Agreement, dated as of August 1, 2014, by and among Casino Guichard Perrachon S.A., Sudaco Participações Limitada and Companhia Brasileira de Distribuição (incorporated by reference to Exhibit 4.(b)(5) to the Annual Report on Form 20-F of Companhia Brasileira de Distribuição (File No. 001-14626) filed with the Securities and Exchange Commission on April 30, 2015).
4.9		First Amendment, dated as of October 30, 2014, by and among Casino Guichard Perrachon S.A., Sudaco Participações Limitada, Companhia Brasileira de Distribuição and Euris, to the Cost Sharing Agreement, dated as of August 1, 2014, by and among Casino Guichard Perrachon S.A., Sudaco Participações Limitada and Companhia Brasileira de Distribuição (incorporated by reference to Exhibit 4.(b)(6) to the Annual Report on Form 20-F of Companhia Brasileira de Distribuição (File No. 001-14626) filed with the Securities and Exchange Commission on April 30, 2015).
4.10		Second Amendment, dated as of October 28, 2020, by and among Casino Guichard Perrachon S.A., Casino Services SAS, Helicco Participações Ltda., Wilkes Participações S.A., Euris, Companhia Brasileira de Distribuição and Sendas Distribuidora S.A., to the Cost Sharing Agreement, dated as of August 1, 2014, by and among Casino Guichard Perrachon S.A., Sudaco Participações Limitada and Companhia Brasileira de Distribuição, as amended.
4.11†		Cost Sharing Agreement, dated as of December 15, 2016, by and among Companhia Brasileira de Distribuição, Via Varejo S.A., CNova Comércio Eletrônico S.A., and Sendas Distribuidora S.A. (English translation).
4.12		First Amendment, dated as of December 10, 2018, by and among Companhia Brasileira de Distribuição, Via Varejo S.A., CNova Comércio Eletrônico S.A., and Sendas Distribuidora S.A. to the Cost Sharing Agreement, dated as of December 15, 2016, by and among Companhia Brasileira de Distribuição, Via Varejo S.A., CNova Comércio Eletrônico S.A., and Sendas Distribuidora S.A. (English translation).
4.13#†		Photovoltaic Equipment Lease Agreement (FV-ASS-CLE-0071), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda. (English translation).
4.14		Schedule of Omitted Photovoltaic Equipment Lease Agreements.
4.15#†		Operation and Maintenance Services Agreement (FV-ASS-COM-71), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda. (English translation).
4.16		Schedule of Omitted Operation and Maintenance Services Agreements.
4.17#†		First Amended and Restated Electric Energy Purchase Agreement (13 Years), dated as of July 29, 2020, by and between Sendas Distribuidora S.A., Greenyellow Serviços e Comercialização de Energia Ltda. and Companhia Brasileira de Distribuição (English translation).
4.18		Schedule of Omitted Electric Energy Purchase Agreements.
8.1		List of subsidiaries of the Registrant. See note 12.1 to our unaudited interim condensed consolidated financial statements and note 13.1 to our audited consolidated financial statements. As of the date of this registration statement, the Registrant does not have any significant subsidiaries.
15.1		Consent of Ernst & Young Auditores Independentes S.S.

*	To be filed by amendment.
#	Certain information has been omitted from this exhibit pursuant to Item 4 of the Instructions As To Exhibits of Form 20-F because it is both not material and would likely cause competitive harm to the Registrant if publicly disclosed. The Registrant hereby agrees to furnish an unredacted copy of the exhibit and its materiality and competitive harm analyses to the Commission upon request.
†	Schedules and other similar attachments to this exhibit have been omitted pursuant to the Instructions As To Exhibits of Form 20-F. The Registrant hereby agrees to furnish a copy of any omitted schedules to the Commission upon request.

Certain debt instruments of the Registrant and its subsidiaries have been omitted as exhibits because the amounts involved in such debt instruments are less than 10% of the Registrant’s total assets. Copies of debt instruments for which the related debt is less than 10% of the Registrant’s total assets will be furnished to the Commission upon request.

148

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused and authorized the undersigned to sign this registration statement on its behalf.

Date: January 22, 2021	SENDAS DISTRIBUIDORA S.A.

	/s/ Daniela Sabbag Papa
	Name:	Daniela Sabbag Papa
	Title:	Chief Financial Officer


	Name:	Wlamir dos Anjos
	Title:	Chief Commercial Officer

149

INDEX TO FINANCIAL STATEMENTS

Sendas Distribuidora S.A.

Interim Condensed Consolidated Statements of Operations and Comprehensive Income for the nine-month periods ended September 30, 2020 and 2019		F-2
Interim Condensed Consolidated Balance Sheets as of September 30, 2020 and December 31, 2019		F-3
Interim Condensed Consolidated Statements of Changes in Shareholders’ Equity for the nine-month periods ended September 30, 2020 and 2019		F-5
Interim Condensed Consolidated Statements of Cash Flows for the nine-month periods ended September 30, 2020 and 2019		F-7
Notes to the Interim Condensed Consolidated Financial Statements		F-9

Report of Independent Registered Public Accounting Firm on Consolidated Financial Statements		F-49
Consolidated Statements of Operations and Comprehensive Income for the years ended December 31, 2019, 2018 and 2017		F-50
Consolidated Balance Sheets as of December 31, 2019 and 2018		F-51
Consolidated Statements of Changes in Shareholders’ Equity for the years ended December 31, 2019, 2018 and 2017		F-53
Consolidated Statements of Cash Flows for the years ended December 31, 2019, 2018 and 2017		F-55
Notes to the Consolidated Financial Statements		F-56

F-1

Sendas Distribuidora S.A.

Interim condensed consolidated statements of operations and comprehensive income

For the nine months ended September 30, 2020 and 2019

(In millions of Brazilian Reais, except earnings per share)

		For the nine months ended September 30,
	Note	2020			2019
		Unaudited

Net operating revenue	25		40,983			20,088
Cost of sales	26		(33,059	)		(16,685	)
Gross profit			7,924			3,403
Expenses, net
Selling expenses	26		(4,141	)		(1,647	)
General and administrative expenses	26		(949	)		(284	)
Depreciation and amortization			(889	)		(288	)
Share of profit and loss of associates			18			-
Other operating expenses, net	27		(295	)		(21	)
			(6,256	)		(2,240	)
Operating profit			1,668			1,163

Net financial result	28		(671	)		(18	)
Financial expense			(943	)		(226	)
Financial revenue			272			208

Income before income taxes			997			1,145

Income tax and social contribution	23.1		(167	)		(371	)

Net income for the year			830			774

Other comprehensive income
Items that may be subsequently reclassified into the statement of operations
Exchange differences on transaction of foreign investments			2,046			-
Foreign investments hedge			(5	)		-
Cash flow hedge			(2	)		(52	)
Income tax related to other comprehensive income			-			17
Other comprehensive income for the year			2,039			(35	)
Total comprehensive income for the year			2,869			739

Net income for the year attributable to:						-
Controlling shareholders			712			774
Non-controlling interest			118			-
			830			774
Total comprehensive income attributable to:
Controlling shareholders			2,259			739
Non-controlling interest			610			-
			2,869			739
Basic and diluted earnings per millions of shares in Reais
(weighted average for the year - R$)
Common shares	29		2.653229			4.399048

The accompanying notes are integral part of the interim condensed consolidated financial information.

F-2

Sendas Distribuidora S.A.

Interim condensed consolidated balance sheet

As of September 30, 2020 and December 31, 2019

(In millions of Brazilian Reais)

	Note	As of September 30, 2020		As of December 31, 2019
Current assets
Cash and cash equivalents	6		3,898		5,026
Trade receivables	7		472		491
Other accounts receivable	8		252		206
Inventories	9		6,383		5,190
Recoverable taxes	10		1,090		1,119
Derivative financial instruments	19		90		29
Assets held for sale			31		52
Other current assets			202		169
Total current assets			12,418		12,282

Noncurrent assets
Trade receivables	7		4		-
Other accounts receivable	8		49		37
Recoverable taxes	10		868		962
Derivative financial instruments	19		12		11
Related parties	11		91		97
Restricted deposits for legal proceedings	20.7		114		121
Other noncurrent assets			85		84
Investments in associate entities	12		452		320
Investment properties	14		3,624		3,051
Property and equipment, net	15		17,303		14,652
Intangible assets, net	16		4,953		4,288
Total noncurrent assets			27,555		23,623

Total assets			39,973		35,905

The accompanying notes are integral part of the consolidated interim financial information.

F-3

Sendas Distribuidora S.A.

Interim condensed consolidated balance sheet

As of September 30, 2020 and December 31, 2019

(In millions of Brazilian Reais)

	Note	As of September 30, 2020		As of December 31, 2019
Current liabilities
Trade payables, net	17		8,138		9,770
Borrowings and financing	18		1,903		316
Debentures	18		1,799		1,156
Payroll and related taxes			775		572
Lease liabilities	21		498		404
Related parties	11		226		152
Taxes and social contributions payable			464		327
Deferred revenues	22		202		277
Dividends payable	24.2		277		11
Acquisition of non-controlling interest	19.4		581		466
Other current liabilities			311		479
Total current liabilities			15,174		13,930

Noncurrent liabilities
Borrowings and financing	18		1,482		622
Debentures	18		4,716		6,727
Deferred income tax and social contribution	23.2		1,029		1,191
Provision for legal proceedings	20		375		349
Lease liabilities	21		4,458		3,347
Deferred revenues	22		1		2
Other noncurrent liabilities			40		36
Total noncurrent liabilities			12,101		12,274

Shareholders´ equity
Capital stock	24.1		4,749		4,421
Capital reserve			22		18
Profit reserve			3,052		2,497
Accumulated other comprehensive income			1,725		162
Controlling shareholders			9,548		7,098

Non- controlling interest			3,150		2,603
Total shareholders´ equity			12,698		9,701

Total liabilities and shareholders´ equity			39,973		35,905

The accompanying notes are integral part of the interim condensed consolidated financial information.

F-4

Sendas Distribuidora S.A.

Interim condensed consolidated statements of changes in shareholders´ equity

For the nine months ended September 30, 2020 and 2019

(In millions of Brazilian Reais)

	Controlling shareholders
			Capital reserve		Profit reserve							Accumulated other						Non-			Total
	Capital stock		Stock options		Legal reserve		Profit retention			Retained earnings		comprehensive income			Total			controlling interest			Shareholders’ equity
As of January 1, 2020 (Unaudited)		4,421		18		177		2,320			-		162			7,098			2,603			9,701

Other comprehensive income
Net income for the period		-		-		-		-			712		-			712			118			830
Exchange rate variation of foreign Investments		-		-		-		-			-		1,555			1,555			491			2,046
Cash flow hedge		-		-		-		-			-		(2	)		(2	)		-			(2	)
Hedge of operations abroad		-		-		-		-			-		(6	)		(6	)		1			(5	)
Comprehensive income for the period		-		-		-		-			712		1,547			2,259			610			2,869

Capital increase with real estate properties (Note 24.1)		178		-		-		-			-		-			178			-			178
Capital increase (Note 24.1)		150		-		-		-			-		-			150			-			150
Stock options granted		-		4		-		-			-		-			4			-			4
Interest on equity		-		-		-		(310	)		-		-			(310	)		-			(310	)
Dividends		-		-		-		-			-		-			-			(78	)		(78	)
Hyperinflationary economy effect (*)		-		-		-		162			-		16			178			16			194
Others		-		-		-		(9	)		-		-			(9	)		(1	)		(10	)
As of September 30, 2020 (Unaudited)		4,749		22		177		2,163			712		1,725			9,548			3,150			12,698

(*)

Refers to adjustments made to foreign subsidiaries with a hyperinflationary economy.

The accompanying notes are integral part of the consolidated interim financial information.

F-5

Sendas Distribuidora S.A.

Interim condensed consolidated statements of changes in shareholders´ equity

For the nine months ended September 30, 2020 and 2019

(In millions of Brazilian Reais)

	Controlling shareholders
			Capital reserve		Profit reserve							Accumulated other						Non-		Total
	Capital stock		Stock options		Legal reserve		Profit retention			Retained earnings		comprehensive income			Total			controlling interest		shareholders’ equity
As of January 1, 2019 (Unaudited)		2,351		16		125		1,600			-		-			4,092			-		4,092

Other comprehensive income
Net income for the period		-		-		-		-			774		-			774			-		774
Cash flow hedge		-		-		-		-			-		(52	)		(52	)		-		(52	)
Income taxes related to other comprehensive income		-		-		-		-			-		17			17			-		17
Comprehensive income for the period		-		-		-		-			774		(35	)		739			-		739

Capital increase with real estate properties		67		-		-		-			-		-			67			-		67
Stock options granted		-		1		-		-			-		-			1			-		1
Interim dividends		-		-		-		(50	)		-		-			(50	)		-		(50	)
Others		-		-		-		(2	)		-		-			(2	)		-		(2	)
As of September 30, 2019 (Unaudited)		2,418		17		125		1,548			774		(35	)		4,847			-		4,847

The accompanying notes are integral part of the consolidated interim financial information.

F-6

Sendas Distribuidora S.A.

Interim condensed consolidated statements of cash flows

For the nine months ended September 30, 2020 and 2019

(In millions of Brazilian Reais)

	For the nine months ended September 30,
	2020			2019
	Unaudited
Cash flow from operating activities
Net income for the period		830			774
Adjustment for reconciliation of net income
Deferred income tax and social contribution		(334	)		63
Loss on disposal of property and equipment		172			6
Depreciation and amortization		1,002			304
Financial charges		638			202
Share of profit and loss of associate		(18	)		-
Provision for litigations		24			12
Share-based payments		3			1
Reversal of allowance for inventory losses and damages		(8	)		(15	)
Gain on leasing liability write-off		(138	)		(1	)
Allowance for doubtful accounts		38			-
		2,209			1,346
Variations in operating assets and liabilities
Trade receivables		(32	)		(26	)
Inventories		(693	)		(310	)
Recoverable taxes		176			(282	)
Restricted deposits for legal proceedings		9			(1	)
Other assets		(24	)		(26	)
Trade payables		(2,444	)		(342	)
Payroll and related taxes		142			52
Related parties		231			(22	)
Provision for legal proceedings		(26	)		(5	)
Taxes payable		90			113
Income tax and social contribution, paid		-			(82	)
Deferred revenue		(102	)		(108	)
Other liabilities		(178	)		20
		(2,851	)		(1,019	)
Net cash generated by operating activities		(642	)		327

Cash flow investment activities
Capital increase on associates		(31	)		-
Purchase of property and equipment		(1,138	)		(842	)
Purchase of intangible assets		(60	)		(35	)
Proceeds from the sale of property and equipment		551			1
Purchase of investment property		(12	)		-
Net cash used in investment activities		(690	)		(876	)

The accompanying notes are integral part of the consolidated interim financial information.

F-7

Sendas Distribuidora S.A.

Interim condensed consolidated statements of cash flows

For the nine months ended September 30, 2020 and 2019

(In millions of Brazilian Reais)

	For the nine months ended September 30,
	2020			2019
	Unaudited
Cash flow financing activities
Proceeds from borrowings and financing		2,782			8,909
Payments of borrowings and financing		(2,321	)		(262	)
Dividends and interest on equity paid		(138	)		(50	)
Payments of lease liabilities		(549	)		(169	)
Transaction with non-controlling interest		2			-
Net cash generated by financing activities		(224	)		8,428
Net (decrease) increase in cash and cash equivalents		(1,556	)		7,879

Exchange rate variation on cash and cash equivalents		428			-
Cash and cash equivalents at the beginning of the year		5,026			1,411
Cash and cash equivalents at the end of the year		3,898			9,290

The accompanying notes are integral part of the interim condensed consolidated financial information.

F-8

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

Corporate information

Sendas Distribuidora S.A. (“Company” or “Sendas Distribuidora”) is mainly engaged in the retail and wholesale sale of food, bazar, and other products through its stores, represented by the banner “ASSAÍ”. The Company is based in the State of Rio de Janeiro, at Avenida Ayrton Senna, 6.000, Lote 2 - Anexo A, Jacarepaguá/RJ.

The Company is a wholly-owned subsidiary of Companhia Brasileira de Distribuição (“CBD”), which is controlled by the Casino Group, a French conglomerate and word leader in food retail.

1.1

Acquisition of Almacenes Éxito S.A.

On November 27, 2019, the Sendas Distribuidora completed a public offering in Colombia to acquire the shares of Almacenes Éxito S.A. (“Éxito”) from the public including those owned by Casino Guichard Perrachon (“Casino”). Éxito is a Colombian company that operates the Éxito, Carulla, Super Inter, Surtimax and Surtimayorista supermarket and hypermarket banners in Colombia, the Libertad banner in Argentina and the Disco and Devoto banners in Uruguay. Additionally, Éxito also operates shopping centers in Colombia under the banner Viva. Éxito is listed on the Colombian Securities Exchange. Further details of the acquisition are disclosed in Note 14 of the financial statements.

Éxito and its subsidiaries are referred to collectively as “Éxito Group”.

Sendas Distribuidora together with Éxito Group are referred to as the “Company”.

1.2

Sendas Distribuidora´s spin-off intended transaction

The Board of Directors, at a meeting held on September 9, 2020, approved initiating a study to segregate Sendas Distribuidora through a partial spin-off with its parent company CBD (the “Potential Transaction”).

The spin-off will be preceded by the transfer of the shareholding interest currently held by the Sendas Distribuidora in Éxito to CBD.

The goal of the Potential Transaction is to unleash the full potential of Sendas Distribuidora’s business, allowing it to operate on a standalone basis, with separate management teams, and focusing on its respective business model and market opportunities. Additionally, the Potential Transaction will provide direct access to the capital markets and other sources of funding.

Upon the implementation of the Potential Transaction, the shares issued by Sendas Distribuidora held by CBD will be distributed to CBD’s shareholders, on a pro-rata basis. The distribution of shares will occur after the listing of Sendas Distribuidora’s shares in the Novo Mercado segment of B3 S.A. – Brasil, Bolsa, Balcão (B3), together with the listing of ADRs representing the Company’s shares on the New York Stock Exchange (NYSE).

F-9

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

1.3

Impacts of the pandemic on the Company’s financial statements

The Company has been monitoring the spread of COVID-19 (Coronavirus) and its impacts on its operations. Management adopted various measures, among them, we point out a crisis committee composed of the senior management, which makes decisions in line with recommendations of the Brazilian Ministry of Health, local authorities, and professional associations.

The Company has been adopting all the measures to mitigate the transmission of virus at stores, distribution centers, and offices, such as frequent sanitization, employees’ safety/protection equipment, flexible working hours, and home office, among others.

Since the beginning of the COVID-19 outbreak, our stores have remained open. The Company has a strong commitment to society to continue selling essential products to its clients. We did not face supply-side hurdles from industries that continued supplying our distribution centers and stores.

On March 10, 2020, the CVM issued circular letter CVM-SNC / SEP No. 02/2020, instructing publicly-held companies to carefully assess the impacts of COVID-19 on their businesses and report the main risks in the quarterly information and uncertainties arising from this analysis, observing the applicable accounting standards.

The Company carried out a complete analysis of the quarterly information, in addition to renewing the analyzes on the Company’s operational continuity. The main themes evaluated were:

●

The Company revisited its budgets, used to estimate the recovery of store assets and intangible assets on December 31, 2019, and there is no relevant expectation of a decrease in revenues, and other lines of statement of operations, which show situations of loss of values recoverable from such assets. Due to the uncertainty regarding the end of the pandemic and its macroeconomic consequences, the Company assessed the existence of indicators of impairment for some of its assets and, consequently, revisited the asset impairment test on June 30, 2020 (see note 16) ; There were no new elements in the quarter ended September 30, 2020 that denote the need for the Company to review the asset impairment test.

●

We analyzed the collection of balances of trade receivables from credit card operators, clients, galleries at our stores, property rentals, we understand, at this point, it is not necessary to record provisions additional to those already recorded.

●

Concerning inventories, we do not envisage the need of an adjustment for market price.

●

Financial instruments already reflect the market assumptions in their valuation, there are no additional exposures not disclosed. The Company is not exposed to significant financing denominated in US dollars.

●

At this point, the Company does not envisage additional funding needs and

●

Finally, the costs necessary to adapt our stores to serve the public are highlighted in Note 27 - Other operating expenses, net.

F-10

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

In summary, according to the Management’s estimates and the monitoring of pandemic impacts or any other that could impact our business, there are no effects that should be recorded in the Company’s interim financial information, nor effects on the business continuity and/or estimates of the Company that would justify changes in conclusions of these interim financial information. The Company will continue monitoring and analyzing the impacts, and if necessary, will make the disclosures needed.

1.4

Sale and Leaseback Transaction

In line with the Company’s asset monetization strategy, a material fact was released on March 5, 2020, disclosed that the Company entered into a Sale and Leaseback Transaction with investment funds administered by BRL Trust Distribuidora de Títulos e Valores Mobiliários S.A. and managed by TRX Gestora de Recursos Ltda., by signing the “Private Instrument of Real Property Purchase and Sale Commitment and Surface Real Right”. This agreement initially estimated the sale of 13 real properties of the Company, for a total amount of R$532.

●

On May 29, 2020, the Company sold 4 of these real estate properties, for the total amount of R$175 paid in cash.

●

On June 29, 2020, the Company sold the other 4 real estate properties, for the total amount of R$206, paid in cash.

●

On July 22, 2020, the Company sold an additional 4 real estate properties for a total amount of R$131, excluding 1 real property of non-relevant amount out of total volume.

Thus, the Company completed the sale of 12 real estate properties to TRX funds, for R$513. The gain related to the transaction is recorded in this interim financial information in the note 27. The parties entered into lease agreements for each properly, with a term of 15 years, renewable for the same period.

Basis of preparation

The interim condensed consolidated financial information have been prepared in accordance with IAS 34 - Interim Financial Reporting.

The interim condensed consolidated financial statements do not include all the information and disclosures required in the annual financial statements, and should be read in conjunction with the Company’s annual consolidated financial statements as at 31 December 2019.

The interim condensed consolidated financial information is presented in millions of Reais - R$. The Company’s functional currency is the Brazilian Real - R$. The functional currency of the foreign subsidiary is its local currency where it operates.

The interim condensed consolidated interim financial information for the nine months period ended on September 30, 2020, were approved by the Board of Directors on December 12, 2020.

The interim condensed consolidated interim financial information was prepared based on historical cost, except for (i) certain financial instruments; and (ii) assets and liabilities arising from business combinations measured at their fair values, when applicable.

F-11

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

In each explanatory note to the interim condensed consolidated financial information as of September 30, 2020, reference is made to the disclosures and information included in the most recent annual financial statements (year ended December 31, 2019), in view of the absence of material changes in the period, when applicable. Accordingly, the interim condensed consolidated financial information being presented must be read in conjunction with such annual financial statements.

Significant accounting policies

The significant accounting policies adopted by the Company in the preparation of the interim condensed consolidated financial information are consistent with those adopted and disclosed on note 3 and each corresponding note of the financial statements for the year ended December 31, 2019 and therefore should be read in conjunction.

Adoption of new pronouncements, amendments, and interpretations of pronouncements issued by IASB

4.1

Standards and interpretations effective in 2020

Statement	Description	Applicable to annual periods stating in or after
IFRS 3-Business combination	Improves the definition of business, helping to determine whether the acquisition is from a group of assets or a business.	01/01/2020
Review - Financial Instruments: Recognition, Measurement and Disclosure	Changes due to the edition of Conceptual Structure Change in the definition of business combination in IFRS3 Changing the definition of material omission or materially distorted disclosure Change in the name of IFRS16 to Leases.	01/01/2020
Revision Conceptual Framework	Concepts and guidelines on presentation and disclosure, measurement bases, financial report objectives and useful information.	01/01/2020
Revision IAS2	As a practical expedient, the lessee may choose not to assess whether a Covid-19 Related Benefit Granted to Tenant under a Lease Agreement is a modification of the lease. The Company does not use this practical expedient.	01/01/2020 (Posted on 07/07/2020)

Applicable for acquisition made as of January 1, 2020.

The adoption of these standards did not result in a material impact on the Company´s interim condensed consolidated financial information.

F-12

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

4.2

New and reviewed standards and interpretations issued and not yet adopted

The Company did not early adopt the following new and reviewed IFRSs, already issued, but not effective yet:

Accounting pronouncement		Description		Applicable to annual periods starting in or after
IAS1 and IAS 8: Definition of material omission		Aligns the definition of omission in all standards defining what information is material if its omission, distortion or obscuration can reasonably influence decisions that the main users of the general purpose financial statements make based on these financial statements, which provide financial information about a specific report of the entity.		01/01/2021

This change is not expected to have a significant impact on the Company’s interim condensed consolidated financial information.

Significant accounting judgments, estimates, and assumptions

The preparation of the interim condensed consolidated financial information requires that Management to makes judgments estimates and assumptions that impact the reported amounts of revenues, expenses, assets, and liabilities, and the disclosure of contingent liabilities at the end of the year, however, the uncertainty about these assumptions and estimates could result in substantial adjustments to the carrying amount of asset or liability impacted in future periods.

The significant assumptions and estimates used in the preparation of the interim condensed consolidated financial information for the nine months ended on September 30, 2020 were the same as those adopted in the consolidated financial statements for the year ended December 31, 2019.

Cash and cash equivalents

The detailed information on cash and cash equivalents was presented in the annual consolidated financial statements for 2019, in note 7.

	As of September 30, 2020		As of December 31, 2019
Cash and bank accounts - Brazil		74		67
Cash and bank accounts - Abroad (*)		1,687		3,024
Financial investments - Brazil (**)		2,078		1,810
Financial investments - Abroad (***)		59		125
		3,898		5,026

(*)

On September 30, 2020, these refer to (i) funds from Éxito Group, R$86 in Argentina, R$342 in Uruguay, and R$1,121 in Colombian pesos; (ii) Company funds invested in the abroad, in dollars in the amount of R$24 and R$114 in Colombian pesos.

(**)

On September 30, 2020, the financial investments correspond to the repurchase and resale agreements, yielded by the weighted average of 98.85% of CDI – Interbank Deposit Certificate (87.71% of CDI on December 31, 2019) and redeemable within terms less than 90 days, as of the date of investment, without losing income.

(***)

These refer to foreign investments, in a local currency, corresponding to R$10 in Uruguay and R$49 in Colombia.

F-13

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

Trade receivables

The detailed information on trade receivables was presented in the annual consolidated financial statements for 2019, in Note 8.

	Note	As of September 30, 2020			As of December 31, 2019
Credit card companies	7.1		63			17
Credit card companies with related parties	11.1		9			10
Sales ticket and others			438			383
Trade receivables with related parties	11.1		5			21
Trade receivables with suppliers/slips			10			92
Allowance for doubtful accounts	7.2		(49	)		(32	)
			476			491
Current asset			472			491
Noncurrent asset			4			-

7.1

Credit card companies

The Company, through the cash management strategy, anticipates the amount receivable with credit card companies, without any right of recourse or related obligation and write off the balance of trade receivables.

7.2

Allowance for doubtful accounts

	For the nine months ended September 30,
	2020			2019
At the beginning of the period		(32	)		(4	)
Additions/reversals recorded in the period		(11	)		(1	)
Foreign currency translation adjustment		(6	)		-
At the end of the period		(49	)		(5	)

F-14

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

Set forth the breakdown of trade receivables by their gross amount by maturity period:

					Overdue
	Total		Due		Less than 30 days		Less than 60 days		Less than 90 days		> 90 days
As of September 30, 2020		525		194		283		29		9		10
As of December 31, 2019		523		407		59		14		4		39

Other accounts receivable

	As of September 30, 2020		As of December 31, 2019
Rental receivables - commercial galleries		183		71
Sales of real estate properties		18		101
Others accounts receivable - Éxito		90		61
Others		10		10
		301		243
Current assets		252		206
Noncurrent assets		49		37

Inventories

The detailed information on inventories was presented in the annual consolidated financial statements for 2019, in Note 10.

	Note	As of September 30, 2020			As of December 31, 2019
Stores			2,938			2,402
Distribution centers			402			404
Inventories - Grupo Éxito			2,964			2,255
Real estate inventories - Grupo Éxito			136			190
Allowance for losses on inventory obsolescence and damages	9.1		(57	)		(61	)
			6,383			5,190

F-15

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

9.1

Allowance for losses on inventory obsolescence and damage

	For the nine months ended September 30,
	2020			2019
At the beginning of the period		(61	)		(34	)
Write-offs		8			15
Foreign currency translation adjustment		(4	)		-
At the end of the period		(57	)		(19	)

Recoverable taxes

The detailed information on recoverable taxes was presented in the consolidated annual financial statements for 2019, in Note 11.

	Nota	As of September 30, 2020		As of December 31, 2019
ICMS State VAT	10.1		1,255		1,189
PIS/COFINS credit			71		353
National Institute of Social Security - INSS	10.2		30		27
Income tax and social contribution (*)			461		410
Other			1		25
Other taxes - Grupo Éxito			140		77
Total			1,958		2,081
Current assets			1,090		1,119
Noncurrent assets			868		962

(*)

includes Éxito Group in the amount of R$370 (R$340 on December 31, 2019).

10.1

–ICMS – State VAT tax credits

Referring to the credits which still cannot be promptly offset, the Company’s Management, based on recovery technical study, based on the future expectation of growth and subsequent offset with debts deriving from its operations, understands to be feasible its future offset. The studies mentioned are prepared and periodically reviewed based on information collected from strategic planning previously approved by the Company’s Board of Directors. For the interim condensed consolidated financial information as of September 30, 2020, Management has monitoring controls over the plan annually established, re-assessing and including new elements to contribute to the realization of recoverable ICMS balance, as shown below:

Year
In 1 year			408
From 1 to 2 years			338
From 2 to 3 years			342
From 3 to 4 years			103
From 4 to 5 years			15
After 5 years			49
Total			1,255

F-16

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

10.2

National Institute of Social Security - INSS

On August 28, 2020, the Supreme Court, in general repercussion, recognized the incidence of social security contributions on the constitutional one-third of vacations payment. The Company has been following the development of these issues, and together with its legal advisors, concluded that the elements so far do not impact the expectation of realization. The amount involved for is R$11 on September 30, 2020.

Related Parties

The detailed information on related parties was presented in the annual consolidated financial statements for 2019, in Note 12.

11.1

Balances and related party transactions

	Assets								Liabilities
	Clients				Other assets				Suppliers				Other liabilities
	As of September 30, 2020		As of December 31, 2019		As of September 30, 2020		As of December 31, 2019		As of September 30, 2020		As of December 31, 2019		As of September 30, 2020		As of December 31, 2019
Controlling shareholder
CBD		4		13		-		2		8		1		150		90
Casino		-		5		-		5		-		-		-		-
		4		18		-		7		8		1		150		90
Other related parties
Novasoc Comercial Ltda.		-		-		4		4		-		-		4		4
Compre Bem		-		2		9		11		-		-		-		-
Greenyellow		-		-		5		10		-		-		25		15
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento (“FIC”)		10		10		9		10		7		16		-		-
Puntos Colombia		-		-		37		29		-		-		47		43
Tuya		-		-		27		26		-		-		-		-
Others		-		1		-		-		-		-		-		-
		10		13		91		90		7		16		76		62
Total		14		31		91		97		15		17		226		152

F-17

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

	Transactions
	Purchases						Revenue (Expenses)
	For the nine months ended September 30,
	2020			2019			2020			2019
Controlling shareholder
CBD		-			(1	)		(153	)		(103	)
		-			(1	)		(153	)		(103	)
Other related parties
Compre Bem		(1	)		(14	)		3			(1	)
Puntos Colombia		-			-			(80	)		-
Tuya		-			-			17			-
Greenyellow		-			-			(34	)		(8	)
Grupo Casino		-			-			(18	)		-
Others		-			-			(2	)		-
		(1	)		(14	)		(114	)		(9	)
Total		(1	)		(15	)		(267	)		(112	)

11.2

Management compensation

Expenses referring to the statutory executive board compensation recorded in the Company’s statement of operations for the nine months ended September 30, 2020 and 2019, as follows:

	Base salary		Variable compensation		Stock options plan		Total
2020		11		5		4		20
2019		14		6		4		24

The stock option plan refers to the Company’s executives holding CBD’s shares and this plan has been treated in the Company’s statement of operations, related expenses are allocated to the Company and recorded in the statement of operations against capital reserve – stock options in shareholders’ equity. There are no other short-term or long-term benefits granted to the members of the Company’s Management.

Investments in associate entities

12.1

Consolidation basis

The detailed information on consolidation, have not changed significantly and was presented in the annual consolidated financial statements for 2019, in Note 13.1.

F-18

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

12.2

Breakdown of investments and rollforward

Balance as of December 31, 2019			320
Equity accounting			17
Capital increase			50
Equity on other comprehensive income			65
Balance as of September 30, 2020			452

Business combination and goodwill

As of September 30, 2020, there were no relevant changes, so the complete information regarding the business combination and goodwill is disclosed in the 2019 annual consolidated financial statements, in Note 14.

Investment properties

The detailed information on property and equipment, have not changed significantly and was presented in the annual consolidated financial statements for 2019, in Note 15.

	As of December 31, 2019		Additions		Depreciation			Exchange rate changes		Transfers			As of September 30, 2020
Land		656		-		-			133		(19	)		770
Buildings		2,385		5		(46	)		490		3			2,837
Construction in progress		10		7		-			2		(2	)		17
Total		3,051		12		(46	)		625		(18	)		3,624

	As of September 30, 2020							As of December 31, 2019
	Historical cost		Accumulated depreciation			Net amount		Historical cost		Accumulated depreciation			Net amount
Land		771		-			771		656		-			656
Buildings		2,891		(54	)		2,837		2,400		(15	)		2,385
Construction in progress		16		-			16		10		-			10
Total		3,678		(54	)		3,624		3,066		(15	)		3,051

F-19

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

Property and equipment, net

15.1

Property and equipment rollforward

	As of December 31, 2019		Additions		Remeasurement			Write-off			Depreciation			Transfer and others (**)			Exchange rate changes		As of September 30, 2020
Land		2,766		62		-			-			-			(125	)		490		3,193
Buildings		3,829		52		-			(48	)		(89	)		(246	)		620		4,118
Improvements		2,207		545		-			(54	)		(139	)		306			75		2,940
Equipment		1,242		159		-			(14	)		(190	)		28			132		1,357
Facilities		330		33		-			(3	)		(23	)		(20	)		15		332
Furniture and appliances		601		47		-			(3	)		(93	)		35			59		646
Constructions in progress		140		222		-			(6	)		-			(161	)		26		221
Others		42		5		-			-			(12	)		10			-		45
Subtotal		11,157		1,125		-			(128	)		(546	)		(173	)		1,417		12,852
Lease - right of use:
Buildings		3,449		670		507			(219	)		(365	)		5			354		4,401
Equipments		43		14		(7	)		(1	)		(10	)		-			7		46
Land		3		-		-			-			-			-			1		4
Subtotal		3,495		684		500			(220	)		(375	)		5			362		4,451
Total		14,652		1,809		500			(348	)		(921	)		(168	)		1,779		17,303

F-20

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

	As of December 31, 2018		Additions		Remeasurement		Write-off			Depreciation			Transfer and others (*)			As of September 30, 2019
Land		348		74		-		-			-			24			446
Buildings		583		157		-		-			(13	)		56			783
Improvements		1,733		343		-		(2	)		(87	)		(9	)		1,978
Equipment		416		102		-		(1	)		(59	)		5			463
Facilities		221		39		-		(1	)		(14	)		1			246
Furniture and appliances		226		36		-		-			(24	)		19			257
Constructions in progress		39		44		-		(1	)		-			(43	)		39
Others		29		2		-		-			(8	)		9			32
Subtotal		3,595		797		-		(5	)		(205	)		62			4,244
Lease - right of use:
Buildings		1,053		248		62		(1	)		(82	)		(8	)		1,272
Equipment		7		-		-		-			(2	)		-			5
Subtotal		1,060		248		62		(1	)		(84	)		(8	)		1,277
Total		4,655		1,045		62		(6	)		(289	)		54			5,521

(*)

Includes: (i) the capital contribution in kind (properties) from our parent company CBD in the amount of R$178 (Note 24.1) and (ii) transfers of fixed assets to "held for sale" in the amount of R$380.

(**)

Includes the capital contribution in kind (properties) form our parent company CBD in the amount of R$67, see Note 24.1.

F-21

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

	As of September 30, 2020							As of December 31, 2019
	Historical cost		Accumulated depreciation			Net amount		Historical cost		Accumulated depreciation			Net amount
Land		3,193		-			3,193		2,766		-			2,766
Buildings		4,443		(325	)		4,118		4,034		(205	)		3,829
Improvements		3,924		(984	)		2,940		3,023		(816	)		2,207
Equipment		2,771		(1,414	)		1,357		2,326		(1,084	)		1,242
Facilities		514		(182	)		332		477		(147	)		330
Furniture and appliances		1,404		(758	)		646		1,163		(562	)		601
Construction in progress		221		-			221		140		-			140
Others		129		(84	)		45		110		(68	)		42
		16,599		(3,747	)		12,852		14,039		(2,882	)		11,157
Finance lease
Buildings		5,565		(1,164	)		4,401		4,198		(749	)		3,449
Equipment		104		(58	)		46		92		(49	)		43
Land		8		(4	)		4		6		(3	)		3
		5,677		(1,226	)		4,451		4,296		(801	)		3,495
Total Property and Equipment		22,276		(4,973	)		17,303		18,335		(3,683	)		14,652

F-22

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

15.2

Capitalized borrowing costs

The capitalized borrowing costs for the nine months ended on September 30, 2020 totaled R$6 (R$10 for the nine months ended September 30, 2019). The rate used to determine the borrowing costs eligible for capitalization was 133.91% (102.31% for September 30, 2019) of CDI, corresponding to the effective interest rate of loans taken by the Company.

15.3

Additions to property and equipment for cash flow presentation purpose are as follows:

	For the nine months ended September 30,
	2020			2019
Additions		1,809			1,045
Leases		(684	)		(248	)
Capitalized interest		(6	)		(10	)
Financing of property and equipment - Additions		(1,037	)		(740	)
Financing of property and equipment - Payments		1,056			795
Total		1,138			842

15.4

Other information

On September 30, 2020, the Company recorded in the cost of sales and services the amount of R$115 (R$16 on September 30, 2019), referring to the depreciation of machinery, building and facilities relating to distribution centers.

F-23

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

Intangible assets, net

The detailed information on Intangible assets was presented in the annual consolidated financial statements for 2019, in Note 17.

	As of December 31, 2019		Additions		Amortizations			Exchange rate changes		Transfers		As of September 30, 2020
Goodwill		785		-		-			29		-		814
Software		135		51		(29	)		15		1		173
Commercial rights		314		6		(6	)		-		-		314
Tradename		3,054		-		-			598		-		3,652
		4,288		57		(35	)		642		1		4,953

	As of December 31, 2018		Additions		Amortizations			As of September 30, 2019
Goodwill		616		-		-			616
Software		61		11		(9	)		63
Commercial rights		297		24		(6	)		315
Tradename		39		-		-			39
		1,013		35		(15	)		1,033

In the consolidated, the balance of the accumulated cost on September 30, 2020 is R$5,461 (R$4,732 on December 31, 2019) and accumulated amortization R$509 (R$444 on December 31, 2019).

16.1

Impairment test of intangible assets with an indefinite useful life, including goodwill

Goodwill and intangible assets were tested for impairment as of December 31, 2019 according to the method described in note 16 property and equipment, in the financial statements for the year ended December 31, 2019

On June 30, 2020, the Company revised the plan used to assess the impairment for operations in Brazil. The value in use was determined, based on cash projections from financial budgets, which were reviewed and approved by Senior Management for the next three years, considering the assumptions updated for June 30, 2020.The discount rate applied to cash flow projections is 8.1% on June 30, 2020 (8.4% on December 31, 2019), and cash flows that exceed the three-year period are extrapolated using a growth rate of 3.9% on June 30, 2020 (4.8% on December 31, 2019). As a result of this analysis, there was no need to record a provision for impairment on these assets. See considerations regarding the effects of the COVID-19 pandemic in Note 1.2.

In relation to the Éxito Group, the projections used for the impairment tests for the financial statements of December 31, 2019 were revisited and updated and there was no need to recognize any impairment loss on the Éxito Group assets.

There were no new elements in the quarter ended September 30, 2020 that denote the need for the Company to review the asset impairment test carried out on June 30, 2020.

F-24

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

Trade payables, net

The detailed information on trade payables was presented in the annual consolidated financial statements for 2019, in Note 18.

	As of September 30, 2020			As of December 31, 2019
Product suppliers		7,611			9,250
Service providers		572			573
Bonuses from suppliers		(45	)		(53	)
Total		8,138			9,770

Borrowings and financing

The detailed information on borrowings and financing was presented in the annual consolidated financial statements for 2019, in Note 19.

18.1

Debt breakdown

	Weighted average rate	As of September 30, 2020			As of December 31, 2019
Current
Debentures and promissory notes
Debentures	CDI + 1.71 p.a.		1,823			1,189
Borrowing costs			(24	)		(33	)
			1,799			1,156
Loans and financing denominated in domestic currency
BNDES	3.72% p.a.		7			7
Working capital	TR + 9.80%		13			-
Working capital	CDI + 2.88 p.a.		8			14
Borrowing costs			(5	)		(3	)
Total domestic currency			23			18
In foreign currency
Working capital	USD + 2.35% p.a.		283			287
Working capital	IBR 3M+3.7%		1,538			-
Working capital	Pre: 31.15%		32			-
Credit letter			24			-
Swap contracts	CDI + 0.59 p.a.		(80	)		-
Swap contracts	IBR 3M+3.7%		3			(18	)
Total foreign currency			1,800			269
Total current			3,622			1,443

F-25

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

	Weighted average rate	As of September 30, 2020			As of December 31, 2019
Noncurrent
Debentures and promissory notes
Debentures	CDI + 1.86 p.a.		4,742			6,773
Borrowing costs			(26	)		(46	)
			4,716			6,727
Loans and financing denominated in domestic currency

BNDES	4.31% p.a.		11			16
Working capital	TR + 9.80%		63			70
Working capital	CDI + 1.96 p.a.		899			500
Swap contracts	CDI + 0.04 p.a.		(11	)		(10	)
Borrowing costs			(9	)		(10	)
Total domestic currency			953			566
In foreign currency
Working capital	IBR 3M+3.7%		518			46
Borrowing costs			-			(1	)
Total foreign currency			518			45
Total noncurrent			6,187			7,338

Total			9,809			8,781

Current assets			80			29
Noncurrent assets			11			11
Current liabilities			3,702			1,472
Noncurrent liabilities			6,198			7,349

F-26

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

18.2

Rollforward

Balance as of December 31, 2019	8,781
Additions	2,782
Accrued interest	381
Swap contracts	(82	)
Mark-to-market	7
Exchange rate and monetary variation	79
Borrowing costs	33
Interest amortization	(449	)
Principal amortization	(1,918	)
Swap amortization	17
Exchange rate changes	178
Balance as of September 30, 2020	9,809

Balance as of December 31, 2018	726
Additions	8,909
Accrued interest	81
Swap contracts	(88	)
Mark-to-market	113
Exchange rate and monetary variation	40
Borrowing costs	2
Interest amortization	(30	)
Principal amortization	(284	)
Swap amortization	52
Balance as of September 30, 2019	9,521

18.3

Schedule of noncurrent maturities

Maturity
From 1 to 2 years	2,749
From 2 to 3 years	2,852
From 3 to 4 years	289
From 4 to 5 years	282
After 5 years	50
Total	6,222
Borrowing Cost	(36	)
Total	6,186

F-27

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

18.4

Debentures and promissory notes

	Issue		Outstanding Debentures		Date		Annual financial	Unit price		As of September 30,			As of December 31,
	amount		(units)		Issuance	Maturity	charges	(in Reais)		2020			2019
First Issue of Promissory Notes - 1st series		50		1	7/4/2019	7/3/2020	CDI + 0.72% p.a.		-		-			52
First Issue of Promissory Notes - 2nd series		50		1	7/4/2019	7/5/2021	CDI + 0.72% p.a.		52.998.286		53			52
First Issue of Promissory Notes - 3rd series		50		1	7/4/2019	7/4/2022	CDI + 0.72% p.a.		52.998.286		53			52
First Issue of Promissory Notes - 4th series		250		5	7/4/2019	7/4/2023	CDI + 0.72% p.a.		52.998.286		265			258
First Issue of Promissory Notes - 5th series		200		4	7/4/2019	7/4/2024	CDI + 0.72% p.a.		52.998.286		212			206
First Issue of Promissory Notes - 6th series		200		4	7/4/2019	7/4/2025	CDI + 0.72% p.a.		52.998.286		212			206
First Issue of Debentures- 1st series		2000		2000000	9/4/2019	8/20/2020	CDI + 1.60% p.a.		-		-			1,001
First Issue of Debentures - 2nd series		2000		2000000	9/4/2019	8/20/2021	CDI + 1.74% p.a.		876		1,753			2,044
First Issue of Debentures - 3rd series		2000		2000000	9/4/2019	8/20/2022	CDI + 1.95% p.a.		1.004		2,008			2,045
First Issue of Debentures - 4th series		2000		2000000	9/4/2019	8/20/2023	CDI + 2.20% p.a.		1.005		2,009			2,046
Borrowing Cost											(50	)		(79	)
											6,515			7,883

Current liabilities											1,799			1,156
Noncurrent liabilities											4,716			6,727

18.5

Borrowings in foreign currencies

On September 30, 2020, the Company had loans denominated in foreign currencies (US dollar) to strengthen its the working capital, maintaining its cash strategy, lengthening its indebt profile and make investments.

18.6

Guarantees

The Company has signed promissory notes for some loan agreements.

18.7

Swap contracts

The Company uses swap operations for 100% of its borrowings denominated in US dollars and fixed interest rates, exchanging these liabilities for Real linked to CDI (floating) interest rates. These agreements have the same debt term and protect the interest rates and principal and are signed with the same due dates and in the same economic group. The annual weighted average rate in September 30, 2020 was 3.54% of CDI (5.96% on December 31, 2019).

F-28

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

18.8

Financial covenants

In connection with the debentures and promissory notes issued and part of loan operations denominated in foreign currency, the Company is required to maintain certain financial ratios. These ratios are calculated quarterly based on the Company’s consolidated financial statements drawn up in accordance with the accounting practices adopted in Brazil, as follows: (i) net debt (debt less cash equivalents and trade receivables) not exceeding shareholders’ equity; and (ii) consolidated net debt/EBITDA ratio less than or equal to 3.25. On September 30, 2020, the Company was compliant with these ratios.

Also, the instrument of the 1^st issue of the Company’s debentures provides for a restrictive covenant that determines limits for distribution of dividends above the legal minimum and higher indebtedness for the acquisition of other entities.

Financial instruments

The detailed information on financial instruments was presented in the annual financial statements for 2019, in note 20.

The main financial instruments and their carrying amounts, by category, are as follows:

		Carrying amount
	Notes	As of September 30, 2020			As of December 31, 2019
Financial assets
Amortized cost
Related parties - assets	11		91			97
Trade receivables and other accounts receivable	7 e 8		642			686
Other assets	0		47			51
Fair value through income
Cash and cash equivalents	6		3,898			5,026
Financial instruments - fair value hedge- long position	0		102			40
Other assets	0		2			2
Fair value through other comprehensive income
Trade receivables with credit card companies and sales tickets	7		135			48
Other assets	0		30			19
Financial liabilities
Other financial liabilities - amortized cost
Related parties - liabilities	0		(226	)		(152	)
Trade payables	0		(8,138	)		(9,770	)
Financing through acquisition of assets	0		(85	)		(101	)
Borrowings and financing	18		(3,024	)		(843	)
Debentures	0		(6,515	)		(7,883	)
Lease liabilities	0		(4,956	)		(3,751	)
Fair value through income
Borrowings and financing, including derivatives	18		(356	)		(84	)
Financial instruments - Fair value hedge - short position	0		(5	)		(11	)
Financial instruments on suppliers - Fair value hedge - Short	0		-			(8	)
Grupo Disco put option (*)	0		(581	)		(466	)
Net exposure			(18,939	)		(17,100	)
(* See note 19.4)

The financial instruments measured at amortized cost, the related fair values of which differ from the carrying amounts, are disclosed in Note 19.4. The fair value of other financial instruments detailed in table above approximates the carrying amount based on the existing terms and conditions.

F-29

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

19.1

Considerations on risk factors that may affect the businesses of the Company and its subsidiary

19.1.1

Credit Risk

●

Cash equivalents: In order to minimize credit risks, the Company adopts investments policies at financial institutions approved by the Company’s Financial Committee, also taking into consideration monetary limits and financial institution evaluations, which are regularly updated.

●

Trade receivables: Credit risk related to trade receivables is minimized by the fact that a large portion of sales are paid with credit cards, and the Group sells these receivables to banks and credit card companies, aiming to strengthen working capital. The sales of receivables result in derecognition of the accounts receivable due to the transfer of the credit risk, benefits and control of such assets. Additionally, regarding the trade receivables collected in installments, the Group monitor the risk through the credit concession and by periodic analysis of the provision for losses.

The Company also has counterparty risk related to derivative instruments which is mitigated by the Company carrying out transactions, according to policies approved by governance boards.

There are no amounts receivable that are individually, high than 5% of trade receivables or sales, respectively.

19.1.2

Interest rate risk

The Company take borrowings and financing with major financial institutions for cash needs for investments. As a result, the Company is mainly exposed relevant in interest rates fluctuation risk, especially in view of derivatives liabilities (foreign currency exposure hedge) and CDI indexed debts. The balance of cash and cash equivalents, indexed to CDI, partially offsets the interest rate risk.

19.1.3

Foreign currency exchange rate risk

The Company is exposed to exchange rate fluctuations, which may increase outstanding balances of foreign currency denominated borrowings. The Company use derivatives such as swaps, aiming to mitigate the foreign currency exchange rate risk, converting the cost of debt into domestic currency and interest rates.

Éxito Group uses derivatives to hedge against the exchange rate variation on imports.

19.1.4

Capital risk management

The main objective of the Company’s capital management is to ensure that the Company maintains credit rating and a well-balanced equity ratio, in order to support businesses and maximize shareholder value. The Company manages the capital structure and makes adjustments, taking into account changes in the economic conditions.

F-30

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

The Company’s capital structure is as follows:

	As of September 30, 2020			As of December 31, 2019
Borrowings and financing		(9,900	)		(8,821	)
(-) Cash and cash equivalents		3,898			5,026
(-) Derivative financial instruments		97			40
Net debt		(5,905	)		(3,755	)

Shareholders´ equity		(12,698	)		(9,701	)
% Net debt over shareholders´ equity		47	%		39	%

19.1.5

Liquidity risk management

The Company manages liquidity risk through the daily analysis of cash flows and maturities of financial assets, and liabilities.

The table below summarizes the aging profile of the Company’s financial liability as of September 30, 2020.

	Less than 1 year			1 to 5 years			More than 5 years			Total
Borrowings and financing		1,949			1,629			76			3,654
Debentures		2,056			5,393			-			7,449
Derivative financial instruments		(79	)		(10	)		(2	)		(91	)
Lease liabilities		854			3,317			4,890			9,061
Trade payables		8,138			-			-			8,138
Total		12,918			10,329			4,964			28,211

The table above was prepared considering the undiscounted cash flows of financial assets and liabilities based on the earliest date the Company may be required to make a payment or eligible to receive a payment. To the extent that interest rates are floating, the non-discounted amount is obtained based on interest rate curves in the nine months ended on September 30, 2020. Therefore, certain balances reported are not consistent with the balances reported in balance sheets.

F-31

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

19.2

Derivative financial instruments

	Notional value						Fair value
	As of September 30, 2020			As of December 31, 2019			As of September 30, 2020			As of December 31, 2019
Swap with hedge accounting
Hedge purpose (debt)		309			750			358			84
Long Position
Fixed rate		106			95			75			84
USD + Fixed		203			655			283			-
EUR + Fixed		-			-			-			-

Short Position		(309	)		(698	)		(268	)		(73	)

Net hedge position		-			52			90			11

Realized and unrealized gains and losses over these contracts during the nine months ended September 30, 2020, are recorded as financial income or expenses and the balance receivable at its fair value of R$90 (R$11 on December 31, 2019). Assets are recorded as “financial instruments” and liabilities as “borrowings and financing”.

The effects of the fair value hedge recorded in the statement of operations for the nine months ended September 30, 2020, resulted in a gain of R$122 (loss of R$40 for nine months ended September 30, 2019).

19.3

Sensitivity analysis of financial instruments

According to Management’s assessment, the most probable scenario is what the market has been estimating through market curves (currency and interest rates) of the B3, on the maturity dates of each transaction.

Therefore, in the probable scenario (I) there is no impact on the fair value of financial instruments. For scenarios (II) and (III), for the exclusive effect a deterioration from 25% to 50%, was taken into account, respectively, on risk variables, up to one year of financial instruments.

For a probable scenario, the weighted exchange rate was R$5.64 on the due date, and the interest rate weighted was 1.96% per year.

In the case of derivative financial instruments (aiming at hedging the financial debt), changes in scenarios are accompanied by respective hedges, indicating that the effects are not significant.

F-32

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

The Company disclosed the net exposure of derivative financial instruments, each of the scenarios mentioned above in the sensitivity analysis as follows:

	Risk	Balance as of September 30,			Market projections
Transactions	(CDI Increase)	2020			Scenario (I)			Scenario (II)			Scenario (III)
Borrowings and Financing	CDI + 1.96 p.a.		(908	)		(935	)		(942	)		(949	)
Fixed rate swap contract (short position)	CDI + 0.04 p.a.		(64	)		(211	)		(214	)		(218	)
Foreign exchange swap contract (short position)	CDI +0.59 p.a.		(204	)		(909	)		(912	)		(921	)
Debentures	0,00%		(6,565	)		(6,758	)		(6,806	)		(6,854	)
Total net effect (loss)			(7,741	)		(8,813	)		(8,874	)		(8,942	)
Cash equivalents	98.85%		2,290			2,341			2,354			2,367
Net exposure gain (loss):			(5,451	)		(6,472	)		(6,520	)		(6,575	)
Net effect gain (loss):						(1,021	)		(1,069	)		(1,124	)

Éxito Group’s sensitivity analysis considers the economic environment in which this company operates. In Scenario I, the observable rates are used. In Scenario II it is considered an increase of 10% and in scenario III it is a decrease of 10%.

Scenario I: Reference Bank Index in Colombia (IBR) available of 1.702%.

Scenario II: 0.1702% increase in IBR and for Libor at 90-day Libor at days an increase of 0.014825%.

Scenario III: 0.1702% decrease in IBR and for Libor at 90-day a decrease of 0.014825%.

	Balance as of September 30,		Market projections
Transactions	2020		Scenario (I)		Scenario (II)		Scenario (III)
Borrowings and financing		2,105		2,105		2,074		2,076

19.4

Fair value measurement

The Company discloses the fair value of financial instruments measured at fair value and of financial instruments measured at amortized cost, the fair value of which differ from the carrying amount, in accordance with IFRS13, which refer to the requirements of measurement and disclosure.

The fair values of cash and cash equivalents, trade receivables and trade payables are equivalent to their carrying amounts.

The table below presents the fair value hierarchy of financial assets and liabilities measured at fair value and of financial instruments measured at amortized cost, the fair value of which is disclosed in the financial statements:

	Carrying amount						Fair value
	As of September 30, 2020			As of December 31, 2019			As of September 30, 2020			As of December 31, 2019			Level (*)
Trade receivables with credit cards companies and sales vouchers		135			-			135			-			2
Swaps of annual rates between currencies		80			-			80			-			2
Interest rate swaps		9			40			9			10			2
Forward between currencies		8			-			8			-			2
Borrowings and financing (fair value)		(357	)		(95	)		(357	)		(84	)		2
Borrowings and financing (amortized cost)		(9,539	)		(8,726	)		(4,107	)		(8,056	)		2
Grupo Disco put option (*)		(581	)		(466	)		(581	)		(466	)		3
		(10,245	)		(9,247	)		(4,813	)		(8,596	)

(*)

The minority shareholders of Grupo Disco del Uruguay S.A., a subsidiary of Grupo Éxito, have a put option exercisable based on a formula using information, such as net income, EBITDA – earnings before interest rates, taxes, depreciation, amortization, and net debt, besides fixed amounts contractually determined and exchange rate variation applicable to conversion to functional currency. This put option was reported in Acquisition of non-controlling interest account in the balance sheet.

F-33

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

There was no change in the fair value level classification in the nine months ended September 30, 2020.

The interest rate, foreign currency swaps, borrowings and financing are classified in level 2, as market inputs promptly observable are used, such for instance, interest rate projections, spot and forward currency parity quotes.

19.5

Consolidated position of operations with derivative financial instruments

The Company has derivative contracts with the following financial institutions: Itaú BBA, Bradesco, Banco Tokyo, Scotiabank, Credit Agricole Corporate, Banco de Bogotá, BBVA, BNP, BBVA, Davivenda, Bancolombia, HSBC, and Corficolombia.

The outstanding derivative financial instruments are presented in the table below:

Risk	Notional (millions)	Due date	As of September 30, 2020			As of December 31, 2019
Debt
USD - BRL	US$ 50	2021		80			-

Interest rate swaps registered at CETIP
Taxa pré-fixada x CDI	R$ 54	2027		6			5
Taxa pré-fixada x CDI	R$ 52	2027		5			5
Derivatives - Fair value hedge - Brazil				91			10

Debt
USD - COP	-	2020		-			20
USD - COP	COP 132,917	2022		(1	)		-
USD - COP	US$ 2	2022		2			1
Taxa de juros - COP	COP 49,950	2020		(1	)		(1	)
Taxa de juros - COP	COP 383,235	2021		(3	)		(1	)

Suppliers
EUR – COP	EUR 3	2020		1			-
USD – COP	USD 24	2020		4			(8	)
USD – COP	USD 23	2021		4			-
Derivatives - Grupo Éxito				6			11

Provision for legal proceedings

Detailed information on the provision for legal claims was presented in the 2019 annual consolidated financial statements, in note 21.

The provision for legal proceedings is estimated by the Company and supported by its legal counsel for an amount considered sufficient to cover probable losses.

	Tax claims			Social security and labor			Civil			Total
Balance as of December 31, 2019		221			75			53			349
Additions		-			20			29			49
Reversal		(3	)		(10	)		(12	)		(25	)
Payments		-			(2	)		(24	)		(26	)
Monetary restatement		1			6			1			8
Exchange rate changes		15			3			2			20
Balance as of September 30, 2020		234			92			49			375

	Tax claims			Social security and labor			Civil			Total
Balance as of December 31, 2018		147			55			34			236
Additions		17			8			6			31
Reversal		(9	)		(6	)		(4	)		(19	)
Payments		-			(2	)		(3	)		(5	)
Monetary restatement		3			5			1			9
Balance as of September 30, 2019		158			60			34			252

F-34

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

20.1

Tax claims

Tax claims are subject by law to the monthly monetary restatement, which refers to an adjustment to the number of provisions based on indexes adopted by each tax jurisdiction. Both interest rates charges and fines, where applicable, were calculated and provisioned concerning the unpaid amounts.

The main tax claims provisioned are as follows:

The Company has other tax claims, which according to its legal counsels’ analysis, were provisioned, namely: (i) discussions on the non-application of Prevention Accident Factor (FAP); (ii) discussions with State tax authorities on ICMS tax rate calculated in electricity bills; (iii) staple basket; and (iv) other matters.

The accrued amount on September 30, 2020, for these matters is R$234 (R$221 on December 31, 2019).

Éxito Group discuss tax matters relating to the value-added tax, property tax, industry, and commerce taxes, totaling R$92 on September 30, 2020 (R$77 on December 31, 2019).

20.2

Social security and labor

The Company is a party in various labor proceedings, especially due to dismissals in the regular course of business. On September 30, 2020, the Company recorded a provision of R$92 (R$75 on December 31, 2019), referring to a potential risk of loss relating to labor claims. The Management, assisted by its legal counsels, assesses these claims recording provisions for losses when reasonably estimated, considering previous experiences in relation to amounts claimed.

20.3

Civil

The Company answers for civil proceedings (indemnifications, collections, among others) which are in different procedural phases and various central courts. The Company’s Management records provisions in amounts considered sufficient to cover unfavorable court decisions when its internal and external legal counsels understand the losses are probable.

Among these proceedings, we point out:

The Company files and answers for various review and renewal lawsuits, discussing rental amounts currently paid by it. The Company recorded a provision for the difference between the amount originally paid by stores and the amounts pleaded by the adverse party in the lawsuit when internal and external legal counsels consider the probability of changing the lease amount paid by the entity. On September 30, 2020, the provision for these lawsuits amounted to R$25 (R$28 on December 31, 2019), to which there are no restricted deposits for legal proceeding.

The Company files and answers for certain lawsuits relating to the fines applied by inspection bodies of direct and indirect administration of the federal government, states, and municipalities, among them, we highlight the consumer defense bodies (PROCONs, INMETRO, and local governments). The Company, assisted by its legal counsels, assesses these claims recording provisions for probable cash disbursements, according to the estimate of loss. On September 30, 2020, the provision for these lawsuits is R$8 (R$8 on December 31, 2019).

The Company’s total civil and regulatory claims on September 30, 2020, is R$49 (R$53 on December 31, 2019).

Éxito Group is party to certain lawsuits relating to cases of civil liability, proceedings due to lease conditions, and other matters amounting to R$16 on September 30, 2020 (R$17 on December 31, 2019).

F-35

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

20.4

Possible contingent liabilities

The Company have other litigations for which the probability of loss was deemed by its legal counsel to be possible, but not probable, therefore, not accrued, totaling an updated amount of R$2,476 on September 30, 2020 (R$2,425 on December 31, 2019), mainly related to:

IRPJ (corporate income tax), IRRF (withholding income tax), CSLL (social contribution on net income) – The Company has several tax assessments referring to proceedings of a tax offset, goodwill disallowance, disagreements in payments and overpayments, fines due to non-compliance with ancillary obligation, among other less relevant issues. The amount involved corresponds to R$466 on September 30, 2020 (R$457 on December 31, 2019).

COFINS, PIS (federal taxes on gross revenues) – The Company has been questioned about discrepancies in payments and overpayments; fine due to non-compliance with ancillary obligation, disallowance of COFINS and PIS credits, among other issues. Referred proceedings are pending judgment in the administrative and judicial levels. The amount involved in these tax assessments is R636 as of September 30, 2020 (R$666 on December 31, 2019).

ICMS (State VAT) – The Company was assessed by State tax authorities as to the appropriation of credits from (i) suppliers acquisitions considered unqualified before the registry of the State Revenue Service; and (ii) among others. These tax assessments amount to R$1,223 on September 30, 2020 (R$1,157 on December 31, 2019), which are pending final judgment both in the administrative and judicial levels.

ISS (services tax), IPTU (urban property tax), Fees and other – These refer to tax assessments of discrepancies in payments of IPTU, fines due to non-compliance with ancillary obligations, ISS – refund of advertising expenses and various fees, totaling R$14 on September 30, 2020 (R$13 on December 31, 2019) and pending administrative and court decisions.

INSS (national institute of social security) – The Company was assessed due to the levy of payroll charges over benefits granted to its employees, among other issues, with possible losses of R$21 on September 30, 2020 (R$21 on December 31, 2019). Proceedings have been discussed in the administrative and judicial levels. On August 28, 2020, the Supreme Court, in general repercussion, recognized the incidence of social security contributions on the constitutional third of vacations as constitutional. The Company has been following the development of these issues, and together with its legal advisors, concluded that the elements so far do not require a provision to be registered.

Other litigation– these refer to real estate lawsuits in which the Company pleads the renewal of lease agreements and rentals according to the amounts practiced in the market, lawsuits within the scope of a civil court, special civil court, and administrative proceedings filed by inspection bodies, such as the consumer defense body (PROCONs), the National Institute of Metrology, Standardization and Industrial Quality– INMETRO, the National Agency of Sanitary Surveillance - ANVISA, amongst others, totaling R$12 on September 30, 2020 (R$20 on December 31, 2019).

The Company engages external legal counsel to defend it in tax assessments, whose remuneration is linked to a percentage to be applied over favorable court decisions in these proceedings. These percentages can vary according to qualitative and quantitative factors of each proceeding; on September 30, 2020, the estimated amount, if all proceedings had favorable court decision, was approximately R$17 (R$19 on December 31, 2019).

Éxito Group has an amount of R$87 of proceedings with chances of possible losses on September 30, 2020 (R$72 on December 31, 2019), most of them referring to tax issues.

F-36

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

20.5

Guarantees

Lawsuits	Real properties		Letter of guarantees		Total
Tax claims		18		295		313
Social security and labor		-		100		100
Civil and others		-		20		20
Total		18		415		433

The cost of guarantees is approximately 0.44% per year of the amount of the lawsuits and is recorded for expense for the time period.

20.6

Deduction of ICMS from the calculation basis of PIS and COFINS

Since the adoption of the non-cumulative regime to calculate PIS and COFINS, the Company has claimed the right to deduct ICMS taxes from the calculation basis of PIS and COFINS. On March 15, 2017, the Supreme Court ruled that the ICMS should be excluded from the calculation basis of PIS and COFINS.

Since such decision, the proceedings have been brought forward by our legal advisors without any change in management’s judgment, but without the final decision on the appeal filed by the Attorney General. The Company and its legal counsel believe that decision on this appeal will limit the right of the lawsuit filed by the Company, however, the elements of proceedings are still pending decision, and do not allow to recognize the asset related to the credits to be raised since the filing of the lawsuit in 2003. The Company still estimates the potential amount of credits at R$117.

20.7

Restricted deposits for legal proceedings

The Company is challenging the payment of certain taxes, contributions, and labor liabilities and made judicial deposits in the corresponding amounts, as well as escrow deposits related to the provision for legal proceedings.

The Company recorded amounts referring to judicial deposits in its assets.

Lawsuits	As of September 30, 2020		As of December 31, 2019

Tax claims		64		69
Social security and labor		43		43
Civil and others		7		9
Total		114		121

F-37

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

Leases

21.1

Lease obligations

The detailed information on leasing obligations were presented in the annual consolidated financial statements for 2019, in note 22.

21.2

Minimum future payments and potential right of PIS and COFINS

Leasing agreements totaled R$4,956 on September 30, 2020 (R$3,751 on September 30, 2019). The minimum future payments as leasing, under the terms of leasing, along with the fair value of minimum lease payments, are as follows:

	As of September 30, 2020		As of December 31, 2019
Financial lease liabilities - minimum payments
Less than 1 year		498		404
1 to 5 years		1,659		1,323
More than 5 years		2,799		2,024
Present value of financial lease agreements		4,956		3,751

Future financing charges		4,105		2,347
Gross amount of financial lease agreements		9,061		6,098
PIS and COFINS embedded in the present value of lease agreements		155		115
PIS and COFINS embedded in the gross value of lease agreements		298		214

Lease liabilities interest expense is stated in note 28. The incremental borrowing rate of the Company on the commencement of the lease agreement was 10.01% for the nine months ended September 30, 2020 (12.83% December 31, 2019).

The average term of agreements considered is 14.7 years. For international subsidiaries, the average nominal incremental rate is 7.5%, with 3.5% of embedded inflation. The average term of agreements considered is 9.2 years.

F-38

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

21.3

Lease obligation rollforward

As of December 31, 2019	3,751
Funding – Lease	684
Remeasurement	500
Interest provision	312
Exchange rate and monetary variation	2
Amortizations	(549	)
Write-off due to early termination of agreement	(138	)
Transfer to parent company	9
Exchange rate changes	385
As of September 30, 2020	4,956
Current liabilities	498
Noncurrent liabilities	4,458

As of December 31, 2018	1,180
Funding – Lease	248
Remeasurement	62
Interest provision	107
Amortizations	(169	)
Write-off due to early termination of agreement	(3	)
As of September 30, 2019	1,425
Current liabilities	104
Noncurrent liabilities	1,321

21.4

Variable rental lease expense, low-value, and short-term assets

	For the nine months ended September 30,
	2020		2019
Expenses (revenues) for the period:
Variables (0.5% e 1.6% of sales)		12		11
Subleases (*)		14		14

(*)

It mainly refers to revenue from rental agreements receivable from commercial galleries.

F-39

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

Deferred revenues

The detailed information on deferred revenue was presented in the annual consolidated financial statements for 2019, in note 23.

	Note	As of September 30, 2020		As of December 31, 2019

Future sales commitment	22.1		49		-
Rental of spaces in stores			34		132
Checkstand			7		20
Gift card			75		95
Revenue from credit card operators			4		15
Deferred revenue – Grupo Éxito			18		8
Others			16		9
Total			203		279

Current liabilities			202		277
Noncurrent liabilities			1		2

22.1

Future sales commitment

In June 2020, the Company sold 02 stores through the Sale and Leaseback agreement with Vórtx Distribuidora de Títulos e Valores Mobiliários Ltda., by signing a “Private Instrument of Real Property Purchase Sale”. This operation is in line with the Company´s asset monetization strategy, the stores are located in the states of Ceará and Rio de Janeiro. The total amount of the sale was R$100, of which the amount received was R$80 and the remaining balance of R$20, will be settled in three semiannual installments. It was observed that the parties entered into lease agreements for each of the properties, on the closing date of the transaction, with a term of 20 years, renewable for the same period, ensuring the continuity of the Company’s operations in properties with sustainable financial conditions.

F-40

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

Income tax and social contribution

23.1

Reconciliation of income tax and social contribution expense

The detailed information on income tax and social contribution was presented in the annual consolidated financial statements for 2019, in note 24.

	For the nine months ended September 30,
	2020			2019

Earnings before income tax and social contribution		997			1,145
Income tax and social contribution at nominal rates (34%)		(339	)		(389	)
Adjustments to reflect the effective rate
Tax fines		(1	)		(1	)
Equity pick-up		6			-
Interest on equity		105			-
Tax benefits		35			10
Other permanent differences		27			9
Effective income tax		(167	)		(371	)
Income tax and social contribution for the year
Current		(501	)		(308	)
Deferred		334			(63	)
Income tax and social contribution expenses		(167	)		(371	)
Effective rate		16.8	%		32.4	%

F-41

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

23.2

Breakdown of deferred income tax and social contribution

Key components of deferred income tax and social contribution in balance sheets are the following:

	As of September 30, 2020									As of December 31, 2019
	Assets			Liabilities			Net			Assets			Liabilities			Net
Deferred income tax and social contribution
Tax losses		338			-			338			253			-			253
Provision for contingencies		158			-			158			106			-			106
Exchange rate variation		24			-			24			31			-			31
Goodwill tax amortization		-			(524	)		(524	)		-			(480	)		(480	)
Mark-to-market adjustment		-			-			-			-			(3	)		(3	)
Property and equipment, intangible and investment properties		65			(1,493	)		(1,428	)		-			(1,217	)		(1,217	)
Unrealized gains with tax credits		123			(77	)		46			-			(130	)		(130	)
Cash flow hedge		4			(69	)		(65	)		-			(78	)		(78	)
Lease net of right of use		174			-			174			105			-			105
Presumed tax on equity - Éxito		227			-			227			192			-			192
Others		56			(35	)		21			30			-			30
Gross deferred income tax and social contribution assets (liabilities)		1,169			(2,198	)		(1,029	)		717			(1,908	)		(1,191	)
Compensation		(1,169	)		1,169			-			(717	)		717			-
Net deferred income tax and social contribution assets (liabilities)		-			(1,029	)		(1,029	)		-			(1,191	)		(1,191	)

The Company estimates the recovery of the deferred tax assets as follows:

Years
Up to one year			212
From 1 to 2 years			306
From 2 to 3 years			125
From 3 to 4 years			153
From 4 to 5 years			136
Above 5 years			237
			1,169

F-42

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

23.3

Rollforward

	For the nine months ended September 30,
	2020			2019
At the beginning of the period		(1,191	)		(265	)
Benefits (expenses) in the year		334			(63	)
Income tax on other comprehensive income		-			18
Conversion currency adjustment		(172	)		-
At the end of the period		(1,029	)		(310	)

Shareholders’ equity

24.1

Capital stock and stock rights

The Company’s capital stock on September 30, 2020 is R$4,749 (R$4,421 on December 31, 2019), represented by 268,000 common shares, respectively, all non-par and registered shares.

The Extraordinary Shareholders’ Meeting held on March 31, 2020 approved: (i) the payment of capital through 3 real properties in the amount of R$57, by issuing 87 million new non-par, registered, common shares.

The Extraordinary Shareholders’ Meeting held on March 31, 2020, approved the capital increase by capitalizing the Advance for Future Capital Increase - AFAC in the amount of R$150, without issuing new shares.

The Extraordinary Shareholders’ Meeting held on September 30, 2020, approved: (i) the payment of capital through 4 real properties in the amount of R$121, by issuing 42 million new non-par, registered, common shares.

24.2

Interest on equity

The Extraordinary Shareholders’ Meeting held on September 29, 2020, approved the payment of interest on equity, in the gross amount of R$310, over which the withholding income tax was deducted in the amount of R$46, corresponding to the net amount of R$264.

24.3

Other comprehensive income

The cumulative effect of gains and loss on the translation of assets, liabilities and profit of Colombian pesos to Reais, corresponding to the investment by Company in the subsidiary Éxito generating a gain of R$1,555.

F-43

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

Net operating revenue

The detailed information on net operating revenue was presented in the consolidated annual financial statements for 2019, in note 26.

	For the nine months ended September 30,
	2020			2019
Gross operating revenue
Goods		44,531			21,757
Services rendered and others		890			61
		45,421			21,818
(-) Revenue Deductions
Returns and sales cancellation		(125	)		(40	)
Taxes		(4,313	)		(1,690	)
		(4,438	)		(1,730	)
Net operating revenue		40,983			20,088

Expenses by nature

The detailed information on expenses by nature was presented in the annual consolidated financial statements for 2019, in note 27.

	For the nine months ended September 30,
	2020			2019
Cost of inventories		(32,089	)		(16,427	)
Personnel expenses		(3,047	)		(1,219	)
Outsourced services		(431	)		(144	)
Selling expenses		(804	)		(285	)
Functional expenses		(1,138	)		(404	)
Other expenses		(640	)		(137	)
		(38,149	)		(18,616	)

Cost of sales		(33,059	)		(16,685	)
Selling expenses		(4,141	)		(1,647	)
General and administrative expenses		(949	)		(284	)
		(38,149	)		(18,616	)

F-44

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

Other operating expenses, net

The detailed information on other operating expenses, net was presented in the annual consolidated financial statements for 2019, in Note 28.

	For the nine months ended September 30,
	2020			2019
Result with property and equipment (*)		(34	)		(5	)
Reversal (Provision) for legal proceeding		(20	)		(16	)
Restructuring expenses (**)		(125	)		-
Covid-19 spending on prevention (***)		(116	)		-
Total		(295	)		(21	)

(*)

The result of property and equipment was mainly impacted by the Sale and Leaseback operations in the amount of R $ 52. See Note nº 1.4.

(**)

amounts related to restructuring expenses in Brazilian operations and expenses in the acquisition process of Grupo Éxito.

(***)

Expenses incurred as a result of the pandemic refer to the purchase of individual protection and store adaptation items, overtime expenses, expenses with internal and external communication, incremental expenses with transportation and cleaning services and sanitation. See Note nº 1.2.

Net financial result

The detailed information on net financial result was presented in the annual consolidated financial statements for 2019, in note 29.

	For nine months ended September 30,
	2020			2019
Financial expenses
Cost of debt		(362	)		(86	)
Cost and sale of receivables		(25	)		(28	)
Monetary restatement (liabilities)		(145	)		(6	)
Interest on lease liabilities		(305	)		(100	)
Other financial expenses		(106	)		(6	)
Total Financial expenses		(943	)		(226	)
Financial revenues
Cash and cash equivalents		104			33
Monetary restatement (assets)		160			172
Other financial revenues		8			3
Total Financial revenues		272			208
Total		(671	)		(18	)

F-45

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

Earnings per share

The detailed information on earnings per share was presented in the annual consolidated financial statements for 2019, in note 30.

At the extraordinary general shareholders´ meeting held on October 5, 2020, Sendas shareholders voted to approve the grouping of 3,269,992,034 (three billion, two hundred and sixty nine million, nine hundred and ninety two thousand and thirty four) common shares, with no par value issued by the Company, in the proportion of 12.1854776946393 to 1 (one) (“Grouping”). After the Grouping, the Company’s capital stock is represented by 268,351,567 (two hundred and sixty-eight million, three hundred and fifty-one thousand, five hundred and sixty-seven) common shares, with no par value. Accordingly, the weighted-average number of shares outstanding for the entire period is retrospectively adjusted as if the change had occurred at the beginning of the first period of EPS information presented.

	For the nine months ended September 30,
	2020		2019
Basic and diluted number:
Allocated basic earnings and not distributed		712		774
Net income allocated available to common shareholders		712		774
Basic and diluted denominator (millions of shares)
Weighted average of the number of shares		268		176
Basic and diluted earnings per million shares (R$)		2.653229		4.399048

Non-cash transactions

The Company had transactions that did not represent cash disbursement, therefore, these were not reported in the Statement of Cash Flows, as follows:

●

Company’s capital increase with property and equipment, in Note 15;

●

Purchase of property and equipment not yet paid, in Note 15.4;

●

Additions of provisions for contingencies, Note 20; and

●

Deferred income tax and social contribution, Note 23.

F-46

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

Segment information

The detailed information on segment information was presented in the annual financial statements for 2019, in Note 33.

Management considers the following segments:

●

Cash & Carry, it includes the “ASSAÍ” brand.

●

Grupo Éxito – it includes the company Éxito (Colombia) and its subsidiaries Libertad (Argentina) and Disco (Uruguay). Éxito also operates the banners Surtimax, Super Inter, and Carulla, as a result of Éxito acquisition in November 2019 (note 13 in financial statement).

Information on the Company’s segments on September 30, 2020 and 2019 and December 31, 2019 are included in the chart below:

	Cash and carry and gas stations						Éxito Group					Total
	For the nine months ended September 30,
	09/30/2020			09/30/2019			09/30/2020			09/30/2019		09/30/2020			09/30/2019
Net sales revenue		25,330			20,088			15,653			-		40,983			20,088
Gross profit		4,089			3,403			3,835			-		7,924			3,403
Depreciation and amortization		(367	)		(288	)		(522	)		-		(889	)		(288	)
Share of profit and loss of associates		26			-			(8	)		-		18			-
Operating profit		1,303			1,163			365			-		1,668			1,163
Net financial result		(416	)		(18	)		(255	)		-		(671	)		(18	)
Net income before income tax and social contribution		887			1,145			110			-		997			1,145
Income tax and social contribution		(175	)		(371	)		8			-		(167	)		(371	)
Net income of period		712			774			118			-		830			774

	As of September 30, 2020		As of December 31, 2019		As of September 30, 2020		As of December 31, 2019		As of September 30, 2020		As of December 31, 2019
Current assets		6,529		5,722		5,889		6,560		12,418		12,282
Noncurrent assets		19,049		17,818		8,506		5,805		27,555		23,623
Current liabilities		7,548		6,721		7,626		7,209		15,174		13,930
Noncurrent liabilities		8,482		9,721		3,619		2,553		12,101		12,274
Shareholders’ equity		9,548		7,098		3,150		2,603		12,698		9,701

F-47

Sendas Distribuidora S.A.

Notes to the interim condensed consolidated financial information

September 30, 2020

(In millions of Brazilian Reais, unless otherwise stated)

The Company and its subsidiary mainly operate as retailers of food, home appliances, and other products. Total net revenue is comprised of the following banners:

	For the nine months ended September 30,
	2020		2019
Assaí		25,330		20,088
Éxito Group (*)		15,653		-
Total Net Sales		40,983		20,088

(*)

Includes sales in Colombia of R$11,950, Uruguay of R$2,719 and Argentina in R$984.

F-48

Report of Independent Registered Public Accounting Firm

To the Shareholders and the Board of Directors of

Sendas Distribuidora S.A

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of Sendas Distribuidora S.A (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations and comprehensive income, changes in shareholders’ equity and cash flows for each of the three years in the period ended December 31, 2019, and the related notes (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2019 and 2018, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2019, in conformity with International Financial Reporting Standards - IFRS as issued by the International Accounting Standards Board - IASB.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

/s/ ERNST & YOUNG
Auditores Independentes S.S.

We have served as the Company's auditor since 2017.

São Paulo, Brazil

December 21, 2020

F-49

Sendas Distribuidora S.A.

Consolidated statements of operations and comprehensive income

For the years ended December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, except earnings per share)

			For the year ended December 31,
	Note		2019			2018			2017

Net operating revenue		26		30,232			23,017			18,544
Cost of sales		27		(24,891	)		(18,845	)		(15,578	)
Gross profit				5,341			4,172			2,966
Expenses, net
Selling expenses		27		(2,782	)		(1,908	)		(1,563	)
General and administrative expenses		27		(166	)		(275	)		(235	)
Depreciation and amortization				(454	)		(313	)		(239	)
Share of profit and loss of associates				(5	)		-			-
Other operating expenses, net		28		(206	)		(3	)		(79	)
				(3,613	)		(2,499	)		(2,116	)
Operating profit				1,728			1,673			850

Net financial result		29		(257	)		(120	)		(142	)
Financial expenses				(544	)		(204	)		(180	)
Financial revenues				287			84			38

Income before income taxes				1,471			1,553			708

Income tax and social contribution		24		(411	)		(477	)		(211	)

Net income for the year				1,060			1,076			497

Other comprehensive income
Items that may be subsequently reclassified into the statement of operations
Exchange differences on translation of foreign investments				220			-			-
Cash flow hedge				5			-			-
Other comprehensive income for the year				225			-			-
Total comprehensive income for the year				1,285			1,076			497

Net income for the year attributable to:							-
Controlling shareholders				1,047			1,076			497
Non-controlling interest				13			-			-
				1,060			1,076			497

Total comprehensive income attributable to:
Controlling shareholders				1,209			1,076			497
Non-controlling shareholders				76			-			-
				1,285			1,076			497

Basic and diluted earnings per millions of shares in Reais		30
(weighted average for the year - R$)
Common shares				4.062383			6.211863			3.023229

The accompanying notes are integral part of the consolidated financial statements.

F-50

Sendas Distribuidora S.A.

Consolidated balance sheets

As of December 31, 2019, 2018 and January 1, 2018

(In millions of Brazilian Reais)

			As of December 31,				As of January 1,
	Note		2019		2018		2018
Current assets
Cash and cash equivalents		7		5,026		1,411		891
Trade receivables		8		491		137		203
Other accounts receivable		9		206		34		27
Inventories		10		5,190		2,235		1,755
Recoverable taxes		11		1,119		338		216
Derivative financial instruments		19.1		29		43		-
Assets held for sale				52		-		-
Other current assets				169		-		-
Total current assets				12,282		4,198		3,092

Noncurrent assets
Other accounts receivable		9		37		-		193
Recoverable taxes		11		962		929		277
Derivative financial instruments		19.1		11		9		16
Related parties		12		97		11		12
Restricted deposits for legal proceedings		21.8		121		118		120
Other noncurrent assets				84		-		-
Investments in associate entities		13		320		-		-
Investment properties		15		3,051		-		-
Property and equipment, net		16		14,652		4,655		3,725
Intangible assets, net		17		4,288		1,013		749
Total noncurrent assets				23,623		6,735		5,092

Total assets				35,905		10,933		8,184

The accompanying notes are integral part of the consolidated financial statements.

F-51

Sendas Distribuidora S.A.

Consolidated balance sheets

As of December 31, 2019, 2018 and January 1, 2018

(In millions of Brazilian Reais)

			As of December 31,				As of January 1,
	Note		2019		2018		2018
Current liabilities
Trade payables, net		18		9,770		3,607		2,770
Borrowings and financing		19		316		676		22
Debentures		19		1,156		-		-
Payroll and related taxes				572		246		198
Lease liabilities		22		404		81		65
Related parties		12		152		104		95
Taxes and social contributions payable				327		128		61
Deferred revenues		23		277		158		104
Dividends payable				11		-		-
Acquisition of non-controlling interest		20.10		466		-		-
Other current liabilities				479		125		66
Total current liabilities				13,930		5,125		3,381

Noncurrent liabilities
Borrowings and financing		19		622		102		451
Debentures		19		6,727		-		-
Deferred income tax and social contribution		24.2		1,191		265		89
Provision for legal proceedings		21		349		236		284
Lease liabilities		22		3,347		1,099		944
Deferred revenues		23		2		4		-
Other non-current liabilities				36		10		11
Total Noncurrent liabilities				12,274		1,716		1,779

Shareholders´ equity
Capital stock		25.1		4,421		2,351		2,252
Capital reserve				18		16		8
Profit reserves				2,497		1,725		764
Accumulated other comprehensive income				162		-		-
Controlling shareholder				7,098		4,092		3,024

Non-controlling interest				2,603		-		-
Total shareholders’ equity				9,701		4,092		3,024

Total liabilities and shareholders´ equity				35,905		10,933		8,184

The accompanying notes are integral part of the consolidated financial statements.

F-52

Sendas Distribuidora S.A.

Consolidated statements of changes in shareholders´ equity

For the years ended December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais)

	Controlling shareholders
			Capital reserves		Profit reserves								Accumulated other							Total
	Capital stock		Stock options		Legal reserve		Profit retention			Retained earnings			comprehensive income		Total			Non-controlling interest		shareholder’s equity
Balances as of January 1, 2017		1,896		4		44		385			(72	)		-		2,257			-		2,257
Capital increase with real estate properties		288		-		-		-			-			-		288			-		288
Capital increase		68		-		-		-			-			-		68			-		68
Stock options granted		-		4		-		-			-			-		4			-		4
Net income for the year		-		-		-		-			497			-		497			-		497
Interest on equity		-		-		-		(81	)		-			-		(81	)		-		(81	)
Legal reserve		-		-		26		-			(26	)		-		-			-		-
Reserve for profit retention		-		-		-		486			(495	)		-		(9	)		-		(9	)
Balances as of December 31, 2017		2,252		8		70		790			(96	)		-		3,024			-		3,024

Capital increase with real estate properties (note 25.1)		99		-		-		-			-			-		99			-		99
Stock options granted (Note 25.4)		-		8		-		-			-			-		8			-		8
Net income for the year		-		-		-		-			1,076			-		1,076			-		1,076
Interest on equity (Note 25.2)		-		-		-		(115	)		-			-		(115	)		-		(115	)
Legal reserve (Note 25.3)		-		-		55		-			(55	)		-		-			-		-
Reserve for profit retention		-		-		-		1,042			(1,042	)		-		-			-		-
Balances as of December 31, 2018		2,351		16		125		1,717			(117	)		-		4,092			-		4,092

The accompanying notes are integral part of the consolidated financial statements.

F-53

Sendas Distribuidora S.A.

Consolidated statements of changes in shareholders´ equity

For the years ended December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais)

	Controlling shareholders
			Capital reserves		Profit reserves								Accumulated other								Total
	Capital stock		Stock options		Legal reserve		Profit retention			Retained earnings			comprehensive income		Total			Non-controlling interest			shareholder’s equity
Balances as of December 31, 2018		2,351		16		125		1,717			(117	)		-		4,092			-			4,092
Other comprehensive results
Net income for the year		-		-		-		-			1,047			-		1,047			13			1,060
Exchange rate variation of foreign investments		-		-		-		-			-			157		157			63			220
Cash flow hedge		-		-		-		-			-			5		5			-			5
Comprehensive income for the year		-		-		-		-			1,047			162		1,209			76			1,285

Capital increase with real estate properties (Note 25.1)		67		-		-		-			-			-		67			-			67
Capital increase (Note 25.1)		2,003		-		-		-			-			-		2,003			-			2,003
Stock options granted (Note 25.4)		-		2		-		-			-			-		2			-			2
Interest on shareholders’ equity (Note 25.2)		-		-		-		(247	)		-			-		(247	)		-			(247	)
Interim dividends (Note 25.2)		-		-		-		(50	)					-		(50	)		(37	)		(87	)
Transactions with non-controlling shareholders		-		-		-		22			-			-		22			7			29
Legal reserve (Note 25.3)		-		-		52		-			(52	)		-		-			-			-
Reversal of profit retention		-		-		-		878			(878	)		-		-			-			-
Non-controlling interest Éxito (Note 14)		-		-		-		-			-			-		-			2,557			2,557
Balances as of December 31, 2019		4,421		18		177		2,320			-			162		7,098			2,603			9,701

The accompanying notes are integral part of the consolidated financial statements.

F-54

Sendas Distribuidora S.A.

Consolidated statements of cash flows

For the years December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais)

	For the year ended December 31,
	2019			2018			2017
Cash flow from operating activities
Net income for the year		1,060			1,076			497
Adjustments for reconciliation of net income
Deferred income tax and social contribution		162			175			69
Loss on disposal of property and equipment		-			50			50
Depreciation and amortization		484			341			263
Financial charges		431			171			127
Share of profit and loss of associates		5			-			-
Provision (reversal) for legal proceedings		19			(46	)		14
Share-based payment		2			8			4
Allowance (reversal) for inventory losses and damages		5			(3	)		1
Gain on leasing liability write-off		(1	)		(15	)		(7	)
Reversal of tax loss provision		-			(369	)		-
		2,167			1,388			1,018
Variations in operating assets and liabilities
Trade receivables		21			66			(39	)
Inventories		(153	)		(477	)		(284	)
Recoverable taxes		(326	)		(161	)		(174	)
Restricted deposits for legal proceedings		(1	)		-			(22	)
Other assets		(106	)		(45	)		100
Trade payables		1,671			779			673
Payroll and related taxes		36			48			37
Related parties		(17	)		10			(41	)
Disbursements for legal proceedings		(22	)		(6	)		(4	)
Taxes payables		69			66			(2	)
Income tax and social contribution, paid		(131	)		(244	)		(113	)
Deferred revenues		(153	)		58			19
Other liabilities		104			63			(66	)
		992			157			84
Net cash generated by operating activities		3,159			1,545			1,102
Cash flow from investment activities
Acquisition of a subsidiary, net of cash		(3,311	)		-			-
Purchase of property and equipment		(1,357	)		(907	)		(717	)
Purchase of intangible assets		(52	)		(41	)		(23	)
Proceeds from the sale of property and equipment		362			22			1
Purchase of investment property		(12	)		-			-
Net cash used in investment activities		(4,370	)		(926	)		(739	)

Cash flow from financing activities
Capital increase		2,003			-			68
Borrowings and financing acquisition		9,395			417			338
Payments of borrowings and financing		(6,124	)		(201	)		(216	)
Dividends and interest on equity paid		(299	)		(115	)		(81	)
Payments of lease liabilities		(260	)		(200	)		(170	)
Net cash generated by (used in) financing activities		4,715			(99	)		(61	)

Net increase in cash and cash equivalents		3,504			520			302
Cash and cash equivalents at the beginning of the year		1,411			891			589
Exchange rate variation on cash and cash equivalents		111			-			-
Cash and cash equivalents at the end of the year		5,026			1,411			891

The accompanying notes are integral part of the consolidated financial statements.

F-55

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Corporate information

Sendas Distribuidora S.A. (“Sendas Distribuidora”) is mainly engaged in the retail and wholesale sale of food, bazar, and other products through its stores, represented by the banner “ASSAÍ”. Sendas Distribuidora is based in the State of Rio de Janeiro, at Avenida Ayrton Senna, 6.000, Lote 2 - Anexo A, Jacarepaguá/RJ.

Sendas Distribuidora is a wholly-owned subsidiary of Companhia Brasileira de Distribuição (“CBD”), which is controlled by the Casino Group, a French conglomerate and world leader in food retail.

1.1

Acquisition of Almacenes Éxito S.A.

Éxito and its subsidiaries are referred to collectively as “Éxito Group”.

Sendas Distribuidora together with Éxito Group are referred to as the “Company”.

1.2

Sendas Distribuidora´s potential spin-off transaction

The spin-off will be preceded by the transfer of the shareholding interest currently held by the Sendas Distribuidora in Éxito. to CBD.

Upon the implementation of the Potential Transaction, the shares issued by Sendas Distribuidora held by CBD will be distributed to CBD’s shareholders, on a pro-rata basis. The distribution of shares will occur after the listing of Sendas Distribuidora’s shares in the Novo Mercado segment of the B3 S.A. – Brasil, Bolsa, Balcão (B3), together with the listing of ADRs representing the Company’s shares on the New York Stock Exchange (NYSE).

F-56

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

1.3

Impacts of the pandemic on the Company’s financial statements

Since the beginning of the COVID-19 outbreak, our stores have remained open. The Company has a strong commitment to society to continue selling essential products to its customers. We did not face supply-side hurdles from industries that continued supplying our distribution centers and stores.

Additionally, since the beginning of the outbreak, the Company has been continuously monitoring all possible relevant impacts that it could have in this consolidated financial statements, in order to inform the market about any eventual risk and uncertainty that could be materialized, in compliance with applicable accounting standards. Below are the key topics analyzed:

Due to uncertainties concerning the end of the pandemic and its macroeconomic effects, the Company analyzed the indication of impairment for certain assets and, accordingly, updated as of June 30, 2020, the projections of the budget used in the December 31, 2019 impairment tests. The recoverable value is determined by calculating the value in use, from cash projections deriving from financial budgets, which were reviewed and approved by senior management for the next three years, considering the assumptions updated for June 30, 2020. The discount rate applied to cash flow projections is 8.1% on June 30, 2020 (8.4% on December 31, 2019), and the cash flows to exceed three years are extrapolated, applying a growth rate of 3.9% on June 30, 2020 (4.8% on December 31, 2019). As a result of this analysis, we did not identify the need for recording a provision for impairment of these assets.

Likewise, in relation to Éxito Group, projections for impairment test of intangible assets were reviewed and updated on June 30, 2020, not identifying the need for recording an impairment charge.

The Company analyzed the collection of balances of trade receivables from credit card operators, clients, galleries at our stores, property rents, and concluded that it is not necessary to record provisions in addition to those already recorded.

In relation to inventories, the Company does not foresee the need of any adjustment, as their book value does not exceed their market price less cost to sell.

The Company does not foresee additional funding needs.

F-57

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

As such according to the Company´s Management estimates and the Company´s monitoring of pandemic impacts or any other that could impact our business, there are no effects that should be recorded in the Company’s financial statements, nor effects on the business continuity and/or estimates of the Company that would justify changes in the conclusions presented in these financial statements. The Company will continue monitoring and analyzing the impacts, and if necessary, will make the disclosures needed.

1.4

Sale and Leaseback Transaction

In line with the Company’s asset monetization strategy, a material fact was released on March 5, 2020, disclosing that the Company entered into a Sale and Leaseback Transaction with investment funds administered by BRL Trust Distribuidora de Títulos e Valores Mobiliários S.A. and managed by TRX Gestora de Recursos Ltda., by signing the “Private Instrument of Real Property Purchase and Sale Commitment and Surface Real Right”. This agreement initially estimated the sale of 13 real properties owned by the Company, for a total amount of R$532.

●

On May 29, 2020, the Company sold 4 of these real estate properties, for a total amount of R$175 paid in cash.

●

On June 29, 2020, the Company sold the other 4 real estate properties, for the total amount of R$206, paid in cash.

●

On July 22, 2020, the Company sold an additional 4 real estate properties for a total amount of R$131, excluding 1 real property of non-relevant amount out of total volume.

Thus, the Company sold 12 real properties to TRX funds, for R$513.

Note that the parties signed lease agreements for each real estate property, on the closing date of the transaction, each with a 15-year term, renewable for an equal period, ensuring the continuity of the Company’s operations in the real properties with sustainable financial conditions.

Basis of preparation

The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards – IFRS, as issued by the International Accounting Standards Board – IASB.

The consolidated financial statements have been prepared on a historical cost basis except for certain financial instruments measured at their fair value.

The consolidated financial statements are presented in millions of Brazilian Reais (R$), which is the functional currency of the Company. The functional currency of the subsidiaries located abroad is the local currency of each jurisdiction.

F-58

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

The consolidated financial statements provide comparative information in respect of the prior periods. In addition, the Company presents an additional statement of financial position at the beginning of the preceding period when there is a retrospective application of an accounting policy, a retrospective restatement, or a reclassification of items in financial statements. An additional statement of financial position as at January 1, 2018 is presented in these consolidated financial statements due to the retrospective application IFRS 16 Leases. See Note 4.

The consolidated financial statements for the fiscal year ended December 31, 2019, were approved by the Board of Directors on December 12, 2020.

2.1

Basis of consolidation

The consolidated financial statements include the financial information of all subsidiaries over which Sendas Distribuidora exercises control directly or indirectly. The determination if a subsidiary is controlled by Sendas Distribuidora and the basis of consolidation are in accordance with the requirements of IFRS 10 – Consolidated Financial Statement.

The consolidated financial statements of the subsidiaries are prepared on the same closing date of the reporting period of Sendas Distribuidora, using consistent accounting policies. All balances and transactions, including income and expense, unrealized gains and losses, and dividends resulting from intercompany operations included in the consolidation are fully eliminated.

Gains or losses resulting from changes in equity interest in subsidiary, which do not result in loss of control, are directly recorded in equity. Losses are attributed to the non-controlling interest, even if it results in a deficit balance.

In the consolidated financial statements, Sendas consolidates all its subsidiary and reports non-controlling interests in a separate line item in shareholders’ equity and statements of operations.

The list of subsidiaries is presented in Note 13.

Significant accounting policies

The main accounting policies and practices are described in each corresponding explanatory note, except for those below that are related to more than one explanatory note. Accounting policies and practices have been consistently applied to the years presented in the Company´s consolidated financial statements.

3.1

Foreign currency transactions

Foreign currency transactions are initially recognized at the exchange rate of the corresponding currencies at the date the transaction qualities for recognition.

Assets and liabilities denominated in foreign currencies are translated into Brazilian Reais, using the spot exchange rate at the end of each reporting period. Gains or losses on changes in exchange rate variations are recognized as financial income or expense.

F-59

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

3.2

Classification of assets and liabilities as current and non-current

The Company presents assets and liabilities in the statement of financial position based on current/noncurrent classification.

An asset is current when it is:

●

expected to be realized or intended to be sold or consumed within twelve months from the end of the reporting periods

●

held primarily for the purpose of trading

	●	expected to be realized within twelve months after the reporting period or

●

cash or cash equivalent unless restricted from being exchanged or used to settle a liability for at least twelve months after the reporting period

All other assets are classified as noncurrent.

A liability is current when it is:

●

expected to be settled within twelve months from the end of the reporting periods

●

held primarily for the purpose of trading

●

due to be settled within twelve months after the reporting period or

●

there is no unconditional right to defer the settlement of the liability for at least twelve months after

●

the reporting period are classified as current liabilities.

All other liabilities are classified as noncurrent.

Deferred tax assets and liabilities are classified as “noncurrent” and presented net when appropriate in accordance with the provisions of IAS 12.

3.3

Foreign operation

For each entity, the Company determines the functional currency and items included in the financial statements of each entity are measured using that functional currency.

On consolidation, the financial statements of foreign operations are translated into Brazilian Reais, as follows:

●

Assets and liabilities, including goodwill, are translated into Brazilian Reais at the exchange rate prevailing at the reporting date.

●

The statements of operation are translated into Brazilian Reais using the average rate for the period except when significant fluctuations in the exchange rate occurs, in which case, the rate at the transaction date is used.

●

Equity accounts are maintained at the historical balance in Reais.

The exchange rate differences arising from the translation are recognized in other comprehensive income. When a foreign operation is disposed of, the component of other comprehensive income related to that particular foreign operation is reclassified to profit or loss.

F-60

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

3.4

Hyperinflation

Starting from September 2018, Argentina has been considered a hyperinflationary economy. As per IAS 29 – Financial Reporting in Hyperinflationary Economies, the non-monetary assets and liabilities, equity items and the statement of operation of the indirect subsidiary Libertad, headquartered in Argentina, a direct subsidiary of Éxito, whose functional currency is the Argentinean peso, are being adjusted so that amounts are reported in the monetary measurement unit at the end of the reporting period. This unit considers the effects measured by the Consumer Price Index in Argentina starting January 1, 2017 and Argentina’s Domestic Retail Price Index up to December 31, 2016. Consequently, as required by IAS 29, the operating results of the indirect subsidiary Libertad must be considered as highly inflationary starting from September 1, 2018 (start of the period in which a hyperinflationary scenario was identified).

Amendments to IFRSs and new interpretations adopted in 2019 and 2018

Amendments to IFRSs and new interpretations adopted in 2019

In 2019, the Company applied amendments and new interpretations to IFRS as issued by IASB, which were effective for accounting periods beginning on or after January 1, 2019. The main new standards adopted are the following:

Statement	Description	Impact
IFRS 16 – Leases (“IFRS16”)	IFRS 16 supersedes IAS 17 Leases, IFRIC 4 Determining whether an Arrangement contains a Lease, SIC-15 Operating Leases-Incentives and SIC-27 Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The standard sets out the principles for the recognition, measurement, presentation and disclosure of leases and requires lessees to recognize most leases on the balance sheet. Lessor accounting under IFRS 16 is substantially unchanged from IAS 17. Lessors will continue to classify leases as either operating or finance leases using similar principles as in IAS 17. Therefore, IFRS 16 does not have an impact for leases where the Company is the lessor.	See Note 4.1.

IFRIC 23 - Uncertainty over Income Tax treatment (“IFRIC23”)	The Interpretation addresses the accounting for income taxes when tax treatments involve uncertainty that affects the application of IAS 12 Income Taxes. It does not apply to taxes or levies outside the scope of IAS 12, nor does it specifically include requirements relating to interest and penalties associated with uncertain tax treatments.	There was no significant impact.

4.1

Adoption of IFRS 16 – Leases

The Company adopted IFRS 16 using the full retrospective method of adoption, with the date of application of January 1, 2019. In accordance with the full retrospective method of adoption, the Company applied IFRS 16 at the date of initial application as if it had already been effective at the commencement date of existing lease contracts. The Company also elected to use the recognition exemptions for lease contracts that, at the commencement date, have a lease term of 12 months or less and do not contain a purchase option (short-term leases), and lease contracts for which the underlying asset is of low value (low-value assets).

The Company uses the incremental borrowing rate to discount the lease liabilities. In addition, the lease liabilities include taxes on lease payments and the impact of the significant leasehold improvements amortization period over the estimation of the reasonably certain lease terms. The Company determines the lease term as the non-cancellable term of the lease, together with any periods covered by an option to extend the lease if it is reasonably certain to be exercised, or any periods covered by an option to terminate the lease, if it is reasonably certain not to be exercised. The Company has several lease contracts that include extension and termination options. The Company applies judgment in evaluating whether it is reasonably certain whether or not to exercise the option to renew or terminate the lease. That is, it considers all relevant factors that create an economic incentive for it to exercise either the renewal or termination, including significant leasehold improvements on the leased property.

F-61

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

The adjustments arising from adoption of IFRS 16 for each period presented in the consolidated financial statements are detailed as follows:

	As of January 1, 2017
Balance sheet	Originally presented		IFRS 16 Effects			After IFRS 16
Other accounts receivable		164		(13	)		151
Total current assets		2,447		(13	)		2,434

Other accounts receivable		226		(25	)		201
Deferred income tax and social contribution		-		36			36
Property and equipment, net		2,111		675			2,786
Total noncurrent assets		3,299		686			3,985
Total assets		5,746		673			6,419

Borrowings and financing		2,160		(4	)		2,156
Leasing liabilities		-		54			54
Total current liabilities		2,959		50			3,009

Leasing liabilities		-		693			693
Total noncurrent liabilities		458		693			1,151

Total liabilities		3,417		743			4,160

Total shareholders’ equity		2,329		(70	)		2,259
Total liabilities and shareholders’ equity		5,746		673			6,419

F-62

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

	As of January 1, 2018
Balance sheet	Originally presented		IFRS 16 Effects			After IFRS 16
Other accounts receivable		42		(15	)		27
Total current assets		3,107		(15	)		3,092

Other accounts receivable		229		(36	)		193
Deferred income tax and social contribution		1		46			47
Property and equipment, net		2,825		900			3,725
Total noncurrent assets		4,229		910			5,139
Total assets		7,336		895			8,231

Borrowings and financing		27		(5	)		22
Lease liabilities		-		65			65
Other current liabilities		72		(6	)		66
Total current liabilities		3,327		54			3,381

Borrowings and financing		460		(9	)		451
Lease liabilities		-		944			944
Total noncurrent liabilities		891		935			1,826

Total liabilities		4,218		989			5,207
Total shareholders’ equity		3,118		(94	)		3,024
Total liabilities and shareholders’ equity		7,336		895			8,231

F-63

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

	As of December 31, 2018
Balance sheet	Originally presented		Effects IFRS 16			After IFRS 16
Other accounts receivable		64		(30	)		34
Total current assets		4,228		(30	)		4,198

Other accounts receivable		43		(43	)		-
Property and equipment, net		3,603		1,052			4,655
Total noncurrent assets		5,726		1,009			6,735
Total assets		9,954		979			10,933

Borrowings and financing		680		(4	)		676
Lease liabilities		-		81			81
Taxes and social contributions payable		127		1			128
Other current liabilities		143		(18	)		125
Total current liabilities		5,065		60			5,125

Borrowings and financing		107		(5	)		102
Deferred income tax and social contribution		323		(58	)		265
Lease liabilities		-		1,099			1,099
Total noncurrent liabilities		680		1,036			1,716

Total liabilities		5,745		1,096			6,841
Total shareholders’ equity		4,209		(117	)		4,092
Total liabilities and shareholders’ equity		9,954		979			10,933

	For the year ended December 31, 2018
Statement of operations	Originally presented			IFRS 16 Effects			After IFRS 16
Gross Profit		4,172			-			4,172
Expenses, net
Selling expenses		(2,057	)		149			(1,908	)
General and administrative expenses		(278	)		3			(275	)
Depreciation and amortization		(234	)		(79	)		(313	)
Other operating expenses, net		(8	)		5			(3	)
Operating profit before financial result		1,595			78			1,673
Net financial result		(7	)		(113	)		(120	)
Earnings before income tax and social contribution		1,588			(35	)		1,553
Income tax and social contribution		(489	)		12			(477	)
Net income for the period		1,099			(23	)		1,076

F-64

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

	For the year ended December 31, 2018
Statement of cash flows	Originally presented			IFRS 16 Effects			After IFRS 16
Net income for the year		1,099			(23	)		1,076
Deferred income tax and social contribution		188			(13	)		175
Loss on disposal of property and equipment		39			11			50
Depreciation and amortization		244			97			341
Interest and monetary variation		47			124			171
Gain on leasing liability write-off		-			(15	)		(15	)
Other assets		(67	)		22			(45	)
Other liabilities		71			(8	)		63
Payment of borrowings and financing		(206	)		5			(201	)
Leasing liabilities payments		-			(200	)		(200	)

4.2

IFRIC 23 – Uncertainty on income tax treatment

The interpretation IFRIC 23 clarifies how to apply the recognition and measurement requirements of IAS 12 when the income tax treatment is uncertain. According to the Company’s management assessment, no relevant impacts are deriving from this interpretation.

New and amended standard and interpretation adopted in 2018

4.3

IFRS 15, Revenue from Contracts with Customers (“IFRS 15”)

IFRS 15 supersedes IAS 11, Construction Contracts, IAS 18, Revenue, and related interpretations and it applies, with limited exceptions, to all revenue arising from contract with customers. IFRS 15 establishes a five-step model to account for revenue arising from contacts with customers and requires that revenue to be recognized at an amount that reflects the consideration to which an entity expects to be entitled in exchange for transferring goods or services to a customer.

IFRS 15 requires entities to exercise judgement, taking into consideration all of the relevant facts and circumstances when applying each step of the model to contracts with their customers. The standard also specifies the accounting for the incremental costs of obtaining a contract and the costs directly related to fulfilling a contract. In addition, the standard requires extensive disclosures.

The Company adopted IFRS 15 using the full retrospective method of adoption.

The effect of the adoption of IFRS 15 resulted in the presentation of rebates received from suppliers related to trade marketing as a reduction of cost of sales. These rebates were previously reported as a reduction of marketing expenses and upon adoption of IFRS 15 management determined that the Company does not have any performance obligation associated with the amounts received from the suppliers.

F-65

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

4.4

Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions

The Company applied the amendments IFRS 2, Share-based payment, to account for the withholding of income tax associated with the share-based payment to employees. Consequently, the withhold tax was accounted for as a deduction of shareholders’ equity, except to the extent that the payment exceeds the fair value on the date of settlement by the net value of the own equity instruments withheld.

New standards, amendments and interpretations issued but not yet effective

The new and amended standards and interpretations that are issued, but not yet effective, up to the date of issuance of the Company’s financial statements are disclosed below. The Company intends to adopt these new and amended standards and interpretations, if applicable, when they become effective:

Accounting pronouncement	Description	Effective for annual periods beginning on or after
Amendments to IFRS 3: Definition of a Business	In October 2018, the IASB issued amendments to the definition of a business in IFRS 3, Business Combinations, to help entities determine whether an acquired set of activities and assets is a business or not. They clarify the minimum requirements for a business, remove the assessment of whether market participants are capable of replacing any missing elements, add guidance to help entities assess whether an acquired process is substantive, narrow the definitions of a business and of outputs, and introduce an optional fair value concentration test. New illustrative examples were provided along with the amendments.	01/01/2020

Amendments to IAS 1 and IAS 8 - Definition of materiality	In October 2018, the IASB issued amendments to IAS 1 Presentation of Financial Statements and IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors to align the definition of ‘material’ across the standards and to clarify certain aspects of the definition. The new definition states that, ‘Information is material if omitting, misstating or obscuring it could reasonably be expected to influence decisions that the primary users of general purpose financial statements make on the basis of those financial statements, which provide financial information about a specific reporting entity.	01/01/2020

It is not expected that the adoption of these standards did not result in relevant impacts on the consolidated financial statements.

F-66

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Significant accounting judgments, estimates, and assumptions

The preparation of the consolidated financial statements requires Management to makes judgments estimates and assumptions that impact the reported amounts of revenues, expenses, assets and liabilities, and the disclosure of contingent liabilities at the end of the year, however, the uncertainty about these assumptions and estimates could result in substantial adjustments to the carrying amount of asset or liability impacted in future periods.

In the process of applying the Company’s accounting policies, Management has made the following judgments, which have the most significant impact on the amounts recognized in the consolidated financial statements, as disclosed in the following notes to these financial statements:

●

Impairment: Notes 8.2,16.1, 17.1 and 17.2.

●

Inventories: inventory allowance: Note. 10.

●

Recoverable taxes: Expected realization of tax credits: Note. 11.

●

Fair value of derivatives and other financial instruments: Measurement of fair value of derivatives: Note 20.

●

Provision for legal proceedings: Record of provision for claims with likelihood assessed as probable loss, estimated with a certain degree of reasonability: Note 21.

●

Income tax and social contribution: Provisions based on reasonable estimates: Note 24.

●

Share-based payments: Estimate of fair value of operations based on a valuation model: Note 25.

●

Business combination and goodwill: estimates of fair value of assets and liabilities acquired in a business combination and resulting goodwill – Note 14.

●

Leasing operations: determination of the lease term, and incremental interest rate – Note 22.

Cash and cash equivalents

Cash and cash equivalents comprise the bank accounts, short-term, highly liquid investments, immediately convertible into known cash amounts, and subject to an insignificant risk of change in value, with intention and possibility to be redeemed in the short term, within 90 days, as of the date of investment.

	As of December 31,
	2019		2018
Cash and bank accounts - Brazil		67		52
Cash and bank accounts - Abroad (*)		3,024		-
Financial Investments - Brazil (**)		1,810		1,359
Financial Investments - Abroad (***)		125		-
		5,026		1,411

(*) On December 31, 2019, these refer to (i) funds from Éxito Group acquired on November 27, 2019, R$73 in Argentina, R$254 in Uruguay, and R$2,697 in Colombia.

F-67

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

(**) On December 31, 2019, the financial investments correspond to the repurchase and resale agreements, yielded by the weighted average of 87.71% of CDI – Interbank Deposit Certificate (86.47% of CDI on December 31, 2018) and redeemable within terms less than 90 days, as of the date of investment, without losing income.

(***) Refers to funds invested abroad, of which R$20 are denominated in Argentinian pesos, R$4 are denominated in Uruguayan pesos and R$101 are denominated in Colombia pesos, as a result of the acquisition of Éxito, to according Note 14, maturing in 90 days or less and which are subject to an insignificant change in value.

Trade receivables

Trade receivables are initially recorded at the transaction amount, which corresponds to the sale value, and are subsequently measured according to the portfolio: (i) fair value through other comprehensive income, in the case of receivables from credit card companies and (ii) amortized cost, for other customer portfolio.

Credit losses on financial assets that are measured at amortized cost are deducted from carrying amount of the asset.

For financial instruments measured at fair value through other comprehensive income, credit losses are recorded in other comprehensive income instead of reducing the carrying amount of the asset.

At each reporting date, the Company evaluates if the financial assets recorded at amortized cost or fair value through other comprehensive income show any indication of impairment. A financial asset shows indication of impairment loss when there is one or more events with adverse impact on the estimated future cash flows of the financial asset.

The provision for expected losses from trade receivables measured at amortized cost is stated as a reducer of its accounting balance.

Trade receivables are considered bad debt and, therefore, written-off from the accounts receivable portfolio, when payment is not made after 180 days of the maturity date. At the end of each reporting period, the Company assesses whether assets or groups of financial assets were impaired.

			As of December 31,
	Note		2019			2018
Credit card companies		8.1		17			17
Credit card companies with related parties		12.1		10			-
Sales tickets and others				383			49
Trade receivables with related parties		12.1		21			38
Trade receivables with suppliers/slips				92			37
Allowance for doubtful accounts		8.2		(32	)		(4	)
				491			137

F-68

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

8.2

Credit card companies

The Company, through the cash management strategy, anticipates the amount receivable with credit card companies, without any right of recourse or related obligation and derecognizes the balance of trade receivables.

8.3

Allowance for doubtful accounts

	For the year ended December 31,
	2019			2018			2017
At the beginning of the year		(4	)		(1	)		(2	)
Additions/reversals recorded in the year		-			(3	)		1
Business combination		(28	)		-			-
At the end of the year		(32	)		(4	)		(1	)

Set forth below the breakdown of trade receivables by their gross amount by maturity period:

					Overdue
	Total		Due		Less than 30 days		Less than 60 days		Less than 90 days		> 90 days
2019		523		407		59		14		4		39
2018		141		127		2		-		12		-
2017		204		199		4		1		-		-

Other accounts receivable

			As of December 31,
	Note		2019		2018

Rental receivable - commercial galleries				71		5
Sales of real estate properties		9.1		101		-
Prepaid expenses				-		25
Others accounts receivable –Éxito Group				61		-
Others				10		4
				243		34
Current				206		34
Noncurrent				37		-

F-69

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

9.1

Sales of real estate properties

On December 13, 2019, the Company sold 7 stores through the Sale and Leaseback agreement executed with SPCV S.A., by signing the “Private Instrument of Real Property Purchase and Sale Commitment”. This transaction is in line with the asset monetization strategy of the Company and its parent company CBD. Sold stores were located in the States of São Paulo, Paraná, Tocantins, Alagoas, and Bahia. The total sale amount of this transaction was R$349, with 71% of the total sale amount received in 2019 and the remaining balance of R$101, will be paid in 2020. The parties executed lease agreements for each real property, on the closing date of the transaction, with a 20-year term, renewable for an equal period, ensuring the continuity of the Company’s operations in the real properties with sustainable financial conditions.

Inventories

Inventories are carried at average cost, including the storage and handling costs, to the extent these costs are necessary to bring inventories to their sale condition at stores, less bonuses received from suppliers or net realizable value, whichever is lower.

Net realizable value is the selling price in the ordinary course of business, less the estimated costs necessary to make the sale.

Inventories are adjusted by an allowance for losses and damages, which is periodically reviewed and evaluated as appropriate. Bonuses received from suppliers are measured and recognized based upon executed contracts and agreements and recorded as cost of sales when the corresponding inventories are sold. Unrealized bonuses are presented as reducing the inventories at each balance sheet date.

	As of December 31,
	2019			2018
Stores		2,402			1,724
Distribution centers		404			545
Inventories –Éxito Group		2,255			-
Real estate inventories - Éxito Group		190			-
Allowance for losses on inventory obsolescence and damages (Note 10.2)		(61	)		(34	)
		5,190			2,235

10.1

Commercial agreements

The Company record rebates from vendors and the storage costs in the statement of income as the inventories that gave rise to the bonuses and the stored costs are realized. On December 31, 2019, the amount of unrealized bonus, as a reduction of inventory balance, totaled R$ 254 (R$ 255 on December 31, 2018 and R$188 on December 31, 2017).

F-70

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

10.2

Allowance for losses on inventory obsolescence and damage

	For the year ended December 31,
	2019			2018			2017
At the beginning of the year		(34	)		(37	)		(36	)
Additions		(5	)		-			(190	)
Business combination		(22	)		-			-
Write-offs		-			3			189
At the end of the year		(61	)		(34	)		(37	)

Recoverable taxes

The Company records tax credit, when obtains internal and external factors as legal and market interpretations to conclude that it is entitled to these credits, including realization of the tax credit ICMS (Imposto Sobre Circulação de Mercadorias e Serviços) (State VAT) is recognized in cost of sale in the statement of operation. PIS (Programa de Integração Social) and COFINS (Contribuição para o Financiamento da Seguridade Social) (federal taxes on gross revenues) is recognized as a credit in the same account on which the credits are calculated.

The future realization of ICMS tax credits is based on a feasibility study, on the expectation of future growth and the expected offset against tax debts from its operations.

		As of December 31,
		2019		2018

State tax credits - ICMS	11.1		1,189		1,008
Provision of non-realization of ICMS VAT tax credits			-		(28	)
Social Integration Program and Contribution for Social Security Financing PIS/COFINS	11.2		353		250
Social Security Contribution - INSS	11.3		27		29
Income Tax and Social Contribution (*)			410		6
Other			25		2
Other recoverable taxes - Éxito Group			77		-
Total			2,081		1,267
Current			1,119		338
Noncurrent			962		929

(*) includes Éxito Group.

F-71

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

11.1

ICMS - State VAT tax credits

Since 2008, the Brazilian States have been substantially amending their local laws aiming at implementing and broadening the ICMS tax replacement system. The referred system implies the prepayment of ICMS throughout the commercial chain, upon goods outflow from a manufacturer or importer or their inflow into the State. The expansion of such system to a wider range of products traded at retail is based on the assumption that the trading cycle of these products will end in the State, such that ICMS is fully owed to such State.

To supply its stores, the Company maintains distribution centers strategically located in certain states and the Federal District, which receive goods with the ICMS of the entire commercial chain already prepaid (by force of tax replacement) by suppliers or the Company and its subsidiaries, and then, goods are sent to locations in other States. This interstate remittance entitles the Company to a refund reimbursement of prepaid ICMS, the ICMS of commercial chain paid upon acquisition is converted into a tax credit to be refunded, pursuant to each State’s laws. The Company reassessed the realization of these credits and based on the amortization plan, the existing provision on December 31, 2017 was reversed.

The refund process requires evidence through tax documents and digital files of transactions made, entitling the Company to such a refund. Only after ratification by State tax authorities and/or the compliance with specific ancillary obligations aiming to support such evidence that credits can be used by the Company, which occur in periods after these are generated.

Since the number of items traded at the retail subject to tax replacement has been continuously increasing, the tax credit to be refunded by the Company and its subsidiaries have also grown. The Company has been realizing referred credits with authorization for immediate offset with those credits due in view of its operations, through the special regime, also other procedures regulated by state rules.

The Company understands that future realization of ICMS tax credits is probable based on a feasibility study, on the expectation of future growth and the expected offset against tax debts from its operations. The projections on the realization of ICMS balances are revised at least annually by the occasion of the annual strategic planning approved by the Company’s Board of Directors. Management has implemented monitoring controls over the progress of the plan annually established, assessing and including new elements that contribute to the recoverability of ICMS tax credits.

F-72

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

The expected recoverability of ICMS tax credits is demonstrated as follows:

Year	Value
Up to 1 Year		243
From 1 to 2 Years		210
From 2 to 3 Years		218
From 3 to 4 Years		217
From 4 to 5 Years		211
More than 5 Years		90
Total		1,189

11.2

PIS and COFINS credit

The Company records PIS and COFINS credits, when it obtains enough evidence to conclude that it is entitled to these credits. Evidence include (i) interpretation of tax legislation; (ii) internal and external factors as legal and market interpretations and; (iii) accounting evaluation about the matter.

11.3

STF Judgment– INSS and IPI

On August 21, 2020, the Brazilian Federal Supreme Court – STF rendered its judgment concluding that the levy of excise tax (“IPI”) over the exit of goods from importer to be resold in the domestic market is constitutional. Likewise, on August 28, 2020, the STF, in general repercussion, recognized to be constitutional the levy of social security contributions (INSS) over the constitutional one-third of the employees’ vacation period. The Company has been monitoring the progress of these issues, and jointly with its legal counsels, concluded that the elements up to date do not require a provision.

F-73

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Related Parties

12.1

Balances and related party transactions

	Assets Balance								Liabilities Balance
	Clients				Other Assets				Suppliers				Other Liabilities
	2019		2018		2019		2018		2019		2018		2019		2018
Controlling Shareholder
CBD		13		12		2		-		1		16		90		101
Casino		5		5		5		-		-		-		-		-
		18		17		7		-		1		16		90		101
Other related parties
Novasoc Comercial Ltda.		-		-		4		4		-		-		4		4
Compre Bem		2		-		11		-		-		-		-		-
Greenyellow		-		-		10		-		-		-		15		-
Financeira Itaú CBD S.A. Crédito, Financiamento e Investimento (“FIC”)		10		21		10		7		16		-		-		-
Puntos Colombia		-		-		29		-		-		-		43		-
Tuya		-		-		26		-		-		-		-		-
Others		1		-		-		-		-		-		-		(1	)
		13		21		90		11		16		-		62		3
Total		31		38		97		11		17		16		152		104

	Transactions
	Purchases				Revenues (Expenses)
	2019		2018		2019			2018
Controlling Shareholder
CBD		1		7		(162	)		(110	)
Compre Bem		13		-		(3	)		-
Puntos Colombia		-		-		(13	)		-
Tuya		-		-		21			-
Greenyellow		-		-		1			-
Grupo Casino		-		-		2			-
Others		-		-		(3	)		-
Total		14		7		(157	)		(110	)

The related-party transactions are represented by operations carried out according to prices, terms and conditions agreed upon the parties, namely:

(i) Casino: Agency Agreement entered into between CBD, the Company, and Groupe Casino Limited on July 25, 2016, as amended, to regulate the rendering of global sourcing services (global suppliers prospecting and purchasing intermediation) by Casino and reimbursed by Groupe Casino Limited to the Company to recover the reduced gain margins due to Company’s promotions at its stores. Agreement executed between CBD, the Company, and Casino International S.A. on December 20, 2004, as amended, for the Company’s representation in the business negotiation of products to be acquired by the Company with international suppliers.

F-74

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

(ii) Purchase Agreement: entered into the CBD, the Company, and E.M.C. Distribution Limited on June 6, 2019, to import food and non-food products (except for perishables and wine) for resale at stores, through purchase orders request, on a non-exclusive basis.

(iii) Puntos Colombia: Loyalty Program for Éxito’s customers. Balance related to the redemption of points and other services.

(iv) Tuya: Éxito’s financial investee. Balance related to participation in business collaboration agreements and expense reimbursement, rebate coupons, and others.

(v) FIC: execution of business agreements to regulate the rules that promote and sell financial services offered by FIC at the Company’s stores to implement a financial partnership between the Company and Itaú Unibanco Holding S.A. (“Itaú”) in the partnership agreement, namely: (i) banking correspondent services in Brazil; (ii) indemnification agreement in which FIC undertook to hold the Company harmless from losses incurred due to services; FIC and the Company mutually undertook to indemnify each other due to contingencies under their responsibility; and (iii) agreement concerning the Company’s provision of information and access to systems to FIC, and vice-versa, in order to offer services.

(vi) Greenyellow: (a) agreement with the Company to set the rules for the lease and maintenance of photovoltaic system equipment by Greenyellow at ASSAÍ stores; and (b) contracts with the Company for the purchase of energy sold on the free market.

(vii) CBD and Novasoc: these comprise the amounts deriving from the use of shared services center, such as treasury, accounting, legal, and others.

12.2

Management compensation

Expenses referring to the statutory executive board compensation recorded in the Company’s statement of operation in the year ended December 31, 2019, totaled R$23 (R$19 on December 31, 2018 and R$21 on December 31, 2017), as follows:

	Base Salary		Variable Compensation		Stock option plan		Total
2019		15		8		6		29
2018		9		10		5		24
2017		10		11		4		25

The stock option plan refers to the Company’s executives holding CBD shares and this plan has been treated in the Company’s statement of operations, related expenses are allocated to the Company and recorded in the statement of operations against capital reserve – stock options in shareholders’ equity. There are no other short-term or long-term benefits granted to the members of the Company’s Management.

F-75

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Investments in associate entities

13.1

Basis of consolidation

13.1.1

Interest in subsidiaries and associates

The table below sets forth the details of the subsidiaries and associates of Sendas Distribuidora as of December 31, 2019:

			Interest in subsidiaries - %
			2019
Groups	Companies	Country	Direct		Indirect
Éxito	Almacenes Éxito S.A. (“Éxito”)	Colombia		96.57		-
(Acquired on 11/27/2019)	Éxito Industrias S.A.S.	Colombia		-		94.59
	Fideicomiso Lote Girardot	Colombia		-		96.57
	Éxito Viajes y Turismo S.A.S.	Colombia		-		49.25
	Almacenes Éxito Inversiones S.A.S. (Móvil Éxito)	Colombia		-		96.57
	Gemex O & W S.A.S.	Colombia		-		96.57
	Marketplace Internacional Éxito y Servicios S.A.S. (MPI)	Colombia		-		96.57
	Logística, Transporte y Servicios Asociados S.A.S. (LTSA)	Colombia		-		96.57
	Depósitos y Soluciones Logísticas S.A.S.	Colombia		-		96.57
	Patrimonio Autónomo Iwana	Colombia		-		49.25
	Patrimonio Autónomo Viva Malls	Colombia		-		49.25
	Patrimonio Autónomo Viva Sincelejo	Colombia		-		25.12
	Patrimonio Autónomo Viva Villavicencio	Colombia		-		25.12
	Patrimonio Autónomo San Pedro Etapa I	Colombia		-		25.12
	Patrimonio Autónomo Centro Comercial	Colombia		-		25.12
	Patrimonio Autónomo Viva Laureles	Colombia		-		39.40
	Patrimonio Autónomo Viva Palmas	Colombia		-		25.12
	Patrimonio Autónomo Centro Comercial Viva	Colombia		-		44.33
	Spice investment Mercosur	Uruguay		-		96.57
	Larenco S.A.	Uruguay		-		96.57
	Geant Inversiones S.A.	Uruguay		-		96.57
	Lanin S.A.	Uruguay		-		96.57
	5 HermYears Ltda.	Uruguay		-		96.57
	Sumelar S.A.	Uruguay		-		96.57
	Raxwy Company S.A.	Uruguay		-		96.57
	Supermercados Disco del Uruguay S.A.	Uruguay		-		60.35
	Maostar S.A.	Uruguay		-		30.18
	Ameluz S.A.	Uruguay		-		60.35
	Fandale S.A.	Uruguay		-		60.35
	Odaler S.A.	Uruguay		-		60.35
	La Cabaña S.R.L.	Uruguay		-		60.35
	Ludi S.A.	Uruguay		-		60.35
	Semin S.A.	Uruguay		-		60.35
	Randicor S.A.	Uruguay		-		60.35
	Setara S.A.	Uruguay		-		60.35
	Hiper Ahorro S.R.L.	Uruguay		-		60.35
	Ciudad del Ferrol S.C.	Uruguay		-		59.14
	Mablicor S.A.	Uruguay		-		30.78
	Tipsel S.A.	Uruguay		-		96.57
	Tedocan S.A.	Uruguay		-		96.57
	Vía Artika S. A.	Uruguay		-		96.57
	Grupo Disco del Uruguay S.A.	Uruguay		-		60.35
	Devoto HermYears S.A.	Uruguay		-		96.57
	Mercados Devoto S.A.	Uruguay		-		96.57
	Geant Argentina S.A.	Argentina		-		96.57
	Libertad S.A.	Argentina		-		96.57
	Onper Investment 2015 S.L	Spain		-		96.57
	Spice España de Valores AmericYears S.L.	Spain		-		96.57
	Marketplace Internacional Éxito S.L	Spain		-		96.57
	Carulla Vivero Holding Inc.	British Virgin Island		-		96.57
	Gelase S. A.	Belgium		-		96.57

F-76

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

13.2

Associates

Investments in associates are accounted for under the equity method when the Company exercises significant influence, but does not have control over these associates, as (a) it is part of the shareholders’ agreement, appointing certain officers and having voting rights in certain relevant decisions; and (b) it has power to participate in the operational and financial decisions. The associate is Tuya, a financial investee from Éxito, which holds a 50% stake. Associates have no restriction on transfer resources to the Company, for example, in the form of dividends.

	Tuya			Cdiscount			Puntos Colombia
	2019			2019			2019
Current Assets		3,943			3,271			160
Noncurrent Assets		100			2,587			31
Total Assets		4,043			5,858			191

Current Liabilities		1,426			5,819			177
Noncurrent Liabilities		2,146			867			11
Shareholders’ Equity		471			(828	)		3
Total Liabilities and shareholders’ equity		4,043			5,858			191

		2019			2019			2019
Statement of operations:

Revenues		698			9,689			51
Operating results		87			(24	)		(2	)
Net income for the year		(14	)		(288	)		(8	)

13.3

Breakdown of investments and rollforward

	Tuya			Cdiscount		Puntos Colombia		Total
Balance as of December 31, 2018	-			-		-		-
Equity		(19	)		-		2		(17	)
Business combination		317			11		-		328
Equity on other comprehensive income		9			-		-		9
Balance as of December 31, 2019		307			11		2		320

F-77

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Business combination and goodwill

Business combinations are accounted for using the acquisition method. The cost of an acquisition is measured as the aggregate of the consideration transferred, measured at fair value on the acquisition date, and the amount of any non-controlling interest in the acquiree. For each business combination, the acquirer measures the non-controlling interest in the acquiree at fair value or at the proportional interest in the acquiree’s identifiable net assets. The acquisition related costs are expensed as incurred in statement of operation.

When the Company acquires a business, it assesses the assets acquired and liabilities assumed for the appropriate classification and designation in accordance with contractual terms, economic circumstances and relevant conditions at the acquisition date. This includes the segregation of any embedded derivatives identified in the agreements or contracts of the acquiree.

Any contingent consideration is recognized at fair value on the acquisition date as part of the business combination. Subsequent changes in the fair value of any contingent consideration classified as an asset or a liability that is a financial instrument is recognized in profit or loss.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests and any previously held interest in the acquiree. If the fair value of the net assets acquired is in excess of the aggregated consideration transferred, the Company re-assesses whether it has correctly identified all of the assets acquired and all of the liabilities assumed and reviews the procedures used to measure the amounts to be recognized at the acquisition date. If the reassessment still results in an excess of the fair value of net assets acquired over the aggregate consideration transferred, then the gain is recognized in profit or loss.

After initial recognition, goodwill is measured at cost, less any impairment losses. For impairment testing purposes, the goodwill acquired in a business combination is, as of the acquisition date, allocated to the cash generating unit that are expected to benefit from the business combination, regardless of whether other assets or liabilities of the acquiree are assigned those units.

When goodwill is part of a cash-generating unit and part of the operation of this unit is sold, the goodwill related to the part is included in the carrying amount of the operation when calculating profit or loss from the sale of the operation. This goodwill is then measured based on the relative amounts of the sold operation to the total of the cash-generating unit which was retained.

F-78

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

14.1

Acquisition of Éxito Group – Colombia

On June 26, 2019, Sendas’ ultimate controlling shareholder, Casino, submitted a recommendation at a meeting of the Board of Directors of CBD to streamline Casino’s structure in Latin America, significantly improve governance and increase the base of potential investors.

At the time of the Éxito Acquisition, Éxito was a publicly-held company located in Colombia, with Casino as its controlling shareholder. Casino tendered all of its shares of Éxito (representing a 55.3% equity interest in Éxito) to Sendas in the public tender offer.

On July 23, 2019, CBD released a material fact announcing that CBD’s Board of Directors, based on a favorable recommendation of the Independent Special Committee and within the price interval originally recommended by CBD’s board of executive officers, authorized the Company to launch an all-cash tender offer (“OPA”) to acquire 100% of Éxito’s shares, at the price of 18,000 Colombian pesos per share (corresponding to R$21.68 on the date of acquisition).

The transaction also involved the acquisition by Casino of Éxito’s indirect equity interest in CBD at the price of R$113 Reais per share, which was approved on September 12, 2019, by the Board of Directors and Éxito’s general shareholders’ meeting.

Since the Company was exposed to Colombian pesos (“COP”) during the tender offer, on July 24, 2019, the finance committee approved a cash flow hedge, via NDFs (Non-Deliverable Forward) to mitigate such exposure (see Note 20).

On November 27, 2019, the OPA was concluded and Sendas became the controlling shareholder of Éxito holding a 96.57% interest in Éxito’s capital stock. The OPA resulted in a cash payment of 7,780 billion Colombian pesos (corresponding to R$9.5 billion, considering the exchange rate as of December 31, 2019). Before the settlement of OPA, Casino’s subsidiaries acquired all the shares issued by CBD held directly and indirectly by Éxito by the price, net of debt, of US$1,161 million (corresponding to R$4.9 billion based on the exchange rate of the date of transaction).

Business combinations under common control are not under the scope of IFRS 3, Business Combinations (“IFRS 3”). IFRS gives no guidance on the accounting for these types of transactions but requires that entities develop an accounting policy for them. The Company opted to apply the acquisition method of accounting following the guidance of IFRS 3 as it has concluded that the acquisition of Éxito ha a commercial substance. This is because the acquisition price was offered through a public tender offer in cash, in which the same price was offered and paid to all the holders of Éxito shares, including Casino.

F-79

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Context of the acquisition

Éxito Group operates more than 650 stores in Colombia, Uruguay, and Argentina, in addition to shopping malls, having also a significant investment in a loyalty and financial company, in addition to its own brands with successful participation in the respective markets.

The Company started consolidating Éxito Group upon obtaining control, consolidating one month of the profit or losses in the statement of operations. Net sales revenue were R$2,150 in this period, and net income was R$71 for this period. Had Éxito Group been consolidated as of January 1, 2019, the contribution to the statement of operations, would have been R$18,388 on net sales revenue and R$178 on net income.

Determination of the consideration transferred in the acquisition

The cash consideration has been adjusted for the dividends received related to the year of 2018 and the effect of the cash flow hedge entered into to hedge the exposure on changes in foreign exchange rates, as shown below.

	As of December 31, 2019
Cash consideration		9,268
Cash flow hedge effect		145
		9,413
Dividends received related to 2018		(42	)
Total cash consideration transferred		9,371

F-80

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Fair values of identifiable assets acquired and liabilities assumed

The fair value of identifiable assets acquired and liabilities assumed from Éxito, on the date of the business combination, are as follows:

	Fair value as of November 27, 2019
Assets
Cash and cash equivalents		6,062
Trade receivables, net		416
Inventories, net		2,765
Recoverable taxes		477
Other current assets		349
Deferred income tax and social contribution		1,353
Related parties		137
Other noncurrent assets		111
Investments in associates		326
Investment properties		2,972
Property and equipment, net		8,496
Intangible assets, net		3,009
		26,463
Liabilities
Payroll and related taxes		283
Trade payables, net		4,545
Taxes and contributions payable		219
Borrowings and financing		2,546
Lease liabilities		277
Other current liabilities		998
Noncurrent borrowings and financing		2,060
Deferred income tax and social contribution		2,100
Provisions for legal proceedings		103
Noncurrent –lease liabilities		1,540
Other noncurrent liabilities		28
		14,699
Net assets		11,764
(-) Attribute to non-controlling interest		(2,558	)
Net assets		9,206

Tradename – These includes the brands Surtimax, Super Inter, Surti Mayorista, Viva, Frescampo, Éxito and Carulla in Colombia, Libertad brand in Argentina and Disco in Uruguay. In addition, it also includes the brands Éxito, Bronzini, Frescampo, Ekono, Arkitect and Carulla. Tradenames have an indefinite useful life.

Investment properties and real estate properties –Éxito Group has real estate assets in galleries and shopping malls for the purpose of being leased. Such assets have high commercial relevance and they are located in prime areas.

Tuya investment – fair value was estimated using the incoming approach method; and

Leases liabilities – Lease liabilities were re-measured using the incremental borrowing rate at the date of acquisition.

F-81

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Goodwill identified

The Company recorded a residual goodwill of R$165; which has been determined as follows:

Fair value of net assets acquired	11,764
(-) Fair value of non-controlling interest	(2,558	)
	9,206
Total consideration transferred for the acquisition of Éxito Group	9,371
Goodwill resulting from acquisition of Éxito Group	165

Goodwill is disclosed in the balance sheet as intangible assets and it is not deductible for tax purposes, except on the sale of the investment. See Note 17.1.

The acquisition related cost was R$124 and is recognized in “other operating expenses” (Note 28).

Investment Properties

Investment properties are measured at historical cost, including transaction costs, net of accumulated depreciation, and/or impairment losses, if any. The cost of investment properties acquired in a business combination is calculated by fair value, pursuant to IFRS 3 – Business combination.

Investment properties are written-off when sold or when they are no longer used and no future economic benefit is expected from its sale. An investment property is also transferred when there is an intention to sell, in this case, it is classified as non-current assets held for sale. The difference between the net amount obtained from the sale and the asset’s carrying amount is recognized in the statement of operations for the year in which the asset is disposed of.

The investment properties of the Company correspond to commercial areas and plots of land held for income generation or price future appreciation.

F-82

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

The fair value of investment properties is measured based on the third parties’ valuation.

	As of December 31, 2018		Additions		Depreciation			Business combinations		Currency translation adjustment		Transfers		As of December 31, 2019
Land		-		2		-			643		11		-		656
Buildings		-		10		(4	)		2,320		44		15		2,385
Construction In Progress		-		-		-			10		-		-		10
Total		-		12		(4	)		2,973		55		15		3,051

	As of December 31, 2019
	Historical Cost		Accumulated Depreciation			Residual value
Land		656		-			656
Buildings		2,400		(15	)		2,385
Construction in Progress		10		-			10
Total		3,066		(15	)		3,051

During December 2019, the net result generated by investment properties owned by Éxito Group are as follows:

	As of December 31, 2019
Lease Revenue		31
Operating expenses related to investment properties that generate revenues		(4	)
Operating expenses related to investment properties that do not generate revenues		(12	)
Net revenue generated by investment properties		15

As of December 31, 2019, the fair value of investment properties was only comprised of balances of Éxito Group amounting R$3,051.

Property and equipment

Property and equipment is stated at cost, net of accumulated depreciation and/or impairment losses, if any. The cost includes the acquisition amount of equipment and borrowing costs for long-term construction projects if recognition criteria are observed. When significant components of property and equipment are replaced, these components are recognized as individual assets, with specific useful lives and depreciation. Likewise, when a major replacement is performed, its cost is recognized as the carrying amount of the equipment as a replacement, if the recognition criteria are met. All other repair and maintenance costs are recognized in the statement of operations for the year as incurred.

F-83

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Asset Category	Average annual depreciation rate in %
Buildings		2.50
Leasehold improvements		4.17
Machinery and equipment		16.68
Facilities		6.92
Furniture and appliances		11.39

Property and equipment items and eventual significant amounts are written-off upon sale or when there is no expectation of future economic benefits deriving from their use or sale. Any gains or losses resulting from disposals of assets are included in the statement of operations for the year.

The residual value, the useful life of assets, and methods of depreciation are reviewed at the end of each fiscal year, and adjusted prospectively, where applicable. The Company reviewed the useful life of property and equipment in 2019 and no significant changes were deemed necessary.

Interest on borrowings and financing directly attributable to the acquisition, construction of an assets, that requires a substantial period of time to be completed for its intended use or sale (qualifying asset), are capitalized as part of the cost of respective assets during its construction phase. From the date that the asset is placed in operation, capitalized costs are depreciated over the estimated useful life of the asset.

16.1

Impairment of non-financial assets

The Company tests its non-financial assets for impairment annually or whenever there is internal or external evidence that they may be impaired.

An asset’s or cash-generating unit recoverable amount is defined as the asset’s fair value less cost to sell or its value in use, whichever is higher.

If the carrying amount of an asset or cash-generating units exceeds its recoverable value, the asset is considered impaired and an impairment loss is recorded to adjust the carrying amount of the asset or cash-generating unit to its recoverable value. When assessing the recoverable value, the estimated future cash flow is discounted to the present value, using a discount pre-tax rate, which represents the Company’s weighted average cost of capital to reflect current market valuations as to the time value of money and asset’s specific risks. The impairment test of intangible assets’ useful life including goodwill is described in Note 17.

Impairment losses are recognized in the statement of operations in categories of expenses consistent with the function of the respective impaired asset. The impairment loss previously recognized is only reversed if there has been a changed in the assumptions used to determine the recoverable amount since the last impairment loss was recognized.

16.1.1

Impairment test of stores operating assets

An impairment assessment is performed on operating assets (property and equipment) and intangible assets (such as Commercial rights) directly attributable to stores, as follows:

●

Step 1: the book value of properties in rented stores was compared to a sales multiple (35%) representing transactions between retail companies. Stores for which the multiple of sales was lower than their book value and owned stores, a more detailed test is made, as described in Step 2 below.

●

Step 2: The Company considered the highest value between: a) the discounted cash flows of stores using sales growth average of 4.5% in 2019 (6.0% in 2018) for period exceeding the next five years and a discount rate of 8.7% in 2019 (9.8% in 2018) and; b) appraisal reports drawn up by independent experts for own stores.

The Company assessed if any of its long-lived assets were impaired at December 31, 2019 and concluded that the recognition of an impairment loss was not needed.

F-84

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

16.2

Property and equipment rollforward

	As of December 31, 2017		Additions		Remeasurement		Write -off			Depreciation			Transfers and others (*)			As of December 31, 2018		Additions		Business combination		Remeasurement		Write -off			Depreciation			Transfers and others (**)			Currency translation adjustment			As of December 31, 2019
Land		261		45		-		-			-			42			348		76		2,277		-		-			-			25			40			2,766
Buildings		437		170		-		(3	)		(13	)		(8	)		583		231		2,935		-		-			(25	)		56			49			3,829
Improvements		1,346		421		-		(30	)		(95	)		91			1,733		553		334		-		(302	)		(123	)		12			-			2,207
Equipment		351		142		-		(8	)		(69	)		-			416		232		672		-		(20	)		(93	)		25			10			1,242
Facilities		178		57		-		(3	)		(15	)		4			221		66		64		-		(1	)		(20	)		2			(2	)		330
Furniture and appliances		169		79		-		(5	)		(26	)		9			226		81		300		-		(8	)		(40	)		36			6			601
Constructions in progress		43		52		-		(12	)		-			(44	)		39		69		154		-		(3	)		-			(122	)		3			140
Others		28		11		-		-			(10	)		-			29		4		6		-		-			(11	)		14			-			42
Subtotal		2,813		977		-		(61	)		(228	)		94			3,595		1,312		6,742		-		(334	)		(312	)		48			106			11,157
Lease – right of use:
Buildings		901		210		52		(13	)		(97	)		-			1,053		670		1,727		138		(28	)		(140	)		(3	)		32			3,449
Equipment		11		-		-		-			(4	)		-			7		15		25		-		-			(5	)		(1	)		2			43
Land		-		-		-		-			-			-			-		-		3		-		-			-			-			-			3
Subtotal		912		210		52		(13	)		(101	)		-			1,060		685		1,755		138		(28	)		(145	)		(4	)		34			3,495
Total		3,725		1,187		52		(74	)		(329	)		94			4,655		1,997		8,497		138		(362	)		(457	)		44			140			14,652

F-85

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

	As of December 31,
	2019							2018
	Historical cost		Accumulated depreciation			Net amount		Historical cost		Accumulated depreciation			Net amount
Land		2,766		-			2,766		348		-			348
Buildings		4,034		(205	)		3,829		669		(86	)		583
Improvements		3,023		(816	)		2,207		2,112		(379	)		1,733
Equipment		2,326		(1,084	)		1,242		668		(252	)		416
Facilities		477		(147	)		330		275		(54	)		221
Furniture and appliances		1,163		(562	)		601		326		(100	)		226
Constructions in progress		140		-			140		39		-			39
Others		110		(68	)		42		70		(41	)		29
		14,039		(2,882	)		11,157		4,507		(912	)		3,595
Financial lease									-		-
Buildings		4,198		(749	)		3,449		1,533		(478	)		1,055
Equipment		92		(49	)		43		52		(47	)		5
Land		6		(3	)		3		-		-			-
		4,296		(801	)		3,495		1,585		(525	)		1,060
Total Property and Equipment		18,335		(3,683	)		14,652		6,092		(1,437	)		4,655

F-86

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

16.3

Guarantees

At December 31, 2019 and 2018, the Company had collateralized property and equipment items in relation to certain legal claims, as disclosed in Note 21.5.

16.4

Capitalized borrowing costs

The capitalized borrowing costs for the year ended December 31, 2019 were R$11 (R$12 on December 31, 2018 and R$8 on December 31, 2017). The rate used for the capitalization of borrowing costs was 136.11% (101.78 on December 31, 2018 and 101.66% on December 31, 2017) of CDI, corresponding to the effective interest rate of loans taken by the Company.

16.5

Additions to property and equipment for cash flow presentation purpose are as follows:

	2019			2018

Additions (i)		1,997			1,187
Leases		(685	)		(210	)
Capitalized interest		(11	)		(12	)
Financing of property and equipment - Additions (ii)		(1,217	)		(921	)
Financing of property and equipment - Payments (ii)		1,273			863
Total		1,357			907

(i)

Additions relate to the acquisition of operating assets, purchase of land and buildings to expansion activities, building of new stores, improvements of existing distribution centers and stores and investments in equipment and information technology.

(ii)

The additions to property and equipment above are presented to reconcile the acquisitions during the year with the amounts presented in the statement of cash flows net of items that did not impact cash flow.

16.6

Other information

On December 31, 2019, the Company recorded in the cost of sales and services the amount of R$24 (R$10 on December 31, 2018), relating to the depreciation of machinery, building and facilities of distribution centers.

F-87

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Intangible Assets

Intangible assets acquired separately are measured at cost upon initial recognition, less amortization, and eventual impairment losses, if any. Internally generated intangible assets, excluding capitalized software development costs, are recognized as expenses when incurred.

Intangible assets mainly consist of software acquired from third parties and software developed for internal use and commercial rights (stores rights of use), customer list and brands.

Intangible assets with definite useful lives are amortized using the straight-line method. The amortization period and method are reviewed, at least, at the end of each reporting period. Changes in the expected useful life or the expected pattern of consumption of future economic benefits embodied in the asset are accounted for by changing the amortization period or method, as appropriate, and are treated as changes in accounting estimate.

Software development costs recognized as assets are amortized over their defined useful life (5 to 10 years). The weighted average rate is 10.96%, and amortization starts when they become operational.

Intangible assets with indefinite useful lives are not amortized but tested for impairment at the end of each reporting period or whenever there are indications that their carrying amount may be impaired either individually or at the level of the cash-generating unit. The assessment is reviewed annually to determine whether the indefinite life assumption remains appropriate. Otherwise, the useful life is changed prospectively from indefinite to definite.

When applicable, gains or losses arising from the derecognition of an intangible asset are measured as the difference between the net proceeds from the sale of the asset and its carrying amount, any gain or loss is recognized in the statement of operations in the year the asset is derecognized.

	As of January 1, 2018		Additions		Amortizations			Transfer (*)		As of December 31, 2018		Additions		Business combination		Amortizations			Exchange rate changes		As of December 31, 2019
Goodwill		618		-		(2	)		-		616		-		165		-			4		785
Software		51		17		(10	)		3		61		28		60		(15	)		1		135
Commercial rights		41		24		-			232		297		24		1		(8	)		-		314
Tradename		39		-		-			-		39		-		2,949		-			66		3,054
		749		41		(12	)		235		1,013		52		3,175		(23	)		71		4,288

F-88

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

	As of December 31,
	2019							2018
	Historical cost		Accumulated amortization			Net amount		Historical cost		Accumulated amortization			Net amount

Goodwill		1,038		(253	)		785		871		(255	)		616
Software		318		(183	)		135		93		(32	)		61
Commercial rights		322		(8	)		314		297		-			297
Tradename		3,054		-			3,054		39		-			39
Total Intangible Assets		4,732		(444	)		4,288		1,300		(287	)		1,013

17.1

Impairment test of intangible assets with an indefinite useful life, including goodwill

The impairment test of intangible assets uses the same practices described in Note 16.

For impairment testing purpose, goodwill, and banners acquired through business combinations and licenses with indefinite lives were allocated to cash-generating units.

The recoverable value is calculated using the value in use based on estimated cash flow based on financial budgets approved by Board of Directors for the next three years. The discount rate used on cash flow projections was 8.4% (10.1% in 2018), and the cash flows exceeding the three-year period are extrapolated using a 4.5% growth rate (6.0% in December 31, 2018). Based on this analysis no impairment charges were recorded.

The Company reassessed its impairment analysis on December 31, 2019, and did not identify any significant indicators of impairment due to current events occurring after the balance sheet date, including COVID-19. See considerations in relation to the effects of COVID-19 pandemic in Note 1.2.

17.1.1

Sensitivity analysis

Based on a probable scenario, a sensitivity analysis was made for 0.5 percentage points increase/decrease in the discount rate and growth rate, whereas in any analysis result, the segment’s cash flow value exceeds its carrying amount. As a result of this analysis, there was no need to record a provision for impairment relating to these assets.

17.2

Commercial rights

Commercial rights are the right to operate stores, which refers to the rights acquired or allocated in business combinations.

According to the Management’s understanding, commercial rights are considered recoverable, either through the expected cash flows of the related store or the sale to third parties.

Commercial rights with a defined useful life are tested using the same assumptions for the Company’s impairment test, following the term of use of these assets.

F-89

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Trade payables, net

			As of December 31,
	Note		2019			2018
Product suppliers				9,250			3,564
Service providers				573			417
Bonuses from suppliers		18.2		(53	)		(374	)
Total				9,770			3,607

18.1

Agreements among suppliers, the Company, and banks

The Company entered into certain agreements with financial institutions in order to allow suppliers to use the Company’s lines of credit, and to anticipate receivables arising from the sale of goods and services, the Company.

These transactions were assessed by management that determined that they have commercial characteristics, since there are no changes to the original terms of the receivables in relation to price and / or terms, including financial charges. The anticipation is also solely at the suppliers’ discretion.

The Company also has commercial transactions increasing payment terms, as part of its commercial activities, without financial charges.

18.2

Bonuses from suppliers

These include bonuses and discounts from suppliers. These amounts are defined in agreements and include amounts referring to discounts by volume of purchases, joint marketing programs, freight reimbursements, and other similar programs. Settlement occurs by offsetting payable to suppliers, according to conditions foreseen in the supply agreements.

F-90

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Borrowings and financing

19.1

Debt breakdown

	Weighted	As of December 31,
	Average Rate	2019			2018
Current
Debentures and promissory note
Debentures			1,189			-
Borrowing costs			(33	)		-
			1,156			-
Borrowings and financing in domestic currency
BNDES	3.99% per year		7			7
Working capital	TR+9.8% per year		14			14
Borrowing cost			(3	)		-
Total domestic currency			18			21
In foreign currency
Working capital	USD + 4.33%		-			380
Working capital	IBR3M + 2%		287			275
Swap contracts	IBR3M + 2%		(18	)		(43	)
Total foreign currency			269			612
Total current			1,443			633

F-91

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

	Weighted	As of December 31,
	Average Rate	2019			2018
Noncurrent
Debentures and promissory note
Debentures			6,773			-
Borrowing cost			(46	)		-
			6,727			-
Borrowings and financing in domestic currency
BNDES	3.99% per year		16			23
Working capital	TR+9.8% per year		70			81
Working capital	CDI + 1.12% per year		500			-
Swap contracts	101.88% of CDI		(10	)		(9	)
Borrowing cost			(10	)		(2	)
Total domestic currency			566			93
In foreign currency
Working capital	IBR3M + 2%		46			-
Borrowing cost			(1	)		-
Total foreign currency			45			-
Total noncurrent			7,338			93
Total			8,781			726

Current assets			29			43
Noncurrent assets			11			9
Current liabilities			1,472			676
Noncurrent liabilities			7,349			102

F-92

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

19.2

Rollforward


Balance as of January 1, 2018	471
Additions	417
Accrued interest	30
Swap contracts	(50	)
Mark-to-Market	10
Exchange rate and monetary variation	63
Interest amortization	(24	)
Principal amortization	(175	)
Swap amortization	(7	)
IFRS 16 - related adjustment	(9	)
Balance as of December 31, 2018	726
Additions	9,395
Accrued interest	246
Swap contracts	(16	)
Mark-to-market	(46	)
Exchange rate and monetary variation	(30	)
Borrowing cost	21
Interest amortization	(116	)
Principal amortization	(6,102	)
Swap amortization	95
Companies acquisition	4,527
Exchange rate changes	81
Balance as of December 31, 2019	8,781

19.3

Schedule of noncurrent maturities

Maturity
From 1 to 2 years	2,093
From 2 to 3 years	2,091
From 3 to 4 years	2,770
From 4 to 5 years	217
After 5 years	223
Total	7,394
Borrowing Cost	(56	)
Total	7,338

F-93

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

19.4

Debentures and promissory notes

Issued

Outstanding
Debentures

Date

Annual
financial

Unit price

Type

amount

(units)

Issuance

Maturity

charges

(in Reais)

2019

First Issue of Promissory Notes - 1st series

non-preemptive right

07/04/2019

07/03/2020

CDI + 0.72% p.a.

51.537.614

First Issue of Promissory Notes - 2nd series

non-preemptive right

07/04/2019

07/05/2021

CDI + 0.72% p.a.

51.537.614

First Issue of Promissory Notes - 3rd series

non-preemptive right

07/04/2019

07/04/2022

CDI + 0.72% p.a.

51.537.614

First Issue of Promissory Notes - 4th series

non-preemptive right

250

07/04/2019

07/04/2023

CDI + 0.72% p.a.

51.537.614

258

First Issue of Promissory Notes - 5th series

non-preemptive right

200

07/04/2019

07/04/2024

CDI + 0.72% p.a.

51.537.614

206

First Issue of Promissory Notes - 6th series

non-preemptive right

200

07/04/2019

07/04/2025

CDI + 0.72% p.a.

51.537.614

206

First Issue of Debentures- 1st series

non-preemptive right

2.000

2.000.000

09/04/2019

08/20/2020

CDI + 1.60% p.a.

500

1,001

First Issue of Debentures - 2nd series

non-preemptive right

2.000

2.000.000

09/04/2019

08/20/2021

CDI + 1.74% p.a.

1.022

2,044

First Issue of Debentures - 3rd series

non-preemptive right

2.000

2.000.000

09/04/2019

08/20/2022

CDI + 1.95% p.a.

1.023

2,045

First Issue of Debentures - 4th series

non-preemptive right

2.000

2.000.000

09/04/2019

08/20/2023

CDI + 2.20% p.a.

1.024

2,046

Borrowing Cost

(79

)

7,883

Current liabilities

1,156

Noncurrent liabilities

6,727

The Company issues debentures to strengthen its working capital, maintain its cash strategy, lengthen its debt profile and make investments. The debentures issued are unsecured, without renegotiation clauses and not convertible into shares.

In the third quarter of 2019, the Company conducted its 1^st issue of promissory notes in 6 series, with par value from R$50 to R$250 and a total of R$800.

During this period, the Company also conducted its 1^st issue of non-convertible debentures, in four series, with a par value of R$2,000 each, and 1-4 years maturity term, totaling R$8,000. These funds were used to finance the acquisition of Éxito’s shares connected with the proposal for restructuring operations in Latin America, as disclosed in Note 14.

19.5

Borrowings in foreign currencies

On December 31, 2019, the Company has loan in foreign currencies (US dollar) to strengthen its the working capital, maintaining its cash strategy, lengthening its indebt profile and make investments.

19.6

Guarantees

The Company has signed promissory notes for some loan agreements.

F-94

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

19.7

Swap contracts

The Company uses swap operations for 100% of its borrowings denominated in US dollars and fixed interest rates, exchanging these liabilities for Real linked to CDI (floating) interest rates. These agreements have the same debt term and protect the interest rates and principal and are signed with the same due dates and in the same economic group. The annual weighted average rate in December 2019 was 5.96% of CDI (6.42% on December 31, 2018).

19.8

Line of credit

The Company entered into credit facility agreements totaling R$ 400. These agreements were executed pursuant to conditions and practiced by the market and are effective for 2020.

19.9

Financial covenants

In connection with the debentures and promissory notes issued and part of loan operations denominated in foreign currencies, the Company is required to maintain certain financial ratios. These ratios are calculated quarterly based on the Company’s consolidated financial statements drawn up in accordance with the accounting practices adopted in Brazil, as follows: (i) net debt (debt less cash equivalents and trade receivables) should not exceed shareholders’ equity; and (ii) consolidated net debt/EBITDA ratio should be lower than or equal to 3.25. On December 31, 2019, the Company was compliant with these ratios.

The Company has been complying with all restrictive covenants, and, over the last three years ended on December 31, 2019, no event occurred that would require the Company to accelerate the payment of its debts.

19.10

Cash flow hedge

The Company used NDF – Non-Deliverable Forward agreements to hedge against COP/BRL exchange rate variation due to the corporate restructuring in Latin America described in Note 14.1. The NDFs agreements were designated for cash flow hedge and already concluded on December 31, 2019. The effect of this transaction is in the consideration paid in the Éxito Group acquisition.

F-95

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

19.11

Loan agreement denominated in domestic currency

On April 24, 2020, the Company entered into a loan agreement denominated in domestic currency in the amount of R$250. The agreement matures on April 25, 2022, with an annual payment of interest rates.

On June 29, 2020, the Company entered into a loan agreement denominated in domestic currency in the amount of R$150. The agreement matures on June 20, 2022, with an annual payment of interest rates.

19.12

Receivables of Éxito’s dividends

The Shareholders’ Meeting of Éxito held on March 19, 2020, approved the payment of dividends in the amount of R$1.3 billion, received by Sendas Distribuidora in April 2020 and fully allocated to the amortization of debt relating to the Éxito Group acquisition.

Financial instruments

Financial assets are recognized when the Company assumes contractual rights of receiving cash or other financial assets of agreements to which it is a party. Financial assets are derecognized when the rights to receive cash linked to the financial asset expire or risks and benefits were substantially transferred to third parties. Assets and liabilities are recognized when rights and/or obligations are retained by the Company.

Financial liabilities are recognized when the Company assume contractual liabilities for settlement in cash or assumption of third-party obligations through a contract to which it is a party. The financial liabilities are initially recognized at fair value and derecognized when settled, extinguished, or expired.

Purchases or sales of financial assets requiring delivery of assets within a term defined by regulation or agreement in the market (negotiations under normal conditions) are recognized on the trade date, i.e., on the date the Company undertakes to buy or sell the asset.

20.1

Classification and measurement of financial assets and liabilities

Pursuant to IFRS 9, on initial recognition, a financial asset is classified as measured: at amortized cost, at fair value through other comprehensive income or at fair value through income. The classification of financial assets pursuant to IFRS 9 is usually based on the business model in which a financial asset is managed and its contractual cash flow characteristics. Embedded derivatives in which the main contract is a financial asset within the scope of the standard are never split. Instead, the hybrid financial instrument is assessed for classification as a whole.

A financial asset is measured at amortized cost if it meets both of the following conditions and is not designated as measured at fair value through income:

●

it is maintained in a business model whose objective is to keep financial assets to receive contractual cash flows; and

●

its contractual terms generate, on specific dates, cash flows related to the payment of principal and interest on the outstanding principal amount.

F-96

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

A debt instrument is measured at fair value through other comprehensive income, if it meets both of the following conditions and is not designated as measured at fair value through income:

●

it is maintained in a business model whose objective is achieved both by receipt of contractual cash flows and sale of financial assets; and

●

its contractual terms generate, on specific dates, cash flows related to the payment of principal and interest on the outstanding principal amount.

At the initial recognition of an investment in an equity instrument that is not held for trading, the Company may irrevocably opt to report subsequent alterations in the fair value of investment under other comprehensive income. This option is made on each individual investment.

All financial assets not classified as measured at amortized cost or at fair value through other comprehensive income, as described above, are classified as fair value through income. This includes all derivative financial assets. At initial recognition, the Company may irrevocably designate a financial asset that otherwise meets the requirements to be measured at amortized cost, at fair value through other comprehensive income or fair value through income if this significantly eliminates or reduces an accounting mismatch that otherwise would arise (option of fair value available in IFRS 9).

A financial asset (unless these are trade receivables without a significant financing component which is firstly measured by the price of the transaction) is initially measured by fair value, accrued, for an item not measured at fair value through income of transaction costs which are directly attributable to its acquisition.

●

Financial assets measured at fair value through income: These assets are subsequently measured at fair value. The net result, including interest rates or dividend income, is recognized in the statement of operations.

●

Financial assets at amortized cost: These assets are subsequently measured at amortized cost applying the effective interest rate method. The amortized cost is reduced by impairment losses. Interest income, exchange gains, and losses are recognized in the statement of operations. Any gain or loss in derecognition is recognized in the statement of operations.

●

Financial assets at fair value through other comprehensive income: These assets are subsequently measured at fair value. Interest income calculated adopting the effective interest rate method, exchange gains, and losses and impairment losses are recognized in the statement of operations. Other net results are recognized in other comprehensive income. In derecognition, the result accumulated in other comprehensive income is reclassified to the statement of operations.

F-97

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

20.2

Derecognition of financial assets and liabilities

A financial asset (or, where applicable, part of a financial asset or part of a group of similar financial assets) is derecognized when:

●

The rights of cash flows receivables expire; and

●

The Company transfers its rights to receive cash flows from an asset or assume an obligation of fully paying the cash flows received to a third party, under the terms of a transfer agreement; and (a) the Company substantially transferred all the risks and benefits related to the asset; or (b) the Company neither transferred nor substantially retained all the risks and benefits relating to the asset, but transferred its control.

When the Company assigns its rights to receive cash flows from an asset or enters into a transfer agreement without having substantially transferred or retained all of the risks and benefits relating to the asset nor transferred the asset control, the asset is maintained and the related liability is recognized. The asset transferred and related liability are measured to reflect the rights and obligations retained by the Company.

A financial liability is derecognized when the liability underlying obligation is settled, canceled, or expired.

When a financial liability is replaced by another of the same creditor, through substantially different terms, or terms of an existing liability are substantially modified, this replacement or modification is treated as the derecognition of original liability and recognition of a new liability, and the difference between respective carrying amounts is recognized in the statement of operations.

20.3

Offset of financial instruments

The financial assets and liabilities are offset and reported net in consolidated financial statements, if, and only if, amounts recognized can be offset and with the intention of settlement on a net basis, or realize assets and settle liabilities, simultaneously.

20.4

Derivative financial instruments

The Company uses derivative financial instruments to limit the exposure to variation unrelated to the local market, such as interest rate swaps and exchange rate variation swaps. These derivative financial instruments are initially recognized at fair value on the date on which the derivative contract is executed and subsequently re-measured at fair value at the end of the reporting period. Derivatives are recorded as financial assets when the fair value is positive and as financial liabilities when the fair value is negative. Gains or losses resulting from changes in the fair value of derivatives are directly recorded in the statement of operations.

F-98

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

At the inception of a hedge relationship, the Company formally designates and documents the hedge relationship to which it intends to apply hedge accounting and its objective and risk management strategy for contracting the hedge. The documentation includes identification of the hedging instrument, the hedged item or transaction, the nature of the risk being hedged and how the Company will assess the effectiveness of the changes in the hedging instrument’s fair value in offsetting the exposure to changes in the fair value of the hedged item or cash flow attributable to the hedged risk. These hedges are expected to be highly effective in offsetting changes in the fair value or cash flow and are assessed on an ongoing basis to determine if they have been highly effective throughout the periods for which they were designated.

The following are recognized as fair value hedges:

●

The change in the fair value of a derivative financial instrument classified as fair value hedging is recognized as financial result. The change in the fair value of the hedged item is recorded as a part of the carrying amount of the hedged item and is recognized in the statement of operations; and

●

In order to calculate the fair value, debts and swaps are measured through rates available in the financial market and projected up to their maturity date. The discount rate used in the calculation by the interpolation method for borrowings denominated in foreign currency is developed through CDI curves, free coupon and DI, indexes disclosed by the B3, whereas for borrowings denominated in Reais, the Company uses the DI curve, an index published by the CETIP (Securities Custodial and Clearing Center) and calculated through the exponential interpolation method.

The Company uses financial instruments only to hedge identified, risks limited to 100% of the value of these risks. Derivative instruments transactions are exclusively used to reducing the exposure to the risk of changes in interest rates and foreign currency fluctuation and maintaining a balanced capital structure.

20.5

Cash flow hedge

Derivative instruments are recorded as cash flow hedge, using the following principles:

●

The effective portion of the gain or loss on the hedge instrument is recognized directly in shareholders’ equity in other comprehensive income. In case the hedge relationship no longer meets the hedging ratio but the objective of management risk remains unchanged, the Company should “rebalance” the hedge ratio to meet the eligibility criteria.

●

Any remaining gain or loss on the hedge instrument (including arising from the “rebalancing” of the hedge ratio) is ineffective, and therefore should be recognized in profit or loss.

●

Amounts recorded in other comprehensive income are immediately transferred to the statement of operations together with the hedged transaction by affecting the statement of operations, for example, when the hedge financial income or expense is recognized or when a forecast sale occurs. When the hedged item is the cost of a non-financial asset or liability, the amounts recorded in equity are transferred to the initial carrying amount of the non-financial asset or liability.

F-99

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

●

The Company should prospectively discontinue hedge accounting only when the hedge relationship no longer meets the qualification criteria (after taking into account any rebalancing of the hedge relationship).

●

If the expected transaction or firm commitment is no longer expected, amounts previously recognized in shareholders’ equity are transferred to the statement of operations. If the hedging instrument expires or is sold, terminated or exercised without replacement or rollover, or if its hedge classification is revoked, gains or losses previously recognized in comprehensive income remain deferred in equity in other comprehensive income until the expected transaction or firm commitment affect the profit or loss.

20.6

Impairment of financial assets

IFRS 9 replaces the “incurred loss” model of IAS 39 with an expected loan loss model. The new impairment loss model applies to financial assets measured at amortized cost, contractual assets, and debt instruments measured at fair value through other comprehensive income but does not apply to investments in equity instruments (shares) or financial assets measured at fair value through income.

Pursuant to IFRS 9, provisions for losses are measured at one of the following bases:

●

Loan losses expected for 12 months (general model): these are loan losses resulting from possible default events within 12 months after the end of the reporting period, and subsequently, in case of a deterioration of credit risk for the entire life of the instrument.

●

Loan losses expected for entire life (simplified model): these are loan losses resulting from all possible default events over the expected life of a financial instrument.

●

Practical expedient: these are loan losses expected and consistent with reasonable and sustainable information available, at the end of the reporting period on past events, current conditions, and estimates of future economic conditions that allow verifying probable future loss based on the historical loan loss occurred in accordance with instruments maturity.

The Company measures provisions for trade receivable losses and other receivables and contractual assets through an amount corresponding to the loan loss expected for the entire life, and for trade receivables, whose receivables portfolio is fragmented, rents receivable, the practical expedient is applied by adopting a matrix of losses for each maturity level.

When determining whether the credit risk of a financial asset significantly increased from initial recognition, and when estimating the expected loan losses, the Company considers reasonable and sustainable information which is relevant and available without cost or excessive effort. This includes qualitative and quantitative information and analyses, based on the Company’s historical experience, the assessment of credit, and considering projection information.

The Company assumes that the credit risk in a financial asset significantly increased if it is more than 90 days overdue.

F-100

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

The Company considers a financial asset in default when:

●

it is unlikely that the debtor will fully pay its loan obligations to the Company, without resorting to collateral (if any); or

●

the financial asset is more than 90 days overdue.

The Company determines the credit risk of a debt instrument by analyzing the payment history, financial, and current macroeconomic conditions of counterparty and assessment of rating agencies, where applicable, thereby evaluating each instrument, individually.

The maximum period considered in the estimate of expected receivable loss is the maximum contractual period during which the Company is exposed to the credit risk.

●

Measurement of expected loan losses: Expected loan losses are estimated weighted by the probability of loan losses based on historical losses and related assumptions projections. The loan losses are measured at present value based on all cash shortfalls (i.e., the difference between cash flows owed to the Company according to the contract and cash flows that the Company expects to receive).

Expected loan losses are discounted by the effective interest rate of a financial asset.

●

Financial assets with credit recovery problems: On each reporting date, the Company assesses if financial assets recorded by amortized cost and debt instruments measured at fair value through other comprehensive income shows signs of impairment. A financial asset shows signs of impairment when one or more events occur with a negative impact on the financial asset’s estimated future cash flows.

●

Reporting of impairment loss: Provision for financial assets losses measured at amortized cost are deducted from an assets’ gross carrying amount.

For financial instruments measured at fair value through other comprehensive income, the provision for losses is recognized in other comprehensive income, instead of reducing the asset’s carrying amount.

Impairment losses related to trade receivables and other receivables, including contractual assets, are reported separately in the statement of operations and other comprehensive income. Losses of recoverable amounts from other financial assets are stated under “selling expenses”.

●

Trade receivables and contractual assets: The Company considers the model and a few of the assumptions applied in the calculation of these expected loan losses as the main sources of an uncertain estimate.

Positions within each group were segmented based on common characteristics of credit risk, such as:

●

Level of credit risk and loss history for wholesale clients and property lease; and

●

Status of default risk and loss history for credit card companies and other clients.

F-101

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

The main financial instruments and their carrying amounts, by category, are as follows:

			Carrying amount
	Notes		2019			2018
Financial Assets
Amortized cost
Related parties - assets		12		97			11
Trade receivables and other accounts receivable		8 and 9		686			120
Other assets				51			-
Fair value through income
Cash and cash equivalents		7		5,026			1,411
Financial investment measured at fair value				2			-
Financial instruments - fair value hedge- long position				40			52
Fair value through other comprehensive income
Financial investments measured at fair value				19			-
Trade receivables - credit card companies and sales vouchers		8 and 9		48			51
Financial liabilities
Other financial liabilities - amortized cost
Related parties - liabilities				(152	)		(104	)
Trade payables		18		(9,770	)		(3,607	)
Financing through acquisition of assets				(101	)		-
Borrowings and financing		19		(842	)		(28	)
Debentures		19		(7,884	)		-
Lease liabilities				(3,751	)		(1,180	)
Fair value through income
Borrowings and financing, including derivatives		19		(84	)		(750	)
Financial instruments - Fair value hedge - short position		19		(11	)		-
Financial instruments on suppliers - Fair value hedge – Short				(8	)		-
Grupo Disco put option (*)				(466	)		-
Net exposure				(17,100	)		(4,024	)

(*)

See Note 20.10.

The financial instruments measured at amortized cost, the related fair values of which differ from the carrying amounts, are disclosed in Note 20.10. The fair value of other financial instruments detailed in table above approximates the carrying amount based on the existing terms and conditions.

F-102

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

20.7

Considerations on risk factors that may affect the businesses of the Company

20.7.1

Credit Risk

●

The Company also has counterparty risk related to derivative instruments, which is mitigated by the Company carrying out transactions, according to policies approved by governance boards.

●

There are no amounts receivable that are individually, higher than 5% of accounts receivable or sales, respectively.

20.7.2

Interest rate risk

The Company obtains borrowings and financing with major financial institutions for cash needs for investments. As a result, the Company is mainly exposed to relevant interest rates fluctuation risk, especially in view of derivatives liabilities (foreign currency exposure hedge) and CDI Indexed debts. The balance of cash and cash equivalents, indexed to CDI, partially offsets the interest rate risk.

20.7.3

Foreign currency exchange rate risk

The Company is exposed to exchange rate fluctuations, which may increase outstanding balances of foreign currency-denominated borrowings. The Company uses derivatives, such as swaps, aiming to mitigate the foreign currency exchange rate risk, converting the cost of debt into domestic currency and interest rates.

Éxito Group uses derivatives to hedge against the exchange rate variation on imports.

20.7.4

Capital risk management

The main objective of the Company’s capital management is to ensure that the Company maintains its credit rating and a well-balanced equity ratio, in order to support businesses and maximize shareholder value. The Company manages the capital structure and makes adjustments taking into account changes in the economic conditions.

F-103

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

The Company’s capital structure is as follows:

	As of December 31,
	2019			2018
Borrowings and financing		(8,821	)		(778	)
(-) Cash and cash equivalents		5,026			1,411
(-) Derivative financial instruments		40			52
Net cash		(3,755	)		685
		-			-
Shareholders’ equity		(9,701	)		(4,092	)
% Net cash over shareholders’ equity		-39	%		17	%

20.7.5

Liquidity risk management

The Company manages liquidity risk through the daily analysis of cash flows and maturities of financial assets and liabilities.

The table below summarizes the aging profile of the Company’s financial liabilities as of December 31, 2019.

	Less than 1 year		1 to 5 years			More than 5 years			Total
Borrowings and financing		342		735			31			1,108
Debentures		1,472		7,630			312			9,414
Derivative financial instruments		6		(11	)		(3	)		(8	)
Lease liabilities		404		1,323			2,024			3,751
Trade payables		9,770		-			-			9,770
Total		11,994		9,677			2,364			24,035

The table above was prepared considering the undiscounted cash flows of financial assets and liabilities based on the earliest date the Company may be required to make a payment or be eligible to receive a payment. To the extent that interest rates are floating, the non-discounted amount is obtained based on interest rate curves in the six months ended on December 31, 2019. Therefore, certain balances reported are not consistent with the balances reported in balance sheets.

20.8

Derivative financial instruments

Swap transactions are designated as fair value hedges, with the objective to hedge the exposure to changes in foreign exchange rates and fixed interest rates (U.S. dollars), converting the debt into domestic interest rates and currency.

F-104

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

On December 31, 2019, the notional amount of these contracts was R$106 (R$705 on December 31, 2018). These transactions are usually contracted under the same term of amounts and carried out with a financial institution of the same economic group, observing the limits set by Management.

According to the Company’s treasury policies, swaps cannot be contracted with restrictions (“caps”), margins, as well as return clauses, double index, flexible options or any other types of transactions different from traditional “swap” and “forwards” transactions to hedge against debts.

The Company’s internal controls were designed to ensure that transactions executed conform to the treasury policy.

The Company calculates the effectiveness of hedge transactions at the inception date and on a continuing basis. Hedge transactions contracted in the year ended December 31, 2019 were effective in relation to the covered risk. For derivative transactions that qualify as hedge accounting, the debt which is the hedged item, is also adjusted at fair value.

	Notional value						Fair value
	2019			2018			2019			2018
Swap with hedge accounting
Hedge purpose (debt)		750			705			84			750

Long position
Fixed rate		95			106			84			95
USD + Fixed		655			599			-			655
Short position		(698	)		(705	)		(73	)		(698	)
Net hedge position		52			-			11			52

Realized and unrealized gains and losses on these contracts during the year ended December 31, 2019, are recorded as financial income or expenses and the balance receivable at fair value is R$10 (R$52 as of December 31, 2018). Assets are recorded as “financial instruments” and liabilities as “borrowings and financing”.

The effects of the fair value hedge recorded in the statement of operations for the year ended December 31, 2019, resulted in a gain of R$30 (gain of R$69 as of December 31, 2018).

20.8.1

Fair values of derivative financial instruments

Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing parties in an arm’s length transaction.

F-105

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Fair values are calculated using projected the future cash flow, using the CDI curves and discounting to present value, using CDI market rates for swap both disclosed by the B3.

The fair value of exchange coupon swaps versus CDI rate was determined based on market exchange rates effective at the date of the financial statements and projected based on the currency coupon curves.

In order to calculate the coupon of foreign currency indexed-positions, the straight-line convention - 360 consecutive days was adopted and to calculate the coupon of CDI indexed-positions, the exponential convention - 252 business days was adopted.

20.9

Sensitivity analysis of financial instruments

Therefore, in the probable scenario (I) there is no impact on the fair value of financial instruments. For scenarios (II) and (III), for the exclusive effect, a deterioration from 25% to 50% was taken into account, respectively, on risk variables, up to one year of financial instruments.

For a probable scenario, the weighted exchange rate was R$5.25 on the due date, and the interest rate weighted was 4.89% per year.

In the case of derivative financial instruments (aiming at hedging the financial debt), changes in scenarios are accompanied by respective hedges, indicating that the effects are not significant.

The Company disclosed the net exposure of derivative financial instruments, each of the scenarios mentioned above in the sensitivity analysis as follows:

(i) Other financial instruments

						Market projections
Transactions	Risk (CDI Reduction)		Balance at 2019			Scenario (I)			Scenario (II)			Scenario (III)
Borrowings and financing
Fixed rate swap contract (short position)		101.88% of CDI		(73	)		(211	)		(214	)		(218	)
Debentures				(7,962	)		(8,349	)		(8,446	)		(8,542	)
Total net effect (loss)				(8,035	)		(8,560	)		(8,660	)		(8,760	)

Cash equivalents		87.71%		1,809			1,888			1,869			1,849

Net exposure gain (loss):				(6,226	)		(6,672	)		(6,791	)		(6,911	)

Net effect gain (loss):							(446	)		(565	)		(685	)

F-106

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Scenario I: Reference Bank Index in Colombia (IBR) available of 4.134%.

Scenario II: 0.4134% increase in IBR and for Libor at 90 days an increase of 0.1763%.

Scenario III: 0.4134% decrease in IBR and for Libor at 90 day a decrease of 0.1763%.

	Balance as of December 31,			Market projections
Transactions	2019			Scenario (I)			Scenario (II)			Scenario (III)
Borrowings and financing		(320	)		(320	)		(321	)		(320	)

20.10

Fair value measurement

Level 1: Quoted (unadjusted) market prices in active markets for assets or liabilities.

Level 2: Valuation techniques for which the lowest level inputs that is significant to the fair value measurement is directly or indirectly observable.

Level 3: Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

The data used in fair value models are obtained, whenever possible, from observable markets or from information in comparable transactions in the market, the benchmarking of the fair value of similar financial instruments, the analysis of discounted cash flows or other valuation models. Judgment is used in the determination of assumptions in relation to liquidity risk, credit risk and volatility. Changes in assumptions may affect the reported fair value of financial instruments.

The fair values of cash and cash equivalents, trade receivables and trade payables approximate their carrying amounts.

F-107

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

The table below sets forth the fair value hierarchy of financial assets and liabilities measured at fair value of financial instruments measured at amortized cost, for which the fair value has been disclosed in the consolidated financial statements:

	Carrying amount						Fair value
	2019			2018			2019			2018			Level (*)
Interest rate swaps		40			52			10			42			2
Borrowings and financing (fair value)		(95	)		(741	)		(84	)		(741	)		2
Borrowings and financing (amortized cost)		(8,726	)		(37	)		(8,056	)		(37	)		2
Grupo Disco put option (*)		(466	)		-			(466	)		-			3
		(9,247	)		(726	)		(8,596	)		(736	)

(*)

Non-controlling shareholders of Group Disco del Uruguay S.A., Éxito’s subsidiary have an exercisable put option based on a formula that uses data such as net income, EBITDA - earnings before interest, taxes, depreciation and amortization - and net debt, in addition to fixed amounts determined in the contract and the exchange variation applicable for conversion to the functional currency. This put option is presented in “Acquisition of non-controlling interest”.

There was no change between the fair value measurements hierarchy levels during the year ended December 31, 2019.

Cross-currency and interest rate swaps and borrowings and financing are classified in level 2 since the fair value of such financial instruments was determined based on readily observable inputs, such as expected interest rate and current and future foreign exchange rate.

20.11

Consolidated position of operations with derivative financial instruments

F-108

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

The outstanding derivative financial instruments are presented in the table below:

	Notional			As of December 31,
Risk	(millions)	Due date		2019			2018
Currency swaps registered at the Clearing House for the Custody and Financial Settlement of Securities – CETIP
US$ X CDI	US$ 100		2019		-			42
US$ X CDI	US$ 70		2019		-			1

Interest rate swaps registered at CETIP
Fixed rate x CDI	R$ 54		2027		5			5
Fixed rate x CDI	R$ 52		2027		5			4
Derivatives - Fair value hedge - Brazil					10			52

Debt
USD – COP	US$ 211		2020		20			-
USD – COP	US$ 3		2022		1			-
Interest rate - COP	COP 673,109		2020		(1	)		-
Interest rate – COP	COP 138,440		2021		(1	)		-
			,
Debt
USD – COP	USD 56		2020		(8	)		-
Derivatives - Éxito Group					11			-

Provision for legal proceedings

Provisions are recognized when the Company has a present obligation (legal or not formalized) as a result of a past event, it is probable that an outflow of resources will be required to settle the obligation, and the obligation can be reliably estimated. The expense related to any provision is recognized in statement of operations for the year, net of any reimbursement. In case of attorney’s fees in favorable court decisions, the Company’s policy is to record a provision when fees are incurred, upon final judgment on lawsuits, as well as disclose in the notes the estimated amounts involved in lawsuits in progress.

In order to assess the outcome’s probability the Company considers available evidence, the hierarchy of laws, prior court decisions in similar cases and their legal significance, as well as the legal counsel’s opinion.

The provision for legal proceedings is estimated by the Company and supported by its legal counsel, for an amount considered sufficient to cover probable losses.

F-109

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

	Tax claims			Social security and labor			Civil			Total
Balance as of January 1, 2018		199			52			33			284
Additions		2			8			10			20
Reversals		(49	)		(11	)		(6	)		(66	)
Payments		-			(2	)		(4	)		(6	)
Monetary correction		(5	)		6			3			4
Balance as of December 31, 2018		147			53			36			236
Additions		16			12			13			41
Reversals		(10	)		(8	)		(4	)		(22	)
Payments		(13	)		(2	)		(7	)		(22	)
Monetary correction		3			7			1			11
Company acquisition		76			13			14			103
Exchange rate changes		2			-			-			2
Balance as of December 31, 2019		221			75			53			349

21.1

Tax claims

Tax claims are subject by law to the monthly monetary correction, which refers to an adjustment to the provision based on indexing rates adopted by each tax jurisdiction. Both interest rates charges and fines, where applicable, were calculated and provisioned with respect to unpaid amounts.

The main tax claims provisioned are as follows:

Éxito Group claims involve tax matters relating to the value-added taxes, property taxes, and industry and commerce taxes, totaling R$77 on December 31, 2019.

The provisioned amount on December 31, 2019, for these matters is R$221 (R$147 on December 31, 2018).

21.2

Social security and labor

The Company is a party to various labor proceedings, especially due to dismissals in the regular course of business. On December 31, 2019, the Company recorded a provision of R$61 (R$53 on December 31, 2018), referring to a potential risk of loss relating to labor claims. Management, with the assistance of its legal counsels, assesses these claims and recording provisions for losses when reasonably estimated, considering previous experiences in relation to amounts claimed. On December 31, 2019, the provision was R$75 (R$53 on December 31, 2018).

F-110

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

21.3

Civil

The Company is party to civil proceedings (indemnifications, collections, among others) at in different procedural phases and various central courts. Management records provisions in amounts considered sufficient to cover unfavorable court decisions when its internal and external legal counsel assess the losses to be probable.

Among these proceedings, we highlight the following:

The Company is party to various lawsuits requesting the renewal of rental agreements and the review of the current rent paid. The Company records a provisions for the difference between the amount originally paid by stores and the amounts claimed by the adverse party in the lawsuit when internal and external legal counsels consider the probability of changing the lease amount paid by the entity. On December 31, 2019, the provision for these lawsuits amounted to R$28 (R$28 on December 31, 2018), for which there are no restricted deposits for legal proceeding.

The Company is party to certain lawsuits relating to the fines applied by inspection bodies of direct and indirect administration of the federal government, states, and municipalities, including consumer defense bodies (PROCONs, INMETRO, and local governments). The Company, assisted by its legal counsel, assesses these claims recording provisions for probable cash disbursements, according to the probability of loss. On December 31, 2019, the provision for these lawsuits is R$8 (R$8 on December 31, 2018).

The Company’s total civil and regulatory claims on December 31, 2019, is R$53 (R$36 on December 31, 2018).

Éxito Group is party to certain lawsuits relating to cases of civil liability, proceedings due to lease conditions, and other matters amounting to R$17 on December 31, 2019.

21.4

Possible contingent liabilities

The Company is party to other litigations for which the probability of loss was deemed by its legal counsel to be possible, but not probable, therefore, not accrued, totaling an updated amount of R$2,406 on December 31, 2019 (R$2,405 on December 31, 2018). Accordingly, no provisions were recorded in connection with these proceedings, which are mainly related to:

IRPJ (corporate income tax), IRRF (withholding income tax), CSLL (social contribution on net income) – The Company received several tax assessment notices relating to tax offsetting proceedings, goodwill disallowance, disagreements regarding payments and overpayments, fines due to non-compliance with ancillary obligation, among other less relevant issues. The amount involved corresponds to R$457 on December 31, 2019 (R$440 on December 31, 2018).

F-111

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

COFINS, PIS (federal taxes on gross revenues) – The Company has been questioned about discrepancies in payments and overpayments; fine due to non-compliance with ancillary obligation, disallowance of COFINS and PIS credits, among other issues. These proceedings are pending judgment at the administrative and judicial levels. The amount involved in these tax assessments is R666 as of December 31, 2019 (R$667 on December 31, 2018).

ICMS (State VAT) – The Company received tax assessment notices from State tax authorities in connection with credits from purchases from suppliers acquisitions considered unqualified by the registry of the State Revenue Service, among others matters. These tax assessments amount to R$1,157 on December 31, 2019 (R$1,195 on December 31, 2018). These proceedings are pending final judgment at the administrative and judicial levels.

ISS (services tax), IPTU (urban property tax), Fees and other – The Company has received tax assessments relating to discrepancies in payments of IPTU, fines due to non-compliance with ancillary obligations, ISS – refund of advertising expenses and various fees, totaling R$13 on December 31, 2019 (R$27 on December 31, 2018). These proceedings are pending judgment at the administrative and judicial levels.

Other litigation– These proceedings refer to real estate lawsuits in which the Company claims the renewal of lease agreements and rents according to market prices. These lawsuits involve proceedings litigated in civil court, and special civil court, as well as administrative proceedings filed by inspection bodies, such as the consumer defense body (PROCONs), the National Institute of Metrology, Standardization and Industrial Quality– INMETRO, the National Agency of Sanitary Surveillance - ANVISA, among others, totaling R$20 on December 31, 2019 (R$56 on December 31, 2018).

The Company engages external legal counsel to represent it in the tax assessments, whose fees are contingent on the final outcome of the lawsuits. Percentages may vary according to qualitative and quantitative factors of each proceeding. On December 31, 2019, the estimated amount, in case of success of all lawsuits, was approximately R$19 (R$14 on December 31, 2018).

Éxito Group has an amount of R$72 of proceedings with chances of possible loss on December 31, 2019, mostly related to tax claims.

F-112

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

21.5

Guarantees

Lawsuits	Real Properties		Letter of guarantee		Total
Tax		18		262		280
Labor		-		57		57
Civil and others		-		19		19
Total		18		338		356

The cost of guarantees is approximately 0.59% per year of the amount of the lawsuits and is recorded as a financial expense.

21.6

Deduction of ICMS from the calculation basis of PIS and COFINS

Since such decision, the proceedings have been brought forward by our legal advisors without any change in management’s judgment, but without the final decision on the appeal filed by the Attorney General. The Company and its legal counsel believe that decision on this appeal will limit the right of the lawsuit filed by the Company. However, the elements of the proceedings are still pending decision and do not allow the recognition of assets related to the credits to be raised since the filing of the lawsuit in 2003. The Company expects a potential credit amount of R$117.

21.7

Inspections

Pursuant to prevailing tax laws, municipal, federal, state taxes and social security contributions are under scrutiny at periods varying between 5 and 30 years.

F-113

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

21.8

Restricted deposits for legal proceedings

The Company recorded amounts referring to judicial deposits in its assets as follows.

	As of December 31,
Lawsuits	2019		2018
Tax		69		67
Labor		43		41
Civil and others		9		10
Total		121		118

Leases

22.1

Lease obligations

When entering into a contract, the Company assesses whether the contract is, or contains a lease. The contract is or contains a lease if it transfers the right to control the use of the identified assets for a specified period in exchange for consideration.

The Company leases equipment and commercial spaces, including stores and distribution centers, under cancellable and non-cancellable lease agreements. The terms of the contracts vary substantially between 5 and 20 years.

The Company as lessors

The Company evaluates its lease agreements in order to identify lease terms for a right to use, using the exemptions provided for contracts with a term of less than twelve months and an individual asset value below US$5,000 (five thousand dollars).

The contracts are then recorded, when the lease begins, as a Lease Liability against Right of Use (Notes 16 and 17), both at the present value of minimum lease payments, using the interest rate implicit in the contract, if this can be used, or an incremental borrowing rate considering loans obtained by the Company.

The lease term used in the measurement corresponds to the term that the lessee is reasonably certain of exercising the option to extend the lease or not exercise the option to terminate the lease.

Subsequently, payments made are segregated between financial charges and reduction of the lease liability, in order to obtain a constant interest rate on the liability balance. Financial charges are recognized as financial expense for the period.

Right-of-use assets are amortized over the lease term. Capitalizations for improvements and renovations carried out in stores are amortized over their estimated useful life or the expected term of use of the assets, limited if there is evidence that the lease will not be extended.

Variable rents are recognized as expenses in the years in which they are incurred.

F-114

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

The Company as lessor

Leases in which the Company does not substantially transfer all the risks and benefits of ownership of the asset are classified as operating leases. The initial direct initial costs of negotiating operating leases are added to the book value of the leased asset and recognized over the term of the contractual, on the same basis as rental income.

Variable rentals are recognized as income in the years in which they are earned.

22.2

Minimum future payments and potential right of PIS and COFINS

Leasing agreements totaled R$3,751 on December 31, 2019 (R$1,180 on December 31, 2018). The minimum future payments as leases, by leases term and with the fair value of minimum lease payments, are as follows:

	As of December 31,
	2019		2018
Financial lease liabilities - minimum payments
Less than 1 year		404		81
1 to 5 years		1,323		347
More than 5 years		2,024		752
Present value of financial lease agreements		3,751		1,180
Future financing charges		2,347		1,141
Gross amount of financial lease agreements		6,098		2,321
PIS and Cofins embedded in the present value of lease agreements		115		72
PIS and Cofins embedded in the gross value of lease agreements		214		141

Lease liabilities interest expense is stated in Note 29. The incremental interest rate of the Company on the signing date of the agreement was 10.73% in the fiscal year ended December 31, 2019 (12.61% on December 31, 2018).

F-115

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

22.3

Lease obligation rollforward

As of January 1, 2018	1,009
Funding – Lease	210
Remeasurement	52
Interest provision	124
Exchange rate and monetary variation	1
Amortizations	(216	)
As of December 31, 2018	1,181
Funding – Lease	682
Remeasurement	138
Interest provision	170
Amortizations	(267	)
Write-off due to early termination of agreement	(1	)
Company acquisition	1,817
Exchange rate changes	31
As of December 31, 2019	3,751
Current liabilities	404
Noncurrent liabilities	3,347

22.4

Lease expense on variable rents, low-value, and short-term assets

	As of December 31,
	2019		2018
Expenses (revenues) for the period:
Variables (0.5% and 1.6% of sales)		19		12
Subleases (*)		20		11

(*)

Refers mainly to revenue from lease agreements receivable from commercial galleries.

F-116

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Deferred revenues

Deferred revenues are recognized by the Company as a liability due to anticipation of amounts received from business partners. These are recognized in the statement of operations in the periods when the services are rendered to these business partners.

	As of December 31,
	2019		2018
Rental of spaces in stores		132		125
Checkstand		20		9
Gift card		95		-
Revenue with credit card operators		15		15
Deferred revenue –Éxito Group		8		-
Others		9		13
Total		279		162
Current liabilities		277		158
Noncurrent liabilities		2		4

The Company received in advance amounts referring to the rental of backlight panels, supplier product exhibition modules, or check stands, rental of POS displays, and front-fee anticipation with credit card operators.

Income tax and social contribution

Current income tax and social contribution

Current income tax and social contribution assets and liabilities are measured by the amount expected to be refunded or paid to the tax authorities. The tax rates and laws adopted to calculate tax are those effective or substantially effective, at the balance sheet date.

Income taxes in Brazil consist of Corporate Income Tax (“IRPJ”) and Social Contribution on Net Income (“CSLL”), calculated based on taxable income, at the statutory rates set forth in the legislation in force: 15% on taxable income plus an additional 10% on annual taxable income exceeding R$240,000 for IRPJ, and 9% for CSLL, and it is paid by each legal entity. According to tax legislation in Brazil there is not a group Corporate Tax Return, and each legal entity has its own tax obligations.

Deferred income tax and social contribution

Deferred income tax and social contribution are generated by temporary differences, at the end of the reporting periods, between the tax bases of assets and liabilities, carrying amounts and all unused tax losses, to the extent it is probable that taxable income will occur from which temporary differences and unused tax losses can be deducted; except when deferred income tax and social contribution referring to the deductible temporary difference results from the initial recognition of an asset or liability in an operation which is not a business combination and, at the moment of operation, neither affects the accounting profit nor the tax income or loss.

F-117

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

With respect to deductible temporary differences associated with investments in subsidiaries, deferred income tax, and social contribution are recognized only if temporary differences can be reversed in the foreseeable future and taxable income will be available from which temporary differences can be used.

The carrying amount of deferred income tax and social contribution assets is reviewed at the end of each reporting period and reduced since it is no longer probable that taxable income will be sufficient to allow the use of total or part of deferred income tax and social contribution. Non-recognized deferred income tax and social contribution assets are re-assessed at the end of the reporting period and again recognized, since it is probable that future taxable income will allow the recovery of these assets.

Accumulated loss carryforwards from deferred income tax and social contribution do not expire no limitation period, but their utilization, as provided for by laws, is restricted to 30% of taxable income of each year for Brazilian legal entities, and refer to their subsidiaries which have tax planning to use these balances.

Deferred taxes relating to items directly recognized in shareholders’ equity are also recognized in shareholders’ equity, and not in the statement of operations.

Deferred income tax and social contribution assets and liabilities are offset if there is any legal or contractual right to offset the tax assets against the income tax liabilities, and deferred assets refer to the same taxpayer entity and the same tax authority.

Due to the nature and complexity of the Company’s businesses, differences between effective results and assumptions adopted or future alterations of these assumptions may result in future adjustments to tax revenue and expenses already recorded. The Company set up provisions, based on reasonable estimates for taxes due. The value of these provisions is based on several factors, such as the experience of previous inspections and different interpretation of tax regulation by taxpayer entity and related tax authority. These different interpretations can refer to a wide variety of issues, depending on the conditions in force at the home of the respective entity.

F-118

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

24.1

Reconciliation of income tax and social contribution expense

	For the year ended December 31,
	2019			2018			2017
Earnings before income tax and social contribution		1,471			1,553			708
IRPJ and CSLL		(500	)		(528	)		(241	)
Adjustments to reflect the effective rate
Tax Fines		(2	)		(1	)		(1	)
Equity accounting		(2	)		-			-
Interest on equity		84			39			28
Other permanent differences		9			13			3
Effective income tax		(411	)		(477	)		(211	)

Income tax and social contribution for the year
Current		(249	)		(302	)		(142	)
Deferred		(162	)		(175	)		(69	)
Income tax and social contribution expenses		(411	)		(477	)		(211	)
Effective rate		27,9	%		30,7	%		29.8	%

F-119

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

24.2

Breakdown of deferred income tax and social contribution

Key components of deferred income tax and social contribution in balance sheets are the following:

	As of December 31,
	2019									2018
	Assets			Liabilities			Net			Assets			Liabilities			Net
Deferred income tax and social contribution
Tax losses		253			-			253			-			-			-
Provision for contingencies		106			-			106			60			-			60
Exchange rate variation		31			-			31			-			-			-
Goodwill tax amortization		-			(480	)		(480	)		-			(287	)		(287	)
Mark-to-market adjustment		-			(3	)		(3	)		-			-			-
Tax depreciation of property and equipment items		-			(1,217	)		(1,217	)		-			-			-
Unrealized gains with tax credits		-			(130	)		(130	)		-			(134	)		(134	)
Cash flow hedge		-			(78	)		(78	)		-			-			-
Lease net of right of use		105			-			105			-			58			58
Presumed Tax on Equity - Éxito		192			-			192			-			-			-
Other		30			-			30			53			(15	)		38
Gross deferred income tax and social contribution assets (liabilities)		717			(1,908	)		(1,191	)		113			(378	)		(265	)
Offset		(717	)		717			-			(113	)		113			-
Net deferred income tax and social contribution assets (liabilities)		-			(1,191	)		(1,191	)		-			(265	)		(265	)
Noncurrent assets		-			-			-			-			-			-
Noncurrent liabilities		-						(1,191	)		-			-			(265	)

Management has assessed the future realization of deferred tax assets, considering the projections of future taxable income. This assessment was based on information from the strategic planning report previously approved by the Board of Directors of Sendas Distribuidora.

The Company estimates the recovery of the deferred tax assets as of December 31, 2019 as follows:

Years
Up to one year			257
From 1 to 2 years			293
From 2 to 3 years			16
From 3 to 4 years			16
From 4 to 5 years			16
Above 5 years			119
			717

F-120

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

24.3

Rollfoward

	For the year ended December 31,
	2019			2018

At the beginning of the year		(323	)		(136	)
IFRS 16-related adjustment		58			46
Opening balance restated		(265	)		(90	)
Benefits (expenses) in the year		(162	)		(175	)
Companies acquisition		(747	)		-
Exchange rate variation		(18	)		-
Other		1			-
At the end of the year		(1,191	)		(265	)

Shareholders’ equity

25.1

Capital stock and stock rights

The Company’s capital stock on December 31, 2019 is R$4,421 (R$2,351 on December 31, 2018), represented by 258,000 registered common shares, (173,000 on December 31, 2018), all non-par and registered shares. All the Company’s common shares participate equally in dividend distributions and payments of interest on equity.

The Extraordinary Shareholders’ Meeting held on February 28, 2019 approved: (i) the payment of capital through 2 real properties in the amount of R$67, by issuing 33 million new registered, common shares, with no par value.

The Extraordinary Shareholders’ Meeting held on December 26, 2019, approved the capital increase by capitalizing the Advance for Future Capital Increase - AFAC in the amount of R$2,003, in 2019, without issuing new shares.

The Extraordinary Shareholders’ Meeting held on September 28, 2018, approved: (i) the payment of capital through 3 real properties in the amount of R$99, by issuing 56 million new registered common shares, with no par value.

On December 1, 2017, the Company’s capital stock was increased by R$77 through 7 real properties. This capital increase was ratified at the Extraordinary Shareholders’ Meeting held on January 1, 2018.

The Extraordinary Shareholders’ Meeting, held on November 1, 2017, approved: (i) a capital increase by capitalizing the Advance for Future Capital Increase – AFAC, in the amount of R$15, in 2017; and (ii) the full payment of capital through 15 real properties totaling R$211, by issuing 161 million new registered, common shares with no par value.

The Extraordinary Shareholders’ Meeting held on February 24, 2017 approved a capital increase by capitalizing the Advance for Future Capital Increase- AFAC in the amount of R$53, in 2017, without issuing new shares.

F-121

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

25.2

Distribution of dividends and interest on equity

The Extraordinary Shareholders’ Meeting held on February 11, 2019 approved the payment of interim dividends, referring to a part of income verified from July 1 to September 30, 2018, in the amount of R$50.

The Extraordinary Shareholders’ Meeting held on December 26, 2019 approved the payment of interest on equity, in the gross amount of R$247, over which the withholding income tax was deducted in the amount of R$37, corresponding to the net amount of R$210.

The Extraordinary Shareholders’ Meeting held on October 1, 2018 approved the payment of interest on equity in the gross amount of R$115, over which the withholding income tax was deducted in the amount of R$17, corresponding to the net amount of R$98.

The Extraordinary Shareholders’ Meeting held on December 1, 2017 approved the payment of interest on equity in the gross amount of R$81, over which withholding tax was deducted in the amount of R$12, corresponding to the net amount of R$69.

Management proposed dividends to be distributed, considering the anticipation of interest on equity to its shareholders, calculated as follows:

	For the year ended December 31,
	2019			2018

Net income for the year		1,047			1,076
% of Legal reserve		5	%		5	%
Legal reserve		52			55
Mandatory minimum dividends - 1%		1			1

Interest on shareholders’ equity payment		247			115
Minimum mandatory dividends paid in the form of interest on shareholders’ equity		1			1

Shareholders are entitled to receive a mandatory minimum annual dividend equivalent to 1% (one percent) of the net profit of each fiscal year, adjusted in accordance with the law.

The net profits or losses will be allocated by the shareholders, and their distribution, if any, will be made in the proportion established by them at the time.

25.3

Legal reserve

Legal reserve: this is recorded by appropriating 5% of the net income of each fiscal year, observing the 20% limit of capital.

F-122

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

25.4

Compensation plan

The Company’s compensation plan is managed by CBD’s Board of Directors, which has assigned to the Human Resources and the Compensation Committee the responsibility to grant the options and act as an advisory in managing the Compensation Plan (the “Committee”).

Members of the Committee meet to decide on the grant of options and Compensation Plan series or whenever necessary. Each series of the option granted are assigned the letter “B”, followed by a number. For the year ended December 31, 2019, the B4, B5 and B6 Series of the Compensation Plan were granted.

Options granted to a participant vest on a period of 36 (thirty six) months from the date of grant (“grace period”), except with formal authorization by the Company, and may only be exercised in the period beginning on the first day of the 37th (thirty-seventh) month from the date of grant, through the 42nd (forty-second) month from the date of grant (“exercise period”).

The participants may exercise their total purchase options or in part, in one or more times, if for each year, the option exercise term is submitted during the exercise period.

The exercise price of each stock option granted under the Compensation Plan should corresponds to R$0.01 (one cent) (“exercise price”).

The exercise price shall be fully paid in domestic currency, through check or wire transfer available to CDB’s bank account, by the tenth (10th) day preceding the acquisition date of the shares.

The participant are precluded for a period of 180 (one hundred and eight) days from the date of the share, directly or indirectly sell, assign, exchange, dispose of, transfer, grant to the capital of another company, grant option, or also, execute any act or agreement to result, or that may result in the direct or indirect, costly or free, all or any of the shares acquired by the exercise of the purchase option under the option plan.

The Company withholds any applicable tax under Brazilian tax laws, less the number of shares delivered to the participant amount equivalent to taxes withheld.

25.5

Stock option plan

The Company’s stock option plan shall be managed by CBD’s Board of Directors, which has assigned to the Human Resources and the Compensation Committee the responsibility to grant options and to provide advice in managing the Stock Option Plan (the “Committee”).

Committee members meet when options under the Option Plan are granted, and, when necessary, to make decisions in relation to the Stock Option Plan. Each series of options granted receive the letter “C” followed by a number. For the year ended December 31, 2019, the series C4, C5 and C6 of the Option Plan were granted.

For each series of options grant within the scope of the stock option plan, the exercise price of each stock option shall correspond to 80% of the average closing price of the CBD preferred shares traded over the last twenty (20) trading sessions of the B3, before the call notice for the Committee’s meeting to resolve on the grant of options of that series (“exercise price”).

F-123

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Options granted to a participant vest in a period of 36 (thirty six) months from the grant date (“grace period”), and may only be exercised in the period beginning on the first day of the 37th (thirty-seventh) month as from the grant date, and ends on the last day of the 42nd (forty-second) month as of the grant date (“exercise period”), provided the exceptions included in the Compensation Plan.

Participants may exercise the options in full or in part, in one or more times, by the formalization of the exercise.

The options exercise price shall be paid in full in local currency by check or wire transfer available to the bank account held by the Company, provided that the payment deadline will always be the tenth (10th) day preceding the date to acquire the shares.

25.5.1

Information on the stock option plans - CBD

CBD created two stock option plans for preferred shares in 2019, series B6 and C6.

According to the terms of the plans, including B6 and C6 series, each option offers the participant the right to acquire a preferred share, with the same conditions of the preceding series. The plans will be exercisable in until 6 months after the end of the vesting period. The series are different, exclusive, in the exercise price of the options and in the existence or not of a restriction of selling after vesting.

According to the plans, the options granted in each of the series may represent maximum 0.7% of the total shares issued by the Company. For these new series 765 thousands options of shares were granted.

On December 31, 2019, CBD had 233,000 preferred shares held in treasury, which could back the options granted by the Plan, and CBD’s preferred stock price at the B3 was R$87.65 per share.

The table below sets forth the dilutive effect if all options granted were exercised:

	2019			2018
Number of shares		267,997			266,845
Balance of effective stock options granted		2,153			2,755
Maximum percentage of dilution		0.80	%		1.03	%

The fair value of each option granted is estimated on the grant date, by using the options pricing model “Black & Scholes” taking into account the following assumptions for the series B4 and C4: (a) expectation of dividends of 0.57%, (b) expectation of volatility of nearly 35.19% and (c) the weighted average interest rate without risk of 9.28% and 10.07%; (d) vesting period of 18 to 36 months.

The fair value of each option granted is estimated at the grant date using the option pricing model Black & Scholes, taking into account the following assumptions for the B5 and C5 series: (a) expectation of dividends of 0.41%, (b) expectation of volatility of nearly 36.52% and (c) the weighted average interest rate without risk of 9.29%.

F-124

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

The fair value of each option granted is estimated at the grant date using the option pricing model Black & Scholes, taking into account the following assumptions for the B6 and C6 series: (a) dividend expectation of 0.67%, (b) volatility expectation of nearly 32.74% and (c) the weighted average interest rate of 7.32%.

The expectation of remaining average life of the series outstanding at December 31, 2019 is 1.50 year (1.25 year at December 31, 2018). The weighted average fair value of options granted at December 31, 2019 was R$56.41 (R$45.24 at December 31, 2018).

	Shares in thousands			Weighted average of exercise price		Weighted average of remaining contractual term
At December 31, 2018
Granted during the period		1,378			30.91
Cancelled during the period		(229	)		38.64
Exercised during the period		(697	)		31.96
Expired during the period		(236	)		68.62
Outstanding at the end of the period		2,755			26.03		1.37
Total to be exercised at December 31, 2018		2,755			26.03		1.37
At December 31, 2019
Granted during the period		765			30.55
Cancelled during the period		(126	)		31.75
Exercised during the period		(1,080	)		21.55
Expired during the period		(161	)		16.74
Outstanding at the end of the period		2,153			30.25		1.50
Total to be exercised at December 31, 2019		2,153			30.25		1.50

The amounts recorded in the statement of operations, for the year ended on December 31, 2019, were R$2 (R$8 on December 31, 2018).

25.6

Other comprehensive income

Exchange rate variation of foreign investment

The cumulative effect of gains and losses from exchange rate variations when translating assets, liabilities, and results in Colombian pesos into Reais, corresponding to the Company’s investment in Éxito.

F-125

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Net operating revenue

IFRS15 establishes a comprehensive framework to determine when and for how much revenue form contracts with customers should be recognized.

Revenue

Sale of goods

Revenues from the sale of goods are recognized when control of the goods is transferred to the customer, usually when delivered in the store, and at an amount that reflects the consideration to which the Group expects to be entitled in exchange for those goods. No revenue is recognized if collection is uncertain.

Revenue from services rendered

Since the Company sells mobile phone credits recharge at its stores, revenues earned are stated on a net basis and recognized in the statement of operations when it is probable that economic benefits will flow to the Company subsidiary, and their amounts can be reliably measured.

	For the year ended December 31,
	2019			2018			2017
Gross operating revenue
Goods		32,789			25,075			20,213
Services rendered and others		203			17			3
		32,992			25,092			20,216

(-) Revenue deductions
Returns and sales cancellation		(68	)		(49	)		(41	)
Taxes		(2,692	)		(2,026	)		(1,631	)
		(2,760	)		(2,075	)		(1,672	)

Net operating revenue		30,232			23,017			18,544

F-126

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Expenses by nature

Cost of sales

The cost of goods sold comprises the acquisition cost of inventory net of discounts and considerations received from suppliers and logistics costs.

Commercial agreement received from suppliers is measured based on contracts and agreements signed between the parties.

The cost of sales includes the cost of logistics operations managed or outsourced by the Company, comprising the storage costs, handling and freight incurred until good is available for sale. Transportation costs are included in the acquisition costs.

Selling expenses

Selling expenses consists of all stores expenses, such as payroll, marketing, occupation, maintenance, and expenses related to credit card companies, among others.

Marketing expenses refer to advertising campaigns. The Company’s principal means of communication are: radio, television, newspapers, and magazines, and the amounts of its commercial agreement are recognized in the statement of operations upon realization.

General and administrative expenses

General and administrative expenses correspond to indirect expenses and the cost of corporate units, including procurement and supplies, information technology, and financial activities.

	For the year ended December 31,
	2019			2018			2017

Inventory cost		(24,401	)		(18,412	)		(15,263	)
Personnel expenses		(1,871	)		(1,376	)		(1,135	)
Third-party services		(218	)		(152	)		(117	)
Selling expenses		(462	)		(331	)		(263	)
Functional expenses		(642	)		(615	)		(489	)
Other expenses		(245	)		(142	)		(109	)
		(27,839	)		(21,028	)		(17,376	)

Cost of sales		(24,891	)		(18,845	)		(15,578	)
Selling expenses		(2,782	)		(1,908	)		(1,563	)
General and administrative expenses		(166	)		(275	)		(235	)
		(27,839	)		(21,028	)		(17,376	)

F-127

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Other operating expenses, net

Other operating revenue and expenses correspond to the effects of significant or non-recurring events during the fiscal year not classified into the definition of other items of the statement of operations.

	For the year ended December 31,
	2019			2018			2017

Result with property and equipment		(1	)		(39	)		(46	)
Reversal (provision) for legal proceeding		(81	)		40			(35	)
Acquisition expenses - Éxito Group		(124	)		-			-
Other		-			(4	)		2
Total		(206	)		(3	)		(79	)

Net financial result

Financial revenue includes income generated by cash and cash equivalents, court deposits, and gains relating to the measurement of derivatives by fair value.

Interest income is recorded for all financial assets measured by amortized cost, adopting the effective interest rate, which corresponds to the discount rate of payments or future cash receivables over the estimated useful life of financial instrument – or shorter period, where applicable – to the net carrying amount of financial asset or liability.

Financial expenses substantially include all expenses generated by net debt and cost of sales of receivables during the fiscal year, the losses relating to the measurement of derivatives by fair value, the losses with sales of financial assets, financial charges over litigations, taxes, and interest expenses over financial leasing, as well as adjustments referring to discounts.

F-128

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

	For the year ended December 31,
	2019			2018			2017
Financial expenses
Cost of debt		(258	)		(43	)		(29	)
Cost and sale of receivables		(34	)		(40	)		(36	)
Monetary correction (liabilities)		(68	)		(1	)		(16	)
Interest on lease liabilities		(160	)		(113	)		(94	)
Other financial expenses		(24	)		(7	)		(5	)
Total Financial expenses		(544	)		(204	)		(180	)

Financial revenues
Cash and cash equivalents		102			4			5
Monetary correction (assets)		182			80			29
Other financial revenues		3			-			4
Total Financial revenues		287			84			38
Total		(257	)		(120	)		(142	)

Earnings per share

The Company calculates earnings per share by dividing the net income, referring to each class of share, by total outstanding common shares during the fiscal year.

At the extraordinary general shareholders´ meeting held on October 5, 2020, Sendas’ shareholders voted to approve the reverse stock split of 3,269,992,034 (three billion, two hundred and sixty nine million, nine hundred and ninety two thousand and thirty four) common shares, with no par value issued by Sendas Distribuidora, in the proportion of 12.1854776946393 to 1 (one) (the “Reverse Stock Split”). Immediately following the Reverse Stock Split, capital stock of Sendas Distribuidora was represented by 268,351,567 (two hundred and sixty-eight million, three hundred and fifty-one thousand, five hundred and sixty-seven) common shares, with no par value. Accordingly, the weighted-average number of shares outstanding for all of the periods presented in the consolidated financial statements is retrospectively adjusted using the same ratio applied in connection with the Reverse Stock Split:

F-129

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

	For the year ended December 31,
	2019		2018		2017
Basic and diluted number:
Allocated basic earnings and not distributed		1,047		1,076		497
Net income allocated available to common shareholders		1,047		1,076		497
Basic and diluted denominator (millions of shares)
Weighted average of the number of shares		258		173		164
Basic and diluted earnings per million shares (R$)		4.062383		6.211863		3.023229

Non-cash transactions

During 2019, 2018 and 2017, the Company had transactions that did not represent cash disbursements, therefore, these were not reported in the Statement of Cash Flows, as follows:

●

Company’s capital increase with property and equipment, in Note 16;

●

Purchase of property and equipment not yet paid, in Note 16.6;

Insurance coverage

Insurance coverage amounts are contracted on a centralized basis to CBD, and costs are transferred to the Company.

The Company’s global insurance coverage is summarized as follows:

		Coverage amount
Insured Assets	Covered risks	2019		2018
Property and equipment and inventories	Nominated risks		9,333		7,318
Profit	Loss of profit		4,675		3,080
Automobile and others (*)	Losses and damages		54		4

(*) This amount does not include hull insurance, which is 100% insured by the Economic Research Foundation Institute – FIPE table.

Also, CBD has specific insurance policies for civil and directors and officer’s liability, protection and fraud risk (Crime) and damage protection risk and cyber liability (Cyber), in the amount of R$315.

F-130

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Segment information

Management considers the following segments:

●

Cash & Carry, it includes the “ASSAÍ” brand.

●

Éxito Group – it includes the company Éxito (Colombia) and its subsidiaries Libertad (Argentina) and Disco (Uruguay). Éxito also operates the banners Surtimax, Super Inter, and Carulla, as a result of the Éxito acquisition in November 2019 (Note No. 14).

Eliminations in the statement of operations and balance sheet are stated in the appropriate segment.

Debentures for the acquisition of Éxito acquisition and interest rates incurred were allocated to the Éxito Group, as well as other acquisition-related expenses.

Management separately monitors the operating results of its business units to make decisions on the allocation of funds and performance evaluation. The segment performance is evaluated based on the operating result and is consistently measured with the operating result of financial statements.

The Company is involved in the operation of retail stores located in 20 Brazilian states and the Federal District. Operating segments are disclosed consistently with the internal report submitted to the main operating decision-maker, identified as the Chief Executive Officer.

The chief operating decision-maker allocates resources and evaluates performance by reviewing results and other segment-related information.

The Company deems irrelevant the disclosure of information on sales per product category, given that similar products are sold based on each business’ strategies and each segment has its own management controls. Therefore, we consider unfeasible any grouping of products for disclosure.

The Company calculates segments’ results, applying the accounting practices adopted in Brazil the IFRSs, and the operating income of each segment, which includes certain allocations of corporate indirect expenses. Frequently, the Company reviews the calculation of the operating income of each segment, including any allocation of corporate indirect expenses, as established by information regularly reviewed by the chief operating decision-maker.

F-131

Sendas Distribuidora S.A.

Notes to the consolidated financial statements

December 31, 2019, 2018 and 2017

(In millions of Brazilian Reais, unless otherwise stated)

Information on the Company’s segments on December 31, 2019, and 2018 are included in the chart below:

	Cash and carry and stations						Éxito Group					Total
	2019			2018			2019			2018		2019			2018

Net sales revenue		28,082			23,017			2,150			-		30,232			23,017
Gross profit		4,733			4,172			602			-		5,335			4,172
Depreciation and amortization		(395	)		(313	)		(59	)		-		(454	)		(313	)
Share of profit and loss of associates		78			-			(76	)		-		2			-
Operating profit		1,619			1,673			114			-		1,733			1,673
Net financial result		(200	)		(120	)		(57	)		-		(257	)		(120	)
Net income before income tax and social contribution		1,419			1,553			57			-		1,476			1,553
Income tax and social contribution		(372	)		(477	)		(44	)		-		(416	)		(477	)
Net income for the year		1,047			1,076			13			-		1,060			1,076

Current assets		5,722			4,198			6,560			-		12,282			4,198
Non-current assets		17,818			6,735			5,805			-		23,623			6,735
Current liabilities		6,721			5,125			7,209			-		13,930			5,125
Noncurrent liabilities		9,721			1,716			2,553			-		12,274			1,716
Shareholders’ equity		7,098			4,092			2,603			-		9,701			4,092

The Company mainly operates as a retailer of food, home appliances, and other products. Total net revenue is composed of the following banners:

	For the year ended December 31,
	2019		2018		2017
Assaí		28,082		23,017		18,544
Éxito Group (*)		2,150		-		-
Total Net Sales		30,232		23,017		18,544

(*)

Includes sales in Colombia of R$1,693, Argentina in R$197 and Uruguay in R$350.

F-132

Exhibit 1.1

Free translation

Bylaws (Estatuto Social)

SENDAS DISTRIBUIDORA S.A.

Corporate taxpayer Id. (CNPJ/ME) No. 06.057.223/0001-71

Corporate State Registration (NIRE) 33.300.272.909

CHAPTER I

NAME, HEADQUARTERS, PURPOSE AND DURATION

ARTICLE 1 - SENDAS DISTRIBUIDORA S.A. (the “Company”) is a Brazilian corporation with headquarters and jurisdiction at Avenida Ayrton Senna, 6000, Lote 2 Pal 48959, Annex A, Jacarepaguá, CEP 22775-005, in the city of Rio de Janeiro, State of Rio de Janeiro, Federative Republic of Brazil, which will henceforth be governed by these Bylaws and also by Brazilian Law No. 6,404 of December 15, 1976 (“Law No. 6,404/76” - the Brazilian Corporations Act) as amended, and other legal provisions in force.

Sole Paragraph - With the Company’s admission into the ‘Novo Mercado’ listing of B3 S.A. - Brasil, Bolsa, Balcão stock exchange (“Novo Mercado” and “B3”, respectively), the Company, its shareholders, including controlling shareholders, administrators and members of the fiscal council (supervisory board), when established, will become subject to the provisions of the Novo Mercado Regulation.

ARTICLE 2 - The Company’s corporate purpose is the sale of manufactured, semi-manufactured or “in natura” products, whether of Brazilian or foreign origin, of any and all types and species, nature or quality.

Paragraph 1 - The Company may also carry out the following activities:

(a)

the manufacturing, processing, handling, transformation, export, import and representation food or non-food products, on its own account or by third parties;

(b)

the international trade, including coffee;

(c)

the import, distribution and sale of cosmetic hygiene and toiletry products, perfumery, sanitizing and household cleaning products and food supplements;

(d)

the general sale of drugs and medicines, pharmaceutical and homeopathic specialties; chemicals, accessories, dental articles, surgical instruments and appliances; the manufacture of chemical products and pharmaceutical specialties, which can be specialized, such as Drugstore or Allopathic Pharmacy, Drugstore or Homeopathic Pharmacy or Compounding Pharmacy for every specialty;

(e)

sale of petroleum products and derivatives, supply of fuels of any kind, including on gas stations, and may also provide technical assistance services, service workshops, repairs, washing, lubrication, sale of accessories and other related services, for any kind of vehicles;

(f)

the sale of in veterinary products, drugs and medicines in general; veterinary office, clinic and hospital and pet shop with bathing and grooming services;

(g)

the rental of any recorded media;

(h)

provision of photographic, cinematographic and similar studio services;

(i)

the practice and management of real estate transactions, buying, promoting subdivisions and developments, leasing and selling its own and third-party real estates;

(j)

act as a distributor, agent and representative of merchants and industrialists established in Brazil or abroad and in such capacity, on behalf of the principals or on their own account to acquire, retain, own and make any transactions and operations in its self interest or of the principals;

(k)

the provision of data processing services;

(l)

the exploitation of buildings and construction in all its modalities, on its own or by third parties, the purchase and sale of construction materials and the installation and maintenance of air-conditioning systems, hoists and cargo elevators;

(m)

application of household cleaning products;

(n)

the municipal, state and interstate highway transportation of cargo in general for its own products and those of third parties, and also store and deposit them, and load, unload, organize and store third-parties’ goods of any kind, as well as subcontract the services provided for in this paragraph;

(o)

activities of communication, general advertising and propaganda services, including bars, diners, cafeterias and restaurants, which may extend to other branches that are compatible or related to it, subject to any legal restrictions;

(p)

the purchase, sale and distribution of books, magazines, newspapers, periodicals and the like;

(q)

carrying out studies, reviews, planning and market research;

(r)

carrying out tests to launch new products, packaging and brands;

(s)

developing strategies and carrying out reviews of the behavior of sales, special promotions and advertising in each segment;

(t)

the provision of card administration services for food, meals, pharmacy, fuel, transportation and other cards resulting from activities connected to its corporate purpose;

(u)

the lease and sublease of its own or third-party chattel;

(v)

the provision of services in the management area;

(w)

to represent other domestic or foreign companies and take part as a partner or shareholder in the capital of other companies, whatever their form or purpose, and in business ventures of any nature;

(x)

agency, brokerage or intermediation of securities and tickets;

(y)

services related to collections, receivables or payments in general, for securities, accounts or passbooks, of foreign exchange, taxes and on behalf of third parties, including those performed by electronic and automatic systems or by answering machines; providing a collection, receivables or payment position; issuance of passbooks, compensation sheets, forms and documents in general;

(z)

provision of parking, accommodation, and car custody and storage services;

(aa)

the import of drinks, wines and vinegars;

(bb)

snack bars, diners, tea houses, juice parlors and the like;

(cc)

sale of seeds and seedlings;

(dd)

sale of telecommunications products; and

(ee)

the import, distribution and sale of toys, metal pots, domestic ladders, baby strollers, party items, school items, tires, household electrical appliances, bicycles, monobloc plastic chairs and bulbs.

Paragraph 2 - The Company may provide sureties or guarantees in business of its interest, being forbidden for mere favor.

Article 3 - The Company’s term of duration is indefinite.

CHAPTER II

CAPITAL STOCK AND SHARES

ARTICLE 4 - The Company’s capital stock is R$761,274,134.78 (seven hundred and sixty-one million, two hundred and seventy-four thousand, one hundred and thirty-four reais and seventy-eight cents), fully subscribed and paid in, divided into 268,351,567 (two hundred and sixty-eight million, three hundred and fifty-one thousand, five hundred and sixty-seven) common, registered, book-entry shares, with no par value.

Paragraph 1 - The shares representing the capital stock are indivisible in relation to the Company and each common share gives its holder the right to one vote at General Meetings.

Paragraph 2 - The shares will be in book-entry form and will be kept in deposit accounts in the name of their holders, at the authorized financial institution that the Company nominates, and no certificates will be issued.

Paragraph 3 - The cost of services for transferring ownership of book-entry shares to be charged by the depositary financial institution may be passed on to the corresponding shareholder, pursuant to Article 35, paragraph 3 of Brazilian Law No. 6,404/76, subject to the maximum limits set by the Brazilian Securities and Exchange Commission (CVM).

Paragraph 4 - The Company may not issue preferred shares and founders’ shares.

ARTICLE 5 - The Company is authorized to increase its capital stock up to the limit of 400,000,000 (four hundred million) common shares upon resolution of the Board of Directors and regardless of any amendment to the bylaws.

Paragraph 1 - The limit of the Company’s authorized capital shall be changed only upon a decision made by the General Meeting.

Paragraph 2 The Company, within the limit of the authorized capital and complying with the plan approved by the General Meeting, may grant a stock option purchase plan to its managers, executives, or employees, or even to individuals who provide services thereto.

ARTICLE 6 - Issuance of shares, subscription warrants or debentures convertible into shares up to the limit of authorized capital, may be approved by the Board of Directors, excluding or reducing the term for exercising the preemptive right, as provided for in Article 172 of Law no. 6,404/76.

Sole Paragraph - Except as provided for in the “caption” of this Article, shareholders will have the right of first refusal, in proportion to the number of shares held by them, to subscribe the Company’s capital increases, and the exercise of this right will be governed by the applicable legislation.

CHAPTER III

GENERAL MEETING

ARTICLE 7 - The General Meeting is the meeting of the shareholders, who may attend it by themselves or by representatives appointed pursuant to the Law in order to resolve on matters of interest to the Company.

ARTICLE 8 - Without prejudice to the provisions of article 123, sole paragraph of Law 6,404/76, the General Meeting will be called, established and chaired by the Chairman of the Board of Directors, or, in his/her absence, by the Vice-Chairperson of the Board of Directors or, in their absence, by an Executive Officer appointed by the Chairperson of the Board of Directors, who will have the following duties and authority, without prejudice to the other responsibilities provided for by law:

(a)

amending the Bylaws;

(b)

electing or removing, at any time, the members of the Board of Directors (and of the Fiscal Council/supervisory board, when established) of the Company, as well as determining the number of positions of the Board of Directors and of the Fiscal Council/supervisory board, when established);

(c)

appointing the Chairperson and the Vice-Chairperson of the Board of Directors;

(d)

taking, every year, the management’s accounts and resolving on the financial statements submitted by them, the allocation of net income for the fiscal year;

(e)

approving the issuance of shares, subscription bonuses, debentures convertible into shares issued by the Company itself or any bonds, securities or other rights or interests that are exchangeable or convertible into shares issued by the Company itself , without prejudice to the competence of the Board of Directors as provided for in Article 5 and Article 17(g);

(f)

deciding on the appraisal of assets with which the shareholders will contribute to compose the Company’s capital stock;

(g)

deciding on the transformation, merger, acquisition (including acquisition of shares), split-up of the Company or on any other kind of restructuring of the Company;

(h)

deciding on the dissolution and liquidation of the Company, appointing or removing liquidator(s);

(i)

examining and approving the accounts of the liquidator(s); and

(j)

determining the annual global compensation of the members of the Board of Directors, the Executive Officers and the Fiscal Council, if installed.

ARTICLE 9 - For any deliberation of the General Meeting, the approval of shareholders that represent at least the majority of votes of those present will be necessary, not counting the blank votes, except for the exceptions provided for by law and in the applicable regulation.

ARTICLE 10 - The Annual General Meeting will have the responsibilities provided for by law and will be held within the first four months subsequent to the end of the fiscal year.

Sole Paragraph - Whenever necessary, the General Meeting may be established on an extraordinary basis, and may be held concurrently with the Annual General Meeting.

CHAPTER IV

THE MANAGEMENT

ARTICLE 11 - The Company’s management will be the responsibility of the Board of Directors and the Board of Executive Officers.

Paragraph 1 - The management members will take their offices conditioned to the signature of the investiture instrument, which must set forth that they are subject to the arbitration clause referred to in Article 42.

Paragraph 2 - The term of office of the Directors and Executive Officers will be extended until the moment their corresponding successors take office.

Paragraph 3 - Minutes of the Board of Directors’ and Executive Officers’ meetings will be recorded in a specific book, which will be signed by the attending Directors and Officers, as the case may be.

Section I

The Board of Directors

ARTICLE 12 - The Board of Directors is composed of at least 3 (three) and at most 9 (nine) members, elected and dismissible by the General Meeting, with a unified term of office of 2 (two) years, with reelection being allowed.

Paragraph 1 - Except in the case of election of the members of the Board of Directors through the multiple voting procedure, in the case of vacancy in the position of Director, the Board of Directors will be responsible for electing a substitute to fill such position on a permanent basis until the end of the corresponding term of office. In the event of a simultaneous vacancy of most positions in the Board, the General Meeting shall be called to proceed to a new election.

Paragraph 2 - Out of the members of the Board of Directors, at least 2 (two) members or 20% (twenty percent) of them, whichever is greater, shall be independent directors, pursuant to the standards set forth by the ‘Novo Mercado’ listing Regulation, and the full data of those nominated to be independent members of the Board of Directors shall be deliberated at the General Meeting that elects such independent directors, being also considered as independent those member(s) of the Board of Directors elected as provided for in article 141, paragraphs 4 and 5 of Law 6.404/76 (Brazilian Corporation Act) in the event of existing a controlling shareholder.

Paragraph 3 - Whenever the application of the aforementioned percentage calculation results in a fractioned number of members, the Company must round it up and consider the immediate higher full number.

ARTICLE 13 - The Board of Directors will have 1 (one) Chairperson and 1 (one) Vice-Chairperson, elected by the General Meeting.

Paragraph 1 - The positions of Chairperson of the Board of Directors and of Chief Executive Officer of the Company cannot be held at the same time for the same person.

Paragraph 2 - In the event of vacancy in the position of Chairperson or impediment of the Chairperson, the Vice-Chairperson will automatically hold such position, remaining until the end of the corresponding term or, in the event a General Meeting is called to elect a new Chairperson, until his/her corresponding investiture.

Paragraph 3 - In the event of vacancy in the position of Vice-Chairperson, the Board of Directors will elect its substitute, observed the terms of article 12, §1º of this Bylaws.

Paragraph 4 - In the event of absence or temporary impediment of the Chairperson, the meetings of the Board of Directors will be chaired by the Vice-Chairperson.

Article 14 - The Board of Directors will meet on a regular basis at least six times a year to review the Company’s financial results and other results and to review and monitor the annual investment plan, and extraordinarily at any time, whenever required.

Paragraph 1 - The Chairperson or, in his/her absence, the Vice-Chairperson, is responsible to call the meetings of the Board of Directors, either on his/her own initiative or upon the written request of any director.

Paragraph 2 - The meetings of the Board of Directors must be called by electronic means or by letter, at least 7 (seven) days before the date of each meeting, specifying the time and place for the first meeting and, case, on second call, and including the agenda. Any proposal and all documents required and related to the agenda must be made available to the Directors. The call for a meeting may be waived whenever all of the Board members in office are present at the meeting, or if the absent board members have previously agreed in writing with such waiver.

Paragraph 3 - The minimum quorum required to establish the Board of Directors’ meetings is the presence of at least half of its acting members on first call, and any number of directors on the second call, considering as present also those represented as allowed for in these Bylaws.

ARTICLE 15 - The meetings of the Board of Directors will be chaired by its Chairperson and in his/her absence, by Vice-Chairperson of the Board of Directors.

Paragraph 1 - The resolutions of the Board of Directors shall be taken by a favorable vote of the majority of its present members, observed the terms of article 14, §3º of this Bylaws. The directors may attend meetings of the Board of Directors by conference call, videoconference or any other means of electronic communication that allows the identification of every director and his/her simultaneous communication with all other persons attending the meeting. In this case the directors should be considered to be present at the meeting and shall sign the corresponding minutes subsequently.

Paragraph 2- In case of absence or temporary impediment, which does not derive from a conflict of interests of any director, the absent Director may appoint, in writing, from among the other members of the Board of Directors, his or her substitute. In this case, the director acting as substitute of the absent or temporarily unable director as per the terms above, in addition to his/her own vote, shall cast the vote of the replaced director.

ARTICLE 16 - The Board of Directors must approve any change to the Internal Regulation or charter and will elect an Executive Secretary, who will be responsible for exercising the functions determined in the Internal Regulation, as well as issuing certificates and certifying, before third parties, the authenticity of the resolutions taken by the Board of Directors.

ARTICLE 17 - In addition to the authority set forth by law, the Board of Directors is responsible for:

(a)

determining the Company’s businesses in general;

(b)

approving or change the Company’s investment plan;

(c)

electing and removing the Company’s Executive Officers, determining their duties and office names;

(d)

determining on the individual compensation of the Board of Directors itself and of the Executive Officers;

(e)

supervising the management of the executive officers, and examining, at any time, the Company’s books and papers, requesting information about contracts executed or in the way of being executed, and any other actions;

(f)

calling the General Meeting;

(g)

issuing its opinion on the Management’s report, the accounts submitted by the Board of Executive Officers and the Company’s financial statements;

(h)

deciding on the issue of shares, subscription bonus, or debentures convertible into shares until the authorized capital limit, establishing the corresponding price and the terms of payment;

(i)

choosing and dismissing independent auditors, subject to the recommendation by the Audit Committee;

(j)

issuing an opinion on any proposal by the Executive Officers to the General Meeting;

(k)

authorizing the acquisition of shares of the Company itself, for purposes of cancellation or keeping with the treasurer, complying with the applicable standards;

(l)

developing, jointly with the Board of Executive Officers, and approving a profit-sharing plan for employees and management members of the Company and for granting additional benefits to employees and management members bound to the Company’s results (“Profit-Sharing Plan”);

(m)

determining the amount of the employees’ and management members’ share in the Company’s results, in compliance with the applicable legal provisions, the Bylaws and the Profit-Sharing Plan in force. The amounts spent or set as allowances each year as profit-sharing plan for employees and management members and also connected to the granting of the Company’s stock option will be limited to up to fifteen percent (15%) of the income of each fiscal year, after the deductions set forth Article 189 of Brazilian Law 6,404/76, observed that the participation of employees and managers on the result can not be higher than the annual compensation of the managers or 0.1% (zero point one percent) of the profits, whichever is lower, as per the terms of §1 of Article 152 and Article 190 of Brazilian Law 6,404/76;

(n)

setting the limit of shares to be issued in the scope of the Company’s Stock Option Plan previously approved by the General Meeting, subject to the limit of the authorized capital and the limit set forth in section “m” above;

(o)

creating Committees, which will be responsible for preparing proposals or making recommendations to the Board of Directors and defining their corresponding responsibilities as provided for in these Bylaws and determining the compensation of its members;

(p)

resolving on the acquisition, disposal, encumbrance, liens of any assets, including real property, of the Company or any other investment by the Company that, in individual or aggregate value over a fiscal year is greater than the amount in Reais equal to US$ 20,000,000 (twenty million US dollars) or greater than one percent (1%) of the Company’s net equity at the time, as ascertained in its most recent balance sheets or quarterly financial statements, whichever is greater;

(q)

resolving on (i) any financial transaction involving the Company, including the granting or borrowing of loans in excess of half the EBITDA (Earnings Before Interest, Tax Income, Depreciation and Amortization), as ascertained in the consolidated financial statements for the fiscal year prior to the corresponding transaction and (ii) any issuance of non-convertible debentures;

(r)

resolving on any association of the Company with third parties involving an individual or aggregate investment, during a fiscal year, exceeding the amount in Reais equivalent to US$ 20,000,000 (twenty million US dollars) or exceeding the amount corresponding to 1% (one percent) of the Company’s net equity at the time, as ascertained in its most recent balance sheets or quarterly financial statements, whichever is greater;

(s)

preparing and disclosing a reasoned opinion, whether favorable or contrary to the acceptance of any public offer for acquisition of shares that has as subject the shares issued by the Company, pursuant to the Novo Mercado Regulation;

(t)

resolving on any change in the Company’s dividend distribution policy;

Sole Paragraph - In the case of a resolution to be taken by the corporate bodies of companies controlled by the Company, or in which the Company elects members for the Board of Directors or the Board of Executive Officers, it shall be the responsibility of the Board of Directors to instruct the vote to be cast by the management members of the Company, in case of decisions taken at the general meeting, shareholders’ meeting or equivalent body, or the vote of the management members elected or nominated by the Company to the management bodies of such companies, when the resolution falls under subparagraphs (p), (q) and (r) of this article, by calculating the parameters referred to therein based on the most recent balance sheets or quarterly financial statements of the subsidiaries or companies that have received investments.

Section II

Audit Committee and Other Advisory Areas to the Management

ARTICLE 18 - The Audit Committee, an advisory body bound to the Board of Directors, is composed of at least 3 (three) members, with at least 1 (one) of them being an independent director, and at least 1 (one) must have recognized experience in corporate accounting matters.

Paragraph 1 - The same member of the Audit Committee may accumulate both characteristics referred to in the caption.

Paragraph 2 - The members of the Audit Committee must be elected by the Board of Directors and fulfill the applicable independence requirements provided for in the standards of the Brazilian Securities and Exchange Commission (CVM) and the ‘Novo Mercado’ Regulation.

Paragraph 3 - The activities of the Audit Committee coordinator are determined in its charter, to be approved by the Board of Directors.

ARTICLE 19 - The Audit Committee members will be elected by the Board of Directors for a term of office of 2 (two) years, and their terms in office can be renewed for successive periods, in compliance with the terms of the charter of the Audit Committee.

Paragraph 1 - In the course of their terms of office, the Audit Committee members may only be replaced in the following cases:

(a)

death or resignation;

(b)

unjustified absence to 3 (three) consecutive meetings or to 6 (six) alternate meetings per year; or

(c)

reasoned decision by the Board of Directors.

Paragraph 2 - In the event of any vacancy in the positions of member of the Audit Committee, the Board of Directors shall elect the person who will complete and finish the term of office of a replaced member.

Paragraph 3 - The Audit Committee is responsible for, among other matters:

(a)

issuing an opinion on the hiring and dismissal of independent auditing companies;

(b)

examining and assessing the management’s report, the Company’s financial statements, mid-period statements and the quarterly information, making the recommendations it deems necessary to the Board of Directors;

(c)

monitoring the activities of the Company’s internal audit and internal control area;

(d)

assessing and monitoring the Company’s risk exposures;

(e)

examining, assessing and monitoring the Company’s internal policies, including the Policy on Transactions between Related Parties, and recommending to the management any corrections or improvements thereto;

(f)

having means for receiving and processing information about any non-compliance with legal and normative provisions applicable to the Company, in addition to internal regulations and charters, including by setting forth specific procedures to protect the provider and the confidentiality of information.

ARTICLE 20 – The installation of the Fiscal Council pursuant to Brazilian Law 6,404/76 and Chapter V hereinbelow, will not harm the functioning and attributions of the Audit Committee.

ARTICLE 21 - The Board of Directors may create other Committees, with the composition that it may determine, which will have the function of receiving and analyzing information, preparing proposals or making recommendations to the Board of Directors, in their specific areas of activity, as may be established in its internal regulations to be approved by the Board of Directors.

Sole Paragraph - The members of the Committees created by the Board of Directors will have the same duties and responsibilities as the administrators.

Section III

The Board of Executive Officers

ARTICLE 22 - The Board of Executive Officers will be composed of at least 3 (three) and at most 8 (eight) members, shareholders or not, residing in Brazil, to be elected and dismissible by the Board of Directors, and 1 (one) of them shall necessarily be appointed to the position of Chief Executive Officer and 1 (one) of them shall necessarily be appointed to the position of Investor Relations Officer, and there may also be 1 (one) Financial Administrative Officer, 1 (one) Sales Officer, 1 (one) Operations Officer, and the other Vice-Presidents and Officers without special designation, with accumulation of such positions being allowed.

Sole Paragraph - The term of office for the members of the Board of Executive Officers is 2 (two) years, with reelection being allowed.

ARTICLE 23 - The Executive Officers are responsible for performing the general functions described in these Bylaws and those assigned to them by the Board of Directors, maintaining mutual cooperation and helping each other in the performance of their functions.

Paragraph 1 - The specific duties and names of each of the Executive Officers will be determined by the Board of Directors.

Paragraph 2 - In the case of vacancy, absence, leave, impediment or temporary or permanent leave, the Executive Officers will be replaced as follows:

(a)

in case of absence or temporary impediment which does not derive from a conflict of interests of the Chief Executive Officer, the CEO shall appoint a person to replace him/her and, in case of vacancy, the Board of Directors shall elect a substitute within 30 (thirty) days who will finish the term of office of the replaced Chief Executive Officer;

(b)

in case of absence or temporary impediment of the other Officers, they will be replaced by the Chief Executive Officer and, in case of vacancy, the Board of Directors must elect a substitute within 30 (thirty) days, who will finish the term of office of the replaced Officer.

ARTICLE 24 - The Board of Executive Officers will meet when convened by the Chief Executive Officer, or even by the call of half of the acting Executive Officers.

Sole Paragraph - The quorum required to establish the Executive Board meetings is at least one third (1/3) of its acting members, and its decisions shall be made by the majority vote of those present. In case of a tie in the deliberations of matters submitted to the approval of the Board of Executive Officers, such matter shall be submitted to the Board of Directors to be approved.

ARTICLE 25 - In addition to the duties and responsibilities that may be incumbent upon the General Meeting and by the Board of Directors, the Board of Executive Officers will be responsible, without prejudice to other legal attributions, for:

(a)

conducting the corporate businesses and enforcing these Bylaws;

(b)

complying with the corporate purpose;

(c)

approving the plans, programs and general standards of operation, management and control in the interest of the development of the Company, observing the guidelines determined by the Board of Directors;

(d)

preparing and submitting to the Annual General Meeting a report on the corporate business activities, supporting them with the Balance Sheet and Financial Statements legally required in each year, as well as the corresponding opinions of the Fiscal Council/Supervisory Board, whenever applicable;

(e)

conducting all the Company’s activities, enforcing the guidelines drawn up by the Board of Directors and appropriate to the achievement of its purposes;

(f)

proposing investment plans and programs to the Board of Directors;

(g)

authorizing the opening and closing of branches, agencies, warehouses and/or creating delegations, offices and representations anywhere in the domestic territory or abroad;

(h)

expressing an opinion on matters on which the Board of Directors may request specific review; and

(i)

developing together with the Board of Directors and performing the Profit-Sharing Plan.

ARTICLE 26 - The Chief Executive Officer is particularly responsible for:

(a)

planning, coordinating, directing and managing all the Company’s activities, exercising executive and decision-making functions, except for the activities that must be carried out with a report to the Board of Directors or its committees;

(b)

exercising general supervision of all the Company’s businesses, coordinating and guiding the activities of the other Officers;

(c)

calling and establishing the meetings of the Board of Executive Officers;

(d)

coordinating and conducting the process of approval of the annual and multi-annual budget and the investment and expansion plan with the Board of Directors; and

(e)

suggesting designations and respective candidates for the positions of the Company’s Board of Executive Officers and submitting such suggestions for approval by the Board of Directors.

ARTICLE 27 - In particular, in addition to the functions conferred on him/her by the Board of Directors and other responsibilities conferred on him/her by applicable law or regulation, the Investor Relations Officer is responsible for:

(a)

representing alone the Company before the Brazilian Securities and Exchange Commission (“CVM”), other regulating entities and other institutions in the securities and financial markets in Brazil or abroad;

(b)

providing information to the investing public, to the CVM, to stock exchanges on which the Company has its securities admitted to trading and other agencies related to activities carried out on the securities market, pursuant to the applicable legislation, in Brazil and/or abroad; and

(c)

taking all steps to keep updated the Company’s registration as a publicly-held corporation with the CVM.

ARTICLE 28 - In particular, in addition to the functions conferred on him/her by the Board of Directors, the Financial Administrative Officer is responsible for:

(a)

managing the Company’s administrative services, financial transactions, and risks;

(b)

taking part in the development and performance of strategies and business plans of the Company; and

(c)

managing human resources, material resources and outsourced services within its area of competence.

ARTICLE 29 - In particular, in addition to the functions conferred on him/her by the Board of Directors, the Sales Officer is responsible for:

(a)

determining of the Company’s strategic planning;

(b)

determining and performing a marketing and sales plan;

(c)

managing sales quality;

(d)

taking part in determining human resources policies; and

(e)

communicating him/herself primarily to disseminate information to the Company’s public of interest.

ARTICLE 30 - In particular, in addition to the functions conferred on him/her by the Board of Directors, the Operations Officer is responsible for:

(a)

determining business guidelines and operations;

(b)

coordinating human resources and managing material and financial resources;

(c)

conducting business operations;

(d)

taking part in marketing activities;

(e)

establishing branches and sales representations; and

(f)

communicating him/herself in seminars, speeches, interviews and in business contacts and negotiations with customers and distributors.

ARTICLE 31 - The other Officers are responsible to assist the Chief Executive Officer in all tasks that the latter may assign to them, to carry out activities related to the functions that have been granted to them by the Board of Directors and to perform all the acts required for the regular operation of the Company, as long as authorized by the Board of Directors.

ARTICLE 32 - The Officers will represent the Company actively and passively, in and out of court and before third parties, practicing and signing all acts that may bind the Company.

Paragraph 1- In the instruments of powers of attorney granting powers to attorneys-in-fact, the Company must be represented by 2 (two) Officers acting jointly. Powers of attorney in the name of the Company must have an expiration date, except for those for court purposes, in addition to the description of the powers granted, which may cover any and all acts, including those for banking purposes.

Paragraph 2 - For acts that imply acquisition, encumbrance or sale of assets, including real estates, as well as instruments of powers of attorney for such acts, the Company must be necessarily represented by 2 (two) Executive Officers, 2 (two) attorneys-in-fact or 1 (one) Officer and 1 (one) attorney-in-fact, with 1 (one) of them being the Chief Executive Officer or an attorney-in-fact appointed by 2 (two) Officers, one of whom must be the Chief Executive Officer.

Paragraph 3 - The Company will consider itself committed to an obligation when it is represented:

(a)

jointly by two (2) Executive Officers;

(b)

jointly by one (1) Officer and a proxy, constituted under the terms of these Bylaws;

(c)

jointly by two (2) attorneys-in-fact, constituted under the terms of these Bylaws; or

(d)

individually, by a proxy or an Executive Officer, in special cases, when so stated in the corresponding power of attorney and according to the extent of the powers contained therein.

CHAPTER V

FISCAL COUNCIL (Supervisory Board)

ARTICLE 33 - The Company will have a non-permanent Fiscal Council (Supervisory Board), composed of 3 (three) to 5 (five) acting members and an equal number of alternates.

Paragraph 1 - The Fiscal Council will only be established upon the request of the Company’s shareholder(s), in compliance with the applicable legislation.

Paragraph 2 - The Fiscal Council, if established, shall approve its own charter, which shall set forth the general rules for its operation, structure, organization and activities.

Paragraph 3 - The members of the Fiscal Council, effectives and substitutes, will take office subject to the prior signing of their investiture term, which must include their agreement to the arbitration clause referred to in Article 42.

CHAPTER VI

FISCAL YEAR AND FINANCIAL STATEMENTS

ARTICLE 34 - The fiscal year will end on December 31 of each year, when the balance sheet and the financial statements will be prepared as required by the legislation then in force.

ARTICLE 35 - The Company may, at the discretion of the Executive Board, prepare quarterly or half-yearly balance sheets.

CHAPTER VII

ALLOCATION OF PROFIT

ARTICLE 36 - Once the balance sheet has been ascertained, the following rules shall be observed as regards the distribution of net income:

(a)

the accumulated losses and the income tax allowance shall be deducted from the result of the fiscal year before any sharing of dividends;

(b)

after deducting the items described in paragraph (a) above, an amount will be deducted to be distributed as profit-sharing to employees and administrators in the Company’s results, as determined by the Board of Directors in compliance with the Profit-Sharing Plan, under to terms and limits of paragraphs “l” and “m” of Article 17 of these Bylaws;

(c)

the remaining profit will be distributed as follows:

5% (five percent) to the Legal Reserve Fund, up to the limit of twenty percent (20%) of the Company’s capital stock;

(ii)

amounts intended to constitute a contingency reserve, if so decided by the General Meeting;

(iii)

twenty-five percent (25%) to pay the mandatory dividend, according to Paragraph 1 below; and

(iv)

the profit that is not allocated to the reserve referred to in Paragraph 2 of this Article, nor retained under the terms of Article 196 of Law no. 6,404/76, will be distributed as additional dividends.

Paragraph 1 - The mandatory dividend will be calculated and paid according to the following rules:

(a)

the basis for calculating the dividend will be the net profit for the year less the amounts allocated to constitute the legal reserve and contingency reserves, plus the reversal of the contingency reserves formed in previous years;

(b)

the payment of the dividend set forth by the previous paragraph may be limited to the net profit amount for the fiscal year that has been ascertained pursuant to the law, provided that such difference is recorded as a reserve of unrealized profits; and

(c)

profits recorded as unrealized profits reserve, when realized and if they have not been absorbed by losses in subsequent years, shall be added to the first dividend stated after such profit realization.

Paragraph 2 - A Reserve for Expansion is hereby created, which will have the purpose of ensuring resources to finance additional investments of fixed and working capital and will be formed with up to 100% of the net profit that remains after the allocations referred to in subparagraphs (i), (ii), and (iii) of paragraph (c) caput, and the total of this reserve cannot exceed the amount of the Company’s capital stock.

Paragraph 3 - The Board of Directors may approve the preparation up of semiannual, quarterly or shorter balance sheets and state dividends or interest on equity to the account of the profit determined in such balance sheets, observing the legal limits, as well as stating interim dividends to the account of retained profits or reserves. Dividends or interests on own capital so stated will constitute an advance of the mandatory dividend.

Paragraph 4 - The Company may pay or credit interest as equity remuneration calculated on the Shareholders’ Equity accounts, subject to the rate and limits set forth by law.

ARTICLE 37 - The amount of dividends will be made available to shareholders within a maximum period of 60 (sixty) days from the date they are attributed, and may be monetarily updated for inflation as determined by the Board of Directors, in compliance with the applicable legal provisions.

CHAPTER VIII

LIQUIDATION

ARTICLE 38 - The Company will go into liquidation in the cases provided for by law, and the General Meeting will be responsible for determining the method of liquidation, electing the liquidator and the Fiscal Council/supervisory board that shall operate during the liquidation, determining their remuneration.

CHAPTER IX

SALE OF SHAREHOLDING CONTROL

ARTICLE 39 - The direct or indirect sale of control of the Company, either through a single transaction or through successive transactions, shall be performed on the condition that the acquirer of the control undertakes to carry out a public offering for the acquisition of shares having as purpose the shares issued by the Company owned by the other shareholders, observing the conditions and terms provided for in the legislation, the regulations in force and in the Novo Mercado Regulation, in order to ensure equal treatment to that given to the seller.

CHAPTER X

ACQUISITION OF RELEVANT EQUITY INTEREST IN THE COMPANY

ARTICLE 40 - Any person, shareholder or Group of Shareholders that acquires or becomes a holder, through a single transaction or through successive transactions (“Acquiring Shareholder”): (a) of a direct or indirect interest equal to or greater than 25% (twenty-five percent) of the total shares issued by the Company, excluding treasury shares; or (b) of any other rights of shareholders, including beneficial ownership or trust, over shares issued by the Company that represent a percentage equal to or greater than 25% (twenty-five percent) of the total shares issued by the Company, excluding treasury shares (“Relevant Interest”), must make a public offer for the acquisition of all the shares issued by the Company (i.e., a takeover, known in Portuguese as ‘OPA’) or request a registration with CVM and B3, as the case may be, within a maximum period of 30 (thirty) days from the date of the last transaction that resulted in achieving the level a a Relevant Interest, with the following minimum requirements, observing the provisions of the applicable CVM standards, the B3 regulations and the terms of this Article (“takeover” or “OPA”):

(a)

to be addressed to all shareholders of the Company without distinction to acquire all the shares issued by the Company;

(b)

the price offered must correspond to, at least, the highest amount between: (i) the Economic Value calculated in an appraisal report; (ii) the highest price paid by the Acquiring Shareholder in the 12 (twelve) months preceding the achievement of a Relevant Interest; and (iii) 125% of the weighted average unit price of the shares issued by the Company during the period of 120 (one hundred and twenty) sessions prior to the takeover (OPA); and

(c)

to be carried out in an auction to be held at B3.

Paragraph 1 - The takeover (OPA) to be carried out as mentioned in the caption of this Article will not exclude the possibility of another person or shareholder to propose a competing takeover (OPA), under the terms of the applicable standards.

Paragraph 2 - The obligations set forth in article 254-A of Brazilian Law no. 6,404/76 and Article 39 of these Bylaws do not exclude compliance by the Acquiring Shareholder with the obligations provided for in this Article.

Paragraph 3 - The Acquiring Shareholder will be required to comply with any ordinary requests or the requirements by CVM and B3 connected to such takeover (OPA), within the maximum time terms set forth in the applicable regulation.

Paragraph 4 - The obligation to carry out a takeover (OPA) under the terms of this Article 40 does not apply in the event that a person, shareholder or Group of Shareholders becomes the holder of shares issued by the Company if the achieved Relevant Participation results from: (a) corporate merger or acquisition of shares involving the Company, (b) in the case of acquisition, through a private capital increase or subscription of shares carried out in a primary offering by those who have preemptive rights or, in the case of acquisition, through a private capital increase or subscription of shares carried out in a primary offer, due to the fact that the amount was not fully subscribed by those who have the preemptive right or who did not have a sufficient number of interested parties in the corresponding distribution; and (c) in the case of public offerings for the distribution of shares (including public offers with restricted placement efforts).

Paragraph 5 - For the purposes of calculating the percentage of Relevant Interest, the involuntary increases in shareholding resulting from the cancellation of treasury shares, the repurchase of shares or the reduction of the Company’s capital stock with the cancellation of shares will not be counted.

Paragraph 6 - For the purposes of the provisions of this Article 40, the following terms shall have the meanings defined as follows:

“Group of Shareholders” means the group of people: (i) bound by a voting agreement (including, without limitation, any individual, company or organization, investment fund, joint ownership, securities portfolio, universality of rights, or other form of organization that is residing, domiciled or headquartered in Brazil or abroad), either directly or through controlled, controlling or jointly controlled companies; or (ii) among which there is a controlling relationship; or (iii) under common control; or (iv) that act representing a common interest. Examples of individuals or organizations representing a common interest include: (a) a person holding, directly or indirectly, a, equity interest equal to or greater than 15% (fifteen percent) of the other person’s share capital; and (b) two people who have a third investor in common who owns, directly or indirectly, an equity interest equal to or greater than 15% (fifteen percent) of the capital of each of the two persons. Any joint ventures, investment funds or clubs, foundations, associations, trusts, joint ownerships, cooperatives, consortia, securities portfolios, universalities of rights, or any other forms of organization or enterprise, constituted in Brazil or abroad, will be considered part of the same Group of Shareholders, whenever two or more among such entities are: (c) managed or administered by the same organization or by parties related to the same organization; or if (d) they have the majority of their managers in common, being certain that, in the case of investment funds with a common manager, it will be deemed as making part of a Group of Shareholders only those whose decision on the exercise of votes at General Meetings, in the terms of the corresponding regulations, is the responsibility of the administrator, on a discretionary basis.

“Economic Value” means the value of the Company and its shares that will be determined by a first-tier financial institution with operations in Brazil, using the discounted cash flow method.

ARTICLE 41 - The takeover (OPA) referred to in Article 40 above may be waived by the General Meeting, provided, however, that the terms below are observed.

Paragraph 1 - The General Meeting must be established on first call with the presence of shareholders representing at least two thirds (2/3) of the total outstanding shares.

Paragraph 2 - If the quorum of Paragraph 1 is not reached, the General Meeting may be established on second call, with the presence of any number of shareholders holding outstanding shares.

Paragraph 3 - The decision on the waiver of the public offering of shares must take place by the majority of the votes of the shareholders holding outstanding shares present at the General Meeting, excluding the votes of the Acquiring Shareholder.

CHAPTER XI

FINAL PROVISIONS

ARTICLE 42 The Company, its shareholders, management members, and members of the Fiscal Council (supervisory board), both acting and deputy members, if any, hereby undertake to settle through arbitration, at the Market Arbitration Chamber (“Câmara de Arbitragem do Mercado”), according to its regulation, any dispute that may arise between them, related to or arising from their status as issuer, shareholders, managers and members of the Fiscal Council (advisory board), especially those arising from the provisions set forth in Law No. 6,385 of Dec. 7, 1976, Law No. 6,404/1976, the Company’s Bylaws, the National Monetary Council, the Central Bank of Brazil and the Securities and Exchange Commission (CVM), as well as other standards applicable to the operation of the securities exchange market in general, in addition to those contained in the ‘Novo Mercado’ Regulation, other B3 regulations and the Novo Mercado Listing Agreement.

ARTICLE 43 - The amounts in US dollars mentioned in these Bylaws shall be used exclusively as a reference basis for monetary restatement and shall be converted into Brazilian Real at the closing selling exchange rate for US dollars as disclosed by the Central Bank of Brazil.

ARTICLE 44 - Omitted cases will be settled pursuant to the legislation and regulations in force, including the Novo Mercado Regulation.

ARTICLE 45 - The provisions set forth in the Sole Paragraph of Article 1, Paragraph 1 of Article 11, paragraphs 2 and 3 of Article 12, Paragraph 1 of Article 13, section (r) of Article 17, Articles 18 to 21, Paragraph 3 of Article 33, Article 39, Articles 40 to 42, will only be effective after the Novo Mercado Listing Agreement to be entered into by and between the Company and B3 becomes effective.

**********************

Exhibit 2.3

INDENTURE OF THE FIRST (1^st) ISSUE OF ORDINARY DEBENTURES, NOT CONVERTIBLE INTO SHARES, UNSECURED, WITH ADDITIONAL PERSONAL GUARANTEE, IN FOUR SERIES, FOR PUBLIC DISTRIBUTION WITH RESTRICTED EFFORTS OF SENDAS DISTRIBUIDORA S.A.

By this private instrument,

SENDAS DISTRIBUIDORA S.A., a corporation without registration as issuer of securities with the Brazilian Securities Exchange Commission (“CVM”), with head office in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida Ayrton Senna, No. 6.000, Lot 2, Pal 48959, Annex A, Jacarepaguá, CEP 22775-005, enrolled with the Corporate Taxpayers Registry of the Ministry of Economy (“CNPJ”), under No. 06.057.223/0001-71 and before the Board of Trade of the State of Rio de Janeiro (“JUCERJA”) under NIRE 33.3.002.7290-9, herein represented under its bylaws (“Issuer”).

PENTÁGONO S.A. DISTRIBUIDORA DE TÍTULOS E VALORES MOBILIÁRIOS, a financial institution with head office in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida das Américas, No. 4.200, Bloco 08, Ala B, Salas 302, 303 and 304 - Barra da Tijuca, CEP 22640-102, enrolled with CNPJ under No. 17.343.682/0001-38, herein represented under its Bylaws, as trustee (“Trustee”); and

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO, a corporation with head office in the City of São Paulo, State of São Paulo, at Avenida Brigadeiro Luiz Antonio, No. 3.142, Jardim Paulista, CEP 01402-000, enrolled with CNPJ under No. 47.508.411/0001-56, and before the Board of Trade of State of São Paulo under NIRE 35.300.089.901, herein represented under its bylaws (“Guarantor”); and

the Issuer, the Trustee and the Guarantor shall be hereinafter jointly referred to as “Parties” and, individually and indistinctly, as “Party”,

come hereby, and in due accordance with the law, to enter into this “Indenture of the First (1^st) Issue of Ordinary Debentures, Not Convertible into Shares, Unsecured, with Additional Personal Guarantee, in Four Series, for Public Distribution with Restricted Efforts of Sendas Distribuidora S.A.” (“Issue” and “Indenture”, respectively), in compliance with the following clauses and conditions:

1. AUTHORIZATIONS

1.1 This Indenture is entered into based on the resolutions of the Issuer’s Extraordinary General Meeting of Debenture holders held on August 9, 2019 (“EGM”), at which the Issue conditions were resolved, under article 59 of Law No. 6,404, of December 5, 1976, as amended (“Brazilian Corporation Law”).

1.2 The posting of a personal guarantee by the Guarantor was resolved on and approved in Board of Directors’ Meeting of the Guarantor, held on August 9, 2019 (“BODM” and, jointly with the EGM, “Corporate Acts”), at which the guarantee conditions were resolved on, specified below.

2. REQUIREMENTS

2.1 The Issue shall be performed in accordance with the following requirements:

2.1.1 Release from Registration with CVM and Registration with ANBIMA – Brazilian Financial and Capital Markets Association

2.1.1.1 The public distribution of Debentures (as defined below) shall be carried out under the CVM Instruction No. 476, dated January 16, 2009, as amended (“CVM Instruction 476”), and other applicable legal and regulatory provisions, being therefore automatically released from registration before CVM, under article 6 of CVM Instruction 476, as it is a public offering with restricted distribution efforts (“Restricted Offering”), except for delivery of a communication regarding the start of the Restricted Offering and the communication of the closing thereof to CVM, under articles 7-A and 8, respectively, of CVM Instruction 476.

2.1.1.2 Pursuant to Chapter VIII of the “ANBIMA Code of Regulation and Best Practices for Structuring, Coordination and Distribution of Public Offering of Securities and Public Offering for the Acquisition of Securities” (“ANBIMA Code”), the Restricted Offering must be registered with ANBIMA, by sending the documentation described in article 18, item V, of the ANBIMA Code, within up to fifteen (15) days from the submission of the notice of closing of the Restricted Offering to CVM.

2.1.2 Filing of the EGM minutes with JUCERJA and Publication of the Board of Directors Meeting (BODM)

2.1.2.1 The EGM minutes shall be filed with JUCERJA under the current legislation, and shall be published on the “State Gazette of Rio de Janeiro” and in the newspaper “Monitor Mercantil” (“Issuer’s Disclosing Newspaper”).

2.1.3 Registration of this Indenture

2.1.3.1 This Indenture and any of its amendments shall be registered with JUCERJA under article 62, item II, and paragraph 3 of the Brazilian Corporation Law, and the protocols in JUCERJA must be made within five (5) Business Days counted as of the execution of the respective instrument.

2.1.3.2 The Issuer undertakes to send to the Trustee one (1) electronic counterpart (pdf) of the Indenture and any of its amendments with the digital official seal of JUCERJA, duly registered within five (5) days as of the registration with JUCERJA.

2.1.3.3 Due to the Surety, the Indenture and any of its amendments shall be filed for registration with the Registry of Titles and Deeds of the City of Rio de Janeiro, State of Rio de Janeiro, and of the City o São Paulo, State of São Paulo (“Registries”), within five (5) Business Days as of its execution. Once they have been duly registered with the Registries, one (1) original copy of the Indenture and of any of its amendments, duly registered with the Registries, shall be sent by the Issuer to the Trustee, within three (3) Business Days as of the registration with the Registries.

2.1.4 Deposit for Distribution, Trading and Electronic Custody

2.1.4.1 The Debentures shall be deposited for (i) distribution in the primary market through the MDA - Módulo de Distribuição de Ativos (i.e.,Assets Distribution Module) (“MDA”) managed and operated by B3 S.A. – Brasil, Bolsa, Balcão – CETIP UTVM Segment (“B3”);and (ii) trading in the secondary market through the CETIP21 - Securities (“CETIP21”), managed and operated by B3. The trading shall be financially settled and the Debentures shall be held in electronic custody with B3.

2.1.4.2 Notwithstanding the foregoing Clause 2.1.4.1, the Debentures may be traded in the regulated markets of securities between qualified investors, as defined in article 9-B of CVM Instruction No. 539, dated November 13, 2013, as amended (“Qualified Investors” and “CVM Instruction 539”) and after ninety (90) days have elapsed as of the date of each subscription or acquisition by Professional Investors (as defined below), in compliance with articles 13 and 15 of CVM Instruction 476, and once verified the Issuer has complied with its obligations set forth in article17 of CVM Instruction 476, the trading of the Debentures must respect at all times the applicable legal and regulatory provisions.

2.1.4.3 The period of ninety (90) days for restriction of trading of the Debentures mentioned above shall not apply to the Arrangers (as defined below), in the event of exercise of firm commitment, as provided in subitem II of article 13 of CVM Instruction 476, provided that the conditions below are complied with: (i) the Professional Investor (as defined below) acquiring the Debentures complies with the ninety (90)-day period of trading restriction, counted as of the exercise of the firm commitment by the Lead Arranger; (ii) the Arrangers verify the compliance with the rules set forth in articles 2 and 3 of CVM Instruction 476; and (iii) the trading of Debentures should be carried out under the same conditions applicable to the Restricted Offering, and the transfer amount of the Debentures may be adjusted by the respective Compensation (as defined below).

3. CHARACTERISTICS OF THE ISSUE

3.1 Issuer’s Corporate Purpose

3.5.1 According to article 2 of its Bylaws, the Issuer’s main corporate purpose is the sale of manufactured, semi-manufactured or “in natura” products, whether national or foreign, of any and all kind and species, nature or quality, provided that not prohibited by law, as well as the other activities listed in said Bylaws.

3.2 Issue Number

3.2.1 This Issue represents the first (1^st) issue of Debentures of the Issuer.

3.3 Number of Series

3.3.1 The Issue shall be performed in four (4) series.

3.4 Total Issue Value

3.4.1 The total Issue value shall be eight billion reais (BRL 8,000,000,000.00), on the Issue Date (as defined below).

3.5 Number of Debentures

3.5.1 Eight hundred thousand (800,000) Debentures shall be issued, from which (i) two hundred thousand (200,000) first series debentures (“First Series Debentures”), (ii) two hundred thousand (200,000) second series debentures (“Second Series Debentures”); (iii) two hundred thousand (200,000) third series debentures (“Third Series Debentures”); and (iv) two hundred thousand (200,000) fourth series debentures (“Fourth Series Debentures” and, together with the First Series Debentures, Second Series Debentures and Third Series Debentures, the “Debentures”).

3.6 Allocation of Funds

3.6.1 The funds raised through the Offering shall be used by the Issuer to acquire shares of Almacenes Éxito S.A., a company organized according to the laws of Colombia, with head office at Carrera 48 No. 32B Sur — 139, Envigado, Colombia, enrolled with CNPJ under No. 23.041.875/0001-37 (“Éxito”), indirectly held by Casino, Guichard-Perrachon S.A., a company organized according to the laws of France, with head office at l, Esplanade de France 42000, Saint-Etienne, France, enrolled with CNPJ under No. 08.572.014/0001-91 (“Casino”) and by the minority shareholders, through the public offering for acquisition of shares to be carried out in Colombia (“IPO”), which shall be settled within one hundred and fifty (150) days of the First Subscription and Payment Date (as defined below).

3.7 Settling Bank and Bookkeeping Agent

3.7.1 The duties of settling bank and bookkeeping agent shall be performed by BANCO BRADESCO S.A., a financial institution with head office in the City of Osasco, State of São Paulo, in the administrative hub named “Cidade de Deus”, w/o No., Vila Yara, enrolled with CEP/CNPJ under No. 60.746.948-55 (“Settling Bank” and “Bookkeeping Agent”, as the case may be), whose definitions include any other institution that may replace the Settling Bank and Bookkeeping Agent in providing the services related to the Debentures.

4. CHARACTERISTICS OF THE DEBENTURES

4.1 Placement and Distribution Plan

4.1.1 The Debentures shall be subject to a Restricted Offering exclusively addressed to Professional Investors (as defined below), in compliance with the distribution plan previously agreed upon between the Issuer and the lead brokerage institution of the Restricted Offering (“Lead Arranger”) and other financial institutions included in the securities system distribution (together with the Lead Arranger, “Arrangers”). The Arrangers shall arrange the placement of all the Debentures in a firm commitment subscription regime.

4.1.1.1 “Professional Investors” are considered those investors referred to in article 9-A of CVM Instruction 539. Provided that investment funds and securities portfolios administrated the decisions of which are made by the same manager shall be considered as a single investor, for the purposes of the limits provided for in the Placement Plan (as defined below).

In compliance with the applicable regulation, the Arrangers shall arrange for the placement of the Debentures exclusively before the Professional Investors, in compliance with the procedures described in CVM Instruction 476 (“Placement Plan”), in accordance with the following terms:

(i)

the search for Professional Investors through stores, offices or establishments open to the public, or by using public communication services, such as the press, radio, television and publicly open pages on the internet shall not be allowed;

(ii)

the Arrangers shall only be allowed to search for at most seventy-five (75) Professional Investors; and

(iii)

the Debentures may only be acquired by at most fifty (50) Professional Investors, under CVM Instruction 476.

4.1.3 The placement of the Debentures shall be performed according to the B3 procedures and the distribution plan described in this Clause Four.

4.1.4 When subscribing and paying the Debentures, each Professional Investor interested in the subscription of the Debentures shall do so by delivering to the Arrangers a letter duly signed, in term and conditions acceptable to the Arrangers, stating to be aware of and to agree, among other things, that: (i) the information received is sufficient for their decision-making regarding the Restricted Offering; (ii) the Restricted Offering has not been registered before CVM; and (iii) the Debentures are subject to the trading restrictions set forth in the applicable regulation and in this Indenture, they may only be traded in the regulated markets ninety (90) days after subscription or acquisition by the professional investor, in observance of the additional obligations of the Issuer, under CVM Instruction 476.

4.1.5 If the Restricted Offering is cancelled or revoked, all acts of acceptance shall be cancelled and the Arrangers, together with the Issuer, shall notify the Professional Investors of the cancellation of the Restricted Offering until the business day prior to the First Subscription and Payment Date (as defined below).

4.2 Issue Date of the Debentures

4.2.1 For all legal purposes, the date of issue of the Debentures shall be August 20, 2019 (“Issue Date”).

4.3 Debentures’ Unit Par Value

4.3.1 The unit par value of the Debentures, on the Issue Date, shall be then thousand Reais (BRL 10,000.00) (“Unit Par Value”).

4.4 Convertibility, Form and Evidence of Ownership of the Debentures

4.4.1 The Debentures shall be issued in registered, book-entry form, without issuance of certificates or provisory certificates and shall not be convertible into shares issued by the Issuer.

4.4.2 Certificates representing the Debentures shall not be issued, under article 63, paragraph 2 of the Brazilian Corporation Law. For all legal purposes and effects, the ownership of the Debentures shall be evidenced by the statement issued by the Bookkeeping Agent. Additionally, a statement in the name of the holders of Debentures issued by B3 shall be recognized as proof of ownership for the Debentures held in electronic custody by B3.

4.5 Species

4.5.1 The Debentures shall be unsecured, with additional personal guarantee, under article 58 of the Brazilian Corporation Law.

4.6 Subscription Price and Form of Payment

4.6.1 The payment of the Debentures in the primary market will be carried out in accordance with the procedures adopted by B3, in cash, in national currency, upon subscription, admitting one or more subscriptions and payments, and may be placed at a premium or discount, to be defined, if applicable, upon subscription, provided that they are applied on equal terms to all investors of a same series on each subscription and payment date. On the date of the first subscription and payment of the respective series (“First Subscription and Payment Date”), the Debentures will be paid in at their Unit Par Value. The remaining payments of the Debentures will be made at the Unit Par Value plus the respective Compensation calculated pro rata temporis from the First Subscription and Payment Date of the respective series, until the respective subscription and payment date. All the subscriptions and payments shall be made within the distribution period under articles 7-A and 8 of CVM Instruction 476.

4.7 Term and Maturity Dates

4.7.1 The First Series Debentures shall be effective for one (1) year counted as of the Issue Date, maturing, therefore, on August 20, 2020 (“First Series Debentures’ Maturity Date”), except for the hypothesis of Optional Early Redemption of all the Debentures, Mandatory Early Redemption, Early Redemption Offering with the subsequent cancellation of all the Debentures and the Early Maturity Hypothesis, as defined below.

4.7.2 The Second Series Debentures shall be effective for two (2) years counted as of the Issue Date, maturing, therefore, on August 20, 2021 (“Second Series Debentures’ Maturity Date”), except for the hypothesis of Optional Early Redemption of all the Debentures, Mandatory Early Redemption, Early Redemption Offering with the subsequent cancellation of all the Debentures and the Early Maturity Hypothesis, as defined below.

4.7.3 The Third Series Debentures shall be effective for three (3) years counted as of the Issue Date, maturing, therefore, on August 20, 2022 (“Third Series Debentures’ Maturity Date”), except for the hypothesis of Optional Early Redemption of all, Mandatory Early Redemption, Early Redemption Offering with the subsequent cancellation of all the Debentures and the Early Maturity Hypothesis, as defined below.

4.7.4 The Fourth Series Debentures shall be effective for four (4) years counted as of the Issue Date, maturing, therefore, on August 20, 2023 (“Fourth Series Debentures’ Maturity Date” and, together with the First Series Debentures’ Maturity Date, Second Series Debentures’ Maturity Date and Third Series Debentures’ Maturity Date, the “Maturity Dates”), except for the hypothesis of Optional Early Redemption of all, Mandatory Early Redemption, Early Redemption Offering with the subsequent cancellation of all the Debentures and the Early Maturity Hypothesis, as defined below.

4.8 Personal Guarantee

4.8.1 In order to ensure the faithful, timely and full compliance with its main and ancillary, present and/or future pecuniary obligations, related to the Debentures, assumed in this Indenture, including, but not limited to, the Unit Par Value of the Debentures, the Compensation and other ordinary and/or late payment charges, penalties, costs, expenses and other contractual and legal charges described herein, fines, taxes, indemnities, fees owed to the Trustee and the expenses provenly incurred by the Trustee or Debenture holders as a result of lawsuits, proceedings and/or other judicial or extrajudicial actions required to safeguard its rights and prerogatives resulting from the Indenture (“Secured Obligations”), the Guarantor irrevocably and irreparably undertakes to, as co-obligor and joint and several debtor, providing a surety in favor of the Debenture holders, represented by the Trustee, being bound, as well as its successors at any title, as guarantor, principal payer, co-obligor and joint and several debtor with the Issuer, by all values due under this Indenture, until full discharge of the Secured Value (as defined below) (“Surety”). Notwithstanding the joint and several aspect of the personal guarantee provided by the Guarantor, it is agreed upon that the Debenture holders shall only require the enforcement of the guarantee by the Guarantor in the event of default of the Issuer, in accordance with the provision of article 397 of the Civil Code.

4.8.2 The Guarantor hereby irrevocably and irreparably states to be guarantor, principal payer, co-obligor of, and joint and severally liable for, any and all obligation, whether principal and/or ancillary, present and/or future, including the payment of the Unit Par Value, Compensation and, if applicable, the Late Payment Charges, expenses, costs, fees and other expected contractual and legal charges, indemnities of any kind and other amounts due by the Issuer under this Indenture and/or under any amendments hereof, as well as any costs required and provenly incurred by the Trustee or by the Debenture holders, including as a result from lawsuits, proceedings and other judicial and extrajudicial actions required to safeguard the rights and prerogatives related to this Indenture (“Secured Value”). Moreover, the Guarantor represents that it is legally capable and is able to provide the Surety as established in this Indenture.

4.8.3 Once the default of the Issuer is verified under the Article 397 of the Civil Code, the Secured Value shall be paid by the Guarantor within five (5) Business Days after receipt of a written notice from the Trustee to the Guarantor, informing the Issuer’s default, notice which shall be accompanied, where applicable, of receipts of the incurred expenses. Such notice shall be issued by the Trustee on the Business Day after becoming aware of the default in payment by the Issuer of any amount due in relation to the Debentures on the payment date defined in the Indenture, respecting any grace periods. The payment shall be made outside the scope of B3, and in accordance with the instructions received from the Trustee.

4.8.4 The Guarantor expressly waives any and all order benefit, as well as disclaimer rights and powers, including those provided for in articles 333, sole paragraph, 364, 366, 368, 827, 834, 837, 838 and 839 of the Civil Code and articles 130, subitem I, and 794 of Law No. 13,105, dated March 16, 2015, as amended (“Code of Civil Procedure”).

4.8.5 No opposition of the Issuer may further be accepted or invoked by the Guarantor with the purpose of being exempted from fulfillment of its obligations before the Debenture holders.

4.8.6 The Guarantor shall be subrogated under the Debenture holders’ rights, if it partially or fully enforces the Surety object hereof, until the threshold of the debt installment effectively honored, being certain that the Guarantor undertakes to only demand such amounts from the Issuer after the Debenture holders have received in full the Secured Amount.

4.8.7 This Surety shall become effective on the Issue Date and shall remain valid in all its terms until the date of full discharge of the Secured Amount.

4.8.8 It is hereby agreed upon that the non-compliance by the Trustee of the terms for enforcement of the Surety in favor of the Debenture holders shall not lead to, in any event, loss of any right or power provided for herein, and the Surety may be judicially or extrajudicially foreclosed and demanded by the Trustee as many times as necessary until full settlement of the Secured Value, and for such, the Trustee must immediately notify the Issuer and the Guarantor.

4.8.9 The Guarantor hereby states to have read and agrees in full with the provisions of this Indenture, being aware of the Surety terms and conditions provided and of the Debentures.

4.8.10 The Guarantor may make the payment of the Secured Value regardless of the receipt of notice referred to in Clause 4.8.3 above, including during any grade period established in this Indenture.

4.8.11 In the documents made available by the Guarantor for property verification purposes thereof, it was not possible to verify if there are other personal guarantees provided in favor of third parties.

4.9 Scheduled Amortization

4.9.1 The balance of Unit Par Value of the First Series Debentures, as the case may be, shall be amortized in two (2) installments, the first one being due on December 26, 2019, and the last one on the First Series Debentures’ Maturity Date, as described in the table below, except for the hypothesis of Optional Early Redemption, Mandatory Early Redemption, Early Redemption Offering, Mandatory Extraordinary Amortization, Optional Amortization and the Early Maturity Hypothesis, as the case may be.

Installment	Amortization Date	Amortized Percentage of the balance of Unit Par Value
1ª	December 26, 2019	50.0000%
2ª	Maturity Date	100.0000%

4.9.2 The Unit Par Value or the balance of the unit par value of the Second Series Debentures, as the case may be, will be amortized in one (01) installment, due on the Second Series Debentures’ Maturity Date, subject to the hypothesis of Optional Early Redemption, Early Redemption Offering, Mandatory Extraordinary Amortization and Optional Amortization, as appropriate.

4.9.3 The Unit Par Value or the balance of the unit par value of the Third Series Debentures, as the case may be, will be amortized in one (01) installment, due on the Third Series Debentures’ Maturity Date, subject to the hypothesis of Optional Early Redemption, Early Redemption Offering, Mandatory Extraordinary Amortization and Optional Amortization, as appropriate.

4.9.4 The Unit Par Value or the balance of the unit par value of the Fourth Series Debentures, as the case may be, will be amortized in one (01) installment, due on the Fourth Series Debentures’ Maturity Date, subject to the hypothesis of Optional Early Redemption, Early Redemption Offering, Mandatory Extraordinary Amortization and Optional Amortization, as appropriate.

4.10.1 Compensation

4.10.1 The Unit Par Value or the Unit Par Value balance, as the case may be, of the First Series Debentures will not be subject to adjustment for inflation. As of the First Subscription and Payment Date, the Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of average daily rates of DI - Interbank Deposits of one day, “over extra group”, base of two hundred and fifty-two (252) Business Days, calculated and disclosed daily by B3 S.A. – Brasil, Bolsa, Balcão, in the daily newsletter available on its website (http://www.b3.com.br) (“DI Rate”), exponentially added with a surcharge (spread) of one point sixty per cent (1.60%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the First Series Debentures, as defined in Clause 4.10.5 below, according to the formula indicated in Clause 4.10.1.5 below (“First Series Compensation”).

4.10.1.1 The First Series Compensation will be calculated exponentially and cumulatively, using the pro rata temporis criterion, per Business Days elapsed, from the immediately preceding First Subscription and Payment Date or First Series Compensation Payment Date (as defined below), immediately preceding, as the case may be, until the date of their effective payment, which must occur at the end of each Capitalization Period of the First Series Debentures.

4.10.1.2 The First Series Compensation will be paid in two (2) installments, and the first payment of the First Series Compensation shall be due on December 26, 2019, and the last one shall be due on the First Series Debentures’ Maturity Date, as per the table below (“First Series Compensation Payment Dates”):

Installment Number	First Series Compensation Payment Dates
1	December 26, 2019
2	First Series Debentures’ Maturity Date

4.10.1.3 If the First Series Compensation Payment Date is not a Business Day, the payment shall be made on the next subsequent Business Day.

4.10.1.4 Those who holds Debentures at the end of the Business Day immediately preceding each First Series Compensation Payment Date shall be entitled to the First Series Compensation.

4.10.1.5 The First Series Compensation shall be calculated according to the following formula:

J = VNb x (Interest Factor - 1)

where:

J: unit value of the First Series Compensation, accrued for the period, at the end of each capitalization period, calculated with eight (8) decimal places without rounding;

VNb: Unit Par Value, or balance of the Unit Par Value, of the First Series Debentures, as the case may be, informed/calculated with eight (8) decimal places without rounding;

Interest Factor: Interest factor composed of the fluctuation parameter plus spread calculated with nine (9) decimal places, with rounding, determined as follows:

Interest Factor = (DI Factor x Spread Factor)

where:

DI Factor = Output of DI Rates of the First Subscription and Payment Date of First Series Debentures, or the immediately preceding First Series Compensation Payment Date (included) until the date of calculation (excluded), calculated with eight (8) decimal places, with rounding, determined as follows:

DI Factor =

where:

k = number of DI Rates orders, going from one (1) to “n”;

n = total number of DI Rates, considered until the date of calculation, “n” being a whole number;

TDI_k= DI rate, order k, expressed per day, calculated with eight (8) decimal places with rounding, calculated as follows:

where: k = 1, 2, ..., n

DI_k = DI Rate, of k order, disclosed by B3 S.A. – Brasil, Bolsa, Balcão, used with two (2) decimal places;

dk = l

Spread Factor = Fixed interest surcharge, calculated with nine (9) decimal places, with rounding, determined according to the following formula:

SpreadFactor =

where:

Spread = 1.6000;

DP = Number of Business Days between the immediately preceding First Subscription and Payment Date of First Series Debentures or First Series Compensation Payment Date and the current date, “DP” being a whole number;

The DI Rate must be used considering an identical number of decimal places disclosed by the entity responsible for calculating them.

Observations:

(i)

The factor resulting from the expression (l + TDIk) is considered with sixteen (16) decimal places, without rounding;

(ii)

The output of daily factors (l + TDIk) is obtained, and at each daily factor accrued, the result is truncated with sixteen (16) decimal places, applying the next daily factor and so on, until the last one considered;

(iii)

Once the factors are accrued, the resulting factor “DI Factor ” is considered with eight (8) decimal places, with rounding; and

(iv)

The factor resulting from the expression (DIFactor x SpreadFactor) is considered with nine (9) decimal places, with rounding.

4.10.2 The Unit Par Value or the Unit Par Value balance, as the case may be, of the Second Series Debentures will not be subject to adjustment for inflation. As of the First Subscription and Payment Date, the Second Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate exponentially exponentially added with a surcharge (spread) of one point seventy-four per cent (1.74%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the Second Series Debentures, as defined in Clause 4.10.5 below, according to the formula indicated in Clause 4.10.2.5 below (“Second Series Compensation”).

4.10.2.1 The Second Series Compensation will be calculated exponentially and cumulatively, using the pro rata temporis criterion, per Business Days elapsed, from the immediately preceding First Subscription and Payment Date or Second Series Compensation Payment Date (as defined below), immediately preceding, as the case may be, until the date of its effective payment, which must occur at the end of each Capitalization Period of the Second Series Debentures.

4.10.2.2 The Second Series Compensation shall be paid semiannually on the 20th of February and August of each year, as of the Issue Date, with the first payment of the Second Series Compensation being due on February 20, 2020, and the last one shall be due on the Second Series Debentures’ Maturity Date, as shown in the table below (“Second Series Compensation Payment Date”):

Installment Number	Second Series Compensation Payment Date
1	February 20, 2020
2	August 20, 2020
3	February 20, 2021
4	Maturity Date of the Second Series Debentures

4.10.2.3 If the Second Series Compensation Payment Date is not a Business Day, the payment shall be made on the next subsequent Business Day.

4.10.2.4 Those who holds Debentures at the end of the Business Day immediately preceding each Second Series Compensation Payment Date shall be entitled to the Second Series Compensation.

4.10.2.5 The Second Series Compensation shall be calculated according to the following formula:

J = VNb x (Interest Factor - 1)

where:

J: unit value of the Second Series Compensation, accrued for the period, at the end of each capitalization period, calculated with eight (8) decimal places without rounding;

VNb: Unit Par Value, or balance of the Unit Par Value, of the Second Series Debentures, as the case may be, informed/calculated with eight (8) decimal places without rounding;

Interest Factor: Interest factor composed of the fluctuation parameter plus spread calculated with nine (9) decimal places, with rounding, determined as follows:

Interest Factor = (DI Factor x Spread Factor)

where:

DI Factor = Output of DI Rates of the First Subscription and Payment Date of Second Series Debentures, or the immediately preceding Second Series Compensation Payment Date (included) until the date of calculation (excluded), calculated with eight (8) decimal places, with rounding, determined as follows:

DI Factor =

where:

k = number of DI Rates orders, going from one (1) to “n”;

n = total number of DI Rates, considered until the date of calculation, “n” being a whole number;

TDI_k = DI rate, order k, expressed per day, calculated with eight (8) decimal places with rounding, calculated as follows:

where: k = 1, 2, ..., n

DI_k = DI Rate, of k order, disclosed by B3 S.A. – Brasil, Bolsa, Balcão, used with two (2) decimal places;

dk = l

Spread Factor = Fixed interest surcharge, calculated with nine (9) decimal places, with rounding, determined according to the following formula:

SpreadFactor =

where:

Spread = 1.7400;

DP = Number of Business Days between the immediately preceding First Subscription and Payment Date of Second Series Debentures or Second Series Compensation Payment Date and the current date, “DP” being a whole number;

The DI Rate must be used considering an identical number of decimal places disclosed by the entity responsible for calculating them.

Observations:

(i)

The factor resulting from the expression (l + TDIk) is considered with sixteen (16) decimal places, without rounding;

(ii)

(iii)

Once the factors are accrued, the resulting factor “DI Factor ” is considered with eight (8) decimal places, with rounding; and

(iv)

The factor resulting from the expression (DIFactor x SpreadFactor) is considered with nine (9) decimal places, with rounding.

4.10.3 The Unit Par Value or the Unit Par Value balance, as the case may be, of the Third Series Debentures will not be subject to adjustment for inflation. As of the First Subscription and Payment Date, the Third Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate exponentially added with a surcharge (spread) of one point ninety-five per cent (1.95%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the Third Series Debentures, as defined in Clause 4.10.5 below, according to the formula indicated in Clause 4.10.3.5 below (“Third Series Compensation”).

4.10.3.1 The Third Series Compensation will be calculated exponentially and cumulatively, using the pro rata temporis criterion, per Business Days elapsed, from the immediately preceding First Subscription and Payment Date or Third Series Compensation Payment Date (as defined below), immediately preceding, as the case may be, until the date of its effective payment, which must occur at the end of each Capitalization Period of the Third Series Debentures.

4.10.3.2 The Third Series Compensation shall be paid semiannually on the 20th of February and August of each year, as of the Issue Date, with the first payment of the Third Series Compensation being due on February 20, 2020, and the last one shall be due on the Third Series Debentures’ Maturity Date, as shown in table below (“Third Series Compensation Payment Dates”):

Installment Number	Third Series Compensation Payment Date
1	February 20, 2020
2	August 20, 2020
3	February 20, 2021
4	August 20, 2021
5	February 20, 2022
6	Third Series Debentures’ Maturity Date

4.10.3.3 If the Third Series Compensation Payment Date is not a Business Day, the payment shall be made on the next subsequent Business Day.

4.10.3.4 Those who holds Debentures at the end of the Business Day immediately preceding each Third Series Compensation Payment Date shall be entitled to the Third Series Compensation.

4.10.3.5 The Third Series Compensation shall be calculated according to the following formula:

J = VNb x (Interest Factor - 1)

where:

J: unit value of the Third Series Compensation, accrued for the period, at the end of each capitalization period, calculated with eight (8) decimal places without rounding;

VNb: Unit Par Value, or balance of the Unit Par Value, of the Third Series Debentures, as the case may be, informed/calculated with eight (8) decimal places without rounding;

Interest Factor: Interest factor composed of the fluctuation parameter plus spread calculated with nine (9) decimal places, with rounding, determined as follows:

Interest Factor = (DI Factor x Spread Factor)

where:

DI Factor = Output of DI Rates of the First Subscription and Payment Date of Third Series Debentures, or the immediately preceding Third Series Compensation Payment Date (included) until the date of calculation (excluded), calculated with eight (8) decimal places, with rounding, determined as follows:

DI Factor =

where:

k = number of DI Rates orders, going from one (1) to“n”

n = total number of DI Rates, considered until the date of calculation, “n” being a whole number;

TDI_k = DI rate, order k, expressed per day, calculated with eight (8) decimal places with rounding, calculated as follows:

where: k = 1, 2, ..., n

DI_k = DI Rate, of k order, disclosed by B3 S.A. – Brasil, Bolsa, Balcão, used with two (2) decimal places;

dk = l

Spread Factor = Fixed interest surcharge, calculated with nine (9) decimal places, with rounding, determined according to the following formula:

SpreadFactor =

where:

Spread = 1.9500;

DP = Number of Business Days between the immediately preceding First Subscription and Payment Date of Third Series Debentures or Third Series Compensation Payment Date and the current date, “DP” being a whole number.

The DI Rate must be used considering an identical number of decimal places disclosed by the entity responsible for calculating them.

Observations:

(v)

The factor resulting from the expression (1 + TDIk) is considered with sixteen (16) decimal places, without rounding;

(vi)

The output of daily factors (1 + TDIk) is obtained, and at each daily factor accrued, the result is truncated with sixteen (16) decimal places, applying the next daily factor and so on, until the last one considered;

(vii)

Once the factors are accrued, the resulting factor “DI Factor” is considered with eight (8) decimal places, with rounding;

(viii)

The factor resulting from the expression (DIFactor x SpreadFactor) is considered with sixteen (9) decimal places, with rounding.

4.10.4 The Unit Par Value or the Unit Par Value balance, as the case may be, of the Fourth Series Debentures will not be subject to adjustment for inflation. As of the First Subscription and Payment Date, the Fourth Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate exponentially added with a surcharge (spread) of two point twenty per cent (2.20%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the Fourth Series Debentures, as defined in Clause 4.10.5 below, according to the formula indicated in Clause 4.10.4.5 below (“Fourth Series Compensation” and, together with the First Series Compensation, the Second Series Compensation and the Third Series Compensation, the “Compensations”).

4.10.4.1 The Fourth Series Compensation will be calculated exponentially and cumulatively, using the pro rata temporis criterion, per Business Days elapsed, from the immediately preceding First Subscription and Payment Date or Fourth Series Compensation Payment Date (as defined below), immediately preceding, as the case may be, until the date of its effective payment, which must occur at the end of each Capitalization Period of the Fourth Series Debentures.

4.10.4.2 The Fourth Series Compensation shall be paid semiannually on the 20th of February and August of each year, as of the Issue Date, with the first payment of the Fourth Series Compensation being due on February 20, 2020, and the last one shall be due on the Fourth Series Debentures’ Maturity Date, as shown in table below (“Fourth Series Compensation Payment Dates” and, together with the First Series Compensation Payment Dates, Second Series Compensation Payment Dates and Third Series Compensation Payment Dates, the “Compensation Payment Dates”):

Installment Number	Fourth Series Compensation Payment Dates
1	February 20, 2020
2	August 20, 2020
3	February 20, 2021
4	August 20, 2021
5	February 20, 2022
6	August 20, 2022
7	February 20, 2023
8	Third Series Debentures’ Maturity Date

4.10.3.3 If the Fourth Series Compensation Payment Date is not a Business Day, the payment shall be made on the next subsequent Business Day.

4.10.3.4 Those who holds Debentures at the end of the Business Day immediately preceding each Fourth Series Compensation Payment Date shall be entitled to the Fourth Series Compensation.

4.10.3.5 The Fourth Series Compensation shall be calculated according to the following formula:

J = VNb x (Interest Factor - 1)

where:

J: unit value of the Fourth Series Compensation, accrued for the period, at the end of each capitalization period, calculated with eight (8) decimal places without rounding;

VNb: Unit Par Value, or balance of the Unit Par Value, of the Fourth Series Debentures, as the case may be, informed/calculated with eight (8) decimal places, without rounding;

Interest Factor: Interest factor composed of the fluctuation parameter plus spread calculated with nine (9) decimal places, with rounding, determined as follows:

Interest Factor = (DI Factor x Spread Factor)

where:

DI Factor = Output of DI Rates of the First Subscription and Payment Date of Fourth Series Debentures, or the immediately preceding Fourth Series Compensation Payment Date (included) until the date of calculation (excluded), calculated with eight (8) decimal places, with rounding, determined as follows:

DI Factor =

where:

k = number of DI Rates orders, going from one (1) to “n”;

n = total number of DI Rates, considered until the date of calculation, “n” being a whole number;

TDI_k = DI rate, order k, expressed per day, calculated with eight (8) decimal places with rounding, calculated as follows:

where: k = 1, 2, ..., n

DI_k = DI Rate, of k order, disclosed by B3 S.A. – Brasil, Bolsa, Balcão, used with two (2) decimal places;

dk = l

Spread Factor = Fixed interest surcharge, calculated with nine (9) decimal places, with rounding, determined according to the following formula:

SpreadFactor =

where:

Spread = 2.2000;

DP = Number of Business Days between the immediately preceding First Subscription and Payment Date of Fourth Series Debentures or Fourth Series Compensation Payment Date and the current date, “DP” being a whole number;

The DI Rate must be used considering an identical number of decimal places disclosed by the entity responsible for calculating them.

Observations:

(ix)

The factor resulting from the expression (l + TDIk) is considered with sixteen (16) decimal places, without rounding;

(x)

The output of daily factors (1 + TDIk) is obtained, and at each daily factor accrued, the is truncated with sixteen (16) decimal places, applying the next daily factor and so on, until the last one considered;

(xi)

Once the factors are accrued, the resulting factor “DI Factor” is considered with eight (8) decimal places, with rounding; and

(xii)

The factor resulting from the expression (DIFactor x SpreadFactor) is considered with sixteen (9) decimal places, with rounding.

4.10.5 For purposes of calculating the Compensation, “Capitalization Period” is defined as the period of time starting on the First Subscription and Payment Date (included), regarding the first Capitalization Period, or on the respective immediately preceding Compensation Payment Date (included), regarding the other Capitalization Periods, and ending on the date of the next payment of the respective Compensation corresponding to the period (included). Each Capitalization Period of the respective series succeeds the preceding one without interruption.

4.10.6 If the DI Rate is not available when determining the Compensation applicable to the Debentures of any of the series, in its place, the last DI Rate applicable that is available on that date shall apply, and no financial set offs shall be due, either by the Issuer or the respective Debenture holders, when the available DI Rate is disclosed.

4.10.7 In the absence of determination and/or disclosure of the DI Rate for more than ten (10) Business Days counted as of the expected date for determination and/or disclosure or further, in the event of termination or unenforceability of the DI Rate by legal provision or court order, the Trustee shall call a general meeting of Debenture holders within two (2) Business Days as of the end of the non-disclosure period, or after termination or unenforceability of the DI Rate by legal provision or court order(in the form and terms stipulated in article 124 of the Brazilian Corporation Law and in this Indenture) (“General Meeting of Debenture holders”), so that the Debenture holders may resolve, in mutual agreement with the Issuer, on the new compensation parameter to be applied (“Replacement Rate”). Until the resolution of the Replacement Rate, the last DI Rate disclosed shall be used in determining the DI Factor, and no financial set off shall be due between the Issuer and the respective Debenture holders, if a payment of Compensation had occurred until the date of resolution of the Replacement Rate.

4.10.7.1 In the event of not holding a General Meeting of Debenture Holders provided in Clause 4.10.7 above or, if held, there is no agreement on the Replacement Rate between the Issuer and the respective Debenture Holders representing at least seventy-five per cent (75%) of the respective outstanding Debentures, including, if for lack of obtaining a quorum for resolution, the Issuer must early redeem all the respective Debentures, within ten (10) days as of the date of closing of the respective General Meeting of Debenture Holders (or if not held in first and second call, on the date on which it should have been held) or on the Maturity Date of the respective series, whichever comes first, or within other term that may be established in said meeting, by its respective Unit Par Value or the balance of Unit Par Value, as the case may be, plus the respective Compensation owed until the effective redemption date, calculated pro rata temporis, from the respective First Subscription and Payment Date, or the respective immediately preceding Compensation Payment Date.

4.10.8 The Debentures early redeemed under the foregoing clause shall be cancelled by the Issuer. In this event, for calculation of the Compensation of the Debentures to be redeemed, for each day of the period in which the absence of rates occurs, the last DI Rate officially disclosed shall be used.

4.10.9 If the DI Rate is disclosed again before the General Meeting of Debenture Holders referred to in Clause 4.10.7 above is held and there is no legal provision or court order expressly prohibiting its use, said meeting will no longer be held, and the DI Rate or the legal substitute for the DI Rate, as the case may be, from the date of its disclosure, it will be used for the Compensation calculation.

4.11 Scheduled Renegotiation

4.11.1 The Debentures will not be subject to scheduled renegotiation.

4.12 Early Maturity

4.12.1 The Trustee shall consider the early maturity of all obligations related to the Debentures and demand, upon written notice, the immediate payment by the Issuer of the respective Unit Par Value or balance of the Unit Par Value, as the case may be, plus the applicable Compensation, calculated on a pro rata temporis basis, as provided in Clause 4.10 above, as of the First Subscription and Payment Date, or of the respective Compensation Payment Date immediately preceding, until the date of its effective payment, regardless of any notice, judicial or extrajudicial notification to the Issuer, in the occurrence of any of the following events (“Automatic Early Maturity Events”):

(i)

occurrence of (a) liquidation or dissolution of the Issuer, Guarantor and/or Éxito (b) voluntary bankruptcy or bankruptcy petition not resolved within the legal term, adjudication of bankruptcy or any similar proceeding in the competent jurisdiction of each company (Éxito) that may be created by law, of the Issuer, Guarantor and/or its controlled and affiliated companies, directly or indirectly (“Affiliates”) and, (c) any event similar to the previous ones that characterizes or may characterize the Issuer’s, Guarantors’ and/or its Affiliates’ insolvency status;

(ii)

proposal by the Issuer, Guarantor and/or its Affiliates and/or Éxito of an extrajudicial reorganization plan to any creditor or class of creditors, or any similar proceeding in the competent jurisdiction of each company (Éxito), regardless of having been requested or obtained judicial approval of said plan, or yet, entry by the Issuer, Guarantor and/or its Affiliates and/or Éxito in court of a request for judicial reorganization or equivalent proceeding in the competent jurisdiction of each company (Éxito), regardless of granting of the reorganization processing or its granting by the competent judge;

(iii)

default by the Issuer and/or Guarantor, of any pecuniary obligation set forth in this Indenture, not remedied within one (1) Business Day from the date of the respective non-compliance;

(iv)

default of any financial debt of the Issuer, Guarantor and/or any of its controlled companies, and for purposes hereof, the definition of control contained in article 116 or the Brazilian Corporation Law is used (“Controlled Companies”), in unit or aggregate value, equal or higher than sixty million reais (BRL 60,000,000.00), or equivalent value in other currencies, respecting its respective cure term, or in case there is no such default, if such default is not remedied within five (5) Business Days counted from the default;

(v)

statement of early maturity of any debt and/or obligation of the Issuer, Guarantor or of any of its Controlled Companies in unit or aggregate value, equal or higher than sixty million reais (BRL 60,000,000.00), or equivalent value in other currencies;

(vi)

spin off, consolidation or merger of the Issuer and/or Guarantor by another company, without prior and express authorization of the Debenture holders, observing the resolution quorum established in this Indenture, except if the spin off, consolidation or merger meets the requirements provided for in article 231, paragraph 1 of the Brazilian Corporation Law;

(vii)

conversion of the corporate type of the Issuer and/or Guarantor in accordance with articles 220 to 222 of the Brazilian Corporation Law;

(viii)

assignment, sale, disposal of, spin off, transfer at no cost or for valuable consideration, of the Issuer’s assets, including shares or quotas of controlled Companies, with value higher than the equivalent to twenty per cent (20%), whether individually or in the aggregate, of the Issuer’s owners’ equity, according to the last quarterly audited financial statement disclosed, except: (a) by sale, disposal, spin-off, transfer and/or the promise of transfer of assets of the Issuer and/or Guarantor, including shares or quotas of controlled companies, to any controlled provided that it is or becomes (before the event) additional guarantor of the transaction, (b) with the prior written consent of the Debenture Holders, or (c) if the net proceeds obtained from said event are fully used for redemption and/or amortization of Debentures, also pursuant to Clause 4.18;

(ix)

redemption, repurchase, amortization or bonus of shares, payment of dividends, including dividends as advance, earnings as interest on the stockholders’ equity, the realization of any other payments by the Issuer and/or Guarantor to its shareholders, in case the Issuer and/or Guarantor are in arrears with any of their pecuniary obligations established herein, except, however, the payment of the minimum mandatory dividend provided in article 202 of the Brazilian Corporation Law;

(x)

distribution of dividends and/or payment of interests on own capital (“JCP”) assigned as dividends by the Guarantor, above the minimum mandatory provided in article 202 of the Brazilian Corporation Law, except (a) if there is a prior and express authorization of the Debenture holders; or (b) in case of JCP assigned as dividends, if there is a distribution of net profit of the respective fiscal year in a percentage of up to twenty-six per cent (26%), due to the variation of the Withholding Income Tax (IRRF) rates applicable to the shareholders, under the legislation in force”

(xi)

if the Issuer and/or Guarantor transfer or in any way assign or promise to assign to third parties the rights and obligations assumed under this Indenture;

(xii)

judicial inquiry, by the Issuer, Guarantor and/or any of its Controlled Companies and/or parent companies, and for purposes of this clause, the definition of control contained in article 116 or the Brazilian Corporation Law, in this Indenture and/or Surety is used; and

(xiii)

reduction of the Issuer’s and/or Guarantor’s capital, after the execution date of this Indenture, without the prior consent of the holders of the Debentures, as provided in article 174, paragraph 3 of the Brazilian Corporation Law.

4.12.2 The occurrence of any of the events described above shall be promptly communicated by the Issuer to the Trustee, within up to two (2) Business Days. The non-compliance by the Issuer of the obligation set forth in this Clause 4.12.2 will not prevent the Trustee or the holders of the Debentures from, at its discretion, exercising its powers and claims set forth in this Indenture and in the other documents of the Issue, including the right to consider and/or state early maturity of the Debentures, as applicable, in accordance with this Clause Four.

4.12.3 The Trustee shall call, upon becoming aware of the occurrence of any of the Events of Non-Automatic Early Maturity (as defined below), within two (2) Business Days from the date on which it becomes aware of the occurrence of the respective event, the General Meeting of Debenture Holders in accordance with Clause 7 below, to resolve on the possible non-declaration of the Debentures early maturity (each of these events, “Events of Non-Automatic Early Maturity” and, together with the Events of Automatic Early Maturity, “Events of Early Maturity”):

(i)

protests of titles against the Issuer, against Guarantor and/or any Controlled Company, with the exception of Éxito, except those provenly made by error or bad faith of third parties, provided that validly evidenced by the Issuer and/or Guarantor within five (5) Business Days as of the notice of such process, for whose payment the Issuer, Guarantor and/or any Controlled Company, with the exception of Éxito being responsible, whose value, individually or jointly, is higher than sixty million reais (BRL 60,000,000.00), unless, within fifteen (15) Business Days as from the notice of said protest, it is validly proved by the Issuer, Guarantor and/or any Controlled Company that (a) the protest was cancelled, stopped or suspended, or (b) guarantees were given in court in an amount at least equivalent to the protested amount;

(ii)

default by the Issuer and/or Guarantor of any non-pecuniary obligation set forth in this Indenture, not remedied within five (5) Business Days from the date of the default, and the term provided in this item does not apply to the obligations for which a specific grace period has been established;

(iii)

non-fulfillment of the obligation of allocating the funds raised by means of the Debentures as established in Clause 3.6 of this Indenture;

(iv)

prove to be false or reveal to be incorrect, inconsistent, insufficient or misleading any of the representations or warranties provided by the Issuer and/or Guarantor in this Indenture and/or in any document related to the Debentures and/or to the Issue, provided that the said inaccuracy, inconsistency or insufficiency is not remedied by the Issuer and/or Guarantor within five (5) Business Days counted as of the notice in writing, forwarded by the Trustee to the Issuer and/or Guarantor in this regard, and the said cure term does not apply for representations or warranties that prove to be false or misleading;

(v)

non-compliance with any court decision that became final and unappealable or final arbitration decision of adverse nature against the Issuer and/or against Guarantor, in unit or aggregate value higher than sixty million reais (BRL 60,000,000.00), or equivalent amount in other currencies, in the period set forth in the decision or, if a period is not provided in the decision, within up to ten (10) Business Days counted as of the date on which the Issuer and/or Guarantor is formally notified of the decision;

(vi)

merger of shares/or transfer of controlling interest of the Issuer and/or Guarantor, in accordance with the wording set forth in article 116 of the Brazilian Corporation Law, unless the Casino remains as direct or indirect controller of the Issuer and/or Guarantor, individually or through a controlling block;

(vii)

change in the Issuer’s and/or Guarantor’s corporate purpose, as described in item 3.1 above, which implies a change in the Issuer’s and/or Guarantor’s main activity or includes activity which implies a change in the Issuer’s main activity;

(viii)

no maintenance by the Guarantor, while there are outstanding Debentures of the following financial indexes and limits (“Financial Indexes and Limits”), which shall be assessed quarterly by the Guarantor, based on the twelve (12) months prior to the respective assessment date, based on the consolidated quarterly financial statements and information of the Guarantor, and followed by the Trustee within ten (10) Business Days counted as of the date of the presentation of the necessary documents by the Guarantor to the Trustee, and the first assessment will be made based on the Guarantor’s consolidated financial statements for the quarter ended on September 30, 2019:

(a)

Consolidated Net Debt not exceeding the Owners’ Equity; and

(b)

Ratio between Consolidated Net Debt and Consolidated EBITDA, less than or equal to three point twenty-five (3.25);

(ix)

in the event of an increase in the Guarantor’s Consolidated Gross Debt, except when the destination of the funds obtained from the said increase is: (a) operational and/or working capital needs, (b) productive/operational investments, or (c) debt refinancing, in which case the use of such resources in the acquisition of other companies is prohibited in any case;

(x)

carrying out financial transactions and/or other transactions and/or entering into any agreements with related parties not directly or indirectly controlled by the Guarantor, not essential to the Guarantor’s operation, or providing guarantees in favor or benefit of its direct or indirect controllers, except the agreements and/or guarantees in effect on the OPA settlement date; and if such transactions occur with the prior and express authorization of Debenture Holders;

(xi)

occurrence of (a) liquidation or dissolution of Casino and/or Cnova N.V., a company duly organized in accordance with the laws of the Netherlands, with registered office at Strawinskylaan 3051, 1077 ZX, Amsterdam, Netherlands (“Cnova”), (b) voluntary bankruptcy or bankruptcy petition not resolved within the legal term, adjudication of bankruptcy or any similar proceeding in the competent jurisdiction of each company (Casino and Cnova) that may be created by law, Casino and/or Cnova;

(xii)

proposal by Casino and/or Cnova of an extrajudicial reorganization plan to any creditor or class of creditors, or any similar proceeding in the competent jurisdiction of each company (Casino and Cnova), regardless of having been requested or obtained judicial approval of said plan, or yet, entry by Casino and/or Cnova in court of a request for judicial reorganization, regardless of granting of the reorganization processing or its concession by the competent judge;

(xiii)

judicial decision, arising from questioning the Indenture and/or Surety by any person not mentioned in item (xii) of Clause 4.12. 1 above, whose effects are not suspended within up to twenty (20) Business Days counted from the date in that the Issuer and/or Guarantor become aware of the said judicial decision;

(xiv)

constitution of any Lien (defined as mortgage, pledge, chattel mortgage, fiduciary assignment, usufruct, trust, charge, encumbrance or burden, seizure, sequestration or attachment, judicial or extrajudicial, voluntary or involuntary, or other act that has a practical effect similar to any of the expressions above, in unit or aggregate value, equal to or higher than sixty million reais (BRL 60,000,000.00), or equivalent value in other currencies (“Lien”) on asset(s) and/or revenue, actual and/or future, of the Issuer and/or Guarantor, including, but not limited to, shares or quotas of its subsidiaries, except: (a) for Lien existing on the Issue Date; (b) for Liens created as a result of renewals or substitutions or renegotiations, total or partial, of debts existing on the Issue Date, provided that the Lien is constituted exclusively on the asset that already guaranteed the renewed, substituted or renegotiated debt on the Issue Date; or (c) for Liens existing on any asset of any company at the time that such company is incorporated by the Issuer and which was not created due to or in anticipation of that event; and

(xv)

default, as determined in a judicial decision, by the Issuer, Guarantor and/or its Controlled Companies, as well as by its employees and their respective officers and members of the board of directors, as applicable, of Law No. 12,846, of August 1, 2013, as amended, Decree No. 8,420, of March 18, 2015, the UK Bribery Act 2010, as amended, and the US Foreign Corrupt Practices Act of 1977, as amended, and other applicable rules that deal with acts of corruption and acts that are harmful to government (“Anticorruption Laws”).

4.12.3.1 For the purposes of the Clause 4.12.3 above, the following definitions shall apply: (i) “Consolidated Net Debt” means the total debt of the Guarantor (short and long term loans and financing, including debentures and promissory notes), subtracted from cash availabilities and accounts receivable, with a discount of one point five percent (1.5%), arising from sales with credit cards, food vouchers and multi-benefits; and (ii) “Consolidated EBITDA”, the gross profit, less operating expenses, excluding depreciation and amortization, plus other recurring operating income and excluding general administrative and sales expenses over the last four (4) quarters covered by the most recent consolidated financial statements available from the Issuer, prepared in accordance with accounting principles generally accepted in Brazil; and (iii) “Consolidated Gross Debt” the total debt of the Guarantor (short and long-term loans and financing, including debentures and promissory notes), and the indicators described above will be verified based on the financial statements and consolidated information of the Guarantor.

4. 12.4 The non-statement of the early maturity of the Debentures must be resolved by Debenture Holders who represent at least ninety percent (90%) of the outstanding Debentures.

4.12.4.1 Should the General Meeting of Debenture Holders referred to in Clause 4.12.4 above not be held due to lack of a quorum, at the first and second call, or there is not enough quorum to not declare the early maturity, the Trustee should also consider in advance all obligations arising from the Debentures and demand immediate payment of the respective Unit Par Value or balance of the Unit Par Value, as the case may be, plus Compensation and other charges due up to the date of actual payment.

4.12.5 In the event of early maturity of the Debentures by the Trustee, the Issuer undertakes to pay the respective Unit Par Value or balance of the Unit Par Value, as the case may be, plus the Compensation, calculated on a pro rata temporis basis as of the First Subscription and Payment Date, or as of the immediately preceding respective Compensation Payment Date, until the respective Maturity Date, as well as any other amounts eventually due by the Issuer under this Indenture.

4.12.5.1 The payment of the amounts referred to in the previous Clause, as well as any other amounts eventually due by the Issuer under this Indenture, shall be performed in up to one (1) Business Day as of the written communication to be sent by the Trustee to the Issuer, in accordance with Clause Nine of this Indenture, outside the scope of B3, under penalty of the Issuer in not doing so, being obliged yet, to the payment of the late payment charges set forth in Clause 4.18 below.

4.12.5.2 B3 shall be communicated immediately after the statement of the early maturity, in accordance with the other terms and conditions of the transactions’ manual.

4.13 Optional Early Redemption

4.13.1 The Debentures may be redeemed at any time from the Issue Date, at the Issuer’s discretion, through delivery of communication to all the Debenture Holders, with a copy to the Trustee, or publication of a communication to the Debenture Holders ten (10) Business Days in advance of the event date (“Optional Early Redemption”), informing: (i) the date on which the Optional Early Redemption shall be made; and (ii) any other information relevant to the Debenture Holders.

4.13.1.1 In the event of Optional Early Redemption, payment of the respective Unit Par Value or balance of the Unit Par Value will be made, as the case may be, plus the respective Compensation, calculated pro rata temporis from the respective First Subscription and Payment Date or the respective last Compensation Payment Date, as the case may be, up to the date of the Optional Early Redemption, as well as a fine and default interest, if any.

4.13.2 B3 shall be communicated by the Issuer, together with the Trustee, about the realization of the Early Redemption of the Debentures with at least three (3) Business Days in advance of the stipulated date for its realization.

4.13.3 The partial Optional Early Redemption of the Debentures shall not be allowed.

4.13.4 Payment of the Debentures subject to Optional Early Redemption will be made (i) through the procedures adopted by B3 for the Debentures held in custody electronically at B3, and/or (ii) by deposit in current accounts indicated by the holders of the Debentures, to be made by the Settling Bank and Bookkeeping Agent, in the case of Debentures not held in custody electronically at B3.

4.14 Mandatory Early Redemption

4.14.1 In the event of the OPA non-liquidation within up to one hundred and fifty (150) days from the First Subscription and Payment Date, the Issuer must mandatorily redeem in advance all Debentures within a maximum of up to one hundred and eighty (180) days from the First Subscription and Payment Date, without the payment of a premium to the Debentures Holders (“Mandatory Early Redemption”).

4.14.1.1 In the event of Mandatory Early Redemption, payment of its respective Unit Par Value or the respective balance of the Unit Par Value will be made, as the case may be, plus the respective Compensation, calculated pro rata temporis from the respective First Subscription and Payment Date or the respective last Compensation Payment Date, as the case may be, up to the date of the Mandatory Early Redemption, as well as a fine and default interest, if any.

4.14.2 B3 shall be communicated by the Issuer, together with the Trustee, about the realization of the Mandatory Early Redemption of the Debentures with at least three (3) Business Days in advance of the stipulated date for its realization.

4.14.3 No partial Mandatory Early Redemption of the Debentures will be allowed.

4.14.4 Payment of the Debentures subject to Mandatory Early Redemption will be made (i) through the procedures adopted by B3 for the Debentures held in custody electronically at B3, and/or (ii) by deposit in current accounts indicated by the holders of the Debentures, to be made by the Settling Bank and Bookkeeping Agent, in the case of Debentures not held in custody electronically at B3.

4.15 Extraordinary Optional Amortization

4.15.1 The Issuer may, at any time as of the Issue Date, pursuant to the terms and conditions established herein, at its sole discretion and regardless of the will of the Debentures Holders, perform optional amortization of the Unit Par Value or the balance of the Nominal Unit Value of the Debentures of any series, as the case may be, upon payment of an installment of the Unit Par Value or the balance of the Unit Par Value of the respective series, plus the respective Compensation, calculated pro rata temporis from the First Subscription and Payment Date or the respective last Compensation Payment Date, as the case may be, up to the date of effective early amortization, as well as a fine and default interest, if any.

4.15.1.1 The Optional Amortization shall be limited to ninety-eight percent (98%) of the Unit Par Value of the Debentures of the respective series and may only occur through a notice addressed directly to the Debenture Holders, with a copy to the Trustee or, also, through the publication of a notice addressed to Debenture Holders to be widely disclosed under Clause 4.23 of this Indenture (“Optional Amortization Notice”), with a minimum advance of ten (10) Business Days prior to the date scheduled for the actual Optional Amortization (“Optional Amortization Date”), and will be carried out in accordance with B3 procedures.

4.15.1.2 The Optional Amortization Notice must include: (i) the Optional Amortization date and procedure, in compliance with the applicable law, as well as the terms and conditions provided in this Indenture; (ii) mention to the installment of the Unit Par Value that will be amortized under this Clause; (iii) whether the Optional Amortization will cover one or more series; and (d) the other information considered relevant by the Issuer to be known by the Debenture Holders.

4.16 Optional Acquisition

4.16.1 The Issuer may acquire Debentures, in whole or in part, at any time, according to the provisions of article 55, paragraph 3 and items I and II, of the Brazilian Corporation Law, subject to the acceptance of the respective Debentures holder seller: (a) for an amount equal to or less than the Unit Par Value or balance of the Unit Par Value, as the case may be, if applicable, plus the respective Compensation and, if applicable, the Late Payment Charges due, the fact being included in the management report and the Issuer’s consolidated and audited financial statements (and/or quarterly financial information) (or subject to special review, as the case may be); or (b) for an amount higher than the Unit Par Value or balance of the Unit Par Value, as the case may be, if applicable, provided that it complies with the rules issued by CVM, plus the respective Compensation and, if applicable, the Late Payment Charges due. The Debentures acquired by the Issuer may, at the Issuer’s discretion, be canceled, hold in treasury or be placed on the market again. The Debentures acquired by the Issuer to be hold in treasury under this clause, if and when replaced on the market, will be entitled to the same Compensation applicable to the other Debentures.

4.17 Early Redemption Offering

4.17.1 The Issuer may, at its sole discretion, at any time as of the Issue Date, perform an early redemption offering of all Debentures (“Early Redemption Offering”), and the Early Redemption Offering proposed by the Issuer must be addressed to all Debenture Holders, with copy to the Trustee. The Early Redemption Offering will be addressed to all Debenture holders, without distinction, ensuring equal conditions to all Debenture holders to accept the early redemption of the Debentures they hold, in accordance with the terms and conditions set forth in the clauses below.

4.17.2 The Issuer will perform the Early Redemption Offering by publishing a notice addressed to the Debenture holders, to be widely disclosed pursuant to Clause 4.23 below, or through an individual notice to be sent by the Issuer to each of the Debenture Holders, with copy to the Trustee and B3 (“Early Redemption Offering Notice”), which shall describe the terms and conditions of the Early Redemption Offering, including: (i) effective date for the redemption object of the Early Redemption Offering, which will coincide with the payment of the Early Redemption Offering Amount (as defined below); (ii) the mention that the Early Redemption Offering Amount shall be calculated in accordance with Clause 4.17.3 below; (iii) the amount of the early redemption premium to be offered by the Issuer, if any, which cannot be negative; (iv) the form and deadline for the statement to the Issuer by the Debenture holders who choose to adhere to the Early Redemption Offering, subject to the provisions of Clause 4.17.4 below; and (v) the other information necessary for the decision by the Debenture holders and for the implementation of the Early Redemption Offering.

4.17.3 At the time of the Early Redemption Offering, Debenture holders will be entitled to the payment of the Unit Par Value or the balance of the Unit Par Value, as the case may be, and if applicable, plus: (i) the respective Compensation, calculated pro rata temporis, as of the respective First Subscription and Payment Date or the respective Compensation Payment Date immediately preceding, as the case may be, until the redemption date subject to the Early Redemption Offering, as well as, if applicable, (ii) redemption premium, which, if any, may not be negative and (iii) as appropriate, Late Payment Charges due and unpaid, up to the date of said redemption (“Early Redemption Offering Amount”).

4.17.4 After the submission or publication, as the case may be, of the Early Redemption Offering Notice, the Debenture Holders who, by adhering to the Early Redemption Offering will have a term of ten (10) Business Days to formally make their statement before the Issuer, with a copy to the Trustee.

4.17.5 If the early redemption of the Debentures is carried out as set out above, it must occur on a single date for all Debentures of the Debentures holders who adhere to the Early Redemption Offering, on the date provided for in the Notice of Early Redemption Offering, with the consequent cancellation of the redeemed Debentures.

4.17.6 The Issuer must, at least five (5) Business Days in advance of the date of the early redemption, communicate to the Bookkeeping Agent, the Settlement Bank, B3 and the Trustee the date of the early redemption.

4.17.7 The payment of the Debentures to be early redeemed, through the Early Redemption Offering, will be made by the Issuer (i) through the procedures adopted by B3 for the Debentures electronically in B3 or (ii) by depositing in current accounts indicated by the Debenture holders, to be performed by the Bookkeeping Agent, in the case of Debentures that are not electronically held in custody in accordance with item (i) above.

4.18. Mandatory Extraordinary Amortization

4.18.1 If (i) there is no need to use all the Issue’s funds to liquidate the OPA; (ii) total or partial disposal of equity interest held, directly or indirectly, by the Guarantor in Éxito and/or Cnova; (iii) receipt, by the Issuer, of dividends paid by Éxito (“Funds for Mandatory Amortization”), the Issuer and the Guarantor are jointly and severally obliged to send written notice to the Trustee, B3 and the Debenture Holders within ten (10) Business Days counted from the availability and/or receipt of the Funds for Mandatory Amortization, as the case may be, or through the publication of a communication addressed to the Debentures Holders, to be widely disclosed under Clause 4.23 below (“Mandatory Extraordinary Amortization Notice”) informing (a) that the Debentures will be extraordinarily amortized on a mandatory basis, within a term of up to thirty (30) days from the date of sending the Mandatory Extraordinary Amortization Notice and (b) the series and the volume to be amortized by series, at its sole discretion, limited to 98% on the balance of the Unit Par Value of the Debentures, and that the total of the Amortization Funds should be used to pay the mandatory extraordinary amortization of the Debentures (“Mandatory Extraordinary Amortization”).

4.18.2 The Mandatory Extraordinary Amortization must be carried out in accordance with the procedures established by B3.

4.18.3 The Amortization Notice must contain (i) the date and procedure of the Mandatory Extraordinary Amortization, in compliance with the applicable law, as well as the terms and conditions established in this Indenture; (ii) mention to the installment of the Unit Par Value or the balance of the Unit Par Value, as the case may be, which will be amortized under this Clause; (iii) the amount of the Mandatory Extraordinary Amortization, which should be equivalent to the installment of the Unit Par Value or the balance of the Unit Par Value of the Debentures indicated in item “b”, as the case may be, plus the respective Compensation, calculated pro rata temporis since the respective First Subscription and Payment Date or the respective immediately preceding Compensation Payment Date, as the case may be, up to the date of payment of the Mandatory Extraordinary Amortization; and (d) the other information considered relevant to the Debenture Holders.

4.19 Late Payment Charges

4.19.1 In case of lack of punctuality in the payment by the Issuer of any amount due to the holders of Debentures, the debits in arrears and not paid by the Issuer shall be since the default date until the date of the actual payment subject to, regardless of notice, or judicial or extrajudicial notification, besides the Compensation: (i) conventional, irreducible and non-compensatory fine of two percent (2%); and (ii) default interest at the rate of one percent (1%) per month, both levied on the amounts in arrears, except if the default occurs due to a third party operational problem and that problem is solved within one (1) Business Day after the default date.

4.20 Decline of Rights to Accruals

4.20.1 The non-attendance of the Debentures holder to receive the amount corresponding to any of the pecuniary obligations due by the Issuer on the date set forth in this Indenture or in a notice published by the Issuer, shall not entitle him to receive the Compensation, late payment charges or any increase relative to the delay in the receipt, however, being assured the right acquired until the date of the respective maturity.

4.21.1 Place of Payment

4.21.1 The payments to which the Debentures are entitled shall be made by the Issuer through B3, pursuant to the procedure of B3, in case the Debentures are held in custody electronically in B3, or by the Issuer through the Settling Bank, in case the Debentures are not held in custody electronically in B3.

4.22 Extension of Deadlines

4.22.1 The deadlines regarding the payment of any obligation provided in this Indenture shall be automatically extended until the first subsequent Business Day if the due date coincides with the day on which there is no bank working hours in the City of São Paulo, State of São Paulo, without any addition to the amounts to be paid, except in cases where the payment must be made through B3, in which case there will only be an extension when the date of payment coincides with a national holiday, Saturday or Sunday.

4.23 Advertising

4.23.1 All relevant acts and decisions resulting from the Issue which, in any way, may involve directly or indirectly the interests of the Debentures holders, pursuant to CVM Instruction 358, shall be mandatorily published as a “Notice to the Debenture Holders” in the Issuer’s Disclosure Newspapers, as well as in the Issuer’s page in the international computer network (www.assai.com.br). The Issuer may change the Issuer’s disclosure newspapers by other newspapers of general circulation by means of written communication to the Trustee and publication as a notice in the newspaper to be replaced.

4.24 Tax Immunity

4.24.1 Should any holder of Debentures enjoy any type of tax immunity or exemption, said holder of Debentures must submit to the Settling Bank, at least ten (10) Business Days before the date set for receipt of payments relating to the Debentures, documentation proving the said tax immunity or exemption, under penalty of having discounted from their payment the amounts due under the tax in force.

4.24.2 The Debentures holder who has submitted documentation proving his condition of immunity or tax immunity, under the item above, and who has this condition altered and/or revoked by regulation, or for failing to meet the conditions and requirements provided in the applicable law, or even, if this condition is questioned by a competent judicial, tax or regulatory authority, or that has this condition altered and/or revoked for any reason other than those mentioned in this Clause, he must communicate this fact, in detail and in writing, to the Settling Bank and the Bookkeeping Agent, with a copy to the Issuer, as well as provide any additional information regarding the topic requested by the Settling Bank and the Bookkeeping Agent or the Issuer.

4.25 Amendment to this Indenture

4.25.1 Any amendments to this Indenture shall be signed by the Issuer and by the Trustee and by the Guarantor after approval in the General Meeting of Debenture Holders, subject to the provisions set forth below, according to Clause Seven below, and later filed with JUCESP and Registries.

4.25.2 The Parties agree that this Indenture, as well as the other documents of the Issue, may be amended, without the need for any approval from the Debenture holders, whenever and only: (i) when such change arises exclusively from the need to meet the requirements for compliance with CVM, B3 or ANBIMA rules, regulations or requirements; (ii) when a relevant error is verified, be it a gross, typing or arithmetic error; (iii) amendments to the Indenture already expressly permitted under the terms thereof; or (iv) due to the updating of the Parties’ registration data, such as changes in the corporate name, address and telephone, among others, as long as there is no additional cost or expense to the Debenture Holders.

5. ADDITIONAL OBLIGATIONS OF ISSUER AND GUARANTOR

5.1 The Issuer and the Guarantor are additionally obliged to:

(i)

Provide the Trustee:

(a)

within at most, ninety (90) days after the end of each fiscal year, or within five (5) Business Days as of the date of its disclosure, whichever occurs first, a copy of the Issuer’s and Guarantor’s complete financial statements related to the respective fiscal followed by the management report and the independent auditors’ opinion, as applicable. The information referred to in this item shall be followed by: (1) report with the calculation chart demonstrating the determination of the Financial Indexes and Limits, prepared by the Guarantor, explaining the items necessary for their calculation, and the Trustee may request the Guarantor and/or the Guarantor’s independent auditors any necessary additional clarifications; and (2) a statement signed by the Issuer’s officer(s), in accordance with its bylaws, certifying: (2.1) that the provisions contained in the Indenture remain valid; and (2.2) the non-occurrence of any of the events of early maturity and non-existence of non-compliance with the of the Guarantor before the Debentures Holders and the Trustee;

(b)

within at most forty-five (45) days after the end of the first three (3) fiscal bimester or in five (5) Business Days after disclosure to the market, whichever occurs first, a copy of the Guarantor’s quarterly information the respective quarter, accompanied by the management report and the independent auditors’ report. The information referred to in this item must be accompanied by a report with the calculation chart demonstrating the determination of the Financial Indexes and Limits, prepared by the Guarantor, explaining the items necessary for their calculation, and the Trustee may request the Guarantor and/or the Guarantor’s independent auditors any necessary additional clarifications;

(c)

within ten (10) Business Days, any information that may be requested by the Trustee, in order for it to comply with its obligations under this Indenture and CVM Instruction No. 583, dated as of December 20, 2016 (“CVM Instruction 583”);

(d)

on the same date of publication, the information disclosed as provided for in Clause 4.23 above;

(e)

notices to the holders of Debentures, material facts, as well as minutes of general meetings and meetings of the Board of Directors of the Issuer and/or Guarantor, as applicable, which, in some way, involve the interest of the holders of Debentures, within two (2) Business Days as of the date they are (or should have been) published or, if not published, as of the date they are carried out;

(f)

as long as it is of its knowledge, information about any non-remedied non-compliance, of pecuniary nature or not, of any clauses, terms or conditions of this Indenture, within up to five (5) Business Days, as of the date of non-compliance, without prejudice to the provisions in item “v” below;

(g)

within up to five (5) Business Days after its receipt, copy of any mail or judicial notification received by the Issuer and/or Guarantor that may result in a Material Adverse Effect to the business, financial situation and the result of the Issuer’s transactions;

(h)

original copy with an attendance list and an electronic copy (pdf) with JUCERJA digital seal of the acts and meetings of the Debenture Holders that may be performed within the scope of the Issue; and

(i)

all other documents and information that the Issuer and/or Guarantor, in accordance with the terms and conditions set forth in this Indenture, has undertaken to send to the Trustee;

(ii)

submit, pursuant to the law, its accounts and balance sheets to evaluation by an independent auditing firm registered with CVM;

(iii)

maintain, in adequate operation, a body to efficiently serve the holders of Debentures or hire financial institutions authorized to provide this service;

(iv)

convene, pursuant to Clause Seven of this Indenture, a General Meeting of Debenture Holders to resolve on any of the matters that directly or indirectly relate to the Issue, in case the Trustee should do so, under this Indenture, but does not do so;

(v)

inform the Trustee within up to two (2) Business Days about the occurrence of any event set forth in Clause 4.12.1 of this Indenture;

(vi)

comply with all determinations issued by CVM, including by sending documents, also providing the information requested;

(vii)

not to carry out transactions out of its corporate purpose, complying with the statutory, legal and regulatory provisions in force;

(viii)

notify the Trustee in up to two (2) Business Days about any substantial change in the financial, economic, commercial, operational, regulatory or corporate conditions or in the Issuer’s and/or Guarantor’s business that (a) makes it impossible or significantly complicates the compliance by the Issuer and/or Guarantor, of its obligations resulting from this Indenture and the Debentures; or (b) causes the financial statements or information provided by the Guarantor to CVM no longer reflect the real economic and financial condition of the Guarantor;

(ix)

keep its property and assets duly insured, according to its current practices;

(x)

not to practice any act in disagreement with its Bylaws and with this Indenture or with any other document related to the Restricted Offering, especially those that may directly or indirectly compromise the punctual and full compliance with the obligations assumed before the Debentures Holders;

(xi)

except in cases where, in good faith, the Issuer and/or Guarantor is discussing the law, rule or regulation applicability at the administrative or judicial levels and this discussion does not cause the interruption or suspension of the Issuer’s and/or Guarantor activities or could result in a material adverse effect: (a) to the Issuer’s and/or Guarantor’s economic, financial or operational situation; and/or (b) in the timely fulfillment of the obligations assumed by the Issuer and/or Guarantor before the Debenture Holders, pursuant to this Indenture (“Material Adverse Effect”), comply with all laws, rules, regulations and orders applicable in any jurisdiction in the which does business or has assets;

(xii)

keep the Settling Bank, the Bookkeeping Agent, the Trustee, and the secondary market negotiation environment (CETIP21) hired, during the Debentures term of validity, at its own expense;

(xiii)

exclusively in the case of the Guarantor, keep Standard & Poor’s, Fitch Ratings or Moody’s (“Risk Rating Agency”) hired throughout the term of the Debentures to assign risk rating exclusively to the Guarantor, being obliged to: (a) keep it updated, under the terms required by the CVM, as well as make it available on its website; (b) provide all information and send all relevant documents requested by the Risk Rating Agency, observing that the amounts due to the Risk Rating Agency for the purposes provided for herein must be paid by the Issuer; and (c) if the Risk Rating Agency ceases its activities in Brazil, has its registration or recognition with the CVM to act as a risk rating agency canceled, or, for any reason, is prevented from issuing the Guarantor’s risk rating, hire another risk rating agency without the need for approval by the Debenture Holders, simply by notifying the Trustee, provided that such risk rating agency is Standard & Poor’s, Fitch Ratings or Moody’s or, in the proven inability to hire one of these companies for facts that are outside the control of the Guarantor, another risk rating agency, provided that it is approved by the General Meeting of Debenture Holders convened for this purpose;

(xiv)

make payment of all expenses evidenced by the Trustee that may be necessary to protect the rights and interests of holders of Debentures or to realize their credits, including attorney’s fees and other expenses and costs incurred by virtue of the collection of any amount due to holders of Debentures under this Indenture;

(xv)

make the collection of any taxes or contributions that may be or may come to be levied on the Issue and that are the responsibility of the Issuer;

(xvi)

keep valid and regular, during the term of validity of the Debentures, the representations and warranties submitted in this Indenture, as applicable;

(xvii)

not disclose to the public information regarding the Issuer and/or Guarantor, the Restricted Offering or the Debentures in disagreement with the provisions of the applicable regulations, including, but not limited to, the provisions of CVM Instruction 476 and article 48, item II of CVM Instruction No. 400, dated as of December 29, 2003, as amended;

(xviii)

refrain from trading securities issued by it until the Lead Arranger sends the closing notice of the Restricted Offering to the CVM, subject to the provisions in article 12 of CVM Instruction 476;

(xix)

abstain until the Lead Arranger sends the closing notice of the Restricted Offering to the CVM, from (a) disclosing information relative to the Restricted Offering, except for what is necessary for the achievement of its objectives, warning the recipients about the reserved nature of the information transmitted; and (b) using the information relative to the Restricted Offering, except for purposes strictly related to the preparation of the Restricted Offering;

(xx)

maintain the Debentures deposited for trading in the secondary market during the term of validity of the Debentures, bearing the costs of said deposit;

(xxi)

perform and provide evidence to the Trustee of all necessary registrations, entries and records, as provided for in this Indenture in the competent bodies, including, but not limited to, JUCERJA and the Registries of Deeds;

(xxii)

notify the holders of Debentures and the Trustee within up to two (2) Business Days in case any of the statements provided by the Issuer and/or the Guarantor in this Indenture become totally or partially untrue, incomplete or incorrect;

(xxiii)

inform and send the organization chart, all financial data and corporate acts necessary to prepare the annual report, according to CVM Instruction No. 583, which may be requested by the Trustee, which shall be duly forwarded by the Issuer within ten (10) Business Days from the request of the Trustee. The said organization chart of the Issuer’s corporate group shall also include controllers, controlled companies, common control, affiliates, and a member of the controlling block, at the end of each fiscal year;

(xxiv)

keep valid and regular the licenses, concessions, authorizations or approvals necessary for its regular operation, except for those that are being questioned in good faith and/or are in legal process of renewal and that does not cause a Material Adverse Effect;

(xxv)

comply with the provisions of the legislation in force relevant to the National Environmental Policy, the Resolutions of CONAMA – National Council of the Environment and other supplementary environmental laws and regulations, adopting the preventive measures or remedies intended to avoid or correct eventual environmental damages resulting from the activities described in its corporate purpose, being solely and exclusively responsible for the allocation of the financial resources obtained with the Issue;

(xxvi)

to comply with the legislation in force, especially the labor, social security and environmental legislation, always taking care so that (a) the Issuer and/or the Guarantor does not use directly or indirectly work in conditions similar to slavery or child labor; (b) the Issuer’s and/or Guarantor’s workers are duly registered under the legislation in force; (c) the Issuer and/or Guarantor fulfills the obligations resulting from the respective employment contracts and the labor and social security legislation in force; (d) the Issuer and/or Guarantor complies with the legislation applicable to the protection of the environment, as well as the public health and safety; (e) the Issuer and/or Guarantor holds all permits, licenses, authorizations and approvals necessary for the exercise of its activities, in compliance with the applicable environmental legislation; and (f) the Issuer and/or Guarantor has all necessary registrations, in compliance with the applicable civil and environmental legislation;

(xxvii)

if becomes aware of any act or fact that violates the Anti-Corruption Laws, it will immediately notify the Trustee;

(xxviii)

make any payments due to the holders of Debentures exclusively by the means set forth in this Indenture;

(xxix)

comply with the obligations related to the allocation of funds arising from the Issue and to the evidence of said allocation, in accordance with Clause 3.6 above;

(xxx)

within five (5) Business Days counted from the OPA’s financial settlement, send to the Trustee a legal opinion signed by the OPA’s legal advisors in Colombia confirming the OPA’s adherence to all applicable legal requirements;

(xxxi)

ensure that the Surety is duly formalized, pursuant to Clause 2.1.3 above; and

(xxxii)

in case of contracting any type of instrument of debt, loan, financing, issuing of debentures or promissory notes or contracting any other fundraising transaction in the financial or capital markets that establishes conditions related to personal guarantees and/or security interest, financial covenants, cure terms and thresholds, more beneficial to the respective creditors than the conditions provided for in this Indenture (“New Debt”), the Issuer and the Guarantor shall notify this fact to the Trustee within five (5) Business Days from the respective execution. The Trustee, the Issuer and the Guarantor shall enter into an amendment to this Indenture that amends it in order to equate the conditions set forth in this instrument to those of the New Debt (“Equivalence Amendment”) within fifteen (15) Business Days from the date of receipt of the notification referred to herein, without the need for approval by the General Meeting of Debenture Holders. The Equivalence Amendment shall be registered with JUCERJA and the Notary Publics in the form of Clause 2.1.3 above.

5.2 The Issuer and/or Guarantor, herein, undertakes, irrevocably and irreversibly, to take care so that the transactions that it may practice in the B3 scope are always supported by good market practices, with full and perfect compliance with the applicable standards to the matter, exempting the Trustee from any and all liability for claims, losses and damages, loss of profits and/or emerging profits to which the non-compliance with the said standards may give cause, provided that they have been proven not to have been generated by the Trustee’s actions.

5.3 Without prejudice to other obligations expressly provided for in the regulations in force and in this Indenture, the Issuer and the Guarantor undertakes to, pursuant to CVM Instruction 476, as applicable:

(i)

prepare its year-end financial statements and, if applicable, consolidated statements, in accordance with the Brazilian Corporation Law and the rules issued by CVM;

(ii)

submit its financial statements for audit by an auditor registered with CVM;

(iii)

disclose, until the day prior to the start of the Debentures negotiations in the secondary market, the financial statements, accompanied by explanatory notes and the report of the independent auditors, relating to the three (3) last closed fiscal years;

(iv)

disclose the following financial statements, accompanied by notes and the independent auditors’ report, within three (3) months from the end of the fiscal year;

(v)

comply with the provisions of CVM Instruction No. 358, of January 03, 2002, as amended (“CVM Instruction 358”), regarding the duty of confidentiality and trade prohibitions;

(vi)

disclose on its website on the world wide web the occurrence of any “Relevant Fact”, as defined in article 2^thof CVM Instruction 358, and report the occurrence of such Relevant Fact immediately to the Arrangers and the Trustee; and

(vii)

provide all information requested by CVM and B3; and

(viii)

disclose on its website on the world wide web the annual report and other communications sent by the trustee on the same date of its receipt, also pursuant to the provisions of item “iv” above.

6. TRUSTEE

6.1 Appointment

6.1.1 The Issuer appoints PENTÁGONO S.A. DISTRIBUIDORA DE TITULOS E VALORES MOBILIARIOS, identified in the preamble of this Indenture, as trustee, representing the Debenture Holders, which, hereby and pursuant to the law, accept the appointment to, under the law and this Indenture, represent before the Issuer the agreement between the Debenture holders.

6.2 Representations

6.2.1 The Trustee hereby represents, under penalty of law:

(i)

that it has no legal impediment, pursuant to article 66, paragraph 3, of the Brazilian Corporation Law, and article 6^th of CVM Instruction 583, to exercise the function granted;

(ii)

that accepts the function granted, fully assuming the duties and attributions provided in the applicable law and in this Indenture;

(iii)

that it is fully aware and accepts this Indenture and all its terms and conditions;

(iv)

that it has no connection with the Issuer that prevents it from exercising its functions;

(v)

that it is aware of the applicable regulations issued by the Central Bank of Brazil and CVM, including Central Bank of Brazil Circular No. 1,832, of October 31, 1990;

(vi)

that it is duly authorized to enter into this Indenture and to comply with its obligations set forth herein, complying with all the legal and corporate requirements necessary for this purpose;

(vii)

that it is duly qualified to act as a trustee, under the applicable regulations in force;

(viii)

that it is a financial institution, and is duly organized, incorporated and existing in accordance with Brazilian laws;

(ix)

that this Indenture constitutes a legal, valid, binding and effective obligation of the Trustee, enforceable in accordance with its terms and conditions;

(x)

that the execution of this Indenture and the fulfillment of the obligations provided herein do not breach any obligation previously assumed by the Trustee;

(xi)

that acts as a trustee in other securities issued by the Issuer or of an affiliate, controlled, controlling company or member of the same group as the Issuer, as described below;

Issue	4^thissue of promissory notes of Companhia Brasileira de Distribuição
Total Issue Value	BRL 800,000,000.00
Amount	800
Type	unsecured
Guaranties	N/A
Maturity Date	1/9/2022
Compensation	105.75% of DI Rate
Classification	financial compliance

Issue	1^stissue of promissory notes of Sendas Distribuidora S.A.
Total Issue Value	BRL 800,000,000.00
Amount	16
Type	unsecured with additional personal guarantee
Guaranties	suretyship
Maturity Date	07/03/2020 (1^st serie); 07/05/2021 (2^nd serie); 07/04/2022 (3^th serie); 07/04/2023 (4^th série); 07/04/2024 (5^th serie); 07/04/2025 (6^th serie)
Compensation	100% of DJ Rate + 0.72% p.a.
Classification	financial compliance

Issue	17^thissue of debentures by Companhia Brasileira de Distribuição
Total Issue Value	BRL 1,200,000,000.00
Amount	700,000 (1^st serie); 500,000 (2^nd serie)
Type	unsecured
Guaranties	N/A
Maturity Date	09/10/2021 (1^st serie); 09/10/2022 (2^nd serie)
Compensation	106% of DI Rate (1^st serie): 107.40% of DI Rate (2^nd serie):
Classification	financial compliance

(xii)

that ensures and will ensure, under paragraph 1 of article 6 of CVM Instruction 583, equal treatment to all Debenture holders, in compliance with guarantees, obligations and specific rights attributed to the respective Debenture holders of each issue or series; and

(xiii)

that verified the truthfulness of the information related to the Surety and the consistency of the other information in this Indenture.

6.2.2 The Trustee will perform its duties from the date of execution of this Indenture or any amendment regarding its replacement, and shall remain in the exercise of its functions until the effective maturity of the Debentures or, if the Issuer’s default obligations remain under this Indenture after the respective Maturity Dates, until all the Issuer’s obligations under this Indenture are fulfilled, or even until its effective replacement, pursuant to Clause 6.3 below.

6.2.3 The Trustee will not make any judgment on the guidance regarding any fact of the Issue for which the Debenture Holders are responsible, being responsible only to act in accordance with the instructions given to it by the Debenture holders. In this regard, the Trustee has no responsibility for the result or the legal effects arising from the strict compliance with the Debenture Holders’ guidelines, as defined under this Indenture and reproduced before the Issuer, regardless of any losses caused to the Debenture Holders and/or the Issuer. The Trustee’s performance is limited to the scope of CVM Instruction 583 and the applicable articles of the Brazilian Corporation Law, and under any form or pretext, it is exempt from any additional liability that has not arisen from the applicable law.

6.2.4 Without prejudice to the Trustee’s duty of care, the Trustee will assume that the original documents or documents certified copies sent by the Issuer or by third parties at its request have not been subject to fraud or adulteration. Nor will it be liable, under any circumstances, for the preparation of the Issuer’s corporate documents, the preparation of which will remain under the Issuer’s legal and regulatory obligation, under the applicable law.

6.2.5 The Trustee’s acts or statements, which create liability for the Debenture Holders and/or exonerate third parties from obligations towards Debenture Holders, as well as those regarding the due fulfillment of the obligations assumed herein, will only be valid when previously so resolved in the General Meeting of Debenture Holders.

6.3 Replacement

6.3.1 In the event of impediments, resignation, intervention or extrajudicial liquidation, bankruptcy, or any other case of vacancy of the Trustee, the General Meeting of Debenture Holders will be held within the maximum term of thirty (30) days from its determination, to choose the new trustee, and this Meeting may be called by the Trustee to be replaced, or by Debenture Holders who represent at least ten percent (10%) of the Outstanding Debentures. In exceptional cases, CVM may call the meeting to choose the new trustee or appoint a temporary replacement. If the call does not occur within fifteen (15) days before the end of the aforementioned term, the Issuer shall make the call, observing the term of fifteen (15) days for the first call and eight (8) days for the second call, and CVM may appoint a temporary replacement until the choice the new trustee has been completed.

6.3.2 If the Trustee may not continue to perform its functions due to circumstances supervening this Indenture, the Trustee shall immediately communicate the fact to the Debenture Holders and the Issuer, requesting its replacement.

6.3.3 After the expiration for the distribution of the Debentures, the Debenture Holders are entitled to proceed with the Trustee replacement and the appointment of its replacement, at the General Meeting of Debenture Holders specially called for this purpose. The permanent replacement.

6.3.4 The Trustee replacement shall be communicated to CVM, within up to seven (7) Business Days after the registration of the amendment to the Indenture that formalizes the respective replacement.

6.3.5 If the Trustee effective replacement occurs, that replacement will receive the same remuneration received by the Trustee in all its terms and conditions, and the first annual installment due to the replacement will be calculated pro rata temporis, from the start date of its function as Trustee. This remuneration may be altered by mutual agreement between the Issuer and the replacement trustee, as long as previously approved by the General Meeting of Debenture Holders.

6.3.6 The rules and precepts on the subject issued by CVM apply to the cases of Trustee replacement.

6.4 Obligations

6.4.1 In addition to others provided by law, in the CVM regulations and in this Indenture, the Trustee’s obligations are:

(i)

exercise its activities in good faith, transparency and loyalty to the Debentures holders;

(ii)

protect the Debenture Holders’ rights and interests, employing the same care and diligence in the exercise of its functions as every active and honest man employs in the management of his own assets;

(iii)

resign from the function, in the event of conflict of interest or any other type of disability, and immediately call the meeting provided for in item “xi” below to resolve on its replacement;

(iv)

keep all documentation regarding the exercise of its functions;

(v)

verify the truthfulness of the information regarding the Surety and consistency of the other information in this Indenture, ensuring that omissions, failures or defects of which it is aware are remedied;

(vi)

arrange with the Issuer so that the Indenture and its amendments are registered with JUCERJA and Notary Publics, and in the event of the Issuer’s omission, adopt the measures eventually provided for by law;

(vii)

monitor the information provided periodically by the Issuer and in the annual report referred to in article 15 of CVM Instruction 583, alert Debenture Holders of inconsistencies or omissions of which it is aware;

(viii)

report on the sufficiency of the information provided in the proposals to modify the Debentures conditions;

(ix)

request, when deemed necessary for the fulfillment of its functions, updated certificates from civil distributors, Tax Courts, Protest Registries, Labor Courts, Office of the Counsel for the Federal Treasury, from the location where the Issuer and/or the Guarantor is headquartered;

(x)

request, when deemed necessary, the Issuer and/or Guarantor external audit;

(xi)

call, when necessary, the General Meeting of Debenture Holders, pursuant to Clause 7.2 below;

(xii)

attend the General Meeting of Debenture Holders to provide the information requested;

(xiii)

prepare an annual report for Debenture Holders, pursuant to article 68, paragraph1, , letter b, of the Brazilian Corporation Law, which shall contain the information provided in Annex 15 of CVM Instruction 583;

(xiv)

make the report referred to in item “xiii” above available to Debenture Holders within a maximum term of four (4) months from the end of the Issuer’s fiscal year, on its website on the world wide web;

(xv)

keep the list of Debenture Holders and their addresses updated, and the Issuer and Debenture Holders (the latter as of the respective date of subscription, payment or acquisition of the Debentures) hereby authorize the Settling Bank, the Bookkeeping Agent and B3 to comply with the Trustee requests necessary for the fulfillment of this item;

(xvi)

supervise compliance with the provisions of this Indenture, including the positive and negative covenants; and

(xvii)

communicate to the Debenture Holders any default by the Issuer regarding the financial obligations assumed in the Indenture, including the obligations regarding contractual clauses protecting the Debenture Holders’ interest and which establish conditions that shall be fulfilled by the Issuer, indicating the consequences for the Debenture Holders and the measures that intends to take on the matter, pursuant to the term provided in article 16, item II, of CVM Instruction 583.

6.4.2 In the event of default of any conditions of the Issue, the Trustee shall use any and all measures provided by law or in the Indenture to protect rights or defend the Debenture holders’ interests.

6.4.3 The Trustee must base itself on the information made available by the Issuer to monitor the Financial Indexes and Limits.

6.5 Trustee’s Compensation

6.5.1 The Trustee or the institution that will replace it, shall receive from the Issuer, under Clause 6.3 above, fees for the performance of its duties and attributions, pursuant to the applicable law and this Indenture, corresponding to:

(i)

annual compensation of thirteen thousand and four hundred reais (BRL 13,400.00), the first installment due in five (5) Business Days after the execution of this Indenture and the remaining installments on the same day of the subsequent years until the maturity of the Issue. The first installment will be due even if the Issue is not paid in, as structuring and implementation. The compensation will be due even after the Debentures final maturity, if the Trustee is still performing activities inherent to its function regarding the Issue, and this remuneration will be calculated pro rata die;

(ii)

the payment of the installments described above shall be made to the Trustee plus the amounts regarding taxes and contributions levied on billing: (a) ISS (Municipal Services Tax); (b) PIS (Social Integration Program); (c) COFINS (Contribution to Social Security); (d) CSLL (Social Contribution on Net Profits); and (e) IRRF (Withholding Income Tax); and (f) any other taxes that may be levied on the Trustee remuneration, at the tax rates in force on the dates of each payment;

(iii)

the installments referred to above will be updated annually, in accordance with the IGP-M accumulated positive variation, or in the absence or impossibility of application, by the official index that will replace it, from the date of execution of this instrument, until the payment dates for each subsequent installment, calculated pro rata die;

(iv)

in case of late payment of any amount due to the Trustee, the arrears will be subject to interest for late payment of one percent (1%) per month and a non-compensatory fine of two percent (2%) on the amount due, and the amount in arrears subject to adjustment for inflation by IGP-M, incurred from the date of default until the date of actual payment will be calculated pro rata die, except if the default occurs due to a third party operational problem and that such problem be resolved within one (1) Business Day after the default date; and

(v)

any additional obligations attributed to the Trustee or changes in the transaction ordinary characteristics will allow the Trustee to review the fees proposed herein.

6.6 Expenses

6.6.1 The compensation does not include the expenses with travel, meals, accommodation, transportation, notices, certificate withdrawal, notary expenses, photocopying, scanning, sending documents and publication necessary to act as the Trustee, during or after the service implementation, to be covered by the Issuer, whenever possible, after prior approval. Also not included, and will be borne by the Issuer, the expenses with experts, such as audit of the guarantees granted to the Debentures and legal advice to the Trustee. Any expenses, deposits, court costs, loss of suit, as well as indemnities, resulting from actions filed against the Trustee resulting from the exercise of its function or its performance in defense of the transaction structure, will be borne by the Issuer. Such expenses include attorneys’ fees for the Trustee defense and shall also be advanced by the Issuer.

6.6.2 All expenses incurred by the Trustee to protect the he Debenture Holders interests shall be, whenever possible, previously approved and advanced by the Debenture Holders, and later, reimbursed by the Issuer. Such expenses include expenses with attorneys’ fees, including those of third parties, deposits, indemnities, costs and court fees for actions filed by the Trustee, as the Debenture Holders’ representative. Any expenses, deposits and court costs arising from the loss of suit will also be borne by the Debenture Holders, as well as the Trustee’s remuneration and reimbursable expenses, in the event that the Issuer remains in default regarding its payment for a period greater than thirty (30) calendar days.

6.6.3 The Issuer will reimburse the Trustee for all reasonable and regular expenses that it has proven to have incurred to protect the Debenture Holders’ rights and interests or to realize its credits, within up to thirty (30) days from the delivery of a copy of the supporting documents in this regard, provided that the expenses, whenever possible, have been previously approved by the Issuer, which will be considered approved if the Issuer does not give any statements within five (5) Business Days from the date of receipt of the respective request by the Trustee.

7. GENERAL MEETING OF DEBENTURE HOLDERS

7.1 Debenture holders may, at any time, hold a general meeting, in accordance with the provisions of article 71 of the Brazilian Corporation Law, to resolve on matters (i) of interest to the debenture holders jointly; or (ii) of specific interest to First Series’ Debentures holders, to Second Series’ Debentures holders, to Third Series’ Debentures holders or to Forth Series’ Debentures holders in which case the General Meeting of Debenture Holders will be held separately, counting the respective quorums, hold of meeting and resolution separately, in order to consider only the Debentures holders of the respective interested series, as applicable.

7.1.1 For the purposes of this Indenture, the matter to be resolved will be considered specific for a given series whenever it refers to changes: (i) in the Compensation, applicable to a given series, being determined that the resolution on the Replacement Rate mentioned in Clause 4.7.3 will not be considered a specific matter of a given series; (ii) any payment dates of amounts provided in this Indenture regarding the respective series; and/or (iii) the term of the Debentures of the respective series.

7.2 The General Meeting of Debenture Holders may be called by the Trustee, by the Issuer, by Debenture Holders representing at least ten percent (10%) of the outstanding Debentures or of the outstanding Debentures of the respective Serie, as applicable, or by CVM.

7.2.1 The call for the General Meeting of Debenture Holders will take place through a notice published, at least three (3) times, in the Issuer’s Newspapers, in compliance with other rules regarding the notice of general meetings in the Brazilian Corporation Law, applicable regulation and its Indenture.

7.3 The provisions of the Brazilian Corporation Law regarding shareholders’ general meetings will apply to the General Meeting of Debenture Holders.

7.3.1 The chairman of the General Meeting of Debenture Holders will be the Debentures Holder elected by the other Debentures Holders in attendance or whoever is appointed by CVM.

7.4 The General Meeting of Debenture Holders will be called at least fifteen (15) days in advance, in the case of the first call.

7.4.1 The General Meeting of Debenture Holders on second call may only be held at least eight (8) days after the disclosure of the second call.

7.5 Pursuant to article 71, paragraph 3, of the Brazilian Corporation Law, the General Meeting of Debenture Holders will be held, on the first call, with the attendance of Debenture Holders representing at least half of the outstanding Debentures or outstanding Debentures of the respective Serie, as applicable, and, on the second call, with any number.

7.6 Each outstanding Debenture will grant its holder the right to one vote at the General Meeting of Debenture Holders, whose resolutions, with the exception provided in this Indenture, will be taken by Debenture Holders who represent the majority of the outstanding Debentures and outstanding Debentures of the respective Serie, as applicable, and the appointment of proxies, Debenture Holders or not, is permitted.

7.6.1 Without prejudice to the provisions of Clause 7.6 above, any change (i) in the term of the Debentures; (ii) on the Compensation Payment Dates; (iii) in the Compensation calculation parameter; (iv) in the quorum for resolution of the General Meeting of Debenture Holders; or (v) in Clause 4.12 (Early Maturity) above, including in the case of temporary waiver or pardon, it shall be approved by Debenture Holders representing at least ninety percent (90%) of the outstanding Debentures or the outstanding Debentures of the respective Serie.

7.6.2 The failure to declare the Debentures’ early maturity, pursuant to Clause 4.12.4 of this Indenture, will depend on the approval of Debenture Holders representing at least ninety percent (90%) of the outstanding Debentures.

7.7 For the purpose of the quorum to hold the meeting and resolution referred to in this Clause Seven, Debentures issued by the Issuer that have not yet been redeemed and/or settled will be considered as outstanding Debentures, and the Debentures held in treasury by the Issuer shall be excluded, or that belong to its controlling company or to any of its controlled and affiliated companies, as well as respective officers or directors and their relatives within the second degree.

7.8 The Issuer’s legal representatives will be allowed to attend the General Meetings of Debenture Holders.

7.9 The Trustee shall attend the General Meetings of Debenture Holders to provide Debenture Holders with the information requested.

7.10 The resolutions taken by the Debenture Holders at General Meetings of Debenture Holders within the scope of their legal authority, subject to the quorums of this Indenture, will bind the Issuer and oblige all holders of Debentures, regardless of attending the General Meeting of Debenture Holders or the vote cast at the respective General Meeting of Debenture Holders.

8. ISSUER AND GUARANTOR STATEMENTS

8.1 The Issuer and the Guarantor hereby represent and warrant, as applicable, on this date:

(i)

that are corporations duly organized, incorporated and existing in accordance with Brazilian laws;

(ii)

that they are duly authorized and obtained all licenses and authorizations, including corporate ones, necessary for the execution of this Indenture, for the issue of Debentures and for the fulfillment of its obligations set forth herein, having met all the legal and statutory requirements necessary for this purpose;

(iii)

that the legal representatives who subscribe this Indenture have statutory and/or delegated powers to assume, on their behalf, the obligations established herein and, as attorneys-in-fact, had the powers legitimately granted, and the respective powers of attorney are in full force;

(iv)

that the execution of this Indenture and the fulfillment of its obligations under this Indenture, as well as the Debentures issue and public distribution do not infringe or contravene, (a) any agreement or document in which the Issuer and/or Guarantor is a party or by which any of its assets and properties are bound, nor will it result in (1) early maturity of any obligation set forth in any of these agreements or instruments; (2) creation of any liens or encumbrances on any of the Issuer’s and/or Guarantor’s assets; or (3) termination of any such agreements or instruments; (b) any law, decree or regulation to which the Issuer and/or Guarantor or any of its assets and properties are subject; or (c) any administrative, judicial or arbitration judgment, decision or award that affects the Issuer and/or Guarantor or any of its assets and properties;

(v)

that have all the relevant authorizations and licenses required by federal, state and municipal authorities for the regular exercise of their activities, all of which are valid, also considering that authorizations and licenses not obtained or renewed by the Issuer and/or Guarantor may not result in any Material Adverse Effect;

(vi)

that are complying with all laws, regulations, administrative rules and determinations of government agencies, agencies or courts, applicable to the conduct of its business and that (a) are relevant to the performance of the Issuer’s and/or Guarantor’s activities or (b) whose non-compliance by the Issuer may not result in a Material Adverse Effect, including the provisions in the legislation in force pertinent to the National Environment Policy, in the Resolutions of the National Environment Council - CONAMA and in other complementary environmental laws and regulations that (i) are equally relevant to the performance of the Issuer’s and/or Guarantor’s activities or (2) whose non-compliance by the Issuer and/or Guarantor may result in a Material Adverse Effect, adopting preventive measures and actions or remedies to avoid or correct any environmental damage arising from the activities described in their respective corporate purpose, and environmental laws, regulations, legislation and regulations, administrative rules and determinations of government agencies, agencies or courts, applicable to the conduct of the Issuer’s and/or Guarantor’s business, not fully complied with by the Issuer and/or Guarantor may not result in a Material Adverse Effect. The Issuer and the Guarantor are also obliged to proceed with all due diligence required to carry out its activities, preserving the environment and complying with the determinations of municipal, state and federal bodies that, alternatively, legislate or regulate the environmental standards in force;

(vii)

that the Issuer’s and/or Guarantor’s financial statements for the fiscal year ended on December 31, 2018 correctly represent the Issuer’s and/or Guarantor’s equity and financial situation on those dates and for those periods, and were duly prepared in accordance with the generally accepted accounting principles in Brazil;

(viii)

that except for those mentioned in the Guarantor’s Reference Form - RF, in its financial statements and quarterly information made available to CVM and the Guarantor’s market and in the Issuer’s financial statements, the Issuer and the Guarantor, as applicable, are not aware of the existence of any action, administrative or arbitration proceeding, investigation or other type of government investigation that may cause a Material Adverse Effect;

(ix)

that the Issuer’s and Guarantor’s consolidated and audited financial statements for the fiscal years ended on December 31, 2018, 2017 and 2016 are true, complete, consistent and correct in all respects at the date they were prepared and/or republished, and reflect the Issuer’s financial and equity position, results, transactions and cash flows in the period, and until the date of execution of this Indenture (a) there was no Material Adverse Effect and on the financial situation and operating results in question, (b) there was no material transaction involving the Issuer and/or Guarantor outside the normal course of their business, with the exception of the conclusion of the alienation of the controlling interest held by the Guarantor in the capital of Via Varejo S.A., enrolled with the CNPJ under No. 33.041.260/0652-90, (c) there was no substantial increase in the Issuer’s and/or Guarantor’s indebtedness;

(x)

that the information and representations in this Indenture regarding the Issuer, the Guarantor and the Restricted Offering, as the case may be, are true, consistent, correct and sufficient;

(xi)

that they have not omitted or will omit any fact, of any nature, which is known to them and which may result in a Material Adverse Effect change in their economic, financial or legal situation to the detriment of Professional Investors who may acquire Debentures;

(xii)

that are in compliance with the obligations in this Deed of Issue and are not, on this date, incurring any of the Early Maturity Events;

(xiii)

that there is no connection between the Issuer and the Trustee that prevents the Trustee from fully exercise its functions;

(xiv)

that they will comply with all obligations undertaken under this Indenture, including, but not limited to, the obligation to allocate the proceeds obtained from the Restricted Offering exclusively for the purposes described in Clause 3.6 of this Indenture;

(xv)

the Issuer and the Guarantor state, by themselves and their controllers and employees, hereby, to be aware of the terms of the Anti-Corruption Laws, and undertake to refrain from practice any activity that constitutes a violation of the provisions contained in Anti-Corruption Laws. The Issuer further states (a) that, within the best knowledge, it adopts the best practices so that avoids that its eventual subcontractors violate the provisions contained in the Laws and (b) that maintain internal policies and procedures that ensure full compliance with such rules and grants full knowledge of such rules to all professionals who come to work with the Issuer;

(xvi)

that on this date, there is no violation or indication of violation of any legal or regulatory provision, national or foreign, regarding corruption or harmful acts against the government, including, without limitation, the Anti-Corruption Laws, by the Issuer, the Guarantor or their Affiliates;

(xvii)

that this Indenture constitutes a legal, valid, effective and binding obligation of the Issuer and the Guarantor, enforceable according to its terms and conditions, as an extrajudicially enforceable instrument, pursuant to article 784 of the Code of Civil Procedure; and

(xviii)

that they are fully aware and agrees with the disclosure and calculation of DI Rate, disclosed by B3, and that the Compensation calculation was agreed by the Issuer’s and Guarantor’s free will, in compliance with the principle of good faith.

9. COMMUNICATIONS

9.1 All documents and communications, which shall always be made in writing, as well as physical means containing documents or communications to be sent by either Party under this Indenture, shall be sent to the following addresses:

(i) if to the Issuer:

SENDAS DISTRIBUIDORA S.A.

Avenida Ayrton Senna, No. 6,000, Lot 2, Pal 48959, Annex A, Jacarepaguá

Zip Code 22775-005 - Rio de Janeiro, RJ Attn.: Frederico Augusto Alonso

Telephone: (11) 3886-3844

Email: frederico.alonso@gpabr.com/captacao.gpa@gpabr.com

(ii) if to the Trustee:

PENTÁGONO S.A. DISTRIBUIDORA DE TÍTULOS E VALORES MOBILIÁRIOS

Avenida das Américas, No. 4.200, Building 08, Side B, Suites 302, 303 and 304, Barra da Tijuca

Zip Code 22640-102 - Rio de Janeiro, RJ

Attn.: Marco Aurélio Ferreira / Marcelle Santoro / Karolina Vangelotti

Telephone: 21 3385-4565

Email: operacional@pentagonotrustee.com.br

(iii) if to the Guarantor:

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO

Avenida Brigadeiro Luiz Antonio, No. 3.142

01402-901 - São Paulo - SP

Attn.: Mr. Frederico Augusto Alonso

Telephone: (11) 3886-3844

Email: frederico.alonso@gpabr.com /captacao.gpa@gpabr.com

(iv) if to the Settling Bank or the Bookkeeping Agent:

BANCO BRADESCO S.A.

Núcleo Administrativo “Cidade de Deus”, s/n, Building Yellow, 1^st floor, Vila Yara 06029-900 -Osasco - SP

Attn.: Marcelo Ronaldo Poli - Stock and Custody Department

Telephone: (11) 3684-7654 - Extension Line: 47654 Email: marcelo.poli@bradesco.com.br

(iv) if to B3:

B3 S.A. - BRASIL, BOLSA, BALCÃO - SEGMENTO CETIP UTVM

Praça Antônio Prado, 48, 4^th floor

01010-901 - São Paulo - SP

Attn.: Superintendence of Corporate Bond and Fund Offers

Telephone: (11) 2565-5061

Email: valores.mobiliarios@b3.com.br

9.2 Communications regarding this Indenture will be considered delivered when received under protocol, with “return receipt” sent by mail or email system, or by telegram at the addresses above. The change of any of the addresses above shall be communicate to the other parties by the one whose address has been changed.

10. MISCELLANEOUS

10.1 There is no presumption of waiver of any of the rights arising from this Indenture. Accordingly, any delay, omission or discretion in the exercise of any right, power or remedy due to the Trustee and/or the Debenture Holders due to any default of the Issuer’s obligations, will prejudice such rights, powers or remedies, or be interpreted as a waiver thereof or agreement with such default, nor will it constitute a novation or modification of any other obligations undertaken by the Issuer in this Indenture or precedent regarding any other default or delay.

10.2 This Indenture is executed on an irrevocable and irreversible manner, except in the event of failure to fulfill the requirements listed in Clause Two, binding the Parties and their successors.

10.3 Any and all costs incurred due to the registration of this Indenture and any of its amendments, as well as Surety and corporate acts related hereto with the competent registries of deeds, shall be exclusively borne by the Issuer.

10.4 If any of the provisions of this Indenture is judged to be illegal, invalid or ineffective, all other provisions not affected by such judgment shall prevail, and the Parties undertake in good faith to replace the affected provision by one that, to the extent possible, produces the same effect.

10.5 For the purposes of this Indenture, Business Day(s) is any day other than Saturday, Sunday or declared national holiday (“Business Day(s)”).

10.6 This Indenture and the Debentures are an extrajudicially enforceable instrument under article 784, items I and III of the Code of Civil Procedure, and the obligations contained therein are subject to specific enforcement, according to articles 536 et. seq. of the Code of Civil Procedure.

11. LAW AND JURISDICTION

11.1 This Indenture is governed by the Laws of the Federative Republic of Brazil.

11.2 The Parties elect the District Court of São Paulo, State of São Paulo, as competent to settle any matters or disputes arising from this Indenture, expressly waiving any other, however privileged it may be.

And, in witness whereof, the Parties execute this Indenture, in five (5) counterparts of equal form and content and for the same purpose, together with the two (3) witnesses undersigned.

São Paulo, August 09, 2019.

(The rest of the page was intentionally left blank)

(Signature Page 1/4 of the Indenture of the First (1^st) Issue of Ordinary Debentures, Not Convertible Into Shares, Unsecured, with Additional Personal Guarantee in Four Series, for Public Distribution With Restricted Efforts of the Sendas Distribuidora S.A.)

SENDAS DISTRIBUIDORA S.A.

[illegible signature]

Name:

Frederico Augusto Afonso

Name:

Fabiana Yoko Uchimura Hirai

Title:

Treasury Officer

Title:

Treasury Manager

(Signature Page 2/4 of the Indenture of the First (1^st) Issue of Ordinary Debentures, Not Convertible Into Shares, Unsecured, with Additional Personal Guarantee in Four Series, for Public Distribution With Restricted Efforts of the Sendas Distribuidora S.A.)

PENTÁGONO S.A. DISTRIBUIDORA DE TÍTULOS E VALORES MOBILIÁRIOS

	[illegible signature]
	Name: Nathany Manhães
	Title: Proxy
	CPF: 113.345.437-20

(Signature Page 3/4 of the Indenture of the First (1^st) Issue of Ordinary Debentures, Not Convertible Into Shares, Unsecured, with Additional Personal Guarantee in Four Series, for Public Distribution With Restricted Efforts of the Sendas Distribuidora S.A.)

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO

[illegible signature]

Name:

Frederico Augusto Afonso

Name:

Fabiana Yoko Uchimura Hirai

Title:

Treasury Officer

Title:

Treasury Manager

Witnesses:

[illegible signature]		[illegible signature]
Name:	Thiago Silva Dakil	Name:	Cosme Rafael Ap. Correia de Morais
ID:	43.938.625-1 SSP-SP	ID:	42.046.510-8 SPP-SP
CPF:	360.471.318-83	CPF:	350.642.108-50

Exhibit 2.4

FIRST AMENDMENT TO THE INDENTURE OF THE FIRST (1^ST) ISSUE OF ORDINARY DEBENTURES, NOT CONVERTIBLE INTO SHARES, UNSECURED, WITH ADDITIONAL PERSONAL GUARANTEE, IN FOUR SERIES, FOR PUBLIC DISTRIBUTION WITH RESTRICTED EFFORTS OF SENDAS DISTRIBUIDORA S.A.

between

SENDAS DISTRIBUIDORA S.A.

as Issuer,

and

PENTÁGONO S.A. DISTRIBUIDORA DE TÍTULOS E VALORES MOBILIÁRIOS.

as Trustee, representing the Debenture Holders jointly

Dated as of

November 19, 2020

FIRST AMENDMENT TO THE INDENTURE OF THE FIRST (1ST) ISSUE OF ORDINARY DEBENTURES, NOT CONVERTIBLE INTO SHARES, UNSECURED, WITH ADDITIONAL PERSONAL GUARANTEE, IN FOUR SERIES, FOR PUBLIC DISTRIBUTION WITH RESTRICTED EFFORTS OF SENDAS DISTRIBUIDORA S.A.

SENDAS DISTRIBUIDORA S.A., a corporation without registration as issuer of securities with the Brazilian Securities Exchange Commission (“CVM”), with head office in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida Ayrton Senna, No. 6.000, Lot 2, Pal 48959, Annex A, Jacarepaguá, ZIP CODE 22775-005, enrolled with the Corporate Taxpayers Registry of the Ministry of Economy (“CNPJ/ME”), under No. 06,057,223/0001-71 and before the Board of Trade of the State of Rio de Janeiro (“JUCERJA”) under NIRE 33.3.002.7290-9, herein represented under its bylaws (“Issuer”).

PENTÁGONO S.A. DISTRIBUIDORA DE TÍTULOS E VALORES MOBILIÁRIOS, with head office in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida das Américas, No. 4.200, Bloco 08, Ala B, Salas 302, 303 and 304 - Barra da Tijuca, ZIP CODE 22640-102, enrolled with CNPJ/ME under No. 17.343.682/0001-38, herein represented under its Bylaws, as trustee (“Trustee”); and

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO, a corporation with head office in the City of São Paulo, State of São Paulo, at Avenida Brigadeiro Luiz Antonio, No. 3.142, Jardim Paulista, ZIP CODE 01402-000, enrolled with CNPJ under No. 47.508.411/0001-56, herein represented under its bylaws (“CBD” or “Intervening Party”);

the Issuer, the Trustee and the Intervening Party being hereinafter jointly referred to as “Parties” and, individually and indistinctly, as “Party”,

come hereby, and in due accordance with the law, to enter into this “First Amendment to the Indenture of the First (1^st) Issue of Ordinary Debentures, Not Convertible into Shares, Unsecured, with Additional Personal Guarantee, in Four Series, for Public Distribution with Restricted Efforts of Sendas Distribuidora S.A.” (“Amendment”), in compliance with the following clauses and conditions:

WHEREAS

WHEREAS on August 09, 2019, the Parties entered into the “Indenture of the First (1^st) Issue of Ordinary Debentures, Not Convertible Into Shares, Unsecured, with Additional Personal Guarantee, in Four Series, for Public Distribution With Restricted Efforts of Sendas Distribuidora S.A.” (“Indenture” and “Issue”, respectively);

WHEREAS the Issuer is authorized to execute this Amendment pursuant to approval from its Board of Directors obtained on November 19, 2020, as well as to reflect the other resolutions passed within the scope of the General Meeting of Debenture holders of the First (1st) Issue of Ordinary Debentures, Not Convertible Into Shares, Unsecured, with Additional Personal Guarantee, in Four Series, for Public Distribution With Restricted Efforts, of Sendas Distribuidora S.A., held on November 19, 2020 (“GMD”).

WHEREAS the Trustee is authorized to execute this Amendment as per approval at the GMD, as well as to reflect the other resolutions passed within the scope of the GMD.

WHEREAS the Parties are willing to change certain terms of the Indenture due to the Release of Surety and the partial spin off transaction of the Company and its parent CBD, described in a CBD’s material fact published on September 9, 2020 and in accordance with the GMD resolutions;

NOW, THEREFORE, the Parties amend the Indenture, in accordance with the clauses, conditions and characteristics below.

1. DEFINITIONS

1.1. Unless otherwise provided for herein, the capitalized terms used herein and not otherwise defined shall have the meaning assigned to them in the Indenture and the interpretation rules set forth therein shall apply to this Amendment, as if they were transcribed herein. All references contained in First Amendment to any other agreements or documents mean a reference to such instruments as amended and modified and as they are in force.

2. AMENDMENTS

2.1 By virtue of the release of the personal guarantee provided by the Intervening Party within the scope of the Issue, as approved by the Parties at a GMD, the Parties agree to exclude Clauses 1.2, 2.1.3.3, 4.8 and item “xiii” of Clause 5.1 of the Indenture, with the subsequent renumbering of the remaining Clauses and items, being certain that CBD shall no longer be a party of the Indenture, being exempted from all obligations and rights assumed thereunder in the capacity of guarantor after the effective performance of the Transaction, as described and defined in clause 4.2 below.

2.2 The Parties agree to change Clause 4.5.1 of the Indenture, which shall become effective as of the date hereof with the following wording:

“4.5.1 The Debentures shall be unsecured, under article 58 of the Brazilian Corporation Law.”

2.3 The Parties agree to change Clause 4.9.2 of the Indenture, which shall become effective as of the date hereof as Clause 4.8.2, with the following wording:

“4.8.2. The Unit Par Value or the balance of the unit par value of the Second Series Debentures, as the case may be, will be amortized in one (1) installment, due on the Maturity Date of the Second Series Debentures, subject to the Early Redemption Offering and Mandatory Extraordinary Amortization hypothesis, as appropriate.”

2.4 The Parties agree to change Clause 4.10.2 of the Indenture, which shall become effective as of the date hereof as Clause 4.9.2, with the following wording:

“4.9.2. The Unit Par Value or the Unit Par Value balance, as the case may be, of the Second Series Debentures will not be subject to adjustment for inflation. As of the First Subscription and Payment Date and until November 23, 2020 (included), the Second Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate, exponentially added with a surcharge (spread) of one point seventy-four per cent (1.74%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the Second Series Debentures, as defined in Clause 4.9.5 below. And as of November 24, 2020 (included), the Second Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate, exponentially added with a surcharge (spread) of two point thirty-four per cent (2.34%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the Second Series Debentures, as defined in Clause 4.9.5 below, according to the formula indicated in Clause 4.9.2.5 below (“Second Series Compensation”).”

2.5 The Parties agree to change Clause 4.10.2.2 of the Indenture, which shall become effective as of the date hereof as Clause 4.9.2.2, with the following wording:

“4.9.2.2 The Second Series Compensation (i) shall be paid semiannually on the 20^th day of the months of February and August of each year, as of the Issue Date, and the first payment of the Second Series Compensation shall be due on February 20, 2020, and the last one shall be due on the Second Series Debentures’ Maturity Date; and (ii) in addition to the dates set forth in item (i) above, it shall also be paid on November 24, 2020, as per the table below (“Second Series Compensation Payment Dates”):

*Installment Number*	*Second Series Compensation Payment Dates*
1	February 20, 2020
2	August 20, 2020
3	November 24, 2020
4	February 20, 2021
5	Maturity Date of the Second Series Debentures

2.6 The Parties agree to change Clause 4.10.2.5 of the Indenture, which shall become effective as of the date hereof as Clause 4.9.2.5, with the following wording:

“4.9.2.5 The Second Series Compensation shall be calculated according to the following formula:

J = VNb x (Interest Factor - 1)

where:

J: unit value of the Second Series Compensation, accrued for the period, at the end of each capitalization period, calculated with eight (8) decimal places without rounding;

VNb: Unit Par Value, or balance of the Unit Par Value, of the Second Series Debentures, as the case may be, informed/calculated with eight (8) decimal places without rounding;

Interest Factor: Interest factor composed of the fluctuation parameter plus spread calculated with nine (9) decimal places, with rounding, determined as follows:

Interest Factor = (DI Factor x Spread Factor)

where:

DI Factor = Output of DI Rates of the First Subscription and Payment Date of Second Series Debentures, or the immediately preceding Second Series Compensation Payment Date (included) until the date of calculation (excluded), calculated with eight (8) decimal places, with rounding, determined as follows:

where:

k = number of DI Rates orders, going from one (1) to “n”;

n = total number of DI Rates, considered until the date of calculation, “n” being a whole number;

TDI_k= DI rate, order k, expressed per day, calculated with eight (8) decimal places with rounding, calculated as follows:

, where: k = 1, 2, ..., n

DI_k= DI Rate, of k order, disclosed by B3 S.A. – Brasil, Bolsa, Balcão, used with two (2) decimal places;

d_k= 1

Spread Factor = Fixed interest surcharge, calculated with nine (9) decimal places, with rounding, determined according to the following formula:

where:

Spread = 1.7400 or 2.3400, as appropriate;

The DI Rate must be used considering an identical number of decimal places disclosed by the entity responsible for calculating them.

Observations:

The factor resulting from the expression (1 + TDIk) is considered with sixteen (16) decimal places, without rounding;

The daily factors are produced (1 + TDIk), with each accumulated daily factor truncating the result to sixteen (16) decimal places, applying the next daily factor, and so on until the latter considered;

Once the factors are accrued, the resulting factor “DI Factor” is considered with eight (8) decimal places, with rounding; and

The factor resulting from the expression (DIFactor x SpreadFactor) is considered with nine (9) decimal places, with rounding.”

2.7 The Parties agree to change Clause 4.10.3 of the Indenture, which shall become effective as of the date hereof as Clause 4.9.3, with the following wording:

“4.9.3. The Unit Par Value or the Unit Par Value balance, as the case may be, of the Third Series Debentures will not be subject to adjustment for inflation. As of the First Subscription and Payment Date and until November 23, 2020 (included), the Third Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate, exponentially added with a surcharge (spread) of one point ninety-five per cent (1.95%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the Third Series Debentures, as defined in Clause 4.9.5 below. And as of November 24, 2020 (included), the Third Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate exponentially added with a surcharge (spread) of two point sixty-five per cent (2.65%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the Third Series Debentures, as defined in Clause 4.9.5 below, according to the formula indicated in Clause 4.9.3.5 below (“Third Series Compensation”).”

2.8 The Parties agree to change Clause 4.10.3.2 of the Indenture, which shall become effective as of the date hereof as Clause 4.9.3.2, with the following wording

“4.9.3.2 The Third Series Compensation (i) shall be paid semiannually on the 20th day of the months of February and August of each year, as of the Issue Date, and the first payment of the Third Series Compensation shall be due on February 20, 2020, and the last one shall be due on the Third Series Debentures’ Maturity Date; and (ii) in addition to the dates set forth in item (i) above, it shall also be paid on November 24, 2020, as per the table below (“Third Series Compensation Payment Dates”):

*Installment Number*	*Third Series Compensation Payment Dates*
1	February 20, 2020
2	August 20, 2020
3	November 24, 2020
4	February 20, 2021
5	August 20, 2021
6	February 20, 2022
7	Third Series Debentures’ Maturity Date

2.9 The Parties agree to change Clause 4.10.3.5 of the Indenture, which shall become effective as of the date hereof as Clause 4.9.3.5, with the following wording

“4.9.3.5 The Third Series Compensation shall be calculated according to the following formula:

J = VNb x (Interest Factor - 1)

where:

J: unit value of the Third Series Compensation, accrued for the period, at the end of each capitalization period, calculated with eight (8) decimal places without rounding;

VNb: Unit Par Value, or balance of the Unit Par Value, of the Third Series Debentures, as the case may be, informed/calculated with eight (8) decimal places without rounding;

Interest Factor: Interest factor composed of the fluctuation parameter plus spread calculated with nine (9) decimal places, with rounding, determined as follows:

Interest Factor = (DI Factor x Spread Factor)

where:

DI Factor = Output of DI Rates of the First Subscription and Payment Date of Third Series Debentures, or the immediately preceding Third Series Compensation Payment Date (included) until the date of calculation (excluded), calculated with eight (8) decimal places, with rounding, determined as follows:

where:

k = number of DI Rates orders, going from one (1) to “n”;

n = total number of DI Rates, considered until the date of calculation, “n” being a whole number;

TDI_k= DI rate, order k, expressed per day, calculated with eight (8) decimal places with rounding, calculated as follows:

, where: k = 1, 2, ..., n

DI_k = DI Rate, of k order, disclosed by B3 S.A. – Brasil, Bolsa, Balcão, used with two (2) decimal places;

d_k= 1

Spread Factor = Fixed interest surcharge, calculated with nine (9) decimal places, with rounding, determined according to the following formula:

where:

Spread = 1.9500 or 2.6500, as appropriate;

The DI Rate must be used considering an identical number of decimal places disclosed by the entity responsible for calculating them.

Observations:

The factor resulting from the expression (1 + TDIk) is considered with sixteen (16) decimal places, without rounding;

Once the factors are accrued, the resulting factor “DI Factor” is considered with eight (8) decimal places, with rounding; and

The factor resulting from the expression (DIFactor x SpreadFactor) is considered with nine (9) decimal places, with rounding.

2.10 The Parties agree to change Clause 4.10.4 of the Indenture, which shall become effective as of the date hereof as Clause 4.9.4, with the following wording:

4.9.4. The Unit Par Value or the Unit Par Value balance, as the case may be, of the Fourth Series Debentures will not be subject to adjustment for inflation. As of the First Subscription and Payment Date and until November 23, 2020 (included), the Fourth Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate, exponentially added with a surcharge (spread) of two point twenty per cent (2.20%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the Fourth Series Debentures, as defined in Clause 4.9.5 below. And, as of November 24, 2020 (included), the Fourth Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate exponentially added with a surcharge (spread) of three per cent (3.00%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the Fourth Series Debentures, as defined in Clause 4.9.5 below, according to the formula indicated in Clause 4.9.4.5 below (“Fourth Series Compensation” and, together with the First Series Compensation, the Second Series Compensation and the Third Series Compensation, the “Compensations”).”

2.11 The Parties agree to change Clause 4.10.4.2 of the Indenture, which shall become effective as of the date hereof as Clause 4.9.4.2, with the following wording:

“4.9.4.2 The Fourth Series Compensation (i) shall be paid semiannually on the 20th of February and August of each year, as of the Issue Date, with the first payment of the Fourth Series Compensation being due on February 20, 2020, and the last one shall be due on the Fourth Series Debentures’ Maturity Date and (ii) in addition to the dates set forth in item (i) above, it shall also be paid on November 24, 2020, as shown in table below (“Fourth Series Compensation Payment Dates” and, together with the First Series Compensation Payment Dates, Second Series Compensation Payment Dates and Third Series Compensation Payment Dates, the “Compensation Payment Dates”)

*Installment Number*	*Fourth Series Compensation Payment Dates*
1	February 20, 2020
2	August 20, 2020
3	November 24, 2020
4	February 20, 2021
5	August 20, 2021
6	February 20, 2022
7	August 20, 2022
8	February 20, 2023
9	Third Series Debentures’ Maturity Date

2.12 The Parties agree to change Clause 4.10.4.5 of the Indenture, which shall become effective as of the date hereof as Clause 4.9.4.5, with the following wording:

“4.9.4.5. The Fourth Series Compensation shall be calculated according to the following formula:

J = VNb x (Interest Factor - 1)

where:

J: unit value of the Fourth Series Compensation, accrued for the period, at the end of each capitalization period, calculated with eight (8) decimal places without rounding;

VNb: Unit Par Value, or balance of the Unit Par Value, of the Fourth Series Debentures, as the case may be, informed/calculated with eight (8) decimal places, without rounding;

Interest Factor: Interest factor composed of the fluctuation parameter plus spread calculated with nine (9) decimal places, with rounding, determined as follows:

Interest Factor = (DI Factor x Spread Factor)

where:

DI Factor = Output of DI Rates of the First Subscription and Payment Date of Fourth Series Debentures, or the immediately preceding Fourth Series Compensation Payment Date (included) until the date of calculation (excluded), calculated with eight (8) decimal places, with rounding, determined as follows:

where:

k = number of DI Rates orders, going from one (1) to “n”;

n = total number of DI Rates, considered until the date of calculation, “n” being a whole number;

TDI_k= DI rate, order k, expressed per day, calculated with eight (8) decimal places with rounding, calculated as follows:

, where: k = 1, 2, ..., n

DI_k = DI Rate, of k order, disclosed by B3 S.A. – Brasil, Bolsa, Balcão, used with two (2) decimal places;

d_k= 1

Spread Factor = Fixed interest surcharge, calculated with nine (9) decimal places, with rounding, determined according to the following formula:

where:

Spread = 2.2000 or 3.0000, as appropriate;

The DI Rate must be used considering an identical number of decimal places disclosed by the entity responsible for calculating them.

Observations:

The factor resulting from the expression (1 + TDIk) is considered with sixteen (16) decimal places, without rounding;

Once the factors are accrued, the resulting factor “DI Factor” is considered with eight (8) decimal places, with rounding; and

The factor resulting from the expression (DIFactor x SpreadFactor) is considered with nine (9) decimal places, with rounding.”

2.13 The Parties agree to change Clause 4.12.1 of the Indenture, which shall become effective as of the date hereof as Clause 4.11.1, with the following wording:

“4.11.1 The Trustee shall consider as early matured all obligations related to the Debentures and demand, upon written notice, the immediate payment by the Issuer of the Unit Par Value or respective balance of the Unit Par Value, as the case may be, plus the applicable Compensation, calculated on a pro rata temporis basis, as provided in Clause 4.9 above, as of the respective First Subscription and Payment Date, or of the respective Compensation Payment Date immediately preceding, until the date of its effective payment, regardless of any notice, judicial or extrajudicial notification to the Issuer, in the occurrence of any of the following events (“Automatic Early Maturity Events”):

(i) occurrence of (a) liquidation or dissolution of the Issuer, (b) voluntary bankruptcy or bankruptcy request not resolved within the legal term, bankruptcy decree or any similar proceeding in the competent jurisdiction that may be created by law, of the Issuer, and/or its controlled and affiliated companies, directly or indirectly (“Affiliates”), (c) any event similar to the previous ones that characterizes or may characterize the Issuer’s and/or its Affiliates’ insolvency status;

(ii) proposal by the Issuer and/or its Affiliates of an extrajudicial reorganization plan to any creditor or class of creditors, or any similar proceeding in the competent jurisdiction of each company, regardless of having been requested or obtained judicial approval of said plan, or yet, entry by the Issuer and/or its Affiliates in court of a request for judicial reorganization or equivalent proceeding in the competent jurisdiction of each company, regardless of granting of the reorganization processing or its concession by the competent court;

(iii) default by the Issuer with any pecuniary obligation set forth in this Indenture, not remedied within one (1) Business Day from the date of the respective non-compliance;

(iv) default of any financial debt of the Issuer and/or any of its controlled companies, and for purposes hereof, the definition of control contained in article 116 or the Brazilian Corporation Law is used (“Controlled Companies”), in unit or aggregate value, equal or higher than sixty million reais (BRL 60,000,000.00), or equivalent value in other currencies, respecting its respective grace period, or in absence thereof, if such default is not remedied within five (5) Business Days counted from the default;

(v) statement of early maturity of any debt and/or obligation of the Issuer or of any of its Controlled Companies in unit or aggregate value, greater than or equal to sixty million reais (BRL 60,000,000.00), or equivalent value in other currencies;

(vi) spin off, consolidation or merger of the Issuer by another company, without prior and express authorization of the Debenture holders, observing the resolution quorum established in this Indenture, except if the spin off, consolidation or merger meets the requirements provided for in article 231, paragraph 1 of the Brazilian Corporation Law, and except the spin-off of the Issuer for transfer of the equity interest held by it in Éxito to Companhia Brasileira de Distribuição (“CBD”), as announced by CBD in a material fact published on September 9, 2020 (“Sendas’ Spin Off”);

(vii) conversion of the corporate type of the Issuer in accordance with articles 220 to 222 of the Brazilian Corporation Law;

(viii) Assignment, sale, disposal of, spin off, transfer, whether at no cost or for valuable consideration, of the Issuer’s assets, including shares or quotas of controlled Companies, with value higher than the equivalent to twenty per cent (20%), whether individually or in the aggregate, of the Issuer’s owners’ equity, according to the last quarterly audited financial statement disclosed, except (a) sale, disposal of, spin off, transfer and/or promise of transfer of Issuer’s assets, including shares or quotas of controlled companies, to any controlled company, provided that the latter is or become (before the event) a guarantor of the transaction, (b) with the prior written consent of the Debenture holders, or (c) if the net funds obtained with said event are used in full to redeem and/or amortize the Debentures, further respecting the provisions of clause 4.17, except for the Sendas’ Spin Off announced by CBD in a material fact published on September 9, 2020;

(ix) redemption, repurchase, amortization or bonus of shares, if the Issuer is in default with any of its pecuniary obligations established in this Indenture, provided, however, the payment of minimum mandatory dividend provided for in Article 202 of the Brazilian Corporation Law;

(x) distribution of dividends, including dividends as advancement, and/or payment of interests on own capital (“JCP”) assigned as dividends by the Issuer, above the minimum mandatory dividend provided for in article 202 of the Brazilian Corporation Law, except (a) if there is a prior and express authorization of the Debenture holders; or (b) in case of JCP assigned as dividends, if there is a distribution of net profit of the respective fiscal year in a percentage of up to twenty-six per cent (26%), due to the variation of the Withholding Income Tax (IRRF) rates applicable to the shareholders, under the legislation in force;

(xi) if the Issuer transfers or in any way assigns or promises to assign to third parties the rights and obligations assumed under this Indenture;

(xii) Judicial inquiry, by the Issuer and/or any of its Controlled Companies and/or parent companies, and for purposes of this clause, the definition of control contained in article 116 or the Brazilian Corporation Law, in this Indenture is used; and

(xiii) reduction of the Issuer’s capital, after the execution date of this Indenture, without the prior consent of the holders of the Debentures, as provided in article 174, paragraph 3 of the Brazilian Corporation Law.”

2.14 The Parties agree to change Clauses 4.12.3 and 4.12.3.1 of the Indenture, which shall become effective as of the date hereof as Clauses 4.11.3 and 4.11.3.1, with the following wording:

“4.11.3. The Trustee shall call, upon becoming aware of the occurrence of any of the Events of Non-Automatic Early Maturity (as defined below), within two (2) Business Days from the date on which it becomes aware of the occurrence of the respective event, the General Meeting of Debenture Holders in accordance with Clause 6 below, to resolve on the possible non-declaration of the Debentures early maturity (each of these events, “Events of Non-Automatic Early Maturity” and, together with the Events of Automatic Early Maturity, “Events of Early Maturity”):

(i) protests of titles against the Issuer, except for those made by error or bad faith of third parties, provided that validly evidenced by the Issuer within five (5) Business Days as of the notice of such process, for whose payment the Issuer and/or any Controlled Company is responsible, whose value, individually or jointly, is higher than sixty million reais (BRL 60,000,000.00), unless, within fifteen (15) Business Days as from the notice of said protest, it is validly proved by the Issuer and/or any Controlled Company that (a) the protest was cancelled, stopped or suspended, or (b) guarantees were given in court in an amount at least equivalent to the protested amount;

(ii) Default by the Issuer of any non-pecuniary obligation set forth in this Indenture, not remedied within five (5) Business Days from the date of the default, and the term provided in this item does not apply to the obligations for which a specific grace period has been established;

(iii) non-fulfillment of the obligation of allocating the funds raised by means of the Debentures as established in Clause 3.6 of this Indenture;

(iv) prove to be false or reveal to be incorrect, inconsistent, insufficient or misleading any of the representations or warranties provided by the Issuer in this Indenture and/or in any document related to the Debentures and/or to the Issue, provided that the said inaccuracy, inconsistency or insufficiency is not remedied by the Issuer within five (5) Business Days counted as of the notice in writing, forwarded by the Trustee to the Issuer in this regard, and the said cure term does not apply for representations or warranties that prove to be false or misleading;

(v) non-compliance with any court decision that became final and unappealable or final arbitration decision of adverse nature against the Issuer, in unit or aggregate value higher than sixty million reais (BRL 60,000,000.00), or equivalent amount in other currencies, in the period set forth in the decision or, if a period is not provided in the decision, within up to ten (10) Business Days counted as of the date on which the Issuer is formally notified of the decision;

(vi) merger of shares and/or transfer of controlling interest of the Issuer, in accordance with the wording set forth in article 116 of the Brazilian Corporation Law, unless Casino remains as direct or indirect controller of the Issuer, individually or through a controlling block;

(vii) change in the corporate purpose of the Issuer, as described in item 3.1 above, which implies a change in the Issuer’s main activity or includes activity which implies a change in the Issuer’s main activity;

(viii) no maintenance by the Issuer, while there are outstanding Debentures of the following financial indexes and limits (“Financial Indexes and Limits”), which shall be calculated quarterly by the Issuer, based on the twelve (12) months prior to the respective calculation, based on the Issuer’s consolidated financial statements, and accompanied by the Trustee within up to ten (10) Business Days counted as of the date of the presentation of the necessary documents by the Issuer to the Trustee:

(a) Ratio between Consolidated Net Debt (“DL”) and Owner’s Equity (“PL”), as per the table below:

Quarter

4Q20

1Q21

2Q21

3Q21

4Q21

1Q22

2Q22

3Q22

4Q22

1Q23

2Q23

3Q23

4Q23

DL/PL

4.5

5.0

3.0

3.5

2.00

2.5

2.0

and

(b) Ratio between Consolidated Net Debt (“DL”) and EBITDA (“EBITDA”), as per the table below:

Quarter

4Q20

1Q21

2Q21

3Q21

4Q21

1Q22

2Q22

3Q22

4Q22

1Q23

2Q23

3Q23

4Q23

DL/EBITDA

3.0

3.25

2.5

2.75

2.0

2.25

2.0

(ix) carrying out financial transactions and/or other transactions and/or entering into any contracts with related parties not directly or indirectly controlled by the Issuer, not essential to the Issuer’s operation, or providing guarantees in favor or benefit of its direct or indirect controllers, except the agreements and/or guarantees in effect on the settlement date of the IPO or if such transactions occur with the prior and express authorization of the Debenture holders;

(x) Occurrence of (a) liquidation or dissolution of Casino, (b) request for voluntary bankruptcy or bankruptcy not eliminated within the legal term, decree of bankruptcy of Casino or any similar feature in the competent jurisdiction of Casino that may be created by law;

(xi) proposal by Casino of an extrajudicial reorganization plan to any creditor or class of creditors, or any similar feature in the competent jurisdiction of Casino, regardless of having been requested or obtained judicial approval of said plan, or yet, entry by Casino in court of a request for judicial reorganization, regardless of granting of the reorganization processing or its concession by the competent court;

(xii) judicial decision, resulting from inquiry of the Indenture by any person not mentioned in item (xii) of Clause 4.11.1 above, whose effects are not suspended within up to twenty (20) Business Days from the date on which the Issuer becomes aware of said decision judicial;

(xiii) constitution of any Lien (defined as mortgage, pledge, chattel mortgage, fiduciary assignment, usufruct, trust, charge, encumbrance or burden, seizure, sequestration or attachment, judicial or extrajudicial, voluntary or involuntary, or other act that has a practical effect similar to any of the expressions above, in unit or aggregate value, equal to or higher than sixty million reais (BRL 60,000,000.00), or equivalent value in other currencies (“Lien”)) on asset(s) and/or income, present and/or future, of the Issuer, including, but not limited to, shares or quotas of its subsidiaries, except: (a) for Lien existing on the Issue Date; (b) for Liens created as a result of renewals or substitutions or renegotiations, total or partial, of debts existing on the Issue Date, provided that the Lien is constituted exclusively on the asset that already guaranteed the renewed, substituted or renegotiated debt on the Issue Date; or (c) for Liens existing on any asset of any company at the time that such company is incorporated by the Issuer and which was not created due to or in anticipation of that event; and

(xiv) default, as determined in a judicial decision, by the Issuer and/or its Controlled Companies, as well as by its employees and their respective directors and members of the board of directors, as applicable, of Law No. 12,846, of August 1, 2013, as amended, Decree No. 8,420, of March 18, 2015, the UK Bribery Act 2010, as amended, and the U.S. Foreign Corrupt Practices Act of 1977, as amended, and other applicable rules that deal with acts of corruption and acts that are harmful to public administration (“Anticorruption Laws”).

4.11.3.1 For the purposes of the Clause 4.12.3 above, the following definitions shall apply: “Consolidated Net Debt” means the total debt of the Issuer (short and long term loans and financing, including debentures and promissory notes), subtracted from cash availabilities and accounts receivable, with a discount of one point five percent (1.5%), arising from sales with credit cards, food vouchers and multi-benefits; (ii) “Consolidated EBITDA”, the gross profit, less operating expenses, excluding depreciation and amortization, plus other recurring operating income and excluding general administrative and sales expenses over the last four (4) quarters covered by the most recent consolidated financial statements available by the Issuer, prepared in accordance with accounting principles generally accepted in Brazil; and (iii) “Consolidated Gross Debt”, the total debt of the Issuer (short and long term loans and financing, including debentures and promissory notes), and the indicators described above shall be verified based on the financial statements and consolidated information of the Issuer; (...)”

2.15 The Parties agree to change Clause 4.13 of the Indenture, which shall become effective as of the date hereof as clause 4.12, with the following wording, and to exclude Clause 4.14 and 4.18 of the Indenture, in view of the events in such clauses have already occurred or will cease to be effective as a consequence of the Transaction:

“4.12.1 The Second Series Debentures will not be subject to the optional early redemption. The Third Series Debentures and/or Fourth Series Debentures may be partially or fully redeemed as of August 1, 2021 (included), at the Issuer’s discretion, upon delivery of a notice to the holders of Debentures of the respective series, with a copy to the Trustee, or publication of a notice to the holders of Debentures of the respective series, under Clause 4.20 of this Indenture, ten (10) Business Days in advance of the event date (“Optional Early Redemption”), informing: (i) the date on which the Optional Early Redemption shall be made and to which series it relates; and (ii) any other information relevant to the holders of Debentures of the respective series.

4.12.1.1 In the event of Optional Early Redemption, payment of the respective Unit Par Value or balance of the Unit Par Value will be made, as the case may be, plus the respective Compensation, calculated pro rata temporis from the respective First Subscription and Payment Date or the respective last Compensation Payment Date, as the case may be, until the date of the actual Optional Early Redemption, plus the Optional Early Redemption Premium (as defined below), as well as a fine and default interest, if any. For the purposes of this Indenture, the “Optional Early Redemption Premium” is a premium equivalent to zero point thirty percent per year (0.30% p.a.), pro rata temporis, based on two hundred and fifty-two (252) Business Days, on the amount redeemed, considering the number of Business Days to elapse between the Optional Early Redemption date and the Third Series Debentures’ Maturity Date or the Fourth Series Debentures’ Maturity Date, as the case may be.

4.12.2 B3 shall be communicated by the Issuer, together with the Trustee, about the early redemption of the Debentures with at least five (3) Business Days in advance of the stipulated date for its realization.

4.12.3 If the Issuer opts for the partial redemption of the Third Series Debentures and/or Fourth Series Debentures, and if the adherence of the Debenture holders representing a greater volume of Debentures that may be redeemed is verified, based on the partial Early Redemption Offering Notice, a drawing of lots procedure should be carried out, under article 55, paragraph 2 of the Brazilian Corporation Law, coordinated by the Trustee;

4.12.4 Payment of the Third Series Debentures and/or Fourth Series Debentures subject to Optional Early Redemption will be made (i) through the procedures adopted by B3 for the respective Debentures held in custody electronically at B3, and/or (ii) by deposit in current accounts indicated by the holders of respective the Debentures, to be made by the Settling Bank and Bookkeeping Agent, in the case of Debentures not held in custody electronically at B3. “

2.16 The Parties agree to change Clause 4.15 of the Indenture, which shall become effective as of the date hereof as Clause 4.13, with the following wording:

“4.13.1 The Second Series Debentures will not be subject to the optional extraordinary amortization. The Issuer may, as of August 1, 2021 (including), subject to the terms and conditions set out below, at its sole discretion and regardless of the will of the Debentures Holders, perform optional amortization of the Unit Par Value or the balance of the Unit Par Value of the Third Series Debentures and/or Fourth Series Debentures, as the case may be, upon payment of an installment of the Unit Par Value or the balance of the Unit Par Value of the respective series, plus the respective Compensation, calculated pro rata temporis from the First Subscription and Payment Date or the respective last Compensation Payment Date, as the case may be, up to the date of effective early amortization, plus the Optional Amortization Premium (as defined below), as well as a fine and default interest, if any (“Optional Amortization”). For the purposes of this Indenture, the “Optional Amortization Premium” is a premium equivalent to zero point thirty percent per year (0.30% p.a.), pro rata temporis, based on two hundred and fifty-two (252) Business Days, on the amount to be amortized in advance, considering the number of Business Days to elapse between the Optional Amortization date and the Third Series Debentures’ Maturity Date or the Fourth Series Debentures’ Maturity Date, as the case may be.

4.13.1.1 The Optional Amortization shall be limited to ninety-eight percent (98%) of the Unit Par Value of the Debentures of the respective series and may only occur through a notice addressed directly to the Debenture Holders of the respective series, with a copy to the Trustee or, also, through the publication of a notice addressed to Debenture Holders of the respective series to be widely disclosed under Clause 4.20 of this Indenture (“Optional Amortization Notice”), with a minimum advance of ten (10) Business Days prior to the date scheduled for the actual Optional Amortization (“Optional Amortization Date”), and will be carried out in accordance with B3 procedures.

4.13.1.2 The Optional Amortization Notice should include: (i) the Optional Amortization date and procedure, in compliance with the applicable law, as well as the terms and conditions provided in this Indenture; (ii) mention to the installment of the Unit Par Value that will be amortized under this Clause; (iii) which of the series that the Optional Amortization will cover; and (iv) the other information considered relevant by the Issuer to be known by the Debenture Holders of the respective series.”

2.17 In view of the foregoing changes, the Parties decide to restate the Indenture, which shall become effective with the wording established in Annex I to this Amendment.

3. RECORD AND REGISTRATIONS

3.1. This Amendment shall be filed with JUCERJA, as provided for in article 62, item II and paragraph 3 of the Brazilian Corporation Law, and the protocols in JUCERJA must be made within five (5) days counted as of the execution of this Amendment.

3.2. The Issuer undertakes to send to the Trustee one (1) original counterpart of this Amendment duly registered within five (5) days as of the registration with JUCERJA.

3.3. The period mentioned in Clause 3.1 above must comply with law No. 14,030 of July 28, 2020 (“Law 14,030”), for as long as it applies, except for any regulatory requirements.

4. MISCELLANEOUS

4.1. All other Clauses, terms, provisions, conditions, statements, rights and obligations established in or arising from the Indenture not expressly modified by this Amendment shall remain unchanged, valid, effective and enforceable and are hereby ratified.

4.2. This Amendment shall become effective as of the date of its execution and binds the Parties and their successor at any title, being irrevocable and irreparable for all legal purposes and effects, and the effectiveness of the changes of Clauses [4.9.2, 4.12.1, 4.12.3, 4.12.3.1, 4.13 and 4.15], as well as the exclusion of Clauses 1.2, 2.1.3.3, 4.8, 4.14, 4.18 and item “xii” of Clause 5.1, under Clauses [2.1, 2.2, 2.3 and 2.13 to 2.16] above, will be subject to, under articles 121 and 125 et. seq. of the Civil Code, to performance of the partial spin off transaction of the Issuer, as described in a CBD’s material fact published on September 9, 2020, to be confirmed by the publication of a material fact in this regard on CBD’s website (“Transaction”), regardless of any amendment. The Company shall be required to immediately notify the Trustee regarding the performance of the Transaction.

4.3. The waiver of any of the rights resulting from this Amendment is not assumed. So, no delay, omission or discretion in the exercise of any right, power or remedy that applies to the Trustee and/or Debenture holders due to any default of the obligations of the Issuer, shall harm such rights, powers or remedies, or shall be construed as waiver thereof or consent with such default, nor shall be novation or modification of any other obligations assumed by the Issuer in this Amendment or in the Indenture or precedent with respect to any other default or delay.

4.4. The Parties hereby acknowledge that this Amendment is an extrajudicially enforceable instrument under article 784, item III of the Code of Civil Procedure, for all legal purposes and effects.

4.5. Any and all costs incurred due to the registration of this Amendment and corporate acts related to it with the competent registries of deeds, shall be exclusively borne by the Issuer.

5. APPLICABLE LAW AND JURISDICTION

5.1. This Amended shall be governed and construed in accordance with the laws of the Federative Republic of Brazil.

5.2. To settle any and all doubts and/or controversies arising from this Amendment, the jurisdiction of the City of São Paulo is hereby elected as competent, with express waiver of any other, however privileged it may be.

In witness whereof, the Parties execute this Amendment in three (3) counterparts of equal content and form, in the presence of the two (2) undersigned witnesses.

São Paulo, November 19, 2020.

[Signature Page 1/4 of the First Amendment to the Indenture of the First (1st) Issue of Ordinary Debentures, Not Convertible Into Shares, Unsecured, with Additional Personal Guarantee, in Four Series, for Public Distribution With Restricted Efforts of Sendas Distribuidora S.A.]

SENDAS DISTRIBUIDORA S.A.

/s/ Frederico Augusto Alonso		/s/ Marcelo Acerdi de Almeida
Name:	Frederico Augusto Alonso	Name:	Marcelo Acerdi de Almeida
Position:	Attorney-in-fact	Position:	Attorney-in-fact

[Signature Page 2/4 of the First Amendment to the Indenture of the First (1st) Issue of Ordinary Debentures, Not Convertible Into Shares, Unsecured, with Additional Personal Guarantee, in Four Series, for Public Distribution With Restricted Efforts of Sendas Distribuidora S.A.]

PENTÁGONO S.A. DISTRIBUIDORA DE TÍTULOS E VALORES MOBILIÁRIOS

	/s/ Monique Beatriz da Silva Lassarot
	Name:	Monique Beatriz da Silva Lassarot
	Position:	Attorney-in-fact
	CPF:	152.839.787-88

[Signature Page 3/4 of the First Amendment to the Indenture of the First (1st) Issue of Ordinary Debentures, Not Convertible Into Shares, Unsecured, with Additional Personal Guarantee, in Four Series, for Public Distribution With Restricted Efforts of Sendas Distribuidora S.A.]

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO

/s/ Frederico Augusto Alonso		/s/ Marcelo Acerbi de Almeida
Name:	Frederico Augusto Alonso	Name:	Marcelo Acerbi de Almeida
Title:	Attorney-in-fact	Title:	Attorney-in-fact

[Signature Page 4/4 of the First Amendment to the Indenture of the First (1St) Issue of Ordinary Debentures, Not Convertible Into Shares, Unsecured, With Additional Personal Guarantee, in Four Series, for Public Distribution With Restricted Efforts of Sendas Distribuidora S.A.]

Witnesses:

/s/ Fabiana Yoko Uchimura Hirai		/s/ Gabriela Gomes Silva
Name:	Fabiana Yoko Uchimura Hirai	Name:	Gabriela Gomes Silva
CPF:	004.589.509-04	CPF:	219.459.418-39

ANNEX I

RESTATEMENT OF THE INDENTURE OF THE FIRST (1ST) ISSUE OF ORDINARY DEBENTURES, NOT CONVERTIBLE INTO SHARES, UNSECURED, IN FOUR SERIES, FOR PUBLIC DISTRIBUTION WITH RESTRICTED EFFORTS OF SENDAS DISTRIBUIDORA S.A.

By this private instrument,

SENDAS DISTRIBUIDORA S.A., a corporation without registration as issuer of securities with the Brazilian Securities Exchange Commission (“CVM”), with head office in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida Ayrton Senna, No. 6.000, Lot 2, Pal 48959, Annex A, Jacarepaguá, Zip Code 22775-005, enrolled with the Corporate Taxpayers Registry of the Ministry of Economy (“CNPJ”), under No. 06,057,223/0001-71 and before the Board of Trade of the State of Rio de Janeiro (“JUCERJA”) under NIRE 33.3.002.7290-9, herein represented under its bylaws (“Issuer”); and

PENTÁGONO S.A. DISTRIBUIDORA DE TÍTULOS E VALORES MOBILIÁRIOS, a financial institution with head office in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida das Américas, No. 4.200, Bloco 08, Ala B, Salas 302, 303 and 304 - Barra da Tijuca, Zip Code 22640-102, enrolled with CNPJ under No. 17.343.682/0001-38, herein represented under its Bylaws, as trustee (“Trustee”);

the Issuer and the Trustee shall be hereinafter jointly referred to as “Parties” and, individually and indistinctly, as “Party”,

come hereby, and in due accordance with the law, to enter into this “Indenture of the First (1st) Issue of Ordinary Debentures, Not Convertible into Shares, Unsecured, in Four Series, for Public Distribution with Restricted Efforts of Sendas Distribuidora S.A.” (“Issue” and “Indenture”, respectively), in compliance with the following clauses and conditions:

1. AUTHORIZATIONS

1.1 This Indenture is entered into based on the resolutions of the Issuer’s General Meeting of Debenture holders held on August 9, 2019 (“EGM”), at which the Issue conditions were resolved, under article 59 of Law No. 6,404, of December 15, 1976, as amended (“Brazilian Corporation Law”).

2. REQUIREMENTS

2.1 The Issue shall be performed in accordance with the following requirements:

A-I-1

2.1.1 Release from Registration with CVM and Registration with ANBIMA – Brazilian Financial and Capital Markets Association

2.1.2 Filing of the EGM minutes with JUCERJA

2.1.3 Registration of this Indenture

2.1.4 Deposit for Distribution, Trading and Electronic Custody

2.1.4.1 The Debentures shall be deposited for (i) distribution in the primary market through the MDA - Módulo de Distribuição de Ativos (i.e., Assets Distribution Module) (“MDA”) managed and operated by B3 S.A. – Brasil, Bolsa, Balcão – CETIP UTVM Segment (“B3”); and (ii) trading in the secondary market through the CETIP21 - Securities (“CETIP21”), managed and operated by B3. The trading shall be financially settled and the Debentures shall be held in electronic custody with B3.

A-I-2

2.1.4.2 Notwithstanding the foregoing Clause 2.1.4.1, the Debentures may be traded in the regulated markets of securities between qualified investors, as defined in article 9-B of CVM Instruction No. 539, dated November 13, 2013, as amended (“Qualified Investors” and “CVM Instruction 539”) and after ninety (90) days have elapsed as of the date of each subscription or acquisition by Professional Investors (as defined below), in compliance with articles 13 and 15 of CVM Instruction 476, and once verified the Issuer has complied with its obligations set forth in article 17 of CVM Instruction 476, the trading of the Debentures must respect at all times the applicable legal and regulatory provisions.

2.1.4.3 The period of ninety (90) days for restriction of trading of the Debentures mentioned above shall not apply to the Arrangers (as defined below), in the event of exercise of firm commitment, as provided in item II of article 13 of CVM Instruction 476, provided that the conditions below are complied with: (i) the Professional Investor (as defined below) acquiring the Debentures complies with the ninety (90)-day period of trading restriction, counted as of the exercise of the firm commitment by the Lead Arranger; (ii) the Arrangers verify the compliance with the rules set forth in articles 2 and 3 of CVM Instruction 476; and (iii) the trading of Debentures should be carried out under the same conditions applicable to the Restricted Offering, and the transfer amount of the Debentures may be adjusted by the respective Compensation (as defined below).

3. CHARACTERISTICS OF THE ISSUE

3.1 Issuer’s Corporate Purpose

3.1.1 According to article 2 of its Bylaws, the Issuer’s main corporate purpose is the sale of manufactured, semi-manufactured or “in natura” products, whether national or foreign, of any and all kind and species, nature or quality, provided that not prohibited by law, as well as the other activities listed in said Bylaws.

3.2 Issue Number

3.2.1 This Issue represents the first (1^st) issue of Debentures of the Issuer.

3.3 Number of Series

3.3.1 The Issue shall be performed in four (4) series.

3.4 Total Issue Value

3.4.1 The total Issue value shall be eight billion reais (BRL 8,000,000,000.00), on the Issue Date (as defined below).

A-I-3

3.5 Number of Debentures

3.6 Allocation of Funds

3.6.1 The funds raised through the Restricted Offering shall be used by the Issuer to acquire shares of Almacenes Éxito S.A., a company organized according to the laws of Colombia, with head office at Carrera 48 No. 32B Sur — 139, Envigado, Colombia, enrolled with CNPJ under No. 23.041.875/0001-37 (“Éxito”), indirectly held by Casino, Guichard-Perrachon S.A., a company organized according to the laws of France, with head office at l, Esplanade de France 42000, Saint-Etienne, France, enrolled with CNPJ under No. 08.572.014/0001-91 (“Casino”) and by the minority shareholders, through the public offering for acquisition of shares to be carried out in Colombia (“IPO”), which shall be settled within one hundred and fifty (150) days as the First Subscription and Payment Date (as defined below).

3.7 Settling Bank and Bookkeeping Agent

3.7.1 The duties of settling bank and bookkeeping agent shall be performed by BANCO BRADESCO S.A., a financial institution with head office in the City of Osasco, State of São Paulo, in the administrative hub named “Cidade de Deus”, w/o No., Prédio Amarelo, 1St floor, Vila Yara, enrolled with CEP/CNPJ under No. 60.746.948-55 (“Settling Bank” and “Bookkeeping Agent”, as the case may be), whose definitions include any other institution that may replace the Settling Bank and Bookkeeping Agent in providing the services related to the Debentures.

4. CHARACTERISTICS OF THE DEBENTURES

4.1 Placement and Distribution Plan

4.1.1.1 “Professional Investors” are considered those investors referred to in article 9-A of CVM Instruction 539, provided that investment funds and securities portfolios administrated the decisions of which are made by the same manager shall be considered as a single investor, for the purposes of the limits provided for in the Placement Plan (as defined below).

A-I-4

4.1.2 In compliance with the applicable regulation, the Arrangers shall arrange for the placement of the Debentures exclusively before the Professional Investors to meet the procedures described in CVM Instruction 476 (“Placement Plan”), in accordance with the following terms:

(i)

(ii)

the Lead Arranger shall only be allowed to search for at most seventy-five (75) Professional Investors; and

(iii)

the Debentures may only be acquired by at most fifty (50) Professional Investors, under CVM Instruction 476.

4.1.3 The placement of the Debentures shall be performed according to the B3 procedures and the distribution plan described in this Clause Four.

4.1.4 When subscribing and paying the Debentures, each Professional Investor interested in the subscription of the Debentures shall do so by delivering to the Arrangers a letter duly signed, in term and conditions acceptable to the Arrangers, stating to be aware of and to agree, among others, that: (i) the information received are sufficient for their decision-making regarding the Restricted Offering; (ii) the Restricted Offering has not been registered before CVM; and (iii) the Debentures are subject to the trading restrictions set forth in the applicable regulation and in this Indenture, they may only be traded in the regulated markets ninety (90) days after subscription or acquisition by the professional investor, pursuant to the additional obligations of the Issuer, under CVM Instruction 476.

4.2 Issue Date of the Debentures

4.2.1 For all legal purposes, the date of issue of the Debentures shall be August 20, 2019 (“Issue Date”).

A-I-5

4.3 Debentures’ Unit Par Value

4.3.1 The unit par value of the Debentures, on the Issue Date, shall be one ten thousand Reais (BRL 10,000.00) (“Unit Par Value”).

4.4 Convertibility, Form and Evidence of Ownership of the Debentures

4.4.1 The Debentures shall be issued in registered, book-entry form, without issuance of certificates or provisory certificates and shall not be convertible into shares issued by the Issuer.

4.4.2 Certificates representing the Debentures shall not be issued, under article 63, paragraph 2 of the Brazilian Corporation Law. For all legal purposes and effects, the ownership of the Debentures shall be evidenced by the statement issued by the Bookkeeping Agent. Additionally, a statement in the name of the Debentures holders issued by B3 shall be recognized as proof of ownership for the Debentures held in electronic custody by B3.

4.5 Species

4.5.1 The Debentures shall be unsecured, under article 58 of the Brazilian Corporation Law.

4.6 Subscription Price and Form of Payment

4.6.1 The payment of the Debentures in the primary market will be carried out in accordance with the procedures adopted by B3, in cash, in national currency, upon subscription, admitting one or more subscriptions and payments, and may be placed at a premium or discount, to be defined, if applicable, upon subscription, provided that they are applied on equal terms to all investors of a same series on each subscription and payment date. On the date of the first subscription and payment of the respective series (“First Subscription and Payment Date”), the Debentures will be paid in at their Unit Par Value. The remaining payments of the Debentures will be made at the Unit Par Value plus the respective Compensation calculated pro rata temporis from the First Subscription and Payment Date of the respective series, until the respective subscription and payment date. All subscriptions and payments will be made within the distribution period, pursuant to articles 7-A and 8 of CVM Instruction 476.

4.7 Term and Maturity Date

A-I-6

4.7.3 The Third Series Debentures shall be effective for three (3) years counted as of the Issue Date, maturing, therefore, on August 20, 2022 (“Third Series Debentures’ Maturity Date”), except for the hypothesis of Optional Early Redemption, Mandatory Early Redemption, Early Redemption Offering with the subsequent cancellation of all the Debentures and the Early Maturity Hypothesis, as defined below.

4.8 Scheduled Amortization

4.8.1 The balance of Unit Par Value of the First Series Debentures, as the case may be, shall be amortized in two (2) installments, the first one being due on December 26, 2019, and the last one on the First Series Debentures’ Maturity Date, as described in the table below, except for the hypothesis of Optional Early Redemption, Mandatory Early Redemption, Early Redemption Offering, Mandatory Extraordinary Amortization, Optional Amortization and the Early Maturity Hypothesis, as the case may be.

Installment	Amortization Date	Amortized Percentage of the balance of Unit Par Value
1^st	December 26, 2019	50.0000%
2^nd	Maturity Date	100.0000%

4.8.2 The Unit Par Value or the balance of the unit par value of the Second Series Debentures, as the case may be, will be amortized in one (1) installment, due on the Maturity Date of the Second Series Debentures, subject to the Early Redemption Offering and Mandatory Extraordinary Amortization, as appropriate.

4.8.3 The Unit Par Value or the balance of the unit par value of the Third Series Debentures, as the case may be, will be amortized in one (01) installment, due on the Third Series Debentures’ Maturity Date, subject to the hypothesis of Optional Early Redemption, Early Redemption Offering, Mandatory Extraordinary Amortization and Optional Amortization, as appropriate.

A-I-7

4.8.4 The Unit Par Value or the balance of the unit par value of the Fourth Series Debentures, as the case may be, will be amortized in one (01) installment, due on the Fourth Series Debentures’ Maturity Date, subject to the hypothesis of Optional Early Redemption, Early Redemption Offering, Mandatory Extraordinary Amortization and Optional Amortization, as appropriate.

4.9 Compensation

4.9.1 The Unit Par Value or the Unit Par Value balance, as the case may be, of the First Series Debentures will not be subject to adjustment for inflation. As of the First Subscription and Payment Date until de date of execution of the First Amendment to the Indenture, the First Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of average daily rates of DI - Interbank Deposits of one day, “over extra group”, base of two hundred and fifty-two (252) Business Days, calculated and disclosed daily by B3 S.A. – Brasil, Bolsa, Balcão, in the daily newsletter available on its website (http://www.b3.com.br) (“DI Rate”), exponentially added with a spread of one point sixty per cent (1.6%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the First Series Debentures, as defined in Clause 4.9.5 below. And, as of the date of execution of the First Amendment to the Indenture, the First Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate exponentially added with a spread of [☐]% ([☐]) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the First Series Debentures, as defined in Clause 4.9.5 below, according to the formula indicated in Clause 4.9.1.5 below (“First Series Compensation”).

4.9.1.1 The First Series Compensation will be calculated exponentially and cumulatively, using the pro rata temporis criterion, per Business Days elapsed, from the immediately preceding First Subscription and Payment Date or First Series Compensation Payment Date (as defined below), immediately preceding, as the case may be, until the date of their effective payment, which must occur at the end of each Capitalization Period of the First Series Debentures.

4.9.1.2 The First Series Compensation will be paid in two (2) installments, and the first payment of the First Series Compensation shall be due on December 26, 2019, and the last one shall be due on the First Series Debentures’ Maturity Date, as per the table below (“First Series Compensation Payment Dates”):

INSTALLMENT NUMBER	FIRST SERIES COMPENSATION PAYMENT DATES
1	December 26, 2019
2	First Series Debentures’ Maturity Date

A-I-8

4.9.1.3 If the First Series Compensation Payment Date is not a Business Day, the payment shall be made on the next subsequent Business Day.

4.9.1.4 Those who holds Debentures at the end of the Business Day immediately preceding each First Series Compensation Payment Date shall be entitled to the First Series Compensation.

4.9.1.5 The First Series Compensation shall be calculated according to the following formula:

J = VNb x (Interest Factor – 1)

where:

J: unit value of the First Series Compensation, accrued for the period, at the end of each capitalization period, calculated with eight (8) decimal places without rounding;

VNb: Unit Par Value, or balance of the Unit Par Value, of the First Series Debentures, as the case may be, informed/calculated with eight (8) decimal places without rounding;

Interest Factor: Interest factor composed of the fluctuation parameter plus spread calculated with nine (9) decimal places, with rounding, determined as follows:

Interest Factor = (DI Factor x Spread Factor)

where:

DI Factor = Output of DI Rates of the First Subscription and Payment Date of First Series Debentures, or the immediately preceding First Series Compensation Payment Date (included) until the date of calculation (excluded), calculated with eight (8) decimal places, with rounding, determined as follows:

A-I-9

where:

k = number of DI Rates orders, going from one (1) to “n”;

n = total number of DI Rates, considered until the date of calculation, “n” being a whole number;

TDI_k= DI rate, of k order, expressed daily, calculated with eight (8) decimal places with rounding, determined as follows:

, where: k = 1, 2, ..., n

DI_k = DI Rate, of k order, disclosed by B3 S.A. – Brasil, Bolsa, Balcão, used with two (2) decimal places;

d_k= 1

Spread Factor = Fixed interest surcharge, calculated with nine (9) decimal places, with rounding, determined according to the following formula:

where:

Spread = 1.6000 or [☐], as the case may be;

The DI Rate must be used considering an identical number of decimal places disclosed by the entity responsible for calculating them.

A-I-10

Notes:

The factor resulting from the expression (1 + TDI_k) is considered with sixteen (16) decimal places without rounding;

The output of daily factors (1 + TDI_k) is obtained, and at each factor accrued, the result is truncated with sixteen (16) decimal places, applying the next daily factor and so on, until the last one considered.

Once the factors are accrued, the resulting factor “Factor DI” is considered with eight (8) decimal places, with rounding; and

The factor resulting from the expression (DI Factor x Spread Factor) is considered with nine (9) decimal places, with rounding.

4.9.2 The Unit Par Value or the Unit Par Value balance, as the case may be, of the Second Series Debentures will not be subject to adjustment for inflation. As of the First Subscription and Payment Date and until November 23, 2020 (inclusive), the Second Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate exponentially added with a spread of one point seventy-four per cent (1.74%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the Second Series Debentures, as defined in Clause 4.9.5 below. And, as of November 24, 2020 (inclusive), the Second Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate exponentially added with a spread of two point thirty-four per cent (2.34%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the Second Series Debentures, as defined in Clause 4.9.5 below, according to the formula indicated in Clause 4.9.2.5 below (“Second Series Compensation”).

4.9.2.1 The Second Series Compensation will be calculated exponentially and cumulatively, using the pro rata temporis criterion, per Business Days elapsed, from the immediately preceding First Subscription and Payment Date or Second Series Compensation Payment Date (as defined below), immediately preceding, as the case may be, until the date of their effective payment, which must occur at the end of each Capitalization Period of the Second Series Debentures.

A-I-11

4.9.2.2 The Second Series Compensation (i) shall be paid semiannually on the 20th of February and August of each year, as of the Issue Date, with the first payment of the Second Series Compensation being due on February 20, 2020, and the last one shall be due on the Second Series Debentures’ Maturity Date and (ii) in addition to the dates set forth in item (i) above, it shall also be paid on November 24, 2020, as shown in the table below (“Second Series Compensation Payment Date”):

INSTALLMENT NUMBER	FIRST SERIES COMPENSATION PAYMENT DATES
1	February 20, 2020
2	August 20, 2020
3	November 24, 2020
4	February 20, 2021
5	Second Series Debentures’ Maturity Date

4.9.2.3 If the Second Series Compensation Payment Date is not a Business Day, the payment shall be made on the next subsequent Business Day.

4.9.2.4 Those who holds Debentures at the end of the Business Day immediately preceding each Second Series Compensation Payment Date shall be entitled to the Second Series Compensation.

4.9.2.5 The Second Series Compensation shall be calculated according to the following formula:

J = VNb x (Interest Factor - 1)

where:

J: unit value of the Second Series Compensation, accrued for the period, at the end of each capitalization period, calculated with eight (8) decimal places without rounding;

VNb: Unit Par Value, or balance of the Unit Par Value, of the Second Series Debentures, as the case may be, informed/calculated with eight (8) decimal places without rounding;

Interest Factor: Interest factor composed of the fluctuation parameter plus spread calculated with nine (9) decimal places, with rounding, determined as follows:

Interest Factor = (DI Factor x Spread Factor)

A-I-12

where:

DI Factor = Output of DI Rates of the First Subscription and Payment Date of Second Series Debentures, or the immediately preceding Second Series Compensation Payment Date (included) until the date of calculation (excluded), calculated with eight (8) decimal places, with rounding, determined as follows:

where:

k = number of DI Rates orders, going from one (1) to “n”;

n = total number of DI Rates, considered until the date of calculation, “n” being a whole number;

TDI_k= DI rate, of k order, expressed daily, calculated with eight (8) decimal places with rounding, determined as follows:

, where: k = 1, 2, ..., n

DI_k = DI Rate, of k order, disclosed by B3 S.A. – Brasil, Bolsa, Balcão, used with two (2) decimal places;

d_k= 1

Spread Factor = Fixed interest surcharge, calculated with nine (9) decimal places, with rounding, determined according to the following formula:

where:

Spread = 1.7400 or 2.3400, as the case may be;

A-I-13

The DI Rate must be used considering an identical number of decimal places disclosed by the entity responsible for calculating them.

Notes:

The factor resulting from the expression (1 + TDI_k) is considered with sixteen (16) decimal places without rounding;

The output of daily factors (1 + TDI_k x p), is obtained, and at each factor accrued, the result is truncated with sixteen (16) decimal places, applying the next daily factor and so on, until the last one considered.

Once the factors are accrued, the resulting factor “Factor DI” is considered with eight (8) decimal places, with rounding; and

The factor resulting from the expression (DI Factor x Spread Factor) is considered with nine (9) decimal places, with rounding.

4.9.3 The Unit Par Value or the Unit Par Value balance, as the case may be, of the Third Series Debentures will not be subject to adjustment for inflation. As of the First Subscription and Payment Date and until November 23, 2020 (inclusive) the Third Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate, exponentially added with a spread of one point ninety-five per cent (1.95%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the Third Series Debentures, as defined in Clause 4.9.5 below. And, as of November 24, 2020 (inclusive), the Third Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate exponentially added with a spread of two point sixty-five per cent (2.65%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the Third Series Debentures, as defined in Clause 4.9.5 below, according to the formula indicated in Clause 4.9.3.5 below (“Third Series Compensation”).

4.9.3.1 The Third Series Compensation will be calculated exponentially and cumulatively, using the pro rata temporis criterion, per Business Days elapsed, from the immediately preceding First Subscription and Payment Date or Third Series Compensation Payment Date (as defined below), immediately preceding, as the case may be, until the date of its effective payment, which must occur at the end of each Capitalization Period of the Third Series Debentures.

A-I-14

4.9.3.2 The Third Series Compensation (i) shall be paid semiannually on the 20th day of February and August of each year, as of the Issue Date, and the first payment of the Third Series Compensation shall be due on February 20, 2020, and the last one shall be due on the Third Series Debentures’ Maturity Date; and (ii) in addition to the dates set forth in item (i) above, it shall also be paid on November 24, 2020, as described in table below (“Third Series Compensation Payment Dates”):

INSTALLMENT NUMBER	FIRST SERIES COMPENSATION PAYMENT DATES
1	February 20, 2020
2	August 20, 2020
3	November 24, 2020
4	February 20, 2021
5	August 20, 2021
6	February 20, 2022
7	Third Series Debentures’ Maturity Date

4.9.3.3 If the Third Series Compensation Payment Date is not a Business Day, the payment shall be made on the next subsequent Business Day.

4.9.3.4 Those who holds Debentures at the end of the Business Day immediately preceding each Third Series Compensation Payment Date shall be entitled to the Third Series Compensation.

4.9.3.5 The third Series Compensation shall be calculated according to the following formula:

J = VNb x (Interest Factor - 1)

where:

J: unit value of the Third Series Compensation, accrued for the period, at the end of each capitalization period, calculated with eight (8) decimal places without rounding;

VNb: Unit Par Value, or balance of the Unit Par Value, of the Third Series Debentures, as the case may be, informed/calculated with eight (8) decimal places without rounding;

Interest Factor: Interest factor composed of the fluctuation parameter plus spread calculated with nine (9) decimal places, with rounding, determined as follows:

Interest Factor = (DI Factor x Spread Factor)

A-I-15

where:

DI Factor = Output of DI Rates of the First Subscription and Payment Date of Third Series Debentures, or the immediately preceding Third Series Compensation Payment Date, included, until the date of calculation, excluded, calculated with eight (8) decimal places, with rounding, determined as follows:

where:

k = number of DI Rates orders, going from one (1) to “n”;

n = total number of DI Rates, considered until the date of calculation, “n” being a whole number;

TDI_k= DI rate, of k order, expressed daily, calculated with eight (8) decimal places with rounding, determined as follows:

, where: k = 1, 2, ..., n

DI_k = DI Rate, of k order, disclosed by B3 S.A. – Brasil, Bolsa, Balcão, used with two (2) decimal places;

d_k= 1

Spread Factor = Fixed interest surcharge, calculated with nine (9) decimal places, with rounding, determined according to the following formula:

where:

Spread = 1.9500 or 2.6500, as the case may be;

A-I-16

The DI Rate must be used considering an identical number of decimal places disclosed by the entity responsible for calculating them.

Notes:

The factor resulting from the expression (1 + TDI_k) is considered with sixteen (16) decimal places without rounding;

10)

The output of daily factors (1 + TDI_k), is obtained, and at each factor accrued, the result is truncated with sixteen (16) decimal places, applying the next daily factor and so on, until the last one considered.

11)

Once the factors are accrued, the resulting factor “Factor DI” is considered with eight (8) decimal places, with rounding; and

12)

The factor resulting from the expression (DI Factor x Spread Factor) is considered with nine (9) decimal places, with rounding.

4.9.4 The Unit Par Value or the Unit Par Value balance, as the case may be, of the Fourth Series Debentures will not be subject to adjustment for inflation. As of the First Subscription and Payment Date and until November 23, 2020 (inclusive), the Fourth Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate exponentially added with a spread of two point twenty per cent (2.20%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the Fourth Series Debentures, as defined in Clause 4.9.5 below. And, as of November 24, 2020 (inclusive), the Second Series Debentures shall be entitled to a compensation corresponding to one hundred percent (100%) of the cumulative change of the DI Rate exponentially added with a spread of three point zero per cent (3.0%) per year, base of two hundred and fifty-two (252) Business Days, incident on the Unit Par Value, or on the balance of the Unit Par Value, as the case may be, and paid at the end of each Capitalization Period of the Fourth Series Debentures, as defined in Clause 4.9.5 below, according to the formula indicated in Clause 4.9.4.5 below (“Fourth Series Compensation” and, together with the First Series Compensation, the Second Series Compensation and the Third Series Compensation, the “Compensations”).

A-I-17

4.9.4.1 The Fourth Series Compensation will be calculated exponentially and cumulatively, using the pro rata temporis criterion, per Business Days elapsed, from the immediately preceding First Subscription and Payment Date or Fourth Series Compensation Payment Date (as defined below), immediately preceding, as the case may be, until the date of its effective payment, which must occur at the end of each Capitalization Period of the Fourth Series Debentures.

4.9.4.2 The Fourth Series Compensation (i) shall be paid semiannually on the 20th of February and August of each year, as of the Issue Date, with the first payment of the Fourth Series Compensation being due on February 20, 2020, and the last one shall be due on the Fourth Series Debentures’ Maturity Date and (i) in addition to the dates set forth in item (i) above, it shall also be paid on November 24, 2020, as described in table below (“Fourth Series Compensation Payment Dates” and, together with the First Series Compensation Payment Dates, Second Series Compensation Payment Dates and Third Series Compensation Payment Dates, the “Compensation Payment Dates”):

INSTALLMENT NUMBER	FIRST SERIES COMPENSATION FOURTH SERIES
1	February 20, 2020
2	August 20, 2020
3	November 24, 2020
4	February 20, 2021
5	August 20, 2021
6	February 20, 2022
7	August 20, 2022
8	February 20, 2023
9	Fourth Series Debentures’ Maturity Date

4.9.3.3 If the Fourth Series Compensation Payment Date is not a Business Day, the payment shall be made on the next subsequent Business Day.

4.9.3.4 Those who holds Debentures at the end of the Business Day immediately preceding each Second Series Compensation Payment Date shall be entitled to the Second Series Compensation.

4.9.3.5 The Fourth Series Compensation shall be calculated according to the following formula:

J = VNb x (Interest Factor - 1)

A-I-18

where:

J: unit value of the Fourth Series Compensation, accrued for the period, at the end of each capitalization period, calculated with eight (8) decimal places without rounding;

VNb: Unit Par Value, or balance of the Unit Par Value, of the Fourth Series Debentures, as the case may be, informed/calculated with eight (8) decimal places, without rounding;

Interest Factor: Interest factor composed of the fluctuation parameter plus spread calculated with nine (9) decimal places, with rounding, determined as follows:

Interest Factor = (DI Factor x Spread Factor)

where:

DI Factor = Output of DI Rates of the First Subscription and Payment Date of Fourth Series Debentures, or the immediately preceding Fourth Series Compensation Payment Date (included) until the date of calculation (excluded), calculated with eight (8) decimal places, with rounding, determined as follows:

where:

k = number of DI Rates orders, going from one (1) to “n”;

n = total number of DI Rates, considered until the date of calculation, “n” being a whole number;

TDI_k= DI rate, of k order, expressed daily, calculated with eight (8) decimal places with rounding, determined as follows:

, where: k = 1, 2, ..., n

DI_k= DI Rate, of k order, disclosed by B3 S.A. – Brasil, Bolsa, Balcão, used with two (2) decimal places;

d_k= 1

A-I-19

Spread Factor = Fixed interest surcharge, calculated with nine (9) decimal places, with rounding, determined according to the following formula:

where:

Spread = 2.2000 or 3.0000, as the case may be;

The DI Rate must be used considering an identical number of decimal places disclosed by the entity responsible for calculating them.

Notes:

13)

The factor resulting from the expression (1 + TDI_k) is considered with sixteen (16) decimal places without rounding;

14)

15)

Once accumulated, the resulting “Factor DI” with eight (8) decimal places is considered, with rounding; and

16)

The factor resulting from the expression (DI Factor x Spread Factor) is considered with nine (9) decimal places, with rounding.

4.9.5 For purposes of calculating the Compensation, “Capitalization Period” is defined as the period of time starting on the First Subscription and Payment Date (included), regarding the first Capitalization Period, or on immediately preceding Compensation Payment Date (included), regarding the other Capitalization Periods, and ending on the date of the next payment of the Compensation corresponding to the period (excluded). Each Capitalization Period of the respective series succeeds the preceding one without interruption.

A-I-20

4.9.6 If the DI Rate is not available when determining the Compensation applicable to the Debentures of any of the series, the last DI Rate applicable that is available on that date shall apply in its place, and no financial set offs shall be due, either by the Issuer or the respective Debenture holders, when the available DI Rate is disclosed.

4.9.7 In the absence of determination and/or disclosure of the DI Rate for more than ten (10) Business Days counted as of the expected date for determination and/or disclosure or further, in the event of termination or unenforceability of the DI Rate by legal provision or court order, the Trustee shall call a general meeting of Debenture holders within two (2) Business Days as of the end of the non-disclosure period, or after termination or unenforceability of the DI Rate by legal provision or court order(in the form and terms stipulated in article 124 of the Brazilian Corporation Law and in this Indenture) (“General Meeting of Debenture Holders”), so that the Debenture Holders may resolve, in mutual agreement with the Issuer, on the new compensation parameter to be applied (“Replacement Rate”). Until the resolution of the Replacement Rate, the last DI Rate disclosed shall be used in determining the DI Factor, an no financial set off shall be due between the Issuer and the respective Debenture holders, if a payment of Compensation had occurred until the date of resolution of the Replacement Rate.

4.9.7.1 In the event of not holding a General Meeting of Debenture Holders provided in Clause 4.10.7 above or, if held, there is no agreement on the Replacement Rate between the Issuer and the respective Debenture Holders representing at least seventy-five per cent (75%) of the respective outstanding Debentures, including, if for lack of obtaining a quorum for resolution, the Issuer must early redeem all the respective Debentures, within ten (10) days as of the date of closing of the respective General Meeting of Debenture Holders (or if not held in first and second call, on the date on which it should have been held) or on the Maturity Date of the respective series, whichever comes first, or within other term that may be established in said meeting, by its respective Unit Par Value or the balance of Unit Par Value, as the case may be, plus the respective Compensation owed until the effective redemption date, calculated pro rata temporis, from the respective First Subscription and Payment Date, or the respective immediately preceding Compensation Payment Date.

4.9.8 The Debentures early redeemed under the foregoing Clause shall be cancelled by the Issuer. In this event, for calculation of the Compensation of the Debentures to be redeemed, for each day of the period in which the absence of rates occurs, the last DI Rate officially disclosed shall be used.

4.9.9 If the DI Rate is disclosed again before the General Meeting of Debenture Holders referred to in Clause 4.9.7 above is held and there is no legal provision or court order expressly prohibiting its use, said meeting will no longer be held, and the DI Rate or the legal substitute for the DI Rate, as the case may be, from the date of its disclosure, it will be used for the Compensation calculation.

A-I-21

4.10 Scheduled Renegotiation

4.10.1 The Debentures will not be subject to scheduled renegotiation.

4.11 Early Maturity

4.11.1 The Trustee shall consider the early maturity of all obligations related to the Debentures and demand, upon written notice, the immediate payment by the Issuer of the respective Unit Par Value or balance of the Unit Par Value, as the case may be, plus the applicable Compensation, calculated on a pro rata temporis basis, as provided in Clause 4.9 above, as of the First Subscription and Payment Date, or of the respective Compensation Payment Date immediately preceding, until the date of its effective payment, regardless of any notice, judicial or extrajudicial notification to the Issuer, in the occurrence of any of the following events (“Automatic Early Maturity Events”):

(i)

occurrence of (a) liquidation or dissolution of the Issuer, (b) voluntary bankruptcy or bankruptcy request not resolved within the legal term, adjudication of bankruptcy or any similar proceeding in the competent jurisdiction of each company that may be created by law, of the Issuer and/or its controlled and affiliated companies, directly or indirectly (“Affiliates”) and, (c) any event similar to the previous ones that characterizes or may characterize the Issuer’s and/or its Affiliates’ insolvency status;

(ii)

proposal by the Issuer and/or its Affiliates of an extrajudicial reorganization plan to any creditor or class of creditors, or any similar proceeding in the competent jurisdiction of each company, regardless of having been requested or obtained judicial approval of said plan, or yet, entry by the Issuer and/or its Affiliates in court of a request for judicial reorganization or equivalent proceeding in the competent jurisdiction of each company, regardless of granting of the reorganization processing or its concession by the competent judge;

(iii)

default by the Issuer with any pecuniary obligation set forth in this Indenture, not remedied within one (1) Business Day from the date of the respective non-compliance;

(iv)

default of any financial debt of the Issuer and/or any of its controlled companies, and for purposes hereof, the definition and control contained in article 116 or the Brazilian Corporation Law is used (“Controlled Companies”), in unit or aggregate value, equal or higher than sixty million reais (BRL 60,000,000.00), or equivalent value in other currencies, respecting its respective cure term, or in case there is no such default, if such default is not remedied within five (5) Business Days counted from the default;

A-I-22

(v)	statement of early maturity of any debt and/or obligation of the Issuer or of any of its Controlled Companies in unit or aggregate value, equal or higher than sixty million reais (BRL 60,000,000.00), or equivalent value in other currencies;

(vi)

spin off, consolidation or merger of the Issuer by another company, without prior and express authorization of the Debenture Holders, observing the resolution quorum established in this Indenture, except if the spin off, consolidation or merger meets the requirements provided in article 231, paragraph 1 of the Brazilian Corporation Law, and except for the Issuer spin-off to transfer the equity interest it held in Éxito to Companhia Brasileira de Distribuição (“CBD”), as announced by CBD in a material fact published on September 9, 2020 (“Sendas Spin-Off”);

(vii)

conversion of the corporate type of the Issuer in accordance with articles 220 to 222 of the Brazilian Corporation Law.

(viii)

assignment, sale, disposal, spin off, transfer by gratuitous or onerous title, of the Issuer’s assets, including shares or quotas of controlled Companies, with value higher than the equivalent to twenty per cent (20%), whether individually or in the aggregate, of the Issuer’s owners’ equity, according to the last quarterly audited financial statement disclosed, except: (a) by sale, disposal, spin-off, transfer and/or the promise of transfer of assets of the Issuer, including shares or quotas of controlled companies, to any controlled provided that it is or becomes (before the event) the guarantor of the transaction, (b) with the prior written consent of the Debenture Holders, or (c) if the net proceeds obtained from said event are fully used for redemption and/or amortization of Debentures, also pursuant to Clause 4.17, except for Sendas Spin-Off announced by CBD in a material fact disclosed on September 9, 2020;

(ix)	redemption, repurchase, amortization or bonus of shares, if the Issuer is in default with any of its pecuniary obligations established in this Indenture, provided, however, the payment of minimum mandatory dividend provided in Article 202 of the Brazilian Corporation Law;

(x)

distribution of dividends, including dividends in advance and/or payment of interests on own capital (“JCP”) assigned as dividends by the Issuer, above the minimum mandatory dividend provided for in article 202 of the Brazilian Corporation Law, except (a) if there is a prior and express authorization of the Debenture holders; or (b) in case of JCP assigned as dividends, if there is a distribution of net profit of the respective fiscal year in a percentage of up to twenty-six per cent (26%), due to the variation of the Withholding Income Tax (IRRF) rates applicable to the shareholders, under the legislation in force;

A-I-23

(xi)

if the Issuer transfers or in any way assigns or promises to assign to third parties the rights and obligations assumed under this Indenture;

(xii)

judicial inquiry, by the Issuer and/or any of its Controlled Companies and/or parent companies, and for purposes of this clause, the definition of control contained in article 116 or the Brazilian Corporation Law, in this Indenture is used; and

(xiii)

reduction of the Issuer’s capital, after the execution date of this Indenture, without the prior consent of the holders of the Debentures, as provided in article 174, paragraph 3 of the Brazilian Corporation Law.

4.11.2 The occurrence of any of the events described above shall be promptly communicated by the Issuer to the Trustee, within up to two (2) Business Days. The non-compliance by the Issuer of the obligation set forth in this Clause 4.11.2 will not prevent the Trustee or the holders of the Debentures from, at its discretion, exercising its powers and claims set forth in this Indenture and in the other documents of the Issue, including the right to consider and/or state early maturity of the Debentures, as applicable, in accordance with this Clause Four.

4.11.3 The Trustee shall call, upon becoming aware of the occurrence of any of the Events of Non-Automatic Early Maturity (as defined below), within two (2) Business Days from the date on which it becomes aware of the occurrence of the respective event, the General Meeting of Debenture Holders in accordance with Clause 6 below, to resolve on the possible non-declaration of the Debentures early maturity (each of these events, “Events of Non-Automatic Early Maturity” and, together with the Events of Automatic Early Maturity, “Events of Early Maturity”):

(i)

protests of titles against the Issuer, except for those provenly made by error or bad faith of third parties, provided that validly evidenced by the Issuer within five (5) Business Days as of the notice of such process, for whose payment the Issuer and/or any Controlled Company is liable, whose value, individually or jointly, is higher than sixty million reais (BRL 60,000,000.00), unless, within fifteen (15) Business Days as from the notice of said protest, it is validly proved by the Issuer and/or any Controlled Company that (a) the protest was cancelled, stopped or suspended, or (b) guarantees were given in court in an amount at least equivalent to the protested amount;

(ii)	Default by the Issuer of any non-pecuniary obligation set forth in this Indenture, not remedied within five (5) Business Days from the date of the default, and the term provided in this item does not apply to the obligations for which a specific grace period has been established;

A-I-24

(iii)

non-fulfillment of the obligation of allocating the funds raised by means of the Debentures as established in Clause 3.6 of this Indenture;

(iv)

prove to be false or reveal to be incorrect, inconsistent, insufficient or misleading any of the representations or warranties provided by the Issuer in this Indenture and/or in any document related to the Debentures and/or to the Issue, provided that the said inaccuracy, inconsistency or insufficiency is not remedied by the Issuer within five (5) Business Days counted as of the notice in writing, forwarded by the Trustee to the Issuer in this regard, and the said cure term does not apply for representations or warranties that prove to be false or misleading;

(v)

non-compliance with any court decision that became final and unappealable or final arbitration decision of adverse nature against the Issuer, in unit or aggregate value higher than sixty million reais (BRL 60,000,000.00), or equivalent amount in other currencies, in the period set forth in the decision or, if a period is not provided in the decision, within up to ten (10) Business Days counted as of the date on which the Issuer is formally notified of the decision;

(vi)	merger of shares and/or transfer of controlling interest of the Issuer, in accordance with the wording set forth in article 116 of the Brazilian Corporation Law, unless the Casino remains as direct or indirect controller of the Issuer, individually or through a controlling block;

(vii)

change in the corporate purpose of the Issuer, as described in item 3.1 above, which implies a change in the Issuer’s main activity or includes activity which implies a change in the Issuer’s main activity;

(viii)

no maintenance by the Issuer, while there are outstanding Debentures of the following financial indexes and limits (“Financial Indexes and Limits”), which shall be calculated quarterly by the Issuer, based on the twelve (12) months prior to the respective calculation, based on the Issuer’s consolidated financial statements, and accompanied by the Trustee within up to ten (10) Business Days counted as of the date of the presentation of the necessary documents by the Issuer to the Trustee:

(a)

Ratio between Consolidated Net Debt (“DL”) and Owners’ Equity (“PL”), as the table below:

Quarter	4Q20	1Q21	2Q21	3Q21	4Q21	1Q22	2Q22	3Q22	4Q22	1Q23	2Q23	3Q23	4Q23
DL/PL	4.5	5.0	5.0	5.0	3.0	3.5	3.5	3.5	2.00	2.5	2.5	2.5	2.0

and

A-I-25

(b)

Ratio between Consolidated Net Debt (“DL”) and Consolidated EBITDA (“EBITDA”), as the table below:

Quarter	4Q20	1Q21	2Q21	3Q21	4Q21	1Q22	2Q22	3Q22	4Q22	1Q23	2Q23	3Q23	4Q23
DL/EBITDA	3.0	3.25	3.25	3.25	2.5	2.75	2.75	2.75	2.0	2.25	2.25	2.25	2.0

(ix)

carrying out financial transactions and/or other transactions and/or entering into any contracts with related parties not directly or indirectly controlled by the Issuer, not essential to the Issuer’s operation, or providing guarantees in favor or benefit of its direct or indirect controllers, except the agreements and/or guarantees in effect on the settlement date of this Issue or if such transactions occur with the prior and express authorization of the Debenture holders;

(x)	occurrence of (a) Casino’s liquidation or dissolution, (b) voluntary bankruptcy petition or bankruptcy not resolved within the legal term, adjudication of bankruptcy or any similar proceeding in the competent jurisdiction of Casino that may be created by law, by Casino;

(xi)

proposal by Casino of an extrajudicial reorganization plan to any creditor or class of creditors, or any similar proceeding in the competent jurisdiction of Casino, regardless of having been requested or obtained judicial approval of said plan, or yet, entry by Casino in court of a request for judicial reorganization, regardless of granting of the reorganization processing or its concession by the competent judge;

(xii)

judicial decision, resulting from inquiry of the Indenture by any person not mentioned in item (xii) of Clause 4.11.1 above, whose effects are not suspended within up to twenty (20) Business Days from the date on which the Issuer becomes aware of said decision judicial;

(xiii)

constitution of any Lien (defined as mortgage, pledge, chattel mortgage, fiduciary assignment, usufruct, trust, charge, encumbrance or burden, seizure, sequestration or attachment, judicial or extrajudicial, voluntary or involuntary, or other act that has a practical effect similar to any of the expressions above, in unit or aggregate value, equal to or higher than sixty million reais (BRL 60,000,000.00), or equivalent value in other currencies (“Lien”) on asset(s) and/or income, present and/or future, of the Issuer, including, but not limited to, shares or quotas of its subsidiaries, except: (a) for Liens existing on the Issue Date; (b) for Liens created as a result of renewals or substitutions or renegotiations, total or partial, of debts existing on the Issue Date, provided that the Lien is constituted exclusively on the asset that already guaranteed the renewed, substituted or renegotiated debt on the Issue Date; or (c) for Liens existing on any asset of any company at the time that such company is incorporated by the Issuer and which was not created due to or in anticipation of that event; and

A-I-26

(xiv)

default, as determined in a judicial decision, by the Issuer and/or its Controlled Companies, as well as by its employees and their respective directors and members of the board of directors, as applicable, of Law No. 12,846, of August 1, 2013, as amended, Decree No. 8,420, of March 18, 2015, the UK Bribery Act 2010, as amended, and the US Foreign Corrupt Practices Act of 1977, as amended, and other applicable rules that deal with acts of corruption and acts that are harmful to public administration (“Anticorruption Laws”).

4.11.3.1 For the purposes of the Clause 4.12.3 above, the following definitions shall apply: (i) “Consolidated Net Debt” means the total debt of the Issuer (short and long term loans and financing, including debentures and promissory notes), subtracted from cash availabilities and accounts receivable, with a discount of one point five percent (1.5%), arising from sales with credit cards, food vouchers and multi-benefits; and (ii) “Consolidated EBITDA”, the gross profit, less operating expenses, excluding depreciation and amortization, plus other recurring operating income and excluding general administrative and sales expenses over the last four (4) quarters covered by the most recent consolidated financial statements available from the Issuer, prepared in accordance with accounting principles generally accepted in Brazil; and (iii) “Consolidated Gross Debt” the total debt of the Issuer (short and long-term loans and financing, including debentures and promissory notes), and the indicators described above will be verified based on the financial statements and consolidated information of the Issuer.

4.11.4 The non-statement of the early maturity of the Debentures must be resolved by Debenture Holders who represent at least ninety percent (90%) of the outstanding Debentures.

4.11.4.1 Should the General Meeting of Debenture Holders referred to in Clause 4.11.4 above not be held due to lack of a quorum, at the first and second call, or there is not enough quorum to not declare the early maturity, the Trustee should also consider in advance all obligations arising from the Debentures and demand immediate payment of the respective Unit Par Value or the balance of the Unit Par Value, as the case may be, plus Compensation and other charges due up to the date of actual payment.

4.11.5 In the event of early maturity of the Debentures by the Trustee, the Issuer undertakes to pay the respective Unit Par Value or the balance of the Unit Par Value, as the case may be, plus the Compensation, calculated on a pro rata temporis basis as of the First Subscription and Payment Date, or as of the immediately preceding respective Compensation Payment Date, until the respective Maturity Date, as well as any other amounts eventually due by the Issuer under this Indenture.

A-I-27

4.11.5.1 The payment of the amounts referred to in the previous Clause, as well as any other amounts eventually due by the Issuer under this Indenture, shall be performed in up to one (1) Business Day as of the written communication to be sent by the Trustee to the Issuer, in accordance with Clause Nine of this Indenture, outside the scope of B3, under penalty of the Issuer in not doing so, being obliged yet, to the payment of the late payment charges set forth in Clause 4.17 below.

4.11.5.2 B3 shall be communicated immediately after the statement of the early maturity, in accordance with the other terms and conditions of the transactions manual.

4.12 Optional Early Redemption

4.12.1. Second Series Debentures will not be subject to optional early redemption The Third Series Debentures and/or the Fourth Series Debentures may be partially or fully redeemed as of August 1st, 2021 (including), at the Issuer’s discretion, through delivery of communication to all the Debenture Holders of the respective series, with a copy to the Trustee, or publication of a communication to the Debenture Holders of the respective series, pursuant to Clause 4.20 of this Indenture, with ten (10) Business Days in advance of the event date (“Optional Early Redemption”), informing: (i) the date on which the Optional Early Redemption shall be made and to which series it relates; and (ii) any other information relevant to the Debenture Holders of the respective series.

4.12.1.1 In the event of Optional Early Redemption, payment of the respective Unit Par Value or balance of the Unit Par Value will be made, as the case may be, plus the respective Compensation, calculated pro rata temporis from the respective First Subscription and Payment Date or the respective last Compensation Payment Date, as the case may be, until the date of the actual Optional Early Redemption, plus the Optional Early Redemption Premium (as defined below), as well as a fine and default interest, if any. For the purposes of this Indenture, the “Optional Early Redemption Premium” is a premium equivalent to zero point thirty percent per year (0.30% p.a.), pro rata temporis, based on two hundred and fifty-two (252) Business Days, on the amount redeemed, considering the number of Business Days to elapse between the Optional Early Redemption date and the Third Series Debentures’ Maturity Date or the Fourth Series Debentures’ Maturity Date, as the case may be.

4.12.2 B3 shall be communicated by the Issuer, together with the Trustee, about the realization of the Optional Early Redemption of the Debentures with at least three (3) Business Days in advance of the stipulated date for its realization.

A-I-28

4.13 Optional Extraordinary Amortization

4.13.1 Second Series Debentures will not be subject to optional extraordinary amortization. The Issuer may, as of August 1, 2021 (including), subject to the terms and conditions set out below, at its sole discretion and regardless of the will of the Debentures Holders, perform optional amortization of the Unit Par Value or the balance of the Unit Par Value of the Third Series Debentures and/or Fourth Series Debentures, as the case may be, upon payment of an installment of the Unit Par Value or the balance of the Unit Par Value of the respective series, plus the respective Compensation, calculated pro rata temporis from the First Subscription and Payment Date or the respective last Compensation Payment Date, as the case may be, up to the date of effective early amortization, plus the Optional Amortization Premium (as defined below), as well as a fine and default interest, if any. (“Optional Amortization”). For the purposes of this Indenture, the “Optional Amortization Premium” is a premium equivalent to zero point thirty percent per year (0.30% p.a.), pro rata temporis, based on two hundred and fifty-two (252) Business Days, on the amount to be amortized in advance, considering the number of Business Days to elapse between the Optional Amortization date and the Third Series Debentures’ Maturity Date or the Fourth Series Debentures’ Maturity Date, as the case may be.

4.13.1.2 The Optional Amortization Notice must include: (i) the Optional Amortization date and procedure, in compliance with the applicable law, as well as the terms and conditions provided in this Indenture; (ii) mention to the installment of the Unit Par Value that will be amortized under this Clause; (iii) which of the series that the Optional Amortization will cover; and (iv) the other information considered relevant by the Issuer to be known by the Debenture Holders of the respective series.

A-I-29

4.14 Optional Acquisition

4.14.1 The Issuer may acquire Debentures, in whole or in part, at any time, according to the provisions of article 55, paragraph 3 and items I and II, of the Brazilian Corporation Law, subject to the acceptance of the respective Debentures holder seller: (a) for an amount equal to or less than the Unit Par Value or balance of the Unit Par Value, as the case may be, if applicable, plus the respective Compensation and, if applicable, the Late Payment Charges due, the fact being included in the management report and the Issuer’s consolidated and audited financial statements (and/or quarterly financial information) (or subject to special review, as the case may be); or (b) for an amount higher than the Unit Par Value or balance of the Unit Par Value, as the case may be, if applicable, provided that it complies with the rules issued by CVM, plus the respective Compensation and, if applicable, the Late Payment Charges due. The Debentures acquired by the Issuer may, at the Issuer’s discretion, be canceled, hold in treasury or be placed on the market again. The Debentures acquired by the Issuer to be hold in treasury under this clause, if and when replaced on the market, will be entitled to the same Compensation applicable to the other Debentures.

4.15 Early Redemption Offering

4.15.1 The Issuer may, at its sole discretion, at any time as of the Issue Date, perform an early redemption offering of all Debentures (“Early Redemption Offering”), and the Early Redemption Offering proposed by the Issuer must be addressed to all Debenture holders, with a copy to the Trustee. The Early Redemption Offering will be addressed to all Debenture holders, without distinction, ensuring equal conditions to all Debenture holders to accept the early redemption of the Debentures they hold, in accordance with the terms and conditions set forth in the clauses below.

4.15.2 The Issuer will perform the Early Redemption Offering by publishing a notice addressed to the Debenture holders, to be widely disclosed pursuant to Clause 4.20 below, or through an individual notice to be sent by the Issuer to each of the Debenture holders, with copy to the Trustee and B3 (“Early Redemption Offering Notice”), which shall describe the terms and conditions of the Early Redemption Offering, including: (i) effective date for the redemption subject to the Early Redemption Offering, which will coincide with the payment of the Early Redemption Offering Amount (as defined below); (ii) the mention that the Early Redemption Offering Amount will be calculated in accordance with Clause 4.15.3 below; (iii) the early redemption premium amount to be offered by the Issuer, if any, which may not be negative; (iv) the form and term for the statement to the Issuer of the Debenture holders who choose to adhere to the Early Redemption Offering, subject to the provisions of Clause 4.15.4 below; and (v) the other information necessary for the decision by the Debenture holders and for the operationalization of the Early Redemption Offering.

A-I-30

4.15.3 At the time of the Early Redemption Offering, Debenture holders will be entitled to the payment of the Unit Par Value or the balance of the Unit Par Value, as the case may be, and if applicable, plus: (i) the respective Compensation, calculated pro rata temporis, as of the respective First Subscription and Payment Date or the respective Compensation Payment Date immediately preceding, as the case may be, until the redemption date subject to the Early Redemption Offering, as well as, if applicable, (ii) redemption premium, which, if any, may not be negative and (iii) if applicable, Late Payment Charges due and unpaid, up to the date of said redemption (“Early Redemption Offering Amount”).

4.15.4 After submission or publication, as applicable, of the Early Redemption Offering Notice, the Debenture holders who choose to adhere to the Early Redemption Offering will have a term of ten (10) Business Days to formally make their statement before the Issuer, with a copy to the Trustee.

4.15.5 If the early redemption of Debentures is carried out under the terms set out above, it must occur on a single date for all Debenture holders who adhere to the Early Redemption Offering, on the date provided in the Early Redemption Offering Notice, with the consequent cancellation of the redeemed Debentures.

4.15.6 At least five (5) Business Days from the date of early redemption, the Issuer shall communicate to the Bookkeeping Agent, the Settling Bank, B3 and the Trustee the date of early redemption.

4.15.7 The Debentures payment to be redeemed in advance, through the Early Redemption Offering, will be made by the Issuer (i) through the procedures adopted by B3 for the Debentures held in custody electronically at B3 or (ii) through deposit in current accounts indicated by the Debentures holders, to be made by the Bookkeeping Agent, in the case of Debentures that are not held in electronic custody pursuant to item (i) above.

4.16 Late Payment Charges

4.16.1 In case of lack of punctuality in the payment by the Issuer of any amount due to the holders of Debentures, the debits in arrears and not paid by the Issuer shall be since the default date until the date of the actual payment subject to, regardless of notice, or judicial or extrajudicial notification, besides the Compensation: (i) a conventional, irreducible and non-compensatory fine of two percent (2%); and (ii) interest for late payment at the rate of one percent (1%) per month, both incident on the amounts in arrears, except if the default occurs due to a third party operational problem and that such problem be resolved within one (1) Business Day after the default date.

A-I-31

4.17 Decline of Rights to Accruals

4.17.1 The non-attendance of the Debentures holder to receive the amount corresponding to any of the pecuniary obligations due by the Issuer on the date set forth in this Indenture or in a notice published by the Issuer, shall not entitle him to receive the Compensation, late payment charges or any increase relative to the delay in the receipt, however, being assured the right acquired until the date of the respective maturity.

4.18 Place of Payment

4.18.1 The payments to which the Debentures are entitled shall be made by the Issuer through B3, pursuant to the procedure of B3, in case the Debentures are held in custody electronically in B3, or by the Issuer through the Settling Bank, in case the Debentures are not held in custody electronically in B3.

4.19 Extension of Deadlines

4.19.1 The deadlines regarding the payment of any obligation provided in this Indenture shall be automatically extended until the first subsequent Business Day if the due date coincides with the day on which there is no bank working hours in the City of São Paulo, State of São Paulo, without any addition to the amounts to be paid, except in cases where the payment must be made through B3, in which case there will only be an extension when the date of payment coincides with a national holiday, Saturday or Sunday.

4.19 Advertising

4.20.1 All relevant acts and decisions resulting from the Issue which, in any way, may involve directly or indirectly the interests of the Debentures holders, pursuant to CVM Instruction 358, shall be mandatorily published as a “Notice to the Debenture Holders” in the Issuer’s Disclosure Newspapers, as well as in the Issuer’s page in the international computer network (www.assai.com.br). The Issuer may change the Issuer’s disclosure newspapers by other newspapers of general circulation by means of written communication to the Trustee and publication as a notice in the newspaper to be replaced.

4.21 Tax Immunity

4.21.1 Should any holder of Debentures enjoy any type of tax immunity or exemption, said holder of Debentures must submit to the Settling Bank, at least ten (10) Business Days before the date set for receipt of payments relating to the Debentures, documentation proving the said tax immunity or exemption, under penalty of having discounted from their payment the amounts due under the tax legislation in force.

4.21.2 The Debentures holder who has submitted documentation proving his condition of immunity or tax immunity, under the item above, and who has this condition altered and/or revoked by regulation, or for failing to meet the conditions and requirements provided in the applicable law, or even, if this condition is questioned by a competent judicial, tax or regulatory authority, or that has this condition altered and/or revoked for any reason other than those mentioned in this Clause, he must communicate this fact, in detail and in writing, to the Settling Bank and the Bookkeeping Agent, with a copy to the Issuer, as well as provide any additional information regarding the topic requested by the Settling Bank and the Bookkeeping Agent or the Issuer.

A-I-32

4.22 Amendment to this Indenture

4.22.1 Any amendments to this Indenture shall be signed by the Issuer and by the Trustee after approval in the General Meeting of Debenture Holders, subject to the provisions set forth below, according to Clause Seven below, and later filed with JUCERJA.

4.22.2 The Parties agree that this Indenture, as well as the other documents of the Issue, may be amended, without the need for any approval from the Debenture holders, whenever and only: (i) when such change arises exclusively from the need to meet the requirements for compliance with CVM, B3 or ANBIMA rules, regulations or requirements; (ii) when a relevant error is verified, be it a gross, typing or arithmetic error; (iii) amendments to the Indenture already expressly permitted under the terms thereof; or (iv) due to the updating of the Parties’ registration data, such as changes in the corporate name, address and telephone, among others, as long as there is no additional cost or expense to the Debenture holders.

5 ADDITIONAL OBLIGATIONS OF THE ISSUER

5.1 The Issuer is additionally obliged to:

(i)

Provide the Trustee:

(a)

within at most, ninety (90) days after the end of each fiscal year, or within five (5) Business Days as of the date of its disclosure, whichever occurs first, a copy of the Issuer’s complete financial statements related to the respective fiscal year, followed by the management report and the independent auditors’ opinion. The information referred to in this item shall be followed by: (1) report with the calculation chart demonstrating the determination of the Financial Indexes and Limits, prepared by the Issuer, explaining the items necessary for their calculation, and the Trustee may request the Issuer and/or the Issuer’s independent auditors any necessary additional clarifications; and (2) a statement signed by the Issuer’s officer(s), in accordance with its bylaws, certifying: (2.1) that the provisions contained in the Indenture remain valid; and (2.2) the non-occurrence of any of the events of early maturity and non-existence of non-compliance with the obligations of the Issuer before the holders of Debentures and the Trustee;

A-I-33

(b)

within a maximum of forty-five (45) days after the end of the three (3) first quarters or five (5) Business Days after the disclosure to the market, whichever occurs first, a copy of Issuer’s quarterly information regarding the respective quarter, followed by the management report and the independent auditors’ opinion. The information referred to in this item must be accompanied by a report with the calculation chart demonstrating the determination of the Financial Indexes and Limits, prepared by the Issuer, explaining the items necessary for their calculation, and the Trustee may request the Issuer and/or the Issuer’s independent auditors any necessary additional clarifications;

(c)

(d)

on the same date of publication, the information disclosed as provided for in Clause 4.20 above;

(e)

notices to the holders of Debentures, relevant facts, as well as minutes of general meetings and meetings of the board of directors of the Issuer, as applicable, which, in some way, involve the interest of the holders of Debentures, within two (2) Business Days as of the date they are (or should have been) published or, if not published, as of the date they are carried out;

(f)

(g)

within up to five (5) Business Days after its receipt, copy of any mail or judicial notification received by the Issuer that may result in a Material Adverse Effect to the business, financial situation and the result of the transactions of the Issuer;

(h)

an original copy with attendance list and an electronic copy (pdf) with the JUCERJA digital seal of the acts and meetings of the Debenture holders that may be carried out within the scope of the Indenture; and

(i)

all other documents and information that the Issuer, in accordance with the terms and conditions set forth in this Indenture, has undertaken to send to the Trustee;

(ii)

submit, pursuant to the law, its accounts and balance sheets to evaluation by an independent auditing firm registered with CVM;

(iii)

maintain, in adequate operation, a body to efficiently serve the holders of Debentures or hire financial institutions authorized to provide this service;

A-I-34

(iv)

(v)

inform the Trustee within up to two (2) Business Days about the occurrence of any event set forth in Clause 4.11.1 of this Indenture;

(vi)

comply with all determinations issued by CVM, including by sending documents, also providing the information requested;

(vii)

not to carry out transactions out of its corporate purpose, complying with the statutory, legal and regulatory provisions in force;

(viii)

notify the Trustee in up to two (2) Business Days about any substantial change in the financial, economic, commercial, operational, regulatory or corporate conditions or in the Issuer’s business that (a) makes it impossible or significantly complicates the compliance by the Issuer, of its obligations resulting from this Indenture and the Debentures; or (b) causes the financial statements or information of the Issuer no longer reflect the real economic and financial condition of the Issuer;

(ix)

keep its property and assets duly insured, according to its current practices;

(x)

(xi)

except in cases where, in good faith, the Issuer is discussing the law, rule or regulation applicability at the administrative or judicial levels and this discussion does not cause the interruption or suspension of the Issuer’s activities or could result in a material adverse effect: (a) in the Issuer’s economic, financial or operational situation; or (b) in the timely fulfillment of the obligations assumed by the Issuer before the Debenture holders, under this Indenture; (“Material Adverse Effect”), comply with all applicable laws, rules, regulations and orders in any jurisdiction in which the Issuer do business or have assets;

(xii)

keep the Settling Bank, the Bookkeeping Agent, the Trustee, and the CETIP21 secondary market negotiation environment hired, during the Debentures term of validity, at its own expense;

(xiii)

A-I-35

(xiv)

make the collection of any taxes or contributions that may be or may come to be levied on the Issue and that are the responsibility of the Issuer;

(xv)

keep valid and regular, during the term of validity of the Debentures, the representations and warranties submitted in this Indenture, as applicable;

(xvi)

not disclose to the public information regarding the Issuer, the Restricted Offering or the Debentures in disagreement with the provisions of the applicable regulations, including, but not limited to, the provisions of CVM Instruction 476 and article 48, item II of CVM Instruction No. 400, dated as of December 29, 2003, as amended;

(xvii)

refrain from trading securities issued by it until the Lead Arranger sends the closing notice of the Restricted Offering to the CVM, subject to the provisions in article 12 of CVM Instruction 476;

(xviii)

(xix)

maintain the Debentures deposited for trading in the secondary market during the term of validity of the Debentures, bearing the costs of said deposit;

(xx)

perform and provide evidence to the Trustee of all necessary registrations, entries and records, as provided for in this Indenture in the competent bodies, including, but not limited to, JUCERJA;

(xxi)

notify the holders of Debentures and the Trustee within up to two (2) Business Days in case any of the statements provided by the Issuer in this Indenture become totally or partially untrue, incomplete or incorrect;

(xxii)

(xxiii)

A-I-36

(xxiv)

(xxv)

to comply with the legislation in force, especially the labor, social security and environmental legislation, always taking care so that (a) the Issuer does not use directly or indirectly work in conditions similar to slavery or child labor; (b) the Issuer’s workers are duly registered under the legislation in force; (c) the Issuer fulfills the obligations resulting from the respective employment contracts and the labor and social security legislation in force; (d) the Issuer complies with the legislation applicable to the protection of the environment, as well as the public health and safety; (e) the Issuer holds all permits, licenses, authorizations and approvals necessary for the exercise of its activities, in compliance with the applicable environmental legislation; and (f) the Issuer has all necessary registrations, in compliance with the applicable civil and environmental legislation;

(xxvi)

if becomes aware of any act or fact that violates the Anti-Corruption Laws, it will immediately notify the Trustee;

(xxvii)

make any payments due to the holders of Debentures exclusively by the means set forth in this Indenture;

(xxviii)

comply with the obligations related to the allocation of funds arising from the Issue and to the evidence of said allocation, in accordance with Clause 3.6 above;

(xxix)

(xxx)

in case of contracting any type of instrument of debt, loan, financing, issuing of debentures or promissory notes or contracting any other fundraising transaction in the financial or capital markets that establishes conditions related to personal guarantees and/or security interest, financial covenants, cure terms and thresholds, more beneficial to the respective creditors than the conditions provided for in this Indenture (“New Debt”), the Issuer shall notify this fact to the Trustee within five (5) Business Days from the respective execution. The Trustee and the Issuer shall enter into an amendment to this Indenture that amends it in order to equate the conditions set forth in this instrument to those of the New Debt (“Equivalence Amendment”) within fifteen (15) Business Days from the date of receipt of the notification referred to herein, without the need for approval by the General Meeting of Debenture Holders. The Equivalence Amendment shall be registered with JUCERJA in the form of Clause 2.1.3 above.

A-I-37

5.2 The Issuer, herein, undertakes, irrevocably and irreversibly, to take care so that the transactions that it may practice in the B3 scope are always supported by good market practices, with full and perfect compliance with the applicable standards to the matter, exempting the Trustee from any and all liability for claims, losses and damages, loss of profits and/or emerging profits to which the non-compliance with the said standards may give cause, provided that they have been proven not to have been generated by the Trustee’s actions.

5.3 Without prejudice to other obligations expressly provided for in the regulations in force and in this Indenture, the Issuer undertakes to, pursuant to CVM Instruction 476, as applicable:

(i)

prepare its year-end financial statements and, if applicable, consolidated statements, in accordance with the Brazilian Corporation Law and the rules issued by CVM;

(ii)

submit its financial statements for audit by an auditor registered with CVM;

(iii)

(iv)

disclose the following financial statements, accompanied by notes and the independent auditors’ report, within three (3) months from the end of the fiscal year;

(v)

comply with the provisions of CVM Instruction No. 358, of January 3, 2002, as amended (“CVM Instruction 358”), regarding the duty of confidentiality and trade prohibitions;

(vi)

disclose on its website on the world wide web the occurrence of any “Relevant Fact”, as defined in article 2 of CVM Instruction 358, and report the occurrence of such Relevant Fact immediately to the Arrangers and the Trustee; and

(vii)

provide all information requested by CVM and B3; and

(viii)

disclose on its website on the world wide web the annual report and other communications sent by the trustee on the same date of its receipt, also pursuant to the provisions of item “iv” above.

A-I-38

6 TRUSTEE

6.1 Appointment

6.2 Representations

6.2.1 The Trustee hereby represents, under penalty of law:

(i)

that it has no legal impediment, pursuant to article 66, paragraph 3, of the Brazilian Corporation Law, and article 6 of CVM Instruction 583, to exercise the function granted;

(ii)

that accepts the function granted, fully assuming the duties and attributions provided in the applicable law and in this Indenture;

(iii)

that it is fully aware and accepts this Indenture and all its terms and conditions;

(iv)

that it has no connection with the Issuer that prevents it from exercising its functions;

(v)

that it is aware of the applicable regulations issued by the Central Bank of Brazil and CVM, including Central Bank of Brazil Circular No. 1,832, of October 31, 1990;

(vi)

that it is duly authorized to enter into this Indenture and to comply with its obligations set forth herein, complying with all the legal and corporate requirements necessary for this purpose;

(vii)

that it is duly qualified to act as a trustee, under the applicable regulations in force;

(viii)

that it is a financial institution, and is duly organized, incorporated and existing in accordance with Brazilian laws;

(ix)

that this Indenture constitutes a legal, valid, binding and effective obligation of the Trustee, enforceable in accordance with its terms and conditions;

(x)

that the execution of this Indenture and the fulfillment of the obligations provided herein do not breach any obligation previously assumed by the Trustee;

A-I-39

(xi)

that acts as a trustee in other securities issued by the Issuer or of an affiliate, controlled, controlling company or member of the same group as the Issuer, as described below;

Issue	16^th issue of debentures by Companhia Brasileira de Distribuição
Total Issue Value	BRL 1,200,000,000.00
Amount	700,000 (1^st series); 500,000 (2^nd series)
Type	unsecured
Guaranties	N/A
Maturity Date	09/10/2021 (1^st series); 09/10/2022 (2^nd series)
Compensation	162,71% of DI Rate (1^st series); 163,56% of DI Rate (2^nd series)
Classification	financial compliance

Issue	17^th issue of debentures by Companhia Brasileira de Distribuição
Total Issue Value	BRL 2,000,000,000.00
Amount	2,000,000
Type	unsecured
Guaranties	N/A
Maturity Date	1/6/2023
Compensation	100% of DI Rate + 1.45%
Classification	financial compliance

A-I-40

Issue	1^stissue of Promissory Notes of Sendas Distribuidora S.A.
Total Issue Value	BRL 800,000,000.00
Amount	16
Type	Unsecured
Guaranties	N/A
Maturity Date	07/05/2020 (1^st series); 07/04/2021 (2^nd series); 07/04/2022 (3^rd series); 07/04/2023 (4^th series); 07/04/2024 (5^th series); 07/04/2025 (6^th series)
Compensation	100% of DI Rate + 0.72% p.a.
Classification	financial compliance

Issue	4^thissue of Promissory Notes of Companhia Brasileira de Distribuição
Total Issue Value	BRL 800,000,000.00
Amount	800
Type	unsecured
Guaranties	N/A
Maturity Date	1/9/2022
Compensation	105.75% of DI Rate
Classification	financial compliance

A-I-41

(xii)

that ensures and will ensure, under paragraph 1 of article 6 of CVM Instruction 583, equal treatment to all Debenture holders, in compliance with obligations and specific rights attributed to the respective Debenture holders of each issue or series; and

(xiii)

that verified the consistency of the other information in this Indenture.

6.3 Replacement

A-I-42

6.3.4 The Trustee replacement shall be communicated to CVM, within up to seven (7) Business Days after the registration of the amendment to the Indenture that formalizes the respective replacement.

6.3.6 The rules and precepts on the subject issued by CVM apply to the cases of Trustee replacement.

6.4 Obligations

6.4.1 In addition to others provided by law, in the CVM regulations and in this Indenture, the Trustee’s obligations are:

(i)

exercise its activities in good faith, transparency and loyalty to the Debentures holders;

(ii)

(iii)

resign from the function, in the event of conflict of interest or any other type of disability, and immediately call the meeting provided for in item “xi” below to resolve on its replacement;

(iv)

keep all documentation regarding the exercise of its functions;

(v)

verify the consistency of the information in this Indenture, ensuring that omissions, failures or defects of which it is aware are remedied;

(vi)

arrange with the Issuer so that the Indenture and its amendments are registered with JUCERJA, and in the event of the Issuer’s omission, adopt the measures eventually provided for by law;

A-I-43

(vii)

(viii)

report on the sufficiency of the information provided in the proposals to modify the Debentures conditions;

(ix)

(x)

request, when deemed necessary, the Issuer external audit;

(xi)

call, when necessary, the General Meeting of Debenture Holders, pursuant to Clause 7.2 below;

(xii)

attend the General Meeting of Debenture Holders to provide the information requested;

(xiii)

prepare an annual report for Debenture Holders, pursuant to article 68, paragraph 1, letter b, of the Brazilian Corporation Law, which shall contain the information provided in Annex 15 of CVM Instruction 583;

(xiv)

(xv)

(xvi)

supervise compliance with the provisions of this Indenture, including the positive and negative covenants; and

(xvii)

A-I-44

6.4.3 The Trustee must base itself on the information made available by the Issuer to monitor the Financial Indexes and Limits.

6.5 Trustee’s Compensation

(i)

(ii)

the payment of the installments described above shall be made to the Trustee plus the amounts regarding taxes and contributions levied on billing: (a) ISS (Municipal Services Tax); (b) PIS (Social Integration Program); (c) COFINS Contribution to Social Security); (d) CSLL (Social Contribution on Net Profits); and (e) IRRF (Withholding Income Tax); and (f) any other taxes that may be levied on the Trustee remuneration, at the tax rates in force on the dates of each payment;

(iii)

(iv)

(v)

any additional obligations attributed to the Trustee or changes in the transaction ordinary characteristics will allow the Trustee to review the fees proposed herein.

A-I-45

6.6 Expenses

6.6.1 The compensation does not include the expenses with travel, meals, accommodation, transportation, notices, certificate withdrawal, notary expenses, photocopying, scanning, sending documents and publication necessary to act as the Trustee, during or after the service implementation, to be covered by the Issuer, whenever possible, after prior approval. Also not included, and will be borne by the Issuer, the expenses with experts, such as legal advice to the Trustee. Any expenses, deposits, court costs, loss of suit, as well as indemnities, resulting from actions filed against the Trustee resulting from the exercise of its function or its performance in defense of the transaction structure, will be borne by the Issuer. Such expenses include attorneys’ fees for the Trustee defense and shall also be advanced by the Issuer.

7 GENERAL MEETING OF DEBENTURE HOLDERS

A-I-46

7.3 The provisions of the Brazilian Corporation Law regarding shareholders’ general meetings will apply to the General Meeting of Debenture Holders.

7.3.1 The chairman of the General Meeting of Debenture Holders will be the Debentures Holder elected by the other Debentures Holders in attendance or whoever is appointed by CVM.

7.4 The General Meeting of Debenture Holders will be called at least fifteen (15) days in advance, in the case of the first call.

7.4.1 The General Meeting of Debenture Holders on second call may only be held at least eight (8) days after the disclosure of the second call.

7.5 Pursuant to article 71, paragraph 3, of the Brazilian Corporation Law, the General Meeting of Debenture Holders will be held, on the first call, with the attendance of Debenture Holders representing at least half of the outstanding Debentures or outstanding Debentures of the respective Series, as applicable, and, on the second call, with any number.

7.6 Each outstanding Debenture will grant its holder the right to one vote at the General Meeting of Debenture Holders, whose resolutions, with the exception provided in this Indenture, will be taken by Debenture Holders who represent the majority of the outstanding Debentures and outstanding Debentures of the respective Series, as applicable, and the appointment of proxies, Debenture Holders or not, is permitted.

7.6.1 Without prejudice to the provisions of Clause 7.6 above, any change (i) in the term of the Debentures; (ii) on the Compensation Payment Dates; (iii) in the Compensation calculation parameter; (iv) in the quorum for resolution of the General Meeting of Debenture Holders; or (v) in Clause 4.11 (Early Maturity) above, including in the case of temporary waiver or pardon, it shall be approved by Debenture Holders representing at least ninety percent (90%) of the outstanding Debentures or the outstanding Debentures of the respective Series.

7.6.2 The failure to declare the Debentures’ early maturity, pursuant to Clause 4.11.4 of this Indenture, will depend on the approval of Debenture Holders representing at least ninety percent (90%) of the outstanding Debentures.

A-I-47

7.8 The Issuer’s legal representatives will be allowed to attend the General Meetings of Debenture Holders.

7.9 The Trustee shall attend the General Meetings of Debenture Holders to provide Debenture Holders with the information requested.

8 ISSUER REPRESENTATIONS

8.1 The Issuer hereby represents and warrants, as applicable, on this date:

(i)

that is a corporation duly organized, incorporated and existing in accordance with Brazilian laws;

(ii)

that it is duly authorized and obtained all licenses and authorizations, including corporate ones, necessary for the execution of this Indenture, for the issue of Debentures and for the fulfillment of its obligations set forth herein, having met all the legal and statutory requirements necessary for this purpose;

(iii)

(iv)

that the execution of this Indenture and the fulfillment of its obligations under this Indenture, as well as the Debentures issue and public distribution do not infringe or contravene, (a) any agreement or document in which the Issuer is a party or by which any of its assets and properties are bound, nor will it result in (1) early maturity of any obligation set forth in any of these agreements or instruments; (2) creation of any liens or encumbrances on any of the Issuer’s assets; or (3) termination of any such agreements or instruments; (b) any law, decree or regulation to which the Issuer or any of its assets and properties are subject; or (c) any administrative, judicial or arbitration judgment, decision or award that affects the Issuer or any of its assets and properties;

A-I-48

(v)

that has all the relevant authorizations and licenses required by federal, state and municipal authorities for the regular exercise of its activities, all of which are valid, also considering that authorizations and licenses not obtained or renewed by the Issuer may not result in any Material Adverse Effect;

(vi)

that is complying with all laws, regulations, administrative rules and determinations of government agencies, agencies or courts, applicable to the conduct of its business and that (a) are relevant to the performance of the Issuer’s activities or (b) whose non-compliance by the Issuer may not result in a Material Adverse Effect, including the provisions in the legislation in force pertinent to the National Environment Policy, in the Resolutions of the National Environment Council - CONAMA and in other complementary environmental laws and regulations that (1) are equally relevant to the performance of the Issuer’s activities or (2) whose non-compliance by the Issuer may result in a Material Adverse Effect, adopting preventive measures and actions or remedies to avoid or correct any environmental damage arising from the activities described in its respective corporate purpose, and environmental laws, regulations, legislation and regulations, administrative rules and determinations of government agencies, agencies or courts, applicable to the conduct of the Issuer’s business, not fully complied with by the Issuer may not result in a Material Adverse Effect. The Issuer is also obliged to proceed with all due diligence required to carry out its activities, preserving the environment and complying with the determinations of municipal, state and federal bodies that, alternatively, legislate or regulate the environmental standards in force;

(vii)

that the Issuer’s financial statements for the fiscal year ended on December 31, 2018 correctly represent the Issuer’s equity and financial situation on those dates and for those periods, and were duly prepared in accordance with the generally accepted accounting principles in Brazil;

(viii)

the Issuer is not aware of the existence of any action, administrative or arbitration proceeding, investigation or other type of government investigation that may cause a Material Adverse Effect;

(ix)

that the Issuer’s consolidated and audited financial statements for the fiscal years ended Monday, December 31, 2018, 2017 and 2016 are true, complete, consistent and correct in all respects at the date they were prepared and/or republished, and reflect the Issuer’s financial and equity position, results, transactions and cash flows in the period, and until the date of execution of this Indenture (a) there was no Material Adverse Effect on the financial situation and operating results in question, (b) there was no material transaction involving the Issuer outside the normal course of its business, (c) there was no substantial increase in the Issuer’s indebtedness;

A-I-49

(x)

that the information and representations in this Indenture regarding the Issuer and the Restricted Offering, as the case may be, are true, consistent, correct and sufficient;

(xi)

that it has not omitted or will omit any fact, of any nature, which is known to them and which may result in a Material Adverse Effect change in its economic, financial or legal situation to the detriment of Professional Investors who may acquire Debentures;

(xii)

is in compliance with the obligations in this Deed of Issue and is not, on this date, incurring any of the Early Maturity Events;

(xiii)

that there is no connection between the Issuer and the Trustee that prevents the Trustee from fully exercise its functions;

(xiv)

that it will comply with all obligations undertaken under this Indenture, including, but not limited to, the obligation to allocate the proceeds obtained from the Restricted Offering exclusively for the purposes described in Clause 3.6 of this Indenture;

(xv)

the Issuer states, by itself and its controllers and employees, hereby, to be aware of the terms of the Anti-Corruption Laws, and undertakes to refrain from practice any activity that constitutes a violation of the provisions contained in Anti-Corruption Laws. The Issuer further states (a) that, within the best knowledge, it adopts the best practices so that avoids that its eventual subcontractors violate the provisions contained in the Anti-Corruption Laws and (b) that it maintains internal policies and procedures that ensure full compliance with such rules and grants full knowledge of such rules to all professionals who come to work with the Issuer;

(xvi)

(xvii)

that this Indenture constitutes a legal, valid, effective and binding obligation of the Issuer, enforceable according to its terms and conditions, as an extrajudicially enforceable instrument, pursuant to article 784 of the Code of Civil Procedure; and

(xviii)

that it is fully aware and agrees with the disclosure and calculation of DI Rate, disclosed by B3, and that the Compensation calculation was agreed by the Issuer’s free will, in compliance with the principle of good faith.

A-I-50

9 COMMUNICATIONS

(i) if to the Issuer:

SENDAS DISTRIBUIDORA S.A.

Avenida Ayrton Senna, No. 6,000, Lot 2, Pal 48959, Annex A, Jacarepaguá Zip Code 22775-005 - Rio de Janeiro, RJ

Attn.: Frederico Augusto Alonso Telephone: (11) 3886-3844

Email: frederico.alonso@gpabr.com / captacao.gpa@gpabr.com

(ii) if to the Trustee:

PENTÁGONO S.A. DISTRIBUIDORA DE TÍTULOS E VALORES MOBILIÁRIOS

Avenida das Américas, No. 4,200, Building 08, Side B, Suites 302, 303 and 304, Barra da Tijuca

Zip Code 22640-102 - Rio de Janeiro, RJ

Attn.: Marco Aurélio Ferreira / Marcelle Santoro / Karolina Vangelotti Telephone: 21 3385-4565

Email: contencioso@pentagonotrustee.com.br

(iii) if to the Settling Bank or the Bookkeeping Agent:

BANCO BRADESCO S.A.

Núcleo Administrativo “Cidade de Deus”, s/n, Building Yellow, 1^st floor, Vila Yara 06029-900 -Osasco - SP

Attn.: Marcelo Ronaldo Poli - Stock and Custody Department Telephone: (11) 3684-7654 - Extension Line: 47654

Email: marcelo.poli@bradesco.com.br

(iv) if to B3:

B3 S.A. – BRASIL, BOLSA, BALCÃO – SEGMENTO CETIP UTVM

Praça Antônio Prado, 48, 4^th floor 01010-901 – São Paulo - SP
Attn.: Superintendence of Corporate Bond and Fund Offers Telephone: (11) 2565-5061

Email: valores.mobiliarios@b3.com.br

A-I-51

10 MISCELLANEOUS

10.2 This Indenture is executed on an irrevocable and irreversible manner, except in the event of failure to fulfill the requirements listed in Clause Two, binding the Parties and their successors.

10.3 Any and all costs incurred due to the registration of this Indenture and any of its amendments, and corporate acts related hereto with the competent registries of deeds, shall be exclusively borne by the Issuer.

10.5 For the purposes of this Indenture, Business Day(s) is any day other than Saturday, Sunday or declared national holiday (“Business Day(s)”).

11 LAW AND JURISDICTION

11.1 This Indenture is governed by the Laws of the Federative Republic of Brazil.

And, in witness whereof, the Parties execute this Indenture, in five (5) counterparts of equal form and content and for the same purpose, together with the two (3) witnesses undersigned.

São Paulo, November 19, 2020.

(The rest of the page was intentionally left blank)

A-I-52

Exhibit 4.1

Free translation

Separation and Other Covenants Agreement

entered into between

on one side,

Companhia Brasileira de Distribuição

and, on the other side,

Sendas Distribuidora S.A.

December 14, 2020

Index

Clause		Page

1.	Definitions and Interpretation	2

2.	Corporate Reorganization	10

3.	Representations and Warranties	12

4.	Reciprocal Settlement and Indemnity	18

5.	Acts of the Business Separation	25

6.	Distribution of Sendas’ Shares	41

7.	Other Covenants	43

8.	Resolutive Condition and Termination	47

9.	General Provisions	47

Annexes

Annex 2.1(i)	List of Transferred Real Estates

Annex 2.2(ii)	List of Gas Stations

Annex 3.1.8(i)	CBD’s Real Estates

Annex 3.1.8(ii)	Licenses of CBD’s Real Estates

Annex 3.1.9	Agreements to be assigned, amended, shared and/or reproduced on behalf of Sendas

Annex 3.1.12	CBD’s or Subsidiaries’ Proxies to Sendas

Annex 3.2.10	Sendas’ or Subsidiaries’ Proxies to CBD

Annex 5.2.1	Shared Agreements

Annex 5.3.2.1	Guarantee Fee Flowchart

Annex 5.4	Existing Insurance

Annex 5.5.2(i)	Incentive Plan Assumptions

Annex 5.5.2(iii)	Employees’ Transfer Agreement

Annex 5.6.1	Real Estates subject to sublease or assignment of the contractual position

Annex 5.6.1.1	Certain real estates subleased by CBD to Sendas

Annex 5.6.2	Combo Stores

Annex 5.6.3	Gallery Management Service Agreement

Annex 5.6.4.1	Real Estate Regularizations

Annex 5.8	Shared Active Claims

Annex 5.9.11	Court Deposits

Annex 5.12	Bellamar’s Shareholders’ Agreement

Annex 5.13	Proxies maintained

Annex 7.3.4	Personal Data Processing Agreement

The present Separation and Other Covenants Agreement, dated December 14, 2020 (“Agreement”), is entered into between:

(1) Companhia Brasileira de Distribuição, publicly-held company established in the Federative Republic of Brazil, headquartered in the Municipality of São Paulo, State of São Paulo, at Avenida Brigadeiro Luiz Antônio, 3142, Jardim Paulista, enrolled with CNPJ/ME under nº 47.508.411/0001-56, represented herein by its legal representatives (“CBD”); and

(2) Sendas Distribuidora S.A., company established in the Federative Republic of Brazil, headquartered in the Municipality of Rio de Janeiro, State of Rio de Janeiro, at Avenida Ayrton Senna, 0600, Jacarepaguá, enrolled with CNPJ/ME under nº 06.057.223/0001-71, represented herein by its legal representatives (“Sendas”).

CBD and Sendas hereinafter referred to as, collectively, the “Parties” and, individually and indistinctly, the “Party”.

WHEREAS:

(A) CBD is a publicly-held company, mainly engaged in the traditional retail market, including the multi retail market (as defined below) with shares traded in B3 S.A. – Brasil, Bolsa, Balcão (“B3”) and American Depositary Receipts (“ADRs”), representing the CBD’s shares, admitted for trading in the New York Stock Exchange (“NYSE”);

(B) Sendas is a company mainly engaged in the wholesale and retail markets (cash and carry), which capital, as of the date hereof, amounts to four billion, seven hundred and forty-nine million, two thousand, two hundred and four reais and ninety-three cents (R$4,749,002,204.93), divided into two hundred and sixty-eight million, three hundred and fifty-one thousand, five hundred and sixty-seven (268,351,567) registered common shares, with no par value, which total shares is held, as of the date hereof, by CBD;

(C) On May 1, 2016 (“Multi Retail Business Spin-off Date”), CBD merged certain Sendas’ assets and liabilities for purposes of allocation to the operations and activities of the Multi Retail Market conducted by CBD (“Multi Retail Business Separation”);

(D) CBD and Sendas intend to implement certain corporate and commercial transactions so that Sendas shall no longer be a company Controlled by CBD and the Parties shall be able to operate on a fully independent basis (“Business Separation”);

(E) In the context of the Business Separation, the Parties shall implement the corporate reorganization (“Corporate Reorganization”), which shall comprise (i) the transfer of shares issued by Bellamar Empreendimentos e Participações S.A., company enrolled with CNPJ/ME under nº 06.950.710/0001-69 (“Bellamar”), and certain real estates owned by CBD to Sendas, as well as cash contribution and capitalization of credits owned by CBD in Sendas, (ii) the transfer to CBD of the shares issued by Almacenes Éxito S.A., publicly-held company established and existing under the Laws of Republic of Colombia, headquartered at Carrera 48 nº 32B Sur – 139, Envigado, Antioquia, Colombia (“Éxito”), and held by Sendas, in conjunction with the assets relating to the gas stations, as identified below, owned by Sendas; and (iii) the CBD Partial Spin-off (as defined below) whereby the shares issued by Sendas shall be merged into Sendas itself and delivered directly to the CBD’s shareholders;

(F) On November 19, 2020, CBD obtained from the respective creditors all previous authorizations deemed necessary, related to the CBD’s and Sendas’ debts, including the debts entered into in the capital market, according to the material facts disclosed by the Parties on that date, in connection with the Business Separation;

(G) Upon implementation of the Corporate Reorganization, the Sendas’ shares shall be traded in B3 and the ADRs, representing the Sendas’ shares, shall be admitted for trading in NYSE; and

(H) The Parties intend to define the terms and conditions that shall govern the relationship between the Parties before, during and after the Business Separation;

RESOLVED the Parties to enter into this Agreement, which shall be governed by the terms and conditions jointly agreed below.

1. Definitions and Interpretation

1.1. Definitions. The terms, in capital letters, used in this Agreement shall have the meanings attributed to them in this Clause 1.1:

Bellamar’s Shares		has the meaning set forth in Clause 2.1(ii) hereof.

Éxito’s Shares		has the meaning set forth in Clause 2.2(i) hereof.

FIC’s Shares		has the meaning set forth in Clause 3.1.7.3 hereof.

Sendas’ Shares		has the meaning set forth in Clause 2.1(iv) hereof.

Bellamar’s Shareholders’ Agreements		has the meaning set forth in Clause 5.12 hereof.

FIC’s Shareholders’ Agreement		has the meaning set forth in Clause 3.1.7.3 hereof.

Association Agreement		has the meaning set forth in Clause 3.1.7.3 hereof.

ADRS		has the meaning set forth in Whereas Clause (A) hereof.

Affiliate		means, in relation to any Person, however the case may be, (a) the companies that Control the Person directly or indirectly; (b) the companies Controlled, directly or indirectly, by the Person; (c) the companies Controlled, directly or indirectly, by any company that Controls the Person; or (d) any other company under common Control, directly or indirectly, of the Person. For the purposes of this Agreement, CBD shall not be deemed a Sendas’ Affiliate and Sendas shall not be deemed a CBD’s Affiliate.

Governmental Agent		means any person holding, although temporarily or without compensation, after election, appointment, designation, contracting or any other means to grant mandate, position, title or pubic employment in any Governmental Authority or political party.

Use of Tax Supervenience		has the meaning set forth in Clause 5.9.12 hereof.

CBD’s Assets		has the meaning set forth in Clause 2.1 hereof.

Sendas’ Assets		has the meaning set forth in Clause 2.2 hereof.

Transferred Assets		has the meaning set forth in Clause 2.2 hereof.

Governmental Authority		means the government of any country and any political subdivision, at federal, state or municipal level, or any executive, legislative, judiciary, regulatory, self-regulatory or administrative entity, authority or body, including, but not limited to, any authority, agency, department, board, commission, autarchy or organization, any court, tribunal or arbitrator, or any stock exchanges or organized over-the-counter markets, with permanent or temporary jurisdiction over any of the Parties and/or operations thereof and/or transactions in connection with this Agreement.

B3		has the meaning set forth in Whereas Clause (A) hereof.

Bellamar		has the meaning set forth in Whereas Clause (E) hereof.

Cash		has the meaning set forth in Clause 2.1(iii) hereof.

Arbitral Chamber		has the meaning set forth in Clause 9.11.3 hereof.

Mediation Chamber		has the meaning set forth in Clause 9.11.2 hereof.

CBD		has the meaning set forth in the Preamble hereof.

CBD’s Partial Spin-off		has the meaning set forth in Clause 2.3(iv) hereof.

Civil Code		means Law 10406, of January 10, 2002, as amended and in force.
Code of Civil Procedure		means Law 13105, of March 16, 2015, as amended and in force.

Resolution Committee		has the meaning set forth in Clause 9.11.1 hereof.

Transition Committee		has the meaning set forth in Clause 5.1.1 hereof.

Compre Bem		has the meaning set forth in Clause 3.3.2 hereof.

Conflict Communication		has the meaning set forth in Clause 9.11 hereof.

Resolutive Condition		has the meaning set forth in Clause 8.1 hereof.

Conflict		has the meaning set forth in Clause 9.11 hereof.

Agreement		means this Separation Agreement and Other Covenants in conjunction with the attachments hereto.

Sharing Agreement		has the meaning set forth in Clause 5.2.3 hereof.

CBD’s Agreements		has the meaning set forth in Clause 3.1.9 hereof.

Shared Agreements		has the meaning set forth in Clause 5.2.1 hereof.

Control		means (including related terms, such as “Controller”, “Controlled by” and “under common Control”) the direct or indirect power (including representatives) to permanently ensure the majority of the votes in the resolutions of the general meeting (or equivalent body) and elect the majority of the directors and executive officers of a company, in addition to the effective exercise of this power to direct the corporate activities and the operation of the company’s bodies, as set forth in Article 116 of Law 6404/76.
Effective Spin-off Date		has the meaning set forth in Clause 2.4 hereof.

Effective Distribution Date		has the meaning set forth in Clause 6.1(i) hereof.

Multi Retail Business Spin-off Date		has the meaning set forth in Whereas Clause (C) hereof.

Defense		has the meaning set forth in Clause 4.5 hereof.

Active Claim		has the meaning set forth in Clause 5.8 hereof.

Shared Active Claim		has the meaning set forth in Clause 5.8 hereof.

Shared Claim		means any Shared Third-party Claim or Shared Active Claim.
Third-party Claim		means any Claim filed by a Third-Party, including Governmental Authorities, which may result in a Loss.

Shared Third-party Claim		has the meaning set forth in Clause 5.7 hereof

Claims		means claims, requests, actions, communications, complaints, inquiries, summons, notices or proceedings, including arbitration proceedings, administrative proceedings, judicial and extrajudicial lawsuits or investigations of any kind.

Business Day(s)		means any day other than Saturday, Sunday or any day on which the commercial banks are obligated or authorized by the applicable Law in force to remain closed in the City of São Paulo, State of São Paulo.

Distribution		has the meaning set forth in Clause 6.1 hereof.

Mandatory Disclosure		has the meaning set forth in Clause 5.11.1 hereof.

Transaction Documents		means this Agreement in conjunction with the Sendas’ Partial Spin-off Agreement and the CBD’s Partial Spin-off Agreement of CBD.

Éxito		has the meaning set forth in Whereas Clause (E) hereof.

Fee		has the meaning set forth in Clause 5.3.2 hereof.

FIC		has the meaning set forth in Clause 2.1(ii) hereof.

Fronteira		has the meaning set forth in Clause 5.6.3 hereof.

Brazilian GAAP		means the accounting principles generally accepted in Brazil, in conformity with applicable Law in force.

Guarantee		has the meaning set forth in Clause 5.3 hereof.

Guarantor		has the meaning set forth in Clause 5.3 hereof.

CBD’s Real Estates		has the meaning set forth in Clause 3.1.8 hereof.

Dom Pedro Real Estate		means the real estate property located at Avenida Parque dos Resedás, 100, Anhumas, Municipality of Campinas, State of São Paulo, as described in public deed 18195, of the 1st Registry of Deeds and Documents of the City of Campinas, State of São Paulo.

Sendas’ Real Estate		has the meaning set forth in Clause 2.2(ii) hereof.

Transferred Real Estates		has the meaning set forth in Clause 2.1(i) hereof.

Law		means any law, decree, decree law, provisional measure, rule, regulation, instruction, resolution, order, decision, corrective measures, valid and effective lawsuit (including, but not limited to, any Order) or any other legal requisite or requisite submitted by any Governmental Authority.

LGPD		has the meaning set forth in Clause 7.3 hereof.

Multi Retail Market		means the businesses related to the retail food market, conducted by CBD, under the main brands Pão de Açúcar and Extra, including all forms and variations, in addition to other brands, such as Aliados, Compre Bem, among others.

NYSE		has the meaning set forth in Whereas Clause (A) hereof.

Burden		means any encumbrances, burdens, collaterals, pledges, mortgages, guarantees, disposals or fiduciary assignments, rights of first refusal, retention rights, charges, usufruct, seizures, options, preemptive rights or rights of first offer.
Order		means any order, judgement, decision, dispatch, determination or sentence ruled by any Governmental Authority.

Standard Market Insurance Package		has the meaning set forth in Clause 5.4 hereof.

Secured Party		has the meaning set forth in Clause 5.3 hereof.

Indemnifying Party		has the meaning set forth in Clause 4.4 hereof.

Indemnified Party		has the meaning set forth in Clause 4.4 hereof.

Parte(s)		has the meaning set forth in the Preamble hereof.

Liability		means any liability, Claim, Loss, responsibility and obligation, pecuniary or not, contingent or not, overdue or not, arising from any applicable Law, agreement or any other instrument in force.

Loss(es)		means, as effectively incurred, any contingencies, losses, damages, fines, legal costs, inflation adjustments and reasonable attorneys’ fees, disbursements (including deposits, advances and financial guarantees) or losses of any nature or type, as well as any fine or pecuniary fine that may be imposed by Governmental Authorities, excluding indirect damages (such as loss of dividends, revenues or opportunities, moral damages or loss of profits).

Exchange		has the meaning set forth in Clause 2.3(ii) hereof.

Person		means the Parties, any individual, corporation, limited-liability company, individual entrepreneur, trust, trade union, association, consortium, investment funds, Governmental Authority or any other legal entity or entity without legal personality.

Gas Stations		has the meaning set forth in Clause 2.2(ii) hereof.

Service Providers		has the meaning set forth in Clause 3.3.3 hereof.

CBD’s Partial Spin-off Agreement		means the Partial Spin-off Agreement of Companhia Brasileira de Distribuição upon Merger of the Spun-off Portion into Sendas Distribuidora S.A., entered by and among the Parties on December 9, 2020.

Sendas’ Partial Spin-off Agreement		means the Partial Spin-off Agreement of Sendas Distribuidora S.A. upon Merger of the Spun-off Portion into Companhia Brasileira de Distribuição, entered by and among the Parties on December 9, 2020.

Chamber Regulation		has the meaning set forth in Clause 9.11.3 hereof.

Mediation Regulation		has the meaning set forth in Clause 9.11.2 hereof.

Corporate Reorganization		has the meaning set forth in Whereas Clause (E) hereof.

Existing Insurance		has the meaning set forth in Clause 5.4 hereof.

Sendas		has the meaning set forth in the Preamble hereof.

Business Separation		has the meaning set forth in Whereas Clause (D) hereof.

Multi Retail Business Separation		has the meaning set forth in Whereas Clause (C) hereof.

SOX		has the meaning set forth in Clause 7.5.1 hereof.

Disclosure Subcommittee		has the meaning set forth in Clause 5.11 hereof.

Tax Active Superveniences		has the meaning set forth in Clause 5.9.12 hereof.

Tribunal Arbitral		has the meaning set forth in Clause 9.11.4 hereof.

Taxes		means any fees, taxes, tariffs, contributions, charges, obligations or similar taxation (including interest, fines, penalties, inflation adjustments and additional amounts paid) registered by or payable to any Governmental Authority, including withholding income tax, taxes on consumption goods, ad valorem, taxes on value added, social contributions and taxes on payroll, financial taxes, taxes on fixed and current assets, taxes on transfer of licenses, sales, use, contracting of employees or services and other taxes of any type or nature, including the contributions to the Severance Pay Fund (FGTS).

Sendas’ Business Unit		has the meaning set forth in Clause 5.2.1 hereof.

1.2. Interpretation. Except if expressly otherwise set forth in this Agreement: (i) the words (including the terms in capital letters defined in this Agreement) in singular form shall include the respective plural form – and vice-versa – and words (including the terms in capital letters defined in this Agreement) in any gender shall include the other gender, as required by the context; (ii) the terms “herein” and “in this Agreement”, as well as other similar words, shall be construed in reference to this Agreement as a whole (including the Appendices hereto) and not as a specific provision of this Agreement; (iii) the references to Chapter, Clause and Appendix shall be construed as references to Chapter, Clause and Appendix of this Agreement; (iv) the word “including” and similar words, when used in this Agreement, shall mean “including, but not limited to”; (v) all references to any periods of days shall be deemed as references to the number of consecutive days, rather than Business Days; (vi) the titles and subtitles of Chapters, Clauses and Appendices of this Agreement have been exclusively included for purposes of convenience and reference, in the sense that such titles and subtitles shall not limit or impact the meaning and interpretation of this Agreement; (vii) any reference to any document or instrument shall be deemed as including all respective changes, modifications, replacements, restatements and amendments in effect on the date of the respective reference; (viii) all terms referred to herein shall be counted in conformity with article 132 of the Civil Code, that is, excluding the initial day and including the maturity date, and all terms ending on any day that is not a Business Day shall be automatically extended to the first subsequent Business Day; (ix) the “Whereas Clauses” of this Agreement are an integral part hereof; and (x) the references to the provisions or legal provisions shall be construed as references to the provisions or legal provisions, as respectively changed, extended, consolidated, restated or revoked on the respective reference date. The Parties acknowledge that the terms and contents of this Agreement resulted from the discussions between the Parties and, as such, there shall not be any assumption that eventual omissions herein will be resolved unfavorably to any specific Party. Any conflicts with respect to the interpretation of this Agreement shall be settled without events of authorship or negotiation.

2. Corporate Reorganization

2.1. CBD’s Assets. The following assets shall be transferred from CBD to Sendas (“CBD’s Assets”) in the context of the Corporate Reorganization:

(i)

ownership rights held by CBD with respect to certain real estates referred to in Appendix 2.1(i) (“Transferred Real Estates”);

(ii)

sixty-nine million, four hundred and thirteen thousand, seven hundred and ninety (69,413,790) registered shares, with no par value (“Bellamar’s Shares”), out of which sixty-nine million, four hundred and thirteen thousand, seven hundred and eighty-nine (69,413,789) are common shares and one (1) is preferred shares, representing 50% of the capital of Bellamar, which holds 35.76% of the capital of Financeira Itaú CBD S.A. – Crédito, Financiamento e Investimento, a company enrolled with CNPJ/ME under nº 06.881.898/0001-30 (“FIC”);

(iii)

the amount equivalent to five hundred million reais (R$500,000,000.00) (“Cash”); and

(iv)

the total shares issued by Sendas and held by CBD (“Sendas’ Shares”).

2.2. Sendas’ Assets. The following assets shall be transferred from Sendas to CBD (“Sendas’ Assets” and, in conjunction with the CBD’s Assets, the “Transferred Assets”) in the context of the Corporate Reorganization:

(i)

the total shares issued by Éxito and held by Sendas (“Éxito’s Shares”); and

(ii)

the assets relating to the gas stations identified in Appendix 2.2(ii) (“Gas Stations”), including the real estate located in São Gonçalo, registered under public deed nº 28.274 with the 2nd Real Estate Registry Office of São Gonçalo/RJ (“Sendas’ Real Estate”).

2.3. The Corporate Reorganization shall be implemented through the acts described below, to be undertaken in the following order:

(i)

approval by the Sendas’ shareholders, at the Extraordinary Shareholders’ Meeting, of the Sendas’ capital increase, upon Cash contribution and two (2) Transferred Real Estates, as well as credit capitalization, totaling approximately one hundred and forty million (R$140,000,000.00), held by CBD against Sendas;

(ii)

exchange of the Bellamar’s Shares and five (5) of the Transferred Real Estates for thirty-nine million, two hundred and forty-six thousand and twelve (39,246,012) Éxito’s Shares (“Exchange”);

(iii)

approval by the Parties’ shareholders of the Sendas’ partial spin-off, upon merger into CBD of the spun-off assets composed of (a) three hundred and ninety-three million, ten thousand and six hundred and fifty-six (393,010,656) Éxito’s Shares; and (b) the assets relating to the Gas Stations, including the Sendas’ Real Estate, in conformity with the Sendas’s Partial Spin-off Agreement; and

(iv)

approval by the Parties’ shareholders of the CBD’s partial spin-off, upon merger into Sendas of the Sendas’ Shares, which shall be directly delivered to the CBD’s shareholders, under the terms of Clause 6.3, in conformity with the CBD’s Partial Spin-off Agreement (“CBD Partial Spin-off”).

2.4. As from the date the CBD Partial Spin-off has been approved, at last, at the Extraordinary Shareholders’ Meeting of each of the Parties (“Effective Spin-off Date”), the Parties shall undertake reasonable commercial efforts to, in the shortest time possible, complete the transfer of the CBD’s Assets and the Sendas’ Assets, however the case may be, and perform the Business Separation, including the performance of all corporate acts and signature of all documents deemed necessary.

2.5. Exchange. On the Effective Spin-off Date, the Parties agree to undertake any measures and enter into all and any instruments deemed necessary for the completion of the Exchange, including (i) the signature of the transfer term drafted in the book of transfer of Bellamar’s registered shares relating to the assignment of the Bellamar’s Shares from CBD to Sendas; and (ii) the signature of the necessary documents to complete the transfer of the Éxito’s Shares from Sendas to CBD.

3. Representations and Warranties

3.1. CBD’s Representations and Guarantees. CBD hereby provides the following representations and guarantees to Sendas, which are true, correct and accurate as of the date hereof, and shall be true, correct and accurate on the Effective Spin-off Date, except for the representations and guarantees that refer to any specific date, which shall be true, correct and accurate on such specific date:

3.1.1. Good Standing. CBD is a publicly-held company duly established and validly existing in accordance with the laws of the Federative Republic of Brazil, with all necessary corporate powers and authority to enter into this Agreement and comply with the respective obligations under the terms of this Agreement.

3.1.2. Validity and Enforceability. This Agreement was duly entered into by CBD and represents a legal, valid and binding commitment, fully enforceable against CBD under the terms and conditions set forth in this Agreement; there shall be no proceedings, Orders, investigations or notices submitted by any Governmental Authorities against CBD that could prevent the execution and/or performance of the transactions referred to in this Agreement.

3.1.3. Absence of Violation. Neither the performance of this Agreement nor the compliance with the provisions shall violate: (a) any provision of the CBD’s corporate documents, or any CBD’s relevant agreement; (b) any Law or regulation or decision ruled by the Governmental Authority applicable to CBD; and/or (c) any other Orders applicable to CBD or agreements to which is bound.

3.1.4. Governmental Consents and Approvals. Except as determined by the Brazilian Exchange and Securities Commission (CVM), the Securities Exchange Commission (SEC), B3 and/or NYSE or, as set forth in this Agreement, the signature of, performance of and compliance with this Agreement by CBD and the performance by CBD of the transactions referred to herein do not require and shall not require any consent, approval, authorization or another order, action, representation, registry or notice to any Governmental Authority, by CBD.

3.1.5. Third-party’s Consents and Approvals. CBD obtained, as of the date hereof, all necessary authorizations from third parties, including creditors, for the execution, documentation and performance of this Agreement by CBD and the performance by CBD of the transactions referred to herein.

3.1.6. Sendas’ Shares. CBD is the holder of two hundred and sixty-eight million, three hundred and fifty-one thousand, five hundred and sixty-seven (268,351,567) registered common shares, with no par value, representing one hundred percent (100%) of the Sendas’ capital, which are, and shall be on the Effective Spin-off Date, free and clear of any Burden. There is no agreement, although not registered with the Sendas’ head office, of any nature, which would directly or indirectly bind the Sendas’ Shares, or which would limit the political and/or equity rights of the Sendas’ Shares. There are no options, rights, commitments or other covenants of any nature, or other notes that could directly or indirectly require the sale or transfer of the Sendas’ Shares.

3.1.7. Bellamar. Bellamar is a corporation duly established and validly existing under the laws of the Federative Republic of Brazil. As of the date hereof, CBD is the lawful holder and owner of one hundred and thirty-eight million, eight hundred and twenty-seven thousand, five hundred and eighty (138,827,580) registered shares, with no par value, out of which one hundred and thirty eight million, eight hundred and twenty-seven thousand, five hundred and seventy-eight (138,827,578) are common shares and two (2) are preferred shares of the same class, fully paid, representing 100% of Bellamar’s capital, free and clear of any Burden. Except for Bellamar’s Shareholders’ Agreement, there is no agreement, registered or not with the Bellamar’s head office, of any nature, which would directly or indirectly bind the Bellamar’s Shares, or which would limit the political and/or equity rights of the Bellamar’s Shares; and there are no options, rights, commitments or other covenants of any nature, or other notes that could directly or indirectly require the sale or transfer of the Bellamar’s Shares.

3.1.7.1. Compliance with the Laws. To the CBD’s knowledge, Bellamar has complied with all applicable Laws in force, in all material respects, and is not subject to any voluntary or involuntary proceedings or requests for settlement, judicial or extrajudicial reorganization or bankruptcy of Bellamar.

3.1.7.2. Financial Statements. To the CBD’s knowledge, the Bellamar’s financial statements as at September 30, 2020, included herein in the form of Appendix 3.1.7.2, (i) are true, complete and correct in all material respects; (ii) have been prepared in conformity with Bellamar’s accounting books and other financial records (except as referred to in the respective explanatory notes), subject to reconciliation; (iii) truly represent, in all material respects, the financial condition, assets, obligations, operational results and cash flow of Bellamar on the respective dates or for the covered periods; and (iv) have been prepared in accordance with the applicable Law in force and the Brazilian GAAP, consistently applied in accordance with the Bellamar’s past practices.

3.1.7.3. FIC. Bellamar is the owner of three hundred and twenty-four million, five hundred and one thousand, one hundred and fourteen (324,501,114) registered common shares, with no par value, representing 35.76% of the FIC’s capital (“FIC’s Shares”), which are and shall be on the Effective Spin-off Date free and clear of any Burden, except for the Association Agreement entered into on October 27, 2004 between CBD, FIC, Itaú Unibanco Holding S.A. and certain other parties, as amended and in force (“Association Agreement”), as well as the Shareholders’ Agreement entered into on October 27, 2004, as amended and in force (“FIC’s Shareholders’ Agreement”). Except for the Association Agreement and FIC’s Shareholders’ Agreement, there is no agreement, registered or not with the FIC’s head office, of any nature, which would directly or indirectly bind the FIC’s Shares, or which would limit the political and/or equity rights of the FIC’s Shares; and there are no options, rights, commitments or other covenants of any nature, or other notes that could directly or indirectly require the sale or transfer of the FIC’s Shares.

3.1.8. CBD’s Real Estates. CBD is the lawful owner or holder of all properties identified in Appendix 3.1.8(i) (“CBD’s Real Estates”), as set forth in Clause 5.6.4. Except as set forth in Appendix 3.1.8(ii), each CBD’s Real Estate is occupied under the terms of a valid and updated real estate permit (“habite-se”), operating license, technical inspection report issued by the Fire Department (AVCB) and/or similar licenses, as determined by the applicable Law in force, and is duly registered with the proper real estate offices, except as indicated in Appendix 3.1.8(i). The CBD’s Real Estates are under good conditions and are adequate for the current use and purpose thereof, except for the normal wear and tear compatible with the respective stage of useful life thereof. There are no (i) contractual or legal restrictions or Claims that would prevent or limit or that could prevent or limit the use of the CBD’s Real Estates for the purposes according to which the CBD’s Real Estates are currently being used; and/or (ii) to the CBD’s knowledge, decisions or domain lawsuits of any type pending decision or threatened against the CBD’s Real Estates.

3.1.9. Agreements. Appendix 3.1.9 includes a list of the agreements, to which CBD is a party and that, as deemed necessary by Sendas, shall be assigned, amended, shared and/or reproduced on behalf of Sendas (“CBD’s Agreements”), under the terms of Clause 5.2. None of the counterparties to the CBD’s Agreements has formally or informally informed to CBD the intention to not renew or terminate the respective agreements in advance. Each of the CBD’s Agreements (i) is valid and binding in relation to CBD and CBD’s counterparties, is enforceable against the respective counterparties, under the respective terms, and is fully valid and effective; (ii) has been timely and fully performed by CBD in all material respects; and (iii) is not subject to pending conflicts or, to the CBD’s knowledge, is imminent.

3.1.10. Intellectual Property. The intellectual property rights exercised by CBD in the conduction of the respective activities are exclusively owned by CBD or the exercise of such intellectual property rights have been duly authorized by the respective owners, in conformity with the respective licenses, assignments, sublicenses and/or other agreements, including, but not limited to, the Shared Agreements, however the case may be.

3.1.11. Anticorruption. CBD and, to the CBD’s knowledge, the directors, executive officers, employees, representatives and associates thereof have not (a) performed any action that would result in violation, by such Persons, of any Law that would reduce or prohibit the corruption or offer, payment, promise to pay or payment authorization of any amount or another type of property, gift, promise to offer or authorization for donation of any item of value to any Governmental Agent or any political party or member of political party or candidate of any public position; and (b) offered, promised, authorized or performed any payment or granted any other type of benefit to any Governmental Agent with the intention or in order to: (i) influence any measure or decision ruled by such Governmental Agent in the exercise of the respective duties; (ii) induce the Governmental Agent to undertake any act or omission that would represent any violation of the exercise of the respective position; or (iii) induce the Governmental Agent to use his/her influence to impact or influence any act or decision, in each case in order to contribute with CBD and/or its Affiliates to obtain or retain businesses with any Person, or otherwise direct the businesses to any Person.

3.1.12. Proxies. Appendix 3.1.12 includes a list of all proxies granted by CBD and/or its Subsidiaries to Sendas and/or its Subsidiaries or respective employees and associates in effect on the signature date of this Agreement; and there are no other proxies in effect that are not listed therein.

3.2. Sendas’ Representations and Guarantees. Sendas hereby provides the following representations and guarantees to CDB, which are true, correct and accurate as of the date hereof, and shall be true, correct and accurate on the Effective Spin-off Date, except for the representations and guarantees that refer to any specific date, which shall be true, correct and accurate on such specific date:

3.2.1. Good Standing. Sendas is a company duly established and validly existing in accordance with the laws of the Federative Republic of Brazil, with all necessary corporate powers and authority to enter into this Agreement and comply with the respective obligations under the terms of this Agreement.

3.2.2. Validity and Enforceability. This Agreement was duly entered into by Sendas and represents a legal, valid and binding commitment, fully enforceable against Sendas under the terms and conditions set forth in this Agreement; there shall be no proceedings, Orders, investigations or notices submitted by any Governmental Authorities against CBD that could prevent the execution and/or performance of the transactions referred to in this Agreement.

3.2.3. Absence of Violation. Neither the performance of this Agreement nor the compliance with the provisions shall violate: (a) any provision of the Sendas’ corporate documents, or any Sendas’ relevant agreement; (b) any Law or regulation or decision ruled by the Governmental Authority applicable to Sendas; and/or (c) any other Orders applicable to Sendas or agreements to which is bound.

3.2.4. Governmental Consents and Approvals. Except as determined by the Brazilian Exchange and Securities Commission (CVM), the Securities Exchange Commission (SEC), B3 and/or NYSE or, as set forth in this Agreement, the signature of, performance of and compliance with this Agreement by Sendas and the performance by Sendas of the transactions referred to herein do not require and shall not require any consent, approval, authorization or another order, action, representation, registry or notice to any Governmental Authority, by Sendas.

3.2.5. Third-party’s Consents and Approvals. Sendas obtained, as of the date hereof, all necessary authorizations from third parties, including creditors, for the execution, documentation and performance of this Agreement by Sendas and the performance by Sendas of the transactions referred to herein

3.2.6. Éxito. Éxito is a company duly established and validly existing under the laws of the Republic of Colombia. As of the date hereof, Sendas is the holder of four hundred and thirty-two million, two hundred and fifty-six thousand, six hundred and sixty-eight (432,256,668) Éxito’s Shares, fully paid, representing 96.57% of Éxito’s capital, fully free and clear of any Burden. There is no agreement, registered or not with the Éxito’s head office, of any nature, which would directly or indirectly bind the Éxito’s Shares, or which would limit the political and/or equity rights of the Éxito’s Shares. There are no options, rights, commitments or other covenants of any nature, or other notes that could directly or indirectly require the sale or transfer of the Éxito’s Shares.

3.2.7. Intellectual Property. The intellectual property rights exercised by Sendas in the conduction of the respective activities are exclusively owned by Sendas or the exercise of such intellectual property rights have been duly authorized by the respective owners, in conformity with the respective licenses, assignments, sublicenses and/or other agreements, including, but not limited to, the Shared Agreements, however the case may be.

3.2.8. Sendas’ Gas Stations and Real Estates. Appendix 2.2(ii) includes the Gas Stations, which assets are exclusively owned by Sendas, including the Sendas’ Real Estate.

3.2.9. Anticorruption. Sendas and, to the Sendas’ knowledge, the directors, executive officers, employees, representatives and associates thereof have not (a) performed any action that would result in violation, by such Persons, of any Law that would reduce or prohibit the corruption or offer, payment, promise to pay or payment authorization of any amount or another type of property, gift, promise to offer or authorization for donation of any item of value to any Governmental Agent or any political party or member of political party or candidate of any public position; and (b) offered, promised, authorized or performed any payment or granted any other type of benefit to any Governmental Agent with the intention or in order to: (i) influence any measure or decision ruled by such Governmental Agent in the exercise of the respective duties; (ii) induce the Governmental Agent to undertake any act or omission that would represent any violation of the exercise of the respective position; or (iii) induce the Governmental Agent to use his/her influence to impact or influence any act or decision, in each case in order to contribute with Sendas and/or its Affiliates to obtain or retain businesses with any Person, or otherwise direct the businesses to any Person.

3.2.10. Proxies. Appendix 3.2.10 includes a list of all proxies granted by Sendas and/or its Subsidiaries to CBD and/or its Subsidiaries or respective employees and associates in effect on the signature date of this Agreement; and there are no other proxies in effect that are not listed therein.

3.3. Mutual Representations and Guarantees. As set forth in Clause 4.8 below, the Parties hereby mutually provide the following representations and guarantees that, to the Parties’ knowledge, are true, correct and accurate as of the date hereof and shall be true, correct and accurate on the Effective Spin-off Date, except for the representations and guarantees that refer to any specific date, which shall be true, correct and accurate on such specific date:

3.3.1. Éxito. Éxito is compliant with all applicable Laws in force, in all material respects; and there are no voluntary or involuntary lawsuits or requests for settlement, judicial or extrajudicial recovery or bankruptcy of Éxito.

3.3.2. Compre Bem. SCB Distribuição e Comércio Varejista de Alimentos Ltda., limited-liability company, enrolled with CNPJ under nº 30.197.161/0001-88, headquartered in the City of São Paulo, State of São Paulo, at Avenida Aricanduva, 5555, Edifício Shopping Interlar, Setor Âncora “E”, Conjunto 2, Vila Matilde, Zip Code 03527-000 (“Compre Bem”), by itself and its representatives, is compliant with all applicable Laws in force, in all material respects; and there are no voluntary or involuntary lawsuits or requests for settlement, judicial or extrajudicial recovery or bankruptcy of Compre Bem. All engagements by Compre Bem were conducted in good faith and according to the interests of Compre Bem, in compliance with applicable Law, bylaws and internal regulations in force.

3.3.3. Service Providers. All service providers contracted by any of the Parties, which have provided or provide services to the other Party (“Service Providers”), were engaged in good faith and according to the interests of the Parties, in compliance with applicable Law, bylaws and internal regulations in force; and no verbal or written agreement entered into with such Service Providers is subject to pending Claims or, to the Parties’ knowledge, imminent Claims, except as disclosed by one Party to the other before the Effective Spin-off Date.

3.3.4. Accounting Procedures. The accounting procedures and other books and records of each of the Parties were adopted in good faith and according to the interests of the Parties, in compliance with applicable Law, bylaws and internal regulations in force.

4. Reciprocal Settlement and Indemnity

4.1. Settlement. Except as otherwise set forth in this Agreement, the Parties, on their own behalf and on behalf of each of its Subsidiaries and respective executive officers, directors, employees, successors and assignees, shall grant each other full, general, irrevocable and unconditional settlement in relation to any Liabilities, currently existing or resulting from (i) any acts, facts or omissions that took place through or on the Effective Spin-off Date; and (ii) any acts, facts or omissions relating to the Business Separation, including the Corporate Reorganization. The Parties acknowledge that the activities performed and the acts undertaken by Parties’ directors and executive officers before the Effective Spin-off Date were performed in good faith and according to the interests of the Parties and its Affiliates, in the sense that each of the Parties waives, to the extension of applicable Law in force, any right to undertake any action against the other Party, its Subsidiaries and respective directors and executive officers based on any facts, acts or omissions covered by settlement under this Clause.

4.1.1. No provision set forth in this Agreement shall (i) prevent or impact any right entitled to the Parties to request the compliance with the agreements and accords entered into by the Parties, as well as with this Agreement and the other Transaction Documents and/or any other acts deemed necessary or advisable for the Business Separation, which remain effective or shall be performed after the Effective Spin-off Date; (ii) release any Person with respect to any terms set forth in employment or labor agreements, including, but not limited to, obligations of confidentiality, non-contact and non-competition and/or payment of salary, compensation and reimbursement, as well as payment of indemnities under insurance policies or indemnity agreements on behalf of any of the Parties, and Affiliates and respective executive officers, directors, successors and assignees thereof, under the terms of the respective policies or agreements; and/or (iii) prevent any Persons from the respective rights as shareholders of one of the Parties and/or Affiliates thereof.

4.1.2. Each of the Parties shall exercise the respective authority, to the extension permitted by the applicable Law in force, and undertake commercially reasonable efforts to (i) avoid that the Subsidiaries and respective executive officers, directors, representatives, successors and assignees thereof file any Claim against the other Party not in conformity with the settlement referred to in this Clause 4.1; and (ii) ensure that the Subsidiaries and respective executive officers, directors, representatives, successors and assignees thereof sign and deliver to the other Party the settlement term, as provided for in this Clause 4.1, as reasonably requested by the other Party.

4.2. CBD’s Indemnity. Without prejudice to any other indemnity obligations defined in the Transaction Documents, as from the Effective Spin-off Date, CBD agrees to indemnify, reimburse and hold harmless Sendas, the Subsidiaries and respective executive officers, directors, employees, representatives, successors and assignees thereof, from any Losses arising from, related to or in connection with:

(i)

any inaccuracy or violation of the representations and guarantees provided by CBD in this Agreement and the other Transaction Documents, including, but not limited to, the representations and guarantees referred to in Clause 3.1 above;

(ii)

any partial or total violation of any of the CBD’s obligations established in this Agreement and the other Transaction Documents;

(iii)

any Claim filed by any Subsidiary, executive officer, director, employee, successor or assignee of CBD and/or respective Subsidiaries against Sendas or Subsidiaries thereof and/or respective executive officers, directors, employees, successors and assignees thereof, in violation of the settlement granted by CBD, as set forth in Clause 4.1;

(iv)

any act, fact or omission, passive supervenience or active insufficiency relating to the Gas Stations and/or Sendas’ Real Estate, informed or not through the representations and guarantees provided in connection with this Agreement, known or not by the Parties, which triggering event has taken place through the Effective Spin-off Date (including), although the respective effects solely take place in the future.

(v)

any environmental Liabilities relating to the (a) CBD’s Real Estates, which triggering event has taken place through the Effective Spin-off Date (including); and/or (b) Dom Pedro Real Estate, which triggering event has taken place through February 28, 2019 (including), informed or not through the representations and guarantees provided in the context of this Agreement, known or not by the Parties, although the respective effects solely take place in the future;

(vi)

any act, fact or omission, passive supervenience or active insufficiency relating to Éxito, informed or not through the representations and guarantees provided in the context of this Agreement, known or not by the Parties, which triggering event has taken place through the Effective Spin-off Date (including), although the respective effects solely take place in the future; and

(vii)

any act, fact or omission, passive supervenience or active insufficiency relating to or arising from the Multi Retail Business Separation and/or CBD’s businesses, informed or not through the representations and guarantees provided in the context of this Agreement, known or not by the Parties, which triggering event has taken place through the Multi Retail Business Spin-off Date (including), although the respective effects solely take place in the future.

4.3. Sendas’ Indemnity. Without prejudice to any other indemnity obligations defined in the Transaction Documents, as from the Effective Spin-off Date, Sendas agrees to indemnify, reimburse and hold harmless CBD, the Subsidiaries and respective executive officers, directors, employees, representatives, successors and assignees thereof, from any Losses arising from, related to or in connection with:

(i)

any inaccuracy or violation of the representations and guarantees provided by Sendas in this Agreement and the other Transaction Documents, including, but not limited to, the representations and guarantees referred to in Clause 3.2 above;

(ii)

any partial or total violation of any of the Sendas’ obligations established in this Agreement and the other Transaction Documents;

(iii)

any Claim filed by any Subsidiary, executive officer, director, employee, successor or assignee of Sendas and/or respective Subsidiaries against CBD or Subsidiaries thereof and/or respective executive officers, directors, employees, successors and assignees thereof, in violation of the settlement granted by Sendas, as set forth in Clause 4.1;

4.4. Indemnity Procedures for Direct Claims. In the event any of the Parties incurs any indemnifiable Loss in accordance with Clause 4.2 or Clause 4.3 hereof (“Indemnified Party”), other than any Loss arising from a Third-party Claim, as referred to in Clause 4.5 below, such fact shall be informed to the other Party (“Indemnifying Party”), as provided for in Clause 9.1, including a description of the indemnity payable, the legal basis and the value of the respective Loss subject to indemnity, including receipts of final disbursements relating to the Loss.

4.4.1. Reimbursement. Upon receipt of the notice, in the event the Indemnifying Party agrees with the terms of such notice or has not submitted any notice to the contrary within ten (10) Business Days, the Indemnifying Party shall reimburse the Indemnified Party for the value of the Loss informed during each quarter, within ten (10) Business Days counted as from the beginning of the quarter after notice, upon transfer of immediately available funds to the bank account informed by the Indemnified Party. The Parties agree with the compensation of credits and debts of each Party relating to the indemnities payable at the end of each quarter.

4.4.2. In the event the Indemnifying Party has not agreed with the indemnity notice submitted by the Indemnified Party, the Indemnifying Party shall notify the Indemnified Party with respect to such disagreement within ten (10) Business Days as from the receipt of such notice, and the Parties shall meet within fifteen (15) subsequent days to achieve an agreement in good faith in relation to the matter under discussion. The failure of the Parties to achieve an amicable agreement with respect to the responsibility for the payment of the eventual Loss shall be resolved under the terms of Clause 9.11 and subsequent clauses hereof, in which case the award issued by the Arbitral Tribunal shall determine the final and indemnifiable Loss, as set forth in this Agreement. The definition of the final Loss in connection with the arbitration award shall be reimbursed to the Indemnified Party within ten (10) Business Days counted as from the award issued by the Arbitral Tribunal, except if otherwise decided by the Arbitral Tribunal.

4.4.3. The non-payment of the indemnity within the term referred to in Clauses 4.4.1 or 4.4.2 above, however the case may be, shall subject the Indemnifying Party to the payment of the indemnity value, adjusted based on the CDI rate between the payment date and the effective payment date, plus interest in arrears of two percent (2%) per year, on a proportional basis.

4.5. Third-Party Claim. Subject to the provisions of Clauses 4.5.4, 5.7 and 5.8 below, if there is a Third-Party Claim against any Indemnified Party, the Indemnified Party will notify, in writing, the Indemnifying Party regarding that Third-Party Claim, as provided for in Clause 9.1, within the term equivalent to 1/3 (one third) of the legal period for the presentation of the applicable defense or measure against said Third-Party Claim or within 10 (ten) Business Days, whichever is shorter (“Defense”), provided that, if the legal term for Defense is 5 (five) days or less, the notice referred to herein will be given until the half of the legal term for Defense. Such notice shall describe the Third-Party Claim in reasonable detail and contain, at a minimum, (i) the amount of the Third-Party Claim, if any, (ii) the facts and circumstances that resulted in the Third-Party Claim, and (iii) the full copy of the subpoena, notice, infraction report or summons related to the Third-Party Claim. In the event the Indemnified Party has failed to notify, on a timely basis, the Indemnifying Party, as set forth in this Clause, the Indemnified Party shall present the applicable Defense to the respective Third-party Claim, in the sense that, if the Indemnified Party has not presented the Defense on a timely basis or has not addressed all applicable preliminary issues and merits, the Indemnifying Party shall not be, under any circumstance, obligated to indemnify the Indemnified Party for any Losses arising from or related to the respective Third-party Claim.

4.5.1. Conduction of Third-Party Claim by Indemnifying Party. The Indemnifying Party will assume the Defense of the Third-Party Claim, through attorneys of its choice, bearing all costs arising therefrom (including, but not limited to, attorney’s fees, court costs, expertise fees, interest on arrears, fines, inflation adjustments, deposits, sureties and/or other judicial and extrajudicial guarantees).

4.5.1.1. The Indemnified Party undertakes to (i) provide the Indemnifying Party with any and all information, documents, materials and/or access to Persons, which are in its possession and/or under its control or authority, as reasonably requested, including, but not limited to, the granting of mandates, in physical or electronic form, as well as (ii) make commercially reasonable efforts to meet the other requests of the Indemnifying Party, in any event, to enable the conduct of the Defense of the Third-Party Claim, under the terms of this Clause 4.5. Information, documents, materials and/or access to Persons, which are in possession and/or under the control of the Indemnified Party and/or its Affiliates, shall be provided within the term equivalent to 1/3 (one third) of the legal period for the submission of such information and/or document within the scope of a Third-Party Claim or within 10 (ten) Business Days, whichever is shorter, provided that if the referred legal term is 5 (five) days or less, the provision shall occur up to half of the applicable term. The Indemnified Party’s failure to provide such information, documents, materials and/or access to Persons, including the prompt provision or at a later time, will not exempt the Indemnifying Party from the obligation to indemnify provided for in this Agreement, except to the extent that the Indemnifying Party is impaired by such failure.

4.5.1.2. The Indemnifying Party may, at any time, settle any Third-Party Claim for which it is responsible for indemnifying the Indemnified Party hereunder, provided that the conclusion of any agreement, transaction or composition in such Third-Party Claim (i) is previously communicated to the Indemnified Party with 10 (ten) days in advance or in the half of the legal term for its conclusion, whichever is shorter; (ii) refers exclusively to payment in cash; and (iii) does not result in damage to the image or creates a material adverse precedent for the Indemnified Party.

4.5.1.3. In conducting the Defense of Third-Party Claims, the Indemnifying Party shall act in good faith with a view to preserving the interests of the Parties and their Affiliates. In the event that the conduct of the Defense of Third-Party Claims may result in prejudice to the activities of the Indemnified Party, the Indemnifying Party and the Indemnified Party shall negotiate in good faith the best strategy to be adopted in the conduct of the Defense of the Third-Party Claim, including, but not limited to, the total or partial settlement of the Claim.

4.5.1.4. The Indemnifying Party undertakes to provide the Indemnified Party with the reports indicated in Clause 5.9.7 below in relation to any and all Third-Party Claims that the Indemnifying Party is conducting, without prejudice to the use of the electronic system referred to in such Clause. In addition, the Indemnified Party will have the right to appoint an attorney of its own choice to accompany (but not control) the Defense of the Third-Party Claim, and this attorney’s fees and expenses will be borne entirely by the Indemnified Party.

4.5.1.5. Without prejudice to the provisions set forth in Clause 4.5.1.1 above, if it is necessary to grant a guarantee or insurance within the scope of a Third-Party Claim, the Indemnified Party, as a party of the Third-Party Claim, undertakes to obtain quotes for guarantees and insurance offered by top-tier banks or insurance companies and to contract the guarantee or insurance at a lower price (provided the necessary coverage is provided), providing the Indemnifying Party in a timely manner with all documents relating to such guarantee or insurance to be submitted under the Third-Party Claim. For the avoidance of doubt, costs and expenses related to the contracting of such a guarantee or insurance will be considered as indemnifiable losses by the Indemnifying Party to the Indemnified Party under this Agreement.

4.5.2. Conduction of Third-Party Claim by Indemnified Party. Should the Indemnifying Party (a) inform in writing, as provided in Clause 9.1 below, the Indemnified Party that it does not intend to conduct the Defense of the Third-Party Claim, or (b) reject the conduct of the Third-Party Claim, expressly or tacitly, even if it does not recognize its obligation to indemnify, the Indemnified Party, at its sole discretion, may assume the Defense, or the payment of the obligation purpose of the Third-Party Claim. In any event, the Indemnifying Party shall ensure access by the Indemnified Party to information, documents or materials related to the Third-Party Claim and its Defense, as reasonably requested by the Indemnified Party, applying, mutatis mutandi, the provisions of Clause 4.5.1.1.

4.5.3. Indemnification Payment. Subject to the provisions of Clause 4.5.3.1 below, the indemnification for Losses arising from Third-Party Claims, as provided for in this Clause 4.5, will only be due after a final and unappealable decision (not subject to appeal) regarding the respective Third-Party Claim, and must be paid, by deposit or transfer of funds immediately available to the bank account held by the Indemnified Party, within ten (10) Business Days as from the beginning of the quarter, following the date of receipt of the notice sent by the Indemnified Party to the Indemnifying Party about such Losses, which shall contain the details of the bank account of the Indemnified Party and the amount to be indemnified by the Indemnifying Party, accompanied by proof of disbursement of the Loss (including payment slip and receipt, as applicable) and a copy of the respective final and unappealable decision (not subject to appeal) that led to the Loss.

4.5.3.1. Although pending a final and unappealable decision (not subject to appeal) in relation to a Third-Party Claim, any and all Losses actually incurred by the Indemnified Party, including, but not limited to, costs and expenses related to the conduct of the Defense of such Third-Party Claim, must be indemnified by the Indemnifying Party within ten (10) Business Days as from the beginning of the quarter following the date of receipt of the notice sent by the Indemnified Party to the Indemnifying Party about such Losses, indicating the details of its bank account and the amount to be indemnified by the Indemnifying Party, provided it is accompanied by proof of disbursement referring to the Loss incurred (including payment slip and receipt, as applicable). Without prejudice to the term referred to in this Clause and in Clause 4.5.3 above, the Indemnifying Party shall indemnify the Indemnified Party within ten (10) Business Days as from the date that the indemnifiable Losses in connection with this Agreement are equivalent to an amount equal to or above thirty million reais (R$30,000,000.00).

4.5.3.2. Failure to pay the indemnification within the period established in Clauses 4.5.3 and 4.5.3.1 above shall subject the Indemnifying Party to the payment of the overdue amount, adjusted based on the CDI rate between the payment date and the effective payment date, plus interest in arrears of two percent (2%), on a proportional basis.

4.5.3.3. The Parties agree that the fees, costs and expenses of any advisors (including attorneys) contracted by the Parties in connection with the conduct of the Defense of Third-Party Claim shall be billed directly to the Party which will be responsible for the payment of such fees, costs and expenses, regardless of whether they consist of indemnifiable Losses under the Transaction Documents.

4.5.4. In the event the Indemnifying Party does not agree, fully or partially, with the responsibility for any Losses in the context of any Third-party Claim, including the value of the Losses, the Indemnifying Party shall notify the Indemnified Party with respect to such disagreement within ten (10) Business Days as from the receipt of the notice submitted by the Indemnified Party, under the terms of Clauses 4.5, 4.5.3 or 4.5.3.1, however the case may be, and the Parties shall meet within the next subsequent fifteen (15) days to achieve an agreement in good faith involving the fact under discussion. The failure of the Parties to amicably agree the responsibility for the payment of any possible Loss shall be resolved under the terms set forth in Clause 9.11 and following clauses hereof; and the award determined by the Arbitral Court shall have the power to determine the final and indemnifiable Loss, under the terms set forth in this Agreement. The final Loss determined by the arbitration award shall be reimbursed to the Indemnified Party, within ten (10) Business Days as from the arbitration decision determined by the Arbitral Court, except of otherwise decided by the Arbitral Court.

4.6. Cumulative Measures. The measures set out in this Clause 4 are cumulative and, subject to the provisions of Clause 4.1, shall not prevent the exercise by any Indemnified Party of other rights or measures against the Indemnifying Party.

4.7. Survival of the Indemnifications. Except for the indemnifications arising from any possible false representations provided under Clauses 3.1.1 to 3.1.5 by CBD or under Clauses 3.2.1 to 3.2.5 by Sendas, which are not subject to any limitation in terms of time, the rights and obligations of each of the Parties under Clauses 4.2 and 4.3 shall remain valid and effective for a period equivalent to the prescription period (excluding any extensions and interruptions), as set forth in applicable Law in force, of the respective Losses, and shall survive any sale or transfer, in part or in full, of the Assets Transferred to third parties, as well as any incorporation, spin-off, merger, asset dropdown or any other corporate or asset reorganization by any of the Parties.

4.8. Exemption of Responsibility. Each of the Parties acknowledges and agrees that none of the Parties shall be entitled to any right to undertake any action or request any indemnification against the other Party in connection with this Agreement with respect to the mutual representations and guarantees referred to in Clauses 3.3.1, 3.3.2, 3.3.3 and 3.3.4, without prejudice to the CBD’s obligation to indemnify Sendas under Clause 4.2(vi).

5. Acts of the Business Separation

5.1. Business Separation. The Parties undertake to make commercially reasonable efforts for the Business Separation to be completed in the shortest possible period after the Effective Spin-off Date. Without prejudice to any other acts and measures necessary and/or convenient for Business Separation, the Parties undertake to implement all acts provided for in this Clause 5.

5.1.1. Transition Committee. The Parties shall, within fifteen (15) days as of the Effective Spin-off Date, establish a Transition Committee, composed of six (6) members, out of which three (3) members shall be appointed by CBD and three (3) members shall be appointed by Sendas (“Transition Committee”). The Transition Committee will be responsible for coordinating any and all activities related to Business Separation, with powers to make any and all decisions on behalf of the Parties, which do not depend on the approval of their respective board of directors or shareholders’ meeting, except, however, that the Transition Committee must not, under any circumstances, change the terms and conditions provided for in this Agreement.

5.1.1.1. Transition Subcommittees. The Transition Committee may establish subcommittees to conduct activities related to any specific subject of the Business Separation, which will be composed of an even number of members, with half of the members appointed by CBD and the other half appointed by Sendas.

5.1.1.2. Committee’s Meetings. The Transition Committee shall hold the first meeting within thirty (30) days from the Effective Spin-off Date to approve the Transition Committee Regulation. The decisions of the Transition Committee (and/or any of its subcommittees) shall be made by an absolute majority of its members.

5.2. Agreements. Without prejudice to the provisions set forth in Clause 5.2.1 below, the Parties agree to jointly negotiate and undertake commercially reasonable efforts to (i) amend, segregate and/or duplicate, as the case may be, the agreements to which CBD is a party on the Effective Spin-off Date, and that, as requested by Sendas, shall be amended, segregated and/or duplicated on behalf of Sendas, including, but not limited to, those listed in the Appendix 3.1.9, so that, after being amended, segregated and/or duplicated, such agreements bind, on the one hand, individually CBD or Sendas and, on the other hand, the respective counterpart, without interdependence between those agreements and the Parties; and (ii) assign the contractual position from CBD to Sendas or from Sendas to CBD, however the case may be, in relation to such agreements, in the sense that solely one of the Parties becomes a party to such agreements. Any and all costs and expenses directly arising from the amendment, segregation, duplication or assignment of such agreements, including the Shared Agreements, however the case may be, in relation to the Business Separation, shall be proportionally allocated to the benefit of the Parties subject to the respective agreement, except for (i) any indirect costs and expenses shall be assumed by the Party that incurred such costs and expenses; (ii) the Party responsible for the application of any fine and/or collection of any charges by the counterparty shall exclusively perform the payment of the respective amounts; and (iii) the Party responsible for the termination, or that intends to terminate, fully or partially, any agreement, shall be exclusively responsible for the payment of the costs, expenses and any amounts relating to the respective termination.

5.2.1. Shared Agreements. Except as otherwise expressly provided in this or the other Transaction Documents, the agreements listed in Appendix 5.2.1 will be considered as “Shared Agreements”, as well as (i) any agreement or arrangement in which CBD and/or its Subsidiaries and Sendas and/or its Subsidiaries are active or passive parties, jointly, as main parties, or otherwise, or for which they may have any residual responsibility by agreement or formalized acknowledgment, and/or (ii) any agreement or arrangement entered into by CBD prior to the Effective Spin-off Date, that is related to any Sendas’ business or business unit (“Sendas Business Unit”), whose purpose and performance is not exclusively for the benefit of the Sendas Business Unit; and/or (iii) any agreement or accord entered into by Sendas before the Effective Spin-off Date, which is related to any Compre Bem’s business unit or business; provided that such agreement or accord under (i), (ii) or (iii) cannot be separated and/or individualized on behalf of the Parties or the respective Subsidiaries thereof, or which segregation or individualization could be significantly expensive, as set forth in Clause 5.2(iii).

5.2.1.1. The rights and obligations under each Shared Agreement shall be allocated, by means of a written instrument between the Parties, in the relevant party to CBD or Sendas, or to the respective Subsidiaries indicated by CBD or Sendas, without prejudice to any amendment or addendum to the Shared Agreement itself during its term, so that each Party will be entitled to the rights and benefits, and will assume the respective portion of any Liability, inherent to its respective business; provided that:

(A)

in no event will any Party be required to assign (or amend) any Shared Agreement in its entirety or to assign a portion of any Shared Agreement that is not assignable (or which cannot be changed) under its terms (including any terms that impose consents or conditions on an assignment, when such consents or conditions cannot be obtained or fulfilled); and

(B)

if any Shared Agreement cannot be partially assigned by its terms or cannot be changed, if such an assignment or amendment unduly damages or encumbers the benefit that the Parties derive from such Shared Agreement or if such Shared Agreement is listed or described in Appendix 5.2.1, then the Parties shall, and shall cause their subsidiaries, to take other reasonable and legally effective actions and measures (including sending notice to the other Party regarding any Claim or other relevant matters related to any Shared Agreement, in order to allow the other Party to exercise any applicable rights under the law and the relevant Shared Agreement) to ensure that CBD or Sendas, as the case may be, receives the rights and benefits of the Shared Agreement that relates to its respective business, as if such Shared Agreement had been assigned (or changed), and bear the burden of the corresponding Liabilities, as if such Liabilities had been assumed if the expected assignment or amendment had occurred due to Business Separation.

5.2.1.2. The Parties shall comply, and the Transition Committee shall define and manage the action plan relating to the negotiation with third parties to separate each one of the Shared Agreements.

5.2.1.3. CBD and Sendas and the respective Subsidiaries thereof shall provide the same accounting and tax treatment to a Shared Agreement, in accordance with applicable Laws and regulations, in line with the treatment previously adopted by the Parties, and undertake not to report or take any tax position inconsistent with such treatment, except by legal imposition or change of interpretation of the applicable Law, which shall be immediately communicated to the other Party.

5.2.2. Mitigation of Adverse Effects. Each of the Parties undertakes to make commercially reasonable efforts to mitigate any and all adverse effects on the other Party, its Affiliates and/or their respective businesses, as a result of negotiations for the conclusion or renewal of agreements and arrangements with third parties within the scope of, or during, the Business Separation. Sendas undertakes to make commercially reasonable efforts, and CBD undertakes to cooperate with Sendas, to negotiate new agreements for Sendas, either with the counterparties of the Shared Agreements, or with other possible suppliers, if any, relating to services, products and/or benefits under any Shared Agreement, so that the Parties terminate, in the shortest possible period, the existing relationships between them under the Shared Agreements, as set forth in Clause 5.2.

5.2.3. Sharing Agreement. The material and human resources shared between the Parties, under the Private Instrument of Expenses Sharing Agreement, signed between the Parties, Via Varejo S.A. and CNova Comércio Eletrônico S.A. on December 15, 2016, as amended and in force (“Sharing Agreement”), shall be segregated and individualized within one (1) year, at most, as from the Effective Spin-off Date, and the Transition Committee may create a specific subcommittee to conduct the activities necessary for the termination, in the shortest possible period, of the relationship established between the Parties under said Sharing Agreement.

5.2.3.1. Back Office. The Transition Committee shall coordinate, and the Parties shall practice, all necessary acts to segregate the teams, processes and systems of human resources, personnel department and other administrative activities currently conducted together, including, but not limited to, payroll processing management and service to subcontractors, provided that the accesses of the members of each team shall be individualized within one (1) year as from the Effective Spin-off Date. Until the completion of the segregation provided for in this Clause, Sendas shall reimburse CBD, and CBD shall reimburse Sendas, however the case may be, for any and all costs and expenses related to the shared activities, maintaining the sharing rules currently practiced by the Parties.

5.2.3.2. The Parties shall comply, and the Transition Committee shall define and manage the action plan, including estimated costs and work schedule, for separation of the activities in connection with the Sharing Agreement.

5.2.4. Information Technology and Systems. Without prejudice to the segregation of the relevant agreements, according to this Clause 5.2, any and all software and computerized systems, as well as the databases of suppliers, employees and service providers, shared by the Parties and/or the respective Subsidiaries thereof, shall be segregated as soon as possible and, in any event, within one (1) year as from the Effective Spin-off Date. Sendas shall use its best efforts, and CBD commits to cooperate with Sendas, to carry out in the shortest possible period any database migration between the Parties, as well as the creation or adaptation of any computerized environment, systems or servers by Sendas, as set forth in Clause 5.2.

5.3. Release of Guarantees. The Party that has any of its obligations or liabilities, or the obligations and liabilities of its Affiliates (“Secured Party”), guaranteed in any way (whether financial guarantees or otherwise) by the other Party and/or by any of its respective Affiliates (a “Guarantor”), undertakes, with the reasonable cooperation of the Guarantor, to make commercially reasonable efforts to release, replace and/or in any way remove the Guarantor from the position of guarantor, warrantor, joint obligor, joint or several debtor (“Guarantee”) in relation to any Liability of the Secured Party, including the removal of any Burden on any Guarantor’s goods and/or assets that may serve as the Guarantee of any Liability of the Secured Party, within six (6) months as from the Effective Spin-off Date, as set forth in Clause 5.3.2.

5.3.1. To the extent necessary to release a Guarantee, CBD or Sendas, as a Secured Party and/or Controlling Company of the Secured Party, undertakes to enter into a guarantee covering the existing Guarantee, or otherwise acceptable to the Parties and creditors, whose agreement shall include the removal of any Guarantee provided by the Guarantor and/or any Burden on a Guarantor’s asset that may serve as a Guarantee for any Liability of the Secured Party, except and to the extent that such existing Guarantee contains representations, agreements or other terms or provisions with which CBD or Sendas, as the case may be, would be unable to comply or endure.

5.3.2. In the event CBD or Sendas, justifiably, is not able to obtain, or ensure the obtaining of any removal or release of the Guarantee, as set forth in Clauses 5.3 and 5.3.1, within the period defined in Clause 5.3, the Secured Party shall (i) monthly pay to the Guarantor, as from the sixth (6th) month after the Effective Spin-off Date, on the 15^th (fifteenth) Business Day of each falling due month (the first payment falling due on the eighth (8th) month after the Effective Spin-off Date relating to the immediately previous month), as compensation for the Guarantee, the amount equivalent to the lowest commercial proposal received from, at least, three (3) first class banks and/or insurance companies, applied on a monthly basis to the outstanding balance of the Guarantees not replaced or released (“Fee”) and, in the event the Guarantee remains in effect after eighteen (18) months as from the Effective Spin-off Date, the Fee shall be increased by twenty percent (20%); (ii) indemnify, defend and hold the Guarantor harmless against or from any Liability arising from or related to such Guarantee, and shall, as agent or subcontractor of the Guarantor, fully comply with all Guarantor’s obligations or other Liabilities under the respective Guarantee; and (iii) refrain from renewing or extending the term or scope of any Liabilities, of any nature, whether in the form of a loan, guarantee, lease, agreement or other obligation, for which Guarantor is or may be responsible, unless that Guarantor is finally and completely released from all its obligations as a result of and /or in connection with the respective Guarantee.

5.3.2.1. For purposes of determination and calculation of the Fee, (a) the Parties shall agree within ten (10) days as from the beginning of each month, the balance of the Guarantees, based on which the Fee payable shall be calculated, by comparing the values of the Guarantees of one Party in relation to the other, in the sense that the Party holding the highest value of the secured obligations shall pay the Fee to the other Party; (b) CBD shall be responsible for obtaining the quotations from three (3) first class banks and/or insurance companies, for a guarantee of one (1) year, taking into account the subject matter of the Guarantees (e.g., real estate guarantee) and the existing balance of the Guarantees; provided that the first quotations are obtained at the end of the period of six (6) months as from the Effective Spin-off Date, subject to renewal each twelve (12) months, based on the existing Guarantees at the end of the month before the obtaining of the quotations; (c) CBD shall submit to Sendas, within ten (10) Business Days as from the beginning of each month, the calculation statement of the Fee; and (d) CBD shall submit to Sendas and, however the case may be, copies of the quotations obtained. For clarification purposes, Appendix 5.3.2.1 includes a flowchart of the system referred to in this Clause 5.3.2.

5.3.3. In the event that Guarantor is required to make any payment and/or disbursement as a result of a Guarantee, or, if a Guarantee is executed, the Secured Party shall reimburse Guarantor for the Losses incurred in connection with the Guarantee provided by it, within 48 (forty-eight) hours from the receipt of notice sent by Guarantor to the Secured Party (and to CBD or Sendas, as Controlling Company of the Secured Party, pursuant to Clause 9.1 below), indicating the total amount of Losses, accompanied by proof of payment and the assignment or endorsement of the securities and rights to which Guarantor has been subrogated.

5.4. Insurance. CBD and Sendas shall jointly notify all insurance companies that have issued insurance policies whose coverage covers both Sendas and/or its assets, business and employees, and CBD and/or its other Affiliates and respective assets, business and employees, as listed in Appendix 5.4 (“Existing Insurance”), about the Business Separation, in order to provide insurance coverage in a market standard for Sendas and/or its assets, business and employees, including civil liability insurance for CBD officers who, as a result of the Business Separation, will take on management positions at Sendas, with coverage of events related to Business Separation (D&O runoff) (“Standard Market Insurance Package”). In the event the Existing Insurance is not extended or, for any reason, does not cover a Standard Market Insurance Package for Sendas, Sendas shall contract the necessary insurance so that, under any circumstance, the Standard Market Insurance Package is fully effective as from the Effective Spin-off Date to cover Sendas. CBD shall support Sendas with respect to the insurance coverage contracted by CBD and that are not applicable to Sendas; however, under no circumstance, CBD shall have any responsibility or obligation of any nature before Sendas in the event that any insurance policy is no longer contracted, loses effectiveness or is not paid, for any reason, after the Effective Spin-off Date; CBD’s cooperation for the renewal or extension of Existing Insurance does not represent any CBD’s commitment to ensure insurance coverage for Sendas, its assets, employees, managers, suppliers or business of any nature.

5.4.1. If Existing Insurance, or a portion of them, is extended to Sendas, each Party shall be responsible, on a proportional basis, for any costs and expenses relating to the Existing Insurance, including the extension premium.

5.4.2. Except to the extent that the Existing Insurance policies are extended or renewed according to Clause 5.4 above, as of the Effective Spin-off Date, Sendas will have no rights under CBD or its Affiliates insurance policies. In the event the Existing Insurance policies are extended, Sendas will appear as insured until the original policy term expires, and the new policies shall be contracted individually without any link between CBD and Sendas.

5.4.3. As of the Effective Spin-off Date, in relation to any Liabilities or Losses incurred by Sendas under the Existing Insurance, Sendas shall undertake the necessary measures for submission, and CBD shall cooperate with Sendas in this regard, of claims that could be covered by the Existing Insurance, in the sense that CBD shall transfer to Sendas eventual indemnities with respect to such claims within fifteen (15) days after the receipt of the respective values; provided that such cooperation will be subject to the terms and conditions of such insurance policies, including any limits of coverage or scope, any deductibles, and other fees and expenses, and will be subject to the following additional conditions:

(A)

Sendas shall indemnify, hold CDB harmless from and refund CBD for any deductibles, fees, costs and expenses incurred by CBD in connection with any claims made by CBD under Existing Insurance on behalf of Sendas, including any indemnification payments, agreements, judgments, legal fees and claim expenses; and

(B)

Sendas shall bear exclusively (and CBD will have no obligation to repay Sendas) and will be responsible for all uninsured, overdraft, unavailable or uncollectible amounts under the respective policies.

5.4.4. All payments and reimbursements by Sendas under this Clause 5.4 shall be made within fifteen (15) days after receipt by Sendas of a notice from CBD on this subject. If CBD incurs costs to enforce Sendas’ obligations contained herein, Sendas agrees to reimburse CBD for such execution costs, including attorney’s fees.

5.4.5. With respect to Existing Insurance, CBD will retain the exclusive right to control its insurance policies and programs, including the right to settle, release, repurchase or otherwise resolve disputes regarding any of its insurance policies and programs and to change, modify or waive any right under such insurance policies and programs, regardless of whether such policies or programs apply to any Sendas’ Liabilities or claims that Sendas has made or could make in the future, except for the fact that CBD shall consult Sendas before the performance of any of these acts that could directly or indirectly impact Sendas. Each of the Parties shall cooperate with each other and share such information, as reasonably deemed necessary, so that the other Party is able to manage and conduct the insurance issues.

5.4.6. Sendas expressly acknowledges and agrees that CBD will have no obligation or responsibility towards Sendas as a result of insurance policies and practices of CBD and its Affiliates in force at any moment, including as a result of any insurance coverage, the credit quality of any insurance company, the terms and conditions of any policy or the suitability or timing of any notice to any insurance company with respect to any claim or potential claim or otherwise.

5.5. Labor Matters.

5.5.1. Unions and Associations. Bearing in mind that the negotiation before employer and employee unions and associations of the Parties is currently carried out by CBD, the Parties shall undertake commercially reasonable efforts to conduct individual negotiations before such unions and associations, as applicable, so that Sendas is able to conduct such negotiations on Sendas’ own behalf and independently from CBD within one (1) year, at most, as from the Effective Spin-off Date. Until Sendas is able to conduct such negotiations on Sendas’ own behalf and independently, the negotiations of the labor collection agreement shall be conducted by associates of both Parties, taking into consideration the maximum term of one (1) year as from the Effective Spin-off Date for separation, and the Transition Committee shall establish a specific subcommittee to conduct activities related to the segregation of the negotiation before employee unions, with the purpose of mitigating potential adverse effects resulting from this segregation for the Parties.

5.5.2. Incentive Plans. The Parties undertake, until the Effective Spin-off Date, to (i) amend the agreements (and applicable programs, as the case may be) currently in effect, relating to the Share Call Option Plan and the CBD Shares Call Option Remuneration Plan, so that the current beneficiaries of the respective programs, including beneficiaries who take and will take positions in Sendas after CBD Partial Spin Off, will have right, within the scope of the respective agreements, to exercise the options and receive shares issued by both Parties, according to the premises contained in Appendix 5.5.2(i); (ii) create and undertake the necessary measures to approve Sendas’ new stock option plans and compensation under stock option plans, including respective programs, under terms that are substantially similar to the terms and conditions of such CBD’s plans; and (iii) enter into the Employee’s Transfer Agreement to govern, among other aspects, the allocation of costs and expenses relating to the performance of such share-based compensation plans, in the form of the draft included in Appendix 5.5.2(iii).

5.6. Real Estate Matters. Without prejudice to the corporate acts relating to the contribution of CBD’s Real Estate to Sendas, the Parties undertake to sign any and all documents, including public deeds, and to take any and all measures, including the rectification of corporate documents, which are necessary for the transfer from CBD’s Real Estate to Sendas, upon reasonable request from the other Party.

5.6.1. Sublease and Assignment. The real estate leased by any Party and/or its Affiliates, which include areas taken by the other Party, including the real estates described in Appendix 5.6.1, shall be subject to contractual assignment or sublease, however the case may be, by the tenant to the other Party and/or its Affiliates, with remuneration compatible with the rent amount due under the respective lease agreement vis-à-vis the proportion of the area taken (or used, with common areas) by the Parties and their respective Affiliates. In any event, lease agreements that benefit both Parties shall be considered Shared Agreements, being applicable, mutatis mutandi, the provisions of Clause 5.2 above.

5.6.1.1 The real estate referred in Appendix 5.6.1.1, which will be subject to own contracts to be signed by the Parties, will be governed solely by the rules established in such contracts, not applying the provisions of this Agreement.

5.6.2. Combo Stores. In relation to the stores identified in Appendix 5.6.2, the Parties agree to enter into, through September 30, 2021, instruments in writing to govern the shared use of these real estates.

5.6.3. Galleries. Sendas and Fronteira Serviços Imobiliários Ltda., limited-liability company, Controlled by CBD and enrolled with CNPJ under nº 34.309.019/0001-36 (“Fronteira”), shall enter into, and CBD shall ensure Fronteira to enter into, through the Effective Spin-off Date, a gallery management agreement, which shall govern the provision of real estate services by Fronteira to Sendas, mainly in the form of the draft included in Appendix 5.6.3. CBD shall assign to Sendas its contractual position in connection with any and all sublease agreements relating to real estates of which Sendas is the lessor, in which case both Parties shall negotiate with the respective sublessees and undertake commercially reasonable efforts to perform such assignment in the shortest time possible.

5.6.4. Real Estate Regularization. The real estate regularization (such as, registry of ownership and obtaining of licenses, authorizations and permits) and the implementation of eventually necessary refurbishments, including costs and expenses, in relation to the CBD’s Real Estates and Dom Pedro Real Estate, shall be under Sendas’ exclusive responsibility, except for the environmental Liabilities under CBD’s responsibility, as set forth in Clause 4.2(v). The Parties agree to undertake commercially reasonable efforts and contribute between each other to obtain any regularization, licensing and refurbishment in real estates, as reasonably requested, as set forth in this Clause.

5.6.4.1. The Parties agree that the eventual real estate regularization or refurbishment deemed necessary to the operation of the Parties and its Affiliates in the real estates identified in Appendix 5.6.4.1 shall be exclusively under the CBD’s responsibility, provided that, however (i) the costs and expenses relating to the areas used by Sendas shall be assumed by Sendas, except as set forth in the respective agreements that have been or shall be entered into between the Parties; and (ii) CBD shall present to Sendas three (3) budgets for the contracting of advisors and/or performance of works, previously to the respective contracting or performance; and Sendas shall be entitled to the right to select for contracting any of the budgets presented or, alternatively, present a fourth (4th) budget covering the same scope of services.

5.6.5. Dom Pedro Real Estate. Sendas shall expressly assumes, and agrees to undertake any necessary measures to comply with all obligations and responsibilities attributed to any of the Parties, including past events, in the context of Public Civil Action 0053712-05.2010.8.26.0114, before the 1st Public Treasury of Campinas (Plaintiff: Public Prosecution Office of the State of São Paulo/Defendant: Companhia Brasileira de Distribuição and Municipality of Campinas), as well as the agreements entered into or to be entered into with any Governmental Authorities in relation to Dom Pedro Real Estate in connection with such Public Civil Action 0053712-05.2010.8.26.0114 (in relation to the agreements that may be entered into, Sendas shall agree with the respective terms set forth therein before signature thereof), including, but not limited to, the Policy Adjustment Commitments (TACs) entered into with the Public Prosecution Office of the State of São Paulo and the Municipality of Campinas. In addition, Sendas shall protect, to the extent permitted by applicable Law in force, and hold CBD harmless from any responsibilities relating to Dom Pedro Real Estate, except for any environmental Liabilities, which triggering event has taken place before February 28, 2019 (inclusive), under CBD’s exclusive responsibility.

5.6.6. Gas Stations. The Parties agree that, on the Effective Spin-off Date, Sendas shall transfer the tangible and intangible assets related to the Gas Stations, as set forth in Clauses 2.2(ii) and 2.3(iii), and shall discontinue the activities developed in the Gas Stations, which may be conducted by CBD or any company Controlled by CBD, at CBD’s exclusive discretion, upon obtaining of all licenses and authorizations deemed necessary to operate the Gas Stations, under CBD’s own brand or under the brand of any CBD’s Subsidiary.

5.6.6.1. The agreements that remain effective between the Parties after the Effective Spin-off Date, in relation to the operation of any gas station (including the Gas Stations) under the “Assaí” brand or any other brands exclusively owned by Sendas, shall be amended or terminated, however the case may be, to reflect the discontinued use by CBD of the “Assaí” brand and any other brands exclusively owned by Sendas.

5.6.6.2. The Parties agree that any and all gas stations operated by CBD, under the “Assaí” brand, shall operate, after six (6) months counted from the Effective Spin-off Date, under independent brands owned by the fuel suppliers.

5.7. Passive Claims. Subject to the provisions of Clause 5.9 below, at any moment after the Effective Spin-off Date, if a Party receives notice, subpoena or otherwise becomes aware of any preparatory act, injunctions or filing of a Third-Party Claim that may result in Losses for both Parties and/or respective Subsidiaries thereof, which are not fully indemnified by one Party to the other Party (“Shared Third-Party Claim”), such Party shall notify the other Party in writing within 1/3 (one third) of the legal period for presentation of Defense against said Shared Third-Party Claim or within 10 (ten) Business Days, whichever is shorter, and if the legal term for Defense is 5 (five) days or less, the notice referred herein will be given until the half of the legal term for Defense, and shall describe the Shared Third-Party Claim in reasonable detail, including, but not limited to (i) the amount of the Shared Third-Party Claim, if any, (ii) the facts and circumstances that resulted in the Shared Third-Party Claim, and (iii) the full copy of the subpoena, notification, notice or summons related to the Shared Third-Party Claim. Notwithstanding the foregoing, the failure of any Party to provide notice under this Clause will not prejudice the rights of such Party under this Agreement and/or under the Shared Third-Party Claim, except to the extent that the Party that should receive the communication and/or conduct of the Defense of the Shared Third-Party Claim has been impaired by the failure to provide notice under this Clause.

5.8. Active Claims. Each Party undertakes to cooperate with, and make commercially reasonable efforts to assist, the other Party in conducting any Claim filed by such Party and/or its Subsidiaries prior to the Effective Spin-off Date and/or in conducting any Claim based on facts, acts, agreements and/or legal relationships, prior to the Effective Spin-off Date, involving both Parties and/or their Affiliates, in any event, against any third parties, including, but not limited to, Governmental Authorities, but provided that they are not related parties of one of the Parties (“Active Claim”). If the Parties and/or their Affiliates have common interests in an Active Claim (“Shared Active Claim”), the Parties shall comply with the provisions set forth in Clause 5.9 below, including the Shared Active Claims referred to in Appendix 5.8.

5.9. Conduction of Shared Claims.

5.9.1. Control of Shared Claim. The Parties shall establish which Party has the greatest financial interest in the Shared Claim and such Party shall be responsible for controlling the Active Claim or Defense strategy of the Shared Third-Party Claim, as the case may be. If the Parties define that the shared conduct is in the best interest of the Parties, the strategies will be equally shared, and in the event of disagreement, the strategy of the Party that has the largest monetary amount at risk in the Shared Third-Party Claim or the largest potential pecuniary benefit arising from the Active Claim shall prevail.

5.9.2. Defense Costs Allocation. The Party responsible for conducting the Shared Claim will be solely responsible for all costs and expenses incurred in connection with such Shared Claim and will only be entitled to reimbursement from the other Party for the costs and expenses that are incurred during the Shared Claim course in proportion to the Losses or economic benefits, as the case may be, attributable to that other Party. If there is a decision to share the conduction of the Shared Claim, each Party will be solely responsible for the costs of its own attorneys.

5.9.3. Right to Monitor and Participate. A Party that does not conduct any Shared Claim (or does not control the Defense, if applicable) will be entitled to appoint an attorney of its own choice to monitor (but not to control) such Shared Claim, and attorney’s fees and expenses will be borne by such Party, who shall make commercially reasonable efforts to cooperate with the Party that conducts the Shared Claim, including, but not limited to, making available to that Party all the witnesses, information and materials in its possession, except if there are real or potential conflicts of interest between the Parties that render joint representation inadequate.

5.9.4. Impossibility of Transacting Rights. The Party that conducts the Shared Claim shall not transact or compromise rights without the prior and express consent of the other Party, unless the respective agreement (i) is communicated to the other Party 10 (ten) days in advance or half of the legal term for its execution, whichever is shorter; (ii) refers exclusively to payment in cash; (iii) does not result in damage to the image or create a material adverse precedent to the other Party; and (iv) in the case of Shared Third-Party Claim, provides for full discharge with the total, unconditional and irrevocable release of the other Party from all responsibility in connection with the respective Shared Third-Party Claim, or, in the case of an Active Claim, ensures to the other Party, at least, the economic benefit intended by it with the respective Active Claim.

5.9.5. Provision of Information and Documents. Each Party undertakes to (i) provide the other Party and its Affiliates with any and all information, documents, materials and/or access to Persons, which are in its possession and/or under its control or authority, as reasonably requested, including, but not limited to, the granting of mandates, in physical or electronic form, as well as (ii) make commercially reasonable efforts to meet the other requests of the other Party, in any event, to enable the conduction of any Shared Claim, according to this Clause 5.9. Information, documents, materials and/or access to Persons, which are in possession and/or under the control of one of the Parties and/or its Affiliates, shall be provided within the term equivalent to 1/3 (one third) of the legal period for submission of such information and/or document within the scope of a Shared Claim or within 10 (ten) Business Days, whichever is shorter, provided that, if the referred term is 5 (five) days or less, the provision shall occur up to half of the applicable term. The failure of one of the Parties to provide such information, documents, materials and/or access to Persons, including untimely provision or at a later time, will not in any way prejudice that Party’s rights in relation to such Shared Claim, except to the extent that such failure impairs the conduction of the Shared Claim and/or results in Losses for the other Party.

5.9.6. Legal Guarantees. Without prejudice to the provisions set forth in Clause 5.9.5 above, if it is necessary to present a guarantee or insurance under a Shared Claim, the Party (or its Subsidiary) that appears as a party of the Shared Claim must obtain quotes for guarantees and insurance offered by top-tier banks or insurance companies and contract the lowest price guarantee or insurance (provided the necessary coverage is provided), providing the Party conducting such Shared Claim, as the case may be, in a timely manner, with all documents relating to such guarantee or insurance to be presented under the Shared Claim.

5.9.7. Reports. The Party conducting a Shared Claim shall provide the other Party (i) with a quarterly report, in writing, to be delivered by the last day of each quarter (i.e., March 31, June 30, September 30 and December 31 each year), detailing the Shared Claims, including, but not limited to, the progress and other information reasonably required by the Parties; (ii) a monthly report, to be delivered on the 1^st(first) Business Day of each month, with the indication of the amounts involved in each Shared Claim whose risk assessment requires the establishment of an accounting provision; and (iii) a monthly report, to be delivered by the 4^th (fourth) Business Day of each month, with the indication of the amounts involved in each Shared Claim that does not require the establishment of an accounting provision. In addition, through the Transition Committee (or a subcommittee created by the Transition Committee) a reasonably acceptable procedure will be established for automatic submission of reports and electronic notices to feed a dispute management system when any Shared Claim is filed, procedurally evolves or is terminated.

5.9.8. Payment of Reimbursements or Indemnifications. The Party that has borne Losses resulting from Shared Claims that should be, totally or partially, under any Transaction Document or applicable Law, supported by the other Party and/or its Subsidiaries, shall send notice to this other Party, indicating the details of its bank account and the amount to be reimbursed or indemnified, accompanied by proof of the effective disbursement of the Loss (including payment slip and receipt, as applicable) and copy of the respective final and unappealable decision (not subject to appeal) that gave rise to the Loss, if applicable, and the other Party shall make the payment of the reimbursement or indemnification, by depositing or transferring funds immediately available to the bank account indicated in the notice, (i) within ten (10) Business Days as from the beginning of the quarter after the receipt date of the respective notice or (ii) within ten (10) Business Days as from the date such Losses are equivalent to or above thirty million reais (R$30,000,000.00), whichever takes place firstly.

5.9.9. Onlending of Economic Benefits. The Party that receives any amounts or obtains any economic benefits (including, but not limited to, the recovery of Losses already indemnified or reimbursed by the other Party, under this Agreement, and the Use of Tax Supervenience) that, totally or partially, are attributable or should be paid to the other Party and/or its Subsidiaries, shall transfer to the other Party the due amount, as well as provide to the other Party all and any calculations and assumptions relating to the transferred amounts, (i) within ten (10) Business Days as from the beginning of the quarter after the receipt date of the respective amounts or (ii) within ten (10) Business Days as from the date such amounts are equivalent to or above thirty million reais (R$30,000,000.00), whichever takes place firstly.

5.9.10. Advisors Fees. The Parties agree that the fees, costs and expenses of any advisors (including attorneys) contracted by the Parties in connection with the conduction of the Shared Claims shall be billed directly to the Party that will be responsible for the payment of such fees, costs and expenses, regardless of whether they consist of Indemnifiable Losses under the Transaction Documents.

5.9.11. Court Deposits. The Parties agree that all and any amounts relating to the court deposits referred to in Appendix 5.9.11 shall be exclusively allocated to CBD, although such court deposits have been performed on behalf of Sendas, provided that (i) in the event such deposits are provided, at any time, Sendas shall transfer such amounts to CBD in conformity with the provisions set forth in Clause 5.9.9, or (ii) in the event such deposits are, fully or partially, used in the settlement of any Losses in connection with any Claim, the amounts relating to such deposits shall be (a) used to pay the indemnification payable by CBD to Sendas in connection with this Agreement, however the case may be, in relation to the Losses in connection with such Claim; and/or (b) reimbursed to CBD by Sendas, in accordance with the amount allocated to the Claim, in the event the Losses in connection with such Claim are not indemnified by CBD to Sendas, as set forth in Clause 5.9.9.

5.9.12. Tax Credits. In the event that any of the Parties conducts a Claim for ratification of credits against tax Governmental Authorities (“Tax Active Superveniences”), including due to the overpayment of Taxes or statement of rights that implies the return of financial amounts to the Parties, for the benefit, totally or partially, of the other Party and/or its Affiliates, such Party shall conduct the Claim in good faith and in the best interest of both Parties, proceeding to offset or refund the amount administratively ratified, according to the chronology order of the Tax Active Superveniences (i.e., first offsetting the oldest Tax Active Superveniences) (“Use of Tax Supervenience”) in the shortest possible period. Once the economic benefit of the Tax Active Supervenience has been obtained through the Use of the Tax Supervenience, the Party directly benefited shall pass on the amount of the economic benefit attributable to the other Party within ten (10) Business Days as from the beginning of the quarter after the Use of Tax Supervenience, as set forth in Clause 5.9.9.

5.9.12.1. If the Use of Tax Supervenience is subsequently rejected by the competent tax Governmental Authority, the Parties shall make commercially reasonable efforts to defend the maintenance of such Use of Tax Supervenience, and the Party with the greatest economic benefit involved in this Use of Tax Supervenience being entitled to conduct the respective defense, subject, as applicable, to the provisions of Clause 5.9.1. If there is a final and unappealable decision confirming the rejection of the Use of Tax Supervenience, the Parties will be responsible for the payment of the debt and other costs, expenses, penalties, arrears and other monetary amounts that may be charged by the tax Governmental Authority as a result of such tax rejection, in proportion to the economic benefit enjoyed by each Party in connection with the respective Use of the Tax Supervenience. In the event that the refusal of the Use of Tax Supervenience arises from the exclusive fault of one of the Parties, this Party will be the sole and exclusive responsible for the payment of the debt and other charges resulting from such refusal, even though both Parties have benefited from the Use of the Tax Supervenience.

5.9.12.2. The Parties expressly agree that any Tax Active Superveniences relating to all Multi Retail activities, which triggering event is dated before the Multi Retail Business Spin-off Date (including), shall belong exclusively to CBD and, in the event of Use of the Tax Supervenience by Sendas in relation to such Tax Active Superveniences, Sendas shall fully transfer to CBD the respective economic benefit arising from such Use of the Tax Supervenience, in conformity with the provisions set forth in Clauses 5.9.12 and 5.9.12.1.

5.9.12.3. The Parties agree to undertake reasonably commercial efforts so that the Use of the Tax Supervenience takes place in the shortest period and in conformity with the chronological order of the Tax Active Superveniences, although to the exclusive benefit of the other Party and/or its Subsidiaries. The Party responsible for the Claim relating to any Tax Active Supervenience, which may partially or fully benefit the other Party and/or its Subsidiaries, shall provide to such other Party, whenever reasonably requested in advance, a report on the progress and current position of the Claim.

5.10. Related-party Transactions. Without prejudice to the other provisions set forth in this Agreement, the Parties shall undertake commercially reasonable efforts to jointly review, negotiate, amend, terminate and/or promote the novation in good faith of all accords and agreements that remain effective between the Parties (and/or its respective Subsidiaries) after the Effective Spin-off Date, in order to align the existing relationship between the Parties with the respective related-party transaction policies and other rules in connection with these transactions, in the shortest time possible.

5.10.1. The Parties agree to, within six (6) months as from the Effective Spin-off Date, contract the guarantees under market terms and conditions with first class insurance companies, with respect to any real estate leased or subleased by any Party and/or respective Subsidiaries to the other Party and/or respective Subsidiaries, with a coverage term of twelve (12) months, renewable for equal periods, over the respective agreement. The delay or lack of fulfilling of the obligation of contracting guarantees, in accordance with this Clause, shall create an obligation for the defaulting Party to pay a penalty to the other Party in the equivalent of three (3) months rental which is due under the relevant lease or sublease agreement, whichever the case may be; the monthly rental will be based in the previous month rental, which shall be multiplied by the number of months delayed, having the non-defaulting Party the right to terminate the relevant lease or sublease agreement and/or be indemnified for all losses and damages which may have occurred due to the lack of fulfillment of such obligation.

5.11. Financial Statements. In order to comply with the obligations before CVM, SEC, B3 and NYSE, the Parties shall cooperate with the exchange of information for purposes of preparation and disclosure of the financial statements. The Transition Committee shall implement a supporting committee (“Disclosure Subcommittee”), which shall be responsible for the review and approval of information, representations, statements, declarations, instruments and other accounting and/or financial statements and documents, including reports and forms, which shall be disclosed by the Parties or registered or filed with CVM or SEC, which contents shall reflect, although partially, the Business Separation and/or the business, transactions and accounting of the other Party, in the sense that the Disclosure Subcommittee shall ensure the consistency of such information or documents with similar information and documents previously disclosed by the Parties. All disclosures to be performed by any of the Parties under this Clause shall be submitted to the Disclosure Subcommittee within reasonable advance to ensure the proper review of the respective information or documents by the Disclosure Subcommittee. Except if determined by the applicable Law in force, none of the Parties shall disclose any accounting or financial information that may conflict, totally or partially, with any information or document previously disclosed by the other Party, except if such disclosure has been previously approved by the Disclosure Subcommittee.

5.11.1. The Parties shall fully cooperate and undertake commercially reasonable efforts to ensure that the Parties’ auditors cooperate, as necessary, with the preparation of any and all statements and financial and/or accounting statements, including reports and forms, under the applicable Law in force, including those that shall be filed with CVM, SEC, B3 or NYSE (“Mandatory Disclosure”). Without prejudice to the provisions set forth in Clause 7.3 below, each of the Parties shall provide to the other Party any information that has been reasonably requested in connection with the Mandatory Disclosure, on a timely basis, in order to ensure that the other Party shall be able to prepare and disclose any Mandatory Disclosure within the term set forth in the applicable Law in force.

5.12. Bellamar’s Shareholders’ Agreement. As of the date hereof, the Parties entered into the Bellamar’s shareholders’ agreement, as set forth in Appendix 5.12, in order to govern the relationship between the Parties as the Bellamar’s shareholders (“Bellamar’s Shareholders’ Agreement”).

5.13. Proxies. The proxies granted by one Party or its Subsidiaries to the other Party and/or its Subsidiaries or respective employees, associates and service providers thereof shall be deemed automatically revoked on the Effective Spin-off Date, regardless of notice, except for the proxies referred to in Appendix 5.13, which shall solely be revoked upon notice to the respective signatories on a timely basis to avoid any negative impact in the management of the Parties’ and its Subsidiaries’ businesses.

6. Distribution of Sendas’ Shares

6.1. Shares Prior to Distribution. Before the distribution of the Sendas’ shares to the CBD’s shareholders (“Distribution”) and in conformity with the terms and conditions set forth in this Agreement, the Parties shall undertake, or shall ensure the undertaking of the following actions with respect to the Distribution:

(i)

Notice to the Shareholders. CBD and Sendas shall agree with B3 the Distribution date (“Effective Date of Distribution”).

(ii)

Sendas’ Registry as a Publicly-held Company and Listing with B3. Through the Effective Date of Distribution, Sendas shall have been registered as the issuer, under category A, before CVM, in the sense that Sendas’ shares shall have been admitted for trading in B3.

(iii)

Admission for Trading of the ADRs in NYSE. Through the Effective Date of Distribution, Sendas shall have ADRs representing the shares admitted for trading in NYSE.

(iv)

ADRs Deposit Agreement. The deposit agreement shall have been entered into to indicate a depositary to the ADRs representing the Sendas’ shares;

(v)

Sendas’ Managers. Through the Effective Date of Distribution, CBD and Sendas shall undertake all necessary measures so that (a) the Sendas’ managers have been duly indicated and taken office; and (b) the composition of Sendas’ management has been disclosed to the market;

(vi)

Securities Laws. Sendas shall file any documents, amendments or supplements, as deemed necessary or advisable, in order to ensure that the registry forms become and remain in effect as determined by CVM and SEC or the applicable Laws in force. CBD and Sendas shall cooperate with the preparation and filing with CVM and SEC of the documents and information deemed necessary to reflect the transactions contemplated by this Agreement and the other Transaction Documents, including any documentation and commitment letters to undertake or not any acts deemed necessary or advisable to perform the Distribution as soon as possible. CBD and Sendas shall undertake all necessary or adequate measures set forth in the applicable Laws in force in connection with the Distribution.

(vii)

Information Availability Statement. CBD shall submit the necessary information on the Distribution to the holders of ADRs and shares issued by CBD, as set forth in the applicable Law in force.

6.2. Distribution Conditions. The completion of the Distribution shall be subject to the performance of the following conditions:

(i)

SEC shall have declared the effectiveness of the Form 20-F and no order suspending the effectiveness of the Form 20-F shall be in effect or being analyzed by SEC;

(ii)

the information shall have been submitted to the holders of the CBD’s shares and ADRs, subject to the proper disclosure by the means defined by the applicable Laws in force;

(iii)

the Corporate Reorganization shall have been validly implemented;

(iv)

all approvals or notices by any Governmental Authorities deemed necessary for the performance of the Distribution shall have been obtained;

(v)

no Order shall have been issued and no other legal restriction or prohibition that prevents the completion of the Business Separation, the Distribution or any transaction set forth in this Agreement or the other Transaction Documents shall be in force; and

(vi)

no other event or fact shall exist or shall have taken place that, based on the opinion and exclusive discretion of the CBD’s Board of Directors, would make the Business Separation, the Distribution or any transaction set forth in this Agreement or the other Transaction Documents not advisable.

6.2.1. The abovementioned conditions are exclusively to the CBD’s benefit and shall not originate or create any obligation by CBD or the CBD’s Board of Directors to waive or not waive any such condition, or otherwise limit the CBD’s right to terminate this Agreement. Any resolution undertaken by the CBD’s Board of Directors, before the Distribution, with respect to the performance or waiver of any or all conditions set forth in this Clause 6.2 shall be final and shall bind the Parties. In the event CBD waives any material condition, CBD shall immediately disclose the material fact to the market with respect to such decision.

6.3. Delivery of Sendas’ Shares. The Distribution shall take place on the Effective Distribution Date, upon delivery to the CBD’s shareholders of the Sendas’ Shares, at the ratio of one share issued by Sendas for one share issued by CBD, as set forth in the CBD’s Partial Spin-off Agreement, provided that (i) the shareholders whose shares are deposited in B3’s Central Depositary shall receive the Sendas’ Shares through the respective custody agent; (ii) the shareholders holding the book-entry shares, not deposited in B3’s Central Depositary may receive the Sendas’ Shares directly from the bookkeeper contracted by Sendas; and (iii) the holders of the ADRs representing the CBD’s shares shall receive the ADRs representing the Sendas’ Shares duly admitted for trading in NYSE.

7. Other Covenants

7.1. Expenses. The costs and expenses incurred with legal costs and attorneys’ fees, accountants, financial consultants and other external professionals, and financial institutions relating to the Business Separation, this Agreement and all other transactions related thereof, shall be equally shared between the Parties.

7.1.1. Rendering of Accounts. Within sixty (60) days as from the Effective Distribution Date, each of the Parties shall render accounts to the other Party with respect to all and any costs and expenses to be apportioned between the Parties; and the Party that has assumed the lowest value of these costs and expenses shall reimburse the other Party in order to comply with the cost apportionment set forth in Clause 7.1. The costs and expenses referred to in this Clause shall be reimbursed within ten (10) Business Days as from the beginning of the quarter immediately after the conclusion of such rendering of accounts, in conformity with the provisions set forth in Clause 7.7

7.2. Confidentiality. The Parties agree to maintain the confidentiality and not disclose to the public the terms and conditions set forth in this Agreement and other confidential information provided by one Party to the other in the context of the Business Separation, within five (5) years as from the Effective Spin-off Date, without the previous consent of the other Party, except for the conditions set forth in Clause 7.2.1 below. In addition, each of the Parties and the respective officers, directors and employees thereof agree to handle as strictly confidential and do not disclose to any third parties any confidential information related to the other Party and respective Affiliates thereof, except for any information that (i) is or may be disclose to the public; (ii) had already been known by the receiving Party on the date of such disclosure by the other Party; or (iii) has been lawfully received, by any of the Parties, from third parties that are not subject to any confidentiality obligation before the other Party.

7.2.1. The confidentiality obligation set forth in this Agreement shall not prevent the Parties to disclose the information under the terms and strict limits determined by the applicable Law in force, inclusive for purposes of registry before CVM, B3, SEC and NYSE. In the event any of the Parties and/or respective Affiliates are obligated, as set forth in the applicable Law in force or by any proper Governmental Authority, to disclose, in the whole or in part, any confidential information referred to in this Clause 7.2, such Party may disclose such information without being subject to indemnifications or charges, and shall notify the other Party with respect to such disclosure obligation (if possible, before the respective disclosure).

7.2.2. Marketing. The Parties shall agree with respect to the disclosure of any notes, press releases or other public statements relating to the Business Separation, including the Corporate Reorganization and the Distribution, or any other transaction in connection with the Transaction Documents.

7.3. Sharing of Information. Without prejudice to any other provisions set forth in the Transaction Documents and except for any request relating to any pending or threatened Claim, by one Party and/or respective Affiliates thereof against the other Party and/or respective Affiliates thereof, each of the Parties shall provide to the other Party and/or respective Affiliates thereof, as requested, with reasonable advance, at any time before or after the Effective Spin-off Date, in the shortest possible period, any information and/or document under the control or owned by the respective Party and/or Affiliate thereof, including the access to Person under the authority thereof, for purposes of (i) performance of the obligations by the requesting Party and/or respective Affiliates thereof in conformity with any applicable Law in force, including, but not limited to, by virtue of Orders; (ii) use by the requesting Party and/or the respective Affiliates thereof in lawsuits and/or administrative and arbitration proceedings; and/or (iii) performance of the obligations assumed by the requesting Party and/or respective Affiliates thereof in connection with this Agreement or the other Transaction Documents, or, in addition, in connection with any other agreements, accords or commercial arrangements in force before the Effective Spin-off Date. The requesting Party shall use the respective information and/or document exclusively for the purposes provided for in this Clause and in strict compliance with the applicable Law in force, including, but not limited to, Law 13709, of August 14, 2018, as amended and in force (“LGPD”).

7.3.1. The provision of information and/or documents as set forth in this Clause 7.3 shall comply with the rules applicable to the personal data sharing set forth in LGPD, however the case may be and, except as set forth in Clause 7.3.3, shall not grant any property or license right to the requesting Party with respect to the information and/or documents provided thereto.

7.3.2. Except if otherwise set forth in the Transaction Documents, the requesting Party shall reimburse the disclosing Party for any costs and expenses, if any, effectively incurred with the obtaining, preparation and/or provision of the respective information, document or access to Persons, as applicable.

7.3.3. After the Effective Spin-off Date, (a) Sendas shall deliver to CBD all and any information and/or documents controlled or owned by Sendas, as well as ensure the reasonable access to Persons under Sendas’ responsibility, which hold information relating to Compre Bem and/or Gas Stations; and (b) CBD shall deliver to Sendas any and all information and/or documents controlled or owned by CBD, as well as ensure the reasonable access to Persons under CBD’s responsibility, which hold information relating to CBD’s Real Estates and Sendas (in relation to Sendas, provided that such information and/or documents are exclusively related to Sendas).

7.3.4. Data Protection Agreement. The Parties shall enter into a Personal Data Handling Agreement, in the form of the draft included in Appendix 7.3.4, which shall govern the obligations attributed to the Parties in relation to the exchange of information and provision of personal data, as well as the responsibility and indemnity of the Parties by virtue of possible violations of the LGPD.

7.3.5. Documents Forwarding. In the event any of the Parties and/or Affiliates thereof receive communications, summons and/or notices relating to Third-Party Claims eventually addressed to the other Party and/or any Affiliates thereof, the Party that has received such communication, summon and/or notice agrees to inform and submit such documents to the other Party within the period equivalent to one third (1/3) of the legal period for presentation of the Defense against such Third-Party Claim or within five (5) Business Days, whichever is the shortest period, provided that, in the event the legal term for Defense is five (5) days, such documents shall be delivered within up to a half of the term for the Defense. The other communications received by one Party and/or Affiliates eventually addressed to the other Party and/or any of the Affiliates thereof shall be submitted to the proper recipient within five (5) Business Days.

7.3.6. Transfer of Amounts. Without prejudice to any other provisions set forth in this Agreement, the Party that has received any amounts that should have been allocated to the other Party (and/or Affiliates thereof) shall transfer such amounts to the other Party within five (5) Business Days from the respective receipt date, subject to the provisions set forth in Clause 7.7.

7.4. Non-Solicitation. Except as otherwise agreed between the Parties, over the period of twelve (12) months as from the Effective Spin-off Date, the Parties and any of the respective Affiliates shall not, directly or indirectly, (i) persuade any person holding any management or executive position, statutory or not in the other Party and/or respective Affiliates thereof to resign or terminate the employment relationship with such Party; and (ii) engage such persons as employees or service providers.

7.5. Other Documents and Approvals. Each of the Parties agrees to enter into any documents and adopt any measures that may be deemed necessary or advisable, from time to time, to comply with this Agreement and perform the Business Separation. In this regard, the Parties agree to cooperate and undertake commercially reasonable efforts to obtain all and any approvals, consents, permits, authorizations, certificates, registries, filings and other documents and/or third-party acts in the shortest possible period.

7.5.1. Compliance Certificates. The CBD’s compliance and internal control policies and procedures are, as of the date hereof, applicable to Sendas as the CBD’s Affiliate. In order to ensure the presentation by the Sendas’ officers of the certificates referred to in Section 302 of the Sarbanes-Oxley Act of 2002 (“SOX”), CBD shall, in relation to any periods before the Effective Spin-off Date (inclusive), provide to Sendas one or more certificates (in the format agreed between the Parties in good faith) relating to such compliance and internal control procedures and respective effectiveness thereof, for purposes of such Section 302 of the SOX, within thirty (30) days as from the end of any quarter in which Sendas’ financial information has been disclosed.

7.5.1.1. Each Party agrees to comply with the regulatory requirements of the other Party, as requested by auditors or other Governmental Authorities, relating to periods before the Effective Spin-off Date. The Party requesting such procedures shall be responsible for possible costs and expenses and maintain such procedures to the shortest extent possible.

7.5.2. Tax Compliance. In addition to the sharing of information referred to in Clause 7.3 above, each of the Parties agrees to undertake, at the Parties’ own expenses, all measures deemed necessary for the regularization of any acts, events and/or facts under the responsibility of each Party that may prevent the issuance of Tax Compliance certificates (debt clearance certificates and/or debt clearance certificates with negative effects) on behalf of the other Party, including, but not limited to, the obtaining of Orders for suspension of the obligation or the right that the non-performance would not prevent the issuance of the certificate on behalf of the other Party, or the performance of the Liability that has prevented the issuance of such certificate, within ten (10) days as from the notice in this regard submitted by the other Party.

7.6. Offset. The Parties agree to offset, although partially, any and all net debts, overdue and existing between the Parties in connection with the Transaction Documents, in conformity with articles 368 and following articles of the Civil Code.

7.7. Delayed Payment. In the event one of the Parties fails to perform, on a timely basis, the payment or reimbursement or transfer of any amounts set forth herein, such Party shall be subject to the payment or transfer of the overdue amount, adjusted based on the CDI rate between the maturity date and the effective payment date, plus interest of arrears of two percent (2%) per year, on a proportional basis.

7.8. Data Room Copy. CBD agrees to deliver to Sendas, within thirty (30) days as from the Effective Distribution Date, a media certified by Intralinks including a copy of the contents of the virtual data room relating to the Business Separation.

8. Resolutive Condition and Termination

8.1. Resolutive Condition. The Parties acknowledge that this Agreement shall be entered into under the resolutive condition, as set forth in articles 127 and 128 of the Civil Code, in the sense that such Agreement may be immediately terminated in the event the CBD’s Partial Spin-off has not been approved by the shareholders of the Parties, and/or the Corporate Reorganization or Distribution has not been implemented through June 30, 2021 (“Resolutive Condition”).

8.1.1. Effects of Resolutive Condition Verification. Upon verification of the Resolutive Condition, this Agreement may be terminated by any of the Parties, in which case the acts undertaken for purposes of Business Separation shall be reversed as if such acts have not been undertaken, and the Parties shall return to the respective status quo ante.

8.2. Termination. This Agreement may be terminated by CBD, at any time, before the Effective Spin-off Date, regardless of any motive or reason, upon notice submitted to Sendas, pursuant to Clause 9.1.

9. General Provisions

9.1. Notices. The notices, claims, requests, consents, approvals, statements, deliveries or other communications, under the terms of this Agreement, shall be deemed valid and effective if prepared in writing and delivered (a) in person (by means of protocol or confirmation of delivery); (b) by certified letter or courier service (upon confirmation of receipt and post service); or (c) by e-mail upon confirmation of delivery, to the following physical and electronic addresses:

Companhia Brasileira de Distribuição

C/O: CEO, with a copy to the Legal Chief Officer

Avenida Brigadeiro Luiz Antônio, 3142, Jardim Paulista, São Paulo/SP, Zip Code 01402-001

E-mail:

Sendas Distribuidora S.A.

C/O: CEO, with a copy to the Financial Chief Officer

Avenida Aricanduva, 5555 - Âncora "E", Central Administrativa Assaí (Shopping Interlar - Aricanduva), Vila Aricanduva, São Paulo/SP, Zip Code 03527-000

E-mail:

9.1.1. The delivery of any notice required under this Agreement may be waived by the Party to whom it is addressed. Any Party may change the address to which the communication shall be submitted, upon notice in writing to the other Party in accordance with Clause 9.1, provided that, in relation to this provision, the notice shall be deemed received solely upon recognition of such receipt by the receiving Party.

9.2. Specific Performance. The commitments and obligations assumed hereunder by each of the Parties are subject to specific performance, according to the Code of Civil Procedure, it being agreed that the establishment of damages will not constitute adequate and sufficient reparation. For this purpose, the Parties acknowledge that this Agreement, duly signed by two (2) witnesses, constitutes an extrajudicial enforcement instrument for all purposes of article part II, of the Code of Civil Procedure.

9.3. Entire Agreement. This Agreement and the other Transaction Documents comprise all understandings between the Parties in relation to the matters in connection with the Transaction Documents and shall prevail over all other express or implicit agreements, understandings, representations, statements and guarantees, orally or in writing, entered into between the Parties and the respective Affiliates, representatives and agents thereof with respect to the matters in connection with the Transaction Documents.

9.4. Waiver; Amendment. No waiver or termination of this Agreement or any of the terms or provisions hereof shall be binding on any of the Parties, unless confirmed in writing. No waiver by any of the Parties of any term or provision set forth in this Agreement or any default related to this instrument shall impact the rights of such Party, as from such date, to execute such term or provision or exercise any right or remedy in relation to any other default, whether similar or not. This Agreement may not be changed or amended except in writing and executed by all Parties.

9.5. Severability. In the event that one or more provisions of this Agreement are considered void, voidable, invalid or ineffective, the validity, legality and enforceability of the other provisions contained in this Agreement shall in no way be affected and/or impaired by such event, remaining in full force and effect, as if such void, voidable, invalid or ineffective provision was not present.

9.6. Successors and Assignors. This Agreement will bind the Parties and their respective successors and permitted assignors. None of the Parties may assign this Agreement or any of its rights and obligations hereunder, without the prior and express written consent of the other Parties.

9.7. Binding Effect. This Agreement is entered into in an irreversible and irrevocable basis, and constitutes legal, valid and binding obligations, to be enforceable and to inure to the benefit of the Parties and their respective successors and permitted assignors.

9.8. Assignment. The Parties shall not assign or transfer this Agreement, totally or partially, on any account, directly or indirectly, to any Third Party, without the previous consent in writing of the other Party.

9.9. Performance of the Agreement. Each of the Parties shall comply, and ensure the compliance by the respective Affiliates, associated companies, officers, directors, employees, representatives and agents, with all respective obligations, covenants and accords in connection with this Agreement and the other Transaction Documents, which shall be complied by such Affiliates, associated companies, officers, directors, employees, representatives and agents. For the purposes of this Clause, the Parties agree to timely inform the obligations, covenants and accords relating to the respective Affiliates, associated companies, officers, directors, employees, representatives and agents thereof.

9.10. Applicable Law. This Agreement shall be governed by and construed in accordance with the Laws of the Federative Republic of Brazil.

9.11. Dispute Resolution. In the event of any disputes, conflicts, issues or divergences of any nature (“Conflict”) in connection with this Agreement, which, after the Effective Spin-off Date, have not been resolved by the Transition Committee, the Parties shall undertake commercially reasonable efforts to resolve the Conflict. In order to do so, any of the Parties may notify the other Party of its desire to initiate the procedure set forth in this Clause from which the Parties shall initiate negotiations to resolve the Conflict amicably and in good faith (“Conflict Communication”). In the event the Parties are not able to achieve any resolution within thirty (30) consecutive days as from the delivery of the Conflict Communication by one Party to the other, the Conflict may be submitted to the Resolution Committee and/or mediation and/or directly to arbitration.

9.11.1. Resolution Committee. The Parties shall implement the Resolution Committee composed of six (6) members (“Resolution Committee”), out of which three (3) members indicated by each Party, including the CEO of each Party. No member of the Resolution Committee shall indicate an attorney-in-fact or substitute to attend to and/or vote for such member at the Resolution Committee’s meetings. The Resolution Committee shall meet whenever a Conflict is submitted, which frequency shall be defined by the Resolution Committee. The decisions undertaken by the Resolution Committee shall be subject to the approval of, at least, four (4) members, to which the Parties and respective Affiliates thereof shall be bound for all purposes and effects. In the event the resolution of any Conflict has not been approved by the Resolution Committee within forty-five (45) days as from the date the Conflict has been submitted to the Resolution Committee, the Parties may submit the Conflict to mediation or directly to arbitration in accordance with Clauses 9.11.2 and 9.11.3 below.

9.11.2. Non-Binding Mediation. Any Conflict not resolved in accordance with Clauses 9.11 or 9.11.1 above may be submitted to mediation, provided that jointly requested by the Parties before the Arbitration and Mediation Center of the Brazil-Canada Chamber of Commerce – CAM-CCBC (“Mediation Chamber”), in accordance with the Mediation Regulation of the Mediation Chamber (“Mediation Regulation”), except for the modifications agreed between the Parties in this Clause. The mediation shall be conducted in the municipality of São Paulo, State of São Paulo, except if otherwise agreed by the Parties. The Parties shall, within twenty (20) days, jointly appoint a mediator. In the event the Parties are not able to achieve an agreement with respect to the mediator within such period, the mediator shall be appointed in conformity with the Mediation Regulation. The mediation set forth in this Clause shall be confidential, in the sense that none of the Parties shall disclose or authorize the disclosure of any information, evidence or document prepared by the other Party in the course of the mediation, as well as the existence, contents or decisions in connection with the mediation, without the previous consent in writing of the other Party, except for the exact extension required by the applicable Law in force, taking into account that, before any disclosure under the applicable Law in force, the disclosing Party shall, to the extent permitted by the applicable Law in force, notify the other Party with respect to such disclosure so that the respective Party is able to protect the related rights and interests. In the event the mediation has been conducted and the Conflict has not been resolved within sixty (60) days as from the request of the mediation before the Mediation Chamber, or within another term agreed by the Parties under the terms of the mediation, the Conflict may be submitted to arbitration, pursuant to Clause 9.11.3 below.

9.11.3. Arbitration. The arbitration shall be conducted in the City of São Paulo, State of São Paulo, before the Arbitration and Mediation Center of the Brazil-Canada Chamber of Commerce – CAM-CCBC (“Arbitral Chamber”), in conformity with the rules established by the Arbitral Chamber and effective on the arbitration date (“Regulation of the Chamber”), taking into account eventual amendments to these rules, as jointly agreed between the Parties.

9.11.4. The arbitration shall be conducted by three arbitrators (“Arbitral Tribunal”). The claimant shall appoint an arbitrator and the respondent shall appoint an arbitrator in accordance with the Regulation of the Chamber. In the event there is more than one claimant, they should appoint only one arbitrator, jointly and by mutual agreement. In the event there is more than one defendant, they should appoint only one arbitrator, jointly and by mutual agreement. The two appointed arbitrators shall choose the third arbitrator, jointly and by mutual agreement. The third arbitrator shall chair the arbitration court.

9.11.5. Any omission, refusal, conflict, doubt or disagreement with respect to the appointment or selection of the arbitrators shall be resolved by the Arbitral Chamber.

9.11.6. 11.14.5. The language of the arbitration shall be Portuguese.

9.11.7. The Parties acknowledge that any one of them may need the granting of a preliminary injunction or of a provisional remedy by the Judiciary Branch before the constitution of the Arbitral Tribunal. Therefore, the advanced relief or preliminary injunction filed before the Judiciary Branch shall not be deemed incompatible with or represent a waiver of the provisions set forth in this Clause. Subsequently to the implementation of the Arbitral Tribunal, any preliminary injunction or advanced relief shall be exclusively filed before the Arbitral Tribunal.

9.11.8. The Parties elect the court of the City of São Paulo, State of São Paulo, to the exclusion of any other, however privileged it may be, exclusively for the purposes of (i) concession of preliminary injunctions or advanced reliefs, before the implementation of the Arbitral Tribunal; (ii) execution of the decisions ruled by the Arbitral Tribunal; (iii) execution of the arbitration; and (iv) other lawsuits expressly accepted by Law 9307, of September 23, 1996, as amended and in force.

9.11.9. The arbitration award shall be in writing, to which the Parties shall be ultimately bound, enforceable in conformity with the respective terms thereof, not subject to any decision by equity. The Parties acknowledge and agree that the award shall be considered a final resolution of the Conflict, and that they shall accept the award as the actual expression of their own decisions regarding such Conflict. The Arbitral Tribunal may grant any available and appropriate remedy in accordance with the Law governing this Agreement, including specific performance. The arbitration award shall consider the distribution of expenses, including reasonable attorney’s fees and expenses, based on the principles of defeated party’s fees, in the sense that each Party shall be responsible for the respective expenses incurred during the progress of the arbitration proceeding or, in the event the expenses cannot be attributed to a specific Party, such expenses shall be equally shared between the Parties.

[the remainder of the page was intentionally left in blank]

[page of signatures of the Separation and Other Covenants Agreement]

São Paulo, December 14, 2020.

	/s/ Christophe José Hidalgo		/s/ Jorge Faiçal Filho
	Christophe José Hidalgo		Jorge Faiçal Filho
	Interim CEO, CFO and Investor Relations Officer		Chief Retail Officer

Companhia Brasileira de DistribuiÇÃo

	/s/ Daniela Sabbag		/s/ Belmiro de Figueiredo Gomes
	Daniela Sabbag		Belmiro de Figueiredo Gomes
	CFO and Investor Relations Officer		CEO


Sendas Distribuidora S.A.

Witnesses:

1.	/s/ Geovani Diogo Jardim de Sousa	2.	Vanessa Borges Rezende
	Name: Geovani Diogo Jardim de Sousa		Name: Vanessa Borges Rezende
	ID: 49.433.380-7		ID: 34.864.975-7
	CPF: 435.826.438-75		CPF: 305.858.878-02

Exhibit 4.2

Free translation

EMPLOYEE MATTERS AGREEMENT

This Employee Matters Agreement, dated as of December 17, 2020 (“Agreement”), is entered between:

(1) Companhia Brasileira de Distribuição, publicly held company incorporated in Federative Republic of Brazil, with head office in the City of São Paulo, State of São Paulo, at Avenida Brigadeiro Luiz Antônio, nº 3142, Jardim Paulista, enrolled with CNPJ/ME under the No. 47.508.411/0001-56, herein represented by its legal representatives under its Bylaws (“CBD”); and

(2) Sendas Distribuidora S.A., company for shares incorporated in Federative Republic of Brazil, with head office in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida Ayrton Senna, nº 0600, Jacarepaguá, enrolled with CNPJ/ME under the No. 06.057.223/0001-71, herein represented by its legal representatives under its Bylaws (“Sendas”).

CBD and Sendas are hereinafter referred to collectively as “Parties”, and individually and indistinctly as “Party”.

Whereas:

(A) The Parties entered into, on December 14, 2020, the Separation Agreement and Other Covenants (“Separation Agreement”) to regulate the terms and conditions necessary for the business and assets separation of Sendas and CBD, within the scope of the partial spin-off of CBD (“Spin-off”), so that Sendas ceases to be a company controlled by CBD, and the Parties begin to operate independently (“Business Separation”);

(B) By means of the Separation Agreement, the Parties agree to establish a Transition Committee to better align the interests of the Parties in relevant matters (“Transition Committee”);

(C) Under the Business Separation, it is in the mutual interest of the Parties that certain employees be transferred between the Parties, and that the Transition Committee determines the specific terms and conditions of such transfers in the best interest of the Parties;

NOW, THEREFORE, the Parties resolve to enter into this Agreement, which shall be governed by the following mutually agreed terms and conditions.

Transfer

1.1. By means of this Agreement, as a result of the Spin-off and in accordance with the Separation Agreement, the Parties undertake to endeavor the best efforts to transfer certain key employees from Sendas to CBD and from CBD to Sendas, including, without limitation, the management and staff (“Transferred Employees”).

1.1.1.

Without prejudice to the transfer of the Transferred Employees, Sendas undertakes to transfer and CDB undertakes to receive the transfer of all Gas Stations’ (as defined in the Separation Agreement) employees, in accordance with Sections 1.1.2 and 1.1.3 below.

1.1.2.

The Parties shall transfer the Transferred Employees by termination of the respective employment agreements, the transfer of employment agreements, or in any other manner in the best interest of the Parties, in accordance with the current legislation and the criteria established by the Transition Committee.

1.1.3.

If the transfers result in the duty to indemnify or other associated liabilities, including of a fiscal and social security nature, such liabilities shall be allocated between the Parties in accordance with the current legislation and the criteria established by the Transition Committee.

Collective Agreements and Unions

2.1. From the effective date of the transfer of Transferred Employees, any unions, associations or professional organizations representing the Transferred Employees (“Unions”), whether hired by CBD or Sendas, shall continue to represent such employees for the purpose of collective bargaining or any other trade union agreement with CBD or Sendas, as applicable.

2.2. The Parties shall endeavor commercially reasonable efforts to segregate, and the Transition Committee shall be responsible for conducting the segregation of the negotiation of interests of Sendas and CBD before the Unions, on this date held jointly, as applicable, in the shortest possible time (“Segregation of Negotiation”).

2.2.1.

The Segregation of Negotiation shall be made by the Transition Committee based on the historical knowledge and the relationship established with the Unions.

Benefits Plans

3.1. The Parties undertake to maintain the benefits granted by CBD to the Transferred Employees in terms and conditions substantially equal to those granted historically, obliging to (i) replace, segregate, duplicate or add the current agreements (and the applicable programs, as the case may be) related to the stock option plan and the CBD stock option compensation plan, so that the current beneficiaries of the respective programs, including beneficiaries who shall hold positions in Sendas after Spin-off, shall become entitled, within the respective agreements, to exercise the options and receive shares issued by both Parties; and (ii) create and take the necessary measures to approve new stock option plans and stock option compensation plans of Sendas, and their programs, in terms substantially similar to the terms and conditions of such CBD plans.

3.2. The Parties shall individually bear, in compliance with applicable legal and accounting rules, all costs relating to the transfer of benefits granted and the implementation of new benefits to the Transferred Employees.

3.2.1.

The transition of the current CBD stock-based incentive plans and implementation to the new Sendas stock-based incentive plans (“Stock Plans”) shall be carried out jointly by the Transition Committee and the CBD Human Resources and Compensation Committee (“HR Committee”).

Term of the Agreement

4.1. Term. The Parties resolve that this Agreement shall remain in full force solely and exclusively for the period (i) of twenty-four (24) months, or (ii) until its subject matter is fully fulfilled, whichever occurs first.

General Provisions

5.1. Notices. All notices, demands, requests, consents, approvals, representations, deliveries or other communications under this Agreement shall be deemed valid and effective when they are made in writing and delivered (a) in person (upon protocol or proof of delivery), (b) by registered letter or recognized courier service (with acknowledged receipt request and postage confirmation), or (c) by email with delivery confirmation, to the following physical and electronic addresses:

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO

Attn.: Chief Executive Officer, with a copy to the Legal Officer

Avenida Brigadeiro Luiz Antônio, nº 3142, Jardim Paulista, São Paulo/SP, Zip Code 01402-001

Email: jorge.faical@gpabr.com; marcelo.almeida1@gpabr.com

SENDAS DISTRIBUIDORA S.A.

Attn.: Chief Executive Officer, with a copy to the Chief Financial Officer

Avenida Aricanduva, nº 5.555 - Âncora "E", Central Administrativa Assaí (Shopping Interlar - Aricanduva), Vila Aricanduva, São Paulo/SP, Zip Code 03527-000

Email: belmiro.gomes@assai.com.br; daniela.sabbag@assai.com.br; c/c societario.assai@assai.com.br

5.1.1.

The delivery of any notice required under this Agreement may be waived by the Party to whom it is addressed. Any Party may change the address to which the notice shall be sent, by giving a written notice to the other Party in accordance with Section 3.1, and with respect to this provision, the notice shall be deemed received only upon recognition of such receipt by the recipient Party.

5.2. Specific Enforcement. The commitments and obligations by each of the Parties under this Agreement are subject to specific enforcement, in accordance with the Code of Civil Procedure (Law No. 13.105, of March 16, 2015, as amended and in force), and it is hereby agreed that the fixing of damages shall not constitute an adequate and sufficient redress. For this purpose, the Parties acknowledge that this Agreement, duly signed by two (2) witnesses, constitutes an extrajudicial enforcement instrument for all purposes of the Code of Civil Procedure.

5.3. Entire Agreement. This Agreement, together with the Separation Agreement, comprises all understandings between the Parties and shall prevail over all agreements, understandings, statements, representations and warranties, oral or written, express or implied, existing between the Parties and their respective Affiliates, representatives and agents.

5.4. Waiver; Amendment. No waiver or termination of this Agreement, or any of the terms or provisions hereof, shall bind the Parties, except if confirmed in writing. No waiver by any of the Parties of any term or provision set forth in this Agreement or any default related to this instrument shall impact the rights of such Party, as from such date, to execute such term or provision or exercise any right or remedy in relation to any other default, whether similar or not. This Agreement may not be modified or amended, unless in writing and signed by the Parties.

5.5. Invalidity; Ineffectiveness. In the event that one or more provisions of this Agreement are considered void, voidable, invalid or ineffective, the validity, legality and enforceability of the other provisions contained in this Agreement shall in no way be affected and/or impaired by such event, remaining in full force and effect, as if such void, voidable, invalid or ineffective provision was not present.

5.6. Binding Effect. This Agreement is entered into in an irreversible and irrevocable basis, and constitutes legal, valid and binding obligations, to be enforceable and to inure to the benefit of the Parties and their respective Affiliates, successors and permitted assigns.

5.7. Assignment. The Parties may not assign or transfer this Agreement, in whole or in part, in any form, directly or indirectly, to any third party, without the prior written express consent of the other Party. This Agreement shall bind the Parties and their respective permitted successors and assignees thereof.

5.8. Compliance with the Agreement. Each of the Parties hereby guarantees compliance, and shall ensure their respective Subsidiaries, affiliates, officers, directors, employees, representatives and agents to comply with all their obligations, covenants and agreements under this Agreement which shall be complied with by such Subsidiaries, affiliates, officers, directors, employees, representatives and agents. For the purposes of this Section, the Parties undertake to inform timely about the obligations, covenants and agreements pertaining to their Subsidiaries, affiliates, officers, directors, employees, representatives and agents.

5.9. Applicable law. This Agreement shall be governed by and construed in accordance with the laws of the Federative Republic of Brazil.

5.10. Dispute Resolution. In the event of any disputes, conflicts, issues or disagreements of any nature arising out of this Agreement, the Parties shall comply with the provisions of Section 9.11 of the Separation Agreement.

São Paulo, December 17, 2020.

	/s/ Christophe José Hidalgo		/s/ Jorge Faiçal Filho
	Christophe José Hidalgo		Jorge Faiçal Filho
	Interim CEO, CFO and Investor Relations Officer		Chief Retail Officer


Companhia Brasileira De DistribuiÇÃo

	/s/ Daniela Sabbag		/s/ Belmiro de Figueiredo Gomes
	Daniela Sabbag		Belmiro de Figueiredo Gomes
	CFO and Investor Relations Officer		CEO


Sendas Distribuidora S.A.

Witnesses:

1.	/s/ Geovani Diogo Jardim de Sousa	2.	Vanessa Borges Rezende
	Name: Geovani Diogo Jardim de Sousa		Name: Vanessa Borges Rezende
	ID: 49.433.380-7		ID: 34.864.975-7
	CPF: 435.826.438-75		CPF: 305.858.878-02

Exhibit 4.3

Free translation

CROSS-MANAGEMENT AGREEMENT
INTERCONNECTED DIRECTORS AND MEMBERS

This Cross-Management Agreement, dated as of December 17, 2020 (“Agreement”), is entered between:

(1)

Companhia Brasileira de Distribuição, publicly held company incorporated in Federative Republic of Brazil, with head office in the City of São Paulo, State of São Paulo, at Avenida Brigadeiro Luiz Antônio, nº 3142, Jardim Paulista, enrolled with CNPJ/ME under the No. 47.508.411/0001-56, herein represented by its legal representatives under its Bylaws (“CBD”); and

(2)

Sendas Distribuidora S.A., company for shares incorporated in Federative Republic of Brazil, with head office in the City of Rio de Janeiro, State of Rio de Janeiro, at Avenida Ayrton Senna, nº 0600, Jacarepaguá, enrolled with CNPJ/ME under the No. 06.057.223/0001-71, herein represented by its legal representatives under its Bylaws (“Sendas”).

CBD and Sendas are hereinafter referred to collectively as “Parties”, and individually and indistinctly as “Party”.

Whereas:

(A) The Parties entered into, on December 14, 2020, certain Separation Agreement and Other Covenants (“Separation Agreement”) to regulate the terms and conditions necessary for the business and assets separation of Sendas and CBD, within the scope of the partial spin-off of CBD (“Spin-off”), so that Sendas ceases to be a company controlled by CBD, and the Parties begin to operate independently (“Business Separation”);

(B) It is in the common interest of the Parties that certain members of the board of directors and other CBD committees be elected to form the board of directors and committees of Sendas (“Regular Members”) for stability purposes and during the transition period under the Business Separation.

(C) The Regular Members shall be instructed to act in a disinterested, informed and in good faith manner, in the sole interest of the Parties and their respective shareholders, to whom the Regular Members shall be subject on a fiduciary basis, as from the effective date of Sendas independence;

NOW, THEREFORE, the Parties resolve to enter into this Agreement, which shall be governed by the following mutually agreed terms and conditions.

Purpose

1.1. The Parties hereby undertake to:

(i)

establish safe monitoring and communication channels so that competitively sensitive information (for example, specific information involving prices, costs, sales and strategies, among others) is kept in confidentiality, in accordance with its own confidentiality policies;

(ii)

consult their committees and advisors whenever there is any competitively sensitive information under discussions, and matters to be decided due to the presence of Regular Members;

(iii)

guide the Regular Members on their own policies on confidentiality, risk management, data privacy and trading with related parties;

(iv)

oversee and guide its Regular Members in defending the independent interests of each company and its respective shareholders in all decisions;

1.2. The Parties acknowledge the presumption of loyalty and diligence in the conduct of all Regular Members, and undertake to hold them harmless from and defend them in the event of any charge, action, inquiry or damage of any kind by acting simultaneously on the board of directors or committees of the Parties, except in cases of bad faith or willful misconduct, the recognition of which is made in a unappealable and final judgment.

1.2.1. In addition to any amount available under the D&O insurance, the Parties undertake to make financial resources available, at reasonable amounts, so that any Regular Member may hire lawyers and consultants, among the best professionals available on the market, to defend the rights and interests of the Regular Members, subject to the terms and conditions provided for in the respective indemnify agreements, to be entered into between the Parties and the Regular Members.

1.3. The Parties acknowledge that the Regular Members are professionals with the knowledge, reputation and skills necessary for the independent structuring of Sendas and the continuity of CBD's operations, and therefore they waive any right to redress that may result from the Regular Members acts taken in the sole interest of the Parties and their shareholders.

1.4. The procedures and measures that may be necessary to ensure the terms of this Agreement may be submitted to the Transition Committee's consideration, as provided for in the Separation Agreement.

Term of the Agreement.

2.1. Term. The Parties establish that this Agreement will remain in force for the term of either (i) 24 (twenty-four) months, or (ii) until the subject matter hereof are complied with in full, whichever occurs first.

General Provisions.

3.1. Notices. All notices, demands, requests, consents, approvals, representations, deliveries or other communications under this Agreement shall be deemed valid and effective when they are made in writing and delivered (a) in person (upon protocol or proof of delivery), (b) by registered letter or recognized courier service (with acknowledged receipt request and postage confirmation), or (c) by email with delivery confirmation, to the following physical and electronic addresses:

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO

Attn.: Chief Executive Officer, with a copy to the Legal Officer

Avenida Brigadeiro Luiz Antônio, nº 3142, Jardim Paulista, São Paulo/SP, Zip Code 01402-001

Email: jorge.faical@gpabr.com; marcelo.almeida1@gpabr.com

SENDAS DISTRIBUIDORA S.A.

Attn.: Chief Executive Officer, with a copy to the Chief Financial Officer

Avenida Aricanduva, nº 5.555 - Âncora "E", Central Administrativa Assaí (Shopping Interlar - Aricanduva), Vila Aricanduva, São Paulo/SP, Zip Code 03527-000

Email: belmiro.gomes@assai.com.br; daniela.sabbag@assai.com.br; c/c societario.assai@assai.com.br

3.1.1. The delivery of any notice required under this Agreement may be waived by the Party to whom it is addressed. Any Party may change the address to which the notice shall be sent, by giving a written notice to the other Party in accordance with Section 3.1, and with respect to this provision, the notice shall be deemed received only upon recognition of such receipt by the recipient Party.

3.2. Specific Enforcement. The commitments and obligations by each of the Parties under this Agreement are subject to specific enforcement, in accordance with the Code of Civil Procedure (Law No. 13.105, of March 16, 2015, as amended and in force), and it is hereby agreed that the fixing of damages shall not constitute an adequate and sufficient redress. For this purpose, the Parties acknowledge that this Agreement, duly signed by two (2) witnesses, constitutes an extrajudicial enforcement instrument for all purposes of the Code of Civil Procedure.

3.3. Entire Agreement. This Agreement, together with the Separation Agreement comprises all understandings between the Parties and shall prevail over all agreements, understandings, statements, representations and warranties, oral or written, express or implied, existing between the Parties and their respective Affiliates, representatives and agents.

3.4. Waiver; Amendment. No waiver or termination of this Agreement, or any of the terms or provisions hereof, shall bind the Parties, except if confirmed in writing. No waiver by any of the Parties of any term or provision set forth in this Agreement or any default related to this instrument shall impact the rights of such Party, as from such date, to execute such term or provision or exercise any right or remedy in relation to any other default, whether similar or not. This Agreement may not be modified or amended, unless in writing and signed by the Parties.

3.5. Invalidity; Ineffectiveness. In the event that one or more provisions of this Agreement are considered void, voidable, invalid or ineffective, the validity, legality and enforceability of the other provisions contained in this Agreement shall in no way be affected and/or impaired by such event, remaining in full force and effect, as if such void, voidable, invalid or ineffective provision was not present.

3.6. Binding Effect. This Agreement is entered into in an irreversible and irrevocable basis, and constitutes legal, valid and binding obligations, to be enforceable and to inure to the benefit of the Parties and their respective Affiliates, successors and permitted assigns.

3.7. Assignment. The Parties may not assign or transfer this Agreement, in whole or in part, in any form, directly or indirectly, to any third party, without the prior written express consent of the other Party. This Agreement shall bind the Parties and their respective permitted successors and assignees thereof.

3.8. Compliance with the Agreement. Each of the Parties hereby guarantees compliance, and shall ensure their respective subsidiaries, affiliates, officers, directors, employees, representatives and agents to comply with all their obligations, covenants and agreements under this Agreement, which shall be complied with by such subsidiaries, affiliates, officers, directors, employees, representatives and agents. For the purposes of this Section, the Parties undertake to inform timely about the obligations, covenants and agreements pertaining to their subsidiaries, affiliates, officers, directors, employees, representatives and agents.

3.9. Applicable law. This Agreement shall be governed by and construed in accordance with the laws of the Federative Republic of Brazil.

3.10. Dispute Resolution. In the event of any disputes, conflicts, issues or disagreements of any nature arising out of this Agreement, the Parties shall comply with the provisions of Section 9.11 of the Separation Agreement.

São Paulo, December 17, 2020.

	/s/ Christophe José Hidalgo		/s/ Jorge Faiçal Filho
	Christophe José Hidalgo		Jorge Faiçal Filho
	Interim CEO, CFO and Investor Relations Officer		Chief Retail Officer

Companhia Brasileira de DistribuiÇÃo

	/s/ Daniela Sabbag		/s/ Belmiro de Figueiredo Gomes
	Daniela Sabbag		Belmiro de Figueiredo Gomes
	CFO and Investor Relations Officer		CEO


Sendas Distribuidora S.A.

Witnesses:

1.	/s/ Geovani Diogo Jardim de Sousa	2.	Vanessa Borges Rezende
	Name: Geovani Diogo Jardim de Sousa		Name: Vanessa Borges Rezende
	ID: 49.433.380-7		ID: 34.864.975-7
	CPF: 435.826.438-75		CPF: 305.858.878-02

Exhibit 4.4

Free translation

DATA PROTECTION AGREEMENT

This Data Protection Agreement, dated as of December 17, 2020 (“Agreement”), is entered between:

CBD and Sendas are hereinafter referred to collectively as “Parties”, and individually and indistinctly as “Party”.

Whereas:

(A) The Parties entered into, on December 14, 2020, the Separation Agreement and Other Covenants (“Separation Agreement”) to regulate the terms and conditions necessary for the business and assets separation of Sendas and CBD, within the scope of the partial spin-off of CBD (“Spin-off”), so that Sendas ceases to be a company controlled by CBD, and the Parties begin to operate independently (“Business Separation”);

(B) As provided for in Section 5.2 of the Separation Agreement, the Parties currently share material and human resources, including software and computerized systems, as well as the databases of suppliers, employees and service providers, and the Parties subsequently have agreed, under Section 5.2.5 of the Separation Agreement, that all the aforementioned resources shall be segregated as soon as possible and, in any case, within a maximum period of 1 (one) year (“Transition Period”) from the date the Spin-off is approved by the special general meeting of CBD (“Effective Date of Spin-off”), with the final purpose of personal data processing by each of the Parties, in an independent and separated manner;

(C) The Parties are interested in regulating their respective personal data processing during the Transition Period to ensure the strict compliance with all Brazilian provisions, laws and rules that regulate the rights to privacy and protection of Personal Data, including, but not limited to, Law No. 13.709/2018 (“General Law of Personal Data Protection”, or “LGPD”), Law No. 12.965, of April 23, 2014 (“Internet Civil Framework”), Law No. 8.078, of September 11, 1990 (“Code of Consumer Protection”), Law No. 12.414, of June 9, 2011, as amended by Supplementary Law No. 166, of April 8, 2019 (“Positive Registry Law”), Law No. 12.527, of November 18, 2011 (“Access to Information Law”), and Decree No. 8,771, of May 11, 2016 (“Regulatory Decree of Internet Civil Framework” and, together with the other rules, the “Legislation”);

NOW, THEREFORE, the Parties resolve to enter into this Agreement, which shall be governed by the following mutually agreed terms and conditions.

Definitions and Interpretation

1.1. Definitions. Any and all capitalized terms used in the Separation Agreement and this Agreement shall have the meanings assigned to them in this Section 1.1:

Database

means the structured set of personal data, established in one or several sites, in electronic or physical support;

Personal Data

means any information related to the identified or identifiable natural person.

Processing

means any operation carried out with Personal Data, such as those that refer to the collection, production, receipt, classification, use, access, reproduction, transmission, distribution, processing, filing, storage, elimination, information evaluation or control, modification, communication, transfer, diffusion or extraction;

Personal data processing by the Parties

2.1. Personal Data Processing. The Parties agree, during and after the Transition Period, to perform the Personal Data processing always in strict compliance with the Legislation, especially when dealing with Personal Data of the other Party accessed through the shared database.

2.1.1.

The Parties shall ensure, during and after the Transition Period, appropriate means for Personal Data protection that is compatible with the Legislation, including, but not limited to, the adoption of appropriate administrative, technical and physical safeguards to protect Personal Data against: (i) reasonably anticipated threats or risks of privacy, security, integrity and/or confidentiality of Personal Data; (ii) accidental or unlawful destruction, loss, modification, disclosure or unauthorized access to Personal Data (including, without limitation, when such processing involves the transfer of Personal Data over a network); (iii) all other illegal forms of processing Personal Data; and (iv) security or privacy incidents.

2.1.2.

The Parties shall retain each other's data only for the period of time necessary to comply with their legal or contractual obligations, and/or specifically until the end of the Transition Period.

2.2. Sharing of Information. Without prejudice to any other provisions in the Transaction Documents, and except for any request relating to any pending or threatened claim of a Party and/or its Subsidiaries against the other Party and/or its Subsidiaries, each of the Parties shall make commercially reasonable efforts to provide the other Party and/or its respective Subsidiaries, when requested, at any time before or after the Effective Date of Spin-off, in the shortest possible time, any information and/or document that is under its control or possession, as well as access to Persons under its authority, for the purpose of (i) compliance with obligations by the Requesting Party and/or its Subsidiaries under any applicable Law, including without limitation, as a result of orders, (ii) being used by the Requesting Party and/or its Subsidiaries in administrative, arbitration and/or court proceedings, and/or (iii) compliance with the obligations of Requesting Party and/or its Subsidiaries under this Agreement or the other Transaction Documents, or under any agreements, contracts or commercial arrangements existing prior to the Effective Date of Spin-off. The Requesting Party shall use the respective information and/or document exclusively for the purposes set forth under this Section, and in strict compliance with applicable Law, including, without limitation, the LGPD.

2.2.1. The provision of information and/or documents under this Section 2.2 shall not confer any right of ownership or license to the Requesting Party over the information and/or documents provided to it, and shall comply with the rules applicable to the sharing of Personal Data set forth in the LGPD, as the case may be.

2.2.2. Except as otherwise provided for in the Transaction Documents, the Requesting Party shall reimburse the providing Party for any and all costs and expenses, if any, actually incurred in obtaining, preparing and/or providing the respective information, document or access to Persons, as applicable.

2.3. Personal Data Holders’ Requests. The Parties undertake, during the Transition Period, to jointly endeavor the best efforts to comply with requests that may be submitted by the personal data subjects pursuant to Chapter III of the LGPD, as well as any other exercise of right by a third party pursuant to the Legislation.

2.4. Privacy and Data Protection Policies. The Parties represent that they currently have joint Privacy and Data Protection Policies, and that, after the end of the Transition Period, the Parties shall have established individual and independent Privacy and Data Protection Policies for the purposes of duly complying with the Legislation.

Violations of Personal Data and Mutual Indemnity Obligation

3.1. Obligation to notify personal data violation. The Parties agree that, during and after the Transition Period, the Party that gives cause to any personal data violation shall notify such occurrence to Agência Nacional de Proteção de Dados (the National Data Protection Agency) and/or other proper authorities pursuant to the Legislation.

3.1.1.

If the violation involves personal data collected by the other Party, the Party that causes the violation shall notify the other Party, within a period of 5 (days), counted from the date the violation is identified, so that the latter may take the necessary measures pursuant to the Legislation. A Party that causes the violation undertakes to endeavor the best efforts to provide all necessary assistance to the other Party, so that all measures are taken in order to mitigate and cure the damages that may arise from such violation, and to comply with the determinations by the National Data Protection Authority or other proper bodies, pursuant to the Legislation.

3.2. Mutual indemnity obligation. The Parties agree that, during the Transition Period, the Party that causes any administrative and/or court sanction, which may be imposed to the other Party as a result of personal data violation (“Indemnifiable Loss”), shall indemnify the injured Party in full.

3.3. Indemnification Procedures. In case of occurrence of an Indemnifiable Loss to be indemnified by any of the Parties, the Parties hereby agree that they shall follow the indemnification procedures determined in Sections 4.2, 4.3, 4.4 and 4.5 of the Separation Agreement, as applicable.

Term of the Agreement

4.1. Term. The Parties resolve that this Agreement shall remain effective for a period of 24 (twenty-four) months, and may be terminated under the provisions of Section 8 of the Separation Agreement.

General Provisions

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO

Attn.: Chief Executive Officer, with a copy to the Legal Officer

Avenida Brigadeiro Luiz Antônio, nº 3142, Jardim Paulista, São Paulo/SP, Zip Code 01402-001

Email: jorge.faical@gpabr.com; marcelo.almeida1@gpabr.com

SENDAS DISTRIBUIDORA S.A.

Attn.: Chief Executive Officer, with a copy to the Chief Financial Officer

Avenida Aricanduva, nº 5.555 - Âncora "E", Central Administrativa Assaí (Shopping Interlar - Aricanduva), Vila Aricanduva, São Paulo/SP, Zip Code 03527-000

Email: belmiro.gomes@assai.com.br; daniela.sabbag@assai.com.br; c/c societario.assai@assai.com.br

5.1.1. The delivery of any notice required under this Agreement may be waived by the Party to whom it is addressed. Any Party may change the address to which the notice shall be sent, by giving a written notice to the other Party in accordance with Section 5.1, and with respect to this provision, the notice shall be deemed received only upon recognition of such receipt by the recipient Party.

5.3. Entire Agreement. This Agreement, together with the Separation Agreement and the other Transaction Documents, comprises all understandings between the Parties in relation to the subject matter of the Transaction Documents, and shall prevail over all agreements, understandings, statements, representations and warranties, oral or written, express or implied, existing between the Parties and their respective Affiliates, representatives and agents with respect to the subject matters of the Transaction Documents.

5.8. Compliance with the Agreement. Each of the Parties hereby guarantees compliance, and shall ensure their respective Subsidiaries, affiliates, officers, directors, employees, representatives and agents to comply with all their obligations, covenants and agreements under this Agreement and the other Transaction Documents, which shall be complied with by such Subsidiaries, affiliates, officers, directors, employees, representatives and agents. For the purposes of this Section, the Parties undertake to inform timely about the obligations, covenants and agreements pertaining to their Subsidiaries, affiliates, officers, directors, employees, representatives and agents.

5.9. Applicable law. This Agreement shall be governed by and construed in accordance with the laws of the Federative Republic of Brazil.

5.10. Dispute Resolution. In the event of any disputes, conflicts, issues or disagreements of any nature arising out of this Agreement, the Parties shall comply with the provisions of Section 9.11 of the Separation Agreement.

São Paulo, December 17, 2020.

	/s/ Christophe José Hidalgo		/s/ Jorge Faiçal Filho
	Christophe José Hidalgo		Jorge Faiçal Filho
	Interim CEO, CFO and Investor Relations Officer		Chief Retail Officer


Companhia Brasileira de DistribuiÇÃo

	/s/ Daniela Sabbag		/s/ Belmiro de Figueiredo Gomes
	Daniela Sabbag		Belmiro de Figueiredo Gomes
	CFO and Investor Relations Officer		CEO


Sendas Distribuidora S.A.

Witnesses:

1.	/s/ Geovani Diogo Jardim de Sousa	2.	Vanessa Borges Rezende
	Name: Geovani Diogo Jardim de Sousa		Name: Vanessa Borges Rezende
	ID: 49.433.380-7		ID: 34.864.975-7
	CPF: 435.826.438-75		CPF: 305.858.878-02

Exhibit 4.5

Free translation

THIRD PARTY STORES MANAGEMENT AGREEMENT

SERVICE CONSUMER
Name: SENDAS DISTRIBUIDORA S/A		Tax ID No.: 06.057.223/0001-71
Address: Avenida Ayrton Senna, nº 6.000
County: Rio de Janeiro		State: RJ
Responsible/Department:
Tel.:	E-mail:
SERVICE PROVIDER
Name: FRONTEIRA SERVIÇOS IMOBILIÁRIOS LTDA.		Tax ID No.: 34.309.019/0001-36
Address: Av. Brigadeiro Luis Antonio, nº 3.126
County: São Paulo		State: SP
Responsible/Department: Rodrigo Keniti Fernandes Gusukuma
Tel.: 55 (11) 3886-5964	E-mail: rodrigo.gusukuma@gpamalls.com

SERVICE CONSUMER and SERVICE PROVIDER referred together herein as “Parties” and individually as “Party”.

WHEREAS:

a) The SERVICE PROVIDER develops and explores the business activity of sale, management and operation of retail sites;

b) The SERVICE PROVIDER also explores the business activity of sale of sites and marketing for interested third parties; and

c) The SERVICE CONSUMER has different stores located at the addresses described in Annex I and desires to hire the services provided by the SERVICE PROVIDER to perfect the businesses of its retail sites.

NOW THEREFORE, the Parties agree to enter into this Third-Party Stores Management Agreement (the “Agreement”), pursuant to the following terms and conditions:

CLAUSE 1 – SERVICES

1.1. This Agreement is entered by the Parties for the execution of the services (“Services”), by the SERVICE PROVIDER to the SERVICE CONSUMER, as detailed below:

(i) Commercialization of retail sites (“Lease of Sites”), including the advertisement of the sites in the digital platforms of the Economic Group of the SERVICE PROVIDER, at the request and on behalf of the SERVICE CONSUMER;

(ii) Management of all lease agreements relating to leases of Commercial Sites (“Agreements Management”), including all agreements that were not intervened by the SERVICE PROVIDER, which shall have the participation of the SERVICE CONSUMER in the event of amendments to pre-existing agreements;

(iii) Announcement and marketing of sites and/or marketing of third parties (“Marketing”), at the request and on behalf of the SERVICE PROVIDER;

(iv) Temporary Concession of rights to use sites for the preparation of events and other purposes (“Site Concession”), at the request and on behalf of the SERVICE PROVIDER;

(v) Temporary Concession of Sites (“Kiosk”);

(vi) Intervening and hiring of legal counseling relating to lease agreements (“Legal Counseling”), at the request and on behalf of the SERVICE PROVIDER; and

(vii) Business operations of kiosks (“Operation”).

THIRD PARTY STORES MANAGEMENT AGREEMENT

1.2. The Parties agree as to the possibility of the SERVICE PROVIDER to initiate studies and work necessary relating to Commercial Sites of the SERVICE CONSUMER, allowing full access of the SERVICE PROVIDER to its retail sites and to the related lease agreement, as well to all the relevant documentation.

1.3. Concerning to item (iii) of Section 1.12 above, the Parties agree as follows:

1.3.1. The SERVICE PROVIDER, SERVICE CONSUMER and advertising and marketing agencies (“Agencies”) will execute specific agreements (“Advertising Agreements”) for the marketing services of the agencies clients (“Advertisers”);

1.3.2. The divulgation of each advertise on the sites and its commercial and operational conditions will be formalized through a legal instrument called Insertion Request (“IR”), which shall be signed between the Advertisers and the Agencies and to be included as an exhibit to the Advertising Agreements;

1.3.3. The SERVICE CONSUMER will have the sole discretion to approve the advertises and the Advertisers that are negotiating sites with the SERVICE PROVIDER.

CLAUSE 2 – PAYMENT

2.1. For the Services rendering, the SERVICE CONSUMER will pay the SERVICE PROVIDER, as follows:

2.1.1. Sites Commercialization (leases):

(a) value of 3,3% of the GLV (general lease value), paid by the SERVICE CONSUMER to the SERVICE PROVICER upon the signature of the Lease agreement;

(b) If the lease is extended, the payment detailed in item (a) above, 20% of the spread between the old lease value and the new lease value.

(c) If the GLV, which is defined as the sum of the amounts of the leases, is variable (e.g. percentage of the lessee gross revenue), the SERVICE PEROVIDER will present the SERVICE CONSUMER the projection of the monthly gross revenue of the lessee. The payment will be equal to the percentage of item (a) above applied to the gross revenue of the lessee.

2.1.2. Marketing and Site Concession: payment of 30% of the revenue of the SERVICE CONSUMER with the Marketing, Site Concession and events, all offset of the production and appliance costs.

2.1.3. Temporary Concession of Sites (Kiosk): monthly payment of 8,33% of the monthly lease due and paid, being certain that this payment will only be due to the SERVICE PROVIDER in relation to Temporary Concession duly intervened by the SERVICE PROVIDER;

THIRD PARTY STORES MANAGEMENT AGREEMENT

2.1.4. Agreement Management: management fee of 10% of the revenue of the managed agreements (lease, advertising, site concession, temporary site concession), regardless if the agreements are intervened by the SERVICE PROVIDER or not; and

2.1.5. Operation: operation fee of 12% of the revenue of the managed agreements (lease, advertising, site concession, temporary site concession), regardless if the agreements are intervened by the SERVICE PROVIDER or not.

2.2. The payments detailed in Section 2.1 will be paid by the SERVICE CONSUMER to the SERVICE PROVIDER as follows:

(i) The SERVICE PROVIDER will charge the lessees on behalf of the SERVICE CONSUMER, being certain that the SERVICE CONSUMER will receive the payments directly by the lessees.

(ii) The SERVICE CONSUMER has the full responsibility to indicate to the SERVICE PROVIDER, until the 20th of each month, the values owed by the lessees with the costs associated with the common areas and specific consumption (light, water, gas, among others) (“Costs”). The Costs shall be charged by the SERVICE PROVIDER from the lessees, in the subsequent month of the values informed by the SERVICE CONSUMER.

(iii) The payment of fees to the SERVICE PROVIDER will be done at month’s end and shall be based in the percentage of revenues of the respective month.

(iv) The SERVICE CONSUMER shall pay the services fees to the SERVICE PROVIDER by means of wire transfer or bill.

2.3. The payments that shall be done to the SERVICE PROVIDER already includes all the related charges such as taxes (ISS, PIS and COFINS) owed in connection with the Services, as well as all associated expenses, including salaries to the personnel hired for execution of the Services. The SERVICE PROVIDER will not charge any other costs or expenses related to the Services, unless the SERVICE CONSUMER agrees to pay any additional charges before the payment is due, which will only be due by the SERVICE CONSUMER if the SERVICE PROVIDER proves such cost or expense.

2.4. The taxes that are due or will be due in connection with the payments made within this Agreement will be solely paid by the person who is responsible for such payment in accordance with the applicable law.

CLAUSE 3 – OBLIGATIONS OF THE SERVICE PROVIDER

3.1. In addition to the other obligations of this Agreement, the SERVICE PROVIDER agrees to:

a) Render the Services in accordance with the applicable law and the SERVICE CONSUMER needs and requests, and all Services shall be rendered with quality, best practices and in congruence with their purpose;

b) Comply with all the orders, law and regulation of all governmental authorities, being liable for the compliance of agreements and sub agreements with the aforementioned orders, law and regulations, as well as this Agreement and its Annexes;

THIRD PARTY STORES MANAGEMENT AGREEMENT

c) Train all the employees of services providers that will render the Services, being prohibited the execution of any activity that is different from the Services;

d) Pay all the direct and indirect compensations owed to its employees, representatives, services providers, direct or indirectly involved with the rendering of the Services of this Agreement, as well as all the taxes, costs and expenses owed in connection with the labor or contractual relation and this Agreement;

e) Obtain and guarantee that all the licenses, authorizations and permissions needed for the Services rendered are valid, including any qualification or demand that may come from any union or profession boards.

CLAUSE 4 – OBLIGATION OF THE SERVICE CONSUMER

4.1. In addition to the other obligations of this Agreement, the SERVICE CONSUMER agrees to:

a) To deliver to the SERVICE PROVIDER, as a part of a due diligence, the documents and information needed for the Services rendering, as detailed below:

a.1. Cadastral information’s, Agreements and material understandings with all sublessees/assignees, suppliers and partners, who maintain or have maintained agreements of any nature, signed less than 1 year ago with the SERVICE CONSUMER, relating to the real state were the SERVICE PROVIDER will render its services.

a.2. Access to all the valid agreements with the landowners of the real state in full, relating to the real state were the SERVICE PROVIDER will render its services.

a.3. The aforementioned information shall be delivered by the SERVICE CONSUMER to the SERVICE PROVIDER within 30 days of the signing of this Agreement.

a.4. The SERVICE PROVIDER will have the right to analyze all documents detailed and delivered by the SERVICE PROVIDER to the SERVICE CONSUMER, for the period of 6 months. During this timeframe, the Parties may agree to alter directives, as well as to amend this Agreement, always through the preparation of a signed written instrument.

b) Pay money owed in due time in connection with this Agreement;

c) Audit, at its own willingness, all the Services, without any type of diminution of the liability of the SERVICE PROVIDER in relation to the Services rendering;

d) Inform the SERVICE PROVIDER immediately if a Commercial Site is leased.

4.2. If there is any pre-existent lease in the Venture, the SERVICE CONSUMER shall, within 30 days from the signature of this Agreement, provide the inclusion of the SERVICE PROVIDER as manager in the lease agreements. After 30 days, regardless of any formal act, or the lack thereof, of the SERVICE PROVIDER, as manager in those agreements, will have the right to collect the payments relating to managing and operation, which will be due by the SERVICE CONSUMER.

THIRD PARTY STORES MANAGEMENT AGREEMENT

CLAUSE 5 - CONFIDENTIALITY

5.1 Each Party and each respective partner, employees, representatives and/or services providers, hereby undertakes to not disclose any information, data, organization methods, commercial rules or any other documents, data and information’s of the other Party and its respective affiliates, that it may get ahold in the development of this Agreement. The failure by any Party to fulfill the obligation set forth in this Section will subject the respective Party to civil and criminal liability.

5.2. After termination of this Agreement, regardless of the reason for termination, the Party that has received any information relating to the other Party shall return such information to the giving Party and any and all documents that it may have in its possession, or it shall destroy any and all such information or documents.

5.3. If the Party that receives any information from the other Party is required by any governmental body or judicial and/or administrative order do disclose any information or document relating to the other Party, it shall inform immediately the other Party and it shall only make available enough information to meet such request.

5.4 All the obligations set forth in this Clause shall remain valid for the entirety of the validity of this Agreement and for an additional 5 years from the termination of this Agreement, regardless if the Parties remain associated or not.

CLAUSE 6 – TERM AND TERMINATION

6.1 This Agreement is entered into by the Parties and will remain valid for a period of 60 months, which will be counted from de signature date of this Agreement, and it may be extended by the written and signed agreement of both Parties.

6.2. Without limitation of Section 6.1 above, any Party may terminate this Agreement, regardless of any reason, by sending a written communication to the other Party with a ninety day advance; Fulfilled this requirement, none of the Parties will owe the other Party any kind of penalty or indemnity, or any other sum of money, with the exception of amounts due in connection with this Agreement that are owed before the effective termination of this Agreement.

6.3. This Agreement may be terminated immediately by:

a) Any Party, when the other Party have not corrected any noncompliance or breach of this Agreement within 15 days from the receival of a written communication by the other Party to correct such noncompliance or breach, without limitation of any penalty or losses or damages that may be due;

b) Any Party, if the other Party is in any bankruptcy or insolvency proceeding;

c) By the SERVICE CONSUMER, if the SERVICE PROVIDER has lost its license or qualification for the rendering of the Services;

d) Other cases provided for in law.

THIRD PARTY STORES MANAGEMENT AGREEMENT

6.4 Regardless of the term of this Agreement, the Clauses that, by their own nature, shall remain valid, will remain valid after the termination of this Agreement.

6.5. If this Agreement is terminated, regardless of the procedure for termination, and it’s not extended, the payment of the amounts in connection with the Services rendering of the Sites Commercialization, detailed in Section 2.1.1, will be owed by the SERVICE CONSUMER, counting the months that remain for the end of the lease term which were intervened by the SERVICE PROVIDER.

CLAUSE 7 – OBLIGATIONS OF THE SERVICE PROVIDER IN CASE OF JUDICIAL PROCEEDINGS

7.1. The Parties hereby expressly state that this Agreement does not constitute any employment relationship or liability of the SERVICE CONSUMER in relation to the personnel of the SERVICE PROVIDER employed for the execution of the Services, being the sole responsibility of the SERVICE PROVIDER to pay all the costs, expenses and salaries concerning such employees and to comply with all applicable law.

7.2. The SERVICE PROVIDER hereby undertakes to assume any and all claims related to working relations that may exist in connection with its employees that have rendered the Services of this Agreement, which may have a judicial or administrative nature, being solely responsible for hiring counsel to its defense and to pay all related costs and expenses, including fees due to the court or to third party counsel.

7.3. The SERVICE PROVIDER will promptly reimburse the SERVICE CONSUMER of any and all costs that the SERVICE CONSUMER may have to pay and are related to payments that are the sole responsibility of the SERVICE PROVIDER in accordance with this Clause. The payment shall be made by the SERVICE PROVIDER within 10 business days after a final and unappealable decision within such proceedings, which shall be counted from the communication sent by the SERVICE CONSUMER to the SERVICE PROVIDER detailing such costs and expenses and presenting proofs of payment, and the counsel fees shall be limited to the value provided for in the Brazilian Bar Association Table of Fees.

7.4. If the SERVICE PROVIDER is demanded in any judicial and/or administrative claim relating to obligations that are the sole responsibility of the SERVICE CONSUMER, regardless of the nature of the claim, the SERVICE CONSUMER will request its inclusion in such demand and request the exclusion of the SERVICE PROVIDER of the claim as defendant and/or requested party, in case of administrative claims. If the SERVICE PROVIDER is not excluded from a claim, regardless of the reason, the SERVICE PROVIDER will choose counsel to conduct its defense, being the SERVICE CONSUMER solely liable for paying the costs relating to the SERVICE PROVIDER defense, including court fees.

THIRD PARTY STORES MANAGEMENT AGREEMENT

CLAUSE 8 – REPRESENTATIONS AND WARRANTIES

8.1. Each Party hereby represents and warranties:

a) It is an entity duly organized and valid existing, and it has the authority to possess its assets and to conduct its business;

b) It has the capacity, powers and authority to execute this Agreement and to fulfill all the obligation set forth herein;

c) Performs its business in strict accordance with the applicable law and regulations and it has all the approvals, licenses, permits and/or permissions;

d) Performs all the actions needed for the environment protection, conducting its business in a sustainable manner and complying with all environmental applicable law and regulations;

e) Complies strictly with the Statute for Minors (Law No. 8.069/90) and other applicable law or regulation and it does not employ any minors to its labor or workforce, including apprentices, in an environment that its harmful for the minor development, and it does not maintain any commercial agreement or understanding with entities that do not comply with this item ‘e’;

f)  It does not explores and will not explore any workforce that is similar to slave condition, complying fully with the Universal Declaration of Human Rights, as well as the Conventions No. 29 and 105 of the International Labor Organization, its Declaration of Principles and Fundamental Labor Rights and the American Convention of Human Rights;

g) It does not have discrimination practices which limit the access of certain individuals in its workforce;

h) Its workforce environment does not imply risks to its employees, training and implementing actions to reduce any risks in relation to labor casualty, in addition to improve its workforce working conditions. In the working environment, the employees have access to drinking water, adequate ventilation, emergency exits, appropriate lightning, suitable bathrooms and generally safety conditions; and

i)  It does not hire third parties that do not comply with the aforementioned principles.

8.2. In the case of proposals and prospection of lessees to the SERVICE CONSUMER, if the commercialization of the real state is not conclude with the lessee, the SERVICE CONSUMER will be prohibited to commercialize with this lessee for the same real state without the intervening of the SERVICE PROVIDER, for a term of 24 months, which shall be counted from the remittance of the proposal by the SERVICE PROVIDER.

8.2.1. If the aforementioned transaction is concluded without the intervening of the SERVICE PROVIDER, the SERVICE CONSUMER will pay fully the value of commercialization to the SERVICE CONSUMER.

CLAUSE 9 – GENERAL PROVISIONS

9.1. The communications between the Parties may be done through the e-mail address detailed in the first page of this Agreement. However, any communication concerning a contractual default by any Party shall be done by delivery of a hard copy of the communication in the address of the other Party. Both Parties hereby agree to inform each other if there are any changes in the respective addresses.

9.2. Failure to exercise or delay in the exercise of any right under this Agreement and its related documents will not prevent the exercise of such right or the corresponding right to action and shall not constitute a waiver of, novation of or consent to such default or any other that may occur in the future. No partial exercise of any right shall preclude the subsequent exercise of such right or any other right.

THIRD PARTY STORES MANAGEMENT AGREEMENT

9.3. The Parties to this Agreement are independent contractors. There is no relationship of agency, partnership, joint venture, employment or franchise between the Parties, and no Party may represent the other with any other third party without the previous consent from the other Party.

9.4. This Agreement is biding upon the Parties and its respective successors.

9.5. This Agreement does not constitute exclusivity of one Party in relation to the other, being both Parties free to execute agreements with third parties with the subject similar to this Agreement.

9.6. None of the contracting Parties hereto may assign this Agreement, whether in whole or in part, without the prior written consent of the other Party. Partial or entire assignment will only be effective after execution of a written agreement between the Parties and the person to which this Agreement is being assigned.

9.7. If any of the Parties is temporally impeded to fulfill its obligations, whether in whole or in part, due to force majeure, in accordance with the sole paragraph of the Article 393 of the Brazilian Civil Code, it shall promptly communicate such impediment to the other Party and to formalize, in writing, such communication, within 2 business days of the force majeure event.

9.7.1. If the occurrence of a force majeure event is verified, the obligations that have its completion impeded will be suspended, being demandable as soon as it is possible to fulfill such obligations. Within the period of suspension of the Services due to a force majeure event, the SERVICE CONSUMER will not have to pay any amount that may be due in connection with this Agreement.

9.7.2. If the force majeure event occurs for more than 30 days, any Party may terminate this Agreement by sending the other Party a written communication with a thirty-day advance, and there shall be no penalties in connection with such termination.

9.8. The Parties hereby declare that both have their own Ethics Code and Anticorruption Policies and hereby undertake to observe and guarantee that its respective workforce respect such documents. SERVICE PROVIDER link to the Ethics Code and Anticorruption Policies: (http://www.gpabr.com/pt/etica-e- compliance/); and SERVICE CONSUMER link to the Ethics Code and Anticorruption Policies: (https://www.assai.com.br/sites/default/files/codigo_de_etica_assai.pdf) and (https://www.assai.com.br/politica-anticorrupcao).

9.8.1. The Parties hereby undertake to fulfill, and provide that is fulfilled, by itself, its affiliates, managers, employees, shareholders or other service providers, the Brazilian Anticorruption Law (Law No. 12.846/13) and related regulations, being obliged to (i) adopt the best practices of integrity and compliance, with the aim to prevent corruption acts, fraud, illicit acts or money laundering; (ii) abstain to execute corruption acts and to act in a manner that is harmful to the public administration, in the interest or in the benefit, exclusive or not, of the Parties, and, specially, not to grant anything of value to a public agent or any related person with the aim to obtain an advantage or to influence the decision making process of this public agent; and (iii) if the Parties know or get to know any act or fact that may breach the aforementioned law and regulations, it shall communicate immediately to the other Party through the following channels: (a) if, to the SERVICE PROVIDER: ouvidoria@gpabr.com and compliance@gpabr.com; and (b) if to the SERVICE CONSUMER, compliance@assai.com.br and ouvidoria@assai.com.br, which will be responsible for conduction of necessary measures.

THIRD PARTY STORES MANAGEMENT AGREEMENT

9.8.2. All interactions with public agents will be in strict compliance with this Agreement, specially to the anticorruption clause, subject to the penalties of the law and this Agreement.

9.8.3. The Parties furthermore represent and warranty that there is not any public agent or person next to a public agent that will be direct or indirectly benefited from this Agreement.

9.9. In connection with this Agreement, the Parties hereby agree to continue to use their integrated systems such SAP and Sales Force for the control and compilation of information, charges, terms and any and all proceeding to be taken for the Services rendering.

9.10. This Agreement substitutes and revokes all previous agreements and understanding between the Parties with the same subject.

9.11. This Agreement was prepared and signed after valuable consideration and in good faith by both Parties. Therefore, the Parties furthermore state that, for all legal effects: (i) had the previous knowledge of this Agreement and understand clearly all the obligations set forth herein; (ii) agree with the terms and conditions of this Agreement; (iii) are duly represented in accordance with their respective corporate documents and have all the necessary authorizations, powers and capacity to assume the obligations set forth herein; and (iv) the obligation set forth in this Agreement are not in conflict with other obligations assumed by the Parties in other agreements, or even with any judicial and/or administrative order.

9.12. The conditions set forth herein may be altered from time to time due to business negotiation, but the changes will only be accepted through a written and signed amendment to this Agreement.

9.13. This Agreement constitutes the sole understanding between the Parties relating to the Services.

CLAUSE 10 - CONFLICTS

10.1. The Parties hereby elect the court located in the city of São Paulo, state of São Paulo, to be the only court with jurisdiction to decide upon any conflict that may arise in connection with this Agreement, regardless of any benefit that other court may have.

IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be duly executed and delivered, in 2 counterparts of equal content and form, by their respective duly authorized signors and 2 witnesses.

São Paulo, January 12, 2021.

[Remainder of the page left intentionally in blank; signature page follows]

THIRD PARTY STORES MANAGEMENT AGREEMENT

/s/ Daniela Sabbag Papa

/s/ Wlamir dos Anjos

Daniela Sabag Papa

Wlamir dos Anjos

Title


SENDAS DISTRIBUIDORA S/A

	/s/ Natalia Innocenzi		/s/ Rodrigo Keniti Fernandes Gusukuma
	Natalia Innocenzi		Rodrigo Keniti Fernandes Gusukuma
	Officer		Manager


FRONTEIRA SERVIÇOS IMOBILIÁRIOS LTDA.

Witnesses:

1.	/s/ Raquel de Souza Lima Monteiro	2.	/s/ Andressa de Abreu Porta
	Tax ID No.: 360.847.728-46		Tax ID No.: 422.660.408-39
	Raquel de Souza Lima Monteiro		Andressa de Abreu Porta

Exhibit 4.10

SECOND AMENDMENT TO THE COST SHARING AGREEMENT

By this SECOND AMENDMENT dated as of October 28, 2020 to the COST SHARING AGREEMENT, entered into by CASINO, SUDACO and CBD on August 1st, 2014 (“Cost Sharing Agreement”) the Parties:

CASINO GUICHARD PERRACHON S.A., a company duly incorporated and validly existing under the laws of France, with head offices at 1, Esplanade de France 42000 Saint-Etienne – France (“CASINO”);

CASINO SERVICES SAS, a company duly incorporated and validly existing under the laws of France, with head offices at 1, Esplanade de France 42000 Saint- Etienne – France (“CASINO SERVICES”);

HELICCO PARTICIPAÇÕES LTDA., a company duly incorporated and validly existing under the laws of Brazil, with head offices at Rua Libero Badaró, 293, 27th floor, 27-0, room 53, in the city of São Paulo/SP, registered with the CNPJ/ME under No. 12.972.326/0001-60 (“HELICCO”);

WILKES PARTICIPAÇÕES S.A., a company duly incorporated and validly existing under the laws of Brazil, with head offices at Avenida Brigadeiro Luis Antônio, 3126, Parte, Jardim Paulista, in the city of São Paulo/SP, registered with the CNPJ/ME under No. 04.745.350/0001-38 (“WILKES”), as legal successor of SUDACO PARTICIPAÇÕES LIMITADA. (“SUDACO”), as a result of the merger of such company into WILKES pursuant to article 227 of Brazilian Federal Law n. 6,404/1976;

EURIS, a “société par actions simplifiée” incorporated under the laws of France, with its registered head office t 83, rue du Faubourg Saint-Honoré 75008 Paris, registered with Paris Registre du Comnerce des Sociétés under number 348 847 062 (“EURIS”).

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO, a company duly incorporated and validly existing under the laws of Brazil, with head offices at Avenida Brigadeiro Luis Antonio, 3142, in the city of São Paulo/SP (“CBD”); and

SENDAS DISTRIBUIDORA S.A., a company duly incorporated and validly existing under the laws of Brazil, with head offices at [Avenida Ayrton Senna, 6000, LOT 2 PAL 48959 ANEXO A, Jacarepagua, in the City of Rio de Janeiro/RJ], registered with the CNPJ/ME under No. 06.057.223/0001-71 (“ASSAÍ” and together with CASINO, CASINO SERVICES, HELICCO, WILKES, EURIS and CBD, the “Parties”).

WHEREAS:

(i) CASINO, SUDACO and CBD have entered into the Cost Sharing Agreement in order to govern the cost sharing relationship among them. EURIS, HELICCO, and CASINO SERVICES, became parties to the Cost Sharing Agreement upon execution of the First Amendment to the Cost Sharing Agreement on October 30th, 2014, the two Joinder Agreements dated August 18, 2015 and August 1st, 2016, respectively. WILKES became a party to the Cost Sharing Agreement as legal successor upon the merger of SUDACO into it, which occurred on August 17, 2015 and since then remained benefiting from the Activities;

(ii) As disclosed in the Material Fact published by CBD on September 9th, 2020, the Board of Directors of CBD approved initiating a study to segregate CBD’s cash and carry unit through a partial spin-off of CBD and its wholly owned subsidiary ASSAÍ. Such spin-off will be preceded by the transfer of the shareholding interest currently held by ASSAÍ in Almacenes Éxito S.A. to GPA (the spin-off, together with the preceding transfer aforementioned, the “Potential Transaction”).

(iii) Upon the implementation of the Potential Transaction, the shares issued by ASSAÍ and held by CBD will be distributed to the CBD’s shareholders, on a pro rata basis. The distribution of shares will occur after the listing of ASSAÍ’s shares on the Novo Mercado segment of B3 S.A. – Brasil, Bolsa, Balcão, together with listing of ADRs representing ASSAI’s shares on the New York Stock Exchange (NYSE).

(iv) if the Potential Transaction is implemented, ASSAÍ shall become a party to the Cost Sharing Agreement to benefit from the Activities performed by CASINO, CASINO SERVICES, EURIS, HELICCO, WILKES and Joining Parties (as defined in the Cost Sharing Agreement).

NOW, THEREFORE, THE PARTIES AGREE to enter into this second amendment on the date hereof, pursuant to the following terms and conditions.

1.	DEFINITIONS

All terms used in this Second Amendment but not defined herein shall have the same meanings ascribed to them in the Cost Sharing Agreement.

2.	CHANGES TO THE COST SHARING AGREEMENT

2.1

Conditioned upon the implementation of the Potential Transaction, the Parties agree that ASSAÍ shall become a party to the Cost Sharing Agreement, with no further act required in addition to the execution of this Second Amendment by the Parties. This Second Amendment shall not be effective before the implementation of the Potential Transaction. If the Parties and their shareholders cease to pursue the Potential Transaction, this Second Amendment shall be automatically terminated.

2.2

The Parties agree that upon the occurrence of the condition set forth in Section 2.1, all references to CBD in the Cost Sharing Agreement shall read as references to CBD and/or ASSAÍ, unless the context requires otherwise. As a result, (a) all Activities undertaken to be performed by CASINO, CASINO SERVICES, EURIS, HELICCO, WILKES and Joining Parties pursuant to the terms and conditions of the Cost Sharing Agreement shall be in the benefit of CBD and ASSAÍ; and (b) ASSAÍ also undertakes to reimburse CASINO, CASINO SERVICES, EURIS, HELICCO, WILKES and any applicable Joining Parties for the costs incurred by each of them in connection with the Activities performed in the benefit of ASSAÍ.

2.3

The Parties agree that this Second Amendment, in particular Section 2.2 above, is not intended to create, and does not create, any joint and several liability for ASSAÍ and CBD under the Cost Sharing Agreement. Each of CBD and ASSAÍ shall be liable for its own obligations and responsibilities under the Cost Sharing Agreement.

2.4	The Parties agree to add the following information to Section 7.7 of the Cost Sharing Agreement:

If to ASSAÍ:

Sendas Distribuidora S.A.

Avenida Ayrton Senna, nº 6.000, Lote 2, Pal 48959, Anexo A, Jacarepaguá,
Rio de Janeiro/RJ, CEP 22775-005, Brazil.

Marked for the attention of the CEO

Copy to the attention of General Counsel

2.5	The Parties ratify all other terms and conditions not modified by this Second Amendment.

IN WITNESS WHEREOF, the Parties hereto have caused this Second Amendment to Cost Sharing Agreement to be duly executed and delivered as of the day and year first above written.

	October 28, 2020.

	CASINO GUICHARD PERRACHON S.A.

	/s/ Bernard Petit
	Name: Bernard Petit
	Title: Attorney-in-fact

[Second page of signatures of the Second Amendment to Cost Sharing Agreement signed by and between Casino Guichard Perrachon S.A., Helicco Participações Ltda., Companhia Brasileira de Distribuição, Euris and Sendas Distribuidora S.A. on October 28, 2020]

	CASINO SERVICES SAS

	/s/ Bernard Petit
	Name: Bernard Petit
	Title: Chief Executive

	HELICCO PARTICIPAÇÕES LTDA.

	/s/ Carlos Eduardo Prado
	Name: Carlos Eduardo Prado
	Title: Officer

	WILKES PARTICIPAÇÕES S.A.

	/s/ Carlos Eduardo Prado
	Name: Carlos Eduardo Prado Title: Officer

	EURIS

	/s/ Didier Lévêque
	Name: Didier Lévêque
	Title: General Secretary

[Third page of signatures of the Second Amendment to Cost Sharing Agreement signed by and between Casino Guichard Perrachon S.A., Helicco Participações Ltda., Companhia Brasileira de Distribuição, Euris and Sendas Distribuidora S.A. on October 28, 2020]

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO

/s/ Marcelo Acerbi de Almeida		/s/ Guillaume Michaloux
Name: Marcelo Acerbi de Almeida		Name: Guillaume Michaloux
Title: Attorney-in-fact		Title: Attorney-in-fact

SENDAS DISTRIBUIDORA S.A.

/s/ Belmiro de Figueiredo Gomes		/s/ Daniela Sabbag Papa
Name: Belmiro de Figueiredo Gomes		Name: Daniela Sabbag Papa
Title: Officer		Title: Officer

Witnesses:

/s/ Geovani Diogo Jardim de Sousa		/s/ Raquel de Souza L Monteiro
Name: Geovani Diogo Jardim de Sousa		Name: Raquel de Souza L Monteiro
ID: (RG 49.433.380-7)		ID: (RG 43.195.522-0)

Exhibit 4.11

Free translation

1591/2016

PRIVATE INSTRUMENT FOR EXPENSE SHARING AGREEMENT

Through this private instrument, the parties ("Parties") identified below:

(i)

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO, a publicly-held corporation, with principal place of business in the City of São Paulo, State of São Paulo, at Av. Brigadeiro Luis Antônio, No. 3.142, Jardim Paulista, Postal Code (CEP) 01402-000, enrolled with the National Corporate Taxpayer's Register of the Ministry of Finance ("CNPJ/MF") under No. 47.508.411/0001-56, hereinafter simply referred to as "CBD";

(ii)

VIA VAREJO S.A., a publicly-held corporation, with principal place of business in the City of São Caetano do Sul, State of São Paulo, at Rua João Pessoa, No. 83, Centro, CEP 09520-010, enrolled with the CNPJ/MF under No. 33.041.260/0652-90, hereinafter simply referred to as "VVar";

(iii)

CNOVA COMÉRCIO ELETRÔNICO S.A., a corporation, with principal place of business in the City of São Paulo, State of São Paulo, at Rua Gomes de Carvalho, No. 1.609, 3º ao 7º andares, Vila Olímpia, CEP 04547-006, enrolled with the CNPJ/MF under No. 07.170.938/0001-07, hereinafter simply referred to as "Cnova";

(iv)

SENDAS DISTRIBUIDORA S.A., a corporation, with principal place of business in the City of São João de Meriti, State of Rio de Janeiro, at Rua João Antonio Sendas, No. 286, José Bonifácio, CEP 25565-330, enrolled with the CNPJ/MF under No. 06.057.223/0001-71, hereinafter simply referred to as "Sendas";

CBD, VVar, Cnova, and Sendas are jointly referred to as "Parties", and, individually and indistinctly, as "Party";

PREAMBLE

I. WHEREAS the Parties belong to the same economic group, Grupo Pão de Açúcar, controlled by Casino Guichard-Perrachon SA ("Casino"), and have an interest in sharing common support activity, in order to optimize the use of human resources and available materials, simplifying, rationalizing, and standardizing processes, providing greater agility and operational productivity, through the sharing of common expenses for the shared resources;

II. WHEREAS the sharing of expenses avoids favoring one Party over the others, through the allocation and equitable distribution of the respective share of common expenses, determined based on the actual use of the resources shared by the Parties;

III. WHEREAS the purpose of the Parties is solely to share the material structure and human resources necessary for their support activity and to share the corresponding expenses, without any Party intending to obtain any equity advantage or profit in relation to the others;

NOW, THEREFORE, the Parties decide to enter into this Private Instrument for Expense Sharing Agreement ("Instrument"), in accordance with the following terms and conditions:

1. Subject Matter

1.1. This Instrument aims to establish the terms and conditions for the sharing of material and human resources between the Parties, as described in Annex I to this Instrument ("Shared Resources"), as well as the sharing of the expenses and costs incurred in the actual use of such Shared Resources, with no profit purpose for any of the Parties, with no compensation due to any of the Parties regarding the Shared Resources.

1.2. The Parties recognize and agree that this Instrument may also include the sharing of common expenses incurred by the Parties when carrying out other routine support activity, as may be necessary for the proper administrative performance of the Parties, subject to the procedures provided for in Section 4 ("Additional Shared Resources").

2. Criteria for Sharing Expenses

2.1. All expenses and costs incurred by the Parties in relation to Shared Resources, including, without limitation, the full compensation of employees, respective labor and social security charges, depreciation charges for fixed assets used and general office expenses, will be shared from time to time between the Parties in proportion to the Shared Resources actually used by each of the Parties in the reference month, according to the criteria (drivers) indicated in Annex I to this Instrument.

2.2. The Parties hereby agree that the sharing criteria indicated in Annex I to this Instrument may be amended at any time, complying with the procedures set forth in Section 4, always with the purpose of correctly and reliably reflecting the interest attributable to each Party in the total expenses to be shared.

3. Committees

3.1. Management Committee

3.1.1.

The Parties must set up a management committee ("Management Committee"), which will be an advisory body composed of four (4) members, and each one (1) of them will be appointed by one of the Parties, from among their own executives.

3.1.2.

The Management Committee will be responsible for reviewing and validating the Monthly Consolidated Reports, as defined in Section 7.1.3 below. After validation of the Monthly Consolidated Reports, each Party shall carry out the accounting for the expenses related to the Shared Resources actually used in the immediately preceding month.

3.2. Approval Committee

3.2.1.

The Parties must set up an Approval Committee ("Approval Committee"), which will be a body composed of four (4) members, and each one (1) of them will be a CFO from the Parties.

3.2.2.

The Approval Committee will be responsible for validating the Quarterly Consolidated Reports, as defined in Section 7.2.1 below for approval of the issue of debit notes by the Parties for reimbursement for each Quarter.

3.2.2.1. For the purposes of this Instrument, "Quarter" means each of the following three (3) month-periods in the calendar year: each period between the dates of (i) January 1 and March 31; (ii) April 1 and June 30; (iii) July 1 and September 30; and (iv) October 1 and December 31.

4. Amendments to the Instrument

4.1. Amendment Proposal

4.1.1.

If CBD intends to (i) amend the sharing method and/or the criteria adopted for apportioning the Shared Resources described in Annex I to this Instrument; and/or (ii) establish the sharing method and the criteria that must be adopted for sharing the Additional Shared Resources, CBD shall notify the other Parties in this regard, in writing.

4.1.2.

If any of the Parties does not agree with CBD's proposal, within sixty (60) days from the date of receipt of the notice, such Party must notify CBD, in writing, indicating its disagreement ("Disagreeing Party").

4.1.2.1. Within ninety (90) days of receipt of the notice by CBD, the Disagreeing Party undertakes to take all necessary measures for the transition so that the activities subject matter of the Shared Resources that will no longer be carried out by CBD for the Disagreeing Party are carried out internally or by a hired third party or by the Disagreeing Party, at the Disagreeing Party's discretion, including provision by CBD of all necessary information and documents, as well as the provision of all necessary assistance from CBD for such purposes. After said term, the Disagreeing Party will declare that it will not be part of the sharing of certain Shared Resource or Additional Shared Resource, with the consent of the other Parties.

4.1.3.

In the event neither Party expresses itself to the contrary within the aforementioned period, CBD's proposal shall be considered accepted by the Parties.

4.1.4.

The Parties that agree with CBD's proposal must, respectively, as the case may be:

(a) enter into an instrument for sharing amendment of the Shared Resources, substantially in the form of Annex II to this Instrument, establishing the new sharing method and/or the criteria to be adopted for the Shared Resource, as proposed by CBD ("Instrument for Sharing Amendment"): and/or

(b) enter into an Instrument of Additional Shared Resources Apportionment, substantially in the form of Annex III to this Instrument, with the description of Additional Shared Resources, the sharing method and the criteria adopted for sharing of Additional Shared Resources, as proposed by CBD ("Additional Instrument for Sharing").

4.1.5.

The Instruments for Sharing Amendment and Additional Sharing Terms that are executed by and between the Parties will be considered part of the Instrument.

4.2. Partial Withdrawal

4.2.1.

If any of the Parties at any time, for any reason, is no longer interested in being part of sharing the Shared Resources or Additional Shared Resources subject matter of this Instrument, it shall notify CBD in writing of its intention, with the description of the Shared Resource or Additional Shared Resource that it no longer intends to share.

4.2.2.

Within ninety (90) days of receipt of notice by CBD, the said Party is assured that CBD will carry out all the measures set forth in Section 4.1.2.1. After said term, said Party will declare that it will no longer be part of the sharing of certain Shared Resource or Additional Shared Resource, with the consent of the other Parties.

5. Parties' Obligations

5.1. Without prejudice to other obligations assumed in accordance with this Instrument and the applicable law, the Parties shall:

(i) provide the other Parties, as set forth in this Instrument, with reports, documents, and other information related to the use and/or availability of Shared Resources;

(ii) make timely reimbursements due, in accordance with the Quarterly Final Reports;

(iii) communicate in a timely manner, in writing, any disagreements, instructions, procedures, requirements, or other information in accordance with this Instrument;

(iv) make the Shared Resources under its administration available, as applicable, in order to provide the other Parties with the necessary administrative support for the development of their activities, in compliance with the instructions and based on the information and documents provided by them; and

(v) prepare and submit expense reports and debit notes on a timely basis, as applicable, pursuant to Sections 7 and 8.

6. Labor Obligations

6.1. In compliance with the provisions of Section 2.1, the Parties expressly acknowledge that there is no employment relationship between the employees and/or service providers of a Party and the other Parties, with each Party assuming the costs and respective labor and social charges of its employees, including labor, insurance, social security, and tax obligations to its employees.

6.2. Without prejudice to the provisions of Section 6.1 above, any expenses incurred by the Parties, including any severance pay and obligations resulting from labor claims, related to their employees allocated in the support activity included in Shared Resources, shall be reimbursed under the terms of Sections 7 and 8, based on the sharing criteria established in Section 2.

7. Calculation of Expenses

7.1. Monthly Calculation. Each month of the calendar year, the Parties undertake to carry out the following acts for the purposes of calculating expenses related to Shared Resources actually used in the immediately preceding month:

7.1.1. By the fifth (5^th) business day of each month, each Party will close accounting of the expenses related to the Shared Resources actually used in the immediately preceding month ("Monthly Closing").

7.1.2. By the eighth (8^th) business day of each month, each Party shall submit to CBD the respective expense reports referring to the Shared Resources actually used in the immediately previous month, as determined in the respective Monthly Closing ("Preliminary Reports").

7.1.3. By the fifteenth (15^th) day of each month, CBD shall process the information contained in the Preliminary Reports received and prepare a consolidated expense report, considering the Shared Resources actually used by the Parties, with an indication of the net amounts to be reimbursed by each of the Parties, based on the sharing criteria established in Section 2 ("Monthly Consolidated Report").

7.1.4. By the twentieth (20^th) day of each month, CBD must submit the Monthly Consolidated Report to the Management Committee for validation.

7.1.5. By the twenty-fifth (25^th) day of each month, the Management Committee will approve the respective Monthly Consolidated Report to be accounted for by the Parties.

7.2. Quarterly Calculation. Each month following the end of each Quarter of the calendar year, the Parties undertake to carry out the following acts for purposes of reimbursing the expenses related to Shared Resources actually used in the immediately preceding Quarter:

7.2.1. By the twenty-fifth (25^th) day of the month following the end of each Quarter, the Management Committee, after approving the Monthly Consolidated Reports for each Quarter, will forward a final report containing the information in the Monthly Consolidated Reports for each Quarter ("Quarterly Consolidated Report") to the Approval Committee.

7.2.2. If none of the Parties makes any statement within five (5) days from the issue date of the Quarterly Consolidated Report, the Quarterly Consolidated Report must be considered accepted by the Parties, which will be considered the final quarterly report ("Final Quarterly Report").

7.2.3. Within five (5) days from the issue date of the Quarterly Consolidated Report, any Party that disagrees with the Quarterly Consolidated Report must notify CBD in writing indicating its duly substantiated disagreement at the discretion of CBD ("Notice of Disagreement").

7.2.4. Within sixty (60) days from receipt of the Notice of Disagreement by CBD, the Parties will make every effort to reach an agreement on the adjustments to be made to the Quarterly Consolidated Report for the issue of the Final Quarterly Report. If the Parties do not reach an agreement within this period, the Parties undertake to hire an independent specialized company to evaluate the Quarterly Report ("Consultant"). The Consultant's opinion on the Quarterly Consolidated Report, which must be issued after thirty (30) days of its hiring, must be final and binding upon the Parties.

7.2.5. Within five (5) days from the issue date of the Consultant's opinion, CBD shall issue the final quarterly report reflecting the adjustments requested by the Consultant, as the case may be.

8. Reimbursement of Expenses

8.1. For the purpose of reimbursing the expenses subject matter of this Instrument, (i) on the thirtieth (30^th) day of the month following the end of each Quarter of the calendar year, or (ii) on the fifth (5^th) business day following the issue of the Final Quarterly Report to the last month of each Quarter, whichever comes first, Parties that have amounts receivable must issue debit notes in the amount applicable to each Party involved in sharing ("Debit Notes"). The net amounts specified in the debit notes and detailed in the Final Quarterly Report must then be reimbursed by the Parties no later than the fifth (5^th) business day after receipt of the Debit Notes by the Parties which must make such reimbursements.

8.2. Unless otherwise agreed by the Parties, the reimbursement set forth in Section 8.1 must be by bank transfer, with the respective transfer receipt considered proof of settlement of the reimbursement due, corresponding to the relevant Quarter.

9. Reimbursement for 2016 Expenses

9.1. The Parties hereby acknowledge and agree that, except regarding the sharing of expenses related to the Shared Resources actually used by the Parties in the period between December 1, 2016, and December 31, 2016 ("Previous Period"), the Parties must send the Preliminary Reports to CBD, considering all expenses incurred in the Previous Period, applying, mutatis mutandi, all the provisions of Sections 7 and 8.

9.2. For the avoidance of doubt, all the terms and conditions agreed in this Instrument, which, by their nature, are compatible with the sharing of expenses incurred by the Parties in the Previous Period, must be fully observed and complied with by the Parties in relation to the sharing and reimbursement of such expenses from the Previous Period.

10. Fine

10.1. Failure to make any payment within the deadlines set out in this Instrument by either Party will automatically subject the defaulting Party to the payment of a fine of ten percent (10%) on the amount due, corrected in accordance with the variation of the General Market Price Index of the Getulio Vargas Foundation (IGP-M (FGV)), plus default interests of one percent (1%) per month, calculated proportionately on the amount due from the date of default until the date of the respective settlement.

11. Term and Termination

11.1. Term of Effectiveness. This Instrument will remain in effect, as of its execution, for up to twenty-four (24) months.

11.2. Events of Early Termination. This Instrument may be terminated, at any time, by any of the Parties, by means of written communication, sent at least ninety (90) days in advance to the other Parties, in any of the following events:

(i)

bankruptcy, dissolution, liquidation, or court-supervised or out-of-court reorganization, requested or ratified by either Party;

(ii)

either Party ceases to be controlled by Casino;

(iii)

non-compliance by either Party with any of the terms and conditions set forth in this Instrument; or

(iv)

by mutual agreement between the Parties.

11.3. Consequences of Early Termination. Within said ninety (90) days of receipt of the notice by CBD, the Party that terminates this Instrument undertakes to take all necessary measures for the transition so that the activities subject matter of the Shared Resources that will no longer be carried out by CBD for that Party are carried out by a hired third party or by internally by the relevant Party, at its discretion, including the provision by CBD of all necessary information and documents, as well as the provision of all necessary assistance from CBD for such purposes.

11.3.1. In the event of early termination of this Instrument, due to the provisions of Section 11.2(ii), if the Party that is no longer controlled by Casino is still interested in hiring CBD or another company from Grupo Pão de Açúcar to provide the administrative services subject matter of the sharing in this Instrument, the Parties shall analyze whether they will be interested in and/or whether there will be continuity in the service provision. If so, the Parties shall agree on the terms and conditions for any service provision, which will be formalized by entering into an agreement.

11.3.2. In addition, either Party has the right to partly terminate this Instrument pursuant to Sections 4.1.2 and 4.2.1, provided that the requirements and terms set out in such sections are complied with.

12. General Provisions

12.1. Offset: The Parties agree that any debts and credits existing between the Parties may be offset under the terms of the law in force.

12.2. Taxes. Any and all taxes, charges, fees, and contributions due or that may be due as a result of this Agreement will be borne by its taxpayer, as defined in the law that governs and/or regulates them, where applicable.

12.3. Confidentiality. The Parties undertake to maintain complete confidentiality of the data and information which they may obtain and/or use to comply with this Instrument and not to use it for purposes other than that provided for in this Instrument, as well as to return or destroy such data and information if requested by the Party that provided it, during the period of effectiveness of this Instrument and after its termination.

12.4. Entire Agreement. This Instrument contains the full agreement and understanding between the Parties regarding its subject matter and specifically supersedes any prior understanding of the Parties on the matter contained herein.

12.5. Waiver. Any possible omission or tolerance by any of the Parties in relation to the breach of the terms of this Instrument, will only apply in an isolated manner and will not be understood as a waiver of the rights arising from this Instrument nor will it represent revocation, amendment, or novation of the obligations assumed herein, nor will it exempt the Parties from full compliance with their obligations as provided for herein.

12.6. Amendment. Except as otherwise provided for in this Instrument, this Instrument may not be modified or amended except by written instrument and executed by all Parties.

12.7. Severability. Should any provision of this Instrument be deemed null and void, annullable, invalid, or ineffective, no other provision hereof shall be affected as a result, so that the remaining provisions of this Instrument shall remain in full force and effect as if such null and void, annullable, invalid, or ineffective provision had not been included in this Agreement.

12.8. Assignment. Neither Party may assign this Instrument or the rights and obligations arising therefrom, in whole or in part, without the express prior written consent of the other Parties.

12.9. Binding Effect. This Instrument is entered into irrevocably and irreversibly, and creates legal, valid, and binding obligations for the benefit of the Parties and their respective authorized successors and assignees.

12.10. Applicable Law. This Instrument will be governed by the laws of the Federative Republic of Brazil.

In witness whereof, the parties enter into this agreement in four (4) copies, before the witnesses mentioned below.

São Paulo, December 15, 2016

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO

(sgd)

NAME: Christophe Hidalgo

TITLE: VP of Finance

(sgd)

NAME: Antonio Salvador

TITLE: VP Human Resources

VIA VAREJO S.A.

(sgd)

NAME: Marcelo Lopes

TITLE: VP Logistics and IT

(sgd)

NAME: Flávio Dias

TITLE: Executive Officer

CNOVA COMÉRCIO ELETRÔNICO S.A.

(sgd)

NAME: Marcelo Lopes

TITLE: VP Logistics and IT

(sgd)

NAME: Flávio Dias

TITLE: Executive Officer

SENDAS DISTRIBUIDORA S.A.

(sgd)

NAME: Belmiro

TITLE: [blank]

(sgd)

NAME: José Marcelo

TITLE: [blank]

Witnesses:

1. (sgd)

Name: Cosme Rafael Ap. Correia de Morais

Identity Card (RG) No.: 42.046.510-8

Individual Taxpayer's Register (CPF): 350.642.108-50

2. (sgd)

Name: Nagella Domenique Felix

Identity Card (RG) No.: 43.795.377-4

Individual Taxpayer's Register (CPF): 421.179.818-95

[Stamp of Via Varejo, Legal, initialed]

Exhibit 4.12

Free translation

1st AMENDMENT TO THE PRIVATE INSTRUMENT OF COST SHARING AGREEMENT

By this private instrument, the parties identified below:

(i)

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO, a publicly-held corporation, with principal place of business in the City of São Paulo, State of São Paulo, at Av. Brigadeiro Luis Antônio, No. 3.142, Jardim Paulista, Postal Code (CEP) 01402-000, enrolled with the National Corporate Taxpayer’s Register of the Ministry of Finance (“CNPJ/MF”) under No. 47.508.411/0001-56, hereinafter simply referred to as “CBD”;

(ii)

VIA VAREJO S.A., a publicly-held corporation, with principal place of business in the City of São Caetano do Sul, State of São Paulo, at Rua João Pessoa, No. 83, Downtown (Centro), Postal Code (CEP) 09520- 010, enrolled with the CNPJ/MF under No. 33.041.260/0652-90, hereinafter simply referred to as “VVar”;

(iii)

(iv)

CBD, VVar, Cnova, and Sendas are jointly referred to as “Parties”, and, individually and indistinctly, as “Party”;

WHEREAS

On December 15, 2016, the Parties entered into the Private Instrument of Cost Sharing Agreement, through which they established the terms and conditions for sharing the material structure and the human resources necessary for their support activity and the division of the corresponding expenses, without any Party obtaining any equity advantage or profit in relation to the others (“Instrument”).

II.

Pursuant to the terms of the Instrument, its term of effectiveness is twenty-four (24) months from its execution, that is, until December 15, 2018;

III.

The Parties intend to extend the term of effectiveness of the Instrument for thirty-six (36) months from its execution, with automatic renewal permitted subject to certain terms;

NOW, THEREFORE, the Parties decide to enter into this 1^st Amendment to the Private Instrument of Expense Sharing Agreement (“Amendment”), in accordance with the following terms and conditions:

SECTIONS

Amendment Definitions

I.1. Capitalized terms used in this Amendment shall have the meanings attributed to them in the Instrument, unless otherwise expressly defined herein.

II.

Amendments

II.1. The Parties decide to amend Section 11.1 of the Instrument to extend the term of effectiveness of the Instrument for thirty-six (36) months from its execution, with automatic renewal for successive periods of 12 (months) days (sic), if there is no written statement to the contrary from any Party under Section 11.2. Accordingly, Section 11.1 will remain in force with the following wording:

“II.1 Term of Effectiveness. This instrument will be in force, from its execution, up to thirty-six (36) months, and will be automatically renewed for successive periods of 12 (months) days (sic), if there is no statement to the contrary from any Party, in writing, sent at least ninety (90) days in advance to the other Parties as a result of any possibility of early termination set forth in Section 11.2.”

III.

Ratifications

III.1. The other sections and conditions contained in the Instrument and its annexes which have not been expressly amended by this Amendment are hereby expressly unaltered and ratified.

In witness whereof, the parties enter into this agreement in four (4) copies, before the witnesses mentioned below.

São Paulo, December 10, 2018.

(Signature page of the 1st Amendment to the Private Instrument of Expense Sharing Agreement executed by and between Companhia Brasileira de Distribuição, Via Varejo S.A., Cnova Comércio Eletrônico S.A., and Sendas Distribuidora S.A., on December 10, 2018)

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO

(sgd)

NAME: Antonio Salvador

TITLE: Executive Officer of Digital Transformation, Multivarejo

(sgd)

NAME: Christophe Hidalgo

TITLE: VP of Finance

VIA VAREJO S.A.

(sgd)

NAME: Felipe Negrão

TITLE: Executive Officer

(sgd)

NAME: Paulo Naliato

TITLE: Executive Officer

CNOVA COMÉRCIO ELETRÔNICO S.A.

(sgd)

NAME: Felipe Negrão

TITLE: Executive Officer

(sgd)

NAME: Paulo Naliato

TITLE: Executive Officer

SENDAS DISTRIBUIDORA S.A.

(sgd)

NAME: Belmiro Gomes

TITLE: General Officer

Assai Atacadista

(sgd)

NAME: José Marcelo Santos

TITLE: [Illegible] Officer

Witnesses:

1. (sgd)

Name: Ana Carolina Staudt Gomes

Identity Card (RG) No.: 42.039.386-9 SSP/SP

Individual Taxpayer’s Register (CPF): 359.349.428-08

2. [blank]

Name: [blank]

Identity Card (RG) No.: [blank]

[Stamp of Grupo Pão de Açucar, Corporate Legal, (sgd)]

[Stamp of Senda Distribuidora S/A, Legal, (sgd)]

[Stamp of Via Varejo, Legal, (sgd)]

Exhibit 4.13

Free translation

Certain information has been omitted from the exhibit because it is both not material and would likely cause competitive harm to the registrant if publicly disclosed. The omissions have been indicated by (“[***]”).

EQUIPMENT LEASE AGREEMENT

FV-ASS-CLE-0071

SENDAS DISTRIBUIDORA S.A.

AND

GREENYELLOW DO BRASIL ENERGIA E SERVIÇOS LTDA.

São Paulo, April 29, 2019.

Between

I. GreenYellow do Brasil Energia e Serviços Ltda., a limited liability company with its principal place of business located at Rua Capitão Pinto Ferreira, 187, Jardim Paulista, in the City of São Paulo, CEP (postcode) 01423-020, State of São Paulo, enrolled with the Brazilian Corporate Taxpayers’ Register of the Ministry of Finance (CNPJ/MF) under No. 20.993.615/0001-73, hereinafter referred to as “LESSOR” or “GY BRASIL”:

and

II. Sendas Distribuidora S.A., a corporation with its principal place of business located at Rua João Antônio Sendas, 286 - part, City of São João de Meriti, State of Rio de Janeiro, enrolled with the CNPJ/MF under No. 06.057.223/0001-71, hereinafter referred to as “LESSEE” or “ASSAI”.

LESSOR and LESSEE, which are hereinafter referred to individually as “PARTY” and jointly as “PARTIES”, have agreed to enter into this Equipment Lease AGREEMENT (“AGREEMENT”) in accordance with the following assumptions and considerations:

Whereas:

1. LESSEE is interested in increasing predictability and control over the costs with electricity of ASSAI Londrina Establishment in Londrina, State of Paraná.

2. LESSOR, a company which is part of the Casino Group, is aware of the relevance of efficient electricity use and develops solutions and facilities with the purpose of reducing, optimizing and keeping track of electricity use of commercial and logistical real properties. The PV Systems solution enables predictability and better management of the electric power cost for the Establishment.

3. LESSOR is a company specialized in the development of PV Systems, installation and lease of Equipment, as well as in the implementation of other solutions aiming at reducing, optimizing and keeping track of the use of electricity in commercial real properties. To perform such projects, it counts on specialized people and materials and on all licenses necessary for its activities, and it has been duly organized and is qualified under the laws in force to perform such projects.

4. LESSOR, before the date of execution of this AGREEMENT and during the “Study Phase”, submitted to LESSEE a project involving the PV Systems that LESSOR could implement at the Establishment. The photovoltaic systems are implemented based on the laws in force, notably ANEEL Normative Resolution No. 482 of April 17, 2012, as amended by Normative Resolution No. 687 of November 24, 2015 (“ANEEL Resolution”).

5. The PV Systems subject-matter of this AGREEMENT has been designed by LESSOR: (i) with the purpose of implementing them at LESSEE’s Establishment, pursuant to this AGREEMENT; and (ii) taking into consideration LESSEE’s electricity consumption, as well as the particularities of the electric power use at LESSEE’s facilities.

6. The PARTIES decided to enter into this AGREEMENT, which sets forth the terms and conditions according to which LESSOR shall lease to LESSEE the Equipment necessary for the operation of the PV Systems to be installed at the Establishment herein indicated.

7. On the same date of execution of this Agreement, the PARTIES will enter into an Operation and Maintenance service agreement (“O&M Agreement”) in order to establish the terms and conditions under which LESSOR shall operate and maintain the Equipment which is part of the PV Systems at the Establishment for the benefit of LESSEE.

8. LESSEE is fully aware that the payments agreed upon herein as consideration for the use and enjoyment of the Equipment also correspond to the investment made upon its acquisition by LESSOR. Thus, the lease shall last for the full term of effectiveness of this Agreement, with the provisions of the sole paragraph of section 473 of Law 10406 of January 10, 2002, as amended (“Brazilian Civil Code”) being applicable.

9. The PARTIES recognize, for all purposes, that LESSOR is the sole and exclusive owner of the Equipment and of all intellectual property rights arising from it, it being clear that LESSEE does not have authority, neither is it eligible to encumber or pledge the Equipment.

10. The PARTIES agree that LESSOR shall not pay any charge for the Area in which the PV System is installed.

11. The following annexes are part of this AGREEMENT after executed and initialed by the PARTIES:

- Annex A: Description of the Equipment

- Annex B: Technical Commissioning Procedure

- Annex C: Rent and Rent Adjustment Calculation Methodology

- Annex D: Actual Electricity Availability

- Annex E: LESSOR’s Current Account

12. This AGREEMENT revokes and supersedes any other previous oral or written contracts, proposals and/or agreements with the same SUBJECT MATTERS exclusively in relation to the Establishment, and this instrument shall prevail over any of them and may not be modified unless by means of an amendment executed by the PARTIES and by two (2) witnesses. This AGREEMENT shall not be construed as creating an association, consortium or partnership between the PARTIES or as imposing any corporate obligation or responsibility on any of the PARTIES.

THE PARTIES RESOLVE to enter into this AGREEMENT, which will be governed by the following sections and conditions:

1. DEFINITIONS AND RULES OF CONSTRUCTION

1.1. For the purposes of this AGREEMENT, except as otherwise expressly provided for or unless the context requires otherwise, the terms below used herein will have the following meanings.

“Acquirer” is a third-party company or an Affiliate that acquires the PV System pursuant to Section 10.

“Rent Adjustment” or “ARAn” is the adjustment of the annual Lease Price of Year n (LAn) calculated at the end of the month following each anniversary of the Photovoltaic System Commissioning in year “n”. This adjustment will be made in order to take into account the Photovoltaic System electricity availability. The calculation of the Rent Adjustment is detailed in Annex C.

“Affiliate” is any company directly or indirectly controlled by the economic group of which it is a part and the corporate purpose of which is compatible with the compliance with the obligations defined in this AGREEMENT. It also means, in relation to any person, another person that, directly or indirectly, by means of one or more finders, controls, is controlled by or is under common control with such person. For the purposes of this definition, control shall be understood as: (i) the direct or indirect ownership of more than fifty percent (50%) of the capital stock or being the holder of rights that ensure, on a permanent basis, the majority of the votes in general meeting resolutions, as well as the power to elect the majority of the company’s managers; or (ii) the authority to direct or cause third parties to direct the administration and management policies of the company as a result of holding voting rights, agreements or in any other way.

“Rent” or “Lease” is the act of assigning or acquiring use or enjoyment of the Equipment for the time and price as determined in this AGREEMENT.

“Year 1” is the year of the date of execution of this Agreement.

“Area” is the area or surface within the Establishment in numbers designated for the installation of the PV System.

“Nominal Capacity” or “P0” is the peak installed capacity of the Photovoltaic System (in kilowatts peak (kWp)).

“Agreement” means this Equipment Lease Agreement FV-ASS-CLE-0071 and its Annexes.

“O&M Agreement” is the agreement that the PARTIES will enter into in order to establish the terms and conditions under which LESSOR shall operate and maintain the Equipment which is part of the PV Systems at the Establishment for the benefit of LESSEE.

“Commissioning Date” is the date on which the Photovoltaic System was commissioned by LESSOR, stated in Annex B. In other words, it corresponds to the date on which the Photovoltaic System starts to generate electricity to be used by the Establishment, as a result of the connection between the Equipment and the public utility electric system.

“Early Termination Date” is the date on which one of the PARTIES notifies the other by informing termination of this AGREEMENT earlier than the date provided for it.

“Incident Definition” is an event that affects the capacity of the photovoltaic (PV) plant or of any part of it to produce and deliver electricity.

“PV Plant Actual Availability” or “AVAILn” is the Actual Electricity Availability of the PV power plant calculated in a percentage (%) according to Annex D to this AGREEMENT.

“Technical Electricity Availability” is the value of the guaranteed availability of the plant, fixed at ninety-eight percent (98%).

“Calculated Generated Electricity Including Annual Degradation n” or “GEn” is the generated electricity including degradation in megawatt-hour (Mwh) calculated by simulation in the PVSyst program, version 6.44 or later, for each year n using the actual irradiation and the room temperature measured by the weather station. In the event of a failure at the local weather station, Irradiation data provided by satellite will be used.

“Actual Generated Electricity in Year n” or “GEactual,nA” is the actual electricity generated during availability times in year n identified by the gauge at the end of the measurement period and expressed in kilowatt-hour (kWh).

“Electricity Generated During Downtime in Year n” or “GEactual,nD” is the actual Generated Electricity during downtime in year n identified by the gauge at the end of the measurement period and expressed in kilowatt-hour (kWh); see Annex D.

“Establishment” is LESSEE’s branch enrolled with the CNPJ/MF under No. 06.057.223/0247-80, located at Avenida Tiradentes, 4650, Block 104, Lot 104-1, Part I, Jardim Rosicler, City of Londrina, State of Paraná, where the PV System is to be installed.

“Equipment” is the set of components that form the PV System which are identified in Annex A and leased to LESSEE pursuant to this AGREEMENT.

“Collective Protective Equipment” or “CPE” is every collective device or system intended for preserving workers’ and third-parties’ physical integrity and health.

“Personal Protective Equipment” or “PPE” is every device or product to be individually used by workers, intended to protect them against risks that may pose a threat to their safety and health.

“Study Phase” is the phase in which LESSOR conducted a feasibility study encompassing a preliminary technical-financial dimensioning of the PV System and demonstrating benefits in electricity savings at the Establishment. Its purpose is to show the expectation of generation, by the PV System during the Lease Term, of a global reduction in the electricity cost projected for the Establishment, as well as provide better management and predictability of such electricity costs.

“Installation Phase” is the period during which the Equipment will be installed at the Establishment.

“Extraordinary Climate Event” is that the probability of occurrence of which is very low and induces a behavior in the PV System which deviates from the theoretical model. The criteria to qualify the Extraordinary Climate Event during the Testing Period are as follows:

(i) Storm/hailstorm: notice by communication from the official local meteorology agency or by surveillance procedure issued by the municipal government. If a storm is not subject to a surveillance procedure by the municipal government, wind speed may serve as an objective reference to both parties, which will jointly validate it.

(ii) Anomalous rainfall: it shall be justified by a survey of meteorological data attesting the exceptional event or its consequences (floods...).

“Simulation Tool” is the PVSyst program in version 6.44 or later.

“Theoretical Electricity Generation of Year n” or “GEtheo.n” is the theoretical electricity generation in year n expressed in kilowatt-hour (kWh).

“Real Estate Property” is the real estate property where the Establishment is located.

“General Market Price Index in Year n” or “IGP-Mn” is determined on the anniversary of year n, disclosed by Getulio Vargas Foundation or by the index that may replace it, always within the shortest periodicity permitted by law.

“General Market Price Index in Year 0” or “IGP-M0” is determined on the Commissioning Date, disclosed by Getulio Vargas Foundation or by the index that may replace it, always within the shortest periodicity permitted by law.

“Irradiation” or “Ir” is the standard solar irradiation (reference value: 1 kW/m2).

“Total Solar Irradiation” or “Gi” is the total solar irradiation over the Technical Downtime Period measured by the average of the pyranometer installed at the same inclination as the module and calculated by the computerized monitoring system (in kilowatt-hour per square meter (kWh/m2)).

“Laws and Regulations” are the Brazilian laws and regulations of legal entities that serve as the basis for this AGREEMENT.

“Service Amount in Year n” or “SAn” is the annual amount to be paid for the service provision (O&M Agreement) as from the Commissioning Date and during year n expressed in Reais per year (BRL/year).

“Service Amount in Year 1” or “SAI” is the amount to be paid for the first year for the service provision (O&M Agreement) as from the Commissioning Date. The SAI amount is (BRL [***]).

“Subject Matter” is the purpose, reason why this AGREEMENT is entered into between the PARTIES.

“Production Losses During Technical Downtime” or “Losstu” is the difference between the electricity production which in theory should be produced during the Technical Downtime Period (Eth) and the Electricity Production produced and measured in the Photovoltaic System by the measurement system (GEactualn) during the Availability Period (in kilowatt-hour (kWh)).

“Accidental Downtime” has the meaning ascribed to it in Annex D.

“Technical Downtime Period” means all days on which the PV System did not generate electricity during the twelve (12) successive months of operation of the PV System.

“Availability Period” means the period of twelve (12) successive months of operation of the PV System as from the Commissioning Date.

“Performance Ratio” or “PR” is the quotient of the actual and theoretical production.

“Reference Performance Ratio” or “PRr” is calculated during the total thirty-(30-) day period, being the nearest 30 days before the start of the Technical Downtime Period, which is not affected by the Technical Downtime Period and/or Accidental Downtime.

“Lease Term” is the term during which LESSEE shall pay the Monthly Lease Price to LESSOR on a month-by-month basis.

“Production at the Beginning of Measurement in Year n” or “PBn” is the electricity production marked in the gauge at the initial measurement time and expressed in kilowatt-hour (kWh). The actual Generated Electricity will not take into consideration the auxiliary consumption during the non-Irradiation periods, particularly at night, in order to retain only the effective production of the PV System.

“Production at the End of Measurement in Year n” or “PEn” is the electricity production marked in the gauge at the measurement final time and expressed in kilowatt-hour (kWh).

“Theoretical Production of the First Year” or “PR1” is the theoretical production of electricity as from the Commissioning Date, including the modules degradation, contained in Annex C.

“Theoretical Electricity Production During Downtime” or “Eth” is the electricity that should, in theory, be produced during the Technical Downtime Period (in kilowatt-hour (kWh)), as calculated in Annex D.

“PV System” or “Photovoltaic System” means the distributed photovoltaic electricity micro- and mini-generation system designed by LESSOR for installation at the Establishment by using the Equipment, which will be leased under this AGREEMENT.

“Early Termination Fee” is the amount corresponding to the remaining balance related to the pending installments of the Lease Amount and of the Service Amount as set forth in the O&M Agreement.

“SELIC Rate” is the rate calculated by the weighted and adjusted average of the financial operations over one day, backed by federal government bonds and processed in the Special System for Settlement and Custody - SELIC, expressed as a percentage per year of two hundred fifty-two (252) business days, calculated and disclosed by the Central Bank Information System.

“Total Rate1” is the total amount, TE + TUSD except for the cap, with no flags, including ICMS (Goods and Services Tax) and PIS/COFINS (Social Security Financing Tax), of the electricity purchased by the Establishment on the Commissioning Date.

On the date of execution of this Agreement, the Total Rate1 is established at [●] of Reais per kWh ([***]/kWh).

If the Commissioning Date does not fall between the date of execution of the Agreement and the date of review of ANEEL CONFIRMATORY RESOLUTION regarding the Electricity Concessionaire of the Establishment, such rate may be adjusted for inflation on the Commissioning Date based on the review in force of ANEEL CONFIRMATORY RESOLUTION and will also imply the review of the contractual amounts in order to keep the discount of Year I of the Agreement.

“Lease Price of Year n” or “LAn” is the annual amount to be paid for the Rent as from the Commissioning Date and during year n expressed in BRL/year.

“Monthly Lease Price“ or “LAi,n” is the Lease Price of Year n divided by 12 in relation to the 12 installments of year n to be paid as Rent. And i is a variable from 1 to 12. Expressed in BRL/month.

“Lease Price of Year 1” or “LP1” is the amount to be paid for the first year as from the Commissioning Date. The LP1 amount is [***] (BRL [***]).

2. SUBJECT MATTER AND PURPOSE OF THE AGREEMENT

2.1. Subject Matter. The Subject Matter of this AGREEMENT is the establishment of the terms and conditions of the Lease of Equipment which is part of the PV System of 217.6 kWp by LESSOR to LESSEE at the Establishment, for the Lease Term.

2.2. Establishment. The PARTIES agree that the Establishment mentioned in this AGREEMENT is a LESSEE’s branch enrolled with the CNPJ/MF under No. 06.057.223/0247-80, located at Avenida Tiradentes, 4650, Block 104, Lot 104-1, Part 1, Jardim Rosicler, City of Londrina, State of Paraná.

2.3 Purpose. The PARTIES agree that the purpose of the Lease of the Equipment which is part of the PV System is to operate and implement the mini generation of photovoltaic electricity at the Establishment.

2.4. Preparation for the execution of this AGREEMENT. The PARTIES agree that previously to executing the AGREEMENT and during the “Study Phase”, LESSOR presented to LESSEE the PV System which LESSOR could implement at the Establishment. Such presentation encompassed the conduction of studies by LESSOR, which also borne the respective costs on an exclusive basis.

3. LEASE TERM

3.1. Term of the AGREEMENT and Lease Term. The PARTIES agree that this AGREEMENT will be effective as from the date of its execution, and the Lease Term will be effective for twenty-five (25) years as from the Commissioning Date, as defined in the Technical Commissioning Procedure contained in Annex B.

3.2 AGREEMENT Renewal. At the end of the Lease Term, the AGREEMENT may be renewed for subsequent annual periods, at the discretion of the PARTIES, by means of a contractual addendum.

3.3. End of the Lease Term. Upon the end of the Lease Term, as set forth in Section 3.2 above, the PARTIES will negotiate the removal of the Equipment as is.

4. LESSOR’S RESPONSIBILITIES

4.1. Acquisition of the Equipment by LESSOR. LESSOR will acquire the Equipment from national or foreign manufacturers and suppliers freely chosen by it.

4.2. Severability. Once the payments are made, the LESSOR will not be exempted from its responsibilities and/or obligations, neither shall it imply full or partial approval of the obligations arising from this AGREEMENT.

4.3. Guaranteed discount. LESSOR guarantees that the sum of the Lease Price of Year 1 and the Service Amount in Year 1 (amount due by LESSEE to LESSOR as a result of the service provision subject-matter to the O&M Agreement), for the first year of this AGREEMENT, will correspond to [***]%of consumption in the electricity bill considering the power tariff on the PV System Commissioning Date as defined in Section 1 and in Annex C.

4.4. Compliance with regulations. LESSOR undertakes, on all stages necessary for the performance of the Subject Matter of this AGREEMENT, to:

(i) Meet all applicable legal requirements, including compliance with the Laws and Regulations, as well as follow all orders and decrees issued by agencies with jurisdiction or authority over the Subject Matter of this AGREEMENT, being responsible for submitting its occasional subcontractors to the above-mentioned Laws and Regulations, as well as to this AGREEMENT;

(ii) Obtain and keep all authorizations and permissions necessary for compliance with the Subject Matter at all stages: and

(iii) Respect third-party rights, such as intellectual property rights, commercial and industry secrets, right to image, right to honor, right to privacy, among others, and LESSOR is the sole responsible for any violation of such rights.

4.4.1. LESSOR may be requested by LESSEE at any time to submit supporting documentation and evidence compliance with its obligations, including compliance with the Laws and Regulations. LESSOR undertakes to provide to LESSEE such clarifications, documents, information and explanations as requested, with all appropriate proofs, and with the required level of accuracy and integrity, within the shortest term possible.

4.5. Responsibility during the Installation Phase. LESSOR undertakes to:

(i) Select and acquire the Equipment which is part of the PV System to be leased and installed at the Establishment, according to Section 4.4;

(ii) Bear the costs and assume responsibility for the investments and adjustments that may be necessary to adapt the Establishment to receive the PV System, provided that previously agreed upon with LESSEE;

(iii) Perform its activities in accordance with the applicable rules in force;

(iv) Manage and provide for, on its own account or on account of third parties, the receipt, storage and installation of the Equipment which is part of the PV System in compliance with the market best practices and at the cost of LESSOR, observing LESSEE’s internal policies; and

(v) Minimize the impact of the works on the Establishment activities and respect any operating restrictions of the Establishment. For such, LESSOR undertakes to send a notice to LESSEE requesting the authorizations for the performance of the necessary procedures, and LESSEE shall respond within five (5) days from the receipt of the notice. If LESSEE does not meet the term above, the initial date of the Lease will be postponed until disclosed by LESSEE. No penalty or fine will be incurred as a result of such failure to meet the term.

4.6. LESSOR’s General Responsibilities. LESSOR undertakes to:

(i) Deliver, receive and store the Equipment at the Establishment;

(ii) Submit to LESSEE, at the formally informed address and sector, the invoices regarding the Equipment Lease;

(iii) Request in advance and in writing to LESSEE, whenever necessary, all rules, specifications or other documents necessary for the Equipment Lease. LESSOR may not delay or interrupt the Equipment Lease due to LESSEE’s failure to provide such information and/or documents, provided that, at LESSOR’s sole discretion, such requested information and/or documents are not necessary to start or continue the Equipment Lease.

5. LESSEE’S RESPONSIBILITIES

5.1. Responsibilities for inherent risks. LESSEE, at the time of the Lease and beginning of the power generation operation dully agreed upon between the Parties, will take out insurance against risks inherent to the Photovoltaic installation, without prejudice to the guarantees against defects provided by LESSOR herein, including, among others:

●

Risk of electric shock;

●

Risk of fire;

●

Mechanical-physical risk of the installation;

●

Safety risk: sharp elements (glass, metals).

5.2. Clarification on inherent risks. Considering that the Equipment will remain, during the term of this AGREEMENT, in a real estate property occupied by LESSEE and that, thus, the Equipment will be under its possession and protection during the term of this AGREEMENT, LESSEE assumes responsibility for the risks inherent to it during the entire term of this AGREEMENT under Section 5.1 above, and it shall thus take out appropriate insurance for it. LESSEE, as the lessee of the Equipment, will be entitled to benefit from the Equipment only within the limits of the terms and conditions herein established.

5.3. Responsibility during the Installation Phase. LESSEE undertakes to:

(i) Actively cooperate with the installation of the PV System at the Establishment as proposed by LESSOR;

(ii) Guarantee to LESSOR’s employees and to its representatives’ employees and/or subcontractors full access and availability to the Establishment, especially at the location where the Equipment will be installed, provided that previously scheduled and accompanied by a person appointed by LESSEE;

(iii) Make available an area to store the materials necessary for building the mini or micro-generation plant as a function of its availability as negotiated at design meetings with LESSOR. The area required to guarantee the swift progress of the works will be negotiated between LESSOR, LESSEE and the company designated by LESSEE or its representative;

(iv) Guarantee that the material stored for the photovoltaic installation shall not suffer damages caused by third parties;

(v) Provide documents and information for installation of the PV System, provided that previously requested in writing by LESSOR pursuant to Section 14;

(vi) Help LESSOR’s to obtain the applicable authorizations and licenses for the installation of the PV System and implementation of actions that imply architectural or structural works or adaptations or that somehow involve civil engineering works;

5.4. LESSEE’s General Responsibilities. LESSEE undertakes to:

(i) Pay to LESSOR such compensation for the Equipment Lease as set forth in this AGREEMENT;

(ii) Abstain from modifying the several parameters defined by LESSOR, as well as from changing the settings of the PV System leased by LESSOR pursuant to this AGREEMENT;

(iii) Incorporate the Equipment to the Property insurance existing in the Establishment;

(iv) Allow free access and guarantee availability of the infrastructure of the shop to LESSOR’s employees and to its representatives’ employees and/or subcontractors to the Establishment, especially to LESSEE’s premises where LESSOR shall perform the Equipment monitoring and maintenance services and other requests inherent to the appropriate operation of the Equipment, pursuant to the O&M Agreement, provided that previously scheduled, and the employees shall be wearing the appropriate uniform and personal protective equipment - PPE and collective protective equipment - CPE and shall be accompanied by a person appointed by LESSEE.

(v) Prevent the intervention by non-authorized personnel in the Equipment;

(vi) Assume responsibility, if it is evidenced poor use of the Equipment on the part of LESSEE, for reimbursement of the damages and defects caused in the Equipment;

(vii) Provide a point of access to water and electricity according to the local standards as near as possible to the roof access so as to enable cleanup of the Photovoltaic System;

(viii) Provide a specific location for storage, which must be covered and with restricted access, to store the spare equipment and cleaning equipment of the Photovoltaic System. Such material will be provided by LESSOR or its subcontractors, except for the inputs described in Section 5.4(vii);

(ix) Directly or indirectly supervise the performance of the Subject Matter, and LESSOR shall facilitate such supervision, which will not reduce neither exempt LESSOR from the responsibilities assumed by it herein;

(x) Maintain the electric interconnection of the Equipment, as well as abstain from making any changes to the electric structure of the Establishment where the Equipment is located without notifying LESSOR at least ten (10) business days in advance; and

(xi) Not to sublease, in any event, in whole or in part, the Equipment.

6. RESPONSIBILITIES OF THE PARTIES

6.1 Performance of the AGREEMENT. The PARTIES will mutually cooperate for the efficient performance of this AGREEMENT. The PARTIES are fully aware that strict collaboration and effective communication are key to obtain the maximum performance from the PV System.

6.2. Indemnifications. Each PARTY will promptly indemnify and keep the other PARTY exempt in relation to any threat or risk, obligation or liability arising from its actions or omissions or that its employees, assistants or subcontractors linked to the Subject Matter and to the terms of this AGREEMENT.

7. RESPONSIBILITIES OVER EMPLOYEES, SUBCONTRACTORS AND INDEMNIFICATION.

7.1. Subcontracting and responsibility. LESSOR, in order to implement all or a part of the provisions of this AGREEMENT, may subcontract any individual or legal entity it wants, provided, however, that LESSOR will remain solely responsible before LESSEE for the correct performance of the AGREEMENT.

7.2. Responsibility for compliance. LESSOR will be the sole responsible for compliance with all obligations included in the agreements entered into with third parties, as well as for requiring compliance with all obligations imposed to subcontractors, including, among others, confidentiality, when applicable, compliance with the laws in force and liability. As a consequence, LESSOR will be responsible for all lawsuits and out-of-court demands related to non-compliance by subcontractors and will require from them all guarantees necessary for the development of the activities they develop. Similarly, LESSOR will keep LESSEE exempt from any complaint by subcontractors, guaranteeing its timely defense. Thus, LESSOR will be responsible before LESSEE for the acts, mistakes and omissions of its subcontractors and will not be exempted from complying with the AGREEMENT on such grounds.

7.3. Compliance with LESSEE’s rules. LESSOR shall cause all its employees and occasional subcontractors, if any, to: (i) comply with the rules established by LESSEE for the access to its premises, including in relation to their identification, appropriate clothing, and (ii) remain only at areas authorized by LESSEE.

7.4. Subcontractors’ complaints. LESSOR represents to LESSEE that, in the event a SUBCONTRACTED company protests any invoice in which LESSEE appears as drawee or sends a document, letter, notice or any form of communication permitted by law to the latter requiring payment as a result of LESSOR’s financial obligation, the latter will, as soon as informed about the facts by LESSEE, provide for normalization of the matter, whether before the registry office or directly with subcontractors, within up to five (5) business days, fully bearing costs and expenses resulting from such protest.

7.5. Subcontractors’ documentation. LESSOR, in addition, shall require from each subcontractor: (i) the insurance policies pertaining to the activity performed by the respective subcontractor, covering the regularity, quality of the activities and general civil liability and of third parties, as well as, (ii) proofs of payments of salaries, labor benefits, taxes and social security contributions, in accordance with LESSEE’s regulations. LESSOR will submit to LESSEE, whenever requested, a copy of the documents mentioned in this Section 7.5.

7.6. Control over employees and subcontractors. LESSOR shall submit to LESSEE, whenever requested, within seven (7) days as from the notice sent to LESSOR, (i) the list of its employees and/or SUBCONTRACTORS; as well as (ii) copies of the Debt Clearance Certificate issued by the Brazilian Social-Security Authority (CND-INSS), of the Guarantee Fund for Length of Service Regularity Certificate (CRF-FGTS) and of the Labor Debt Clearance Certificate (CNDT) - labor debts regarding employees and SUBCONTRACTORS in relation to the services, under penalty of suspension of payment of the Monthly Lease Price up to regularization of the situation at the discretion of LESSEE.

7.7. Insurance. LESSOR hereby represents that all its employees are insured against labor accidents and exempts LESSEE from any liability in relation to the payment of possible indemnifications arising from proceedings involving any accidents or infirmities/wounds connected with the services. LESSOR undertakes to comply with all labor rules related to cleanness, safety and health, especially in relation to the mandatory use of Collective Protective Equipment - CPE and Personal Protective Equipment - PPE of the people responsible for the provision of the services included in the Lease subject matter of this AGREEMENT.

7.8. LESSOR’S Responsibilities. LESSOR shall be civilly and criminally liable for the acts practiced by its professionals (employees, agents, representatives or contracted professionals/subcontractors) upon the provision of the services included in the Lease Subject Matter of this AGREEMENT. LESSOR is fully responsible for any damage caused to LESSEE or to third parties, taking out general civil liability insurance and employer’s liability insurance, on its own account, as well as for presenting its policies on time, duly accompanied by proof of payment of their premium, as well as the endorsements and the policy renewals or new policies, if applicable, and the respective proofs of payment.

7.9. No employment relationship with LESSEE. The PARTIES agree that this AGREEMENT will not create any employment relationship between LESSEE and LESSOR’s employees and contractors, directly or indirectly, and LESSOR will be exclusively responsible for all expenses with such employees arising from labor laws, as well as from social security laws and related to occupational accidents.

7.10. Lawsuits. LESSOR undertakes to assume any civil, labor, regulatory, social security, tax or occupational accident claims (from public or private agents) related to the scope of this AGREEMENT and filed against LESSEE in a lawsuit or administrative proceeding or by an out-of-court complaint by third parties. It shall spontaneously appear in court to request its inclusion in the proceeding and exclusion of LESSEE or, in the event of an out-of-court complaint by a third party, informing the third party about LESSEE’s absolute non-existence of liability. If LESSEE remains in the proceeding as a result of a denial of the request for its exclusion, it shall elect its attorneys to defend it, and LESSOR shall bear all respective expenses, such as fees of counsels, court costs and adverse judgments, which will also be applicable in the event of an out-of-court complaint by third parties.

7.11. Compliance with the Applicable Laws. LESSOR shall adopt all applicable measures for the subcontractor to undertake to comply with all obligations applicable thereto as a result of this AGREEMENT, such as confidentiality, compliance with laws in force, liability, among others, and LESSOR will be responsible for any default by subcontractor.

7.12. Labor Obligations. LESSOR undertakes to timely pay any charges, contributions and taxes, including those of a social security, social and labor nature, and any fees, burdens or charges of any nature resulting from the execution and performance of this AGREEMENT and the Subject Matter, and it shall assume and bear any complaints or claims filed by its employees or occasional subcontractors.

7.13. Reimbursement of expenses. LESSOR shall reimburse LESSEE for all incurred expenses (including, among others, adverse judgment, fine, penalty, costs and legal costs, fees of counsel, contractual fees, up to the amount provided for in the Table of the Brazilian Bar Association), for lawsuits related to the Subject Matter and filed by its employees and subcontractors against LESSEE. The reimbursement shall be made within seven (7) days from receipt of the notice sent by LESSEE declaring such amounts.

7.14. Lawsuits filed against LESSEE. If LESSOR fails to make the reimbursement pursuant to section 7.13 above within the established term, regardless of previous notice to LESSEE, and if it still leases the Equipment to LESSEE, the latter may retain a portion of the payments due to LESSOR, by way of security, limited to [***]%of the amount stated in the adverse judgment rendered by the trial court. Even in the event of an appeal, which may cause a reduction or increase as a result of calculations of the proceeding, change in decision or any other justifiable procedural incident. In the cases provided for in this AGREEMENT in which there occurs retention of the payments due to fault of LESSOR, the latter shall keep performing the Subject Matter pursuant to the terms and conditions of the AGREEMENT.

7.15. Normalization of payments by LESSEE. The retained amount shall be returned to LESSOR by LESSEE, duly adjusted by the IPCA or IGPM indexes (whatever is lower), as soon as LESSOR evidences exclusion of LESSEE from the dispute, the full compliance with the adverse judgment or compliance with a settlement with plaintiff/complainant dismissing the case.

7.16. Limitation to lawsuits filed against LESSEE. If the pending issues or the lawsuits or administrative proceedings filed against LESSEE exceed the number of ten (10) or achieve, in any number, an amount equal to or higher than the monthly amount to be paid by LESSEE to LESSOR, LESSEE may immediately terminate this AGREEMENT, occasion on which LESSEE may retain the amounts due in order to resolve the mentioned pending issues, without prejudice to court or out-of-court collection, if any, even after retention, outstanding debts or obligations.

7.17. Continuity. All obligations pursuant to this Section will survive even if LESSOR no longer has a relationship with LESSEE for any reason.

8. NON-COMPLIANCE WITH RESPONSIBILITIES

8.1. Omission and forbearance. Omission or forbearance upon requiring compliance with any terms or conditions of this AGREEMENT or upon exercising rights arising herefrom will not constitute a waiver, novation or any procedure that may justify a violation of a contractual section, neither will it damage the PARTIES’ right to require them or to exercise them at any time.

8.2. Action in the event of LESSOR’s non-compliance with responsibilities. If LESSEE understands that LESSOR has failed to comply with any of its obligations pursuant to this AGREEMENT, the PARTIES agree that it will be upon LESSEE to send a notice to LESSOR informing, with justifications, the referred to non-compliance pursuant to Section 14.

8.3. Term for compliance by LESSOR. If such non-compliance is not cured within one hundred and twenty (120) days counted from the receipt, by LESSOR, of the referred to non-compliance notice, LESSEE may not retain credits of LESSOR, since there will be no interruption to this AGREEMENT.

8.4. Renewal of action in the event of LESSOR’s non-compliance with responsibilities. If it is not cured within the term specified in Section 8.3 above, LESSEE shall send a new notice to LESSOR communicating LESSOR about such failure to meet the first notice.

8.5. Maintenance of the contractual responsibilities. For one hundred and twenty (120) days from the receipt by LESSOR of the non-compliance notice as established in Section 8.3 above and until the non-compliance is cured, LESSOR may not, under any event, suspend the service provision or protest any collection document corresponding to the retained installments, under penalty of responding for the losses and damages caused by it.

9. PRICE AND PAYMENT METHOD

9.1. Monthly Lease Price. The Monthly Lease Price is defined in Section 1.

9.2. Payment Methods.

(i) Beginning of effectiveness of payments. LESSEE will pay to LESSOR, on a monthly basis, the Monthly Lease Price during the Lease Term counted from the first day of the month after the Commissioning Date, as established in Annex B.

(ii) First measurement. The first invoice of the Monthly Lease Price will be prepared by LESSOR and will make reference to the proportional price of the current month (the period from the Commissioning Date to the end of the current month). For the subsequent months, it will make reference to the then current month.

(iii) Payment method. LESSEE will pay LESSOR by bank transfer to the current account stated in Annex E, and the proof of deposit or transfer will serve as receipt and proof of payment.

(iv) Payments. LESSEE will pay LESSOR, on a monthly basis, the Monthly Lease Price every twentieth (20th) day of the month (or on the 1st business day after such date) by presenting the invoice and other documents that may be required by LESSEE, such as reports of services included in the Lease, proof of compliance with obligations, among others.

(v) Billing. LESSOR will issue the invoice of the Monthly Lease Price and send it to LESSEE to the address indicated below, up to the tenth (10th) business day of the subsequent month, and maturity will be extended for as many days as the days of delay in issuing the invoice, and no penalty or burden will be applicable to LESSEE in the exclusive event of the invoice being issued at a date later than the referred to date. The PARTIES agree that, if the maturity date falls on weekends, holidays or days on which banks are closed in the city where LESSEE’s principal place of business is located, the maturity date will be automatically postponed to the following business day without any type of burden or penalty.

SENDAS DISTRIBUIDORA S/A. (LOJA 0071 - ASSAÍ Londrina)

Subject: Agreement No. FV-ASS-CLE-0071

Address: Av. Aricanduva, 5.555, Vila Matilde, São Paulo - SP

Phone Number: (11) 3411-5246

CNPJ/MF No.: 06.057.223/0001-71

State Enrollment: 10685373-2

(vi) Invoice rectification. If LESSEE identifies any discrepancies in the tax invoices, invoices and/or the documents submitted by LESSOR, as mentioned in Section 9.2(v) above, in relation to its internal controls, LESSEE will return the documents and the invoice to LESSOR so that the latter may provide for the necessary rectifications and issue a new invoice as a replacement. In this event, the indicated term for payment will be extended for the subsequent month.

(vii) Tax deduction. LESSEE will deduct, from the payment due to LESSOR as a consequence of the performance of the subject matter, the installment related to charges, contributions and taxes for which LESSOR is responsible, the deduction at source of which is mandatory.

9.3. Amendment to Laws and Regulations.

9.3.1. In the event of an amendment to the Laws and Regulations applicable to this AGREEMENT that modifies the term for readjustment to be performed for less than twelve (12) months, the price readjustment will happen within the new term provided for by the Laws and Regulations. If the Laws and Regulations do not state anything regarding periodicity, the readjustment will be made within the term agreed upon between the PARTIES, being applicable on a pro rata temporis basis. If the readjustment index is extinguished, ceases to be published or if its use becomes prohibited and the Laws and Regulations do not designate another index to replace it, the PARTIES will agree, within thirty (30) days counted from the date of the event, upon another index or parameter that appropriately reflects the price variation of the AGREEMENT as the index would do, or as near as possible. If the PARTIES fail to reach an agreement within such term, they will seek an external consultant to better define the periodicity of the adjustment.

9.3.2. The Lease Price of Year n will be proportional and appropriately increased in the event of any amendment to the Laws and Regulations during the term of this AGREEMENT, including, among others, the creation, amendment, or increase of any tax that causes any direct negative impact on the Lease Price of Year n or in the Lease Price of Year 1, and, as a consequence, in the Monthly Lease Price originally agreed upon.

9.4 Costs, Taxes and Expenses. The PARTIES agree that each one of them is responsible for its own costs, expenses and taxes related to the payments established herein, in accordance with the applicable laws.

9.5. Forbearance. If LESSOR fails to collect the notified amounts within the term established above, this fact shall be considered as mere forbearance and not, in any event, a novation or reduction of any debt. The possibility of recovery in the future is then preserved, at the time which best fits LESSOR.

9.6. Payment issues resolution. The PARTIES agree that, in the event of any dispute in relation to any payment provided for herein, LESSEE shall timely pay any amount not subject to dispute pursuant to the provisions of this AGREEMENT. Receipt by LESSOR of any amount will not exempt LESSEE from paying the whole amount under dispute. The PARTIES shall make their best commercial efforts to solve any dispute on an amicable basis within thirty (30) days from receipt of a dispute notice sent by the other PARTY pursuant to Section 15.

9.7. Adjustment in the Lease Price of Year n (LPi). The PARTIES agree that the Lease Price of Year n shall be adjusted for inflation on an annual basis by the IGP-M variation (General Market Price Index) disclosed by Getulio Vargas Foundation or by another index that may replace it in the future, always within the shortest periodicity permitted by law, calculated according to Annex C.

9.7.1. Annual regularization of the Lease Price of Year n (LPi). The PARTIES agree that the Lease Price of Year n will be subject to a Rent Adjustment, which will be calculated each year in order to take into consideration the plant availability according to Annexes C and D.

9.8. Limitation to the enjoyment of bonds. LESSOR may not issue negotiable instruments and/or protest notes receivable from LESSEE.

9.9. Payment delay by LESSEE. Failure to make any payment within the term established herein, except for the provisions of Sections 9.2(v) and 9.2(vi), will subject LESSEE to payment of a non-compensatory fine of [***]%of the principal, plus interest for late payment of [***]%per month, pro rata die. There will be no other penalty or payment due as a result of a delay in paying the invoice.

10. REAL ESTATE PROPERTY TRANSFER

10.1. Real Estate Property Transfer. If LESSEE intends to transfer the ownership or possession of the Real Estate Property (including, among others, through sale, lease and surface interest) where the Establishment is located (“Transfer”) to a third party (including, among others, an Affiliate) (“Acquirer”), LESSEE undertakes to practice one of the following acts before LESSOR upon performing the Transfer under the condition that the Acquirer shall assume all rights and obligations of LESSEE under the same terms of this AGREEMENT. LESSEE will provide LESSOR with Acquirer’s detailed financial balance and the list of all transferred assets, so LESSEE undertakes to expressly state in the instrument formalizing the Transfer that:

(a) concurrent with the execution of the instrument formalizing the Transfer, Acquirer shall execute the instrument of assignment of the contractual position of this AGREEMENT, which shall remain in force under its same terms and conditions; and

(b) Acquirer will comply with any LESSEE’s obligation pending compliance on the date of Transfer, including, among others, the payment of any amounts due by LESSEE to LESSOR and the remaining monthly payments corresponding to the Monthly Lease Price, as well as indemnification for termination which have not been paid.

10.2. If the Real Estate Property is transferred, but (i) the Acquirer refuses to assume the obligations established in Section 10.1 above, or (ii) LESSOR considers that the Acquirer is not financially reliable in order to assume LESSEE’s contractual position, LESSEE undertakes to terminate the AGREEMENT early, as provided for in Section 11.1(ii)(d), and, as a consequence, make all payments and adopt all necessary measures established in Section 11.

11. TERMINATION OF THE LEASE

11.1. Events of Early Termination: This AGREEMENT is entered into on an irrevocable basis and may be terminated before the end of the Lease Term under the following circumstances and upon notice:

(i) Early Termination by LESSOR. LESSOR may early terminate this AGREEMENT by means of notice sent to LESSEE pursuant to Section 14 of this AGREEMENT, in the following events:

(a) In the event of LESSEE’s adjudication of bankruptcy, request for court-supervised or out-of-court reorganization, dissolution or winding up;

(b) In the event of default of the obligations provided for herein or in the O&M Agreement on the part of LESSEE and not cured within sixty (60) days from the receipt, by LESSEE, of the notice sent by LESSOR; and

(c) Due to Acts of God or Force Majeure, pursuant to Section 17.8 below, that renders unfeasible, on a permanent basis, the performance of the AGREEMENT by LESSOR.

(ii) Early Termination by LESSEE. LESSEE may terminate this AGREEMENT early by means of a notice sent to LESSOR pursuant to this AGREEMENT (Section 15) in the following events:

(a) In the event of LESSOR’s adjudication of bankruptcy, request for court-supervised or out-of-court reorganization, dissolution or winding up;

(b) In the event of default of the obligations provided for herein or in the O&M Agreement on the part of LESSOR and not cured within one hundred and twenty (120) days provided for in Section 8.3. After which, the PARTIES must meet within ten (10) business days to enter into a mutual agreement for resolution of the default identified by LESSEE. If the PARTIES fail to reach an agreement, LESSEE may terminate the AGREEMENT early; and

(c) Due to Acts of God or Force Majeure, pursuant to Section 17.8 below, that renders unfeasible, on a permanent basis, LESSOR’s compliance with this AGREEMENT; and

(d) In the event provided for in Section 10.2, upon notice sent to LESSOR one hundred and eighty (180) days in advance of the date on which LESSEE intends to terminate this AGREEMENT.

11.2. The PARTIES agree that this AGREEMENT will remain in force regardless of LESSEE and/or any of its direct or indirect affiliates, subsidiaries or controlling companies being subject to change of controlling interest or any merger, consolidation, spin-off, transformation or another corporate restructuring.

11.3 Payment of indemnification for termination. In the event of early termination pursuant to Sections 11.1(i)(b) and 11.1(ii)(d) above, and in view of the provisions of Recital 8, LESSEE must pay the Early Termination Fee.

12. CONSEQUENCES OF EARLY TERMINATION ON THE PHOTOVOLTAIC SYSTEM.

12.1. Equipment demobilization. In the event of early termination pursuant to Sections 11.1(i)(b) (default by LESSEE), 11.1(ii)(b) (default by LESSOR) or 11.1(ii)(d) (transfer of Real Estate Property), after payment of the Early Termination Fee by LESSEE pursuant to Section 11 above, the PARTIES will negotiate the removal of the Equipment from the Establishment.

12.2. Event of delivery of the shop by LESSEE. In the event of delivery of the shop by LESSEE, the term for removal of the Equipment shall follow the demobilization schedule of the shop, and such demobilization will be performed at LESSOR’s cost.

13. EXEMPTION OF LIABILITY.

13.1. For clarification purposes, it is hereby declared that, in any event of termination of this AGREEMENT pursuant to Sections 11.1(i)(a), 11.1(i)(c), 11.1(ii)(a) and 11.1 (ii)(c), none of the PARTIES will be subject to payment of any fine or penalty to the other PARTY.

14. NOTICES

14.1. Notice. For any notice between the PARTIES to be valid, it shall be sent through the corresponding interlocutors to the commercial addresses indicated below, unless the PARTY provides a new address at least five (5) days before the date of change of address:

LESSOR:

Attn.: Pierre-Yves Mourgue

Email: [***]

Address: Rua Capitão Pinto Ferreira, 187, Jardim Paulista, São Paulo - SP

LESSEE:

Attn.: Fernando Martinez Basílio

Email: [***]

Address: Av. Aricanduva, 5.555, Vila Matilde, São Paulo - SP

14.2. Receipt of the notice. Notices will be deemed received: (i) on the business day following receipt, in the event of delivery in person; (ii) on the business day following receipt by certified mail or similar service, with notice of receipt; and/or (iii) on the subsequent business day, if sent by facsimile or e-mail, provided that the receiving device issues a receipt confirmation to the sending device or that there are other satisfactory means of proof that the message has been received.

14.3. Conditions for communication. In order for them to be effective, all communications, authorizations, requests, notices, challenges, consents, approvals, delegations or information exchanged between the PARTIES within the scope of this AGREEMENT shall be made in writing, with proof of receipt by the other PARTY.

14.4. Change of interlocutor. The PARTIES undertake to communicate any change of interlocutor to the other PARTY.

14.5. Communications and approvals - Lease. The interlocutors of the PARTIES are duly authorized to bind each of the PARTIES in relation to the decision they make regarding the performance of this AGREEMENT. The interlocutors will be the following people:

●

LESSOR: [***]

●

LESSEE: [***]

15. EXCLUSIVITY

15.1. Exclusivity granted to LESSOR for the implementation of the PV System. While this AGREEMENT remains in force, LESSEE will abstain from entering into any similar agreements or other equivalent agreements in relation to the Establishment with any other company other than LESSOR or one of its Affiliates.

16. REPRESENTATIONS AND WARRANTIES.

16.1. LESSOR’s Representations and Warranties. LESSOR hereby represents and warrants to LESSEE that:

(i) It is a duly organized and validly existing company, and it has the legal authority to possess its assets and properties and conduct its businesses;

(ii) It has the unrestricted capacity, powers and authorizations to execute this AGREEMENT and comply with the obligations herein established, as well as to consummate the operations contained herein.

(iii) It performs its activities in full compliance with the laws in force and has all approvals, licenses, permits and/or authorizations necessary for such;

(iv) It adopts the actions necessary for the preservation of the environment, exercising the activities on a sustainable basis and abiding by all applicable environmental standards at federal, state or municipal levels;

(v) It strictly complies with the Brazilian Child and Adolescent Statute (Law No. 8069/90) and other prevailing legal and/or regulatory standards, and it does not employ child labor, or persons younger than 18 years old, including minor apprentices, in places that are harmful to their growth, physical, psychic, moral and social development, as well as in places and services that are dangerous or hazardous, during times that do not allow them to attend school and, also, at night (between 10 pm and 5 am), and does not maintain a business agreement or any other agreement with any companies that use, explore or employ child labor or people younger than 18 years old in breach of the law;

(vi) It does not and will not explore any form of degrading work or work similar to slavery, in compliance with the Universal Declaration of Human Rights, as well as Conventions No. 29 and 105 of the International Labor Organization (ILO), the ILO Declaration on Fundamental Principles and Rights at Work, and the American Convention on Human Rights;

(vii) It does not use discriminatory practices restraining the access to the employment relationship or the maintenance thereof, as a result of gender, origin, race, skin color, physical condition, religion, marital status, family status, or any other condition;

(viii) Its working environment does not pose risks to employees’ physical integrity or health, constantly applying practices aiming at reducing accidents and improving its employees’ labor conditions. In its working environment, employees have access to drinking water, clean toilets in an appropriate number, appropriate ventilation, emergency exits, appropriate lighting and safety conditions; and

(ix) It does not hire third parties that do not exercise their activities in compliance with the practices mentioned above.

(x) LESSOR warrants that it has an appropriate personal data protection policy in place, compatible with all the applicable laws and LESSEE’s needs, including, among others, the adoption of the appropriate administrative, technical and physical safeguards to protect the personal data against: reasonably anticipated threats or risks to privacy, integrity and/or confidentiality of personal data; accidental or illicit destruction or loss of, amendment or disclosure or unauthorized access to personal data (including, among others, when the treatment involves the transfer of the personal data through a network); all the other illegal forms of treatment of personal data; safety or privacy incidents.

In compliance with the principle of contractual good faith, LESSOR warrants that it will not, directly or indirectly, offer, give, make, promise, pay or authorize payment, in cash, gifts of any kind or anything of value, in kind or not, resulting from this AGREEMENT, to a national or foreign government official and/or his/her advisors, acting on a transitory basis and/or without compensation, at any level or instance, as well as political parties, regulatory agencies, diplomatic representations, quasi-governmental entities, government-owned or controlled companies, or employee of any public or private international organization. Every possible interaction of any nature with any of the agents mentioned above must occur only under the terms of this AGREEMENT, always with the previous and express consent of LESSEE, under penalty of the applicable legal and contractual penalties. Any information related to this section may be communicated by LESSOR to LESSEE through its ombudsman channel, number 0800 55 5711 or e-mail ligação@gpabr.com.

16.2. PARTIES’ Representations and Warranties. This AGREEMENT was executed in accordance with the contractual good-faith principle, with no defect of consent. Thus, the PARTIES represent, for all legal effects and purposes, that: (i) they had previous knowledge of the contents of this instrument and perfectly understood all obligations and risks included herein; (ii) they agree with all terms and conditions of this Instrument; (iii) they are duly represented pursuant to its respective organizational documents and have the authorizations, powers and capacity to assume the obligations provided for in this AGREEMENT; and (iv) the obligations assumed herein are not in conflict with other obligations previously assumed by them in other private or public instruments, or arising from court and/or administrative order or notice.

17. MISCELLANEOUS

17.1. Entire Agreement. The AGREEMENT expresses the entire agreement between the PARTIES in relation to its Subject Matter.

17.2. Amendments. Any changes to the AGREEMENT, whether material or not, shall be subject to an amendment duly executed by both PARTIES.

17.3. Prevalence and priority. In the event of contradiction, it is hereby expressly agreed upon that the AGREEMENT and/or its occasional future amendments will prevail over its Annexes.

17.4. Limitation of Liability. LESSOR will be rendered liable for direct damages, with the exclusion of indirect damages, suffered by LESSEE due to LESSOR’s violation of any of its contractual obligations. The limitation of liability will be [***]% of the Lease Price of Year n.

17.5. Change to Control. This AGREEMENT will be kept in force if LESSEE and/or any of its direct or indirect affiliates, subsidiaries or controlling companies are subject to changes of controlling interest or any merger, consolidation, spin-off, transformation or another corporate restructuring.

17.6. Assignment to an Affiliate. The PARTIES may assign all or a part of their rights and obligations to an Affiliate upon communication to the other PARTY.

17.7. Assignment of this AGREEMENT. LESSOR may assign to third parties any current or future credit rights resulting from the Rent Amount under its title, including to investment funds and financial institutions, upon communication to LESSEE. LESSEE may not assign any rights and/or obligations of this Agreement without the previous written consent by LESSOR.

17.8. Act of God or Force Majeure. Act of God or Force Majeure, strictly pursuant to section 393 and its sole paragraph of the Brazilian Civil Code, is any event or circumstance that adversely and materially affects any of the PARTIES and that simultaneously meets the following criteria:

(i) Its occurrence is beyond the affected PARTY’s control;

(ii) The affected PARTY is not directly or indirectly responsible for its occurrence;

(iii) The acts of the affected PARTY, although diligent and in due time, were not sufficient to prevent or minimize the effects of the occurrence of Act of God or Force Majeure; and

(iv) Its occurrence directly affects or prevents compliance, by the affected PARTY, with one or more obligations set forth in this AGREEMENT.

17.8.1. Non-affected Obligations. No Act of God or Force Majeure will exempt the PARTIES from any of their obligations due previous to the occurrence of the respective event or that have been constituted before it, although required during or after the event of Act of God or Force Majeure.

17.8.2. Effects of this AGREEMENT. Upon the occurrence of Acts of God or Force Majeure, the PARTIES, while the effects arising from such event last, will be exempted from complying with the contractual obligations directly affected by the Act of God or Force Majeure, characterized pursuant to this AGREEMENT, as well as exempted from any liability for the failure or delay to comply with the obligations directly attributable to the Act of God or Force Majeure.

17.9. Ownership. The title and all rights on the Subject Matter, such as reports, projects, brands, patents, licenses, designs and technical documentation will belong exclusively to LESSOR or to whomever LESSOR appoints.

17.10. Confidentiality. The PARTIES recognize that the AGREEMENT, any document delivered to them by the other PARTY for the execution and/or performance of the AGREEMENT, as well as every information regarding any of the companies to which they have access due to the execution and/or performance of the AGREEMENT shall be confidential. The PARTIES will keep under secrecy every information of confidential nature and will adopt all measures necessary for their employees, their contractors’ employees and suppliers and any other external agents to know and respect the confidentiality obligation agreed upon herein.

17.10.1. The PARTIES will use the information only to achieve the purposes of this AGREEMENT and will not use it for other purposes without the other PARTY’s previous and express authorization.

17.10.2. Such secrecy obligation is not applicable to information that: (i) was of public domain at the time of its disclosure or obtainment; (ii) becomes of public domain after its disclosure or obtainment, except if by means of violation of this AGREEMENT or tort practiced by the PARTY, its officers, employees or occasional subcontractors; or (iii) is lawfully obtained by the PARTY from third parties, with no violation of this AGREEMENT or of any confidentiality obligations in relation to the other PARTY.

17.10.3. LESSOR shall not use, at whatever title, the corporate name of LESSEE and/or its affiliates, subsidiaries and/or controlling companies, as well as their brands and other distinctive signs without their express authorization.

17.10. 4. LESSOR shall respect third-party rights, such as intellectual property rights, commercial and industry secrets, right to image, right to honor, right to privacy, among others, and LESSOR is individually liable for any violation of such rights.

17.10.5. Effectiveness of confidentiality. It is hereby expressly stipulated by the PARTIES that this Section will remain effective for a two-(2-) year period after termination of this AGREEMENT.

17.10.6. Applicability of the confidentiality obligation. The confidentiality obligation is not applicable to information that: (i) is under the PARTIES’ possession before the execution of this AGREEMENT, whenever they may evidence that they have obtained it by themselves or through third parties not related to the other PARTY; (ii) is or become known to the public during the performance of this AGREEMENT not due to an action or omission of any of the PARTIES and/or contracted employees (including employees and contractors); and (iii) is required by a public agency or court order within proceedings filed by it. The requested PARTY shall immediately inform the other PARTY about such requirement, so that the latter may adopt the measures to reverse the order or, if it is not possible, the receiving PARTY shall provide only a minimal portion as necessary for compliance with the requirement.

17.11. Dispute Resolution. In the event of any dispute or conflict related to the validity, performance, construction or enforcement of this AGREEMENT or of any of its provisions that may not be resolved on an amicable basis by the PARTIES within thirty (30) days (except for another term agreed upon between the PARTIES), the PARTIES will submit the dispute to the jurisdiction of the Judicial District of the Capital City of the State of São Paulo to settle occasional doubts arising from this AGREEMENT, with the exclusion of any other, however privileged it may be. This AGREEMENT shall be governed by the laws of the Federative Republic of Brazil.

17.12. Validity of the sections of this AGREEMENT. If any of the sections of this AGREEMENT is deemed null, subject to annulment or ineffective by any Laws and Regulations, it shall be deemed as it had not been written and, to the extent legally possible, replaced with another provision agreed upon between the PARTIES. The other contractual provisions not affected by the legal prohibition shall remain in full force and effect.

In witness whereof, the PARTIES execute this AGREEMENT in two (2) counterparts of equal form and content in the presence of the two (2) witnesses subscribed below, so that it may produce its legal effects.

São Paulo, April 29, 2019.

BY LESSEE:

(sgd)	(sgd)
Name: Belmiro Gomes	Name: Pierre-Yves Mourgue
Title: General Officer - Assaí Atacadista	Title: Chief Executive Officer

BY LESSOR:

(sgd)

Name: Anderson Barres Castilho

Title: Chief Operating Officer - Assaí Atacadista

WITNESSES:

(sgd)	(sgd)
Name: Noemie Gogol	Name: Lucas Attademo
Identity Card (RG) and Individual Taxpayer ID (CPF): 237847558-60	Identity Card (RG) and Individual Taxpayer ID (CPF): 107 946 217 16
	Operations

Exhibit 4.14

Schedule of Omitted Photovoltaic Equipment Lease Agreements

As these agreements are identical in every case except for reference number, description of equipment and pricing information, we have, for ease of reference, filed only one standard agreement and provided this schedule to indicate the agreements that we have omitted from filing as exhibits to this registration statement on Form 20-F.

Photovoltaic Equipment Lease Agreement (FV-ASS-CLE-0070), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda.

Photovoltaic Equipment Lease Agreement (FV-ASS-CLE-0082), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda.

Photovoltaic Equipment Lease Agreement (FV-ASS-CLE-0084), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda.

Photovoltaic Equipment Lease Agreement (FV-ASS-CLE-0111), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda.

Photovoltaic Equipment Lease Agreement (FV-ASS-CLE-0131), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda.

Photovoltaic Equipment Lease Agreement (FV-ASS-CLE-0133), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda.

Photovoltaic Equipment Lease Agreement (FV-ASS-CLE-0135), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda.

Exhibit 4.15

Free translation

OPERATION AND MAINTENANCE SERVICE AGREEMENT (O&M)

FV-ASS-COM-0071

SENDAS DISTRIBUIDORA S.A.

AND

GREENYELLOW DO BRASIL ENERGIA E SERVIÇOS LTDA.

São Paulo, April 29, 2019

By and between:

I. GreenYellow do Brasil Energia e Serviços Ltda., a limited liability company with its principal place of business at Rua Capitão Pinto Ferreira, 187, Jardim Paulista, in the City of São Paulo, 01423-020, State of São Paulo, registered with the National Corporate Taxpayer’s Register of the Ministry of Finance (CNPJ/MF) under No. 20.993.615/0001-73, hereinafter referred to as “SERVICE PROVIDER” or “GY BRASIL”

and

II. Sendas Distribuidora S.A., a closely held corporation with its principal place of business at Rua João Antônio Sendas, 286 – parte, City of São João de Meriti, State of Rio de Janeiro, registered with the CNPJ/MF under No. 06.057.223/0001 -71. hereinafter referred to as “CLIENT” or “ASSAÍ”.

GY BRASIL and CLIENT hereinafter referred to individually as “PARTY” and collectively as “PARTIES”.

WHEREAS:

1. The CLIENT is interested in increasing the predictability and control over the electricity costs of the ASSAÍ Londrina Establishment in Londrina - State of Paraná.

2. GY BRASIL, a member of the Casino Group, is aware of the importance of efficient electricity use and develops solutions and installations with the aim of reducing, optimizing and monitoring the electricity consumption of commercial and logistical properties. The solution for distributed micro and mini-generation systems of photovoltaic electricity (“PV System”) allows for predictability and better management of the Establishment’s energy cost.

3. GY BRASIL is a company specialized in the development of PV Systems, installation and lease of Equipment and in the implementation of other solutions in order to reduce, optimize and monitor the electricity consumption of commercial properties, having for these projects specialized people and materials, as well as all the licenses necessary for its activities, being properly organized and trained under the current legislation for the provision of photovoltaic services.

4. GY BRASIL, before the date of execution of this AGREEMENT and during the so-called “Study Phase”, presented to the CLIENT a project involving the PV Systems that GY BRASIL could implement in the Establishment. Photovoltaic systems are implemented based on current legislation, notably, ANEEL active Resolution No. 482. of April 17, 2012, as amended by Normative Resolution No. 687, of November 24, 2015 (“ANEEL Resolution”).

5. The PV Systems subject matter of this AGREEMENT were designed by GY BRASIL: (i) the purpose of being implemented in the CLIENT’s Establishment, under the terms of the Lease Agreement (defined in the item below); and (ii) taking into account the CLIENT’s electricity power juice, as well as peculiarities of the use of electric energy in the CLIENT’s installations.

6. The PARTIES have decided to enter into this O&M Agreement, which defines the terms and conditions under which GY BRASIL shall operate and maintain for the CLIENT the Equipment forming part of the PV System that will be installed in the Establishment.

7. On this date, the PARTIES have entered into an Equipment Lease Agreement (hereinafter referred to as the “Lease Agreement”) to establish the terms and conditions under which GY BRASIL shall rent and install the Equipment necessary for the operation of the PV System for use in the Establishment for the benefit of the CLIENT.

8. They are part of this O&M Agreement. after signed and initialed by the PARTIES the following annexes:

Annex A: Description of the Equipment

Annex B: Technical Commissioning Procedure

Annex C: O&M Description

Annex D: Actual Electricity Availability

Annex E: Checking Account of GY BRASIL

Annex F: Annual Performance Evaluation

9. This O&M Agreement revokes and replaces any verbal contracts, written proposals and/or preexisting agreements with the same Subject Matter in relation exclusively to the Establishment, prevailing over them, which can be modified only by an amendment signed by the PARTIES and by two (2) witnesses. This O&M Agreement shall not be interpreted as creating an association, consortium or company the PARTIES or imposing any obligation or corporate responsibility on any PARTIES.

NOW, THEREFORE, THE PARTIES RESOLVE, by mutual agreement, to enter into this Operation and Maintenance Service Agreement - O&M (“O&M Agreement”). which shall be governed according to the following sections and conditions:

1. DEFINITIONS AND ANNEXES TO THE O&M AGREEMENT

1.1. For the purposes of this O&M Agreement, unless expressly provided otherwise or unless the context requires otherwise, the following terms used in this O&M Agreement will have the following meanings:

“Acquirer” is a third party, or Affiliate, that purchases the Equipment, pursuant to Section 14.

“Affiliate” is any company controlled, directly or indirectly, by the economic group they belong to and which has a corporate purpose compatible with the fulfillment of the obligations defined in this O&M Agreement. It also means, with respect to any person, the person who, directly or indirectly, through one or more intermediaries, control, or controlled by, or shares common control with that person. For the purposes of this definition, control shall be understood as: (i) the ownership, direct or indirect, of more than fifty percent (50%) of the capital stock or being the holder of rights that permanently assures the majority of votes in the deliberations of the general meeting and the power to elect the majority of the company’s administrators: or (ii) the power to direct or cause third parties to direct the company’s management and management policies, through the ownership of voting, agreements or any other form.

“Service Adjustment” or ”AMS” is the adjustment of the annual Service Amount in Year n (SAn) that will be calculated at the end of the month following each Photovoltaic System Commissioning anniversary date of year “n”, this time allowing the calculation of the Actual Electricity Availability for year “n”. This will be done in order to take into account the Performance Level of the “n” of the Photovoltaic System. The details of the calculation of the Service Adjustment amount are described in Section 13 below.

“Year 1” is the year arising from the date of April 30, 2019, date of execution this Agreement.

“Monthly Measurement Report” is the monthly report presented by GY BRASIL to the CLIENT showing the generated electricity, the PV Plant Actual Availability and the performance.

“Nominal Capacity” or ”P0” is the peak installed capacity of the Photovoltaic System (in kilowatt peak (kWp)).

“O&M Agreement” means hereinafter the Operation and Maintenance Service Agreement - O&M and its Annexes.

“Lease Agreement” means the Equipment Lease Agreement FV-ASS-CLE-0084 (and its Annexes) entered into between the PARTIES to establish the terms and conditions under which GY BRASIL shall rent and install the Equipment comprising the PV System for use in the Establishment for the benefit of the CLIENT.

“Commissioning Date” is the date on which the Photovoltaic System was commissioned by GY BRASIL, in Annex B. In other words, it corresponds to the date on which the Photovoltaic System starts to generate electricity to be used by the Establishment, as a result of the connection between the Equipment and the public utility electric system.

“PV Plant Actual Availability” or “AVAILn” is the Actual Electricity Availability of the PV plant calculated according to Annex D in percentage (%).

“Technical Electricity Availability” is the value of the guaranteed availability of the plant fixed at ninety-eight percent (98%).

“Calculated Generated Electricity Including Annual Degradation n” or “GEn” is the generated electricity included degradation in megawatt hour (MWh) calculated by simulation in the PVSyst program in version 6.44 or higher for each year n using the actual irradiation and the measured ambient temperature by the weather station. In case of failure of the local weather station, satellite irradiation data will be used.

“Actual Generated Electricity in Year n” or “GEactual,nD” is the real generated electricity during the time of availability in year n, found on the meter at the end of the measurement period and expressed in kilowatt hours (kWh), see Annex F.

“Electricity Generated During Downtime in Year n” or “GEactual,nI” is the real generated electricity during downtime in year n, found on the meter at the end of the measurement period and expressed in kilowatt hour (kWh), see Annex D.

“Equipment” is the set of components that form the PV System and identified; Annex A leased to the CLIENT under the terms of the Lease Agreement.

“Collective Protective Equipment” or “CPE” is any device or system of a collective scope, intended to preserve the physical integrity and health of workers, as well as that of third parties.

“Personal Protective Equipment” or “PPE” is any device or product, for individual use used by the worker, intended to protect against risks capable of threatening their safety and health.

“Establishment” is the subsidiary of the CLIENT registered with CNPJ/MF under No. 06.057.223/0247-80, located at Avenida Tiradentes, 4650, Quadra 104, Lote 10 Parte 1, Jardim Rosieler, City of Londrina, State of Paraná, where the PV System is installed.

“Study Phase” is the phase in which GY BRASIL carried out the feasibility study comprising a preliminary technical and financial dimensioning of the PV System, presenting the benefits of this for the electricity savings in the Establishment. It aims to demonstrate the expectation of the PV System and, during the Term of Effectiveness, generate a global reduction in the cost of electricity projected in the Establishment, as well as providing greater management and predictability of such electricity costs.

“Operation Phase” is the period that will start on the Commissioning Date and will remain in effect during the Term of Effectiveness.

“Extraordinary Climate Event” is one whose probability of occurrence is very low and which induces a behavior of the PV System that is far from the theoretical model. The criteria for qualifying the Extraordinary Climate Event during the Testing Period are as follows:

(i) Storm/hail: announcement either by a statement by the local official meteorological agency or by the procedure and surveillance issued by the city. In the event of a storm not subject to a surveillance procedure on the part of the city, the wind speed may serve as an objective reference to the two parties that will jointly validate.

(ii) Abnormal rainfall: it must be justified by the collection of meteorological data attesting to an exceptional event or consequences (floods...).

“Simulation Tool” is the PVSyst program in version 6.44 or higher.

“Actual Power Generation of the Year n” or “GEactual,n” is the real electricity produced during the Technical availability period and measured by the photovoltaic plant (PV) meter system (in kilowatt hours (kWh)).

“Theoretical Electricity Generation of Year n” or “GEtheo,n” is the theoretical electricity generation in year n expressed in kilowatt hours (kWh), see in Annex F.

“Incident” is any event that affects the capacity of the photovoltaic plant (PV) (or any part thereof) to produce and deliver electricity.

“Accidental Unavailability Incident” is any event that affects the capacity of the photovoltaic plant (PV) or any part thereof to produce and deliver electricity.

“Consumer Price Index for the Year n” or “IPCAn” is determined on the anniversary date of year n, released by the Brazilian Institute of Geography and Statistics or by the index that replaces it, always in the shortest period permitted by law.

“Consumer Price Index for the Year 0” or “IPCA0” is determined on the Commissioning Date, released by the Brazilian Institute of Geography and Statistics or by the index that replaces it, always at the lowest frequency allowed by law.

“Real Estate Property” is the real estate property where the Establishment is located.

“Irradiation” or “Ir” is the standard solar irradiation (reference value: 1 kW/m2).

“Total Solar Irradiation” or “Gi” is the total solar irradiation for the Technical Downtime Period measured by the average of the pyranometer installed on the same inclination plane of the module and calculated by the computerized monitoring system (in kilowatt hours per square meter (kWh/m2)).

“Laws and Regulations” are the Brazilian laws and regulations of legal entities that serve as the basis for this O&M Agreement.

“Service Amount in Year n” or “SAn” is the annual amount to be paid for performing the Service (O&M) as of the Commissioning Date and during the year n expressed in Brazilian reais per year (BRL/year).

“Monthly Service Amount” or “MSAn,i” is the Service Amount in Year n (SAn) divided by 12, referring to the 12 monthly payments of year n. to be paid for performing the Service. Being i variable from 1 to 12. Expressed in Brazilian reais per month (BRL/month).

“Service Amount in Year 1” or “MS1” is the amount to be paid for the first year after the Commissioning Date. The value of MS1 is [***] (BRL[***]).

“Performance Level of Year n” or “NDn” is given by the ratio between the measurement of Actual Power Generation of the Year n (GEactual,n) and Theoretical Electricity Generation of Year n (GEtheo,n), including the degradation of modules, given in percentage (%).

Operation and Maintenance” or “O&M” is the set of responsibilities and actions related to the operation and maintenance of the PV System during the Term of Effectiveness of the O&M Agreement.

“Subject Matter” is the object, subject, reason for which this O&M Agreement is signed between the PARTIES.

“Production Losses During Technical Downtime” or “Losstu” is the difference between the electricity production, which in theory should have been produced during the Technical Downtime Period (Eth) and the Electricity Production produced and measured in the Photovoltaic system by the measurement system (GEactualn) during the Availability Period (in kilowatt hour (kWh)).

“Availability Period” means the period of twelve (12) successive months of operation of the PV System since the Commissioning Date.

“Accidental Downtime” has its meaning set out in Annex D.

“Technical Downtime Period” means any period of twelve (12) consecutive months of operation of the PV System during which no electricity was generated, since and the Commissioning Date or for another twelve (12) consecutive months.

“Performance Ratio” or ”PR” is the quotient between actual and theoretical production.

“Reference Performance Ratio” or “PRr” is calculated over the period of thirty total days, with the 30 closest days before the beginning of the Technical Downtime Period, which is not affected by the Technical Downtime Period and/or Accidental Downtime.

“Theoretical Electricity Production During Downtime” or “Eth” is the electricity that should, in theory, have been produced during the Technical Downtime Period (in kilowatt hour (kWh)), as calculated in Annex D.

“Term of Effectiveness” is the period in which the CLIENT must pay monthly the Monthly Service Amount to BRASIL.

“Production at the Beginning of Measurement in Year n” or “PBn” is the electricity production marked on the meter at the initial moment of the actual Generated Electricity will not take into account the consumption of auxiliaries during periods of lack of irradiation, particularly at night, in order to retain only the effective production of the PV System.

“Production at the End of Measurement in Year n” or “PEn” is the electricity production marked on the meter at the final moment of measurement and expressed in kilowatt hour (kWh).

“PV System” or “Photovoltaic System” means the micro and mini generation system equipped with photovoltaic electricity designed by GY Brasil for installation in the Establishment through the use of the Equipment, which will be leased under the terms of the Lease Agreement.

“SELIC rate” is the rate calculated by the weighted and adjusted average of financial operations for one day, backed by federal public securities and processed in the Special System for Settlement and Custody - SELIC, expressed as a percentage per annum of two hundred and fifty-two (252) business days, calculated and disclosed by the Central Bank’s Information System.

“Total Rate1” is the total amount, TE + TUSD off-peak, without any extras. ICMS (State Goods and Services Tax) and PIS/COFINS (Social Integration Program/Social Security Financing Contribution) included, of the electricity purchased by the Establishment on the Commissioning Date.

On the date of signing this Agreement, the Total Rate1 is set at an amount of [***]of BRL/kWh (BRL[***]/kWh).

If the Commissioning Date does not occur between the date of signing the Agreement and the date of the revision of ANEEL CONFIRMATORY RESOLUTION for the Establishment’s Electricity Concessionaire, this tariff may be updated on the Commissioning Date based on the current review of ANEEL’S HOMOLOGATORY RESOLUTION 1 and will also imply a review of contractual amounts in order to maintain the discount for Year I of the Agreement.

“Lease Price of Year n” or “LAn” is the annual amount to be paid for the Rent as of the Commissioning Date and during year n expressed in BRL/year.

“Monthly Lease Price” or “LAi,n” is the Lease Price of Year n divided by 12, referring to the 12 monthly payments of year n, to be paid for the Rent. Being i variable from 1 to 12. Expressed in BRL/month.

“Lease Price of Year 1” or “LP1” is the amount to be paid for the first year from the Commissioning Date. The amount of LP1 is [***] reais and [***]cents (BRL[***]).

2. SUBJECT MATTER AND PURPOSE OF THE O&M AGREEMENT

2.1. Subject Matter. The subject matter of this O&M Agreement is the provision of specialized services for the operation and maintenance of the Equipment that is part of the 217.6 kWp voltaic System installed on the Establishment’s roof.

2.2. Establishment. The Subject Matter will be executed at the Establishment, which corresponds to the CLIENT’s subsidiary registered with the CNPJ/MF under No. 06.057.223/0247-80, located at Avenida Tiradentes, 4650, Quadra 104, Lote 104-1, Parte 1, Jardim Rosicler, City of Londrina, State of Paraná.

2.3. Purpose. The PARTIES agree that the purpose of providing specialized services for the operation and maintenance of the equipment included in the PV Systems is to operationalize and implement the mini-generation of photovoltaic electricity distributed in the Establishment.

2.4. Preparation for the execution of this O&M Agreement. The PARTIES agree that the execution of this O&M Agreement was preceded by the Study Phase mentioned in the preamble of this O&M Agreement and which included the carrying out of studies by GY BRASIL, which even borne the respective costs.

3. TERM OF EFFECTIVENESS

3.1. Term of Effectiveness of the AGREEMENT and Term of Service. The PARTIES agree that the AGREEMENT will be effective from the date of its signature, with the Term of Service being effective for twenty-five (25) years from the Commissioning Date, as defined in the Technical Commissioning Procedure contained in Annex B.

3.2. AGREEMENT Renewal. At the end of the Term of Service, the AGREEMENT may be renewed for subsequent annual periods, at the discretion of the PARTIES, by means of a contractual amendment.

4. RESPONSIBILITIES OF GY BRASIL

4.1. Enforcement of Subject Matter. GY BRASIL shall execute the Subject Matter in the form, term and quality provided for in this O&M Agreement.

4.2. Performance warranty. GY BRASIL shall guarantee, during the Term of Effectiveness of this O&M Agreement, the performance of the Photovoltaic System, as described in the technical performance evaluation report Annex F.

4.3. Obtaining and maintaining licenses. GY BRASIL must obtain, maintain and comply, or cause them to be obtained, maintained and complied, at its exclusive expense, all; the licenses, approvals, authorizations, records and other similar instruments necessary for the execution of the Subject Matter.

4,4. Redress of Subject Matter. GY BRASIL will redress, at its expense, the executed Subject Matter that is in disagreement with this O&M Agreement or that has defects.

4.5. Damage to the CLIENT and third parties. GY BRASIL must execute the Subject Matter at its own risk. GY BRASIL will be liable for damages of any nature resulting from the Services provided, by itself and its professionals and subcontractors, provided that the fault of GY BRASIL or its subcontractors is proven, exempting the CLIENT from any onus, fines, infractions and/or charges arising thereof.

4.6. Call of GY BRASIL by the CLIENT. GY BRASIL must present itself, whenever called by the CLIENT, for meetings scheduled at least ten (10) days in advance, so that no meeting or service can be given or suspended due to the absence or delay of GY BRASIL, and it is incumbent upon it to bear the result from failure to meet the call.

4.7. Responsibility of GY BRASIL. GY BRASIL, made payments, will not be the one of its responsibilities and/or obligations, nor will it imply approval, total or partial, obligations arising from this O&M Agreement.

4.8. Guaranteed discount. GY BRASIL guarantees that the sum of the Lease Price of Year s for Photovoltaic Systems set out in the Lease Agreement and the Service Amount of I of this O&M Agreement will correspond to [***]percent ([***]%) of consumption in the electricity considering the electricity tariff on the Commissioning Date of the PV System as defined in 1 and in Annex C of the Lease Agreement.

4.9. Compliance with regulation. GY BRASIL commits itself in all the steps necessary for the execution of the Subject Matter of this O&M Agreement:

(i) To meet all applicable legal requirements, including compliance with LAWS AND REGULATIONS, as well as follow all orders and decrees issued by bodies that have any jurisdiction or authority with respect to the Subject Matter of this O&M Agreement, being responsible for submitting their eventual subcontractors to the above laws and regulations, as well as this O&M Agreement.

(ii) To obtain and maintain valid all authorizations and permissions necessary to fulfill the Subject Matter in all its stages.

(iii) To respect the rights of third parties, such as intellectual property rights, trade and industrial secrets, right to image, right to honor, right to privacy, among others, etc., GY BRASIL being solely responsible for any violation of such rights.

4.9.1. GY BRASIL may at any time be requested by the CLIENT to provide supporting documentation and evidence of compliance with GY BRASIL’s obligations, including compliance with the Laws and Regulations. GY BRASIL undertakes to provide the CLIENT with the requested clarifications, documentation, information and explanations, with all appropriate evidence, and with the required level of accuracy and completeness, within the shortest possible time.

5. RESPONSIBILITY FOR MAINTENANCE OF INSTALLATION

5,1 Responsibility for maintenance. GY BRASIL shall be responsible, solely and exclusively, for the maintenance, repair and replacement of parts of the Equipment whenever necessary, without burden to the CLIENT, if the Equipment contains defects, except when the responsibility for misuse rests with the CLIENT.

5.2. Cleaning and conservation of the PV System. GY BRASIL will be exclusively responsible for the cleaning and conservation of the Photovoltaic System and the place where the Subject Matter will be executed or any installations that are temporarily assigned by the CLIENT or made available to GY BRASIL, and must respect the CLIENT rules for access and maintenance such facilities.

5.3. Obligation to replace labor. GY BRASIL shall replace, within ten (10) consecutive days, its employees in case of absence or inconvenience, as considered by the CLIENT.

5.4. Responsibility for employees and appropriate materials. GY BRASIL shall use appropriate materials and qualified personnel for the execution of the Subject Matter, having full and exclusive responsibility for fully complying with all competent legislation, including, without limitation, the technical standards applicable to the materials and the legal requirements for qualification and qualification of the employees assigned to the SERVICES.

5.5. Installation changes. GY BRASIL cannot make any changes to the premises of the Establishment without the prior and express consent of the CLIENT.

6. RESPONSIBILITY FOR THE OPERATION OF THE INSTALLATIONS

6.1. GY BRASIL undertakes to include visualization access to the supervisory remote electricity monitoring system for the CLIENT.

6.2. Monthly Measurement Report. GY BRASIL shall deliver the Monthly Measurement Report to the CLIENT for approval by the fifth (5th) day of each month. The content of the Monthly Measurement Report will be defined between the PARTIES at the beginning of the Term of Effectiveness of this O&M Agreement.

6.3. CLIENT’s return on the Monthly Measurement Report. In the event that the CLIENT does not agree with the data contained in a Monthly Measurement Report, it must submit a challenge within five (5) days from receipt, requesting the review of the controversial party.

6.4. Annual monitoring report. GY BRASIL must carry out continuous monitoring and send an annual report on electricity generation and the CLIENT’s theoretical and actual financial gains.

6.5. The O&M Description, Annex C, explains the maintenance and monitoring procedures of the Photovoltaic System.

6.6. Irregularities in the operation of the CLIENT’s equipment. GY BRASIL shall notify the CLIENT of any irregularities or malfunction in equipment and systems of the CLIENT that are under its responsibility and that are affecting the performance of the Subject Matter, within five (5) days after the finding of the irregularity or defect. In the absence of notice within this period, all direct costs arising shall be fully reimbursed by GY BRASIL.

7. RESPONSIBILITY FOR INFORMATION

7.1. Responsibility for the installations. GY BRASIL will also be exclusively responsible, at its expense, for the installation, monitoring, protection, maintenance and licensing of any hardware and software necessary for the correct execution of the Subject Matter. GY BRASIL will be responsible for the equipment of the CLIENT used for the installation of hardware and software for the execution of the Subject Matter.

7.2. Responsibility for the instruction of employees and third parties. GY BRASIL shall instruct its employees and any subcontractors about the risks related to the use of information systems and resources and the policies, rules and procedures related to the CLIENT’s information security available on the website http://www.assai.com.br/sites/default/files/codigo_conduta_assai.pdf.

7.3. Responsibility for authorization. The PARTIES authorize the employees of GY BRASIL, with the consent of the CLIENT to use the CLIENT’s systems and other information resources necessary for the execution of the Subject Matter. GY BRASIL is solely responsible for communicating and requesting the cancellation of access rights of its employees and other persons under its responsibility, directly or indirectly related to the Subject Matter, upon the termination of the link they maintain with these employees and other persons.

7.4. Responsibility for reporting incidents. GY BRASIL will have the responsibility to immediately inform the CLIENT of the occurrence of violation of access passwords used by its employees or other persons under its responsibility. GY BRASIL will be responsible for informing the CLIENT of the improper disclosure of information related to the CLIENT’s business processes or personal information.

7.5. Responsibility for actions. GY BRASIL shall assume, within the limits set forth in this O&M Agreement, full responsibility for the actions and omissions of its employees, suppliers and persons directly or indirectly employed in the Subject Matter. This shall include actions and omissions related to the use of the systems and other information resources of the CLIENT, mainly, but not limited to, the use of application systems, network environments, internet, electronic mail and illegality of the stored content.

7.6. Access restriction. When the Subject Matter is provided on the CLIENT’s premises, GY BRASIL undertakes to observe and ensure that its employees do not have the equipment, access login, electronic means and resources and other means made available by the CLIENT, for purposes other than the services Subject Matter to this O&M Agreement.

7.7. Commitment to the rules of the CLIENT. GY BRASIL expressly declares that it knows and accepts the terms of the CLIENT’s Information Security Policy, submitting itself to all its procedures.

8. RESPONSIBILITY FOR OCCUPATIONAL MEDICINE AND SAFETY

8.1. GY BRASIL undertakes to supply the PPE and CPEs associated with the equipment’s operation and maintenance activities at its expense, when necessary or when requested by the CLIENT.

8.2. Employee documentation. GY BRASIL shall provide the CLIENT before the execution of the Subject Matter with an Occupational Health Certificate (ASO) from its employees and any subcontractors and shall comply with the specific recommendations made by the CLIENT, under penalty of suspension of the Subject Matter.

8.3. Training and qualification. GY BRASIL must train and qualify its employees to execute the Subject Matter, being prohibited the execution of any activity other than those contracted, GY BRASIL is responsible for all safety and prevention against accidents at work and exercising strict vigilance to comply with its determinations.

8.4. Occupational health and safety. GY BRASIL, with regard to health and safety at work, undertakes to, but is not limited to:

(i) Comply with the provisions of NR 35 on working at heights;

(ii) Comply with the provisions of NR 10 on safety in installations and electricity services;

(iii) Take immediate actions to interrupt unsafe practices or activities and correct them in situations that present imminent risks of incidents, damage to property or interruption of the process;

(iv) Providing life and accident insurance to its employees and covering the same of its subcontractors.

9. RESPECT TO THE CLIENT’S CODE OF ETHICS AND CONDUCT

9.1. Remittance of Documents. GY BRASIL shall, whenever necessary, request the CLIENT, in advance and in writing, all the standards, specifications or any other document, necessary to provide the services. No justification for delaying or stopping services or changing costs will be accepted, based on the bread provided by ASSAI with such information.

9.2. Knowledge of the code of ethics. GY BRASIL declares to know and undertakes to observe and ensure that its employees respect the terms provided for in the CLIENT’s Code of Conduct made available at the electronic address: http://www.assai.com.br/sites/default/files/código_conduta_assai.pdf.

9.3. Conveyance of the code of ethics. GY BRASIL undertakes to pass on the terms provided for in the CLIENT’s Code of Conduct to its employees and subcontractors together with a declaration of receipt and commitment to comply with such standards by the employees themselves.

9.4. Proof in accordance with the CLIENT’s Code of Conduct. GY BRASIL must submit to the CLIENT the copy of the statements mentioned in the Section above, duly signed by all its employees involved in the service provision, whenever requested.

9.5. Consequence of non-compliance. In the event of non-compliance with any provision of the CLIENT’s Code of Conduct, the Parties undertake to initiate an investigation to determine the facts, and the CLIENT is now entitled to monitor this investigation, with its participants being the professionals who are executing the Subject Matter of this O&M Agreement.

10. RESPONSIBILITIES FOR EMPLOYEES, SUBCONTRACTORS, AND INDEMNITIES

10,1 Responsibilities and investment. GY BRASIL represents that it has not made any investment of considerable value under this O&M Agreement. It is hereby established that the CLIENT has no liability for debts and obligations incurred by GY BRASIL related or not to this O&M Agreement, the latter or third parties may not use this O&M Agreement or any other justification to claim any indemnities or refunds from the CLIENT.

10.2 Subcontracting and responsibility. GY BRASIL, for the implementation of all or part of the provisions of this O&M Agreement, may subcontract any natural or legal person that wishes to save that GY BRASIL will remain with only 3 responsible to the CLIENT for the correct execution of the O&M Agreement.

10.3 Responsibility for compliance. GY BRASIL will be solely responsible for the fulfillment of all obligations included in the subcontracts, as well as for demanding the fulfillment of all obligations that are under the responsibility of the subcontractors, including, but not limited to confidentiality when applicable, compliance with current legislation and responsibility. Consequently, GY BRASIL will be responsible for all judicial and extrajudicial demands related to the non-compliance of subcontractors and will demand all; the necessary guarantees for the development of the activities they perform. Likewise, GY BRASIL will keep the CLIENT unscathed and free from any claims by subcontractors, ensuring their timely defense. Thus, before the CLIENT, GY BRASIL will be responsible for the acts, errors and omissions of its subcontractors and cannot be excused from complying with the O&M Agreement on such grounds.

10.4. Compliance with norms and rules of the CLIENT. GY BRASIL must ensure that all its employees and any subcontractors, if any: (i) comply with the rules established by the CLIENT for access to its premises, including in relation to their identification, appropriate clothing and (ii) remain only in areas authorized by the CLIENT.

10.5. Subcontractor complaints. GY BRASIL declares to the CLIENT that, if a subcontracted company promotes appointment and/or protest of in which the CLIENT appears as a drawee or sends a document, letter, notice or any form of communication permitted by law to it, requiring payment arising of pecuniary obligation of GY BRASIL, it will promote, as soon as informed of the fact(s) by the CLIENT, the regularization of the matter, either before the notary or directly with the subcontractor, within a maximum period of five (5) business days, fully bearing, including, costs and expenses resulting from such appointment and/or protest.

10.6. Documentation of subcontractors. In addition, GY BRASIL shall require from each subcontractor: (i) insurance policies relevant to the activity performed by the respective subcontractor, covering regularity, quality of activities and general and third party civil liability, as well as: (ii) proof of payment of wages, labor benefits, taxes, and social security contributions, in accordance with the CLIENT’s regulations. GY BRASIL will present to the CLIENT, whenever requested, a copy of the documents mentioned in this Section 10.6.

10.7. Indemnification for losses and damages. GY BRASIL shall be liable for any losses and damages incurred by the CLIENT due to any breach by GY BRASIL of its contractual obligations shall not exceed the amount of [***]% of the Service Amount in Year n, except as provided in Section 10.7.1 below.

10.7.1. Application of the limitation of liability. GY BRASIL agrees the limitation of liability provided for in this Section 10.7 the following assumptions shall not apply: (i) violation, by GY BRASIL of confidentiality, intellectual property obligations or losses and damages arising from claims filed by third parties (including employees of the other party); or, even for the losses and damages originating from intent or serious fault. In the cases described here, GY BRASIL will be fully liable.

10.8. Control over employees and subcontractors. GY BRASIL must present to the CLIENT, whenever requested, within seven (7) days from the notice sent to GY BRASIL, (i) the list of employees and/or subcontractors; as well as (ii copies of the Clearance Certificate by the National Social Security Institute (CND-INSS), the Regularity Certificate of the Severance Pay Fund (CRF-FGTS) and the Clearance Certificate of Labor Debts (CNDT) - labor debts related to employees and subcontractors in relation to services, under penalty of suspension of payment of the Monthly Service Amount until the situation is settled at the discretion of the CLIENT.

10.9. Insurance. In this act, GY BRASIL declares that all its employees and insured against accidents at work and exempts the CLIENT from any liability in relation to the payment of possible indemnities arising from processes involving any accidents or illness/injuries related to the services. GY BRASIL, undertakes to comply with all labor standards related to hygiene, safety and health, especially with regard to the mandatory use of Collective Protective Equipment - CPE and Personal Protective Equipment - PPE of the persons responsible for providing the services included in the Lease Subject Matter of this AGREEMENT.

10.9.1. Insurance coverage. The insurance coverage provided for in this O&M Agreement does not exclude or diminish any of the obligations or responsibilities of GY BRASIL assumed in this O&M Agreement or under the LAWS AND REGULATIONS. GY BRASIL will remain responsible to the CLIENT and third parties for any losses and damages that it causes, even if insured.

10.10 Responsibility of GY BRASIL. GY BRASIL shall be responsible, civilly and criminally, for the acts practiced by its professionals (employees, agents, representatives or contracted/subcontracted professionals) in the execution of the services under this O&M Agreement. GY BRASIL is fully responsible for any and all problems, contracting general liability insurance and employer liability insurance, at its own expense, and presenting its policies, duly accompanied by proof of payment of your premium, as well as endorsements with policy actions or a new policy, if applicable, and your payment receipts in a timely manner.

10.11. No employment relationship with the CLIENT. The PARTIES agree that this O&M Agreement will not create any employment relationship between the CLIENT and the employees and contractors, directly or indirectly, by GY BRASIL, which is solely responsible for all expenses with these employees arising from any labor laws, as well as social security and occupational accident laws.

10.12. Judicial Claims. GY BRASIL undertakes to assume any demands (from public or private agents), labor, regulatory, social security, tax or occupational accidents that are related to the scope of this O&M Agreement, filed against the CLIENT, in a judicial process or administrative or by an extrajudicial appeal of third parties, appearing spontaneously to request their inclusion in the process and the exclusion of the CLIENT or, in the case of an extrajudicial complaint of a third party, informing the third party about the total lack of liability of the CLIENT. If the CLIENT remains in the process, due to his request for exclusion having been denied, he must elect his lawyers for his defense, with GY BRASIL being responsible for all pertinent expenses, such as attorney fees, court costs and convictions, which also will apply in the event of an out-of-court claim by a third party.

10.13. Compliance with current legislation. GY BRASIL shall take the appropriate measures so that the subcontractor is obliged to comply with all applicable obligations arising from this O&M Agreement, such as confidentiality, compliance with all applicable laws, liability, among others, with GY BRASIL being responsible for any default by the subcontractor.

10.14. Labor Obligations. GY BRASIL undertakes to be up to date with any and all charges, contributions and taxes, including those of a social, social and labor nature, and with any and all fees, charges or charges of any nature arising from the celebration and execution of this O&M Agreement and Subject Matter, and must assume and bear any and all complaints or claims by its employees or any subcontractors.

10.15. Reimbursement of expenses. GY BRASIL shall reimburse the CLIENT for all expenses incurred (including, but not limited to. Conviction, fine, penalty, legal costs and costs, attorney fees, contract fees, up to the amount provided in the Table of the Brazilian Bar Association), for legal actions related to the Subject Matter and initiated by its employees and subcontractors against the CLIENT. The refund must be made within seven (7) days of receiving the notice sent by the CLIENT stating these amounts.

10.15.1. Lack of automatic refund. If GY BRASIL does not reimburse the CLIENT spontaneously, the CLIENT may deduct remuneration due to GY BRASIL from the amounts paid referred to in the notice mentioned in the paragraph above. If the amount of the invoice due is not enough to cover the debt, with the balance remaining to be paid, the CLIENT may, at its discretion, discount the next invoices and/or use the judicial system regardless of prior notification or notice.

10.16. Legal claims against the CLIENT. If GY BRASIL does not make the reimbursement pursuant to Section 10.15 above within the established period, the CLIENT may retain part of the payments due to GY BRASIL, as collateral, limited to [***]%of the amount contained in the first sentence degree. Even if there are resources, which may be reduced or increased as a result of process calculations, decision changes or any other procedural incident that justifies, cases provided for in this O&M Agreement in which payments are withheld due to GY BRASIL, it must continue the execution of the Subject Matter, according to the terms and conditions of the O&M Agreement and its Annexes.

10.17. Regularization of payments by the CLIENT. The retained amount must be returned to GY BRASIL by the CLIENT, duly updated by the IPCA or index that replaces it, always in the shortest period permitted by law, as soon as GY BRASIL proves the exclusion of the CLIENT from the dispute, the full compliance with the condemnatory sentence or compliance with an agreement made with the plaintiff/claimant that dismisses the process.

10.18. Limit of legal proceedings violated to the CLIENT. If the pending or judicial or administrative proceedings brought against the CLIENT exceed the number of ten (10) or reach, in any quantity, the amount involved equal to or greater than the monthly amount to be paid by the CLIENT to GY BRASIL, the CLIENT may terminate this AGREEMENT immediately, occasion on which the CLIENT may retain the amounts due to close the aforementioned pending matters, without prejudice to collection, extrajudicial or judicial, if there are, even after this retention, debts, or open obligations.

10.19. Continuity. All obligations under this Section will survive even if GY BRASIL ceases to have a relationship, for any reason, with the CLIENT.

11. CLIENT’S GENERAL RESPONSIBILITIES

11.1. General responsibilities of the CLIENT. The CLIENT undertakes to:

(i) Pay GY BRASIL the compensation for providing O&M services as provided for in this O&M Agreement;

(ii) Allow free access and guarantee availability of the store’s infrastructure to the employees of GY BRASIL and the employees of their representatives and/or subcontractors to the Establishment, mainly to the CLIENT’s premises where GY BRASIL must perform the monitoring and maintenance services of the Equipment and other requests inherent to the proper functioning of the Equipment, under the terms of this O&M Agreement, provided that it is previously scheduled:

(iii) Prevent the intervention of unauthorized personnel in the Equipment;

(iv) Be responsible, in case of proven misuse of the Equipment by the CLIENT, for the compensation of damages and defects generated in the Equipment;

(v) Provide a water point and an electric power point, as agreed between the PARTIES and local standards as close as possible to access to the roof in order to facilitate the cleaning of the Photovoltaic System;

(vii) Provide a specific, covered, restricted-access storage location for storing spare equipment and cleaning the Photovoltaic System. This material will be supplied by GY BRASIL or its subcontractors, except for the inputs described in Section 11.1 (v);

(vii) Supervise, directly or indirectly, the execution of the Subject Matter, and GY BRASIL shall facilitate such inspection, which will not reduce or exempt GY BRASIL from the responsibilities assumed by it in this AGREEMENT;

(viii) Maintain the electrical interconnection of the Equipment, as well as refrain from making any changes to the electrical structure of the Establishment where the Equipment is located without prior notice to GY BRASIL, at least ten (10) business days in advance; and

(ix) Do not sublet under any circumstances, in whole or in part, the Equipment.

12. NON-COMPLIANCE OF RESPONSIBILITIES

12.1. Non-compliance. If the CLIENT understands that GY BRASIL has breached any of its obligations under this AGREEMENT under the terms of Section 8 of the Lease Agreement, the PARTIES are obliged to comply with the procedures set out in the same section.

13. PRICE AND PAYMENT METHOD

13.1. The provision of O&M service will be remunerated by the CLIENT for the Service Amount.

13.2. Payment Methods.

(i) Payments start. The CLIENT shall pay GY BRASIL monthly the Monthly Service Amount during the Term of Effectiveness counted from the first day of the month following the Commissioning Date, as set out in Annex B.

(ii) First measurement. The first invoice/bill for Monthly Service Amount will be issued by GY BRASIL and will refer to the current month’s balance (from the period of the Commissioning Date to the end of the current month). For subsequent months, it will refer to the current month.

(iii) Means of payment. The CLIENT shall pay GY BRASIL by bank transfer to the current account indicated in Annex E, with proof of deposit or transfer, as receipt and proof of payment.

(iv) Making payments. The CLIENT shall pay monthly the Monthly Service Amount to GY BRASIL on the twentieth (20th) day of the month (or on the 1st business day after that date) upon presentation of an invoice and invoice for services and other documents that may be requested by the CLIENT, such as service reports, proof of compliance with obligations, among others.

(v) Invoicing. GY BRASIL will issue the invoice for the Monthly Service Amount and send it to the CLIENT to the address indicated below by the tenth (10th) business day of the following month (payment of a month overdue), with the maturity being extended by as many days as there is a delay in issuing the invoice/bill, with no penalty or burden applicable to the CLIENT in the exclusive event of issue of the invoice/bill on a date after that date. The PARTIES agree that, if the maturity falls on weekends, holidays or days when there is no banking expedient in the city of the CLIENT’s headquarters, the maturity date will be automatically extended to the next business day, without any type of burden or penalty. The invoices/bills must be delivered by GY BRASIL with this data and to this address:

SENDAS DISTRIBUIDORA S/A. (LOJA 0071 - ASSAI Londrina)

Subject: Agreement No. FV-ASS-COM-0071

Address: Av. Aricanduva. 5.555, Vila Matilde, São Paulo - State of São Paulo

Phone: (11) 3411-5246

CNPJ/MF: 06.057.223/0001-71

State Registration (I.E.) No.: 10.685.373-2

(vi) Invoice correction. If the CLIENT finds any discrepancy in the invoices and/or in the documents presented by GY BRASIL, as mentioned in the item above, in relation to its internal controls, the CLIENT will return the documents and the invoice/bill to GY BRASIL so that it can provide the necessary corrections and issue a new invoice/bill, replacing the previous one. In this case, the indicated payment deadline will be extended to the following month.

(vii) Deduction of taxes. The CLIENT, from the payment due to GY BRASIL, as a result of the execution of the Subject Matter, will deduct the portion related to the charges, contributions and taxes of responsibility of GY BRASIL, whose deduction at source is mandatory.

13.3. Compensation.

(i) The CLIENT shall pay to GY BRASIL for the execution of the Subject Matter of this O&M Contract only the amounts expressly contained in this O&M Agreement.

(ii) The SAn will be paid in twelve (12) monthly installments, corresponding to the Monthly Service Amount.

13.3.1. Adjustment according to IPCA/IBGE. Every year on the Anniversary of the Commissioning Date of the PV System, the Service Amount in Year n will be adjusted according to the Broad Consumer Price Index (IPCA/IBGE). According to the formula:

[***]

13.4. Changes in Laws and Regulations. If there is a change in the Laws and Regulations applicable to this O&M Agreement and modifying the adjustment period to be made in less than twelve (12) months, the price adjustment will take place in the new period provided for in the Laws and Regulations. If the Laws and Regulations are omitted with respect to periodicity, the adjustment will be made within a period that is agreed between the PARTIES, applying on a pro rata temporis basis. If the 1 is extinguished, it ceases to be published or its use is prohibited without a designation in the Laws and Index Regulations to replace it, the PARTIES shall agree within (thirty) days from the date of the event, another index or parameter that adequately reflects the variation in the value of the O&M Agreement in the same way as the IPCA would do, or as close as possible. If there is no agreement during this period, support from external consultants will be sought to establish a better adjustment periodicity.

13.5. Adjustment according to PV Plant Availability. When the calculated Service Adjustment is negative, the absolute value of the Service Adjustment will correspond to an amount due to the CLIENT by GY BRASIL, and conversely, when the calculated Service Adjustment is positive, this will correspond to an amount due to GY BRASIL by the CLIENT. AMS will be limited to [***]% of the absolute amount of the Service Amount paid during year n (SAn).

13.6 The AMS Adjustment is defined as follows:

[***]

Where: the calculation method of GEactual,n and GEtheo,n is explained in Annexes D and F.

13.7 Costs, Taxes, and Expenses. The PARTIES agree that each is responsible for its own costs, expenses and taxes related to the payments now established, in accordance with the applicable legislation.

13.8 Liberality. If GY BRASIL does not collect the amounts notified within the period established above, this fact will be considered a mere liberality, it will not be considered under any circumstances a novation or reduction of any debt, thus remaining the possibility of future recovery, at best opportunity that fits GY BRASIL.

13.9 Payment issues resolution. The PARTIES agree that in the event of any dispute regarding any payment provided for herein, the CLIENT shall pay on time any and all uncontroversial amounts pursuant to the provisions of this O&M Agreement. The receipt by GY BRASIL of any amount will not release the CLIENT from paying any controversial amount. The PARTIES shall use their best commercial efforts to resolve any dispute amicably within 30 (thirty) days from receipt of a notice of dispute, sent by the other PARTY pursuant to Section 19.

13.10. Limitation on the usufruct of securities. GY BRASIL will not be able to issue duplicates and/or charge air with automatic protest instruction on the receivables from the CLIENT.

13.11. Late payment by the CLIENT. Failure to make any payments within the period established herein, except as provided for in Sections 13.2(v) and 13.2(vi). subject the client to the payment of a non-compensatory default penalty of [***]% of the principal amount plus default interest of [***]%per month, pro rate die. There will be no further penalty or payment for delay in settling the bill.

14. REAL ESTATE PROPERTY TRANSFER

14.1 Real Estate Property Transfer. If the CLIENT intends to transfer the property or possession of the Real Estate Property (including, without limitation, through sale, lease and surface right) where the Establishment (“Transfer”) is located to a third party (including, without limitation, an Affiliate (“Acquirer”), PARTIES undertake to comply with the procedures provided for in section 10 of the Lease Agreement.

15. SUSPENSION OF THE O&M AGREEMENT OR TERMINATION OF THE INDEMNITY PAYMENT SERVICE

15.1. Suspension of the O&M Agreement. The CLIENT or GY BRASIL may suspend the execution of the Subject Matter of this O&M Agreement, or part of it, as long as accepted by the other PARTY.

15.1.1. To that end, the PARTY interested in suspending the execution of the Subject Matter of the O&M Agreement must send a justified written notice to the other requesting the suspension of the Subject Matter.

15.1.2. The suspension will be considered effective on the date of acceptance of the suspension by the other PARTY, after receipt of the notice.

15.1.3. Within ten (10) business days after receiving the aforementioned notice, the PARTIES undertake to jointly prepare an action plan with an execution period and commissioning criteria, aiming at regularization and the reestablishment of the Subject Matter of the O&M Agreement. The PARTIES undertake to take the measures agreed at the meetings.

15.1.4. Suspension request by the CLIENT. If the suspension of the Subject Matter is requested by the CLIENT and accepted by GY BRASIL, the CLIENT may suspend payments.

(i)

Such payments will be resumed and will be made retroactively in (sixty) business days without any additions, only after proper completion of the outstanding obligations. Likewise, any debts and credits existing between the PARTIES may be used as compensation, under the terms of the current legislation.

(ii)

During the suspension period, GY BRASIL will not be able to protest any collection order, under penalty of being responsible for the losses and damages that it causes.

(iii)

In cases of suspension on the initiative of the CLIENT for more than sixty (60) days, the CLIENT shall reimburse GY BRASIL for the expenses actually incurred and duly proven that are directly resulting from the suspension of the Subject Matter.

15.1.5. During the case suspension period, at the discretion of GY BRASIL, having verified the impossibility of continuing the execution of the Subject Matter, GY BRASIL considered released from the fulfillment of its performance and Availability obligations for the PV Plant.

15.1.6. Complaint of this O&M Agreement. The suspension of the O&M Agreement will not imply its automatic termination by the PARTIES. However, if either PARTY requests termination, in accordance with the procedure provided for in Section 15, and the PARTIES do not reach an agreement or the other PARTY does not meet the commissioning criteria determined in this O&M Agreement, the other PARTY may, at its discretion, request the termination of the O&M Agreement, pursuant to Section 11 of the Lease Agreement.

16. TERMINATION OF THE O&M AGREEMENT

16.1. Events of Early Termination: This O&M Agreement is entered into on an irrevocable and irreversible basis, and can only be terminated before the end of the Lease Term in the event of termination provided for in the Lease Agreement.

16.2 Automatic Termination. Termination of this O&M Agreement will automatically terminate the Lease Agreement, and termination of the Lease Agreement will automatically terminate this O&M Agreement.

16.3 In the event of termination of the O&M Agreement for the payment of the last invoice, GY BRASIL must submit, up to five (05) days before the due date:

(a)

the list of employees who will remain hired by the provider and the employees who had or will have your employment contracts terminated as a result of termination; and

(b)

proof of payment of severance pay from employees.

16.4 The PARTIES agree that this O&M Agreement will remain in effect regardless of whether the CLIENT and/or any of its affiliates, subsidiaries or parent companies, direct or indirect, undergo a change in their shareholding control or any incorporation, merger, spin-off, transformation or other corporate reorganization.

17. CONSEQUENCES OF EARLY TERMINATION AND PAYMENT OF THE REMAINING BALANCE

17.1. Payment of the remaining balance and the severance payment. The PARTIES agree that, in the event of early termination pursuant to Sections 11.1 (i)(b) of the Lease Agreement (i.e., default of the CLIENT’s obligations not remedied in 60 days) or 11.1 (ii)(d) of the Lease Agreement (i.e., transfer of the Real Estate Property by the CLIENT) of the Lease Agreement, the CLIENT undertakes to make the payment of the remaining balance related to the outstanding installments of the Lease Price of Year n of the Service Amount of Year n within a period of up to ten (10) business days from the date of receipt of the notice requesting termination, by bank transfer to the current account of GY BRASIL indicated in Annex E, so that:

(i) The remaining balance, for each year between the Early Termination Date and the end of the Lease Term, will correspond to the Lease Price of Year n of the Service Amount of Year n, plus an update with a rate of [***]% per annum applied to from the year following the Early Termination Date; and

(ii) The remaining balance will be updated to Net Present Value based on the current SELIC Rate (as defined in Section 1)

17.2. Conditions for fulfilling the termination payment. In order to comply with the obligation of this Section, all payments will be made by the CLIENT free of any deduction or withholding of taxes (including, without limitation, any tax, fee, contribution or any other charge or withholding of a similar nature). If any deduction or withholding of taxes is made or required, the CLIENT shall increase the amount to be paid to GY BRASIL to ensure that GY BRASIL will receive an amount equal to the amount that it should have received and withheld, if such deduction or withholding taxes had not been made or required.

18. DISCLAIMER OF LIABILITY

18.1. For the avoidance of doubt, it is stated that neither PARTY will be subject to payment of any fine or penalty to the other PARTY in any case of termination of this O&M Agreement under the following Lease Agreement Sections: 11.1 (i)(a) and 11.1 (ii)(a) (i.e., bankruptcy, reorganization, dissolution, or extrajudicial or judicial liquidation of the PARTIES) and 11.1(i)(c) and 11.1(ii)(c) (i.e., due to Act of God or Force Majeure).

19. NOTICES

19.1. Notice. In order for any notice or notification between the PARTIES to be valid, it must be sent through the corresponding interlocutors to the business addresses indicated below, unless the PARTY provides a new address with an antecedence not less than five (5) calendar days in relation to the date of change of address:

GY BRASIL:

Attn.: Pierre-Yves Mourgue

Email: [***]

Address: Rua Capitão Pinto Ferreira. 187. Jardim Paulista. São Paulo - State of São Paulo

CLIENT:

Attn.: Fernando Martinez Basílio

Email: [***]

Address: Av. Aricanduva. 5.555. Vila Matilde, São Paulo - State of São Paulo

19.2. Acceptance of notice. Notifications will be considered received: (i) on the business day following receipt, if delivery is made in person: (ii) on the business day following receipt by certified mail or similar, with acknowledgment of receipt: and/or (iii) on the following day, if sent by fax or electronic mail, provided that the device recipient issues a receipt confirmation to the sending device or other satisfactory evidence exists that the message has been received.

19.3. Conditions for communication. To take effect, all communications, authorizations, requests, notifications, disputes, consents, approvals, delegations or information exchanged between the PARTIES under this O&M Agreement must be made in writing, with proof of receipt by the other PARTY.

19.4. Change of interlocutor. The PARTIES undertake to communicate any change of interlocutor to the other PARTY.

19.5. Notices and approval - Lease. The PARTIES’ interlocutors are deemed to be duly authorized to oblige each PARTY in relation to the decisions they take to execute this O&M Agreement. The interlocutors will be the following people:

● GY BRASIL: Diego Langerhorst (diego.langerhorst@greenvellow.com.br)

● CLIENT: Fernando Martinez Basilio (fernando.basilio@assai.com.br)

20. EXCLUSIVITY

20.1. Exclusivity granted to GY BRASIL for the implementation of the PV System. While this O&M Agreement is in effect, the CLIENT will refrain from entering into a similar agreement with any company other than GY BRASIL or its Affiliate or any other equivalent agreement for the Establishment.

21.1 GY BRASIL’s Representations and Warranties. GY BRASIL declares and guarantees to the CLIENT that:

(i) It is a properly organized and validly organized company, and has the legal authority to own its assets and properties and conduct its business:

(ii) It has unrestricted ability, powers and authorization to enter into this O&M Agreement and to fulfill the obligations set forth herein and to consummate the operations contained therein.

(iii) It carries out its activity in full compliance with the legislation in force and has all the approvals, licenses, permits, permits and/or authorizations necessary for such purpose;

(iv) It adopts the actions necessary for the preservation of the environment, exercising the activities on sustainable basis and abiding by all applicable environmental standards at federal, state or municipal levels;

(v) It strictly complies with the Child and Adolescent Statute (Law No. 8069/90) and/or other prevailing legal or regulatory standards, and they do not employ child labor, or person below 18 years old, including minor apprentice, in places that are prejudicial to their growth, physical, psychic, moral and social development, nor in dangerous or unhealthy places and/or services, and/or at times that do not allow school attendance, and also, at night hours (between 10 pm and 5 am) and does not maintain a commercial or any kind of agreement with companies that use, exploit or employ child labor or persons below 18 years old in breach of the law;

(vi) It does not explore, and will not explore, any form of degrading work or work similar to slave work, in conformity with the Universal Declaration of Human Rights, as well as Conventions No. 29 and 105 of the International Labor Organization (ILO), the ILO Declaration on Fundamental Principles and Rights at Work, and the American Convention on Human Rights;

(vii) It does not use discriminatory practices restraining the access to the employment relationship or the maintenance thereof, as a result of gender, origin, race, color, physical condition, religion, marital status, family status, or any other condition;

(viii) Its work environment does not endanger the physical integrity or health of employees, constantly putting into practice actions to reduce accidents and to improve the working conditions of its employees. In the workplace, employees have access to drinking water, clean toilets in adequate quantities, adequate ventilation, emergency exits, appropriate lighting and safety conditions; and

(ix) Do not contract with third parties that do not carry out their activities in accordance with the aforementioned precepts.

(x) GY BRASIL warrants to have an appropriate personal data protection program, compatible with all applicable laws and needs of the CLIENT, including, but not limited to, the adoption of appropriate administrative, technical and fiscal safeguards to protect personal data against: reasonably anticipated threats or risks to privacy, integrity and/or confidentiality of personal data; accidental or illicit destruction or loss of, amendment or disclosure or unauthorized access to personal data (including, but not limited to, when the treatment involves the transfer of the personal data through a network); all illegal forms of treatment of personal data: safety or privacy incidents.

(xi) In compliance with the principle of contractual good faith, the GY BRASIL warrants that it will not, directly or indirectly, offer, give, make, promise, pay or authorize payment, in cash, gifts of any kind or anything of value, in kind or not, resulting from this O&M Agreement, to a national or foreign government official and/or his/her advisors, acting on a transitory basis and/or without remuneration, at any level or instance, as well as political parties, regulatory agencies, diplomatic representations, quasi-governmental entities, government owned or controlled companies, or employee of any public or private international organization. Any possible interaction, of any nature, with any of the agents indicated above must take place only under the terms of this O&M Agreement, and always with prior and express consent of the CLIENT, under penalty of the legal and contractual arrangements applicable to the case. Any information related to this section may be communicated by GY BRASIL to the CLIENT, through its ombudsman channel, on the phone 0800 55 5711 or email ligação@gpabr.com.

21.2. Representations and Warranties of the PARTIES. This O&M Agreement was entered into in accordance with the principle of contractual good faith, without any bias in consent. Thus, PARTIES declare, for all legal purposes, that: (i) they had previous knowledge of the content of this instrument and perfectly understood all obligations contained therein; (ii) they agree with all the terms and conditions of this Instrument; (iii) are duly represented in the form of their respective constitutive acts and have all the authorizations, powers and capacity to assume the obligations provided for in this O&M Agreement; and (iv) the obligations assumed in this act do not conflict with other obligations previously assumed by them in other private or public instruments, or even, arising from a judicial and/or administrative order or summons.

22. MISCELLANEOUS

22.1. Integrality of the Subject Matter. The O&M Agreement expresses the entire agreement between PARTIES with respect to its Subject Matter.

22.2. Modification and amendments. Any modification of the O&M Agreement, whether substantial or not, must be the subject of an amendment duly signed by both PARTIES.

22.3. Prevalence and priority rule. In case of contradiction, it is expressly agreed that the O&M Agreement and/or any future amendments thereto will prevail over its Annexes.

22.4. Limitation of Liability. The SERVICE PROVIDER will be liable for damages, excluding indirect damages, incurred to the CLIENT due to any violation, by the SERVICE PROVIDER, of its contractual obligations. The liability limit is [***]% of the Service Amount in Year n.

22.5. Change of control. This O&M Agreement will remain in effect if the CLIENT and/or any of its affiliates, subsidiaries or controlling companies, direct or indirect, undergoes a change in its shareholding control or any incorporation, merger, spin-off, transformation or other corporate reorganization.

22.6 Assignment to an Affiliate. The PARTIES may assign all or part of their acts and obligations to an Affiliate, upon communication to the other PARTY.

22,7. Assignment of this AGREEMENT. The SERVICE PROVIDER may assign the present or future credit rights arising from the Service Amount owned by the SERVICE PROVIDER to third parties, including investment funds and financial institutions, through CLIENT communication. The CLIENT may not assign any rights and/or shares of this Agreement without the prior written consent of the SERVICE PROVIDER.

22.8. Act of God or Force Majeure. It is characterized as Act of God or Force Majeure, with strict observance of article 393 and its sole paragraph of the Brazilian Civil Code, any event or circumstance that negatively and substantially affects any of the PARTIES and that meets, concomitantly, all the following assumptions:

(i) The occurrence occurs and remains outside the control of the affected PARTY:

(ii) The affected PARTY does not compete directly or indirectly for its occurrence;

(iii) The performance of the affected PARTY, while diligent and timely, has not been sufficient to prevent or mitigate its occurrence; and

(iv) Its occurrence directly affects or prevents compliance by the affected PARTY with one or more obligations provided for in this O&M Agreement.

22.8.1 Unaffected Obligations. No Act of God or Force Majeure will release the PARTIES from any of their obligations due prior to the occurrence of the respective event or which have been constituted before it, although they are due during or after the event of Act of God or Force Majeure.

22.8.2. Effects on this O&M Agreement. With the occurrence of an Act of God or Force Majeure, the PARTIES, while the effects of such event persist, are: exempted from the fulfillment of contractual obligations, directly affected by the event of unforeseen circumstances or force majeure, characterized under the terms of this O&M Agreement, as well as exonerated from any responsibility for the lack or delay in fulfilling obligations that are directly attributable to the Act of God or Force Majeure.

22.9. Ownership. The ownership and all rights on the Subject Matter, such as reports, projects, trademarks, patents, licenses, drawings and technical documentation will belong exclusively to GY BRASIL or to whom GY BRASIL indicates.

22.10. Confidentiality. The PARTIES acknowledge that the O&M Agreement, any document delivered to them by the other PARTY for the conclusion and/or execution of the O&M Agreement, as well as any information regarding any of the two companies that comes into the hands of the other due to the celebration and/or performance of the O&M Agreement, will be confidential. The PARTIES will keep confidential all information that is of a confidential nature and will take all necessary measures so that their employees, the employees of their contractors and suppliers and any other external agents know and respect the confidentiality obligation agreed herein.

22.10.1. The PARTIES will only use the information to achieve the purposes and objectives of this O&M Agreement and will not use it for other purposes and objectives without the prior and express authorization of the other PARTY.

22.10.2. This confidentiality obligation does not apply to information that: (i) is in the public domain at the time of its disclosure or obtaining: (ii) becomes public domain after its disclosure or obtaining, unless through breach of this O&M Agreement or unlawful act by PARTY, its directors, employees or any subcontractors; or (iii) are lawfully obtained by the PARTY from third parties, without breach of this O&M Agreement or any confidentiality obligations in relation to the other PARTY.

22.10.3. GY BRASIL should not use, under any circumstances. the corporate name of the CLIENT and/or its affiliated, subsidiaries and/or controlling companies, as well as their brands and other distinctive signs without its express authorization.

22.10.4. GY BRASIL shall respect the rights of third parties, such as intellectual property rights, trade and industrial secrets, right to image, right to honor, right to privacy, among others, etc., GY BRASIL being solely responsible for any violation of such rights.

22.10.5. Confidentiality Term. It is expressly stipulated between the PARTIES that this Section will remain in force for a period of (two) years after the end of the term of this O&M Agreement.

22.10.6. Application of confidentiality. The confidentiality obligation will not apply to information that: (i) is in the possession of the PARTIES prior to the signing of this O&M Agreement, whenever they can prove that they obtained them by themselves or by third parties unrelated to the other PARTY; (ii) is in the public domain or reaches the public domain during the performance of this O&M Agreement, without being due to an action or omission by any of the PARTIES and/or employees and/or contractors (including suppliers and contractors); and (iii) are required by a public agency or court order within the procedures initiated by it. The requested PARTY must immediately inform the other PARTY of this request, so that it can take steps to reverse the order or, if this is not possible, the receiving PARTY must provide only the minimum amount necessary for the fulfillment of the request.

22.11. Dispute Resolution. In the event of any controversy or conflict regarding the reality, performance, interpretation or application of this O&M Agreement or any provision of this O&M Agreement that cannot be resolved amicably by the PARTIES within thirty (30) days (except as otherwise agreed) between the PARTIES), the PARTIES will submit the dispute to the jurisdiction of the Judicial District of the Capital of the State of São Paulo, to settle any doubts arising from this O&M Agreement, except for any other, however privileged it may be. This O&M Agreement shall be governed by the laws of the Federative Republic of Brazil.

22.12. Validity of the sections of this O&M Agreement. If one of the sections of this O&M Agreement and its Annexes is found to be null, voidable or ineffective by any Laws and Regulations, it must be considered as unwritten and, to the extent legally possible, replaced by another agreed between the PARTIES. The other contractual provisions not affected by the legal prohibition will survive with their full effectiveness.

In witness whereof, the PARTIES hereby read this O&M Agreement and sign it in two (2) copies of equal content and form, in the presence of the two (2) witnesses undersigned, so that it produces its legal and juridical effects.

São Paulo, April 29, 2019.

FOR ASSAÍ:		FOR GY BRASIL:
(sgd)		(sgd)
Name: Belmiro Gomes		Name: Pierre-Yves Mourgue
Title: Assaí Atacadista		Title: Chief Executive Officer

(sgd)

Name: [blank]

Title: [blank]

FOR THE LESSOR:

(sgd)

Name: Anderson Barres Castilho

Title: Assaí Atacadista

WITNESSES:

(sgd)		(sgd)
Name: Noemie Gogol		Name: Lucas Attademo
Identity Card RG No. and Individual Taxpayers’ Register (CPF) enrollment No.: 237.847.558-60		Identity Card RG No. and Individual Taxpayers’ Register (CPF) enrollment No.: 107 946 217 16
		Operations

Exhibit 4.16

Schedule of Omitted OPERATION AND MAINTENANCE SERVICES Agreements

Operation and Maintenance Services Agreement (FV-ASS-COM-70), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda.

Operation and Maintenance Services Agreement (FV-ASS-COM-82), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda.

Operation and Maintenance Services Agreement (FV-ASS-COM-84), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda.

Operation and Maintenance Services Agreement (FV-ASS-COM-111), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda.

Operation and Maintenance Services Agreement (FV-ASS-COM-131), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda.

Operation and Maintenance Services Agreement (FV-ASS-COM-133), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda.

Operation and Maintenance Services Agreement (FV-ASS-COM-135), dated as of April 29, 2019, by and between Sendas Distribuidora S.A. and GreenYellow do Brasil Energia e Serviços Ltda.

Exhibit 4.17

Free translation

DocuSign Envelope ID: ED0FE3C3-1737-4DEE-BEE4-138565F51B54

1st AMENDMENT TO THE ELECTRICITY SALE AGREEMENT BY AND BETWEEN SENDAS DISTRIBUIDORA S/A. (ASSAÍ ATACADISTA) AND GREENYELLOW SERVICOS E COMERCIALIZACAO DE ENERGIA LTDA. AND, AS INTERVENING GUARANTOR, COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO (“1st Amendment”).

ON THE ONE PART,

SENDAS DISTRIBUIDORA S/A. (ASSAÍ ATACADISTA), a corporation organized under the laws of the Federative Republic of Brazil, with its principal place of business at Avenida Ayrton Senna, 6.000, Lote 2 - Anexo A, Jacarepaguá, Rio de Janeiro - State of Rio de Janeiro, registered with the National Corporate Taxpayer’s Register of the Ministry of Economy (CNPJ/ME) under No. 06.057.223/0001-71, herein represented by its undersigned legal representatives, hereinafter referred to as Purchaser;

AND, ON THE OTHER PART,

GREENYELLOW SERVICOS E COMERCIALIZACAO DE ENERGIA LTDA., registered with the National Corporate Taxpayer’s Register of the Ministry of Finance (CNPJ/MF) under No. 34.230.109/0001-37, with its principal place of business in the Capital City of the State of São Paulo, at Alameda Santos, 1.357, 13º andar, Cerqueira César, Zip Code (CEP) 01418-100, hereinafter referred to as Seller,

And, as INTERVENING GUARANTOR,

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO, a corporation organized under the laws of the Federative Republic of Brazil, with its principal place of business at Av. Brigadeiro Luiz Antônio, 3142 - Jardim Paulista, in the City of São Paulo, State of São Paulo, registered with CNPJ/ME under No. 47.508.411/0001-56, herein represented according to its articles of incorporation, hereinafter referred to as Guarantor;

And also, as Primary Suppliers,

[***];

[***]);

[***];

[***]; and

[***];

[***].

[***] (hereinafter referred to simply as “[***]”, and [***], jointly with [***] and [***], “Primary Supplier”)

Whereas:

On December 31, 2019, the Parties executed the Electricity Sale Agreement, the purpose of which is the sale of Contracted Electricity from incentivized source, entitled to a 50% rebate on the portion of the wire component of TUSD/TUST subject to rebate, to be provided by Seller to Purchaser at the Delivery Point, during the period from January 1, 2022, to December 31, 2034 (“Agreement”);

The Contracted Electricity comes from an agreed relationship with its Primary Suppliers (“Supply Agreement”);

The Agreement provides for procedures to be carried out between the Parties in the event of a default by Seller that results in the need for termination under the Supply Agreement;

It is necessary to adapt the Agreement in order to regulate the provisions of item c above, then the Parties, as identified above, mutually agree to execute this 1st Amendment, the sections and conditions of which are binding on the Parties and any of their successors, according to the following terms:

TITLE I - PURPOSE

Section 1 - The Parties mutually agree to amend the Agreement, replacing it entirely with the Exhibit I to this 1st Amendment.

TITLE II - DEFINITIONS AND ASSUMPTIONS APPLICABLE TO THE 1ST AMENDMENT

Section 2 - This 1st Amendment shall become effective on the date of execution hereof, and shall remain in effect until the termination of the Agreement.

Section 3 - The capitalized terms used in this 1st Amendment shall have meanings expressly ascribed to them herein, and when no meaning is expressly ascribed to them herein, then they shall have the meanings expressly ascribed to them in the Agreement.

In witness whereof, the Parties execute this Agreement in two (2) counterparts of equal form and content and with the same effect, before the two (2) undersigned witnesses.

São Paulo - State of São Paulo, July 29, 2020.

SENDAS DISTRIBUIDORA S.A. (“ASSAÍ ATACADISTA”)

Purchaser

[blank]

Name: [blank]

Title: [blank]

Individual Taxpayer’s Register (CPF): [blank]

DocuSigned by:

(sgd)

248C9A8BB10240D

Name: Anderson Barres Castilho

Title: title

Individual Taxpayer’s Register (CPF): [blank]

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO

Intervening Guarantor

[blank]

Name: [blank]

Title: [blank]

Individual Taxpayer’s Register (CPF): [blank]

[blank]

Name: [blank]

Title: [blank]

Individual Taxpayer’s Register (CPF): [blank]

GREENYELLOW SERVICOS E COMERCIALIZACAO DE ENERGIA LTDA.

Seller

[blank]

Name: [blank]

Title: [blank]

Individual Taxpayer’s Register (CPF): [blank]

[***]

Primary Suppliers

[blank]

Name: [blank]

Title: [blank]

Individual Taxpayer’s Register (CPF): [blank]

[blank]

Name: [blank]

Title: [blank]

Individual Taxpayer’s Register (CPF): [blank]

Witnesses:

DocuSigned by:

(sgd)

28BF4F82989F4AF

Name: Lucas Attademo

Individual Taxpayer’s Register (CPF): 107.946.217-16

[blank]

Name: [blank]

Individual Taxpayer’s Register (CPF): [blank]

EXHIBIT I

ELECTRICITY SALE AGREEMENT EXECUTED BY AND BETWEEN SENDAS DISTRIBUIDORA S/A. (ASSAÍ ATACADISTA) AND GREENYELLOW SERVICOS E COMERCIALIZACAO DE ENERGIA LTDA. AND, AS INTERVENING GUARANTOR, COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO, AND ALSO, AS PRIMARY SUPPLIERS, [***] AND ITS AFFILIATES

ELECTRICITY SALE AGREEMENT BY AND BETWEEN SENDAS DISTRIBUIDORA S/A. (ASSAÍ ATACADISTA) AND GREENYELLOW SERVICOS E COMERCIALIZACAO DE ENERGIA LTDA. AND, AS INTERVENING GUARANTOR, COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO (“Agreement”).

ON THE ONE PART,

AND, ON THE OTHER PART,

And, as INTERVENING GUARANTOR,

And also, as Primary Supplier,

[***];

[***]; and

[***]

[***];

[***].

[***] (hereinafter referred to simply as “[***]”, and [***], jointly with t[***] and [***], “Primary Supplier”)

Whereas:

Seller is a trading agent authorized by CCEE to operate in the free market;

Seller is interested in selling, and Purchaser is interested in buying a certain amount of electricity on the open market for a period of fifteen (15) years;

On this date, Seller and Purchaser executed an Electricity Sale Agreement with term of effectiveness of two (2) years, with supply for the remaining thirteen (13) years subject to compliance with certain conditions precedent, as specified in this Agreement;

Seller has plans to obtain authorization from CCEE to operate as a retailer, and it is also in the interest of Purchaser, when it is granted the said authorization, to migrate its units under the management of Seller from a free market unit to a retail unit, and the Parties also agree that, upon the consummation of such migration, this Agreement shall be revised and duly amended to make it reflect the requirements of the retail market;

Seller and Purchaser, hereinafter referred to individually as Party and jointly as Parties, as identified above, mutually agree to execute this Agreement, the sections and conditions of which are binding on the Parties, Guarantor and any of their successors, according to the following terms:

TITLE I – DEFINITIONS AND ASSUMPTIONS APPLICABLE TO THE AGREEMENT

Section 1 - In this Agreement, technical words and terms will be used and their meanings, unless otherwise specified, shall be as following:

“CCEE Agent”: any Concessionaire, Permittee or Authorized Person that engages in provision of electricity services and installations, as well as Sellers, Free Consumers and Special Consumers;

“Monthly Adjustments”: any adjustments to be made by Seller in the CLIQCCEE related to the Monthly Contracted Electricity, in each month of the Supply Period;

“ANEEL”: Brazilian Electricity Regulatory Agency, a special instrumentality responsible for regulation and inspection of electricity services, instituted by Law No. 9427, of December 26, 1996, and regulated by Decree No. 2335 of December 6, 1997, as amended;

“Measurement Agent”: the CCEE Agent responsible for collecting, sending and adjusting measurement data from the measurement point in the CLIQCCEE system.

“Competent Authority”: any legal, arbitral or government authority with power to interfere in this Agreement or in the Parties’ activities;

“CCEE”: Electricity Trading Chamber, a non-profit legal entity of private law that operates as regulated and inspected by ANEEL, the purpose of which is to account for and settle the electricity purchase and sale transactions between the CCEE Agents in the National Interconnected System;

“Gravity Center”: the virtual point in a specific Submarket of the National Interconnected System, according to terms of the Sale Rules, where Contracted Electricity is delivered symbolically for accounting purposes;

“CLIQCCEE”: the computer system developed based on the Sale Rules and Sale Procedures, which supports the accounting and financial settlement of all electricity sold in the CCEE;

“Supply Agreement”: the agreement executed by and between Seller and Primary Supplier on December 23, 2019, the purpose of which is the sale of electricity from incentivized sources, entitled to a [***]% rebate on the portion of the wire component of TUSD/TUST subject to rebate, with the same technical characteristics described in Annex I to this Agreement;

“Trading Convention”: document that establishes the structure and operation of the CCEE, instituted by ANEEL Normative Resolution No. 109, of October 26, 2004;

“Sector Charges”: all specific fees, contributions, charges, and costs of the power industry, including, but not limited to, System Service Charges (ESS), Reserve Energy Charge, and Electricity Development Account (CDE);

“Electricity”: the quantity of active electricity during any period of time, expressed in Watt-hour (Wh) or its multiples;

“Contracted Electricity”: the quantity of electricity established in Annex I to be made available by Seller to Purchaser during the Supply Period, expressed in MWh (megawatt hour) and average MW (average megawatt);

“Monthly Contracted Electricity”: the quantity of Contracted Electricity for each Contract Month of the Supply Period, expressed in MWh (megawatt hour), according to the Seasonalization defined in Annex I to this Agreement;

“Billable Monthly Electricity”: quantity of electricity to be billed by Seller for each Contract Month;

“Flat”: homogeneous distribution of Contracted Electricity in monthly or hourly amounts according to the Seasonalization or Modulation agreed by the Parties according to the terms of Annex I to the Agreement;

“Flexibility”: possibility for Purchaser, as agreed between the Parties in Annex I, to adjust the amount of Contracted Electricity for a Contract Month at its sole discretion;

“Primary Supplier”: [***], and all its subsidiaries, as electricity generation company and Seller under the Supply Agreement;

“Economic Group”: means, in relation to any of the Parties, any company that, individually or jointly, directly or indirectly, holds a shareholding interest in a certain Party, has its capital held in whole or in part by a certain Party, or is a partner in a company together with a certain Party;

“Law”: all constitutional provisions, laws, provisional measures, decrees, resolutions, ordinances, instructions, orders, declarations, rulings, regulations and official interpretations of any Competent Authority with jurisdiction over the matter concerned, including the Sales Rules and the Sales Procedures, and the respective subsequent amendments thereto or any writings that may replace them;

“Contract Month”: each and every calendar month of each year of the Supply Period;

“Short-Term Market”: segment of CCEE where the differences between the quantities of electricity contracted and registered by the CCEE agents and the quantities of generation or consumption actually verified and attributed to the respective CCEE agents are traded.

“Modulation”: distribution of Monthly Contracted Electricity at all hours of the respective Contract Month;

“Notice of Dispute”: a written notice to the Parties about disputes arising from and/or relating to the provisions of this Agreement;”

“ONS”: the Electric System National Operator created by Law No. 9648/1998;

“TUSD/TUST Reduction Reference Percentage”: reference percentage equal to fifty percent (50%) of the portion of the wire component of TUSD/TUST subject to rebate;

aa)

“Supply Period”: the period during which Seller will provide Purchaser with the Contracted Electricity as set out in Annex I;

bb)

“Delivery Point”: the Submarket Gravity Center in which the Contracted Electricity shall be made available and sold by Seller to Purchaser by symbolic delivery, as provided for in Annex I;

cc)

“PLD”: the Settlement Price for the Differences to be announced by the CCEE, calculated in advance, with a weekly maximum periodicity and based on the operation marginal cost, limited by minimum and maximum prices, in force for each calculation period and for each Submarket, based on which the electricity sold in the Short-Term Market is priced.

dd)

“Sales Procedures”: set of rules approved by ANEEL, which define the conditions, requirements, events, and terms related to the sale of electricity in the CCEE;

ee)

“Sales Rules”: set of operating and business rules and their algebraic formulations defined by ANEEL, applicable to the sale of electricity in the CCEE;

ff)

“Seasonalization”: monthly distribution within each Supply Period of the quantities of annual Contracted Electricity, subject to the Sales Rules and Procedures;

gg)

“Accounting and Settlement System (SCL)”: the computer system developed based on the Sale Rules and Sale Procedures, which supports the accounting and financial settlement of all electricity sold under the scope of the CCEE;

hh)

“National Interconnected System (SIN)”: the set of facilities and equipment responsible for the electricity supply of the electrically-connected regions of the country.

ii)

“Submarket”: divisions of the National Interconnected System (SIN) for which specific PLDs are established and the boundaries of which are defined based on the presence and duration of relevant transmission constraints on the flows of electricity in the SIN.

jj)

“Taxes”: all taxes, fees, and contributions accruing on the supply under this Agreement, excluding any other taxes now existing or that may be created on the net profit or income of any of the Parties. Such exclusion includes, but it is not limited to, corporate income tax, social contribution on net profits and taxes or contributions on financial transactions;

kk)

“TUSD/TUST”: Fees for Use of the Electric Distribution and Transmission Systems to be charged to the Consumer Units for the use of the distribution and transmission networks of the concessionaires of the place where it is connected; and

ll)

“Consumer Unit” means each Purchaser consumer unit listed in Annex III to this Agreement.

Sole Paragraph - All the terms defined above, when used in the singular in the context of this Agreement and exhibits hereto shall also include plural and vice versa.

Section 2 - In order to enforce the provisions under this Agreement, the Parties represent that they agree to comply with the Sale Rules, the Sale Procedures and the Law and amendments thereto.

Section 3 - The Annexes to this Agreement described below are part of this Agreement as they had been fully transcribed herein, and the Parties hereby represent that they are aware of the entire content thereof:

Annex I - Agreement Specific Conditions;

Annex II - Communication Channels;

Annex III - List of Consumer Units;

Annex IV - Reimbursement of Penalties and Restoration of Generation Capacity;

Annex V - Corporate Guarantee Letter - Primary Suppliers; and

Annex VI - Power of attorney.

TITLE II - PURPOSE, CONDITIONS PRECEDENT AND TERM OF EFFECTIVENESS

Chapter I - Purpose

Section 4 - The purpose of the Agreement is the sale of Contracted Electricity from incentivized source, entitled to a [***]% rebate on the portion of the wire component of TUSD/TUST subject to rebate, to be supplied by Seller to Purchaser at the Delivery Point during the Supply Period, as set out in Annex I.

Paragraph Two - The Parties agree that Seller shall solely bear all the risks, obligations, liabilities, Taxes, fees, costs and Sector Charges that are incurred and/or verified as result of the supply of the Contracted Electricity to the Gravity Center.

Paragraph Two - The Parties agree that Purchaser shall solely bear all the risks, obligations, liabilities, Taxes, fees, costs and Sector Charges that are incurred and/or verified after the supply of the Contracted Electricity to the Gravity Center.

Paragraph Four - The Parties acknowledge that the physical supply of the Contracted Electricity is not part of the scope of this Agreement and shall be fully subordinated to the technical determinations of ONS and ANEEL, including any determination of electricity rationing by the Competent Authority.

Chapter II - Conditions Precedent

Conditions Precedent

Section 5 - The Parties’ obligations regarding the sale and purchase of Contracted Electricity are subject to the final approval by the Primary Supplier of the capacity to supply the amount of Electricity contracted hereunder during all the Supply Period.

Paragraph One - Seller shall inform Purchaser, until June 30, 2020, provided that this limit date may be extended by Seller with reasonable justification, but in any event by no longer than September 30, 2020, about the obtainment of all the necessary approvals for the supply of Contracted Electricity for the Supply Period, upon written notice to Purchaser (“Notice of Satisfaction of the Conditions Precedent”).

Paragraph Two - Upon receiving the Notice of Satisfaction of the Conditions Precedent, Purchaser shall confirm its acceptance within five (5) business days, which confirmation may not be unreasonably withheld, provided that confirmation will be implied if Purchaser does not answer giving its confirmation within the period of time set forth above.

Paragraph Three - If Seller does not give the Notice of Satisfaction of the Conditions Precedent by June 30, 2020, or by a date extended according to Paragraph One above, Purchaser may immediately and unilaterally terminate this Agreement, without any lien or charges, upon written notice to Seller.

Chapter III - Term of Effectiveness

Section 6 - This Agreement shall enter into effect on the earlier of the date when Purchaser gives notice to Seller agreeing with the Notice of Satisfaction of the Conditions Precedent or the date of expiration of the deadline set forth in Section 5, Paragraph Two above, and will remain in effect until the actual fulfillment of all contractual obligations, including the payment of the invoice relating to the last month of the Supply Period, according to Annex I.

TITLE III - QUANTITIES, SEASONALIZATION, FLEXIBILITY, AND MODULATION

Chapter I - Quantities

Section 7 - The quantity of Contracted Electricity sold by Seller to Purchaser under the conditions of this Agreement is the one stipulated for each year of the Supply Period, as specified in Annex I hereto.

Paragraph One - The Billable Monthly Electricity is the Monthly Contracted Electricity adjusted in accordance with the flexibility set out in Section 9 below.

Chapter II - Seasonalization and Modulation

Section 8 - The conditions for distribution of the Contracted Electricity quantities upon Seasonalization and Modulation are set out in Annex I to this Agreement.

Chapter III - Flexibility

Section 9 - The Contracted Electricity shall be supplied by Seller to Purchaser on a monthly basis with a supply flexibility of up to ten percent (10%) upwards or downwards, as detailed in Annex I of this Agreement.

Section 10 - Seller shall provide Purchaser, until the 2nd business day of each month, with the measurement data consolidated per Consumer Unit, listed in Annex III, collected from the SCDE system to determine the monthly consumption, plus losses equivalent to [***]% of the measured consumption. The measured electricity, plus losses, will be applied to the flexibilities for determining the Billable Monthly Electricity. This flexibility shall be exercised in accordance with Purchaser’s official consumption measurement reports - CCEE MED003 - or any future format that may replace it.

Paragraph One - If Purchaser, for any reason, in a given Contract Month, does not need [***]%of the Monthly Contracted Electricity, the Billable Monthly Electricity will be equivalent to at least [***]%of the Monthly Contracted Electricity.

Paragraph Two - If Purchaser, for any reason, in a given Contract Month needs more than [***]% of the Monthly Contracted Electricity, the Billable Monthly Electricity will be equivalent to at most [***]%of the Monthly Contracted Electricity.

TITLE IV - AGREEMENT REGISTRATION AND VALIDATION

Section 11 - Seller will carry out the entire management of Contracted Electricity before the CLIQCCEE, proceeding to registration and validation of the quantities of Contracted Electricity within the deadlines provided for in the Sales Procedures and in accordance with the terms agreed in this Section.

Paragraph One - Until January 1, 2020, Seller will register and validate with CLIQCCEE, on behalf of Purchaser, the amount of Contracted Electricity corresponding to twelve (12) months after the start of the Supply Period.

Paragraph Two -- Monthly, if Seller does not register the volume of Contracted Electricity within the deadlines set out in the Sales Rules, Seller shall bear the costs with the financial settlement of the MCP, with the payment of penalties for exposure of electricity generation capacity, and with the restoration of electricity in the immediately following accrual Contract Month. Purchaser hereby agrees to refund, within five (5) business days, the amount paid in relation to the electricity used to restore the generation capacity upon financial settlement. For illustrative purposes only, this Agreement, in the form of Annex IV, contains the rationale of the mechanisms for reimbursement of penalties and restoration of generation capacity.

Paragraph Three - Seller will be required to make Monthly Adjustments during all the Supply Period.

Paragraph Four - If Seller, for any reason, fails to perform management of the Contracted Electricity at CCEE (including adjustments) under the terms of this Agreement and in accordance with the Rules and Sales Procedures, it will be deemed in default and shall indemnify Purchaser for all costs and penalties that the latter has provenly incurred with the quantities not registered, not validated and/or not adjusted in the CCEE accounting, as the case may be.

Paragraph Five - For the purpose of complying with the provisions of this Section, Seller shall, every 2nd business day of each month, provide Purchaser with a report informing the Monthly Contracted Electricity of the previous month.

Section 12 - In the event that Seller does not register or adjust the Contracted Electricity due to Purchaser default, Purchaser shall not be entitled to the Contracted Electricity and/or to any complaint, and this Agreement may be terminated, and Purchaser shall pay the amounts relating to the fine and financial compensation provided for in Sections 30 and 31.

Section 13 - Without prejudice to the provisions of Sections 30 and 31 of this Agreement, if the registered quantity of Contracted Electricity is to be changed/adjusted by CCEE, in accordance with the Sales Procedures and Rules and as established in ANEEL Normative Resolution No. 622, of August 19, 2014, due to Seller’s proven fault, Seller undertakes to reimburse Purchaser upon debit note to be paid within up to five (5) business days after the date of its issue. The amount of reimbursement shall take into account the losses and damages duly proven resulting from the said adjustment, proportional to the amount of electricity adjusted by the CCEE, including, but not limited to (i) amounts paid in the Short-Term Market; (ii) penalties for insufficient electricity generation capacity; and (iii) replacement electricity to be supplied to Purchaser. With respect to replacement electricity, Purchaser hereby agrees to refund, within up five (5) business days, the amount paid in relation to the electricity used to restore the generation capacity upon financial settlement.

Sole Paragraph - If the registration of the Agreement is definitely canceled by the CCEE, due to proven fault of the Seller, Seller shall pay the amounts provided for in Sections 30 and 31.

TITLE V - PRICES AND ADJUSTMENTS

Chapter I - Prices

Section 14 - The Contract Price valid for each year of the Supply Period is established in Annex I hereto.

Paragraph One - The Parties acknowledge that the contract price, together with the adjustment rules provided for in the Agreement, is sufficient, on this date, for the fulfillment of the obligations provided for herein.

Paragraph Two - The creation, alteration or extinction of Taxes and/or Sector Charges related to the subject matter of this Agreement that directly impacts the economic-financial balance of the Agreement shall be discussed between the Parties for a possible adjustment upwards or downwards of the contractual price of electricity. Studies of impacts on the Agreement due to changes in Taxes and/or Sector Charges shall be made by the interested Party and submitted to the other Party by written notice, informing the event that changed the ordinary condition of the Agreement, the date of its occurrence, the impacts on the contractual price and the suggestion of new prices.

Paragraph Three - If the Parties agree with the adjustment of the Contract Price, they shall execute an amendment to this Agreement to reflect such adjustment within up to thirty (30) days after the sending of the notice.

Paragraph Four - In the event of disagreement about the adjustment of the Contract Price or about its new amounts, the Parties agree to proceed in accordance with Title XII.

Paragraph Five - Without prejudice to Paragraph Six of this Section, the Parties resolve that any subsequent regulatory changes resulting in a change in the ceiling price of the PLD (Settlement Price for Differences), or even in any change in the systematic calculation of the PLD, including, but not limited to, the calculation of prices on an hourly basis, as well as any reductions in the electricity demand in the Free Contracting Environment (ACL), will not result in changes in the commercial sections, in Annex I and/or adjustment of the contract price.

Paragraph Six - The Parties represent that they know that the determination of the Settlement Price for Differences (“PLD”) may change, including, but not limited to, the implementation of the price with hourly training. In the event of an actual change in the PLD, in the hourly training or other procedures/criteria, there will be no changes in the commercial sections and conditions agreed under Paragraph Five of this Section.

Paragraph Seven - The Parties shall be responsible for the payment of Taxes levied on their income, including those levied on financial transactions, without any transfer of such responsibility to the other Party.

Chapter II - Adjustments

Section 15 - The base date for adjustment of the Contract Price valid for each year of the Supply Period is defined in Annex I hereto, and such price shall be adjusted on the dates and based on indexes provided for in the said Annex I.

Paragraph One - The contract price, subject to the adjustment date and index set out in Annex I, shall be adjusted according to the formula below:

Paragraph Two - If the inflation rate provided for in Annex I is extinguished, another one that will replace it will be adopted and, in case of uncertainty of substitute rate, other rate shall be agreed between the Parties.

TITLE VI - BILLING AND PAYMENT

Chapter I - Billing

Section 16 – The electricity will be billed on a monthly basis according to the Billable Monthly Electricity quantity, in megawatt-hours, and the Contract Price agreed under this Agreement, according to the formula below:

[***]

Section 17 - Purchaser shall pay all Sector Charges and Taxes for which it is responsible.

Section 18 - Considering that the Contracted Electricity is from an incentivized source, pursuant to Law No. 9427/1996, Article 26, paragraph 1, Purchaser shall be entitled to a [***]% rebate in the TUSD/TUST, according to the terms of the Sales Rules and Sales Procedures.

Paragraph One - If, in a certain Contract Month, the Percentage Reduction in TUSD/TUST is less than the Reference Percentage for Reduction in TUSD/TUST, as defined in Annex I, Seller shall submit a detailed report showing the loss of rebate in order for the Purchaser to issue a debit note for partial cancellation, stating the lower amount of the actual operation and the reason for its issue and the number and date of the debit note, proportionally to the TUSD/TUST Reduction Percentage delivered, after exhaustion of all possibilities of disputing the rebate reduction before the CCEE.

Paragraph Two - In the event of republication or recalculation of the rebate matrix described in the Paragraph One above, Seller will issue a debit note for reimbursement, stating the additional value of the actual operation and stating the reason for its issue and the number and date of original invoice, proportionally to the TUSD/TUST Reduction Percentage delivered, after exhaustion of all possibilities of disputing the rebate reduction before the CCEE.

Paragraph Three - The Parties represent that they freely agreed on this provision with regard to the formula given above and the reimbursement thereof, and that they are aware that due to the system of calculating the TUSD/TUST Reduction Percentages at CCEE, a time lag will occur. The Parties also represent that they know CCEE’s method of publishing and reviewing the TUSD/TUST Reduction Percentages and the possibility of reassessing and recalculating the price, considering the TUSD Rev.0 (sic) amount of the last month of supply.

Paragraph Four - The Parties hereby acknowledge that, in the event of any regulatory change that is proven to have a neutral effect on the adjustment and price conditions, no refund will be due and there will be no change in the Contract Price.

Paragraph Five - Seller shall not be liable for the financial reimbursement provided for in this Section as result of reduction in the TUSD/TUST rebate, which is proven to have been motivated by Purchaser, according to the Sales Procedures and Sales Rules.

Paragraph Six - The reduction of the applicable discount on TUSD/TUST will not constitute Seller’s contractual default when reimbursed according to this Section.

Paragraph Seven - The Parties hereby agree that, under no circumstances described above, the amount attributed to the financial compensation resulting from the loss of the discount in the TUSD/TUST will be greater than the component (VPNA₁) provided for in Annex I to this Agreement.

Chapter II - Payment

Section 19 - The way in which the electricity invoices/bills are to be sent by Seller to Purchaser and the respective maturity dates thereof are provided for in Annex I.

Paragraph One - Seller will provide Purchaser with billing details by email addressed to the people designated by Purchaser in Annex II.

Paragraph Two - In case of delay in the issue of the tax invoice by Seller, the payment date will be extended for the same period of time, maintaining the interval of business days originally provided for in this Agreement between the issue of the invoice and the payment date.

Paragraph Three - Any expenses incurred with banking operations resulting from the payments shall be borne by the Party itself, without any charge to the other Party.

Paragraph Four - All payments due by Purchaser must be made free of any lien and deductions not expressly provided for in this Agreement, unless any lien and deductions are due to legal and/or regulatory determination.

Section 20 - If, in relation to any invoice, there are undisputed amounts and clear debts that have not been disputed by Purchaser, Purchaser shall pay the undisputed amount on the respective due date.

Paragraph One - Once the question regarding the disputed amounts has been resolved, the owing Party shall, within up to ten (10) business days from the due date of the invoice, if any additional payment is required, pay the amount of the difference to the other Party.

Paragraph Two - The parties understand and accept that the aforementioned default charges will only apply, in this specific case, to the disputed amount, if Purchaser’s questioning proves to be incorrect.

Paragraph Three - In the event that any discrepancies in the amounts invoiced persist, the Parties agree to proceed as provided for in Title XII.

Chapter III - Default in the Payment and its Effects

Section 21 - Purchaser shall be deemed to be in default if it fails to fully or partially pay any of the amounts due on their due dates.

Section 22 - In the event of late payment by Purchaser of any Bill or Tax Invoice issued under this Agreement, the following charges shall accrue on the overdue amounts, plus monetary restatement based on the same adjustment index set out in Annex I:

fine of [***]%on the amount due;

default interest calculated on the invoice amount, which shall be equal to [***]% per month, calculated on a pro rata die basis, for the period between the due date and the date of the actual payment (exclusive);

TITLE VII - PURCHASER’S GUARANTEE

Section 23 - In order to ensure faithful, timely and full compliance with its current and/or future, principal and ancillary, pecuniary obligations related to the Contracted Electricity for the entire Supply Period, Guarantor hereby irrevocably and irreversibly, in its name and in the name of its successor in any way, as guarantor, principal payor, co-obligor and debtor jointly and severally with Purchaser, guarantees in favor of Seller the payment of all amounts due under this the terms of this Agreement (“Guarantee”).

Paragraph One - Guarantor hereby represents to be legally capable and able to provide the Guarantee, and irrevocably and irreversibly accepts to be the principal payer and jointly and severally responsible for any and all current and/or future, principal and/or accessory obligations due under the terms of this Agreement.

Paragraph Two - In case of Purchaser’s default, pursuant to article 397 of the Civil Code, Guarantor shall pay the amount due for the Contracted Electricity within fifteen (15) calendar days after receiving a written notice from Seller to Guarantor informing that Purchaser is in default.

Paragraph Three - Guarantor expressly waives the benefit of privilege under Article 827 do Código Civil, and no objection or opposition by Purchaser may be admitted or invoked by Guarantor with the intent to be released from its obligations to Seller.

Paragraph Four - This Guarantee shall become effective on the date of execution of this Agreement and will remain valid in all its terms until the date of full settlement of the amount due for the Contracted Electricity for all the Supply Period.

Paragraph Five - Guarantor hereby represents that it has read and agrees with the provisions of this Agreement in its entirety, and is aware of all its terms and conditions.

TITLE VIII - ACT OF GOD OR FORCE MAJEURE, AND RATIONING

Chapter I - Act of God or Force Majeure

Section 24 - In the event that any Party is prevented from performing any of its obligations under this Agreement due to an Act of God or Force Majeure, pursuant to article 393 of the Brazilian Civil Code, this Agreement shall remain in force, but the obligations affected by the Act of God or Force Majeure shall be suspended for a period equal to the duration of the said events and proportionally to their effects.

Paragraph One - The Party affected by the occurrence of an Act of God or Force Majeure shall notify the fact to the other Party within no longer than forty-eight (48) hours from the date of the event, upon written notice including (i) detailed description of the Act of God or Force Majeure; (ii) and information about its nature, the extent to which such event jeopardizes the performance of its obligations under this Agreement; and (iii) the estimated period during which the Act of God or Force Majeure will prevent the affected Party from performing its obligations suspended by such event. The suspension of the obligations as a result of Act of God or Force Majeure shall not release the affected Party from its obligation to deliver the volumes agreed or to pay the amounts due in relation to the period prior to the occurrence Act of God of Force Majeure and/or in respect of obligation not affected by the Act of God or Force Majeure.

Paragraph Two - The Party affected by the Act of God or Force Majeure undertakes to take all measures within its reach to overcome the effects arising from the Act of God or Force Majeure that prevent it from performing its obligations, or to mitigate the extension of such effects aiming at the performance, even if partially, of its obligations under this Agreement.

Paragraph Three - On the occasion on which the Act of God or Force Majeure ceases, the affected Party shall notify the fact to the other Party within forty-eight (48) hours, upon written notice, and immediately resume the performance of its obligations under this Agreement.

Paragraph Four - For purposes of this Agreement, under no circumstances the occurrence of any of the events listed below shall be deemed Force Majeure or Act of God:

problems and/or difficulties of economic and financial nature by any Party;

ii.

any measure from any Competent Authority which either Party could have avoided if it had complied with the applicable law;

iii.

insolvency, liquidation, bankruptcy, court-supervised or out-of-court reorganization, restructuring, closing, termination or similar event, of one Party, companies of its Economic Group or third parties;

iv.

Purchaser’s loss of market or its inability to use the Contracted Electricity;

the possibility of Seller or Purchaser, respectively, selling or purchasing the Contracted Electricity in the market with prices more favorable than those agreed hereunder;

vi.

strikes, manifestos or commotions of employees or contractors of the Parties or companies of their Economic Groups;

vii.

variations in the PLD or any type of change in its calculation methodology or definition of the minimum and maximum limits or even calculation and accounting of hours, as well as price variations in the Free Market or even in the Captive Market.

viii.

CCEE’s refusal to account for and/or settle this Agreement as a result of proven action or omission by any of the Parties;

ix.

default or early termination of other electricity sale and purchase agreements entered into by the Parties with third parties;

variations in demand for electricity by consumers/clients of the Parties, or general variations in demand in the Free Contracting Environment (ACL);

xi.

changes in the market conditions in which the Parties operate;

xii.

imposition of government restrictions on the execution of this Agreement, as a result, for example, of electricity rationing programs, provided that no order from competent authority making the execution of the Agreement unfeasible is contemplated hereby.

Paragraph Six - If any Party hereto erroneously claims the occurrence of Act of God or Force Majeure to escape from performing any obligation hereunder, the other Party will be entitled to terminate this Agreement, and the Party giving rise to termination shall be subject to the penalties provided for in this Agreement.

Paragraph Six - The occurrence of an Act of God or Force Majeure so recognized will imply the suspension of Seller’s obligation to deliver the volumes of Contracted Electricity and, consequently, the suspension of Purchaser’s obligation to pay therefor. The suspension of the obligations will continue for the same period as the Act of God or Force Majeure continues, and will not give rise to automatic extension of the Supply Period.

Chapter II - Rationing and Rationalization

Section 25 - The contractual responsibilities, in the event of electricity rationing, shall be governed by the Applicable Law and/or the Sale Procedures and Rules that may be determined by the Competent Authority.

Sole Paragraph - In the event of a rationing decree, and if there are no rules to be applied to a given affected transaction nor any provision in the Sales Rules and Procedures to regulate the subject, the respective transaction shall immediately suffer a reduction in the quantity of Contracted Electricity and in the corresponding payment, in the exact proportion of the consumption reduction target that may be adopted for the relevant Submarket or the Purchaser Consumer Unit (if applicable), during the period in which the rationing continues.

TITLE IX - IRREVOCABILITY

Section 26 - Except as provided for in Section 27 below, this Agreement is executed on an irrevocable and irreversible basis to be effective during the Supply Period, pursuant to Section 6.

TITLE X - EVENTS OF EARLY TERMINATION, LIABILITY AND INDEMNITY

Chapter I - Early Termination Events

Section 27 - Notwithstanding the irrevocable and irreversible nature of the Agreement, the non-breaching Party may terminate the Agreement upon prior notice to the breaching Party. The breaching Party shall be entitled to a period of five (5) business days, per event, from the receipt of the aforementioned notice to cure a breach of financial obligations, and fifteen (15) business days to cure a breach of non-financial obligations, except in the case of subsection i. below. This Agreement may be early terminated by the non-breaching Party in the event of any of the following circumstances:

In the event of filing for bankruptcy, dissolution, or judicial or extrajudicial liquidation of the other Party or in the event of court-supervised or out-of-court reorganization of the other Party;

ii.

If the other Party fails to obtain any legal, governmental, or regulatory authorization that is essential for the performance of the activities or obligations under this Agreement at the beginning of the Supply Period, or may have it revoked, including, but not limited to, the permit to conduct its business, or may have its rights as CCEE member suspended;

iii.

If the registration of the Agreement by Seller is canceled or adjusted in whole or in part by CCEE or by Competent Authority, and Seller has not registered in favor of Purchaser another electricity sale and purchase agreement covering the obligations assumed in this Agreement;

iv.

If the guarantees set out in this Agreement are not provided or are not renewed, supplemented and/or do not remain in force, as provided for in the Agreement;

In event that Seller does not register and validate Contracted Electricity with CLIQCCEE, according to the terms hereof;

vi.

In the event of a change in the control of one of the Parties in disagreement with the conditions required under Title XIV of this Agreement;

vii.

Breach by the other Party of any of its obligations under this Agreement, subject to the cure period provided for in the main provision hereof; and

viii.

Failure by any of the Parties to comply with the provisions of Section 38 will result in immediate termination of the Agreement, regardless of prior notice.

Paragraph One - The Agreement shall be deemed terminated upon expiration of the period of time provided for in the main provision of this Section.

Paragraph Two - Upon termination of this Agreement, the breaching Party shall release the other Parties from any obligation and liability under this Agreement, including those to CCEE and to third parties, and shall pay any of the penalties provided for in this Agreement.

Paragraph Three - The termination of this Agreement does not release Purchaser from the obligation to pay for the Contracted Electricity that has been actually delivered by Seller until the date of termination.

Paragraph Four - After the termination of this Agreement, Seller will change to zero the quantities of Contracted Electricity and registered with the CCEE for the remaining Supply Period and will terminate this Agreement in accordance with the Procedures of this Agreement and the Sales Procedures, and Seller shall also validate the necessary adjustments for termination of the Agreement within one (1) business day after notice by Seller.

Paragraph Five - The Parties hereby acknowledge that breaches of obligations related to the registration and validation of this Agreement with CCEE will not be considered as a case of termination of the Agreement, so long as the Parties have paid the financial amounts due under the Agreement, including within the deadlines for payment of financial compensation set forth in Section 13 of this Agreement.

Chapter II - Replacement of Consumer Units

Section 28 - Purchaser shall be entitled to replace one or more Consumer Units listed in Annex III, without this resulting in an event of termination, with one or more other Consumer Units that are not listed therein, provided that such new Consumer Unit or such new Consumer Units are located in the same Submarket as the replaced Consumer Unit and have the same consumption characteristics as the one to be replaced. For such purpose, Purchaser shall send a notice to Seller in accordance with Section 77 below, identifying (i) the Consumer Unit to be replaced; (ii) complete data of the new Consumer Unit with corporate name, CNPJ, state registration, address and Submarket; and (iii) the estimated time schedule for such replacement.

Paragraph One - Seller shall have five (5) business days to verify the compliance of Purchaser’s request and to send an answer.

Paragraph Two - If the request meets the characteristics required above, Seller shall make the necessary adjustments in order to have the replacement Consumer Units reflected in the subsequent bills.

Chapter III - Seller’s Default under the Supply Agreement

Section 29 - In the event of any default by Seller that results in the need to terminate within the scope of the Supply Agreement, this Agreement will be automatically assigned to the Primary Supplier, which will be subrogated in all rights and obligations arising from this Agreement, except for management services. The Parties hereby represent that they will perform all acts necessary for the consummation of the assignment of this Agreement.

Paragraph One - Considering that the above provision is exclusively intended to maintain the supply of Contracted Electricity to Purchaser, Purchaser and Seller agree that, in the event of the above provision, no fines or penalties will be charged to the Seller.

Paragraph Two - In the event of application of the head provision of this Section 29, Purchaser shall adjust the terms of this Agreement in order to exclude the provisions pertaining to the management service, jointly with the Primary Supplier.

Paragraph Three - Also in the event of application of the head provision of Section 29 above, without prejudice to the adjustment provided for in paragraph two above, this Agreement will become effective subject primarily to the terms of Title XV, with all other sections and conditions of the Agreement that do not conflict with the sections of the said Title being ratified.

Chapter IV - Liability, Fine and Indemnity

Section 30 - In the event of termination, the Party giving rise to termination shall pay the other Party a non-compensatory fine for early termination in the amount equivalent to thirty percent (30%) of the remaining amount of the Agreement, plus compensation for any difference between the Contract Price and the electricity market prices, as provided for in Section 31.

Sole paragraph - The amount of the non-compensatory fine referred to in the head provision of this section shall be calculated according to the formula below:

[***]

Section 31 - Without prejudice to the non-compensatory fine provided for in the Section above, the Party giving rise to termination shall pay the other Party financial compensation for direct damages that shall be calculated based on the price for replacement of the Contracted Electricity volume, as provided in the paragraphs of this Section.

Paragraph One - If early termination of this Agreement is caused by Purchaser and the Replacement Electricity Price is lower than the Contract Price, Purchaser shall pay Seller compensation calculated as follows:

Paragraph Two - If early termination of this Agreement is caused by Seller and the Replacement Electricity Price is greater than the Contract Price, Seller shall pay Purchaser compensation calculated as follows:

Paragraph Three - It is hereby understood and accepted that, if the difference between the contract price and the Replacement Electricity price, or vice versa, is negative, there will be no direct damages, but a non-compensatory fine will apply as provided for in Section 30.

Paragraph Four - The liability of each Party under this Agreement shall, in any event, be limited to the amount established in this chapter, and neither Party shall be under any obligation to indemnify the other for any indirect damages, including, but not limited to, consequential damages, punitive damages, loss of profits, pain and suffering, loss of a chance/opportunity or any other indemnity of any nature arising from the facts resulting in fine and consequential damages.

Paragraph Five - Termination of this Agreement shall not exempt the Parties from obligations due until the termination date, and shall not affect nor limit any right that, expressly or by its nature, should remain in force after termination or that may result from termination.

TITLE XI - PARTIES’ OBLIGATIONS

Section 32 - The termination of this Agreement’s term of effectiveness shall not affect any rights or obligations arising before such event or the obligations or rights of any Party, even if they are exercised or complied with after termination of the Agreement.

Section 33 - Without prejudice to the other obligations established herein, the Parties undertake:

Strictly abide by and comply with any Law applicable to their businesses and/or operations to be conducted under this Agreement;

Obtain and keep valid and in force, during the term of effectiveness of this Agreement, all licenses and permits required for the conduction of their business and/or performance of their obligations under this Agreement, except where any change is made in such status by the Competent Authorities, within the attribution of their powers, in which case the Parties undertake to seek a contractual alternative to preserve the economic and financial effects of the Agreement as close as possible to what was originally agreed upon; and

Notify the other Party within no longer than forty-eight (48) hours from the date when it gets knowledge of any event of any nature which might pose a threat to the full and timely performance of the obligations under this Agreement.

Sole Paragraph - In the event that Seller is unable to manage Contracted Electricity, the Parties hereby undertake to renegotiate the terms agreed hereunder, guaranteeing the delivery of the Contracted Electricity to Purchaser and excluding the management services described in this Agreement. Likewise, if Seller does not receive authorization to operate as a retailer or, for any other reason, Purchaser units are not converted into retail units, the Parties undertake to renegotiate the terms agreed herein in order to resolve on the termination of the management services and renegotiation of electricity prices to maintain the contractual balance between the Parties.

TITLE XII - RESOLUTION OF DISPUTES

Section 34 - A dispute is initiated when a Dispute Notice is sent by one Party to the other.

Section 35 - In the event of any dispute or controversy arising from this Agreement, the Parties hereby agree to use their best efforts to resolve it amicably by means of negotiations in order to reach a fair and satisfactory solution acceptable to both of them within up to fifteen (15) days from the sending of the Dispute Notice by one Party to the other.

Sole Paragraph - The sending of a Dispute Notice by one of the Parties does not release it from performing any of its obligations hereunder, and any corrections that may be necessary shall be made at the end of the negotiation or conflict-solving process adopted.

Section 36 - The Parties elect the courts of the Judicial District of the City of São Paulo, State of São Paulo, to resolve any disputes related to this Agreement, with express waiver of any other, however privileged it may be.

TITLE XIII - CONFIDENTIALITY AND ANTICORRUPTION

Section 37 - Each Party agrees that all information and data made available to the other Party will be deemed confidential as provided for in this Agreement, and no Party shall disclose any such information to any third party without the prior written approval of the other Party, provided that:

This Section will not apply to information that is in the public domain;

This Section will not apply in the event of information provided to ANEEL or CCEE or any other Competent Authority that may require it, in accordance with the Law, court order or determination of any government body or authority, as well as the financial institutions that will act in the issue of the Performance Bond and guarantee of long-term financing. In this case, the disclosing Party will only disclose confidential information as strictly required by the court order or legal determination; and

This Section will not apply if the information is sent to public or private financial institutions, so long as in compliance with the confidentiality duty of this Section.

Section 38 - The Parties shall keep strictly secret the performance resulting from this Agreement and shall ensure that their employees, agents, representatives, service providers and the like also keep secret every information related to or belonging to any of the Parties and/or jointly developed by them.

Section 39 - The Parties hereby represent that they are aware of, know and understand the terms of the Brazilian anticorruption law or any other applicable provisions of this Agreement, especially Law 12.846/2013 and Decree 8.420/2015 (“Anti-corruption Rules”), and undertake to refrain from any activity that constitutes a violation of the provisions of these Anticorruption Rules.

Paragraph One - The Parties, on their own behalf and on behalf of their managers, officers and agents, as well as their shareholders who may act on their behalf, undertake to conduct their business activities during the term of this Agreement in an ethical manner and in compliance with the applicable legal requirements. When performing this Agreement, neither Party nor their officers, employees, agents or shareholders acting on their behalf shall give, offer, pay, promise to pay, or authorize the payment of, whether directly or indirectly, any money or anything of value to any governmental authority, consultants, representatives, partners or any other third party, with the purpose of influencing any act or decision by the official or the government, or to assure any undue advantage or direct business to any person, which may violate the Anticorruption Rules.

Paragraph Two - Any failure by the Parties to comply with the Anticorruption Rules, in any aspect thereof, shall give rise to immediate termination of this instrument for cause, regardless of any notice, subject to the penalties provided for in this Agreement.

Paragraph Three - The parties hereby expressly represent that the amounts under this Agreement are not resulting from any unlawful activity. Thus, in order to ensure that the transactions carried out are not to conceal the proceeds from criminal activities, and that no funds will be used to perform unlawful acts, the necessary measures will be taken as required by Law No. 9613/98 and amendments to Law No. 12.683/2012. Accordingly, the transactions shall be carried out based on ethical principles and in full compliance with the laws and regulatory rules aimed at preventing money laundering and the financing of terrorism.

TITLE XIV - CHANGE IN CONTROL

Chapter I - Change in Direct and Indirect Control of the Seller

Section 40 - The change in direct and indirect control of Seller is permitted with the prior approval of Purchaser.

Section 41 - Any direct or indirect change in the shareholding structure of Seller that does not imply a change in control does not require Purchaser’s prior consent.

Chapter II - Change in Direct and Indirect Control of the Purchaser

Section 42 - The change in direct and indirect control of Purchaser is permitted without the prior approval of Seller, so long as the sections of this Agreement remain unchanged and the assignee fully assumes the obligations set out in this Agreement.

TITLE XV - SUBROGATION

Chapter I - Payment Conditions

Section 43 - In the event of the subrogation, the sections included in this Title shall prevail over all other provisions that conflict with or are contrary to them, with all other provisions hereof being ratified.

Sole Paragraph: For the avoidance of doubt, the Parties agree that, in the event of subrogation, the guarantees previously granted by the Parties under this Agreement will be extinguished and replaced by the guarantees provided for in this title.

Section 44 - Purchaser is aware that all current and/or future rights of [***] arising from, related to and/or under the Free Market Electricity Sale Agreements and the respective amendments thereto, were assigned under fiduciary assignment of credit rights in guarantee of obligations assumed with funding providers¹ of the respective complex, and so Purchaser assumes the obligation to pay any and all amounts arising from this Agreement at the following financial institutions and in the following checking accounts described in the table below. The deposit obligation in the manner described will remain in effect until the notice, to be sent to Purchaser, of the full performance of Sellers’ obligations to the funding providers, as may be attested by them.

¹ Fiduciary assignment of credit rights as guarantee of the obligations assumed (i) under the “Credit Facility Agreement No. 15.2.0516.1”, executed on November 13, 2015; (ii) under the “Credit Facility Agreement upon Transfer of Funds (On-Lending) by the Brazilian Development Bank (BNDES) No. 000050004280700”, executed on March 2, 2016; and (iii) under the “Private Instrument of Indenture of the Second (2nd) Issue of Simple Debentures, Not Convertible Into Shares, with Collateral Guarantee and Additional Personal Guarantee, in a Single Series, for Public Distribution with Restricted Efforts, of Complexo Morrinhos Energias Renováveis S.A.”, executed on April 10, 2017; created under the “First Amendment and Restatement to the Agreement for Fiduciary Assignment of Credit Rights, Management of Accounts, and Other Covenants”, executed as of the date hereof by and between the Brazilian Development Bank – BNDES (“BNDES”), Itaú Unibanco S.A. (“Itaú”), Banco Santander (Brasil) S.A. (“Santander”), Banco Bradesco S.A. (“Bradesco”), and Oliveira Trust Distribuidora de Títulos e Valores Mobiliários S.A., as representative of the group of debenture holders of the second (2nd) issue of simple debentures, not convertible into shares, with collateral guarantee and additional personal guarantee, in a single series, for public distribution with restricted efforts, of [***] (“Oliveira Trust” and, jointly with BNDES, Itaú, Santander and Bradesco, “Guaranteed Parties”) and, as assignors, [***], [***], [***], [***], [***], and [***]. (“[***]” and, jointly with [***], [***], [***], [***], “Assignors”), with others as intervening parties (“Fiduciary Assignment Agreement”)

Assignor

CNPJ (National Corporate Taxpayer’s Register)

Bank

Branch

Account

[***]

Section 45 - Purchaser is aware that all current and/or future rights of [***] arising from, related to and/or under the Free Market Electricity Sale Agreements and the respective amendments thereto, were assigned under fiduciary assignment of credit rights in guarantee of obligations assumed with funding providers² of the respective complex, and so Purchaser assumes the obligation to pay any and all amounts arising from this Agreement at the following financial institutions and in the following checking accounts described in the table below. Any changes in the terms and instructions of this Section 45 may only be made with the prior and written authorization of the guarantors.

[***]

Chapter II - Billing

Section 46 – The electricity will be billed on a monthly basis according to the Billable Monthly Electricity quantity, in megawatt-hours, and the Contract Price agreed under this Agreement, according to the formula below:

[***]

Section 47 - Purchaser shall pay all Sector Charges and Taxes for which it is responsible.

Section 48 - Considering that the Contracted Electricity is from an incentivized source, pursuant to Law No. 9.427/1996, Article 26, paragraph 1, the Parties are entitled to a rebate in the TUSD/TUST, according to the terms of the applicable Law and the Sales Rules and Sales Procedures.

² We have irrevocably and irreversible given under fiduciary assignment to Itaú Unibanco S.A., Banco BTG Pactual S.A., Banco ABC Brasil S.A. and Banco Pine S.A., to ensure the payment of any obligations under the Guarantee Agreement and Other Covenants, dated March 29, 2018, as amended from time to time, all the credit rights of Lagoa do Barro Complex.

Paragraph one - If in a given Contract Month the TUSD/TUST Reduction Percentage delivered by the Primary Supplier on the sale of the Billable Monthly Electricity is less than the TUSD/TUST Reduction Reference Percentage established in Annex I, Purchaser shall send a debit note to the Primary Supplier with its bank details for payment.

[***]

Paragraph Two - If the TUSD/TUST Reduction Percentage occurs in the last month of supply, Purchaser shall send a debit note to the Primary Supplier with its bank details for payment, according to the parameters established in the previous paragraph.

Paragraph Three - Purchaser and the Primary Supplier represent that they freely agreed on this provision with regard to the formula given above and the reimbursement thereof, and that they are aware that due to the system of calculating the TUSD/TUST Reduction Percentages at CCEE, a time lag will occur. Purchaser and the Primary Supplier also represent that they know CCEE’s method of publishing and reviewing the TUSD/TUST Reduction Percentages and the possibility of reassessing and recalculating the price, considering the calculation of the TUSD/TUST of the last month of supply whenever such reviews are made.

Paragraph Four - In the event of a Percentage Reduction in the TUSD/TUST delivered by Seller, Purchaser shall issue a debit note stating the lower value of the actual operation and stating the reason for its issuance, and the number and date of the debit note, proportionally to the TUSD/TUST Reduction Percentage delivered, after exhaustion of all possibilities of disputing the rebate reduction before the CCEE.

Paragraph Five - In the event of republication or recalculation of the rebate matrix described in the head provision above, the Primary Supplier will issue a reimbursement debit note, stating the additional value of the actual operation and stating the reason for its issue and the number and date of original tax invoice, proportionally to the TUSD/TUST Reduction Percentage delivered, after exhaustion of all possibilities of disputing the rebate reduction before the CCEE.

Paragraph Five - Purchaser and the Primary Supplier hereby acknowledge that, in the event of any regulatory change that is proven to have a neutral effect on the adjustment and price conditions, no refund will be due and there will be no change in the Contract Price.

Paragraph Seven - The Primary Supplier shall not be liable for the financial reimbursement provided for in this Section as result of reduction in the TUSD/TUST rebate, which is proven to have been motivated by Purchaser, according to the Sales Procedures and Sales Rules.

Paragraph Eight - The temporary loss or reduction in the applicable TUSD/TUST rebate will not constitute Primary Supplier’s contractual default when reimbursed according to this Section.

Paragraph Nine - Purchaser and the Primary Supplier hereby agree that, under no circumstances described above, the amount attributed to the financial compensation resulting from the loss of the discount in the TUSD/TUST will be greater than the component (VPNA_k) provided for in Annex I to this Agreement.

Chapter III - Seasonalization e Modulation

Section 49 - The conditions for making the distribution of the quantities of Contracted Electricity in the corresponding load levels through Seasonalization and Modulation, respectively, are established by the Parties in Annex I to this Agreement.

Sole Paragraph - By October 15 of each year, Purchaser will inform the Primary Supplier of the need to apply the seasonalization described in Section 49- above, at a cost of BRL[***] per MWh, and the seasonalization will be provided to Purchaser pursuant to the terms of Annex I to this Agreement.

Section 50 - The option to apply seasonalization in accordance with Section 49- will imply an increase of R$[***] to the base price established in Annex I.

Chapter IV - Flexibility

Section 51 - The Contracted Electricity shall be supplied by Seller to Purchaser on a monthly basis with a supply flexibility of up to [***]%upwards or downwards, as detailed in Annex I to this Agreement.

Section 51 - Purchaser shall provide the Primary Supplier, until the 2nd business day of each month, with the measurement data consolidated per Consumer Unit, listed in Annex III, collected from the SCDE system to determine the monthly consumption, plus losses equivalent to [***]% of the measured consumption. The measured electricity, plus losses, will be applied to the flexibilities for determining the Billable Monthly Electricity. This flexibility shall be exercised in accordance with Purchaser’s official consumption measurement reports - CCEE MED003 - or any future format that may replace it.

Paragraph One - If Purchaser, for any reason, in a given Contract Month, does not need [***]% of the Monthly Contracted Electricity, the Billable Monthly Electricity will be equivalent to at least [***] of the Monthly Contracted Electricity.

Paragraph Two - If Purchaser, for any reason, in a given Contract Month needs more than [***] of the Monthly Contracted Electricity, the Billable Monthly Electricity will be equivalent to at most [***]% of the Monthly Contracted Electricity.

Chapter V - Guarantees

Item I - Purchaser Guarantee

Section 53 - In order to ensure the faithful, timely and full performance of its current and/or future pecuniary, principal and accessory obligations related to the Contracted Electricity during all the Supply Period, Purchaser shall provide, upon the execution of the instrument of assignment of this Agreement, a financial guarantee in the form of a Bank Guarantee issued by top financial institutions classified as AAA (Bra) by Moody’s, Fitch or Standard & Poor’s, considering the billable amount equivalent to six (6) months of this Agreement, and shall be renewed periodically by Purchaser in order to remain valid until the full fulfillment of Purchaser’s obligations under this Agreement, plus 30 days after the Electricity Sale Agreement between Purchaser and the Primary Supplier. This guarantee shall be renewed every six months.

Paragraph One - Purchaser shall keep the guarantee valid, enforceable and sufficient during all the period for which it was issued, regardless of Primary Supplier’s notice.

Paragraph Two - Purchaser and the Primary Supplier hereby agree that in the event of termination due to Purchaser’s fault, the Primary Supplier may use the bank Guarantee provided to pay the penalties imposed on Purchaser.

Paragraph Three - Failure by Purchaser to fulfill its obligations to submit, maintain, reinforce or replace the guarantee will result in a default event by Purchaser, pursuant to the terms of this Agreement.

Paragraph Four - If Purchaser does not maintain its valid, enforceable and sufficient guarantee for the entire period for which it was issued, the Primary Supplier will be exempted from the obligation to register with CliqCCEE, on behalf of Purchaser, the Contracted Electricity volume corresponding to the six (6) months of the Supply Period under Section 11.

Item II - Primary Supplier Guarantee

Section 54 - Atlantic will fully guarantee this Agreement through the issue of a Corporate Guarantee Letter, under the terms of Annex V, valid from the date of its issue and until the full performance of the Primary Supplier’s obligations under this Agreement. This guarantee shall be provided within five (5) days from the receipt of notice of subrogation by Purchaser.

Paragraph One - The Primary Supplier shall keep the guarantee valid, enforceable and sufficient during all the period for which it was issued, as provided for in Annex V hereto, regardless of notice by Purchaser.

Paragraph Two - The Primary Supplier and Purchaser hereby agree that in the event of termination due to the Primary Supplier’s fault, Purchaser may use the Corporate Guarantee Letter provided by Atlantic to pay the penalties imposed on the Primary Supplier, upon written notice.

Paragraph Three - if Atlantic ceases to exist as result of a corporate restructuring, the Primary Supplier may offer a Corporate Guarantee Letter, in the form of Annex V, issued by its new direct or indirect controlling company, as an alternative guarantee.

Paragraph Four - In the event of non-performance of the guaranteed obligations on the dates on which they are due, according to the terms and conditions of this Agreement, and regardless of any act of enforcement or collection through execution proceedings, the Primary Supplier shall immediately arrange for the performance of the guaranteed obligations, within the no longer than five (5) business days from the date of receipt of notice sent by Purchaser informing the Primary Supplier’s non-compliance.

Paragraph Five - Failure by the Primary Supplier to comply with its obligations to provide, maintain, reinforce or replace the guarantee will be deemed a default according to the terms of this Agreement.

Paragraph Six - Purchaser and the Primary Supplier may register the guarantees provided by the other parties, each bearing their respective costs.

Chapter VI - Registration and Validation

Section 55 - The Primary Supplier shall register and update monthly in the CliqCCEE, on behalf of Purchaser, the total volume of Contracted Electricity corresponding to the period of six (6) months of the supply under this Agreement, within five (5) days after delivery of the guarantee referred to in Section 49 and 50, and Purchaser shall validate the said registration.

Paragraph One - Purchaser will be exempt from any contractual penalty or sanction if the Primary Supplier does not register the Contracted Electricity as provided for above.

Paragraph Two - if the Primary Supplier does not register the volume of Contracted Electricity within the deadlines set out in the electricity Sales Rules, the Primary Supplier shall bear the costs with financial settlement of the MCP, payment of penalties for exposure of electricity generation capacity and restoration of electricity in the immediately following accrual month. In the following accrual month, Purchaser hereby agrees to refund, within five (5) business days after the credit date of the Financial Settlement of the CCEE, the amount paid in relation to the electricity used to restore the generation capacity priced in the MCP.

Paragraph Three - The Primary Supplier will not suffer any penalty if Purchaser does not validate its electricity registration with CliqCCEE, except in cases where the Primary Supplier makes an incorrect registration of the Contracted Electricity volume, in which case the Primary Supplier shall be subject to the penalties and other liens provided for in this Agreement.

Paragraph Four - Without prejudice to the provisions of Paragraph Four above, if Purchaser does not validate the registration made by the Primary Supplier pursuant to the terms of this Agreement, Purchaser (i) shall remain obliged to pay the invoice for the respective month, and shall bear all direct costs and penalties directly resulting from the disregard of the amounts not validated in the accounting of the respective month, (ii) shall not be entitled to require from the Primary Supplier the registration of the Contracted Electricity paid and not registered in a month other than the one in which the consumption should occur, and (iii) shall not be entitled to demand from the Primary Supplier any type of indemnity or financial compensation for its omission to validate.

Paragraph Five - If the Primary Supplier correctly performs the registration of the electricity and Purchaser does not make the validation, (i) Purchaser may request a new computation through the CCEE or any other mechanism provided for in the Sales Rules and Commercialization Procedure to restore the registration of the Electricity for the period; or (ii) if Purchaser is not successful in the procedure provided for in item (i), the Primary Supplier shall transfer the lesser of the following amounts to Purchaser: (a) the net financial amount actually received, free of direct and indirect taxes, at CCEE in favor of the Primary Supplier. In this case, the amount shall be transferred to Purchaser upon issue of a debit note due and payable within five (5) business days after the amount is actually available in the Primary Supplier’s account; or (b) the amount of the tax invoice for electricity not validated in the reference month.

Paragraph Six - Purchaser shall grant a specific irrevocable power of attorney to Primary Supplier for the cancellation of the registration with CCEE, in the event of proven termination of the Agreement pursuant to Annex V.

Paragraph Seven - The irrevocability of the powers of attorney referred to in Paragraph Five above is a condition of this Agreement, and the revocation of the power of attorney by the grantor is null and void pursuant to article 684 and the sole paragraph of article 686 of the Civil Code.

Section 56 - In the event that the Primary Supplier does not register or adjust the Contracted Electricity due to Purchaser default, Purchaser shall not be entitled to the Contracted Electricity and/or to any complaint, and this Agreement may be terminated, and Purchaser shall pay the amounts relating to the fine and financial compensation provided for in Sections 30 and 31.

Section 57 - Without prejudice to the provisions of Sections 30 and 31 of this Agreement, if the registered quantity of Contracted Electricity is to be changed/adjusted by CCEE, in accordance with the Sales Procedures and Rules and as established in ANEEL Normative Resolution No. 622, of August 19, 2014, due to the Primary Supplier’s proven fault, the Primary Supplier undertakes to reimburse Purchaser upon debit note to be paid within up to five (5) business days after the date of its issue. The amount of reimbursement shall take into account the losses and damages duly proven resulting from the said adjustment, proportional to the amount of electricity canceled by the CCEE, including, but not limited to (i) amounts paid in the Short-Term Market; (ii) penalties for insufficient electricity generation capacity; and (iii) replacement electricity to be acquired by the affected Party. With respect to replacement electricity, Purchaser hereby agrees to refund, within up five (5) business days, the amount paid in relation to the electricity used to restore the generation capacity upon financial settlement.

Sole Paragraph - If the registration of the Agreement is definitely canceled by the CCEE, the Party giving rise to such cancellation shall pay the amounts provided for in Sections 30 and 31.

Chapter VI - Change in Direct and Indirect Control of the Primary Supplier

Section 58 - Change in direct and indirect control of the Primary Supplier is permitted, provided that Atlantic continues to directly or indirectly hold one hundred percent (100%) of the company that to which has been awarded the Project.

Section 59 - Corporate restructuring that results in a change, directly or indirectly, of Atlantic’s shareholding interest in the Primary Supplier is permitted, so long as within the economic group of Atlantic.

Section 60 - In the case of corporate restructuring within the economic group, according to Section 58 above, the new parent company of the Primary Supplier shall provide a corporate guarantee, pursuant to Annex V or another guarantee acceptable to Purchaser, and the new guarantee shall be maintained throughout the term of this Agreement.

Section 61 - Any direct or indirect change in the shareholding structure of the Primary Supplier not covered by Sections 58, 59 e 60 does not require Purchaser’s prior consent.

Chapter VIII - Change in Direct and Indirect Control of the Purchaser

Section 62 - Corporate restructuring that results in a change, directly or indirectly, in the control of Purchaser is permitted, so long as within the economic group of Purchaser.

CHAPTER IX - Miscellaneous

Section 63 - Purchaser and the Primary Supplier may not assign this Agreement and any and all of their rights hereunder, in whole or in part, without the express and written consent of the other Party, except as provided for in Sections 44 and 45 of this Agreement.

Paragraph One - For all legal purposes and effects, Purchaser hereby authorizes the Primary Supplier make a fiduciary assignment of credit rights from this Agreement in favor of lenders (creditors) of funds provided for the implementation of the wind power project, individually or jointly with other projects, including issue of debentures subject to a public offering with restricted distribution efforts, pursuant to the terms of the Instruction No. 476 of the Brazilian Securities and Exchange Commission, issued on January 16, 2009 (“Offering 476”), subject to the satisfaction of the requirements, cumulatively:

(i)

Purchaser is not required to sign any documents or take any new obligations other than those provided for in this Agreement.

(ii)

The respective lock of the Primary Supplier’s bank address or credit rights under this Agreement will not be used directly or indirectly to back securitization transactions in Brazil and/or abroad.

(iii)

The fiduciary assignment is made exclusively in favor of lenders (creditors) of funds provided for the implementation of a wind project, individually or jointly with other projects, including the issue of debentures subject to a public offering with restricted distribution efforts, pursuant to Instruction 476 of the Brazilian Securities and Exchange Commission, issued on January 16, 2009 (“Offering 476”), provided, however, that the fiduciary assignment of credit rights as guarantee of instruments (debt instruments or others) offered by means of a public, primary and/or secondary public offering is not permitted, according to the terms of Instruction No. 400 of the Brazilian Securities and Exchange Commission, issued on December 29, 2003, as amended (or any instruction succeeding it).

No mention is permitted to be made of the name of Purchaser, the Intervening Guarantor of Purchaser or the companies directly or indirectly controlling, controlled by, or under common control with any of them (“Related Parties”), or of this Agreement and its terms and conditions, except in the exhibits to the financing agreements and/or indenture that aim to list the credits assigned under fiduciary agreement to the creditors - so long as such exhibits guarantee the confidentiality of the commercial conditions provided for herein - and in any notice, by the Primary Supplier, to the underwriters of the offer, rating agencies and creditors or potential investors of the financings obtained for the project and respective advisors, provided that: (a) the notice is given to the extent as necessary to assess credit risk and enable the financing of the project in accordance with market practices for the respective type of operation; and (c) any notice given by the Primary Supplier regarding this Agreement, Purchaser and/or its Related Parties, expressly specify the fact that Purchaser’s obligations under this instrument are conditional upon the Primary Supplier’s full and timely performance of its obligations, thus constituting an obligation to do.

In any case: (a) the Primary Supplier is not permitted to use the logo of the companies of the Purchaser group and their Related Parties; (b) the use of the name of Purchaser and its Related Parties in any material other than those provided for herein by the Primary Supplier shall be subject to the prior and written consent of Purchaser; (c) the fiduciary assignment may only be offered by the Primary Supplier, according to the terms hereof, if there is no default by the Primary Supplier, Atlantic or the companies directly or indirectly controlling, controlled by or under common control with any of them, to Purchaser and its Related parties either according to this instrument or other instruments, or in compliance with the law, regulation or self-regulation; (d) under no circumstances will Purchaser and/or any of its Related Parties be required to disclose information concerning to them, including financial statements, or to certify the veracity, consistency, sufficiency or quality of the information provided; (e) the fiduciary assignment may not generate, for Purchaser or any of its Related Parties, any lien, cost, expense or additional disbursement requirement, in any form or in any way.

Paragraph Two: In no event, the fiduciary assignment of credit rights may be invoked to restrict or limit the exercise of any right granted to Purchaser under this Agreement.

Section 64 - This Agreement may not be changed nor any provision hereof waived other than by written amendment signed by Purchaser and the Primary Supplier, subject to the provisions of the applicable law.

Section 65 - No delay or forbearance by any of the Parties in relation to the exercise of any right, power, privilege, or remedy under this Agreement shall adversely affect such right, power, privilege, or remedy, nor shall it be deemed as a waiver or novation of such obligation(s).

Section 66 - Any notice or other communication by one Party to the other in respect of this Agreement shall be in writing, in Portuguese language, and addressed to the agent of each party named in Annex II, and may be delivered or sent by registered mail or electronic means, in any case with return receipt requested, at the addresses mentioned by them in the preamble of this instrument, or at the addresses they may expressly specify in the future. Any changes in the content of this Annex shall be notified by the Party at least fifteen (15) days in advance.

Section 67 - In the event that any of the provisions of this Agreement is deemed illegal, invalid or unenforceable, all the remaining provisions hereof shall not be affected and will continue in full force and effect. In any of the events set forth herein, the Parties hereby agree to search a provision to replace it which meets the goals of the provision deemed illegal, invalid or unenforceable, and which maintains, as far as possible, in all circumstances, the balance between the commercial interests of Purchaser and the Primary Supplier.

Section 68 - This Agreement contains or expressly refers to the entire understanding between Purchaser and the Primary Supplier in respect of its subject matter, and comprises all the prior agreements and understandings between the Parties concerning the subject matter hereof. Purchaser and the Primary Supplier agree and confirm that this Agreement is not entered by relying on any representation, warranty or other promise of the other Party other than those expressly provided for in this Agreement. The terms of this Agreement and Annexes hereto supersede all documents and negotiations previously made between Purchaser and Primary Supplier up to the date hereof regarding the subject matter of this Agreement

Section 69 - In the event of any subsequent change in Law that materially modifies the conditions of this Agreement, the Purchaser and the Primary Supplier hereby agree to execute an amendment to this Agreement in order to have it adapted to the supervening Law, so long as there is no provision in this Agreement to the contrary.

Paragraph One - In case it is necessary to amend this Agreement in order to make the financing of the Project viable, Purchaser and the Primary Supplier agree to discuss in good faith the respective changes, so long as such change does not result in any additional lien to Purchaser.

Paragraph Two - Purchaser and the Primary Supplier expressly represent to have full knowledge of the Law and regulations applicable to the sale of electricity in the Free Contracting Environment (ACL), especially the sale and purchase of electricity, acquisition of volume of use of network and connection with the distribution system.

Section 70 - This Agreement is recognized by Purchaser and the Primary Supplier as an enforcement deed, pursuant to Article 784, section III, of the Brazilian Code of Civil Procedure, for collection of overdue amounts.

Chapter VIII - COMMERCIAL CONDITIONS OF THE OPERATION

Section 71 - In the event of the subrogation hereunder, the COMMERCIAL CONDITIONS OF THE OPERATION shall become effective, as shown in the table below:

TERMS AND CONDITIONS FOR THE SALE OF ELECTRICITY
Seller's CNPJ	[***]
	[***]
	[***]
	[***]
	[***]
	[***]
	[***]
	[***]
	[***]
	[***]
	[***]
	[***]
	[***]
	[***]
Intervening Guarantor of Sellers	[***]
CNPJ/MF	[***]
Address	[***]
Purchaser
Intervening Guarantor of Sellers
CNPJ/MF
Address

COMMERCIAL CONDITIONS OF THE OPERATION

Supply Period	From 12:00 a.m. on January 1, 2022, to midnight on December 31, 2034
Type of Electricity Source	[***]% Incentivized
Delivery Point	Center of gravity of the [***] Submarket
Contracted Electricity	Start Date	Quantity in Average MW	Price (BRL/MWh)
	2022	13.42	[***]
	2023	13.42	[***]
	2024	13.42	[***]
	2025	13.42	[***]
	2026	13.42	[***]
	2027	13.42	[***]
	2028	13.42	[***]
	2029	13.42	[***]
	2030	13.42	[***]
	2031	13.42	[***]
	2032	13.42	[***]
	2033	13.42	[***]
	2034	13.42	[***]
Monthly Flexibility	+/-[]%*
Annual Seasonalization	+/-[]%.* Seller will send Purchaser, by the 20th day of the month October of each year of the Supply Period, a suggestion of the intended seasonalization curve for the following year, subject to the Contracted Electricity quantities defined in this Annex. Purchaser shall, within five (5) business days, approve the seasonalization curve suggestion sent by Seller or indicate a new curve to be adopted, provided that the silence of Purchaser during the said period shall be presumed as its acceptance of the suggestion made by Seller.
Modulation	FLAT
Losses	([***]%)
Amount of Reimbursement in the event of Loss of TUSD/TUST Rebate	BRL[]/MWh* (Base Date October 1, 2019, and adjusted according to the positive accumulated variation of the IPCA Index in January of each year).
Issue of Tax Invoice	Up to the 3rd business day of the month following the month of supply.
Issue of Tax Invoice	For the purposes of this Term of Reference, for the purposes of counting time periods in business days, the respective days of such period according to banking calendar in the City of São Paulo, State of São Paulo.
Payment Date	The payment date will be the 7th business day of the month following the month of supply or, if it is not a business day on which the barks are opened for business in the City of São Paulo, State of São Paulo, then on the next following business day.

Section 72 – Communication Channels:

1. Purchaser Identification	Name:
	Address:
	CNPJ:
	Phone:		Facsimile:	N/A
	Email:		Email:
	Email:		GN Email:
Contact - Agreements	Mailing address
	Contact
	Email
	Phone:
Contact - Billing	Contact
	Email
	Phone:
Identification of Intervening Party	Company Name
	CNPJ (National Corporate Taxpayer's Register)
	State Registration No.
	Contact:
	Email
2. Identification of the Primary Supplier	Company Name	[***]
Contact – Agreements	Mailing address	[***]
	Contact	[***]
	Email	[***]
		[***]
	Phone:	[***]
Contact - Billing	Contact	[***]
	Email	[***]
		[***]
	Phone:	[***]

TITLE XVI - MISCELLANEOUS

Section 73 - The Parties shall comply with all federal, state and municipal legal requirements regarding occupational safety, hygiene and health; environment and social rights.

Section 74 - Purchaser and Seller may not assign or transfer to third parties, in whole or in part, their rights and obligations under this Agreement, without the express and written consent of the other Party, as well as the express authorization of the Primary Supplier.

Section 75 - This Agreement may not be changed, nor any provision hereof waived other than by written amendment signed by the Parties, subject to the provisions of the applicable law.

Section 76 - No delay or forbearance by any of the Parties in relation to the exercise of any right, power, privilege, or remedy under this Agreement will adversely affect such right, power, privilege, or remedy or be deemed as a waiver or novation of such obligation(s).

Section 77 - Any notice or other communication by one Party to the other in respect of this Agreement shall be in writing, in Portuguese language, and addressed to the agent of each party named in Annex II, and may be delivered or sent by registered mail or electronic means, in any case with return receipt requested, at the addresses mentioned by them in the preamble of this instrument, or at the addresses they may expressly specify in the future. Any changes in the content of this Annex shall be notified by the Party at least fifteen (15) days in advance.

Section 78 - In the event that any of the provisions of this Agreement is deemed illegal, invalid or unenforceable, all the remaining provisions shall not be affected and will continue in full force and effect. In any of the events set forth herein, the Parties hereby agree to search a provision to replace it which meets the goals of the provision deemed illegal, invalid or unenforceable, and which maintains, as far as possible, in all circumstances, the balance between the commercial interests of Purchaser and the Primary Supplier.

Section 79 - This Agreement comprises or expressly refers to the entire understanding between the Parties in respect of its subject matter, and it covers all the prior agreements and understandings between the Parties concerning the subject matter hereof. Each Party agrees and confirms that this Agreement is not entered by relying on any representation, warranty or other promise of the other Party other than those expressly provided for in this Agreement. The provisions of this Agreement and Annexes hereto supersede all documents and negotiations previously made between Parties up to the date hereof regarding the subject matter of this Agreement

Section 80 - In the event of any subsequent change in Law that materially modifies the conditions of this Agreement, the Parties hereby agree to execute an amendment to this Agreement in order to have it adapted to the supervening Law, so long as there is no provision in this Agreement to the contrary.

Sole Paragraph - The Parties expressly represent to have full knowledge of the Law and regulations applicable to the sale of electricity in the Free Market Environment (ACL), especially the sale and purchase of electricity, acquisition of amount of use of network and connection with the distribution system.

Section 81 - This Agreement is acknowledged by the Parties as an enforcement deed, pursuant to article 784, section III, of the Brazilian Code of Civil Procedure, for collection of overdue amounts.

Section 82 - This Agreement shall be governed and construed, in all its respects, according to the Brazilian Law.

In witness whereof, the Parties execute this Agreement in two (2) counterparts of equal form and content and with the same effect, before the two (2) undersigned witnesses.

São Paulo/State of São Paulo, December 31, 2019

(Remainder of page intentionally left blank. Signatures on next page)

SENDAS DISTRIBUIDORA S.A. (“ASSAÍ ATACADISTA”)

Purchaser

[blank]

Name: [blank]

Title: [blank]

Individual Taxpayer’s Register (CPF): [blank]

DocuSigned by:

(sgd)

248C9A8BB10240D

Name: Anderson Barres Castilho

Title: title

Individual Taxpayer’s Register (CPF): [blank]

COMPANHIA BRASILEIRA DE DISTRIBUIÇÃO

Intervening Guarantor

[blank]

Name: [blank]

Title: [blank]

Individual Taxpayer’s Register (CPF): [blank]

[blank]

Name: [blank]

Title: [blank]

Individual Taxpayer’s Register (CPF): [blank]

GREENYELLOW SERVICOS E COMERCIALIZACAO DE ENERGIA LTDA.

Seller

[blank]

Name: [blank]

Title: [blank]

Individual Taxpayer’s Register (CPF): [blank]

[***]

Primary Suppliers

[blank]

Name: [blank]

Title: [blank]

Individual Taxpayer’s Register (CPF): [blank]

[blank]

Name: [blank]

Title: [blank]

Individual Taxpayer’s Register (CPF): [blank]

Witnesses:

DocuSigned by:

(sgd)

28BF4F82989F4AF

Name: Lucas Attademo

CPF 107.946.217-16

[blank]

Name: [blank]

Individual Taxpayer’s Register (CPF): [blank]

[Signature page of the Electricity Sale Agreement for the period from January 1, 2022, to December 31, 2034, executed on December 27, 2019, by and between SENDAS DISTRIBUIDORA S/A. (ASSAÍ ATACADISTA) and GREENYELLOW SERVICOS E COMERCIALIZACAO DE ENERGIA LTDA., with Companhia Brasileira de Distribuição as intervening guarantor of Purchaser, and also with ATLANTIC ENERGIAS RENOVÁVEIS S.A. and its Affiliates as Primary Suppliers]

Exhibit 4.18

Schedule of ELECTRIC ENERGY PURCHASE Agreements

As these agreements are identical in every case except for pricing, quantities and term, we have, for ease of reference, filed only one standard agreement and provided this schedule to indicate the agreements that we have omitted from filing as exhibits to this registration statement on Form 20-F.

First Amended and Restated Electric Energy Purchase Agreement (2 Years), dated as of July 29, 2020, by and between Sendas Distribuidora S.A., Greenyellow Serviços e Comercialização de Energia Ltda. and Companhia Brasileira de Distribuição.

Exhibit 15.1

We consent to the reference to our firm under the caption “Experts” and to the use of our reports dated December 21, 2020, in the Registration Statement (Form 20-F) of Sendas Distribuidora S.A for the registration of its common shares.

São Paulo, Brazil

January 22, 2021.

Very truly yours,

/s/ Ernst & Young Auditores Independentes S.S.