2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A    Index1. Persons responsible for the...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A7.2 – Information on the operating segm...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A12.4 – Rules, policies and practices of...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A15.3 – Capital distribution            ...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A22. Extraordinary business22.1 – Acquis...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A1.1 – Statement and identification of p...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A2.1/2.2 – Auditor information and compe...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A2.3 – Other material information      2...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Write-off of sunflower seed inventory ...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A3.2 – Non-accounting measurement     EB...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A3.3 – Subsequent events to the last fin...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A3.4 – Policy for the allocation of net ...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A3.5 – Dividend distribution and net inc...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A3.6 – Statement of dividends to retaine...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.1 – Description of risk factors     4...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.1 – Description of risk factors     O...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.1 – Description of risk factors     A...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.1 – Description of risk factors     W...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.1 – Description of risk factors     W...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.1 – Description of risk factors     W...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.2 – Comments on the expectations for ...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A     4.2 – Comments on the expectations...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A     4.2 – Comments on the expectations...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.3 – Non-confidential and material law...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.3 – Non-confidential and material law...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.3 – Non-confidential and material law...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.3 – Non-confidential and material law...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.3 – Non-confidential and material law...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.4 – Non-confidential lawsuits, admini...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.6 – Repetitive or connected, non-conf...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.7 – Other material contingencies     ...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.8 – Rules from the origin country and...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A5.1 – Description of the main market ri...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A5.2 – Description of market risk manage...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A5.3 – Material changes on main market r...
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A5.4 – Other material information     5....
2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A6.1/ 6.2/ 6.4 – Incorporation of the is...
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2010 reference form

  1. 1. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Index1. Persons responsible for the form1.1 – Statement and identification of persons responsible 12. Independent auditors2.1/2.2 – Auditor information and compensation 22.3 – Other material information 33. Selected financial information 33.1 – Financial information3.2 – Non-accounting measurement 33.3 – Subsequent events to the last financial statements 63.4 – Policy for the allocation of net income 73.5 – Dividend distribution and net income retention 83.6 – Statement of dividends on retained income or reserves 93.7 - Indebtedness 93.8 – Obligations pursuant to nature and maturity 93.9 – Other material information 94. Risk factors4.1 – Description of risk factors 104.2 – Comments on the expectations for the amendment of risk factor exposure 164.3 – Non-confidential and material lawsuits, administrative or arbitration proceedings 194.4 - Non-confidential lawsuits, administrative or arbitration proceedings whose opposing parties are managers,former managers, controllers, former controllers or investors 244.5 – Material confidential proceedings 244.6 – Repetitive or connected, non-confidential and material lawsuits, administrative or arbitration proceedings 254.7 – Other material contingencies 264.8 – Rules from the origin country of securities and from the country the securities are under custody 275. Market risk5.1 – Description of the main market risks 285.2 – Description of market risk management policy 295.3 – Material changes on the main market risks 305.4 – Other material information 316. Company history6.1/ 6.2/ 6.4 – Incorporation of the issuer, duration and date of registration with CVM 326.3 - History 336.5 – Main corporate events of the company, subsidiaries or affiliated companies 346.6 - Information on bankruptcy petition based on relevant amount or court-supervised reorganization or out-of-court reorganization 366.7 – Other material information 377. Company’s activities 387.1 – Description of the activities of the company and its subsidiaries 1
  2. 2. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A7.2 – Information on the operating segments 397.3 – Information on products and services related to the operating segments 407.4 – Clients responsible for more than 10% of total net income 417.5 – Material effects of the state regulation on the company‘s activities 417.6 – Material income arising from foreign activities 457.7 – Effect of foreign regulation on the company‘s activities 467.8 – Material long-term relations 477.9 – Other material information 508. Economic group8.1 – Description of economic group 518.2 – Economic group‘s organization chart 528.3 – Corporate restructuring transactions 528.4 – Other material information 529. Material assets9.1 – Material, non-current assets – other 539.1 – Material non-current assets/ 9.1.a – Fixed assets 539.1 - Material non-current assets/ 9.1.b – Patents, trademarks and brands, licenses, concessions, franchises andagreements for transfer of technology 539.1 - Material non-current assets/ 9.1.c – Interest in other companies 549.2 – Other material information 6110. Executive Officers’ Comments10.1 – General financial and equity conditions 6210.2 – Operating and financial income 7710.3 - Events with material, incurred and expected effects in the financial statements 8110.4 – Material changes on the accounting practices – Qualified opinions and emphasis in the auditor‘s report 8210.5 – Critical accounting policies 8310.6 – Internal controls relating to the preparation of financial statements – Efficiency and deficiency level andrecommendations in the auditor‘s report 8510.7 – Allocation of funds from IPOs and distribution and eventual deviations 8710.8 – Material items not presented in the financial statements 8710.9 – Comments on material items not presented in the financial statements 8910.10 – Business plan 9010.11 – Other material factors 9311. Outlooks11.1 – Disclosed outlooks and assumptions 9411.2 – Monitoring and amendment on the disclosed outlooks 9412. General meeting and management12.1 – Description of the administrative structure 9412.2 – Rules, policies and practices related to the general meetings 9812.3 – Dates and newspapers for publishing the information required by Law 6,404/76 99
  3. 3. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A12.4 – Rules, policies and practices of the Board of Directors 9912.5 – Description of the arbitration clause to resolve conflicts by means of arbitration 10012.6/8 - Composition and professional experience of the management and fiscal council 10112.7 – Composition of the statutory committees, as well as audit, financial and compensation committees 11712.9 – Marital relation, stable union or relatives up to second degree related to executives at the issuer,subsidiaries and parent company 11812.10 – Subordinate, service-provision or stakeholder relationship between executives and subsidiaries, parentcompanies and others 11812.11 - Agreements, including insurance policies, for the payment or reimbursement of Management‘s expenses 11812.12 – Other material information 11813. Management compensation13.1 – Description of the compensation policy or practice, including non-statutory board of executive officers 11913.2 – Overall compensation to the Board of Directors, Executive Board and Fiscal Council 12113.3 – Variable compensation to the Board of Directors, Statutory Executive Board and Fiscal Council 12213.4 – Compensation plan based on actions of the Board of Directors, Statutory Executive Board and FiscalCouncil 12213.5 - Interest in shares, quotas and other securities convertible into shares or quotas, held by the Managementand Fiscal Council members – by body 12313.6 – Share-based compensation plan of the Board of Directors and Statutory Executive Board 12413.7 – Information on outstanding shares held by the Board of Directors and Statutory Executive Board 12513.8 – Options exercised and shares delivered corresponding to the share-based compensation plan of the Boardof Directors and the Statutory Executive Board: 12613.9 – Necessary information to understand data disclosed in items 13.6 to 13.8 – Method used for share andoption pricing 12713.10 – Information on pension plans granted to Board members and statutory executive officers 12813.11 – Maximum, minimum and average individual compensation to the Board of Directors, Executive Board andFiscal Council 12913.12 – Compensation or indemnification mechanisms for the Management when removed from office or retired. 13013.13 – Percentage of total compensation held by the Management and members of the Fiscal Council, who arerelated parties to controlling shareholders 13113.14 – Management and Fiscal Council compensation received not related to their duties, by body 13213.15 – Compensation of the Management and members of the Fiscal Council recognized in the statements ofincome of direct or indirect controlling shareholders, companies under common control and subsidiaries 13313.16 - Other material information 13414. Human resources14.1 – Description of human resources 13514.2 – Material changes – Human resources 13714.3 – Description of employees‘ compensation policy 13814.4 – Description of the relationship between the company and the unions 14015. Control15.1/15.2 - Shareholder position 141
  4. 4. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A15.3 – Capital distribution 14215.5 – Shareholders‘ agreement filed in the company‘s headquarters or which the controlling shareholder is part of 14315.6 – Material changes to the interest of other members of the control group and issuer‘s management 14415.7 – Other material information 14716. Transactions with related parties16.1 – Description of the issuer‘s rules, policies and practices regarding the transaction with related parties 14816.2 – Information on transactions with related parties 14916.3 – Identification of the measures taken to deal with conflicts of interest and to show the strictly commutativefeature of the conditions agreed upon or the appropriate compensation payment 15217. Capital stock17.1 – Information on Capital Stock 15317.2 – Capital increases 15417.3—Information on splits, reverse splits and stock bonus 15517.4 – Information on capital decrease 15617.5 – Other material information 15718. Securities18.1 – Share rights 15818.2 – Description of eventual statutory rules that limit the voting rights of major shareholders or that may obligethem to hold an IPO 15918.3 – Description of exceptions and restrictive clauses relative to equity or political rights set forth in the bylaws 16218.4 – Trading volume and highest and lowest listing price of traded securities 16318.5 – Details on other securities issued 16418.6 – Brazilian markets that allow securities to be traded 16518.7 – Information on the class and type of security tradable in foreign markets 16618.8 – IPOs held by the issuer or by third parties, including controlling shareholders and subsidiaries and affiliated 167companies, relative to the Company‘s securities18.9 – Description of IPOs held by the issuer relative to shares issued by third parties 16818.10 – Other material information 16919. Buybacks and Treasury Stock19.1 - Information on issuers share buyback plans 17019.2 – Breakdown of securities held in treasury 17119.3 - Information on securities held in treasury on the closure date of the last fiscal year 17220. Trading policy 17320.1 – Information on the policy for trading securities20.2 - Other material information 17421. Information disclosure policy21.1 – Description of norms, rules or internal procedures relative to information disclosure 17521.2 – Description of the disclosure policy of material act or fact and the procedures corresponding to themaintenance of confidentiality on material information not disclosed 17621.3 - Management responsible for the implementation, maintenance, assessment and control of the informationdisclosure policy 18121.4 – Other material information 182
  5. 5. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A22. Extraordinary business22.1 – Acquisition or sale of any material asset not eligible as normal operation at the issuers business 18322.2 – Material changes to the issuer‘s operations 18422.3 – Material contracts executed by the issuer and its subsidiaries not directly related to its operating activities 18522.4 – Other material information 186
  6. 6. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A1.1 – Statement and identification of persons responsible Name of the person responsible for the form’s content Eduardo de Come Position held by the person in charge Investor Relations OfficerThe executive officers identified above declare that:a. they reviewed the reference formal information included in this form complies with CVM Rule 480, especially articles 14 to 19 the information provided herein is a true, accurate and complete representation of the issuer‘s economic and financial situation and of the risks inherent to its business affairs and securities issued in its name. 1
  7. 7. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A2.1/2.2 – Auditor information and compensation Auditor’s CVM code 385-9 Auditor’s corporate name DELOITTE TOUCHE TOHMATSU Auditor’s individual taxpayer ID (CPF) / corporate taxpayer ID 49.928.567/0013-55 (CNPJ) Term of service 11/09/2006 to 12/31/2010 Name of technician in charge RUTI A. RAMOS Individual taxpayer ID (CPF) of 607.732.277-68 technician in charge Avenida Desembargador Moreira, 2120, Salas 201/202/204, Address Aldeota, Fortaleza, CE, Brasil, CEP 601 70-002, Telephone (85) 32647050, Fax (85) 32647055, e-mail: ruramos@deloitte.com 1 – Audit of annual financial statements, individual and consolidated, according to the accounting practices adopted in Brazil. 2 – Special review of quarterly financial statements. 3 – Internal control review. 4 – Management report. 5 – Examination of Note concerning the reconciliation of shareholders‘ equity and income for the year prepared according to Details of contracted services the accounting practices adopted in Brazil and the International Financial Reporting Standards (IFRS) for the years ended December 31, 2008 and 2009. 6 – Advisory services in the analysis of material aspects of the law referring to Corporate Income Tax (―IRPJ‖) and Social Contribution on Net income (―CSLL‖), to be complied with at the delivery of the Statement of Economic-Financial Information of legal entity for 2009 (referring to the calendar year 2008). Total compensation for - Audit services: R$168,629.53 independent auditors - IFRS: R$64,139.94 separated by type of service Justification for replacement No replacements have been made 2
  8. 8. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A2.3 – Other material information 2.3 – Provide other information the Company deems relevant All relevant information regarding this topic was described in items above.3.1 – Financial information(Reais) Fiscal year Fiscal year Fiscal year (12/31/2009) (12/31/2008) (12/31/2007)Shareholders‘ Equity 419,777,672.41 104,337,584.85 301,438,734.74Total Assets 549,303,917.40 499,570,620.00 577,705,945.90Net Rev./Interm. Financ.Rev./Insurance PremiumsEarned 349,321,755.79 350,981,906.49 327,905,131.71Gross Income 59,115,457.33 -30,013,821.07 -12,504,987.58Net Income -88,493,027.55 -197,100,915.62 -45,981,434.99Number of Shares, Ex- 725,248,727 126,310,741 126,310,741Treasury (units)Share book value (Reais 0.578800 0.826000 2.386500unit)Net income per share -0.120000 -1.560000 -0.3600003.2 – Non-accounting measurement 3.2 – If the issuer has disclosed it in the last fiscal year, or if the issuer wants to disclose non-accounting measurement in this form, such as EBITDA (earnings before interest, taxes, depreciation and amortization) or EBIT (earnings before interest and tax), it shall: a) Inform the amount of non-accounting measurement The amount of adjusted loss and adjusted EBITDA were R$17,999,852.51 and R$45,778,632.34, respectively. b) Reconcile the amounts disclosed and the amounts of the audited financial statements ADJUSTED EBITDA 2009 Net Income/Loss (88,493,027.55) Depreciation and amortization 25,964,000.00 Other Operating Expenses 12,821,806.79 Assignment of rights (37,964,671.00) Termination of assignment of rights agreement 900,000.00 Provision for adjustment at market value of grains 5,902,788.39 Adjustment of the amount of inventory of raw material, agricultural products, 22,424,000.00 industrial byproducts and finished goods Allowance for doubtful accounts 799,385.31 Idleness cost 21,825,204.09 Others (1,064,900.00) Adjustment of strategic targets 63,778,484.85 3
  9. 9. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Write-off of sunflower seed inventory overdue 5,359,826.21 Write-off of amounts recorded in the long-term (crops under development - Jatropha 3,359,653.62 curcas) Provision of the amount of civil works – Floriano and Crateus plants 5,087,865.25 Write-off of intangible assets – right of use of software – purchase network 1,090,697.10 Write-off of deferred asset of the Santa Clara Center 48,880,442.67 Financial Income 31,707,368.25 ADJUSTED EBITDA 45,778,632.34 ADJUSTED LOSS (17,999,852.51) c) explain the reason why the measurement used is the most appropriate for correct understanding of the Company’s financial situation and operating income (losses) 4
  10. 10. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A3.2 – Non-accounting measurement EBITDA is a measurement accepted by the market as an index of operating cash generation and, given the fact that the Company has future loans to be amortized in August 2010, and that it plans to invest in improving its industrial efficacy, the value of the cash generation represents a material indicator. In addition, it presented in its balance sheets, several non-recurring adjustments not binding to its operating activities. Therefore, the simple calculation of EBITDA (net income considering interests, depreciation, amortization and taxes) would not reflect the actual result of the Company‘s operations, that is why we adjusted the EBITDA. 5
  11. 11. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A3.3 – Subsequent events to the last financial statements 3.3 – Identify and comment on any subsequent event to the last year-end financial statements that may significantly alter said financial statements Change on the Company’s headquarters The Extraordinary General Meeting held on May 5, 2010 resolved on the transfer of the Company‘s headquarters from Rio de Janeiro to São Paulo. The administrative offices, currently located in Fortaleza and Rio de Janeiro, will be transferred to the new headquarters. Biodiesel auction th th The Company took part in the 17 and 18 biodiesel auction promoted by the National Petroleum and Biofuel Agency (ANP) to be delivered in 2Q10 and 3Q10, respectively. th ³ At the 17 auction, held on March 1 and 2, the Company acquired 69,000 m , by means of its ³ ³ units Rosário do Sul/Rio Grande do Sul (20,000 m ), Porto Nacional/Tocantins (20,000 m ), ³ ³ Iraquara/Bahia (15,000 m ) and Itaqui/Maranhão (14,000 m ). The average price of the lot ³ acquired by the Company was R$2,263/m biodiesel, net of ICMS (state value-added tax). Given the Corporate Seal was lost, items 13, 18, 30 and 34 of Lot 1 (with Social Fuel Seal) of th 3 the 17 Biodiesel auction, totaling 24,000 m biodiesel, were not ratified. th ³ The Company took part in the 18 biodiesel auction held on May 31, acquiring 34,000 m . ³ The average price of the lot acquired by the Company was R$2,131/m biodiesel, net of ICMS. Suspension of the Social Fuel Seal Through publication on the Official Gazette of March 5, 2010, the Ministry of Agrarian Development (MDA) suspended for 12 months the Social Fuel Seal of Brasil Ecodiesel‘s units located in Itaqui/Maranhão and Iraquara/Bahia and the units of Floriano/Piauí and Crateús/Ceará, already discontinued. By means of a material fact and notice to the market disclosed on March 5, 2010, and published at the Valor Econômico newspaper on March 8, 2010, the Company provided details on the possible effects of the suspension in its operating activities. Labor claims – Santa Clara Production Center On February 2, 2010, the Company received a notice of claims involving employment relationship between the partners of the Santa Clara Production Center and Buriti Agrícola, a subsidiary of Brasil Ecodiesel. Two hundred and twenty-four (224) lawsuits, pending decision in the judicial district of São Raimundo Nonato/ Piauí, have already been filed. We have not found requirements that imply employment relationship, especially subordination as provided for by law, given there was no mismanagement. We also have an individual rural partnership agreement with each of our rural partners, which identifies and regulates the relationships being developed. Both procedures are pending decision. In 2006, in similar proceedings, the Company was successful with the rejected applications. 6
  12. 12. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A3.4 – Policy for the allocation of net income 3.4 – Policy for the allocation of net income The form to allocate Brasil Ecodiesel‘s income is defined in articles 32, 33 and 34 of its Bylaws: ―Article 32 – Out of the result recorded in the year, after deducting accumulated losses, if any, and provision for the payment of Income Tax, net income will be allocated as established by the General Meeting, respecting the following: (i) 5% will be used to record Legal Reserve, which shall not exceed 20% of the capital stock; (ii) 25% of net income of each year will be allocated as mandatory dividends, pursuant to the provisions of article 202 of Law 6,404/76; and (iii) after recording the Legal Reserve, the other reserves aforementioned, and the payment of minimum mandatory dividends, the allocation of the balance, if any, will be approved by the General Meeting based on the proposal of the Board of Directors included in the financial statements, pursuant to article 176, paragraph three and article 132, II of Law 6,404/76, complying with the provisions set forth in article 134, paragraph 4 of the aforementioned Law 6,404/76. If the balance of the profit reserve surpasses the capital stock, the General Meeting will resolve on the use the excess to pay-up or to increase the capital stock or to distribute additional dividends to shareholders. Paragraph one – The General Meeting can, pursuant to the Law in effect, resolve on the payment of interest to shareholders as remuneration of shareholders‘ equity. Paragraph two – The amount of interest paid or credited to shareholders, as compensation on shareholders‘ equity can, pursuant to the applicable law and regulations, be attributed to the amount of minimum mandatory dividend, integrating this amount to the amount of dividends distributed by the Company, for legal purposes. Article 33 – The Company can prepare balance sheets on a bi-annual basis, or in smaller periods of time, and declare, according to the resolution of the Board of Directors: (i) the payment of dividend or interest on shareholders equity, to profit recorded in bi-annual balance sheet, attributable to the amount of mandatory dividend, if any; (ii) the distribution of dividends in periods lower than six (6) months, or interest on shareholders‘ equity attributed to the amount of mandatory dividend, if any, as long as the total amount of dividend paid in each six months of the year does not surpass the amount of capital reserves; and (iii) the payment of interim dividend or interest on shareholders‘ equity to the retained earnings or profit reserve account recorded in the last annual or bi-annual balance sheet, attributed to the amount of mandatory dividend, if any. Article 34 – Dividends will be paid, except resolved otherwise by the General Meeting, in sixty (60) days as of the date they were declared and, in any case, within the year.‖ 7
  13. 13. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A3.5 – Dividend distribution and net income retentionReason for not filling out the chart:Brasil Ecodiesel has not distributed any amounts of dividends or interest on shareholders‘ equity,considering that the Company did not record net income in previous years. 8
  14. 14. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A3.6 – Statement of dividends to retained earnings or reserves 3.6 – Inform if, in the last 3 fiscal years, the Company declared dividends to retained earnings or reserves recorded in previous fiscal years Brasil Ecodiesel has not distributed any amounts of dividends or interest on shareholders‘ equity, considering that the Company did not record net income in previous years.3.7 - IndebtednessFiscal Year Total debt, any nature Description ratio and reason to use another debt ratio31/12/2009 129,525,643.00 Debt ratio 30.860000003.8 – Obligations pursuant to nature and maturity Fiscal year (12/31/2009) One to Three to More Less than Type of debt three five than five Total one year years years years Personal 10,886,591.00 55,675,808.00 0.00 0.00 66,562,399.00 Guarantee Total 10,886,591.00 55,675,808.00 0.00 0.00 66,562,399.00 Note3.9 – Other material information 3.9 – Provide other information the Company deems relevant All material information regarding this topic was described in items above. 9
  15. 15. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.1 – Description of risk factors 4.1. Describe risk factors that may influence investment decisions When public auctions are finished, our operating results and financial situation will depend on the prices of the biodiesel market. The biodiesel market in Brazil currently depends on public auctions organized by the Brazilian National Agency of Petroleum, Natural Gas and Biofuels (ANP), which offer assured sales agreements to Petrobras and REFAP. In addition to public auctions, no other market has been established for biodiesel in Brazil, despite the fact that the diesel is the most important fuel for heavy vehicles and to produce energy in the country. Until September 2009, we had assured market according to sale agreements executed between Petrobras and REFAP, at prices 3 established by the auctions and corresponding to 34,000 m biodiesel. Therefore, when agreements arising from the auctions, and sales performed through auctions terminate our operating results and our financial situation will depend upon and will be materially affected by the market prices for biodiesel, as well as by our capacity to directly trade with the buyers, diesel distributors, refineries and major consumers. Any amendment to the law, regulation and policies of the Federal Government to subsidize biodiesel may materially affect our activities. The Biodiesel Law, enacted by the National Congress on January 2005, established a minimum percentage of biodiesel to be mixed with the mineral diesel oil as of 2008. In 2008, this percentage was established in 2.0% and was expected to reach 5.0% by 2013. Market reaction substantially increased biodiesel offer and the Ministry of Mines and Energy (MME) brought forward the 5% mandatory ratio to January 1, 2010. The National Petroleum and Biofuel Agency (ANP) expects that the mandatory ratios would create a domestic biodiesel market of 3 2,400,000 m per year. Any decrease in the ratio or amendments to the Federal Government policy regarding the use of biodiesel may materially affect our activities. If this happen, we may not be capable of competing in the market and our activities and operating results may be materially affected. Interruptions in the operations of our producing units may affect our operating results. We will have to maintain the production levels expected for our producing units in order to comply with our biodiesel delivery schedule, pursuant to our agreements with Petrobras and REFAP. Despite our insurance to cover losses from fire, explosion, flood, machine damages, short circuit and electricity stoppage in our facilities, as well as loss of profits, and despite the fact we carry out regular maintenance programs in our producing units, any non-scheduled stoppage or extended suspension of a large portion of production in any of our facilities, or any damage or destruction of our producing units due to unpredicted or catastrophic events (such as fire or flood), interruptions or electricity shortage or other similar events, could materially affect the volume of our production and, consequently, our operating results. We compete with other users of oleaginous seed and vegetable oil necessary to produce biodiesel and any reduction in the market supply volume or any default of our suppliers may materially affect our activities. We currently obtain the largest portion of our raw material (soybean oil) from trading companies. Any severe shortage in the supply soybean oil, default from our suppliers or increase in market prices, among others, may limit our supply capacity and we will have to buy vegetable oil in the spot market at considerably higher prices. This may materially affect our operating results and financial situation. 10
  16. 16. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.1 – Description of risk factors Overall, vegetable oil production in Brazil is considerably small compared to the supply of mineral diesel oil. Currently, most of vegetable oil produced in Brazil is allocated for human consumption. As the need to use vegetable oil to comply with the growing needs of biodiesel production increases, we will have to use a considerably large portion of vegetable oil produced in Brazil. Therefore, we may have to enter into tender offers to obtain vegetable oils and some oleaginous seeds from food companies considerably larger than our Company, with higher financial resources and a more solid commercial relation with producers. Moreover, as new producers enter the biodiesel industry, the prices of oleaginous seeds and vegetable oil supply may significantly increase. Adverse weather conditions may affect the availability of oleaginous seeds, forcing us to acquire raw materials in the spot market. We depend on suppliers of oleaginous seeds located in areas near our producing units to provide us with a large portion of the raw material we acquire to produce biodiesel, mainly the soybean oil. Weather instability in those areas may damage or reduce harvests, thus increasing the cost of our raw materials. Severe and adverse weather conditions, including drought, flood, hail or extreme temperatures, are unpredictable and may adversely affect the production of oleaginous seeds and, consequently, the vegetable oil used by us. Consequently, we cannot guarantee that future severe and adverse weather conditions will not materially affect the supply and prices of oleaginous seeds used in our production process and biodiesel sold by us, which may materially affect our activities and operating results. Moreover, the increase in the price of our raw materials could make us less competitive, given that those prices can change and the prices charged for the biodiesel are fixed and also, producers from other regions may be less affected by weather conditions. The prices of raw materials chiefly depend on the prices prevailing in the market. Market conditions, both domestically and internationally, are out of our hands. The cost of our raw materials represents approximately 92% of the cost of products sold. We expect this situation to remain stable in coming years. Similarly to other agricultural products, oleaginous seeds and derivative oils used to produce biodiesel are subject to prices fluctuation due to the weather, diseases, natural disasters, domestic and foreign commercial policies, changes in the supply and demand and other factors that are out of our hands. Some oleaginous seeds are traded in commodities exchange and, therefore, are subject to speculation, which could affect their prices and our production costs. Moreover, several of those products are traded internationally and changes in prices in North America, Europe or Asia could affect raw materials acquired in Brazil. Any long-lasting increase in the prices of agricultural inputs, especially soybean oil, may materially affect our activities and operating results. An increase in biodiesel production in Brazil may also increase the prices of agricultural inputs. Considering that there is few or none relation between the price of these inputs and the biodiesel price, we cannot transfer these increases to biodiesel consumers. Consequently, increases in the prices of agricultural inputs may cause lower profit margins, thus decreasing our revenue. After the assured market, established by biodiesel auctions, is concluded, our financial performance will depend on the prices of mineral diesel oil and petroleum. Biodiesel is normally used as a mixture with the mineral diesel oil. Petroleum and diesel industries, both in the world and in Brazil, have been historically cyclic and sensitive to domestic and international changes in the supply and demand, as well as towards political uncertainties and other factors affecting market prices. The international petroleum market has historically undergone limited supply periods, driving increases in the petroleum price and in the industry‘s profit and loss margin, followed by an expansion in the sector, which caused oversupply and decreases in the price of petroleum and in the sector‘s profit and loss margin. 11
  17. 17. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.1 – Description of risk factors After the assured market, established by biodiesel auctions, is concluded, biodiesel prices may be influenced by the prices of mineral diesel oil, which are determined based on the price of petroleum. As a result, even after creating a legal provision of a minimum volume of biodiesel that is mixed with diesel, any drop in the price of mineral diesel oil or petroleum may affect the biodiesel price our clients would be willing to pay and, consequently, it could materially affect our profitability and operating results. Any drop in diesel oil prices may also affect our capacity to sell biodiesel to customers that could use it instead of diesel oil, at percentages higher than the minimum required by law. Moreover, highly concentrated distribution structure of diesel oil in Brazil and the influence the distributors may have on prices may materially affect biodiesel market prices. Although the price of mineral diesel oil has increased in the past years, these prices have remained lower or equal to those of biodiesel. If prices of diesel drop, policies that foster the use of biodiesel currently in effect and that benefit us may be changed or suspended or the mandatory mixture may be revised. If that happens, it may be difficult to sell biodiesel, which could materially affect our activities and our operating results. Our relationship with rural partners is determined by employment relationship, which may materially affect our Company. We have employment relationship with the rural partners of the Santa Clara Center, which comprises approximately 600 families that, originally, would provide us with raw material. The current law defines these relationships as rural partnership agreements. On the Management‘s opinion, which is based on legal precedent, these are not employment relationships, which could incur costs, charges and additional taxes that do not apply to contractual adjustments, as well as penalties enforced by the competent authorities. If this scenario changes due to a new law or legal interpretation, we may have to bear significant costs and pay the amounts claimed and related taxes, which may materially affect our financial situation. Changes in production technology may require sizeable investments to update our producing units or they may harm our capacity to compete in the biodiesel market or our profits. In case we do not monitor technological advances, our competitiveness may be affected. We are expecting technological advances and changes in the biodiesel production process. Our current production technology may become less efficient or outdated with these advances and changes. Considering that technology to produce biodiesel is constantly improving, an eventual inability to keep up with technological improvements would prevent us from reducing unit production costs and, consequently, affect our competitiveness. Moreover, any technologic improvement may require our Company to make sizeable investments and to suspend its operations for a long period of time. If we are not capable of keeping up with technological changes, thus losing market share and operating with production lower capacity for a long period of time, our operating results may be materially affected. Loosing tax incentives for the production of biodiesel may affect our profitability and reduce investments in Company’s shares. We currently benefit from federal and state tax incentives, which may be annulled at any time. Some tax incentives have maturities whereas others may be suspended due to changes in the applicable laws or due to our incapacity to comply with the requirements to obtain said incentives or, even if those benefits remain effective, they may not remain in the current levels. The suspension or reduction of tax incentives for the biodiesel market, or the amendment in the requirements to obtain tax incentives, or even our incapacity to comply with those requirements, may reduce our net operating revenue and margins. This may materially affect our activities and operating results. 12
  18. 18. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.1 – Description of risk factors We may have to compete with major players in the biodiesel business, which may affect our market share and profitability. After the end of the assured market, established by biodiesel auctions, we can compete with several companies. Currently, our main competitors, who have also took part in public biodiesel auctions, are: ADM, Caramuru, Granol, BSBIOS, among others, who are players in the soybean oil network. We also compete with Petrobras, which has a solid presence in the Brazilian fuel distribution segment and created Petrobras Biocombustíveis especially to operate in this segment. In the future, we will also compete with major fuel distributors that, due to their own activity, may enter the biodiesel market with reduced costs, in addition to international biodiesel producers and international fuel distributors that aim the Brazilian or the international biodiesel market. Compared to our Company, Petrobras, major fuel distributors, international competitors and the major vegetable oil producers will have access to significant higher financial and commercial resources, to a larger client base, wider and cheaper access to oleaginous seeds and vegetable oil supply chains and a larger variety of products. This would allow competitors to produce biodiesel at lower costs, thus reducing market prices and our margins which, consequently, would make us lose market share. Any of these factors could materially affect our activities and operating margins. The competition with other sources of fuel and other diesel substitutes that may be a cheaper alternative to the diesel or biodiesel may materially affect our capacity to trade our production and may result in losing market share, thus reducing the investments made in the Company’s shares. New technologies may be developed or implemented to obtain alternative sources of energy and products using them. Advances made to develop alternatives to mineral oil or biodiesel, or the development of products that use other sources of energy different than diesel, may materially reduce the demand for mineral diesel oil and biodiesel, thus affecting our sales. After the end of the assured market established by biodiesel auctions, the demand for biodiesel in Brazil will also be affected by the availability and prices of alternative fuel sources that may replace the diesel or the biodiesel. The demand for biodiesel in Brazil increased in the past years due to incentives and regulations of the Federal Government, as well as to increased consumption in mineral diesel oil. However, it is impossible to guarantee that the demand for diesel will continue growing, even if biodiesel consumption by diesel distributors surpasses the minimum mandatory percentages. If the increase in alternative fuel supply surpasses or keeps up with the demand for mineral diesel oil, and alternative fuel is cheaper than diesel and biodiesel, the demand for biodiesel may reduce or not grow as fast as we expect. If that happens, we may not have the return expected and our activities and operating results may be materially affected. We should compete with producers of other types of oil made from raw materials with similar lubricity or biodiesel producers that, in their industrial processes, use other chemical products, such as ethanol. If a new fuel is created to compete with the biodiesel, it may be difficult to sell biodiesel and this would materially affect our activities and operating results. We are subject to an extensive environmental regulation and may be held liable for repairing eventual damages to the environment or may be responsible for paying the costs to comply with environmental requirements. We are subject to several Brazilian federal, state and municipal laws and regulations related to environmental, health and safety protection that rule, among others:  the generation, storage, handling, use and transportation of hazardous materials;  the waste of residues in the soil, atmospheric emissions and wastewater; and  our employees‘ health and safety. 13
  19. 19. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.1 – Description of risk factors We must also have licenses issued by the government authorities to perform some of our activities. These laws and regulations, as well as the licenses, may frequently require that we buy and install expensive equipment to control pollution, or to have operating changes to control effective or potential damage to the environment and/or the health of our employees. The breach of laws, regulations or licenses may incur in significant fines, punitive sanctions, revocation of operating licenses and/or closure of our facilities, in addition to us being obliged to repair the damage caused to the environment and to third parties. We invested and expect to continue investing significant amounts to guarantee the compliance with environmental laws and regulations. In addition, shall the environmental regulation become stricter; the amounts spent with the environment in the future may substantially vary if compared to our current expectations. According to certain environmental laws, we may be held liable for all the costs relating to any contamination in the current and old facilities of the Company and its predecessor companies, as well as at the outsourced residue waste units. We may also be held liable for all and any consequences arising from human exposure to hazardous materials or for other environmental damage. It is impossible to assure that the money spent to comply with the current and future environmental, health and safety laws and regulations, as well as our responsibility from future or previous emissions or exposure to hazardous materials, will not jeopardize our activities, our operating results or financial situation. Government policies and regulations that affect the agriculture and related industries may materially affect our operations and profitability. Agricultural production and flows will be materially affected by government policies and regulations from Brazil and from other countries, such as taxes, fees, subsidies and import and export restrictions towards agricultural commodities, which may influence the sector‘s profitability, the preference for planting specific crops and the location and size of the production of certain crops. Future government policies in Brazil and in other countries may affect the supply, the demand and the prices of our agricultural inputs, restrict our capacity of receiving raw materials at reasonable prices from producers ideally located, which may materially affect our operating results. If limitation in prices is imposed, some suppliers could reduce their production levels, whereas if prices are supported, the costs of our raw materials would increase, materially affecting our production costs since we would not be able to transfer the increase to our clients. We may not be capable of complying with the requirements of Social Fuel Seal The National Program for the Production and Use of Biodiesel (PNPB) determines that, in order to participate in biodiesel sale auction representing 80% of the total volume to be sold, companies producing biodiesel must present, in addition to other certifications and records, the Social Fuel Seal. The seal certifies that the company acquired the minimum necessary percentage of raw material from family producers compared to the volume of biodiesel produced in prior periods. The company, therefore, must establish an agricultural procurement chain that allows the acquisition of raw material from family producers according to the minimum percentages established by the Ministry of Agrarian Development (MDA) Normative Instruction 01. Since this activity is subject to the region‘s climate changes, the development of the agricultural crop, the behavior of agricultural partners hired through grains purchase and sale contract and, given that this activity requires a significant volume of working capital, the company may not be capable of complying with those minimum requirements, which may imply in the suspension of the Social Fuel Seal for its plants, limiting its participation in the biodiesel auctions held by the ANP for the lots reserved to producers that do not have the seal mentioned above, totaling a volume of 20% . 14
  20. 20. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.1 – Description of risk factors We may not be able to sell our production capacity at the auctions held by the ANP. Currently, all biodiesel produced in Brazil is sold at auctions held by the ANP. These auctions are currently held electronically, as a reverse auction where the ANP determines a ceiling price and the participants make bids below this amount, until the moment the auctioneer ends the auction for that specific item. The competition in biodiesel auctions is extremely high given the supply is significantly greater than the demand established by the law (B5). Therefore, the companies that participate in the auctions may not be successful at selling all of their production, being subject not to produce throughout the quarter the auction was held. We may not fully comply with the biodiesel delivery contracts entered into with Petrobrás, becoming subject to penalties. After the biodiesel auctions are held, the company executes agreements with Petrobras in order to deliver the volume of biodiesel acquired in the auctions. These agreements establish, among others, the minimum delivery volumes in order to avoid the company to be excluded from the next auctions (currently 60% of the total contracted volume), and minimum volumes to avoid the company to be subject to fines for not delivering biodiesel (fines currently correspond to 50% of 3 the m of biodiesel sold and the minimum delivery percentage to avoid fines is 90% of total contract volume). Working capital shortcomings that make the acquisition of raw material necessary for biodiesel production impracticable, problems with the operating process, difficulties to produce biodiesel according to the quality standards required by ANP, logistics difficulties to make the inputs necessary to the production available may prevent the company from complying with the contracts for the volumes scheduled and making it subject to the fines determined in the contract. 15
  21. 21. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.2 – Comments on the expectations for changes in risk factor exposure 4.2. Regarding the aforementioned risks, comment on eventual expectations to reduce or increase the Company’s exposure to risks, if relevant When public auctions are finished, our operating results and financial situation will depend on the prices of the biodiesel market. The Company has developed a close relationship with fuel distributors, which will be the major biodiesel consumers in the free market. In addition, the location of the Company‘s units in states having lower numbers of biodiesel producing plants provides the competitive advantage to meet the biodiesel demand in the northern and northeastern regions of Brazil, which will also be important when biodiesel is no longer sold through auctions. Any amendment to the law, regulation and policies of the Federal Government to subsidize biofuel may materially affect our activities. Brasil Ecodiesel is currently a partner of the Brazilian Biodiesel Union (Ubrabio), a company that gathers the major biodiesel producers in the country and submits the needs of the sector to competent government agencies, which will then solve their demands. Therefore, the Company has been making efforts to expand the biodiesel demand, thus guaranteeing a sustainable development to the market, which is still under a consolidation stage. Interruptions in the operations of our producing units may affect our operating results. The Company has been developed a strict preventive maintenance program in its plants and has contracted insurance policies that guarantee the coverage of its assets, including loss of profit. These actions, together with the safety measures adopted in the plants, as well as the adoption of operating procedures, minimize the possibility of events that may interrupt for long periods the Company‘s activities, thus jeopardizing its operating results. We compete with other users of oleaginous seed and vegetable oil that are necessary to produce biodiesel and any reduction in the market supply volume or any def ault of our suppliers may materially affect our activities. The Company currently has a commercial relationship with several vegetable oil suppliers in order to decrease the concentration and the subordination of fewer producers. In addition, as disclosed in its strategic guidance, the Company plans to develop alternative agricultural procurement chain to reduce the subordination of soybean oil and guarantee a regular supply of raw material. Adverse weather conditions may affect the availability of oleaginous seeds, forcing us to access the spot market to obtain the raw materials. Like every agricultural activity, those related to the procurement of raw material for biodiesel production are subject to adverse weather conditions. The development of different crops (soybean, jatropha curcas, cotton, sunflower), as well as the decentralization of the geographic location of those crops and our biodiesel producing units, decrease the effects of eventual weather problems in specific regions that may affect some of the crops. The Company is working to provide alternative raw materials, not to depend so much on the soybean oil market. The prices of raw materials chiefly depend on the prices prevailing in the market. Market conditions, both domestically and internationally, are out of our hands. Raw materials acquired by the Company, especially vegetable oil, are international commodities, subject to price variations at the Chicago Board of Trade (CBOT), as well as variations in the American dollar. BrasilEcodiesel does not directly affect those variables. However, it has been developing together with vegetable oil suppliers price fixing mechanisms after the auctions are held, allowing minimizing the effects of raw material price variation in its operating results. 16
  22. 22. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 4.2 – Comments on the expectations for changes in risk factor exposure After the end of the assured market established by biodiesel auctions, our financial performance will depend on the prices of mineral diesel oil and petroleum. We expect the government to make the biodiesel market independent where, biodiesel would then directly compete with mineral diesel oil. This competition would consequently be pegged to the prices of petroleum. Given that biodiesel market is guaranteed by federal laws, any change would depend on a new government action which, according to the sector‘s current position, is improbable. Additionally, we understand that the Company has made industrial investments, thus guaranteeing its competitiveness. Therefore, we could continue as a major participant in the market, even after the assured market is ended. Changes in the production technology could require sizeable investments to update our producing units or could, otherwise, jeopardize our capacity to compete in the biodiesel market or to be profitable. If we do not make technological changes, our competitiveness may be affected. The Company has a technical team prepared and in tune with the development of ne w technologies in both domestic and international scopes. Its current financial situation, as well as its privileged situation to carry out technological partnerships, allows us to say that the Company will be capable of having state-of-the-art technology and compete with the technologies present in the market. Losing tax incentives for biodiesel production may affect our profitability and reduce investments in the Company’s shares State and federal tax incentives are definitely important to generate the Company‘s results. We have maintained good relationships with state governments and complied with the incentive agreements executed in order to assure the maintenance of benefits for the initially contracted periods. By the end of this term, operating and industrial improvements will minimize the impacts arising from the interruption of those benefits in our results. We may have to compete with major players in the biodiesel industry, which may affect our market share and profitability. The biodiesel attractiveness brings new industries to the segment. If the demand for biodiesel does not increase, following the trend in the past years, the supply x demand ratio would be increasingly out of balance. Excess demand may reduce the prices and margins of the industry as a whole. The Company should invest in improving and making the biodiesel production units more efficient, as well as in developing alternative raw materials in order to preserve its margins, even when prices are lower. Similarly, the Company has supported actions to expand the biodiesel market (i.e. metropolitan B20) through Ubrabio (its trade association), which would lower the impacts of an increased supply. The competition with other sources of fuel and other diesel substitutes that may be a cheaper alternative to diesel or biodiesel may materially affect our capacity to sell our production and may result in losing market share, thus reducing the investments made in the Company’s shares. New energetic alternatives always arise in the energy market, which is very dynamic. A reduced biodiesel market and its importance in the energy matrix may reduce the attractiveness of biodiesel producing companies. We have monitored the developments made in the energy market, which comprises other sources of energy, not only biodiesel, as to continue competitive. We expect to be recognized as a company that uses renewable energy, not only biodiesel. 17
  23. 23. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 4.2 – Comments on the expectations for changes in risk factor exposure We are subject to an extensive environmental regulation and may be held liable for repairing eventual damages to the environment or may be responsible for paying the costs to comply with environmental requirements. The Company has a specific department to monitor all environmental rules, as well as to ensure the compliance with these rules in our plants. Biodiesel producing units have effluent and water treatment plants (ETE and ETA), as well as strict operating procedures to treat residues and byproducts arising from our production process. We believe that complying with these procedures, as well as making the necessary investments in the area, would significantly reduce the probability of environmental damages. Government policies and regulations that affect agriculture and related segments may materially affect our operations and profitability. All the oils used as raw material for the production of biodiesel are currently from the agriculture or have animal origin (cattle-fat based). The diversification of raw material used to produce biodiesel, part of the Company‘s strategic plan, will allow reducing the impacts of government‘s policies and regulations on specific agricultural segments. We may not be capable of complying with the requirements of Social Fuel Seal The Company‘s strategic relationship policy with Cooperatives of Agricultural Producers that hold the DAP 3.0 (PRONAF Aptitude Certificate), already in progress and which guarantees that the Company‘s raw materials come from family producers, mainly in the southern and mid-west regions, decrease the Company‘s possibilities not to comply with the obligations established in the MDA‘s IN01 to grant the social fuel seal. We may not be able to sell our production capacity at the auctions held by the ANP. At each auction there is the possibility that the Company does not sell its production capacity due to excess in supply. Given that our business has variable cost, an eventual idle capacity does not jeopardize the Company‘s activities. In addition, the Company has a contingency plan (company holidays, paid leave, temporary service suspension) to minimize eventual idleness impacts in the plants. We may not fully comply with the biodiesel delivery contracts entered into with Petrobrás, becoming subject to penalties. The Company currently has working capital to guarantee the supply of the raw material necessary to comply with the contracts. The units also have quality control and certification laboratories that ensure the compliance with quality standards determined by the ANP. The operating process is supervised and goes through a complete preventive maintenance program. These factors guarantee biodiesel availability according to the specifications required, thus minimizing the possibility of non-compliance with the contracts. 18
  24. 24. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.3 – Non-confidential and material lawsuits, administrative or arbitrationproceedings 4.3. Describe lawsuits, administrative or arbitration proceedings, to which the issuer or its subsidiaries are parties, detailing whether they are labor, tax, civil or any other type of lawsuit: (i) non-confidential, and (ii) relevant to the business of the issuer or its subsidiaries, detailing: 1) Civil proceedings 1.a Petrobrás th a) Court11 Civil CourtJurisdictionThe proceeding has not been decided in the trial court c) Date of Institution07/08/2009 d) PartiesPlaintiff and counterclaim defendant: Brasil Ecodiesel Indústria e Comércio de Biocombustíveis Óleos Vegetais S.A.Defendant and counterclaim plaintiff: Petróleo Brasileiro S.A – Petrobras. e) Amount of assets or rights. R$131,039,000 (amount of counter claim) f) Main facts Considering the problems to claim biodiesel and the delivery problems in the first half of 2008, pursuant to the 6th and 7th auctions held on July 8, 2008, the Company filed an action at the 11th Civil Court of the State of Rio de Janeiro, against Petróleo Brasileiro S.A. – PETROBRAS, claiming: (i) contractual penalty amounting to R$8,554, due by PETROBRAS, given the biodiesel contracted in auctions 69/07 and 70/07 have not been claimed, specifically in February and March 2008. Out of the amounts claimed by the Company, PETROBRAS recognized the debt corresponding to R$7,222,000.00; (ii) the lack of legal ground for charging contractual fines corresponding to R$100,234,000.00 against the Company, referring to April, May and June 2008, Given that during this period, PETROBRAS had default obligations under the Biodiesel Purchase and Sale Agreement entered into, which, in accordance with the understanding of the Company‘s legal advisors, provides for the suspension of its contractual obligations, which was duly notified to PETROBRAS at the time of the events. The amount of the claim corresponded to R$107,456,000.00 and it is currently in the process of presenting evidence. Brasil Ecodiesel has already replied the counterclaim proposed by PETROBRAS, where the claim was increased to R$131,039,000.00. g) Probability of Loss Due to the aforementioned, the Company and its lawyers believe that the Company‘s chances of success are probable, given that the Management‘s decisions have always complied with the contract rules, as well as with the Civil Law. h) Impact Analysis Definitive loss of the claim would represent the payment of a large sum of money, which would adversely affect the Company‘s cash flow. i) Amount provisioned The Company decided not to record provision given the remote possibility of loss, as well as by the lack of decision in the trial court. 19
  25. 25. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.3 – Non-confidential and material lawsuits, administrative or arbitrationproceedings 2) Labor claims 2.a) Labor claims – Santa Clara Production Center a) CourtLabor Court of São Raimundo Nonato - PiauíJurisdictionThe proceedings have not been decided in the trial court c) Date of Institution01/05/2010 d) Parties Plaintiff: 300 rural partners of the Santa Clara center, located in Canto do Buriti, Piauí. Defendant and counter claim plaintiff: Brasil Ecodiesel Indústria e Comércio de Biocombustíveis e Óleos Vegetais S.A. e) Amount of assets or rights. R$100,000.00 per claim, that is, R$30,000,000.00 f) Main facts The Santa Clara Project is located in the city of Canto do Buriti, southern region of Piauí, 470km from Teresina, capital city of the state. The Santa Clara Production Center was implemented in 2004 to produce castor oil to produce biodiesel, providing the social and economic inclusion of the partner families. Santa Clara Center structure was based on community production centers, which are agricultural production units where families are relocated to residences on individual lots, grouped into production cells associated to a service center that includes health, education, culture, leisure, technical assistance and training. The Santa Clara Center is a pioneer experience in terms of agrarian reform never seen before in the country and seeks to form and foster a relationship based on respect and trust with its rural and institutional partners, in a transparent way. The Center is managed based not only on technical grounds that seek productive and financial results, but also on the creation of a unique, pioneer society. This process aims at creating a social organization that provides agriculturists with a new entrepreneurial vision. Therefore, it is necessary to be careful when constructing a collective project. The Santa Clara project was implemented through a partnership between the Company and the agriculturists that wanted to be part of the project. We granted our partners the ownership of land corresponding to 25.0 ha of the center, which was donated from the Federal Government of the State of Piauí. The donation depended upon the effectiveness of partnerships with the center‘s producers. After ten years as of the first castor oil plant harvest, we will definitely grant the ownership of the land and its additional assets to our partners. In addition, we provide, free of charge, seeds, inputs and agricultural equipment, as well as infrastructure and technical assistance necessary for production and harvest. Approximately 300 rural partners have filed lawsuits so their employment relationship is recognized. g) Probability of Loss Although the Company has documents and factual evidence that a rural partnership agreement has been established, lawyers consider possible the chance to lose the claim. 20
  26. 26. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.3 – Non-confidential and material lawsuits, administrative or arbitrationproceedings h) Impact Analysis The definite loss of the claim means that the Company would have to pay its partners and would allow other 300 rural partners to file similar lawsuits. i) Amount provisioned Due to the possible loss claimed by the lawyers, as well as by the lack of decision in the trial court, the Company decided not to record provision until this moment. 2.b) Pedro Cosmo da Silva Junior a) Court nd 2 Labor Court of Fortaleza, Ceará b) Jurisdiction The proceeding has not been decided in the trial court c) Date of Institution 01/27/2010 d) Parties Plaintiff/Claimant: Pedro Cosmo da Silva Junior Defendant: Brasil Ecodiesel Ind. Com. de Biocombustíveis e Óleos Vegetais S .A. e) Amount of assets or rights R$1,036,948.00 (amount of the lawsuit) f) Main facts The claimant was hired on June 10, 2002 as maintenance supervisor, to work 44 hours per week from Monday to Thursday, from 7 a.m. to 5 p.m. and on Fridays from 7 a.m. to 5 p.m., with one hour break to have lunch and rest, and a monthly payment of R$3,649.50 as salary and premium for dangerous work. After the agreement was terminated, the plaintiff claimed that (i) he was hired in Fortaleza/Ceará and transferred to Canto do Buriti in December 2005, Crateús/Ceará in January 2007, São Luis/Maranhão in January 2008, and finally to Iraquara/Bahia in May 2008, without receiving the premium for being transferred; (ii) his work hours exceeded the normal hours – from 7:30 a.m. to 9:30 p.m. from Monday to Saturday, with one-hour break to have meals and rest, in addition to three Sundays per m onth, from 7:30 a.m. to 9:30 p.m., with one-hour break to have meals and rest, not being paid for additional work, (iii) he was fired without receiving notice of termination, which amounted to R$1,036,948.00. g) The change of loss is Considering the aforementioned, the Company and its lawyers understand as remote the chances to win the cause, given that the work hours were recorded, the overtime was entirely paid, the transfers were definite and the employee was previously noticed on his contract termination. Therefore, we complied with the law. h) Impact analysis The definite loss means that the Company would have to pay a large sum of money. i) Amount provisioned. Due to the remote possibility of loss, as well as to the fact the lawsuit is pending trial, the Company decided not to record provision. 21
  27. 27. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.3 – Non-confidential and material lawsuits, administrative or arbitrationproceedings 2.c) Labor Claim – Marcos Cesar de Morais a) Court nd 2 Labor Court of Dourados, Mato Grosso do Sul b) Jurisdiction Appellate court c) Date of Institution 03/17/2009 d) Parties Plaintiff/Claimant: Marcos Cesar de Morais Defendant: Brasil Ecodiesel Ind. Com. de Biocombustíveis e Óleos Vegetais S.A. e) Amount of assets or rights R$7,016,573.40 (amount of the lawsuit) f) Main facts The conflict arises from a commercial agreement for the assignment of rights and other covenants between Coopercompras Ltda. and Brasil Ecodiesel Ind. Com. de Biocombustíveis e Óleos Vegetais S.A.After the termination of the employment agreement, the Claimant filed a labor dispute claiming (i) the employment stability set forth in the agreement for the assignment of rights and other covenants; (ii) the amount of R$3,000.00 received as monthly vacation indemnity, which should be added to the salary; (iii) the payment of vacation not enjoyed; (iv) the work days – Monday to Saturday, from 7 a.m. to 9 p.m., holidays, from 7 a.m. to 9 p.m., and one Sunday per month, from 7 a.m. to 9 p.m, which overlapped the weekly 44 hours of work of which the claimant has not received payment for working overtime. The dispute was deemed favorable by the trial court, the penalty set forth in the agreement was enforced. g) The change of loss is According to the aforementioned, the Company and its lawyers understand that the chances to succeed in the lawsuit are possible, even after the demand was considered as partially valid. h) Impact analysis If the Company loses the claim, it would incur in a large disbursement, affecting its results. i) Amount provisioned. Despite the possibility of probable loss, the lawyers understand that the Company may have to pay R$262,000.00, which is currently recorded. Regarding other issues, the matter will probably be revised in the appellate court. 3) Tax proceedings 3.a) Lawsuit for Annulment of Debt Tocantis a) Court nd 2 Civil Court of Porto Nacional, Tocantins b) Jurisdiction The lawsuit is pending judgment in the appellate court.The decision was favorable to the Company in the trial court. c) Date of Institution 02/28/2010 22
  28. 28. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.3 – Non-confidential and material lawsuits, administrative or arbitrationproceedings d) Parties Plaintiff: Brasil Ecodiesel Indústria e Comércio de Biocombustíveis e Óleos Vegetais S.A. e) Amount of assets or rights R$1,900,000.00 f) Main facts This lawsuit aims the annulment of the alleged ICMS (State Value Added Tax) debit charged by the State and Treasury Office of Tocantins. g) Probability of Loss Remote h) Impact analysis The definite loss of the lawsuit means that the Company would have to pay a large amount of money. i) Amount provisioned Due to the remote loss possibility claimed by the lawyers, as well as by the favorable decision in the trial court, the Company decided not to record provision up to this moment. 23
  29. 29. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.4 – Non-confidential lawsuits, administrative or arbitration proceedingswhose opposing parties are managers, former managers, controllers, formercontrollers or investors 4.4 – Describe the non-confidential lawsuits, administrative or arbitration proceedings, to which the issuer or its subsidiaries are parties and whose opposing parties are managers, former managers, controllers, former controllers or investors of the issuer or its subsidiaries, informing: Currently the Company is not party to any proceeding involving shareholders or managers and former managers.4.5 – Material confidential proceedings 4.5 – Regarding the material, confidential proceeding to which the issuer or its subsidiaries are parties, and which have not been disclosed in items 4.3 and 4.4 above, analyze loss impact and inform the amounts involved in the lawsuits The Company does not have any confidential lawsuit in progress. 24
  30. 30. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.6 – Repetitive or connected, non-confidential and material lawsuits,administrative or arbitration proceedings 4.6- Describe repetitive or connected non-confidential lawsuits, administrative or arbitration proceedings, based on similar legal facts and causes which together may be relevant, to which the issuer or its subsidiaries are parties, detailing whether they are labor, tax, civil or any other type of lawsuit Regarding its activities, Brasil Ecodiesel is involved in contingencies, which we have been trying to decrease throughout time. Type Lawsuit Loss Amounts involved Amounts in the lawsuit provisioned Labor 57 Remote 15,261,882.00 113,313.00 Labor 100 Possible 1,588,698.00 779,349.00 Labor 8 Probable 371,340.00 371,340.00 Total Labor 165 Loss 17,221,920.00 1,264,002.00 Type Lawsuit Loss Amounts involved Amounts in the lawsuit provisioned Civil 3 Remote 145,207,589.00 20,758.00 Civil 4 Possible 401,663.00 200,831.00 Civil 1 Probable 48,861.00 48,861.00 Total Civil 8 145,658,113.00 270,450.00 Type Lawsuit Loss Amounts involved Amounts in the lawsuit provisioned Tax/Adm and Others 0 Remote Tax/Adm and Others 0 Possible Tax/Adm and Others 5 Probable 728,002.00 728,002.00 Total Tax/Adm and Others 728,002.00 728,002.00 Total Contingencies 163,608,035.00 2,262,454.00 *Reference Date: December 31, 2009. 25
  31. 31. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.7 – Other material contingencies 4.7 – Describe other material contingencies not included in the previous items Not applicable 26
  32. 32. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A4.8 – Rules from the origin country and from the country where securitiesare under custody 4.8. Information on the rules of the foreign issuer’s country of origin and rules of the country where the foreign issuer securities are held under custody Brasil Ecodiesel does not have securities under custody abroad. The Company‘s IPO was held with placement efforts abroad, by the coordinator of the international offer and by specific financial institutions contracted by him/her, exclusively with qualified institutional investors, resident and domiciled in the United State s, as provided for by Rule 144A, pursuant to the exemption recording terms set forth in the Securities Act and, in other countries, except Brazil and the United States, in compliance with the procedures set forth in Regulation S, and according to the applicable law in the country of domicile of each investor. 27
  33. 33. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A5.1 – Description of the main market risks 5.1. Describe, on a quality and quantity basis, the main market risks the issuer is exposed to, including foreign exchange and interest rate risks The Company‘s main market risk is related to the variation of raw material prices (vegetable oil and methanol, which together represent approximately 90% of the Company‘s production cost). Since biodiesel is sold through auctions, where prices remain fixed throughout the quarter (auction‘s coverage period), the Company has to manage possible variations in the prices of its raw materials in order to maintain its margins. Even if the Company does not adopt an effective measure, price variations that make its operations impracticable would cause the interruption on biodiesel deliveries regarding the agreements entered into with Petrobrás. Risk measurement is limited to 50% of the amount contracted with Petrobrás, which is the maximum fine that the Company can pay for the non-compliance of the agreements. Risk measurement varies each quarter due to the variation in prices and volumes bought at auctions. Concerning foreign exchange risk in the Company‘s current scenario, where 100% of sales are aimed at the domestic market, variations in foreign exchange would not interfere in the revenue. Variations in those rates would affect the Company‘s operations as they affect the prices of its main raw materials (vegetable oil and methanol), as described in the paragraph above and, therefore, are subject to the effects previously described. Regarding interest rates, the Company currently has a sound financial situation with investments amounting to R$124 million and debts of R$66.6 million, as shown in last quarter‘s financial statements. In both cases, the Company is subject to floating interest rates (CDI) in which material rises would positively impact the Company‘s operations. 28
  34. 34. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A5.2 – Description of market risk management policy 5.2. Description of market risk management policy adopted by the issuer, its objectives, strategies and instruments Currently, the Company does not have a Risk Management Policy formally implemented. Based on current market rules for the sale of biodiesel, the Company has worked to determine, together with the suppliers, the price of vegetable oil and methanol for the quarter, and a minimum volume of 60% (minimum volume to avoid contracts to be cancelled) and a maximum volume of 90% (the contract allows Petrobrás to remove from 90% to 110% of the volume of biodiesel contracted). Limits are determined based on the operating margins obtained in the auctions and on the expectation of cost variation for the quarter the contract is effective. Despite having lines approved to carry out hedge operations with financial institutions, the Company decided to establish directly with its suppliers, if possible, the prices and costs related to this activity, which are significantly lower than of the financial hedge operations. As previously mentioned, the Company does not have a formally implemented risk management policy. However, since December 2010, the Company has adopted several actions to do so, creating the Audit and Financial Committees, which report to the Board of Directors. It has also created an internal audit department, which also reports to the Board of Directors, and hired RiskOffice to prepare an extensive work to implement a risk management policy. 29
  35. 35. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A5.3 – Material changes on main market risks 5.3. Inform whether, compared to the last fiscal year, there were material changes to the main market risks the issuer is exposed to or on the risk management policy adopted Taking into consideration that there were no material changes in the way of trading biodiesel and that the structuring of raw material markets for the production of biodiesel continued operating according to the existing logic, there were no material changes to the main market risks. 30
  36. 36. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A5.4 – Other material information 5.4. Provide other information the Issuer deems relevant All relevant information regarding this topic was described in items above. 31
  37. 37. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A6.1/ 6.2/ 6.4 – Incorporation of the issuer, duration and date of registrationwith CVM Date of issuer’s incorporation 07/18/2003 Type of incorporation of the issuer Company Country where incorporated Brazil Duration The duration is indefinite. Date of registration with CVM 11/09/2006 32

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