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2010 reference form

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  • 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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. 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
  • 38. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A6.3 – History 6.3 – Issuer’s history Brasil Ecodiesel (―Company‖) is a corporation incorporated in Brazil and was granted a registration as a publicly-held company by the Brazilian Securities and Exchange Commission (CVM) on November 9, 2006. On July 18, 2003, the Company was incorporated as a limited liability company. At that time, the Company was controlled by Brasil Ecodiesel Participações S.A., a holding company which was also the controlling shareholder of the Company‘s current subsidiaries. On August 14, 2006, the Company incorporated Brasil Ecodiesel Participações S.A., changed its status to corporation and its company name to Brasil Ecodiesel Indústria e Comércio de Biocombustíveis e Óleos Vegetais S.A., which remains until today. On November 10, 2006, the Company held an IPO for 31,577,685 registered common shares, with no par-value, at R$12.00 per share. Since then, Brasil Ecodiesel remained among the major players in the Brazilian biodiesel market by implementing 6 biodiesel production units throughout Brazil, in addition to having over 30 thousand ha of proprietary land and two grain crushing plants. From 2008 to 2010, the Company had an operating and financial reorganization, resulting in: (i) new capital structure; (ii) capital distribution at the stock exchange, (iii) change of the company‘s headquarters to São Paulo – SP; (iv) shutting down of 2 biodiesel production units. At the same time, the Company‘s management underwent some changes; the main one was the appointment of Mauro A. Cerchiari as CEO. Consequently, a new long -term project was created aiming at preparing the Company to the changes that are expected for the biodiesel sector. 33
  • 39. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A6.5 – Main corporate events of the issuer, subsidiaries or affiliatedcompanies 6.5 – Main corporate events 1) Capital Increase Ratified on June 25, 2009 A private capital increase was ratified on June 25, 2009, totaling R$104 million with the issue of one hundred forty-eight million, five hundred seventy-one thousand, four hundred and twenty- nine (148,571,429) common shares for R$0.70 per share. The capital increase was subscribed by means of cash or with the translation of financial credits held in the Company. Prior to the capital increase, the Company‘s shareholding structure was as follows: SHAREHOLDER Shares % Zartman Services** 24,975,508 19.77% Silvio Tini Araújo*** 13,824,100 10.94% Nelson Silveira* 9,702,636 7.68% Others 77,808,497 61.60% Total 126,310,741 100.00% * Including shares held by Carleton Towers LLC ** Including shares held by Boardlock Holdings LLC *** Including shares held by Bonsucex Holding Ltda After the increase, the Company‘s capital stock is as follows: SHAREHOLDER Shares % Eco Green Solutions LLC 29,672,762 10.8% Nelson Silveira* 28,571,430 10.4% Silvio Tini Araújo*** 27,856,047 10.1% Zartman Services** 23,113,108 8.4% Others 165,668,823 60.3% Total 274,882,170 100.00% * Including shares held by Carleton Towers LLC ** Including shares held by Boardlock Holdings LLC *** Including shares held by Bonsucex Holding Ltda 2) Capital Increase Ratified on August 27, 2009 On August 27, 2009, the Board of Directors of Brasil Ecodiesel ratified a capital increase amounting to R$315,256,589.90, by issuing 450,366,557 shares for R$0.70 per share. The capital increase was subscribed by means of cash or with the translation of financial credits held in the Company. Part of the Company‘s shareholders waived their rights of first refusal so the main creditors of the Company could translate their credits held in the Company, through Fundo de Investimento em Participações Neobiodiesel, managed by Galleas Administração de Valores Mobiliários, representing interest of 14.24% at Brasil Ecodiesel‘s the capital stock. 34
  • 40. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A6.5 – Main corporate events of the issuer, subsidiaries or affiliatedcompanies Prior to the capital increase, the Company‘s shareholding structure was as follows: SHAREHOLDER Shares % Eco Green Solutions LLC 29,672,762 10.8% Nelson Silveira* 28,571,430 10.4% Silvio Tini Araújo*** 27,856,047 10.1% Zartman Services** 23,113,108 8.4% Others 165,668,823 60.3% Total 274,882,170 100.00% * Including shares held by Carleton Towers LLC ** Including shares held by Boardlock Holdings LLC *** Including shares held by Bonsucex Holding Ltda After the capital increase aforementioned, the Company‘s capital stock is as follows: SHAREHOLDER Shares % Fundo de Investimento em Participações Neo Biodiesel 103,305,568 14.24% Silvio Tini Araújo* 61,793,000 8.52% Others 560,150,159 77.24% Total 725,248,727 100.00% *Including shares held by Bonsucex Holding Ltda. 35
  • 41. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A6.6 – Information on bankruptcy filing based on relevant amount orcourt-supervised reorganization or out-of-court reorganization. 6.6 – Bankruptcy petition Brasil Ecodiesel did not file for bankruptcy based on relevant amount or court-supervised reorganization or out-of-court reorganization. 36
  • 42. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A6.7 – Other material information 6.7 – Provide other information the issuer deems relevant All relevant information regarding this topic was described in items above. 37
  • 43. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A7.1 – Description of the activities of the issuer and its subsidiaries 7.1. Describe briefly the activities of the issuer and its subsidiaries Issuer The corporate purpose of the issuer is:  Processing and sale of biofuels, vegetable oils and their byproducts and similar, including byproducts of oleaginous seeds and biodiesel, in the domestic and international markets ;  Production and sale of vegetable products;  Production of chemical materials derived from the industrial processing of vegetables of any kind;  Storage and industrial handling of chemical products in general, ethanol and methanol for production of biofuels;  Transportation and storage of its products, byproducts or third -party products, as well as any product on the Brazilian Nomenclature of Goods;  Import of consumable materials, raw materials, machines and equipment applicable to its industrial activity; and  Hold corporate interest in other companies, subject to the law. Subsidiaries Brasil Ecodiesel controls (holds over 99%) of the capital stock of the companies listed below: Agriculture  Buriti Agrícola Ltda.  Bonanza Agro-industrial Ltda.  Bora-Bora Agro-industrial Ltda.  Capão da Canoa Agro-industrial Ltda.  Erebango Agro-industrial Ltda.  Gustavia Agro-industrial Ltda.  Jaicós Agrícola Ltda.  Mocuri Agrícola Ltda.  Montana Agro-industrial Ltda.  Piatã Agrícola Ltda. Activities performed by the subsidiaries include:  cultivation and extraction, sale and export of agricultural products, especially oleaginous seeds, its byproducts, purchase and sale of third-party production, together with the production of fertilizers, inoculating agents, stimulating products and biofertilizers for proprietary use and import and/or purchase of agricultural inputs, and can also hold interest in the capital stock of other companies. Rede de Compras Intermediação de Negócios, Comércio de Produtos e Insumos Agrícolas Ltda. Activities performed:  Integration services among suppliers, the carrier and the client, making agribusiness transactions simple, profitable and secure. 38
  • 44. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A7.1 – Description of the activities of the issuer and its subsidiaries Ecotrans Transportes, Serviços e Locação de Equipamentos e Máquinas Ltda. Activities performed:  Transportation of cargo and containers in general;  Transportation of vegetable products, storage, inventory management, packaging, distribution and logistics support;  Rental in general of its assets or assets of third parties, among which: generators, trucks, tractors, rural vehicles or vehicles used in agricultural activities, industrial machinery and equipment in general;  Trade, import and export, transportation and storage of any product included in the Brazilian Nomenclature of Goods;  Interest in the capital stock of other companies, complying with legal provisions;  Rendering of maintenance and handling services of rented equipment and/or machines. Crateús Algodoeira S.A. Activities performed:  Production of chemical products derived from oleaginous seeds or any other vegetable seed and biofuels, among which, biodiesel;  Production and transformation of vegetable oils and byproducts;  Processing of oils derived from oleaginous seeds;  Sale of vegetable oils and other derivative products, including biodiesel, in domestic and international markets;  Storage and industrial handling of ethanol and methanol for production of biodiesel;  Trade, import and export, transportation and storage of any product included in the Brazilian Nomenclature of Goods;  Import of inputs, raw materials, machinery and equipment to be used in the Company‘s activities; and  Holding interest in the capital of other companies as shareholder or quotaholder.7.2 – Information on operating segments 7.2. In relation to each operating segment that has been disclosed in the last financial statements at the closure of the fiscal year or, if any, in the consolidated financial statements, point out the following: a) products and services sold Brasil Ecodiesel‘s income results from the sale of products listed below: b) income from the segment and its share in the issuer’s net income Products and 2007 2008 2009 services sold Amount (R$) Share (%) Amount (R$) Share (%) Amount (R$) Share (%) Biodiesel B100 388,782,653.76 92.64% 405,052,129.74 94.83% 401,001,059.74 99.03% Glycerin 1,139,801.09 0.27% 2,467,080.97 0.58% 227,867.90 0.06% Other 29,741,605.12 7.09% 19,631,284 4.60% 3,690,566.58 0.91% Total income 419,664,059.97 100.00% 427,150,495.52 100.00% 404,919,494.22 100.00% c) profit or loss resulting from the segment and its share in the issuer’s net income The Company has not calculated its share by segment because its main product is Biodiesel B100 39
  • 45. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A7.3 – Information on products and services related to the operatingsegments 7.3 – As regards products and services corresponding to operating segments disclosed under item 7.2, describe: a) characteristics of the production process We produce biodiesel by means of the transesterification process, consisting of the chemical reaction among vegetable oils or animal fat and an alcohol (methanol or ethanol), produced by the adding catalysts derived from sodium or potassium hydroxide or methylate. We use soybean oil as well as methanol in our production process. Currently, we buy soybean oil from various suppliers. Then, we perform the transesterification process to produce biodiesel, which, after obtained, is purified and goes through a quality check in order to meet the specifications of the Brazilian Petroleum Agency (ANP). As a result of the transesterification process, we also obtain glycerin. Methanol used in the chemical reaction can be reused after a dehydration chemical process. Our production technology grants us the flexibility to use ethanol in the production process, although its use is ³ currently unfeasible due to reduced productivity (more consumption of ethanol per m of biodiesel produced) and to international regulations that specify only methyl ester. Our biodiesel is produced in a batch process. This process has replaced the continuous process adopted especially in Europe, and which limits the use of oils with different characteristics. The quality certificate of the biodiesel we produce is a basic requirement for its sale. To analyze the quality of biodiesel, we use methods based on domestic technical regulations, such as those by the Brazilian Technical Standards Association (ABNT), as well as international ones, including standards by the International Union of Pure and Applied Chemistry (IUPAC), American Society for Testing and Materials (ASTM) and American Oil Chemists‘ Society (AOCS). In addition to the laboratories that it has in each production unit, the Company has 2 own labs (in the states of Ceará and Rio Grande do Sul) prepared to develop 23 out of the 26 tests required for certification of the product. These laboratories attest the quality of the final product and, after issuing compliance reports, biodiesel is made available for delivery to our customers. After completing internal quality analysis, we periodically submit biodiesel samples for analysis at qualified labs accredited by the ANP. b) Details of the distribution process According to the current trade rules, biodiesel selling process is carried out according to the FOB (free on board) modality, directly to Petrobrás, which will then transfer the products directly to fuel distributors, who are responsible for removing the products from the plants. Each lot of biodiesel must have a quality certificate to be cleared, proving the compliance with the specific legislation enacted by ANP. In addition, we should periodically inform ANP about the product quality data and keep samples of each lot produced for two months. c) Characteristics of the target market The Company‘s target market is the biodiesel market exclusively. This market is regulated by government laws that set forth a 5% mandatory rate of biodiesel in mineral diesel (B5). According to data disclosed by ANP, the current installed capacity corresponds to the ³ production of 4,200 thousand m per year for an estimated demand of approximately 2,400 ³ thousand m . Therefore, there is an extremely competitive market that, by means of auctions held by the ANP, has shown high level of idleness in the biodiesel industries installed and in operation. d) Probable seasonality Biodiesel trading activity is subject to seasonality which has not affected us yet because biodiesel sales are determined by auctions in which the volume acquired depends on both the mandatory biodiesel mixture and the mineral diesel market that, according to historical data, did not have a significant seasonality in the past years. 40
  • 46. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A7.3 – Information on products and services related to the operatingsegments e) Main inputs and raw materials Vegetable Oils The acquisition cost of vegetable oils used as input for biodiesel production represents approximately 80.0% of cost of goods sold. The procurement of raw material at low and stable costs is a key factor to guarantee our profitability. In our production process we use mainly the soybean oil, which is the main vegetable oil sold in the Brazilian and international markets. Despite the low proportion of oil extracted from soybean grain (18.0%), the use of soybean oil allows us to comply with the demand for production of biodiesel in the short term. There is no government control or regulation that interferes in the operations of the soybean oil market. We acquire soybean oil directly from large- and average-size suppliers, by means of agreements that guarantee volume and market price. At the end of each auction, the volumes of biodiesel to be delivered by each of our units are defined and we enter into soybean oil supply contracts with our suppliers. We do not depend on a specific supplier. However, logistics matters impose higher competitiveness for specific suppliers due to their location in relation to our biodiesel producing units. We can enter into supply agreements at fixed prices or agreements that have a specific pricing formula for vegetable oil, based on soybean prices at the Chicago Board of Trade (CBOT), the dollar quotation (PTAX) and the Brazil award. Given the fact that the oil is an international commodity, the volatility in its price is mainly related to the fluctuation of soybean grains prices. Methanol Methanol, together with vegetable oil, is an essential raw material for the production of biodiesel. The Company enters into supply agreements on a quarterly basis depending on the volume acquired in the auctions with the main suppliers. There is no government control over the sale of methanol. The only Brazilian producers of methanol are Copenor – Companhia Petroquímica do Nordeste, located in the state of Bahia, and Prosint Química S.A., located in Rio de Janeiro. According to data of the International Trade Center (CCI) of the United Nations Conference on Trade and Development (UNCTAD), and the Commercial Statistics Bank of the United Nations Statistics Division (COMTRADE), the remaining demand for methanol in Brazil is supplied by imports, most of them from Chile. Despite the low number of suppliers, the offer for methanol and the needs of the biodiesel market do not raise other concerns regarding the regular supply. The prices of methanol are subject to volatility given that they depend on the dollar quote and the prices of natural gas in the international market.7.4 – Customers responsible for more than 10% of total net income 7.4. Identify whether there are customers responsible for more than 10% of the total net income of the issuer, informing a) total amount of the customer’s revenue In the last fiscal year, Petrobras was responsible for 91.82% of our revenues, totaling R$367,586,343.94. b) operating segments affected by customers’ revenues Not applicable.7.5 – Material effects of the state regulation on the Companys activities 7.5. Describe the material effects of the state regulation on the issuer’s activities, specifically commenting on: a) the need of government authorizations to operate and history of relationship with public administration to obtain those authorizations 41
  • 47. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Brazilian Regulatory Framework The Federal Government, together with government entities such as the Ministry of Agrarian Development (MDA), the Ministry of Mines and Energy (MME) and the National Petroleum Agency (ANP), has adopted several measures to develop the Brazilian biodiesel market. Law no. 11,097, published on January 13, 2005, introduced biodiesel in the Brazilian energy matrix and expanded ANP‘s administrative competence, which is now called National Petroleum, Natural Gas and Biofuel Agency. As of the publication of said law, ANP became responsible for regulating and monitoring activities related to the production, quality control, distribution, resale and sale of biodiesel and the diesel-biodiesel mixture (BX). To perform the new task, ANP has edited specification rules for the biodiesel and the diesel- biodiesel mixture, promoted the adaptation to those rules and held auctions to stimulate biofuel offer for the mixture. The production and use of biodiesel in Brazil enabled the development of a sustainable energy source from the environmental, economic and social point of view, in addition to possibly reducing diesel oil imports. In 2008, Brazil avoided importing 1.1 billion liters of diesel by using biodiesel, thus saving approximately US$976 million, which brought foreign currency to the country. Since January 1, 2010, diesel sold throughout the country contains 5% of biodiesel. This rule was established by the National Energy Policy Council (CNPE) Resolution no. 6/2009, published in the Official Gazette of the Union on October 26, 2009, which increased from 4% to 5% the mandatory percentage of biodiesel into the diesel mixture. The continued increase in the percentage of biodiesel in diesel mixture shows the success of the National Program for Production and Use of Biodiesel and the experience acquired by Brazil in producing and using biofuel. According to data disclosed by ANP, the current installed capacity of industries corresponds to the production of 4,200 thousand m³ per year for an estimated demand of approximately 2,400 thousand m³. Therefore, there is an extremely competitive market that, by means of auctions held by the ANP, has shown high level of idleness in the biodiesel industries installed and in operation. The sale of BX diesel – name of the diesel mixture deriving from petroleum plus 5% of biodiesel – is mandatory in every gas station reselling diesel, which is subject to inspection by the ANP. The 5% biodiesel ratio was extensively tested by the Testing Program, which was coordinated by the Ministry of Science and Technology, which had the participation of the National Association of Vehicle Manufacturers (Anfavea). Results showed that until the moment, there is no need to adjust or change engines and vehicles using the mixture. Regulatory Entities Ministry of Mines and Energy - MME The MME is the main regulating body of the energy sector, operating as a granting authority on behalf of the Federal Government, whose main responsibility is to create policies, guidelines and rules for the sector. Ministry of Agrarian Development - MDA The MDA was created by Law 10,683 as of May 28, 2003, and is responsible for fostering agrarian development, focusing social inclusion and the human development of rural workers. The MDA is responsible for granting the Social Fuel Seal to producers and biodiesel production projects. 42
  • 48. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A7.5 – Material effects of the state regulation on the Companys activities National Petroleum, Natural Gas and Biofuel Agency - ANP ANP is an agency created by Law 9,748, as of August 6, 1997, whose attributions are regulating, monitoring and contracting petroleum, natural gas and biofuel in Brazil. One of ANP‘s main guidelines is to create a competitive environment for petroleum, natural gas and biofuels in Brazil, with lower prices and better services provided to final consumers. Production, import, export, storage, distribution and sale of biodiesel are subject to ANP‘s regulation and authorization. National Energy Policy Council - CNPE CNPE was created in August 1997 to help the President to create and develop the national energy policy. CNPE is presided over by the Minister of Mines and Energy and most of the members are ministers of the Federal Government. The main objective of the agency is to optimize the use of Brazilian energy resources and guarantee the supply of energy to the country. The Biodiesel Law grants CNPE the option to anticipate the terms that make mandatory the use of biodiesel in Brazil. Social Fuel Seal The Social Fuel Seal is a certification granted by the MDA to biodiesel producers and production projects that meet the criteria aimed at integrating family farmers into the biodiesel production chain. Biodiesel producer who receive the Social Fuel Seal and have a project which qualifies in its requirements are authorized to take part in public auctions for the purchase of biodiesel and to obtain tax benefits and easy access to loans with the BNDES, Banco da Amazônia S.A. – BASA, Banco do Nordeste do Brasil – BNB, Banco do Brasil S.A. and other accredited financial institutions, in more favorable conditions as those currently practiced in the market. Among the criteria required by the MDA to grant the Social Fuel Seal, biodiesel producers should comply with minimum percentages for the acquisition of raw materials of family farmers, which vary according to their location (30% for the Northeastern and semi-arid regions, 30% for the Southeastern and Southern regions and 15% for the Northern and Midwestern regions. Percentages are calculated over the total annual cost raw material acquisition). Biodiesel producers should also enter into agreements with family farmers, under minimum conditions such as guarantee of purchase, price adjustment criteria and delivery conditions. The agreements should be negotiated with the intervention of unions or entities representing family farmers. 0In addition, producers should guarantee assistance and technical qualification to family farmers, which are carried out by the employees or third parties. Biodiesel auctions Public auctions for the purchase of biodiesel are an instrument adopted by CNPE to increase investments in the biodiesel production in Brazil. The auctions are held by ANP by means of an electronic system. Biodiesel producers holding the Social Fuel Seal, holders of projects recognized by the MDA as having the necessary requirements to obtain the Social Fuel Seal and producers who do not have the seal can take part in the auctions as suppliers. ANP can hold separate auctions for each of the categories of suppliers mentioned above. Biodiesel acquirers are those producing and importing diesel – Petrobras and REFAP – who are responsible for acquiring volume of biodiesel proportional to their shares in the domestic diesel market (93.0% corresponding to Petrobras and 7.0% to REFAP). 43
  • 49. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A7.5 – Material effects of the state regulation on the Companys activities b) Company’s environmental policy and costs incurred to comply with the environmental regulation and, if the case may be, of other environmental practices, including the adhesion to international environmental protection standards. Environmental Regulations The Brazilian environmental law establishes that the regular operation of effective or potentially polluting activities or activities that may damage the environment depend on prior environmental licensing. The non-compliance with environmental legislation may cause the enforcement of administrative and criminal penalties to individuals and legal entities, in addition to the obligation of repairing damages directly or indirectly caused to the environment and third parties affected, regardless of their liability. Projects that have environmental impacts in two or more states, or projects carried out in areas of interest of the Federal Government are under the regulation of the Brazilian Institute of Environment and Renewable Natural Resources (―IBAMA‖). In case of projects located in more than one city, or in conservation units belonging to the states, the competence belongs to state environmental bodies. In case of strictly local impact, the city will have the competence to grant environmental licenses. Our activities are currently licensed by the following state bodies: CRA – Environmental Resources Center of Bahia, Naturatins – Environmental Institute of Tocantins, SEMA – State Department of Environment and Natural Resources of Maranhão, SEMACE – State Environment Superintendence of Ceará and SEMAR – Environment and Water Resources Secretariat of Piauí, FEPAM – State Environmental Protection Foundation of Rio Grande do Sul. The process to grant environmental licenses comprises three stages: preliminary permit, installation permit and operation permit. We currently have or are under the process of obtaining all relevant environmental permits to conduct our activities. The chart below shows the licensing phase of each of our units producing biodiesel and the conditions imposed by the competent agencies: Unit and State Licensing Stage Conditions Floriano, Piauí Discontinuation process - Crateús, Ceará Discontinuation process - TAC (Conduct adjustment term) Iraquara, Bahia Operation permit - Porto Nacional, Tocantins Operation permit - Rosário do Sul, RS Operation permit - Itaqui, Maranhão Operation permit – being renewed - Environmental works As part of the licensing process, we may have to investment in preservation areas in order to make up for the environmental impact caused by our activities. Therefore, the agency or competent authority determines the amount to be invested and the way and destination of the investment. The amount invested in environmental compensation cannot be lower than 0.5% of the total implementation cost of the project. Environmental Management We have an environment advisory department responsible for monitoring our activities, which periodically checks the compliance with the environmental legislation established by the competent agencies of each state in where we operate. This area, called Health, Environment and Security (SMS), has powers to notify our units‘ manager, require the adoption of remedial measures when necessary, and determine the interruption of activities in our units that are not complying with the environmental legislation until the problems are solved. Until the moment we have not adhered to any international standard corresponding to environmental protection. 44
  • 50. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A7.6 – Material income from foreign activities 7.6. Information on countries where the Company obtains relevant income: (a) income from customers attributed to the country where the Company is headquartered and its share on the Company’s total net revenue; (b) income from customers attributed to foreign countries and its share on the Company’s total net revenue; (c) total income arising from foreign countries and its share in the Company’s total net revenue. There is no income from other countries but Brazil. Our activities are limited to the national territory. 45
  • 51. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A7.7 – Effect of foreign regulation on the Company’s activities 7.7. Regulation of countries where the Company obtains relevant income and influence on the Company’s business: Not applicable. 46
  • 52. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A7.8 – Material long-term relations 7.8. Describe relevant issuer’s long-term relations that do not appear in any other part of this form The Company has rural partnership agreements with 610 partners of the Santa Clara Production Center, where the rural partners plant and sell oleaginous seeds to Brasil Ecodiesel. These contracts establish that the Company will foster and acquire the production of those partners for 10 years (beginning in 2004). Tax Incentives STATE OF PIAUÍ The Company and subsidiaries Buriti Agrícola Ltda., Jaicós Agrícola Ltda., Mocuri Agrícola Ltda. and Piatã Agrícola Ltda. have tax incentive for 10 years, which correspond to the exemption of 100% of the ICMS calculated in the first 7 years and 70% of the ICMS calculated in the last 3 years, pursuant to the terms of State Decrees no. 11,153, 11,155, 11,157, 11,159 and 11.162, as of September 29, 2003, of the state of Piauí. Since it exempts the Company from paying 100% of the ICMS in the first 7 years, tax incentive does not require that special conditions are complied with to record income. Upon calculation of the monthly ICMS amount due, the payment will be exempt in case of debt due, and the amount will be recorded in the result. The only obligations of the Company are to maintain tax records that allow the calculation of the tax and the benefit, and comply with the state of Piauí‘s tax requirements. The Company complied with the related requirements in the year. The Company has recorded tax incentives as income because it understands them to be cost subsidies. STATE OF BAHIA The Company has a tax incentive called ―DESENVOLVE‖ for the unit located in Iraquara, whose benefit establishes the deferral, on the payment term, of 80% of the monthly debtor balance of ICMS in up to 12 years. For prepaid settlement of deferred installments, a discount of up to 80% o the amount payable will be granted, according to Resolution no. 170/2006, as of November 17, 2006. ICMS reduction will be recognized as income depending on the prepaid settlement of the installment subsidized or the collection of ICMS not subject to the extension of term on the regular date, during the deferral of the payment. STATE OF CEARÁ According to Resolution 013/2007 of the Council of Economic Development of the State of Ceará, dated April 20, 2007, the Company has a tax incentive called ―FDI – Industrial Development Fund‖ for the unit located in Crateús, whose benefit enables financing 75% of the ICMS due over operations remaining from its industrial process. Payments are made in monthly installments by means of the Statement of Deferred ICMS and the collection of the additional ICMS installment (25% of the amount due). The term of benefit fruition is 120 months. The incentive also comprises the deferral of ICMS levied on imported machines and equipment that are part of the Company‘s fixed assets and the difference in the rate. Out of the amount financed, 25% will be collected after 36 months, monetarily adjusted based on the Long-Term Interest Rate (TJLP). 47
  • 53. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A7.8 – Material long-term relations To become effective, the incentive depends on the payment of the deferred portion of ICMS, with a maximum delay of 30 days, collection of ICMS on operations not included in the tax incentive according to the required form and terms, update all tax, labor, social security and other social liabilities, and issuance of the Statements of Deferred ICMS, in up to 36 months. STATE OF TOCANTINS According to the Special Regime Agreement no. 1834/2007, as of March 26, 2007, the Company has a tax incentive called ―Proindústria‖, which allows the Company to benefit from presumed credit so that the tax burden corresponds to 2% (two percent) of the establishment‘s taxed outgoing merchandise. The term of benefit fruition is 15 years as of December 2006. The collection of mandatory ICMS is also waived for goods and services to be used in the production, industrialization, transformation or handling process. The difference of rate due from interstate acquisition of machinery and equipment to comprise the Company‘s fixed assets is exempt from ICMS. On January 24, 2008, the Company filed the Prosperar agreement no. 001/2008 to amend the way the benefit is granted, which is now a credit of 75% of the ICMS due. In the first 5 years of incentive, the Company should collect (until the twentieth business day of the following month after the taxable event occurred), 5% of the benefit granted and then can record the remaining amount as revenue. The Company must send every month to the Economic Development Council of the State of Tocantins the ICMS tax payment forms, make investments set forth in the economic and financial feasibility project, not delay ICMS collection for more than 60 days, notice amendments on its Bylaws and send its financial statements in up to 90 days after the end of the fiscal year. STATE OF MARANHÃO According to the Agreement entered into with the state of Maranhão on May 4, 2004, the Company has tax incentive for a 10-year term, which corresponds to the exemption of ICMS levied on the acquisition of machinery, equipment and facilities acquired abroad, and application of exemption of outgoing goods within the state and interstate, valid for 12 years for the activities developed in within the state, and 10 years for activities developed in the capital city, activities corresponding to industrialized products derived from oleaginous seeds, including vegetable oils and biodiesel. The tax incentive exempts in 100% the payment of ICMS. Therefore, upon calculation of the monthly amount of ICMS, there will be the exemption of any amount due and the credit will be allocated to the result. The Company must have investments of approximately R$20,000 and generate 25 direct industrial jobs and up to 5,000 jobs within the project‘s rural partnerships. The Company complied with the related obligations in the year. STATE OF RIO GRANDE DO SUL According to Resolution no. 02/2007 of the Administrative Board of Fundopem/RS, dated May 10, 2007, the Company has a tax incentive called ―Fundopem‖ for the unit located in the city of Rosário do Sul, whose benefit allows financing 75% of ICMS amount due on operations arising from the Company‘s industrial process. The financed portion will be paid after 60 months, with a 60% discount and monetary restatement corresponding to 100% of the variation of the Amplified Consumer Price Index (IPCA) plus interest of 3% p.a. The term of benefit fruition is 96 months. 48
  • 54. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A7.8 – Material long-term relations To become effective, the incentive depends, at the end of 60 months, on the maintenance of the compliance with contract requirements with the Banco do Estado do Rio Grande do Sul S/A, Caixa Estadual S/A – Development Branch/Rio Grande do Sul and Regional Development Bank of the Southern Region (BRDE), towards tax and environmental obligations arising from the law in effect and the generation of 168 new direct jobs in 8 years. The Company has entered into an agreement with the Government of the State of Rio Grande do Sul to pay the ICMS due (from October 2007 to February 2008) in installments, including the deferred installment. According to the agreement, the amount of ICMS corresponding to the period mentioned above will be recognized as income as the payments are made. INCOME TAX Based on the Incorporation Report no. 0143/2006, issued on August 28, 2006 (further confirmed by Report no. 46/2007) by the Northeast Region Development Agency (ADENE), for 10 (ten) years, as of 2007, the Company was granted a 75% reduction in income tax and non- refundable additions for the unit located in Floriano, state of Piauí. Based on the Incorporation Report no. 0045/2007, issued on April 16, 2007 by the Northeast Region Development Agency (ADENE), for 10 (ten) years, as of 2007, the Company was granted a 75% reduction in income tax and non-refundable additions for the unit located in Crateús, state of Ceará. Based on the Incorporation Report no. 0108/2007, issued on July 30, 2007 by the Northeast Region Development Agency (ADENE), for 10 (ten) years, as of 2007, the Company was granted a 75% reduction in income tax and non-refundable additions for the unit located in Iraquara, state of Bahia. 49
  • 55. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A7.9 – Other material information 7.9. Other material information: All relevant information regarding this topic was described in items above. 50
  • 56. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A8.1 – Description of Economic Group 8.1 – Economic Group Brasil Ecodiesel does not have direct or indirect controlling shareholders, given that no shareholders‘ agreement was executed, and the major shareholder of the Company currently holds 14% of the Company. Brasil Ecodiesel controls (holds over 99%) of the capital stock of the companies listed below. Brasil Ecodiesel does not have associated companies or interest in the group‘s companies, except the subsidiaries. Company Headquarters Date of incorporation Fazenda Santa Clara, Rod. PI 141- Buriti Agrícola Ltda. July 18, 2003 Buriti – PI Av. Des.Moreira, 2120, sala 102 - Bonanza Agro-industrial Ltda. September 1, 2003 Fortaleza - CE Bora-Bora Agro-industrial Ltda. Rua Ulisses Vale, 164 - Lajes – RN September 1, 2003 Av. Ana Jansen, Qd.19, Lote 2 - São Capão da Canoa Agro- industrial Ltda. September 1, 2003 Luis - MA Av. Sarg. Hermínio, 969 – Crateús – Crateús Algodoeira S.A. February 16, 1962 CE Rua Barão da Boa Vista, 242 - Erebango Agro-industrial Ltda. September 1, 2003 Petrolina – PE Ecotrans Transp. Serv. E Loc. De Av. Jóquei Clube, 299 – Teresina - July 28, 2003 Equip. e Máquinas Ltda. PI Fazenda Caraíba, s/n, parte Pilar - Gustavia Agro-industrial Ltda. September 1, 2003 Jaguarari – BA Av. Jóquei Clube, 299, sala Jaicós Agrícola Ltda. July 18, 2003 1401 -Teresina – PI Av. Des. Cândido Martins, 586 - Mocuri Agrícola Ltda. July 18, 2003 Oeiras – PI Faz. São José, Est.Vicinal km 65, Montana Agro-industrial Ltda. September 1, 2003 Setubinha-MG Rua Dois, s/n, Qd. 66 Alvorada do Piatã Agrícola Ltda. July 18, 2003 Gurguéia – PI Rede de Compras Intermediação de Av. Des. Moreira, 2120, sala 101- Negócios, Comércio de Produtos e September 1, 2003 Fortaleza – CE Insumos Agrícolas Ltda. 51
  • 57. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 8.2 – Economic Group’s Organization Chart Brasil Ecodiesel S.A. Capão da Canoa Crateús Erebango Agro-Buriti Agrícola Bonanza Agro-Ind. Bora-Bora Agro- Algodoeira Gustavia Agro-Ind. Jaicós Agrícola Mocuri Agrícola Piatã Agrícola Ecotrans Transp. Rede de Compras Montana Agro- Agro-Ind. Ind. (99.9%) (100.0%) Ind. (100.0%) (100.0%) (99.2%) (99.9%) (99.9%) Serv. (99.9%) (99.9%) Ind. (100.0%) (100.0%) (99.5%) (100.0%) 8.3 – Corporate restructuring transactions Transaction date 08/27/2009 Corporate event Other Corporate event details – ―Other‖ Capital increase Transaction Details On August 27, 2009, the Board of Directors of Brasil Ecodiesel ratified a capital increase amounting to R$315,256,589.90, by issuing 450,366,557 shares for R$0.70 per share. Transaction date 06/25/2009 Corporate event Other Corporate event details – ―Other‖ Capital increase Transaction Details A private capital increase was ratified on June 25, 2009, totaling R$104 million with the issue of one hundred forty eight million, five hundred seventy- one thousand, four hundred and twenty-nine (148,571,429) common shares for R$0.70 per share. Transaction date 03/28/2009 Corporate event Sale and acquisition of share control Transaction Details On March 28, 2009, the controlling shareholders of Brasil Ecodiesel, representing 50% of the Company‘s capital stock, terminated the shareholders‘ agreement, disclosed on a Material Fact filed at the CVM. After this period, there were two capital increases, already mentioned in this form, and sale of shares by the Company‘s former controlling shareholders. Due to the changes mentioned above, these shareholders currently do not hold a relevant interest in Company‘s shares. 8.4 – Other material information 8.4. Provide other information the Issuer deems relevant All relevant information regarding this topic was described in items above. 52
  • 58. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A9.1 – Material, non-current assets - other 9.1. Material, non-current assets - other All relevant information regarding this topic was described in items above.9.1 – Material non-current assets/ 9.1.a – Fixed assets Details of fixed assets Country State where Type of where located located City where located ownership Farm (9,178 thousand m²) Brazil Piauí Cristiano Castro Own Farm (24,004.32 thousand m²) Brazil Piauí Cristiano Castro Own Farm (40,000 thousand m²) Brazil Piauí Pio IX Own Farm (45,280 thousand m²) Brazil Ceará Parambú Own Farm (3,212.62 thousand m²) Brazil Ceará Parambú Own Farm (10,679.54 thousand m²) Brazil Ceará Parambú Own Farm (119,000 thousand m²) Brazil Ceará Parambú Own Farm (3,739,827 thousand m²) Brazil Minas Gerais Setubinha Own Farm (5,319,017 thousand m²) Brazil Ceará Parambú Own Farm (14,000 thousand m²) Brazil Ceará Cratéus Own Farm (13,772.83 thousand m²) Brazil Ceará Cratéus Own Farm (12,030.00 thousand m²) Brazil Ceará Cratéus Own Farm (179,106.70 thousand m²) Brazil Piauí Canto do Buriti Own Biodiesel plant Brazil Piauí Floriano Own Biodiesel plant Brazil Ceará Cratéus Own Biodiesel plant Brazil Bahia Iraquara Own Biodiesel plant Brazil Tocantins Porto Nacional Own Biodiesel plant Brazil Rio Grande do Sul Rosário do Sul Own Farm (70,000.00 thousand m²) Brazil Piauí Cristiano Castro Own Farm (20,900.24 thousand m²) Brazil Minas Gerais Setubinha Own Biodiesel plant Brazil Maranhão Portal de Itaqui Own Farm (198,120.00 thousand m²) Brazil Bahia Irecê Own São Luiz Gonzaga crushing plant Brazil Rio Grande do Sul São Luiz Gonzaga Own Iraquara crushing plant Brazil Bahia Iraquara Own9.1 – Material non-current assets/ 9.1.b – Patents, trademarks and brands,licenses, concessions, franchises and agreements for transfer oftechnology Reason for not filling out the chart: Not applicable 53
  • 59. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A9.1 – Material non-current assets/ 9.1.c – Interest in other companiesCompany Name CORPORATE CVM Code Type of Country State City Details of activities performed Issuer’s TAXPAYER ID Company interest (%) (CNPJ)Fiscal Year Book value – Market value – Dividends Date Amount Variation % Variation % received (Reais) (Reais)Bonanza Agro- 06.040.512/0001-68 - Subsidiary Brazil Ceará Fortaleza Agribusiness, for cultivation and 100.000000industrial Ltda extraction, sale and export of agricultural products, especially oleaginous seeds, their by-products, purchase and sale of third-party production, together with the production of fertilizers, inoculating agents, stimulating products and biofertilizers for proprietary use and import and/or purchase of agricultural inputs, which can also hold interest in the capital stock of other companies12/31/2009 0.000000 0.000000 0.00 Market Value12/31/2008 12.000000 0.000000 0.00 Book value 12/31/2009 0.2412/31/2007 0.000000 0.000000 0.00Reasons for acquisition and maintenance of stake in companyStructuring of agricultural networkNote: Book value = market valueBora-Bora Agro- 06.042.271/0001-96 - Subsidiary Brazil Rio Grande Lajes Agribusiness, for cultivation and 100.000000industrial Ltda do Norte extraction, sale and export of agricultural products, especially oleaginous, their by-products, purchase and sale of third-party production, together with the production of fertilizers, inoculating agents, stimulating products and biofertilizers for proprietary use and import and/or purchase of agricultural inputs, which can also hold interest in the capital stock of other companies12/31/2009 0.000000 0.000000 0.00 Market Value12/31/2008 58.000000 0.000000 0.00 Book value 12/31/2009 766.6012/31/2007 0.000000 0.000000 0.00Reasons for acquisition and maintenance of stake in companyStructuring of agricultural network 54
  • 60. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A9.1 – Material non-current assets/ 9.1.c – Interest in other companiesCompany Name CORPORATE CVM Code Type of Company Country State City Details of activities performed Issuer’s TAXPAYER ID interest (%) (CNPJ)Fiscal Year Book value – Market value – Dividends Date Amount (Reais) Variation % Variation % received (Reais)Buriti Agrícola Ltda 05.796.980/0001-02 - Subsidiary Brazil Piauí São Luiz Agribusiness, for cultivation and 99.990000 Gonzaga extraction, sale and export of agricultural products, especially oleaginous, their by-products, purchase and sale of third-party production, together with the production of fertilizers, inoculating agents, stimulating products and biofertilizers for proprietary use and import and/or purchase of agricultural inputs, which can also hold interest in the capital stock of other companies12/31/2009 0.000000 0.000000 0.00 Market Value12/31/2008 0.000000 0.000000 0.00 Book value 12/31/2009 2,523,915.0112/31/2007 0.000000 0.000000 0.00Reasons for acquisition and maintenance of stake in companyStructuring of agricultural networkCapão da Canoa 06.042.277/0001-63 - Subsidiary Brazil Maranhão São Luís Agribusiness, for cultivation and 100.000000Agroindustrial Ltda extraction, sale and export of agricultural products, especially oleaginous, their by-products, purchase and sale of third-party production, together with the production of fertilizers, inoculating agents, stimulating products and biofertilizers for proprietary use and import and/or purchase of agricultural inputs, which can also hold interest in the capital stock of other companies12/31/2009 0.000000 0.000000 0.00 Market Value12/31/2008 0.000000 0.000000 0.00 Book value 12/31/2009 -140,628.0012/31/2007 0.000000 0.000000 0.00Reasons for acquisition and maintenance of stake in companyStructuring of agricultural network 55
  • 61. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A9.1 – Material non-current assets/ 9.1.c – Interest in other companiesCompany Name CORPORATE CVM Code Type of Company Country State City Details of activities performed Issuer’s TAXPAYER ID interest (%) (CNPJ)Fiscal Year Book value – Market value – Dividends Date Amount (Reais) Variation % Variation % received (Reais)Crateús Algodoeira 07.158.470/0001-27 - Subsidiary Brazil Ceará Crateus a) Production of chemical products 99.480000S.A. derived from oleaginous seeds or any other vegetable seed and biofuels, among which, biodiesel; b) Production and transformation of vegetable oils and derivative products; c) Processing of oils derived from oleaginous seeds; d) Trade of vegetable oils and other derivative products, including biodiesel, in domestic and international markets; e) Storage and industrial handling of ethanol and methanol for the production of biodiesel; f) Trade, import and export, transport and store any products at the Brazilian Nomenclature of Goods; g) Import inputs, raw materials, machinery and equipment to be used in the Company‘s activities; and h) Hold interest in the capital of other companies, as shareholder or quotaholder.12/31/2009 0.000000 0.000000 0.00 Market Value12/31/2008 0.000000 0.000000 0.00 Book value 12/31/2009 -1,698,032.5912/31/2007 0.000000 0.000000 0.00Reasons for acquisition and maintenance of stake in companyStructuring of agricultural network 56
  • 62. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A9.1 – Material non-current assets/ 9.1.c – Interest in other companiesCompany Name CORPORATE CVM Code Type of Country State City Details of activities performed Issuer’s TAXPAYER ID Company interest (%) (CNPJ)Fiscal Year Book value – Market value – Dividends Date Amount Variation % Variation % received (Reais) (Reais)Ecotrans Transporte, 05.823.134/0001-26 - Subsidiary Brazil Piauí São Luiz a) Transportation of cargo and containers in 99.980000Serviços e Locação de Gonzaga general;Equipamentos e b) Transportation of vegetable products, storage,Máquinas Ltda inventory management, packaging, distribution and logistics support; c) Rental, in general, of its assets or the assets of third parties, among which: generators, trucks, tractors, rural vehicles or vehicles used in agricultural activities, machinery and equipment in general; f) Trade, import and export, transport and store any products at the Brazilian Nomenclature of Goods; e) Interest in the capital stock of other companies, complying with legal provisions; and f) Provide services related to the maintenance and handling of rented equipment and/or machines.12/31/2009 0.000000 0.000000 0.00 Market Value12/31/2008 0.000000 0.000000 0.00 Book value 12/31/2009 4,443,530.1712/31/2007 0.000000 0.000000 0.00Reasons for acquisition and maintenance of stake in companyStructuring of agricultural networkErebango Agro- 06.040.714/0001-00 - Subsidiary Brazil Pernambuco Petrolina Agribusiness, for cultivation and extraction, sale 100.000000industrial Ltda and export of agricultural products, especially oleaginous seeds, their by-products, purchase and sale of third-party production, together with the production of fertilizers, inoculating agents, stimulating products and biofertilizers for proprietary use and import and/or purchase of agricultural inputs, which can also hold interest in the capital stock of other companies12/31/2009 0.000000 0.000000 0.00 Market Value12/31/2008 0.000000 0.000000 0.00 Book value 12/31/2009 -791,463.0012/31/2007 0.000000 0.000000 0.00Reasons for acquisition and maintenance of stake in companyStructuring of agricultural network 57
  • 63. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A9.1 – Material non-current assets/ 9.1.c – Interest in other companiesCompany Name CORPORATE CVM Code Type of Company Country State City Details of activities performed Issuer’s TAXPAYER ID interest (%) (CNPJ)Fiscal Year Book value – Market value – Dividends Date Amount Variation % Variation % received (Reais) (Reais)Gustavia Agro- 06.042.320/0001-90 - Subsidiary Brazil Bahia Jaguarari Agribusiness, for cultivation and 100.000000industrial Ltda extraction, sale and export of agricultural products, especially oleaginous seeds, their by-products, purchase and sale of third-party production, together with the production of fertilizers, inoculating agents, stimulating products and biofertilizers for proprietary use and import and/or purchase of agricultural inputs, which can also hold interest in the capital stock of other companies12/31/2009 0.000000 0.000000 0.00 Market Value12/31/2008 0.000000 0.000000 0.00 Book value 12/31/2009 -494,798.0012/31/2007 0.000000 0.000000 0.00Reasons for acquisition and maintenance of stake in companyStructuring of agricultural networkJaicós Agrícola Ltda 05.796.984/0001-82 - Subsidiary Brazil Ceará Fortaleza Agribusiness, for cultivation and 99.180000 extraction, sale and export of agricultural products, especially oleaginous seeds, their by-products, purchase and sale of third-party production, together with the production of fertilizers, inoculating agents, stimulating products and biofertilizers for proprietary use and import and/or purchase of agricultural inputs, which can also hold interest in the capital stock of other companies12/31/2009 0.000000 0.000000 0.00 Market Value12/31/2008 23.000000 0.000000 0.00 Book value 12/31/2009 -0.2312/31/2007 0.000000 0.000000 0.00Reasons for acquisition and maintenance of stake in companyStructuring of agricultural networkNote: Book value = market value 58
  • 64. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A9.1 – Material non-current assets/ 9.1.c – Interest in other companies Company Name CORPORATE CVM Code Type of Company Country State City Details of activities performed Issuer’s interest TAXPAYER ID (%) (CNPJ) Fiscal Year Book value – Market value – Dividends Date Amount Variation % Variation % received (Reais) (Reais) Mocuri Agrícola Ltda 05.796.986/0001-71 - Subsidiary Brazil Ceará Fortaleza Agribusiness, for cultivation and 99.940000 extraction, sale and export of agricultural products, especially oleaginous seeds, their by-products, purchase and sale of third-party production, together with the production of fertilizers, inoculating agents, stimulating products and biofertilizers for proprietary use and import and/or purchase of agricultural inputs, which can also hold interest in the capital stock of other companies 12/31/2009 0.000000 0.000000 0.00 Market Value 12/31/2008 1697.000000 0.000000 0.00 Book value 12/31/2009 66,457.75 12/31/2007 0.000000 0.000000 0.00 Reasons for acquisition and maintenance of stake in company Structuring of agricultural network Note: Book value = market value Montana Agro- 07.052.601/0001-97 - Subsidiary Brazil Minas Setubinha Agribusiness, for cultivation and 100.000000 industrial Ltda Gerais extraction, sale and export of agricultural products, especially oleaginous seeds, their by-products, purchase and sale of third-party production, together with the production of fertilizers, inoculating agents, stimulating products and biofertilizers for proprietary use and import and/or purchase of agricultural inputs, which can also hold interest in the capital stock of other companies 12/31/2009 0.000000 0.000000 0.00 Market Value 12/31/2008 0.000000 0.000000 0.00 Book value 12/31/2009 -65,063.00 12/31/2007 0.000000 0.000000 0.00 Reasons for acquisition and maintenance of stake in company Structuring of agricultural network Note: Book value = market value 59
  • 65. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A9.1 – Material non-current assets/ 9.1.c – Interest in other companiesCompany Name CORPORATE CVM Code Type of Company Country State City Details of activities performed Issuer’s interest TAXPAYER ID (%) (CNPJ)Fiscal Year Book value – Market value – Dividends Date Amount (Reais) Variation % Variation % received (Reais)Piatã Agrícola Ltda 05.796.977/0001- - Subsidiary Brazil Piauí Alvorada do Agribusiness, for cultivation and 99.940000 80 Gurguéia extraction, sale and export of agricultural products, especially oleaginous seeds, their by- products, purchase and sale of third-party production, together with the production of fertilizers, inoculating agents, stimulating products and biofertilizers for proprietary use and import and/or purchase of agricultural inputs, which can also hold interest in the capital stock of other companies12/31/2009 0.000000 0.000000 0.00 Market Value12/31/2008 1622.000000 0.000000 0.00 Book value 12/31/2009 280,904.0312/31/2007 0.000000 0.000000 0.00Reasons for acquisition and maintenance of stake in companyStructuring of agricultural networkRede de Compras 06.041.069/0001- - Subsidiary Brazil Ceará Fortaleza Integration services among 99.970000Intermediação de 40 suppliers, the transportingNegócios, Comércio company and the client, makingde Produtos e Insumos agribusiness transactionsAgrícolas Ltda simple, profitable and secure.12/31/2009 0.000000 0.000000 0.00 Market Value12/31/2008 0.000000 0.000000 0.00 Book value 12/31/2009 2,710,232.4912/31/2007 0.000000 0.000000 0.00Reasons for acquisition and maintenance of stake in companyStructuring of agricultural networkNote: Book value = market value 60
  • 66. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A9.2 – Other material information 9.2. Provide other information the Issuer deems relevant All relevant information regarding this topic was described in items above. 61
  • 67. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A10.1 – General financial and equity conditions 10.1 – The Executive Officers should comment on: a) the general financial and equity conditions After the financial restructuring and capitalization, the company had net cash of around R$ 36.7 million on 12/31/09. Its debt of R$ 66.6 million is repayable in the long-term and has lower interest rates than the market, which facilitate its amortization using the cash generated from operations. The assets are owned by the company, except a small balance of Finame loans, and are fully paid for. A part of these assets (3 plants) is encumbered as collateral for long-term agreements. Debt owed to suppliers is low and there are no overdue taxes or debts. The inventories are linked to the company‘s operations, with a low operational cycle. The accounts receivable are concentrated in a single client (Petrobrás) which, given its excellent financial standing, is not a cause for concern. Investments are concentrated in highly liquid funds, which enables us to capitalize on the opportunities in a market that should undergo consolidation among the players. b) capital structure and possibility of redemption of shares or membership interest The company‘s capital structure is diffuse, with around 28,000 shareholders, a majority of whom are individuals. The largest shareholder (NeoBiodiesel Fund) owns around 14% of the capital. I.Redemption scenarios Not applicable II.Formula for calculation of redemption amount Not applicable c) Payment capacity in relation to the financial obligations assumed On December 31, 2009, the Company‘s total debt was R$ 66.6 million, of which R$ 10.9 million was short-term and the balance is payable as follows: R$ 15.9 million in 2011, R$ 15.8 million in 2012, R$ 15.7 million in 2013 and R$ 8.2 million in 2014. Even after excluding the current cash and cash equivalents (R$ 103.8 million on 12/31/2009) and based on the results generated in 2009 (adjusted EBITDA of R$ 40.7 million), the Executive Board considers the payment capacity in relation to the financial obligations as positive. 62
  • 68. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A d) Sources of working capital financing and for investments in non- current assets For working capital finance, the company uses funds obtained through Bank Credit Bills (CCB) which, after the company‘s restructuring in August 2009, had the term extended, having been renegotiated with a 12-month grace period, another 48 months for amortization and at cost equivalent to 120% of the interbank lending rate (CDI). For investments in non-current assets, the company uses FINAME (Modermaq) loans, with costs varying between the long-term interest rate (TJLP) + 6% p.a. and TJLP+13.9% p.a. Originally, these loans had a payment term of 42 months (6+36), and most of the amortization will be till the end of 2011. e) Sources of working capital financing and for investments in non- current assets that the company plans to use to cover liquidity shortfalls In case of liquidity shortfalls, for its working capital, the company may anticipate its receivables from the debtor (a line normally provided by Petrobrás to provide liquidity to its suppliers) or carry out new operations through CCBs backed by receivables. For non-current assets, the company may use the lines provide by BNDES or the regional banks in locations where the company operates (BNB - Banco do Nordeste and BASA – Banco da Amazônia). f) Debt levels and characteristics of such debts, as well as a description of: The company‘s debt on December 31, 2009 was R$ 66.6 million, of which R$ 10.9 million was short-term and R$ 55.7 million was long-term, with maturity up to 2014. The major part of the debt (R$ 62.7 million, or 94.1% of the total) was obtained at a cost equivalent to 120% of the variation in the CDI, and the remainder is indexed to the TJLP variation + spread. i. significant loan and financing agreements The most significant loan agreements are: Banco ABN Santander, R$ 36.8 million, maturing on 06/12/2014; Banco Bradesco, R$ 16.3 million, maturing on 07/30/2014 and Banco BMG, R$ 9.6 million, maturing on 06/12/2014. The cost of all the loans is 120% of the CDI rate. ii. other long-term relations with financial institutions There are no other long-term relations with financial institutions 63
  • 69. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A iii. degree of subordination among the debts There is no subordination among the debts contracted. iv. any restrictions on the issuer, especially, with regard to debt levels and contracting of fresh debt, distribution of dividends, disposal of assets, issue of new securities and sale of ownership control There are no restrictions g) utilization limits of financing already contracted There are no limits on using the financing already contracted h) significant changes in each item of the financial statements CONSOLIDATED INCOME STATEMENTConsolidated Income Statement 2007 AV% 2007 2008 AV% AH 2009 AV% AH 2008 2008/ 2009 2009/ 2007 2008GROSS SALES 419,664 128.0% 427,151 121.7% 1.8% 404,919 115.9% -5.2% (-) Sales Tax (91,759) -28.0% (76,169) -21.7% -17.1% (55,597) -15.9% -27.0%NET SALES 327,905 100.0% 350,982 100.0% 7.0% 349,322 100.0% -0.5% (-) Cost of Goods and Services (340,409) -103.8% (380,995 -108.6% 11.9% (289,183 -82.8% -24.1% ) )GROSS PROFIT (12,504) -3.8% (30,013) -8.6% 140.0% 60,139 17.2% n.a. (+/-) OPERATING REVENUES (28,370) -8.7% (107,609 -30.7% 279.3% (116,947 -33.5% 8.7%(EXPENSES) ) ) General and administrative (40,132) -12.2% (44,318) -12.6% 10.4% (38,035) -10.9% -14.2% Taxes (5,445) -1.7% (2,668) -80.0% -51.0% (1,282) -40.0% -51.9% Other operating revenues (expenses) 17,207 5.2% (60,623) -17.3% 452.3% 16,061 4.6% -126.5% Adjustments to strategic repositioning 0.0% - 0.0% n.a. (93,691) -26.8% n.a.OPERATING RESULTS (40,874) -12.5% (137,622 -39.2% 236.7% (56,808) -16.3% -58.7% )(+/-)FINANCIAL RESULT (5,106) -1.6% 59,478 -16.9% 1064.9 (31,707) -9.1% -46.7% % Financial revenues 9,697 3.0% 1,781 50.0% -81.6% 4,847 1.4% 172.2% Financial expenses 14,801 -4.5% (56,765) -16.2% 283.5% (38,721) -11.1% -31.8% Exchange variation, net (2) 0.0% (4,494) -1.3% 224600. 2,167 0.6% -148.2% 0%Results before income and social (45,980) -14.0% (197,100 -56.2% 328.7% (88,515) -25.3% -55.1%contribution taxes (IR & CSLL) ) (-) Income and social contribution taxes (4) 0.0% - 0.0% -100.0% - 0.0% n.aLoss before Minority Interest (45,984) -14.0% -56.2% 328.6% (88,515) -25.3% -55.1% (-) Minority Interest 3 0.0% - 0.0% -100.0% 22 0.0% n.a.NET INCOME (45,981) -14.0% (197,100 -56.2% 328.7% (88,493) -25.3% 44.9% ) Gross sales: Gross sales mainly consists of biodiesel sales, but also includes the sale of oilseeds (castor, sunflower, soybean), resale of soybean oil and the sale of byproducts generated during the production and sale of biodiesel. Revenue from biodiesel depends on the result of the biodiesel auctions conducted by the National 64
  • 70. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Petroleum Agency (ANP). In 2007, the first year when biodiesel became mandatory, the company sold R$ 419.6 million, 1.8% more than the R$ 427.2 million in 2008, a part of which came from the sale of castor seeds to strengthen the company‘s working capital. In 2009, despite the increase in the biodiesel blending percentage, which is already 4% of mineral diesel, till August 2009, the company faced significant restrictions in its working capital, which hampered its revenue growth. Gross sales in 2009 came to R$ 404.9 million, 5.2% lower than in 2008. Sales taxes: Sales taxes include ICMS, the value-added tax on sales and services, and PIS/COFINS, the social insurance contributions, levied on the sale of biodiesel and its byproducts, as well as the deduction of state tax benefits that the company enjoys in the states where it operates. In 2007, domestic biodiesel sales were taxed at 17% and interstate taxes were 12%. PIS and COFINS, which are levied according to a special regime of the Federal Revenue Service, are a fixed value per m³ of biodiesel, irrespective of the product sale value. In 2007, theses amounts were R$ 38.89 /m³ for PIS and R$ 9999179.07/ m³ for COFINS. The net amount of this account came to R$ 91.8 million, equivalent to 28% of the Net Operating Revenue. In 2008, with its plants fully operational, the company managed to acquire raw materials from within the biodiesel producing states, which improves the utilization of the prevailing state tax benefits. Uniform rates for sale of biodiesel, whether intrastate or interstate, came into force. Thus, biodiesel sales attracted ICMS of 12%, regardless of the destination of the product. The government also standardized the tax rate of biodiesel in relation to diesel in order to compensate for the levy of CIDE and then reduce the PIS and COFINS rates to R$ 999931.75 /m³ and R$ 146.20/ m³ respectively. Sales deductions in 2008 came to R$ 76 million, equivalent to 21.7% of the Net Operational Revenue, a 17% drop in relation to 2007. In 2009, since these effects were felt during the whole year, the amount was R$ 55.6 million, representing 15.9% of the Net Operating Revenue, 27% down from the previous year. Net Operating Revenue: It is Gross Sales less relevant deductions. Thus, if we analyze the last 3 years, despite the decline in Gross Revenue, we notice a recovery in Net Revenue, especially as a result of the changes in the Sales Taxes. Net revenue was R$ 327.9 million in 2007, increasing to R$ 351.0 million in 2008 (up 7%) and remaining practically stable in 2009, at R$ 349.3 million, dropping by a mere 0.5%. Cost of Products Sold: This item represents around 90% of the company‘s total expenses. It is almost composed of raw material (especially vegetable oil and methanol) and is directly related to the volume of biodiesel produced. Since 65
  • 71. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A biodiesel has a fixed price, determined in quarterly auctions (which were held once every six months in 2007), it is not possible to pass through the cost variations to the selling price, which ends being absorbed by the company if the costs of the main raw materials had not been fixed before the auction. In 2007, the company‘s cost of products sold totaled R$ 340.4 million, equivalent to 103.8% of the Net Operating Revenue (NOR). As a result of the high raw material prices and low utilization at the units, this expense item came to R$ 381.0 million, equivalent to 108.6% of NOR. In 2009, especially after the 3rd quarter, the installed capacity was better utilized and the company managed to obtain better prices at biodiesel auctions. Moreover, mechanisms were adopted to fix the price of vegetable oil together with suppliers in order to preserve the margins obtained in the auction. Cost of products sold came to R$ 289.2 million, 24.1% down from 2008, and represented 82.8% of NOR. Gross Result: The Gross Result was the direct consequence of Net Operating Revenue and Cost of Products Sold. In 2007, the Gross Result was a loss of R$ 12.5 million, equivalent to 3.8% of NOR. In 2008, the gross loss increased by 140.1% to R$ 30.0 million. However, in 2009, the results were reversed and the company posted a positive Gross Margin. Gross Profit in 2009 came to R$ 60.1 million, equivalent to 17.2% of NOR. Operating Revenues/Expenses: The Company‘s Operating Revenues and Expenses consist of all the other expenses incurred in the origination of raw materials and the production of biodiesel, in addition to the provisions constituted for covering losses generated in the process. In the past 3 years, these expenses were significantly influenced by extraordinary, non-recurring expenses, which accounted for a significant portion of the amounts in this group. In 2007, they totaled R$28.4 million, increasing to R$ 107.6 million in 2008 and to R$ 116.9 million in 2009. An analysis of the groups making up this expense item allows a better understanding of their behavior in the past 3 years. a. General and Administrative Expenses: These consist of expenses incurred by the administrative area of the plant and all the expenses involved in the company‘s corporate area (personnel, rent, travel, consulting services, etc.). In 2007, this item totaled R$ 40.1 million, equivalent to 12.2% of NOR, increasing by 10.4% to R$ 44.3 million in 2008, equivalent to 10.4% of NOR. In 2009, thanks to significant reductions in the operating expenses, the amount dropped to R$ 38.0 million, 14.2% down year-on- year. 66
  • 72. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A b. Taxes: Tax expenses include taxes on operations that are not directly related to its sales. These basically consist of IPTU, IPVA and ICMS on internal transfers by the company, of items in its fixed assets. With the conclusion of works at the plants, these transfers declined significantly, resulting in lower ICMS. These expenses, which corresponded to 1.7% of NOR in 2007, dropped to 0.8% in 2008 and to 0.4% in 2009, amounting to R$ 1,282,000, compared to R$ 5,445,000 in 2007. c. Other operating revenues (expenses): This group includes the expenses that are non-recurring in nature and are not directly linked to the company‘s operations. In 2007, the company booked in this account, revenues of R$ 17.2 million, equivalent to 5.2% of NOR, which mainly came from the fines levied on Petrobrás for non-withdrawal of the biodiesel produced, pursuant to contractual terms. In 2008, the company provisioned losses on account of its family farming project directed at castor cultivation, as well as a part of the fines levied on Petrobrás, whose receipt was considered difficult. This year, expenses of R$ 60.6 million were booked, whereas in 2009, the company rescinded its agreement for the assignment of the right of use with Enguia GEN, which generated revenues of around R$ 38 million. However, it booked fresh losses in its family farming program, now with regard to sunflower, while wrote off raw material inventories not in use and adjusted provisions for losses in its ―trade accounts receivable‖. The net effect of these adjustments was a revenue of R$ 16.1 million, equivalent to 4.6% of NOR. d. Adjustments for strategic redirectioning: At the end of 2009, and after the conclusion of the financial restructuring that began in 2008, significant changes were made in the company‘s management. A new Board of Executive Officers was named in August 2009 and a new Board of Directors was named in December 2009. A new strategic direction was also defined for the company, which included, among others, the deactivation of the biodiesel production units in Floriano and Crateús and new initiatives for the Santa Clara Production Nucleus (NPSC), to make it sustainable but did not include the cultivation of castor as defined originally, and the offering of the company‘s farms in the states of Ceará, Piauí and Minas Gerais for sale. As a result of all these, several assets recorded in the company‘s balance sheet were provisioned, and all the deferred assets of NPSC were written off. Consequently, the company recorded expenses of R$ 93.7 million in this account which, due to its non-recurring nature and is related to the company‘s new strategic direction, did not happen in the previous years. Operating Result: The operating result directly depends on Gross Profit and 67
  • 73. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Operating Expenses. As such, since operating expenses oscillated in the past 3 years, operating results too varied during the period – R$ 40.9 million loss in 2007, equivalent to 12.5% of the Net Operating Revenue (NOR), R$ 137.6 million in 2008, 236.7% up year-on-year and equivalent to 39.2% of NOR, and despite the 58.7% decrease in 2009, a loss of R$ 56.9 million, equivalent to 16.3% of NOR. Financial Results: The Company‘s financial result consists of 3 groups: Financial Revenues, Financial Expenses and Net Exchange Variation. In 2007, the net financial result was an expense of R$ 5.1 million, equivalent to 1.6% of the NOR. In 2008, with the increase in debt, the financial result was an expense of R$ 59.5 million, 1064.9% up over the previous year and equivalent to 16.9% of NOR. In 2009, after the conclusion of the company‘s financial restructuring in August, its debt level decreased significantly and consequently its financial result fell to R$ 31.7 million, 46.7% down from the previous year and equivalent to 9.1% of NOR. The individual analysis of each group is detailed below: a. Financial Revenues: In the first half of 2007, the company has invested a substantial part of its IPO funds in financial investments. Its financial revenues were R$ 9.7 million, equivalent to 3.0% of its NOR. In 2008, with the continuance of the process of construction of plants and the working capital needs for the plants in operation, the company reduced its investments and increased its debt level. As a result, financial revenues fell 81.6% to R$ 1.8 million. This scenario continued till April 2009, when the company carried out its first capital increase, reducing its working capital debt, and is completely changed since August, when the company concluded its second capital increase and reported a positive net cash position (financial investments exceeding debt). As a result, financial revenues came to R$ 4.9 million in 2009, representing growth of 172.2%. b. Financial Expenses: Financial expenses started increasing from the second half of 2007, when the IPO funds were invested in the construction of plants and the company resorted to bank loans for its working capital needs. The negative operating results pushed up financial expenses till the 1st half of 2009, when after the company‘s capitalization, bank loans dropped by around R$ 280 million to R$ 67 million. Thus, in the past 3 years, financial expenses were R$ 14.8 million in 2007, rising to R$ 56.8 million in 2008 (283.5% up) and dropping to R$ 38.7 million in 2009 (31.8% down). c. Exchange variation, net: In 2007, the company contracted a loan from its parent company, Ecogreen Solutions, at market conditions and pegged to 68
  • 74. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A the U.S. dollar. This loan was settled in April 2009 after the company‘s first capital increase. In this period, the exchange variation followed the variation in the U.S. dollar. The company practically did not register any amount in this account in 2007, but recorded an expense of R$ 4.5 million in 2008 and revenue of R$ 2.2 million in 2009. Result before Income Tax and Social Contribution: The result before income tax and social contribution was directly affected by all the above-mentioned factors. In 2007, the loss was R$ 45.9 million, equivalent to 14% of NOR. In 2008, the loss increased by 328.7% to R$ 197.1 million, equivalent to 56.2% of NOR. In 2009, the results recovered, with loss decreasing by 55.1% to R$ 88.7 million, equivalent to 25.3% of NOR. Income Tax and Social Contribution: As a result of the losses registered, the company did not provision and pay income tax and social contribution in the past 3 years. Net Result of the Year: Since no income tax and social contribution was paid in the past 3 years, the net result is the same as the result before income tax and social contribution for the period. 69
  • 75. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A BALANCE SHEET ASSETSASSETS 2007 AV% 2007 2008 AV% 2008 AH 2008/ 2009 AV% AH 2009/ 2007 2009 2008CURRENT ASSETS 298 0.1% 1,049 0.2% 252.0% 103,822 18.9% 9797.2%Cash and cash equivalents 13,304 2.3% 28,490 5.7% 114.1% 49,765 9.1% 74.7% Trade accounts receivable 194,076 33.6% 80,212 16.1% -58.7% 90,868 16.5% 13.3% Inventories 8,791 1.5% 8,760 1.8% -0.4% 4,312 0.8% -50.8% Advances to suppliers 25,737 4.5% 11,476 2.3% -55.4% 3,474 0.6% -69.7% Other receivables 150 0.0% 207 0.0% 38.0% 539 0.1% 160.4%Prepaid expenses 449 0.1% 192 0.0% -27.2% 494 0.1% 157.3%Total current assets 242,805 42.0% 130,386 26.1% -46.3% 253,274 46.1% 94.2%NON-CURRENT ASSETSLong-term assets Financial investments 6,510 1.1% - 0.0% -100.0% 0.0% n.a.Trade accounts receivable 18,658 3.2% 11,454 2.3% -38.6% 11,454 2.1% 0.0% Long-term agricultural crop - 0.0% 11,583 2.3% n.a. 9,874 1.8% -14.8% Assets available for sale - 0.0% - 0.0% n.a. 7,012 1.3% Recoverable taxes 553 0.1% 20,451 4.1% 38598.2% 28,773 5.2% 40.7% Escrow deposits 489 0.1% 214 0.0% -56.2% 462 0.1% 115.9% Guarantee deposits 97 0.0% 104 0.0% 7.2% 117 0.0% 12.5% Other receivables 188 0.0% 181 0.0% -3.7% 9 0.0% -95.0%InvestmentsProperty, plant and equipment 245,563 42.5% 250,892 50.2% 2.2% 216,942 39.5% -13.5% Intangible assets 1,117 0.2% 1,288 0.3% 15.3% 132 0.0% -89.8% Deferred charges 61,726 10.7% 73,017 14.6% 18.3% 21,254 3.9% -70.9%Total non-current assets 334,901 58.0% 369,184 73.9% 10.2% 296,029 53.9% -19.8%TOTAL ASSETS 577,706 100.0% 499,570 100.0% -13.5% 549,303 100.0 10.0% % CURRENT ASSETS: Current assets consist of 3 major groups: cash, trade accounts receivable and inventories. At the end of 2007, the first full year of operations, the company had current assets of R$ 242.8 million. In 2008, as a result of operating losses, its working capital fell significantly, affecting its current assets, which fell to R$ 130.4 million, 46.3% down year-on-year. In 2009, after the financial restructuring, its working capital was rebuilt and the company considerably improved its liquidity position. Total current assets came to R$ 253.2 million, 94.2% up on the previous year. In 2007, current assets were equivalent to 42.0% the total assets, falling to 26.1% in 2008 and back to 46.1% in 2009. 70
  • 76. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A a. Cash and cash equivalents: This group, consisting of cash and short-term financial investments, recorded substantial amounts only after 2009 with the conclusion of the financial restructuring and the capitalization process. In 2007, this item represented 0.1% of total assets, increasing to 0.2% in 2008 and 18.9% in 2009 (9.797% up year-on-year). b. Trade accounts receivable: This item consists mainly of sales invoices of the company‘s biodiesel sales to Petrobrás. It depends directly on the company‘s monthly sales volume and the period of payment of Petrobrás. In 2007, the payment period was 16 days and total trade accounts receivable was R$ 13,304 thousand, equivalent to 2.3% of total assets in 2007. In 2008, the payment period of Petrobrás agreements was changed to 30 days after delivery of biodiesel. The volume of trade accounts receivable grew to R$ 28,490 thousand, 114.1% up year-on-year, equivalent to 5.7% of total assets. Between December 2008 and December 2009, the company‘s biodiesel sales volume grew significantly, resulting in trade accounts receivable of R$ 49,765 thousand, 74.7% up on the previous year. At the end of 2009, this item was equivalent to 9.1% of the company‘s total assets. c. Inventories: Inventories consist of raw materials (agricultural and industrial), goods in process and finished goods. In 2007, a significant portion of the inventories consisted of Crops in Formation, which represented the expenses incurred by the company for the formation of the family agriculture network and other expenses relating to the development of castor crop. The inventories totaled R$ 194.1 million, equivalent to 33.6% of the assets. In 2008, besides reducing the industrial inventories by reducing the volume of its operations, the company created provisions in its agricultural inventories to adjust them to the market value. There was a significant reduction in the value of the agricultural inventories, and the total inventories decreased to R$ 80.2 million, 58% down from the previous year. In 2009, the company made fresh adjustments in its inventories, now in the sunflower crop, but there was a recomposition of the industrial inventories. The final amount was R$ 90.9 million, 13.3 % over the previous year and equivalent to 16.5% of total assets. d. Advances to suppliers: This account includes the advances made to suppliers of agricultural and industrial raw materials. In 2007, with substantial agricultural activity, this amount was R$ 8.8 million. In 2008, the amount remained practically stable (R$ 8.8 million), and in 2009, when the advances are basically made to the suppliers of soybean oil, the amount fell to R$ 4.3 million, 50.8% down and equivalent to 0.8% of the total assets. 71
  • 77. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A e. Recoverable taxes: This account includes the accrued taxes that could not be offset in the normal course of its business. The accumulation of these amounts is basically due to the fact that since the beginning of the companys operations till July 2008, a federal law established the withholding of 5.85% of the total invoice amount as PIS, Cofins, IRRF and CSSL taxes at the time of payment of the bill. As the company did not post profit from its operations and since operating margins were low or negative, these amounts could not be offset and accrued in this account. In 2007, this amount came to R$ 25.8 million, growing to R$ 31.8 million, but since the company did not expect to fully use these amounts in the short term, it broke down this total, classifying R$ 11.5 million in short term and R$ 20.5 million in the long term. At the end of 2009, the total amount of this group was R$ 32.3 million, of which R$ 3.5 million was short term and R$ 28.8 million was long term. NON-CURRENT ASSETS: This group includes the company‘s assets whose expected realizable period is more than 12 months, and all the fixed assets. In 2007, the total of this group was R$ 334.9 million, equivalent to 58.0% of total assets. In 2008, this group increased by 10.2%, amounting to R$ 369.2 million. In 2009, the company partially provisions for the value of its Floriano and Crateús plants, which were deactivated, and wrote off the entire amount booked in the deferred assets relating to the Production Nucleus Santa Clara. The total value fell by 19.8% from the previous year to R$ 296.0 million. At the end of 2009, non- current assets were equivalent to 53.9% of the company‘s total assets. The key accounts of this group are detailed below: Trade accounts receivable: It consists of the fines levied on Petrobrás for not withdrawing the biodiesel from the plants, as established in the agreement. In 2007, the aggregate amount was R$ 18.6 million, In 2008, the company provisioned a part of this amount as there were doubts about its actual receipt, and the balance reached R$ 11.4 million, decreasing by 38.6% from the previous year. In 2009, the amounts remained unchanged. a. Agricultural crops in formation: This account records the amounts invested in pine crop cultivation. As the crop maturation occurs after the 4th year, the amounts invested are for the long term. In 2007, there was no pine crop plantation, while in 2008, the amount came to R$ 11.6 million and, in 2009,a part of this amount was provisioned on account of the decision to put up a few farms for sale, and the balance came to R$ 9.8 million (14.8% decrease). 72
  • 78. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A b. Assets available for sale: In 2009, as part of its strategic plan, the company decided to sell its farms located in the states of Ceará, Piauí and Minas Gerais. The amount of these assets was transferred to the Property, plant and equipment for this account, whose balance at the end of 2009 was R$ 7.012 million, equivalent to 1.3% of the total assets. c. Recoverable taxes: As described in the Current Assets account, these refer to taxes that the company does not expect to realize in the next 12 months. d. Property, plant and equipment: Includes all the industrial assets of the company (biodiesel plants and grain crushing plants), certification laboratories, farms and agricultural equipment. In 2007, the balance was R$ 245 million, representing 42.5% of total assets. In 2008, as a result of the investments made in the crushing mills and the environmental adaptations to the plants, the amount rose to R$ 250.9 million (2.2% up). In 2009, the company partially provisioned the value of its Floriano and Crateús plants which, in accordance with its strategic plan, will be deactivated and reallocated later. It also transferred to the ‗Assets available for sale‘ account its farms in Ceará, Piaui and Minas Gerais. Consequent to these adjustments, the Property, Plant and Equipment account decreased by 13.5% to R$ 216.9 million. 73
  • 79. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A BALANCE SHEET LIABILITIES AND SHAREHOLDERS EQUITYLIABILITIES 2007 AV% 2008 AV% 2008 AH 2008/ 2009 AV% 2009 AH 2009/ 2007 2007 2008CURRENT LIABILITIES Loans and financing 141,245 24.4% 82,191 16.5% -41.8% 10,886 2.0% -86.8% Suppliers 278 4.8% 16,484 3.3% -40.8% 15,598 2.8% -5.4% Advances from customers 14,233 2.5% 14,376 2.9% 1.0% 14,790 2.7% 2.9% Loans with shareholders - 0.0% 20,776 4.2% n.a. - 0.0% -100.0% Assignment of use - 0.0% 2,728 0.5% n.a. - 0.0% -100.0%Social obligations 4,789 0.8% 7,466 1.5% 55.9% 3,994 0.7% -46.5% Fiscal obligations 2,671 0.5% 5,809 1.2% 117.5% 5,557 1.0% -4.3% Other payables 10 0.0% 320 0.1% 3100.0% 4 0.0% -98.8%Total current liabilities 190,783 33.0% 150,150 30.1% -21.3% 50,829 9.3% -66.1%NON-CURRENT LIABILITIES Loans and financing 36,715 6.4% 188,493 37.7% 413.4% 55,676 10.1% -70.5% Deferred ICMS payable 3,528 0.6% 4,762 1.0% 46.2% 7,080 1.3% 48.7% Social obligations 0.0% 0.0% n.a. 2,844 0.5% n.a. Provision for contingencies 337 0.1% 1,485 0.3% 340.7% 2,262 0.4% 52.3% Deferred revenue from tax 4,470 0.8% 15,090 3.0% 237.6% 10,841 2.0% -28.2%incentives Assignment of right to use 40,693 7.0% 35,237 7.1% -13.4% - 0.0% -100.0%Total non-current liabilities 85,473 14.8% 245,067 49.1% 186.7% 78,703 14.3% -67.9%MINORITY INTEREST 12 0.0% 15 0.0% 25.0% (7) 0.0% -146.7%SHAREHOLDERS’ EQUITY Capital 388,957 67.3% 388,957 77.9% 0.0% 792,890 144.3% 103.9% Capital reserve 15 0.0% 15 0.0% 0.0% 15 0.0% 0.0% Accumulated losses (87,534) -15.2% (284,634) -57.0% 225.2% (373,127 -67.9% 31.1% ) Total shareholders‘ equity 301,438 52.2% 104,338 20.9% -65.4% 419,778 76.4% 302.3%TOTAL ASSETS 577,706 100.0% 499,570 100.0% -13.5% 549,303 100.0% 10.0% LIABILITIES: The company‘s current liabilities in 2007 totaled R$ 190.8 million, decreasing by 21.3% to R$ 150.1 million in 2008 as a result of the change in the profile of loans, which were concentrated in the long term. In 2009, with the conclusion of the financial restructuring process, the company liquidated its short- term liabilities and significantly reduced these amounts. The year‘s closing balance decreased by 66.1% to R$ 50.9 million, equivalent to 9.3% of the total assets. Following are the main account of this group: a. Loans and financing: Refers to the bank loans that mature in the 12 months after the end of the year. At the end of 2007, the balance of loans was R$ 141.2 million. In 2008, despite the increase in total loans, the long- 74
  • 80. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A term profile of the debt allowed a reduction in short-term loans, which came to R$ 82.2 million, 41.8% down from the previous year. In 2009, the company concluded its financial restructuring by which a part of its short- term debt is settled and another part is converted to capital. At the end of the year, the balance of this account was R$ 10.9 million, 86.8% down year- on-year. b. Suppliers: the company‘s key raw material is soybean oil. However, as per market practice, these raw materials are acquired by means of advance payment. Thus, the suppliers account is not significantly high compared to the ‗Revenues‘ and ‗Trade Accounts Receivable‘ accounts. In 2007, the balance was R$ 27.8 million, with a significant part of the suppliers of agricultural inputs and a balance in the suppliers of works account. In 2008, the amount fell to R$ 16.5 million (40.8% down) and remained stable at R$ 15.6 million in 2009. c. Advances from customers: basically refers to the funds received from Petrobrás at the end of 2007 as advance payment for the biodiesel to be supplied between October and December 2010. Due to operational and contractual reasons, this biodiesel was not delivered and the amount became payable to Petrobrás. A lawsuit was later filed involving Petrobrás and Brasil Ecodiesel and this amount remained frozen, totaling R$ 14.2 million at the end of 2007 and remaining stable till the end of 2009. NON-CURRENT LIABILITIES: Non-current liabilities include obligations with maturity of over 12 months. At the end of 2007, the balance was R$ 85.4 million, increasing by 186.7% to R$ 245.1 million in 2008 due to the growth and change in the debt profile. In 2009, with the financial restructuring of the company and conversion of a portion of the debt into capital, the amount fell to R$ 78.7 million, down 67.9%. At the end of 2009, non-current liabilities represented 14.3% of the total liabilities. The main accounts are described below: a. Loans and Financing: It includes long-term bank loans. In 2007, the balance was R$36.7 million. In 2008, with the growth in the Company‘s debt and the change in the debt profile, the balance increased by 413.4% to reach R$188.5 million. In 2009, with the conclusion of the Company‘s capitalization process and the restructuring of its debt, this amount rose to R$55.7 million, 66.1% down. At the end of 2009, long-term loans and financing represented 10.1% of the Company‘s total liabilities. 75
  • 81. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A b. Deferred Revenue from Tax Incentives: CPC 9 establishes that state tax benefits that the Company is entitled to (‗government subsidies‘ in CPC language) may only be recorded when all the necessary conditions are met. Therefore, in 2008, the Company reversed some of the incentives already recorded, whose deferred installment has not been settled yet. As a result, the balance rose from R$4.5 million in 2007 to R$15.1 million in 2008 but fell to R$10.9 million at the end of 2009. c. Assignment of Right of Use: At the end of 2006, the Company signed an agreement with Enguia GEN for the assignment of the right of use, by which the company should make available biodiesel production capacity of to 40,000 m³/year for a 15-year period. Whenever necessary, Enguia GEN shall supply raw material for the production of biodiesel and shall pay an additional amount of R$150/m³ of processed biodiesel. With this agreement, the existing Loan Agreement amount was transferred to the ‗Assignment of the Right of Use‗ account. Every month, the Company would book 1/180 of the amount as revenue, whether or not biodiesel was produced. Since the parties were no longer interested in continuing this agreement, it was terminated in April 2009, and the balance was recorded in the Company‘s results. The balance stood at R$40.7 million and R$0 at the end of 2007 and 2009, respectively. SHAREHOLDERS’ EQUITY: The shareholders‘ equity is influenced by the period‘s negative results and, significantly, by the capital increases between April and August 2009. At the end of 2007, shareholders‘ equity amounted to R$310.1 million, dropping to R$104.4 million in 2008 due to the loss of R$197.1 million in the period (down 65.4%), before rising significantly in 2009 due to the capital increase, which was higher than the loss during the year. At the end of 2009, the shareholders‘ equity amounted to R$419.8 million, 302.3% higher than in 2008. In the same period, the capital rose from R$389.0 million to R$792.9 million, up 103.9%. 76
  • 82. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 10.2 - Operating and financial result 10.2 – The Executive Officers must comment on: a) The issuer’s operating results, especially: i. Description of any important revenue components The Company basically has 3 sources of revenue: Biodiesel: it is the main source of revenue for the Company. Almost the entire revenue comes from the sale of biodiesel in connection with agreements entered with Petrobrás and obtained through ANP auctions. In these auctions, ANP establishes the maximum price to be charged by the companies and after the bids (electronic or in person) are made, the final price of each tranche is established. After the prices are fixed, the agreements are signed with Petrobrás for the delivery of biodiesel. Glycerin and Fatty Acids: glycerin (approximately 10% of the biodiesel produced) and fatty acids (approximately 2% of the biodiesel produced) are the byproducts generated during biodiesel production. In some market circumstances, the Company is able to sell these byproducts. Grains and Vegetable Oils: during the agricultural process, the Company generates several types of oilseeds (castor, sunflower and jatropha curcas) that may be sold directly to the market or transformed into vegetable oil to be used in biodiesel production or even to be directly sold to the market. The breakdown of revenue in the past 3 years follows: 2007 % 2008 % 2009 Change - % 2009Biodiesel 388,782,654 92.6% 405,030,230 94.8% 401,001,060 99.0%Glycerin and Fatty Acids 2,858,144 0.7% 6,040,330 1.4% 426,027 0.1%Grains and Vegetable 28,023,262 6.7% 16,079,936 3.8% 3,492,407 0.9%OilsTotal Revenues 419,664,060 100.0% 427,150,496 100.0% 404,919,494 100.0% In 2007, the Company obtained a substantial portion of its revenue from the sale of soybean oil and castor grains. Approximately R$26million came from the sale of soybean oil purchased after the second-half auction and which was not consumed due to the low volume of biodiesel production and extraction. 77
  • 83. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A In 2008, the Company obtained a substantial portion of its revenue (3.8%) from the sale of sunflower and castor grains, which were obtained from the agricultural process, initially for the purpose of transforming them into biodiesel. However, the need to raise cash and the low sale prices of biodiesel forced the Company to directly sell the grains in the market. In 2009, with the greater interruption of its agricultural process, the Company‘s revenues were mostly concentrated in biodiesel sales. Approximately 99% of the revenue came from the sale of biodiesel and the remainder from the sale of glycerin and fatty acids. ii. Factors that significantly affected the operating results 2007 was practically the first year of biodiesel production and sale. The Company‘s operating income that year came mainly from the sale of biodiesel. Though soybean oil was sold, it was sold at cost price and did not bring any operating income. In 2008, the Company‘s operating results were influenced by the sale of sunflower and castor grains, which were directly sold to the market and not used in the transformation of vegetable oil into biodiesel. These items represented almost 4% of operating results. Also in 2008, the Company made adjustments in its assets, mainly regarding the provision of fines issued against Petrobrás resulting from the non-removal of the biodiesel supplied, and also the agricultural investments made. Adjustments amounting to R$60,623 thousand were made and recorded in the Company‘s operating income. Throughout 2009, the Company‘s operating results were composed of fairly distinct items: operating items, related to the Company‘s operations and non-recurring items, not related to the Company‘s core business and, in some cases, resulting from the Company‘s new strategic direction. Notable among the operating items is the significant recovery in the production and billed volume in the second half of the year, after the financial restructuring and rebuilding of the company‘s working capital. The volume billed in the second half of the year was 207% higher than in the first half, enabling the recovery of operating results. Notable among the non-recurring items are the adjustments made to recover the fair value of the assets due to their non-use under the new strategic direction 78
  • 84. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A defined by Management. We highlight the provision of inventories as part of the family farming program, expenses with crops in formation applied in the farms that will be put up for sale, provision of assets related to the works on deactivated plants (Floriano and Crateús) that could not be reallocated, and the write-off of deferred assets of the Company‘s agricultural subsidiaries, particularly Buriti Agrícola, which is responsible for the Santa Clara Nucleus, which, due to the absence of positive economic prospects, could not be amortized in the future and hence were provisioned at the end of 2009. b) Revenue variations caused by changes in prices, exchange rates, inflation, volumes and launch of new products and services Since the beginning of the biodiesel program, the biodiesel market has been regulated and biodiesel has been sold through public auctions organized by ANP. The result of the Company‘s participation in these auctions determines the volumes contracted and, consequently, the revenue earned. Selling prices change every quarter (interval between the auctions organized by ANP) and are related to the volume contracted by the Company in the auctions, which determines the revenue level for the quarter. Hence, variations in the price of inputs, exchange rates and inflation have no effect on the selling price. c) Impact of inflation, variations in the price of main inputs and products, exchange and interest rates on the issuer’s operating and financial results Biodiesel production is an activity of variable costs. In a normal production process, raw material costs represent around 90% of the Company‘s total costs. The main raw materials are vegetable oil (soybean oil, in the Company‘s case) and alcohol (methanol, in the Company‘s case). The price of these products is based on international market prices. The price of soybean oil is defined by the prices at the Chicago Board of Trade (CBPT), and by the U.S. dollar rate. The price of methanol is influenced by the price of Natural Gas and by the U.S. dollar rate. Accordingly, variations in the prices of these inputs over the quarter, a period when the prices of products are fixed, may significantly impact the Company‘s operating result. In 2007, prices of inputs did not vary significantly and did not have a material impact on the results. In 2008, the first year the 2% addition of biodiesel to diesel was made mandatory, there was an exceptional increase in soybean prices in the first quarter, which directly impacted the price of soybean oil. The chart shows the price variation in this period: 79
  • 85. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Auctions were held on a half-yearly basis at that time, and cost variations could not be passed on to prices, which significantly impacted the Companys operating results. With the purpose of minimizing these impacts, after the financial restructuring and the regularization of biodiesel delivery volumes, the Company started to adopt hedge strategies to establish the price of inputs together with its suppliers or by means of financial instruments. There is no direct influence of the exchange rate variation on the financial result. All loans are contracted in domestic currency. The Company‘s loans are pegged to the TJLP (long-term interest rate) and the CDI (interbank rate). If any variation in the inflation causes changes in the TJLP or CDI, it will impact the costs of loans. However, since the Company‘s investments, higher than loans at present, are also pegged to the CDI variation, these should increase the Company‘s financial result. 80
  • 86. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 10.3 - Events with significant effects, occurred and expected, on the financial statements 10.3 – Executive officers should comment on the significant effects that the events below may have caused or are likely to cause in the issuer’s financial statements and results: a) Introduction or sale of operating segment There was no introduction or sale of any operating segment. b) Constitution, acquisition or sale of shareholding interest The Company did not constitute, acquire or sell any shareholding interest. c) Unusual events or operations In April 2009, the Company rescinded its Agreement for the Assignment of the Right of Use with Enguia GEN. Under the agreement, the Company was obliged to make available the biodiesel processing capacity of up to 40,000 m³/year for a period of 15 years. By common agreement between the parties, this contract was rescinded, generating revenue of R$35.2 million in the Company‘s results and a rescission amount of R$900,000.00 payable in up to 60 days from signifying of this document, restated by the CDI. In June 2009, as part of its financial restructuring program, the Company carried out the first phase of its capital increase in which 148,571,429 new shares were issued for a total of R$104,000,000. Shareholders‘ credits in the amount of R$58,983,090 were converted and new funds in the amount of R$44,955,632 were added. In August 2009, the second phase of the capital increase was carried out with the issue of 450,366,577 shares for a total amount of R$315,256,589, of which R$124,738,864 were loans from financial institutions and R$190,517,724 were new funds. 81
  • 87. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A10.4 – Significant changes in accounting practices - Reservations andemphasis in the auditor’s report10.4 – Executive officers should comment on:a) significant changes in accounting practicesThe Company made changes in the accounting of state tax incentives inaccordance with CPC 6 relating to government subsidies.b) significant effects of the changes in accounting practicesDue to the changes in the accounting of state tax benefits, the Company ceasedto record as revenue (sales tax reduction) the amount of R$10,841,000 in thefiscal year 2009.c) reservations and emphasis in the auditor’s reportThere are no reservations in the auditor‘s report. There is one emphasis, relatedto the lawsuit between the Company and Petrobrás, which is fully transcribedbelow:As mentioned in Notes 1 and 6 on July 8, 2008, the Company filed a lawsuit at the 11 thCivil Court of Rio de Janeiro against Petróleo Brasileiro S.A – PETROBRAS,demanding: (i) the payment of contractual fines owed by PETROBRAS related tothe non-withdrawal of the biodiesel contracted in auctions 69/07 and 70/07,specifically in February and March 2008; (ii) the unenforceability of contractual finesagainst Brasil Ecodiesel related to April, May and June 2008. According to theCompany‘s Management and its legal advisors, PETROBRAS was in breach of theBiodiesel Purchase and Sale Agreements, leading to the understanding that BrasilEcodiesel‘s contractual obligations were suspended. The Company and its legaladvisors believe that the chances of winning this lawsuit are good, since theManagement‘s decisions on the matter have always been in line with the contractualprovisions as well as Civil Law. The lawsuit is currently pending presentation ofevidences, and Brasil Ecodiesel has already presented the reply and the answer tothe counterclaim filed by PETROBRAS, whereby the amount in dispute was raised toR$131 million, an amount not provisioned in the financial statements sinceManagement and its legal advisors believe in a positive outcome for the lawsuit.‖ 82
  • 88. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A10.5 - Critical accounting policies 10.5 – Executive Officers should indicate and comment on the critical accounting policies adopted by the issuer, especially discussing the accounting estimates made by Management in relation to uncertain and relevant matters in order to describe the financial situation and results, which require subjective or complex judgments, such as: provisions, contingencies, recognition of revenue, tax credits, long-term assets, useful life of non-current assets, pension plans, foreign exchange translation adjustments, environmental recovery costs, criteria for impairment test and financial instruments. At the end of 2009, in line with the Company‘s new strategic plan, the Company made adjustments in the value of its inventories and assets (fixed and deferred) in order to ascertain their real economic utility under these new guidelines. The main adjustments made, through the constitution of provisions, are described below: Adjustment in the value of inventories of agricultural raw materials, industrial byproducts and finished products. During its normal activities, the Company accumulated agricultural inventories for the purpose of expanding the planted area under family farming. After the redirectioning of the agricultural activities, these inventories were provisioned. Additionally, the Company adopted the procedure of bearing the cost of byproducts (glycerin and fatty acids), which depreciated over time in relation to the value of inventories. The same occurred with castor oil inventories, whose amounts too were provisioned. Lastly, there were biodiesel inventories in the hands of third-parties, whose costs increased as a result of the cost of agricultural storage and freight, whose values were adjusted to market value. Adjustment in the value of jatropha curcas crops in formation at the farms made available for sale According to new definitions, the company focused its Jatropha Curcas plantation in its areas in Bahia. The farms in other states will be sold and the acquisition of new lands in Bahia will be considered. Due to this decision, the investments made in the farms in Piaui, Ceará and Minas Gerais were provisioned and the farms‘ asset value was transferred from the fixed asset line to the current asset line (assets destined for sale). Provision of the Amount of the Construction Works in the Deactivated 83
  • 89. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Plants at Floriano and Crateús. As disclosed to the market, the Company deactivated its biodiesel production units in Crateús (CE) and Floriano (PI). The Company is evaluating the transfer of these assets to units already installed or to new units to be built. Since the Company cannot take advantage of the construction works, it provisioned these amounts in its asset line. Write-off of the right to use the rural producers registration software – Rede de Compras The acquisition of the company Rede de Compras included software to intermediate the purchase and sale of agricultural products among the family farmers participating in the Company‘s family farming program. With the changes to said program and with no prospect of using the software, th e amounts registered in the Company‘s asset line were provisioned. Write-off of the Agricultural Companies’ Deferred Asset: When Brasil Ecodiesel was created, subsidiaries were set up in several Brazilian states for the purpose of expanding the family farming program for castor. Later, due to the rules of the Social Fuel Seal, these companies‘ activities were replaced by Brasil Ecodiesel‘s branch offices. With the change in the crop development of the Company‘s family farming, there are no prospects of reactivating these units‘ operations. Accordingly, the amounts registered in these companies‘ deferred asset line were provisioned. Write-off of the Deferred Asset of Santa Clara Nucleus – Buriti Agrícola At the startup of Brasil Ecodiesel‘s activities, the Santa Clara Community Production Nucleus was established. A total of 20 cells were constructed, with 35 homes in each, where each family received eight hectares for planting of castor grain together with beans. The objective was to use the castor harvested as input in biodiesel production. Over time, the low productivity from the castor crops made this goal unviable, and the 2010 harvest will be made of subsistence crops for maintenance of the families. In its new strategic plan, the Company does not consider the Santa Clara Nucleus as an alternative for generation of raw material for biodiesel. Under this perspective, the amounts in its deferred asset line, which would be amortized over time, were already provisioned in 2009. 84
  • 90. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A10.6 – Internal controls related to the preparation of financial statements –Efficiency and deficiency levels and recommendations presented in theauditors report 10.6 – In relation to the internal controls adopted to ensure th e preparation of reliable financial statements, the Executive Officers should comment on: a) the efficiency level of such controls, indicating any flaws and the measures adopted to correct them The Company‘s current internal controls are deemed adequate by the Executive Board and are analyzed every quarter by external auditors who issue a "Comment Letter" that serves as guidance for correcting and improving the Company‘s internal controls. For the purpose of improving this process, a specialized firm was hired to prepare a broad risk management process and create an Audit Committee and an Internal Audit Department, both directly reporting to the Board of Directors. The Executive Board believes that these measures are extremely important for perfecting internal controls. b) deficiencies and recommendations about the internal controls present in the independent auditor’s report: We reproduce below the points commented in the last auditor‘s report made available to the Company‘s management; Comment: On June 30, 2009, the Company had a balance of R$ 4,302,000 in trade accounts receivable pending for more than 180 days from the sale of seeds to diverse clients, cooperatives, Petrobras and REFAP, though the balance of the provision for doubtful accounts was only R$ 2,913,000 on that date. Additionally, we did not obtain any evidence of analysis of the likelihood of receipt of these instruments. Recommendation: We a periodical review of the likelihood of receipt of said overdue instruments in order to establish a provision for doubtful accounts for those that the Management believes will be difficult to recover. Comment: We were not provided with the inventory register book as of June 30, 2009. We highlight that said book is required by tax authorities and that its absence may result in the employment of the taxable income method in accordance with law, pursuant to Paragraph 4 of Article 3 of Normative Instruction 56/92. 85
  • 91. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Recommendation: We recommend an evaluation to see if the current management system provides such report. If not, to evaluate the possibility of customizing it in order to avoid potential questioning by tax authorities. Comment: The Company‘s management system does not provide an analytical composition of advances to suppliers containing the disbursement dates and the individual balance on a specified date. This information is of fundamental importance for monitoring their regularization and future analysis of realization of such credits. Recommendation: We recommend studying the possibility of customizing the current management system in order to obtain a report on the advances from clients by date. If it is not viable, we recommend the implementation of this control through an electronic spreadsheet. Comment: The Company does not have a report on the accounts payable indicating the breakdown of balance by supplier, trade note, date of issue and due date. Recommendation: We recommend improving the system so that it can provide a report in the above-mentioned format. This report helps to understand and analyze the accounts payable balance. Comment: On June 3, 2009, the Company entered into an ICMS installment payment plan with the Rio Grande do Sul state for the total amount of R$ 3,231,117 divided into 12 installments of R$ 269,260. On June 15, 2009, the Company paid the first installment. Accordingly, on June 30, 2009, the Company had eleven installments outstanding in the total amount of R$ 2,961,860. However, the book balance was only R$ 2,598,097, resulting in a difference of R$ 363,763. Recommendation: We recommend adding the above-mentioned amount to the provision. Additionally, we recommend calculating the monetary restatement of the outstanding installments and pass the due accounting entries.‖ The comments made by the auditor, as well as the recommendations, were noted and the corrections made in later reports. 86
  • 92. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A10.7 – Allocation of proceeds from public offerings and possibledeviations 10.7 – If the issuer has made a public offering of securities, the Executive Officers should comment: a) on how the proceeds of the offering were used There was no public offering in the past three years. b) if there was a significant deviation between the effective application of the proceeds and the application proposals disclosed in the respective offering prospectus Not applicable. c) in case of any deviation, the reason for such deviation Not applicable10.8 - Other items not included in the financial statements 10.8 –The Executive Officers should describe the relevant items not evidenced in the issuer’s financial statements, indicating: a) the assets and liabilities directly or indirectly held by the issuer, not included in its balance sheet (off-balance sheet items), such as: i. Operating and commercial leasing agreements, assets and liabilities The Company has not entered into any leasing agreement. ii. receivables portfolios written-off over which the institution maintained risks and responsibilities, indicating the respective liabilities There are no contingent liabilities associated with the Company‘s receivables. iii. contracts for the future purchase and sale of products or services At the end of 2009, the Company had contracts for the 87
  • 93. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A future acquisition of vegetable oil and methanol, during the first quarter of 2009, in order to meet the volumes contracted in the biodiesel auction number 16, for delivery in the period from January to March 2010. These contracts were performed in the period, with no obligation remaining for the Company in relation to said contracts. As a result of the 17th ANP Auction, contracts for the future acquisition of oil for biodiesel production were also entered into, for delivery in the quarter from April to June 2010, which are being fully performed. The Company bid and won 34,000 m3 of biodiesel at the 18th Auction, for delivery in July/September 2010. In compliance with the same policy of locking prices and quantities with suppliers, the Company also entered into contracts for the future acquisition of soybean oil. iv. Unfinished construction agreements. This does not apply to the Company‘s activities v. contracts for future receipts of financings There are no such contracts b) Other items not included in the financial statements As highlighted in the auditor‘s report and in the Explanatory Note of subsequent events, the Company has 3 items not included in its financial statements which may affect its operating results: a lawsuit involving Petrobrás, the suspension of the Social Fuel Seal in 4 plants, and labor suits filed by agricultural partners of the Santa Clara Nucleus. In addition to the Petrobrás lawsuit already described in the paragraph related to the auditor‘s emphasis of matter, in item 10.4 C, we summarize below the other items not included in the financial statements. Suspension of the Social Fuel Seal: Through a publication in the Official Gazette of March 5, 2010, the Ministry of Agricultural Development (MDA) suspended the Social Fuel Seal for Brasil Ecodiesel‘s units in Itaqui (Maranhão), Iraquara (Bahia), Floriano (Piauí), and Crateús (Ceará) (the last two plants are deactivated). 88
  • 94. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A The Company legally questioned MDA‘s decision to suspend the social fuel seal and the non-ratification by ANP of the lots won at the 17th auction, but was unsuccessful. Consequently, Brasil Ecodiesel did not get ratification for the 24,000 m 3 won at the 17 º Biodiesel Auction and will have the social fuel seal for Iraquara and Itaqui units suspended for one year. Through material facts and notices to the market disclosed on March 5 and June 24, 2010, the Company detailed the consequences and possible effects of these court decisions. Labor Claims — Santa Clara Production Nucleus: On February 2, 2010, the Company was notified of lawsuits requiring the acknowledgement of employment relationship between the agricultural partners of Santa Clara Production Nucleus and Buriti Agrícola, a subsidiary of Brasil Ecodiesel. Currently, two hundred seventy-four (274) labor claims have been filed in the Court of São Raimundo Nonato, Piauí state. In our view, the essential elements in the characterization of an employment relationship are absent, notably the legal subordination, since the Company has no power over the activities of the rural partners. In 2006, two partners had filed before the labor courts, claims demanding the recognition of employment relationships but their claims were rejected. No judgment has so far been issued on the labor claims.10.9 – Comments on items not included in the financial statements 10.9 – In relation to each of the items not included in the financial statements indicated in item 10.8, the Executive Officers should comment on: a) how such items change or may change revenues, expenses, operating result, financial expenses or other items in the issuer’s financial statements The Petrobrás lawsuit may cause a negative impact of approximately R$ 130 million (the penalty amount demanded by Petrobrás). Suspension of the social fuel seal and the non-ratification of 24,000 m³ of the 17 th Auction caused an estimated revenue loss of R$54.3 million in 2Q10. As a result of the suspension of the 89
  • 95. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A seal of the Itaqui and Iraquara units, the Companys strategy was to direct efforts at selling the biodiesel production of those two units in the lots for the producers without the social fuel seal in the next ANP auctions. The labor claims of Santa Clara Nucleus‘ partners involve approximately R$28 million. b) nature and purpose of operation There are no ongoing operations. c) nature and amount of obligations assumed and rights generated in favor of the issuer as a result of the operation Not applicable. d) nature and amount of obligations assumed and rights generated in favor of the issuer as a result of the operation Not applicable. 10.10 – Executive officers should indicate and comment on the key elements of the issuers business plan, discussing the following topics in particular: At the end of 2009, the Company concluded its new Strategic Plan, with the guidelines that will drive its actions in the following periods. The main guidelines of this strategic plan, which was the subject matter of a notice to the market, are described below: Search for raw material alternatives In the search for alternative raw materials, the Company believes it needs to invest in the integration with the supply chain, generating a part of the raw materials required for producing biodiesel. All viable alternatives will be studies, with oil seeds receiving more attention and investments will be made in the plantation of Jatropha curcas, which has enormous potential to be explored. This decision takes into account that it is necessary to gradually and continuously reduce the Company‘s dependence on soybean oil. The measures to be adopted are: Feasibility study for planting of Jatropha Curcas in Bahia, Mato Grosso do Sul and other locations. 90
  • 96. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Among the current alternatives, the jatropha curcas is the oilseed that best fits with the Company‘s strategy. Given the successful planting by the Company in Bahia, it was decided to study the feasibility of increasing the area under cultivation to obtain gains of scale. In addition, a study will be conducted to check the possibility of developing own and partnership cultivation in other locations, notably Mato Grosso do Sul, given their advantages in terms of logistics, geographic and climate conditions. Search for partnerships for R&D in Agriculture Currently, numerous studies are in progress on alternative raw materials for biodiesel production, conducted by both official research bodies and private universities and institutes. Going by its characteristics, the evolution of agricultural R&D is relatively slow and hence it is important for the Company to be involved, either directly or via partnerships, in research related to genetic modifications, oilseeds and/or alternative raw materials, etc. Search for partnerships to supply raw material in the short and medium term Given the importance and the predominance of soybean oil as a raw material, it is essential to establish agricultural/commercial partnerships in order to reduce the seasonality impact on supply and the price volatility of this commodity. At the same time, given the flexibility among the Company‘s plants, various partnership possibilities will be studied for other types of raw materials. Introduction of industrial R&D in the Company Although biodiesel production is a well-known technology, there is room for improvement. In order to be at the forefront of adopting new technologies in the industrial process, an R&D area will be created to increase efficiency in biodiesel production. Reallocation of the assets at the Floriano and Crateús plants and the equipment for the chemical extraction of oil at the Porto Nacional plant The assets of the deactivated Floriano and Crateús plants and the idle equipment for the chemical extraction of oil located at the Porto Nacional will be used to increase production capacity. The place to be defined will not only take into consideration logistics and market issues but will also be in line with the investments to be made, to enable greater integration with the raw material chain. Enable the functioning of the crushing units at Iraquara and São Luiz 91
  • 97. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Gonzaga The Company has two complete crushing units in São Luiz Gonzaga and Iraquara, which are currently idle. The decision to put these units into operation will imply verticalization, with a possible need to acquire grains for processing and/or the establishment of partnership agreements in order to guarantee the supply of vegetable oil. Industrial efficiency improvement project The continuous pursuit of greater efficiency in the industrial process is the key to providing the Company with the competitive advantage when a free market is established. The project comprises investments that will allow the Company to use more acidic and, consequently, cheaper vegetable oil. Compliance with the Social Fuel Seal, prioritizing working with more advanced forms of Family Farming Due to the unsuccessful experience earlier, which prioritized working with individual farmers, the Company will work with more advanced forms of Family Farming, such as cooperatives, developing long-term methods for operation/cooperation for the acquisition of raw materials. In regions suitable for the development of alternative raw materials, the Company will encourage the creation of cooperatives and the development of a network of Family Farming suppliers to obtain raw materials in order to comply with the Social Fuel Seal rules. Sale of farms in the states of Piauí, Ceará and Minas Gerais Due to their geographic and climate characteristics, the Company decided to sell its farms with total area of 23,232 hectares in the states of Piauí, Ceará and Minas Gerais. Sale of crushing assets in Crateús The Company decided to sell the equipment in its crushing unit in Crateús, as it is obsolete and idle. a) investments, including: i. quantitative and qualitative description of ongoing and expected investments The detailed description of investments in accordance with the guidelines of the strategic plan is currently being prepared and should be concluded by the end of the first half of 2010. ii. investment financing sources considering the investments in the expansion of production capacity, increase in the planting area of 92
  • 98. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A oilseeds for the generation of raw materials to be used in the production of biodiesel, and investments in the improvement of industrial efficiency and, furthermore, considering the Company‘s current capital structure, the Management believes that the Company should have no difficulties in obtaining funds from BNDES and regional banks (BNB and BASA). iii. significant ongoing divestments and expected divestments The ongoing divestments relate to the sale of the farms that will not be used in the future for planting jatropha curcas. The financial information disclosed on December 31, 2009 already included these farms as ―Assets available for sale‖, with this item amounting to R$ 7,012,000. b) provided it has already been disclosed, indicate the acquisition of plants, equipment, patents or other assets that might significantly impact the issuer’s production capacity not applicable c) new products and services, indicating: i. description of ongoing research already disclosed. Not applicable. ii. total amount spent by the issuer on research for development of new products and services Not applicable iii. projects under development already disclosed. Not applicable iv. total amount spent by the issuer on the development of new products and services Not applicable10.11 – Other factors with significant influence 10.11 – Comment on other factors that significantly influenced the operating performance and which have not been identified or commented in other items in this sectionAll the items deemed relevant by the Company‘s Executive Board, which impacted theCompany‘s results were commented in the previous items in this report. 93
  • 99. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 11.1 – Projections disclosed and assumptions 11.1 – Projections Brasil Ecodiesel does not usually disclose operating and financial projections and estimates or guidance. 11.2 – Monitoring and changes to the projections disclosed 11.2. If the Company disclosed projections on the growth of its indicators in the last three fiscal years: Brasil Ecodiesel does not usually disclose operating and financial projections and estimates or guidance. 12.1 – Description of the administrative structure 12.1. Description of the issuer’s administrative structure, as established in its Bylaws and internal regulations The administration of the Company is the responsibility of the Board of Directors and the Board of Executive Officers, whose members are elected for a term of one (1) year and may be reelected for equal terms. Board of Directors The Board of Directors is the organ responsible for establishing the Company‘s guidelines in line with the corporate purpose. The Board of Directors is a collective decision-making body and will comprise at least five (5) and at most nine (9) sitting members, all individuals, resident or not in Brazil, subject to paragraph two of article 146 of Law 6,404/76, who are shareholders of the Company elected at the Shareholders‘ Meeting and who may be removed by it at any time. The Board of Directors is responsible for resolving on: (i) establishing the Company‘s general direction, establishing the basic annual and long-term guidelines and objectives; (ii) electing, from among its members, the Chairman and Vice-Chairman; (iii) inspect the management of the Executive Officers, examining, at any time, the Company‘s books and records, requesting information on agreements executed or to be executed and any other acts; (iv) calling the Annual and Extraordinary General Meetings; (v) giving opinion on the 94
  • 100. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Management Report, the Financial Statements and the Management‘s Accounts; (vi) distributing, within the limits established annually by the Annual General Meeting, the administrators‘ overall compensation; (vii) giving opinion on any proposal submitted to the Shareholders‘ Meeting, even if prepared by the Board of Executive Officers; (viii) capital increases and issue of subscription warrants, including the terms of issue, price and deadline for payment, subject to the limits and conditions set forth in article 5, paragraph one of these Bylaws; (ix) resolving on the amortization, redemption or purchase of the Company‘s shares to be held in treasury or canceled, as well as the subsequent sale of shares held in treasury; (x) choosing and terminating independent auditors; (xi) declaring interim dividends from accrued or retained earnings, subject to legal limits and these Bylaws; (xii) authorizing the implementation of the investment budget presented by the Board of Executive Officers, consisting of acquisition costs, services and acquisition of assets, goods and equipment necessary for its execution; (xiii) authorizing the sale, promise to sell or the pledge of properties or items from permanent assets for an amount equal to or greater than two million reais (R$2,000,000.00) per operation or series of related operations, adjusted on a half-yearly basis by the variation of the General Market Price Index published by the Getúlio Vargas Foundation (―IGP-M‖), provided it is not envisaged in the investment budget plan; (xiv) authorizing the Company to be represented by a single Executive Officer or a legal representative pursuant to paragraph two of article 24 of the Bylaws; (xv) authorizing the Company to be represented in the assumption of liability or obligation in amounts equal to or greater than twenty million reais (R$20,000,000.00) per operation or series of related operations, adjusted on a half-yearly basis by the variation of the IGP-M, except in cases relating to the acquisition of inputs and raw materials to meet the corporate purpose, or when provided for in the investment budget plans; (xvi) authorizing the acquisition of items for the Company‘s fixed assets for amounts equal to or greater than five million reais (R$5,000,000.00) per operation or series of related operations, adjusted on a half-yearly basis by the variation of the IGP-M, except for cases envisaged in investment budget plans; (xvii) except the provisions of article 21 of these Bylaws, authorizing long-term loans, with or without guarantees; (xviii) electing and removing the members of the Company‘s Board of Executive Officers; (xix) holding interest in other companies, in addition to the current ones, as shareholder, partner, quotaholder, member of consortium, or through other types of investment, such as subscription or acquisition of debentures, subscription warrants or in any other manner accepted by law, except the issue of founders‘ shares, which is prohibited by these Bylaws; (xx) contracting, by the Company and/or any of its subsidiaries, financing that, solely or jointly, represents an individual or joint amount of more than five million reais (R$5,000,000.00), except for cases envisaged in the investment budget plans; (xxi) approving any investment and/or extraordinary expense that, individually or jointly, represents an individual or joint amount of more than twenty million reais (R$20,000,000.00), adjusted on a half-yearly basis by the variation of the IGM-M; 95
  • 101. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A (xxii) resolving on other matters envisaged in these Bylaws. Board of Executive Officers The Board of Executive Officers is the executive body responsible for, within the provisions of these Bylaws, guaranteeing the regular functioning of the Company. It has power to practice all and any acts and sign contracts relating to the corporate purpose, except those that, according to law or these Bylaws, are the duty of or depend on the authorization of another Company body. The Board of Executive Officers will comprise at least three (3) and at most sixteen (16) members, all of them individuals, shareholders or not, resident in Brazil, elected by the Board of Directors for a term of one year, who may be reelected and can hold more than one position. They are one (1) CEO, one (1) Investor Relations Officer, up to four (4) Executive Officers and up to ten (10) Executive Officers without specific designation. The Board of Executive Officers is responsible for (i) complying with and ensuring compliance with these Bylaws, the guidelines of the Board of Directors and the law in force; (ii) managing the Company, providing it with the necessary measures to comply with the corporate purpose; (iii) entering into the following contracts within the limits established per operation, as shown below: (iii.a) advances of foreign exchange contracts up to the amount in Reais, based on the PTAX rate, column 5 of the Brazilian Central Bank, equivalent to five million U.S. dollars (US$5,000,000.00), which may be exceeded if envisaged in the investment budget plan; (iii.b) pledge agreements up to five million reais (R$5,000,000.00), which may be exceeded if envisaged in the investment budget plan; (iv) signing any other agreement not mentioned above, practicing legal acts of any nature, purpose or value, as well as practicing acts and signing documents related to the sale or charge of assets, as applicable. Responsibilities The CEO‘s responsibilities are: a) to represent the Company, actively and passively, in court or out of court; b) call and preside over the Board of Executive Officers‘ meetings; c) submit to the Board of Directors the financial statements required by law, balance sheets and all and any other material that depends on its analysis or resolution. The Executive Officers‘ responsibilities are: i) to represent the Company, actively and passively, in court or out of court; ii) to organize, coordinate and supervise the departments and areas subordinated to them by the Board of Directors; iii) to prepare and define the policies to be followed by the respective supervision and coordination areas; iv) to comply and ensure compliance with the Company‘s policy and general guidelines, established by the Board of Directors. 96
  • 102. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A The Investor Relations Officer‘s responsibilities are: a) to represent the Company, actively and passively, in court or out of court, including at the CVM, stock exchanges and other capital market participants; b) to provide information to investors, CVM and the stock exchanges where the Company is registered; and c) to maintain the Company‘s registration at the CVM and stock exchanges updated. The other Officers‘ responsibilities are to plan, organize and lead specific activities assigned to them by the Board of Directors. Audit and Risk Management Committee The Company has set up an Audit Committee, consisting of members of the Board of Directors. Its task is to advise Board members on accounting, risk management and corporate governance matters. Finance Committee The Company has set up a Finance Committee, consisting of the members of the Board of Directors. Its task is to advise Board members on financial matters involving the Company. Human Resources Committee The Company has set up a Human Resources Committee, consisting of members of the Board of Directors. Its task is to discuss matters related to the succession, compensation and development of people. The Committee also establishes the criteria for hiring and removing executives and for assessing the existing policies and the compensation packages. Fiscal Council The Fiscal Council is responsible for inspecting the administrators‘ acts and monitoring the compliance with the legal and statutory obligations. The Company‘s Fiscal Council has been functioning since the 2007 Annual General Meeting. Mechanisms for Evaluating Each Body or Committee The Company still does not have a specific process for evaluating each body or committee. Performances are evaluated individually based on generally used criteria. 97
  • 103. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 12.2 Rules, policies and practices related to shareholders’ meetings 12.2. Shareholders’ Meetings Shareholders‘ Meetings are called by the Chairman of the Board pursuant to Law 6,404/76, at least 15 days in advance in case of 1st Call or 8 days in case of 2nd Call. Documents All the documentation relating to Shareholders‘ Meetings will be available at the website of the Company (www.brasilecodiesel.com.br/ri) and the Securities and Exchange Commission of Brazil - CVM (www.cvm.gov.br). Conflict of Interests If there is a conflict of interest between the shareholder and the matter to be deliberated, the shareholder should abstain from voting, under the penalty of having his vote annulled pursuant to article 115 of Law 6,404/76. Power of Attorneys With the objective of increasing shareholder participation, the Management has provided a power of attorney so that shareholders interested in taking part in the Meetings may submit the power of attorney and their vote. The powers of attorney should always be sent along with a copy of the shareholder‘s identification document but need not be notarized. Disclosure The Company does not have policies on holding forums on the agenda of shareholders‘ meetings, and does not broadcast the meetings live. Consequently, the Company still does not allow proposals of shareholders to be included in the agenda. 98
  • 104. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 12.3 – Dates and newspapers for publishing the information required by Law 6,404/76Fiscal Year Publication Newspaper - State Dates12/31/2009 Financial Statements Official Gazette – Rio de Janeiro 03/25/2010 Valor Econômico - São Paulo 03/25/2010 Call Notice for the Annual General Meeting that analyzed the Financial Statements Official Gazette – Rio de Janeiro 04/17/2009 04/12/2010 04/13/2010 Valor Econômico – Rio de Janeiro 04/09/2010 Valor Econômico - São Paulo 04/09/2010 04/12/2010 04/13/2010 Minutes of the Annual General Meeting that analyzed the Financial Official Gazette – Rio de Janeiro 05/07/2010 Statements Valor Econômico - São Paulo 05/07/201012/31/2008 Financial Statements Official Gazette – São Paulo 03/31/2009 Valor Econômico – Rio de Janeiro 03/31/2009 Call Notice for the Annual General Meeting that analyzed the Official Gazette – Rio de Janeiro 04/15/2009 Financial Statements 04/16/2009 Official Gazette – São Paulo 04/15/2009 Valor Econômico - São Paulo 04/16/2009 04/17/2009 Minutes of the Annual General Meeting that analyzed the Financial Official Gazette – São Paulo 04/30/2009 Statements Valor Econômico – Rio de Janeiro 04/30/200912/31/2007 Financial Statements Valor Econômico - São Paulo 03/26/2008 Notice to Shareholders announcing the availability of Official Gazette – Rio de Janeiro 03/28/2008 Financial Statements Call Notice for the Annual General Meeting that analyzed the Official Gazette – Rio de Janeiro 03/27/2008 Financial Statements Official Gazette – São Paulo 03/26/2008 Valor Econômico – Rio de Janeiro 03/26/2008 Valor Econômico - São Paulo 03/27/2008 03/28/2008 Minutes of the Annual General Meeting that analyzed the Financial Official Gazette – São Paulo 04/28/2008 Statements Valor Econômico – Rio de Janeiro 03/26/2008 04/28/2008 12.4 – Rules, policies and practices relating to the Board of Directors 12.4. Practices relating to the Board of Directors The Company‘s Bylaws determine that the Board of Directors will ordinarily meet five (5) times a year and, extraordinarily, whenever called by the Chairman, Vice- Chairman or any Board member. 99
  • 105. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 12.5 – Description of the arbitration clause 12.5. Arbitration clause to resolve conflicts The Company, its shareholders, the management and members of the Fiscal Council are obliged to resolve, by means of arbitration, any dispute or conflict that may arise among them, related to or arising, especially from the application, validity, efficacy, interpretation, breach and its effects, of the provisions of Law 6,404/76, these Bylaws, the rules of the National Monetary Council, the Brazilian Central Bank and CVM, as well as other rules applicable to the operation of the capital markets in general, in addition to the Novo Mercado Arbitration Rules, the Regulations of the Market Arbitration Chamber and the Novo Mercado Participation Agreement. 100
  • 106. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 12.6/8 - Composition and professional experience of the management and board of auditorsName Age Management body Election date Term of officeIndividual Taxpayers’ ID (CPF) Elected by controlling Profession Elective position held Date of investiture shareholderOther positions held and functions performed in the CompanyEduardo de Come 44 Board of Executive Officers 04/27/2010 Annual General Meeting only of 2011073.445.828-21 12—Executive and Investor Economist 04/27/2010 No Relations OfficerNone 30 Board of Executive OfficersExpedito José de Sá Parente Júnior 04/27/2010 Not applicable only617.202.323-34 Chemical Engineer 19 – Assistant Industrial No OfficerGuilherme Augusto d‘Avila Mello Raposo 43 Board of Executive Officers 04/27/2010 Annual General Meeting only of 2011498.994.904-82 Economist 19 – Executive Officer 04/27/2010 NoN/AJose Carlos Aguilera 56 Board of Executive Officers 10/07/2010 Annual General Meeting only of 2011669.242.948-04 Business administrator 10 – CEO / Superintendent 10/07/2010 NoN/ACarlos Antônio Rocca 69 Board of Directors only 04/26/2010 Annual General Meeting of 2011 20 - Chairman of the Board045.661.818-04 Economist 04/27/2010 No of DirectorsMember of the Audit and Risk Management CommitteeJoel Mendes Rennó 72 Board of Directors only 04/26/2010 Annual General Meeting of 2011 21 – Vice-Chairman of the026.310.678-00 Engineer 04/27/2010 No Board of DirectorsMember of the Audit and Risk Management CommitteeJosé Ferraz Ferreira Filho 63 Board of Directors only 04/26/2010 Annual General Meeting of 2011 22 – Board of Directors250.616.158-91 Mechanical Engineer 04/27/2010 No (sitting member)Member of the Finance CommitteeMarco Antonio Moura de Castro 56 Board of Directors only 04/26/2010 Annual General Meeting 101
  • 107. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A of 2011 22 – Board of Directors991 .246.298-04 Business administrator 04/27/2010 No (sitting member)Member of the Human Resources CommitteeMauro Fernando Maria Arruda 63 Board of Directors only 04/26/2010 Annual General Meeting of 2011 22 – Board of Directors028.882.701-53 Economist 04/27/2010 No (sitting member)Member of the Audit and Risk Management CommitteeSilvio Tini de Araújo 63 Board of Directors only 04/26/2010 Annual General Meeting of 2011 22 – Board of Directors064.065.488-68 Businessman 04/27/2010 No (sitting member)Member of the Finance CommitteeWagner Pinheiro de Oliveira 47 Board of Directors only 04/26/2010 Annual General Meeting of 2011 27 – Independent Board087.166.168-39 Economist 04/27/2010 No member (sitting member)Member of the Human Resources CommitteeAlcinei Cardoso Rodrigues 44 Fiscal Council 04/26/2010 Annual General Meeting of 2011 48 – Fiscal Council (alternate066.206.228-01 Economist member) elected by minority 04/27/2010 No shareholdersN/AEmilio Botelho Franciscon 54 Fiscal Council 04/26/2010 Annual General Meeting of 2011 48 – Fiscal Council (alternate671 .532.678-91 Lawyer member) elected by minority 04/27/2010 No shareholdersN/AJorge Luiz Gouvêa 49 Fiscal Council 04/26/2010 Annual General Meeting of 2011 42 – Fiscal Council Chairman558.995.797-49 Economist elected by minority 04/27/2010 No shareholdersN/ALuiz Carlos Lazarini 57 Fiscal Council 04/26/2010 Annual General Meeting of 2011 45 – Fiscal Council (sitting519.886.238-04 Business administrator 04/27/2010 No member) elected by minority 102
  • 108. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A shareholdersN/A 57 Fiscal Council 04/26/2010 Annual General MeetingLuiz Fonseca de Souza Meirelles Filho of 2011 Bank Officer 45 – Fiscal Council (sitting 04/27/2010 No500.165.63891 member) elected by minority shareholdersN/A 60 Fiscal Council 04/26/2010 Annual General MeetingPaulo Augusto de Azevedo Antunes Junior of 2011 Business administrator 48 – Fiscal Council (alternate 04/27/2010 No045.661.818-04 member) elected by minority shareholdersN/A 103
  • 109. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/AProfessional experience/Statement of convictionsEduardo de Come - 073.445.828-21Main professional experience in the last 5 years:Company: Brasil Ecodiesel Indústria e Comércio de Biocombustíveis e Óleos Vegetais S .APosition and Duties: Position: Executive Officer Duties: Officer responsible for Ecodiesel‘s financial areaMain activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest, equal to orhigher than 5% of the same class or type of the issuer‘s securities:Biodiesel productionManagement positions holding or held in publicly-held companiesExecutive Officer at Brasil EcodieselAny criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended ordisqualified the member from practicing any professional or commercial activity:NoExpedito José de Sá Parente Júnior - 617.202.323-34Main professional experience in the last 5 years:Company: Tecbio – Tecnologias Bioenergéticas Ltda.Position and Duties: Position: Chief Operations Officer Duties:- Technological development- Licensing of technology- Basic and executive energy- Management of Projects and Industrial Implementations- Marketing and sale of industrial projects and specialized technical services 104
  • 110. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/AMain activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest, equal to orhigher than 5% of the same class or type of the issuer‘s securities:Privately held company, specialized in developing and licensing technologies and supplying industrial biofuel production systems, a pioneer in biodiesel development in Brazil.Management positions holding or held in publicly-held companiesNone heldAny criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended ordisqualified the member from practicing any professional or commercial activity:NoGuilherme Augusto d‘Avila Mello Raposo - 498.994.904-82Main professional experience in the last 5 years:Company: Companhia Siderúrgica Nacional (CSN)Position and Duties: Position: Chief Supply and Logistics Officer Duties: Acquisition of raw materials, inputs, services and equipment necessary for the production process at all the industrial units in Brazil.Main activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest, equal to orhigher than 5% of the same class or type of the issuer‘s securities:Production of carbon steel for domestic and export markets.Management positions holding or held in publicly-held companiesExecutive Officer at Brasil EcodieselAny criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended ordisqualified the member from practicing any professional or commercial activity:NoJose Carlos Aguilera – 669.242.948-04 .Main activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest,equal to or higher than 5% of the same class or type of the issuer‘s securities:  From August 2009 To September 2010 he served as partner at JC Aguilera & Associates, a consulting firm. 105
  • 111. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A • From April 2008 to August 2009 served as CEO of Brazil Ecodiesel Industry and Trade of Biofuels and Vegetable Oils. • From 2003 to April 2008 was a partner of Galeazzi & Associados acting as a consultant in several companies, consulting firm.Management positions holding or held in publicly-held companiesFrom April 2008 to August 2009: Chief Executive Officer of Brasil EcodieselCurrently: CEO of Brasil Ecodiesel.Any criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended ordisqualified the member from practicing any professional or commercial activity:NoCarlos Antônio Rocca - 045.661.818-04Company: ROCCA, PRANDINI & RABBAT FINANCIAL SERVICES LTDA; trade name RRk Office.Position and Duties: Position: Managing Partner. Participated in the Company‘s foundation in 1999 and held the position until December 2007. The company is currently called RRk Office Consultoria Financeira Ltda. Duties: Supervision and development of products aimed at risk and investment portfolio management, together with other partners. Formulation of macroeconomic scenarios with the aim of informing the drafting of investment policies of institutional clients.Under his direct supervision, the company developed products for non-financial companies – management of cash and cash flow, as well as financial and operating risks. He coordinated consultingprojects at major non-financial companies. He conducted specific consulting projects for large publicly-held companies aimed at quantifying the impact of better governance standards on the companysvalue and capital costs.Main activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest,equal to or higher than 5% of the same class or type of the issuer‘s securities: Financial consulting company created in 1999, registered with the CVM, focused on systems (software), training and consulting services in risk and investment portfolio management. Models to optimize investment portfolios, measure and manage market risks, Asset Liability Management (ALM) models. Main clients: Pension funds, insurance companies, family offices, non-financial companies. Company: Brazilian Institute of Capital Markets (IBMEC) Position: Technical consultant and Coordinator of the Capital Markets Development Committee. Term: 2001 till date. 106
  • 112. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Duties: Development of studies and works to analyze the performance of Brazilian capital markets and proposing of measures for their development. Coordination of meetings and seminars to present and debate proposals from representatives of private sector entities, regulatory bodies, universities and research centers. Six books have been published under the title ―IBMEC Studies‖ (―Estudos IBMEC"), numbered 1 through 6.Main activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest,equal to or higher than 5% of the same class or type of the issuer‘s securities: Non-profit civil society founded in 1970, in which public and private entities (CVM, BACEN, BANCO DO BRASIL, CEF, ANBIMA, BM&F BOVESPA, among others) participate and whose objective is to sponsor studies and research aimed at developing the capital markets. Company: IBMEC Capital Market Studies Center Position: Chief Technical Officer Period: November 2008 till date. Duties: Technical management, development of methodologies and supervision of the technical team to execute projects relating to the evaluation of the performance of Brazilian capital markets. Coordination of capital market CEMEC seminars.Management positions holding or held in publicly-held companies Chairman of the Board of Directors of Casa Anglo-Brasileira S.A., 1982 to April 1997. Former Board member of Souza Cruz.Any criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended ordisqualified the member from practicing any professional or commercial activity:NoJoel Mendes Rennó - 026.310.678-00 Professor of ―Generating Power Stations" Chair of the Engineering Course at Universidade Mackenzie in São Paulo. Attended the Business Administration Course for Executives at the Reenselaer Polytechnic Institute (RPI) in New York, USA, in 1972 Chief Technical Advisor at the Ministry of Mines and Energy in Brasília from 1975 to 1977 CEO of Companhia Vale do Rio Doce from 1978 to 1979 CEO of Braspetro, international subsidiary of Petrobras, and later Vice-President of Petroquisa. Executive Officer of Petrobras from 1983 to 1986. CEO of Petrobras from 1992 to 1999. Works as a consultant in the areas of business management and administrationMain activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest,equal to or higher than 5% of the same class or type of the issuer‘s securities: 107
  • 113. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A NoManagement positions holding or held in publicly-held companies Former Chairman of the Board of Directors of Companhia Vale do Rio Doce. Former Chairman of the Board of Directors of Braspetro Former Chairman of the Board of Directors of PetrobrasAny criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended ordisqualified the member from practicing any professional or commercial activity:NoJosé Ferraz Ferreira Filho - 250.616.158-91Main professional experience in the last five years, including companies, positions and duties Managing Director of Banco Pecúnia (Société Générale) from 1996 to 2001, currently working as a consultant to its Board of Directors Since 2002 he performs M&A Consulting and Advising services at J Ferraz Business Development. Member of the Board of Directors of Brasil Ecodiesel S.A. and Bombril S.A. Member of the Fiscal Council of Paranapanema S .A. Eluma S.A. and São Paulo Alpargatas S .A. Alternate member of the Fiscal Council of Azevedo & Travassos S.A. Director of Associação Arte Despertar (NGO) Employee of Bonsucex Holding. Member of the Board of Directors and the Fiscal Council, Executive Officer and Consultant.Main activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest,equal to or higher than 5% of the same class or type of the issuer‘s securities: Not applicableManagement positions holding or held in publicly-held companies Member of the Board of Directors of Brasil Ecodiesel S.A. and Bombril S.A. Member of the Fiscal Council of São Paulo Alpargatas S .A. Alternate member of the Fiscal Council of Azevedo & Travassos S.A. Former member of the Fiscal Council of Cia. Paraibuna de Metais and Caraíba Metais S A.Any criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended or 108
  • 114. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/Adisqualified the member from practicing any professional or commercial activity:NoMarco Antonio Moura de Castro - 991.246.298-04Main professional experience in the last five years, including companies, positions and duties Managing partner of ASSETS Consultoria e Participações Ltda. Executive Officer of Brasil Ecodiesel, Indústria e Comércio de Biocombustíveis e Óleos Vegetais S.A. Member of the Board of Directors of Companhia Brasileira de Cartuchos S.A., and Brasil Ecodiesel Ind. e Com de Óleos Vegetais S .A.Main activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest, equal toor higher than 5% of the same class or type of the issuer‘s securities: Assets Economic and financial consulting services in financial and capital markets. Consulting services in institutional and government relations, focusing on strategy and intelligence for markets, companies and products. Companhia Brasileira de Cartuchos – manufacture and sale of arms and ammunition for civilian and military markets in Brazil and abroad. DFV Participações SA Brasil Ecodiesel –production and sale of vegetable oil, fuel and biodiesel.Management positions holding or held in publicly-held companies NoAny criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended ordisqualified the member from practicing any professional or commercial activity:NoMauro Fernando Maria Arruda - 028.882.701-53Main professional experience in the last five years, including companies, positions and duties Managing partner of Macrotempo Consultoria Econômica S/S Ltda Economic consulting services to the following companies, among others: Colgate, CVRD, TEKSID (FIAT group company), AMBEV and Braskem. Member of the Board of Directors of Mahle Metal Leve Ferbasa and Brasil Ecodiesel.Company: Macrotempo Consultoria Econômica S/S Ltda.Position and Duties: 109
  • 115. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Managing Director, responsible for technical projects carried out by the company.Main activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest, equal toor higher than 5% of the same class or type of the issuer‘s securities: Macrotempo Consultoria Econômica is a single-profession company (comprising economists only) with four partners. Mauro Fernando Maria Arruda is the main partner holding approximately 60% of the membership interest.Management positions holding or held in publicly-held companiesNeither holds nor has held management positions in publicly-heldcompaniesAny criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended ordisqualified the member from practicing any professional or commercial activity:NoSilvio Tini de Araújo - 064.065.488-68Main professional experience in the last five years, including companies, positions and duties Managing partner of Bonsucex Holding Ltda Chairman of the Board of Directors of Mineração Buritirama S.A. Member of the Board of Directors of São Paulo Alpartas S.A. Member of the Board of Directors of Paranapanema S.A.Main activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest, equal toor higher than 5% of the same class or type of the issuer‘s securities: Mr. Silvio Tini de Araújo is managing partner of Bonsucex Holding Ltda., which holds 8% of the common shares issued by the CompanyManagement positions holding or held in publicly-held companies Board member at São Paulo Alpartas S.A. Board member at Directors of Paranapanema S.A. Board member at Administração Eluma S.A.Any criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended ordisqualified the member from practicing any professional or commercial activity:NoWagner Pinheiro de Oliveira - 087.166.168-39Main professional experience in the last five years, including companies, positions and duties 110
  • 116. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A CEO of Petros – Petrobras Social Security Foundation (since February 13, 2003) Main activity – Closed Private Pension Fund responsible for the management and coordination of the Executive Board‘s activities as the chief supervisor and coordinator of Petros activities. Independent Board member at Brasil Ecodiesel (since April 9, 2007). Board member of ALL – America Latina Logística do Brasil S.A. (since February 10, 2009). Board member of JBS S.A. (since April 29, 2009). Board member of Telemig Participações S.A. (July 22, 2003 to April 03, 2008). CEO of the Social Security Cultural Institute (ICSS) from 2005 to 2007. Chief Financial Officer of BANESPREV (Banespa Social Security Fund). Economist at Banco BANESPA‘s Economic Department in the area of Financial and Investment Analysis.Main activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest,equal to or higher than 5% of the same class or type of the issuer‘s securities: NoManagement positions holding or held in publicly-held companies Member of the Board of Directors of ALL – America Latina Logística do Brasil S.A. Member of the Board of Directors of JBS S.A. Member of the Board of Directors of Telemig Participações S.A.Any criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended ordisqualified the member from practicing any professional or commercial activity:NoAlcinei Cardoso Rodrigues - 066.206.228-01Main professional experience in the last five years, including companies, positions and duties Equities Manager and Strategic Planning Manager of Petrobras Social Security Foundation (Petros) since 2003. Member of the Fiscal Council of Amazônia Celular from April 2006 to March 2008. Member of the Investment Committee of FIP Caixa Ambiental and FIP Infra Brasil, both in 2008.Main activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest,equal to or higher than 5% of the same class or type of the issuer‘s securities: Not applicable 111
  • 117. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/AManagement positions holding or held in publicly-held companies Member of the Fiscal Council of Amazônia Celular from April 2006 to March 2008.Any criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended ordisqualified the member from practicing any professional or commercial activity:NoEmilio Botelho Franciscon - 671.532.678-91Main professional experience in the last five years, including companies, positions and duties Worked at Banco Mercantil de São Paulo S.A. Worked at Finasa Crédito Financiamento e Investimento – July 1973 Worked at the Human Resources and Personnel Redeployment Control Department of Banco Mercantil S.A. - 1974 He was Chief Operating Officer and Foreign Exchange Officer at Corretora de Cambio e Valores Mobiliários - 1978 He was the coordinator responsible for increasing sales of the Finasa Visa/MasterCard Credit Card - 1999 He was a member of the Technical Board at the Securities Distributors Association – 2001. He has been Director of D&M Consultores Associados since 2002.Main activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest,equal to or higher than 5% of the same class or type of the issuer‘s securities: Not applicableManagement positions holding or held in publicly-held companies Member of the Fiscal Council of Amazônia Celular from April 2006 to March 2008.Any criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended ordisqualified the member from practicing any professional or commercial activity:NoJorge Luiz Gouvêa - 558.995.797-49Main professional experience in the last five years, including companies, positions and dutiesCompany: Petrobras Social Security Foundation (Petros) – Closed Private Pension Fund.Position and Duties: Executive Control Manager of PETROS since 2004 to date. He is responsible for the technical and administrative coordination of the preparation and follow-up of the Budget, Financial 112
  • 118. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Statements, Tax Control, Contracts and Permanent Assets, Calculation of Operating Costs, and Performance Appraisal of the Foundation, in order to record, control and analyze the operating performance and assist Petros‘ management in decision-making.Main activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest,equal to or higher than 5% of the same class or type of the issuer‘s securities:Management positions holding or held in publicly-held companies Member of the Fiscal Council of Telemig Celular S/A from April 2006 to April 2008. Member of the Board of Directors of Varig Participações em Transportes Aéreos (VPTA). Sub-holding company that controlled the airlines Riosul and Nordeste of the VARIG Group. From May 2005 to May 2007. Vice-Chairman of the Board of Directors of Varig from August 2003 to May 2005. Board member of Varig Participações em Serviços Complementares (VPSC) – sub holding that used to control the companies in hotel and tourism segments of the VARIG group. From August 2003 to May 2005. Member of the Board of Directors of Fundação Ruben Berta Participações (FRB-PAR), a holding company that controlled the investments in the sub-holding companies VARIG, VPTA and VPSC, from April to August 2003.Any criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended ordisqualified the member from practicing any professional or commercial activity:NoLuiz Carlos Lazarini - 519.886.238-04Main professional experience in the last five years, including companies, positions and dutiesCompany:GRUPO INAL S.A.Position and Duties: Group Executive Director, responsible for the management of all areas of the group, especially strategic and operational planning, including annual budget, coordination of the group‘s corporate activities, namely finance, controllership, IT, human resources, supplies, marketing and communication, assets and maintenance. Also responsible for the business units, definition of their strategies and targets for the fiscal year and for the financial results.Main activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest,equal to or higher than 5% of the same class or type of the issuer‘s securities: Healthcare company comprising 3 hospitals: Cema Hospital Ltda, Instituto Cema, both in the areas of ophthalmology and otorhinolaryngology, and Hospital VillaManagement positions holding or held in publicly-held companies Executive Officer of Manah SA. from 1992 to 2000.Any criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended or 113
  • 119. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/Adisqualified the member from practicing any professional or commercial activity:NoLuiz Fonseca de Souza Meirelles Filho - 500.165.638-91Main professional experience in the last five years, including companies, positions and duties: Member of the Board of Directors of Azevedo & Travassos S.A. Member of the Fiscal Council of OHL Brasil S.A. Member of the Fiscal Council of Brasil Ecodiesel Indústria e Comércio de Bicombustíveis e Óleos Vegetais S.A. Alternate member of the Board of Directors of São Paulo Alpargatas S.A. Alternate member of the Fiscal Council of Paranapanema S.A. Member of the Governing Council and Vice President, Finance of Club Athlético Paulistano Member of the Fiscal Council of Sociedade Arte Despertar.Main activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest,equal to or higher than 5% of the same class or type of the issuer‘s securities: Not applicableManagement positions holding or held in publicly-held companies Vice-Chairman of Banco Mercantil Finasa de São PauloAny criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended ordisqualified the member from practicing any professional or commercial activity:NoPaulo Augusto de Azevedo Antunes Junior - 045.661.818-04Main professional experience in the last five years, including companies, positions and duties: Founder and administrator of AA C S & Associados from 2000 to 2006. Chairman of Caterpillar Financial and Services Corp. from 1996 to 1998. Superintendent of the Leasing Company and the Credit and Investment Company and Executive Board of Corporate Finance of the Banco Econômico Group between 1990 and 1996. Chief Administrative and Financial Officer of Staroup S A. Ind. e Comercio from 1987 to 1990. Assistant Executive Officer, responsible for the portfolio of investment funds of Banco Crefisul de Investimentos, from 1986 to 1987. Division General Manager of Grupo Comind – Banco de Investimento from 1982 to 1985. He was responsible for business development and structuring of financial operations at BEAL – West LB, from 1981 to 1982. Manager of First National Bank of Boston from 1978 to 1981. 114
  • 120. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Former Chief Financial Officer of Club Athlético Paulistano, São Paulo, and Director of the Brazilian Association of Leasing Companies (ABEL). Former Director of the Brazilian Association of Credit, Financing and Investment Companies (ACREFI).Main activity of the company where the person performed these activities, highlighting the companies that are part of (i) the issuer‘s group, or (ii) partners holding direct or indirect interest,equal to or higher than 5% of the same class or type of the issuer‘s securities: Not applicableManagement positions holding or held in publicly-held companies Not applicableAny criminal conviction, conviction in CVM‘s administrative proceeding and the penalties applied, any final and unappealable judicial or administrative conviction that suspended ordisqualified the member from practicing any professional or commercial activity:No 115
  • 121. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 12.7 – Composition of the statutory, audit, finance and compensation committeesName Type of committee Position held Profession Election date Term of officeIndividual Taxpayers’ ID Description of other Description of other positions Age Date of Investiture committees heldOther positions/dutiesperformed at the CompanyCarlos Antônio Rocca Audit Committee Committee member (sitting member) Economist 04/26/2010 Annual General Meeting of 2011045.661.818-04 69 04/27/2010Chairman of the Board ofDirectorsJoel Mendes Rennó Audit Committee Committee member (sitting member) Engineer 04/26/2010 Annual General Meeting of 2011026.310.678-00 72 04/27/2010 Vice-Chairman of the Board ofDirectorsMauro Fernando Maria Arruda Audit Committee Committee member (sitting member) Economist 04/26/2010 Annual General Meeting of 2011028.882.701-53 63 04/27/2010Member of the Board ofDirectorsJosé Ferraz Ferreira Filho Finance Committee Committee member (sitting member) Mechanical Engineer 04/26/2010 Annual General Meeting of 2011250.616.158-91 63 04/27/2010Member of the Board ofDirectorsSilvio Tini de Araújo Finance Committee Committee member (sitting member) Economist 04/26/2010 Annual General Meeting of 2011064.065.488-68 63 04/27/2010Member of the Board ofDirectorsMarco Antonio Moura de Castro Other Committees Committee member (sitting member) Business Administrator 08/03/2010 Annual General Meeting of 2011991 .246.298-04 Human Resources Committee 56 08/04/2010Member of the Board ofDirectorsWagner Pinheiro de Oliveira Other committees Committee member (sitting member) Economist 08/03/2010 Annual General Meeting of 2011087.166.168-39 Human Resources Committee 47 08/04/2010Member of the Board ofDirectors 116
  • 122. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 12.9 – Existence of marital relation, stable union or relationship up to second degree with the administrators of the issuer, subsidiaries and controlling shareholders Justification for not completing the form: Not applicable 12.10 – Relations of subordination, provision of service or control between administrators and subsidiaries, controlling shareholders and others Justification for not completing the form: Not applicable 12.11 Agreements, including insurance policies, for payment or reimbursement of expenses incurred by administrators 12.11. Describe the provisions of any agreement, including insurance policies, envisaging the payment or reimbursement of the expenses incurred by administrators on account of damages caused to third parties or to issuer, penalties imposed by state authorities or agreements to conclude administrative or judicial lawsuits, in the exercise of their activities. The Company has a civil liability insurance that guarantees payment to third parties for losses and damages caused by administrators by act or fact, in amounts up to twenty-five million reais (R$25,000,000.00).12.12 Other material information12.12. Provide other information the issuer deems relevant:All the relevant information to this topic has been described in the above items. 117
  • 123. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 13.1 – Description of the compensation policy or practice, including non-statutory board of executive officers 13.1. Compensation policy or practice of the Board of Directors, Statutory Executive Board, Fiscal Council of the Audit, Risk, Financial and Compensation Committees, encompassing the following: a) Objectives of the compensation policy or practice. The Company‘s compensation policy for Management, including the members of the Board of Directors, Statutory and Non-Statutory Executive Board and members of the Fiscal Council, is in line with the best practices in the market. The Annual and Extraordinary General Meeting held on April 30, 2009 approved a stock option plan that expects a maximum 5% dilution of outstanding shares to be distributed among the Company‘s executives. The plan, however, has not been implemented by the Board of Directors yet. Management still does not receive variable compensation calculated based on annual targets and performance indicators. The Board of Directors is responsible for distributing the budget to Management according to article 18, item ―vi‖ of the Company‘s Bylaws. b ) Breakdown of compensation, including: i. description of compensation components and purposes thereof Board of Directors: The members of the Board of Directors receive a fixed salary, set according to law and market standards, in addition to reimbursement for all business travel expenses and related accommodation. The chairman of the Board of Directors‘ receives an additional 25%. Fiscal Council: The members of the Fiscal Council received fixed and equal compensation and are reimbursed for all business travel expenses and related accommodation. Board of Executive Officers Compensation for the members of the statutory Board of Executive Officers is fixed. The compensation policy follows the best market prices. Committees The participants of the permanent committees receive fixed compensation corresponding to 50% of the compensation granted to members of the Board, in 118
  • 124. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A addition to their other remunerated duties. Currently, only the members of the Board of Directors take part in the committees. ii. what is the ratio of each element to total compensation? Not applicable, since there is no variable compensation. iii.calculation and adjustment methodology for each compensation element. Management‘s compensation is periodically compared to standard market practices through salary comparisons conducted by specialized consulting companies that identify necessary salary adjustments.reasons that justify salary breakdownNot applicable since no variable compensation has been approved. c) main performance indicators considered to determine each compensation element. Not applicable since no variable compensation has been approved. d) how is compensation structured to reflect the growth of performance indicators. Not applicable since is no variable compensation has been approved. e) how is the compensation policy or practice consistent with the issuer’s short-, medium- and long-term interests?Although Management is committed to the Companys strategic objectives, variable compensation has not yet been implemented. f) existence of compensation borne by subsidiaries, controlled companies or direct or indirect parent companies. No compensation is borne by subsidiaries. g) existence of compensation or benefit related to a specific corporate event, such as sale of the Company’s control. There is no compensation or benefit related to a specific corporate event, such as the sale of the Company‘s control. 119
  • 125. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 13.2 – Overall Board of Directors Executive Board Fiscal Council Total compensation for the Board of Directors, Executive Board and Fiscal Council Overall Number of members 6.00 4.00 3.00 13.00 Fixed annual compensation Compensation or pro- 900,000.00 3,556,000.00 216,000.00 4,672,000.00 labore Direct and indirect 0.00 0.00 0.00 0.00 benefits Participation in 288,000.00 0,00 0,00 288,000.00 committees Others 0.00 0.00 0.00 0.00 Variable compensation Bonus 0.00 0.00 0.00 0.00 Profit sharing 0.00 0.00 0.00 0.00 Participation in 0.00 0.00 0.00 0.00 meetings Commissions 0.00 0.00 0.00 0.00 Others 0.00 0.00 0.00 0.00 Post-employment 0.00 0.00 0.00 0.00 Withdrawal from 0.00 0.00 0.00 0.00 position Share-based 0.00 0.00 0.00 0.00 compensation Total compensation 1,188,000.00 3,556,000.00 216,000.00 4,960,000.00 Overall compensation for the fiscal year ending 12/31/2009 - Yearly amounts Board of Directors Executive Board Fiscal Council Total Number of members 4.58 4.33 3.00 11.91 Fixed annual compensation Compensation or pro- 362,000.00 2,158,333.33 216,000.00 2,736,333.33 labore Direct and indirect 0.0 0.00 0.00 0.00 benefits Participation in 24,000.00 0.00 0.00 24,000.00 committees Others 0.00 904,583.33 0.00 904,583.33 Variable compensation Bonus 0.00 0.00 0.00 0.00 Profit sharing 0.00 0.00 0.00 0.00 Participation in 76,000.00 0.00 0.00 76,000.00 meetings Commissions 0.00 0.00 0.00 0.00 Others 0.00 0.00 0.00 0.00 Post-employment 0.00 0.00 0.00 0.00 Withdrawal from 000 0.00 0.00 0.00 position Share-based 0.00 0.00 0.00 0.00 compensation Total compensation 462,000.00 3,062,916.66 216,000.00 3,740,916.66 120
  • 126. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 13.3 – Variable compensation to the Board of Directors, Statutory Executive Board and Fiscal Council 13.3. Regarding the variable compensation in the last three years and the expected compensation for the current year for the Board of Directors, Statutory Executive Board and Fiscal Council: Not applicable, since the Company has never implemented a variable compensation plan. 13.4 Compensation plan based on actions of the Board of Directors, Statutory Executive Board and Fiscal Council 13.4. Compensation Plan based on shares for the Board of Directors and Statutory Executive Board in the last fiscal year and expected for the current fiscal year: Not applicable, since the plan approved by the Annual and Extraordinary General Meeting as of April 30, 2009 has not been implemented by the Board of Directors. 121
  • 127. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 13.5 Interest in shares, quotas and other securities convertible into shares or quotas, held by the Management and Fiscal members – by corporate body 13.5. Report the number of directly or indirectly held shares or quotas in Brazil or abroad and other report all other securities convertible into shares or quotas and issued by the Company, its direct or indirect parent companies, subsidiaries or companies under joint control, members of the Board of Directors, the Statutory Executive Board or the Fiscal Council, by corporate body, as of the closing date of the last fiscal year. Issued by the Company (Brasil Ecodiesel) Name Number of shares Interest - % Board of Directors 63,871,408 8.81% Board of Executive 300,015 0.01% Officers Fiscal Council 0 0.00% Total 64,171,423 8.82% Issued by the Company’s direct or indirect parent companies Name Number of shares Interest - % Board of Directors N/A N/A Board of Executive N/A N/A Officers Fiscal Council N/A N/A Total N/A N/A Note: The Company does not have any established direct or indirect subsidiaries. Issued by the Company’s subsidiaries or under common control Name Number of shares Interest - % Board of Directors N/A N/A Board of Executive N/A N/A Officers Fiscal Council N/A N/A Total N/A N/A Note: In addition to being idle, more than 99.99% of the subsidiaries‘ quotas are issued by the Company. The CEO holds only a symbolic stake to comply with the Company‘s Bylaws. 122
  • 128. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 13.6 Compensation plan based on shares of the Board of Directors and Statutory Executive Board 13.6. Regarding the compensation based on shares recognized in the income of the last three fiscal years and expected compensation for the current fiscal year for the Board of Directors and Statutory Executive Board: Not applicable, given that the approved plan has not been implemented by the Board of Directors. 123
  • 129. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 13.7 Information on outstanding shares held by the Board of Directors and Statutory Executive Board 13.7. Information on the outstanding shares held by the Board of Directors and Statutory Executive Board at the end of the last fiscal year. Not applicable, given that the approved plan has not been implemented by the Board of Directors. 124
  • 130. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 13.8 Under the share-based compensation plan, options exercised and shares delivered to the Board of Directors and Statutory Executive Board 13.8. Regarding the share-based compensation plan - the options exercised and shares delivered to the Board of Directors and Statutory Executive Board in the last three fiscal years. Not applicable, given that the approved plan has not been implemented by the Board of Directors. 125
  • 131. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 13.9 Necessary information to understand the data disclosed in items 13.6 to 13.8 – Method used for share and option pricing 13.9 Summarized description of the necessary information to understand the data disclosed in items 13.6 to 13.8, such as an explanation of the method used for share and option pricing Not applicable, given that the approved plan has not been implemented by the Board of Directors. 126
  • 132. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 13.10 Information on pension plans granted to Board members and statutory executive officers 13.10. Regarding the pension plans in effect and granted to Board members and statutory executive officers, report the following information in table format: Not applicable since the Company has not implemented pension plans. 127
  • 133. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 13.11 – Maximum, minimum and average individual compensation to the Board of Directors, Executive Board and Board of Auditors Yearly amounts Executive Board Board of Directors Fiscal Council 12/31/2009 12/31/2008 12/31/2007 12/31/2009 12/31/2008 12/31/2007 12/31/2009 12/31/2008 12/31/2007 Number of 4.16 5.76 5.75 5.80 5.83 9.00 3.00 3.00 0.00 members Highest 491,833.00 520,000.00 520,000.00 78,000.00 72,000.00 72,000.00 72,000.00 72,000.00 0.00 compensation (R$) Lowest 480,000.00 300,000.00 200,000.00 78,000.00 48,000.00 0.00 72,000.00 72,000.00 0.00 compensation (R$) Average compensation amount (R$) Executive Note The amount of the lowest individual compensation was determined excluding the members in their positions for fewer than 12 months 12/31/2009 12/31/2008 The amount of the lowest individual compensation was determined excluding the members in their positions for fewer than 12 months 12/31/2007 The amount of the lowest individual compensation was determined excluding the members in their positions for fewer than 12 months Board of Directors 12/31/2009 The amount of the lowest individual compensation was determined excluding the members in their positions for fewer than 12 months 12/31/2008 The amount of the lowest individual compensation was determined excluding the members in their positions for fewer than 12 months 12/31/2007 The amount of the lowest individual compensation was determined excluding the members in their positions for fewer than 12 months Fiscal Council 12/31/2007 Not instated 128
  • 134. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 13.12 Compensation or indemnification mechanisms for Management who are removed from office or retired 13.12. Describe contract agreements, insurance policy or any other instrument concerning compensation or indemnification mechanisms for Management who are removed from office or retired, expressing all financial consequences for the Company. There are no contract mechanisms that cover these situations. 129
  • 135. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 13.13 Percentage of the total compensation pertaining to Management and members of the Fiscal Council who are related to the parent companies. 13.13. Report the total compensation percentage for each corporate body listed in the Company’s financial statements for the last three years, for Board members, Statutory Executive Officers or the Fiscal Council who are direct or indirect related parties of the parent company as defined by applicable accounting rules. Not applicable. 130
  • 136. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 13.14 Management and Fiscal Council compensation received, by corporate body, not related to their duties 13.14. Report the amounts recognized in the Company’s financial statements for the last three year, for the members of the Board of Directors, Statutory Executive Board or Fiscal Council, by corporate body, for reasons not related to their duties, such as commissions and fees for advisory or consulting services. Assets Consultoria e Participações Ltda, the company in which the Board member Marco Antonio Moura de Casto is the main quota holder and manager, provided consulting services in 2007, 2008 and 2009. The company was paid R$324,000.00 in 2007, R$270,000.00 in 2008, and R$358,000.00 in 2009. The agreement with that company was cancelled on August 1, 2010. 131
  • 137. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 13.15 Compensation for Management and members of the Fiscal Council recognized in the statements of direct or indirect parent companies, companies under joint control and subsidiaries 13.15. Report the amounts recognized in the statements of direct or indirect parent companies, companies under joint control and subsidiaries in the last three fiscal years, such as compensation for members of the Board of Directors, Statutory Executive Board or Fiscal Council, by corporate body, specifying why the amounts were paid to those individuals. Not applicable. 132
  • 138. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 13.16 – Other material information 13.16. Provide other information the Company deems relevant Not applicable. 133
  • 139. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 14.1 – Description of human resources 14.1. Describe the Company’s human resources, providing the following information: a) number of employees (total, by group, based on activity and location) 2007 2008 2009 ECO HEADQUARTERS – 56 39 28 Rio de Janeiro BURITI HEADQUARTERS 270 104 86 ECO CRATEUS – Ceará 246 148 55 ECO FLORIANO – Piauí 121 98 27 ECO PETROLINA – 15 13 6 Pernambuco ECO SETUBINHA – Minas 43 29 18 Gerais ECO IRAQUARA – Bahia 346 190 133 ECO PORTO NACIONAL – 140 81 99 Tocantins ECO ROSÁRIO DO SUL – 165 112 111 Rio Grande do Sul ECO ITAQUI – Maranhão 132 103 111 ECO CUITE – Paraíba 3 6 3 ECO FORTALEZA – Ceará 104 82 73 ECO EUSEBIO – Ceará 9 8 3 ECO S LUIS GONZAGA – 56 97 16 Rio Grande do Sul ECO DOURADOS – Mato 11 3 0 Grosso do Sul ECO ITATIBA – Espírito 5 5 0 Santo ECO CHAPECÓ – Santa 9 4 0 Catarina ECO REDENÇÃO – Pará 7 1 0 ECO GOIANIA – Goiás 0 10 0 ECO CUIABA – Mato 6 1 0 Grosso ECO FAZ VIOLETO – 0 46 22 Piauí ECO FAZ SUCESSO – 0 98 7 Bahia 134
  • 140. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A ECO FAZ SÃO VICENTE – 0 14 7 Ceará ECO FAZ RESERVA – 0 13 0 Bahia ECO FAZ BANDEIRA 0 25 14 PIATÃ 2 2 0 TOTAL 1,746 1,332 819 b) number of outsourced employees (total, by group, based on activity and location) c) turnover rate Number of employees Hired Dismissed Turnover rate 2007 1,746 1,548 1,297 80.65% 2008 1,332 299 690 32.28% 2009 819 209 716 42.20% Note: The turnover rate was calculated based on the volume of (E) hires + (D) dismissals, divided by the effective average ([(E+D):2x100]:EA d) Company’s exposure to liabilities and labor claims The Company operates according to the legal provisions and labor guidelines effective in Brazil (Consolidated Labor Laws (CLT), Federal Constitution (CF), Legal Opinions, Precedents, Labor Court Precedents, among others). Having being inspected by Regional Labor Offices from different states on several occasions, it has never been guilty of any infraction resulting from labor lawsuits. Therefore, no material liabilities and labor claims are enlisted in the financial statements. 135
  • 141. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 14.2 Material amendments – Human resources 14.2. Report any relevant change to the numbers disclosed in item 14.1 Not applicable. 136
  • 142. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 14.3 Description of employees’ compensation policy 14.3. Describe the employee’s compensation policy, providing information on: a) Variable salary and compensation policy Brasil Ecodiesel uses the salary groups to manage paid positions. This approach allows us to facilitate compensation management, and allows us to acknowledge positions that are similar in complexity and breadth. Positions listed in a given group will be compensated according to the wage bracket with a 50% variation (80% to 120%). Adjustments made to the wage brackets depend on the market and are effected according to procedures defined by the Human Resources Department: annual salary comparison and wage bracket adjustment, if the salary comparison finds such. Salary can change due to: classification, merit and promotion (vertical). Individual classification occurs when salaries are maintained with minimum competitiveness so the Company has internal consistency. Collective classification occurs when, according to comparison, the salary of specific functional groups is below the salary paid in the market. Classification can also occur to try to eliminate salary changes among employees performing the same duties, which will depend on the employee‘s performance. Merit-based salary increases recognize the individual growth of each professional, a statement that the Company will now compensate the employee pursuant to a level that best acknowledges the Company‘s view of the employee‘s professional growth. This type of adjustment occurs so the Company can revise salary brackets. The HR Department is responsible for determining an annual budget to increase salaries according to merit, in line with the budget forecast. Internal (vertical) promotions will always occur after a 90-day probation period where the employee‘s performance will be assessed by the HR Department and the employee‘s manager. The HR Department should establish the criteria for promotion, such as past performance to merit a promotion and/or employee‘s potential to assume a new position. The internal consistency of the new position should also be taken into consideration. Promotions can occur though internal recruitment or at Management‘s request, which, consequently, are not automatic and depend on the Company‘s needs. The HR Department will give a technical opinion on the new position and salary, which must be approved by the Board of Executive Officers. 137
  • 143. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A b) benefit policy The benefits adopted by the Company are: food vouchers or meals served to the employees of the Company and the industrial units; life insurance, Bradesco health insurance and Bradesco dental insurance. c) characteristics of share-based compensation plans for non- management employees not performing There is no share-based compensation plan for employees not performing management duties. 138
  • 144. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 14.4 Description of the relationship between the company and the unions 14.4. Describe the relationship between the company and the unions The Company has a relationship with the following unions: Union of Chemical and Petroleum Industry Workers of the State of Bahia; Industrial Workers Federation of the State of Ceará; Union of Chemical and Pharmaceutical Industry Workers of the State of Maranhão; Union of Chemical Industry Workers of the State of Piauí; Union of Chemical and Pharmaceutical Industry Workers of the State of Rio de Janeiro; the Chemical and Pharmaceutical Industry Workers Federation of the State of Rio Grande do Sul; the Industry Workers Federation of the State of Tocantins, Goiás and the Federal District. The Company entered into collective bargaining agreements with the unions, except those from Bahia and Maranhão, where unions filed lawsuits requesting compliance with the collective bargaining agreements. Even with the agreements‘ not being ratified in those states, the Company adjusts the salaries of its employees on par with other business units. 139
  • 145. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 15.1/15.2 - Shareholding positionShareholderShareholder’s Number of Nationality - Common Participation Number of Controlling Preferred Last change Total number Total sharesCPF/CNPJ common state shares (%) per preferred shareholder shares (%) of shares (%) shares (units) shareholders’ shares (units) (units) agreementDetails on class of shares (units)Class of share Number of shares (units) Shares %SILVIO TINI ARAUJO064.065.488-68 BRAZILIAN-SP No No 73,610,204 10.150000% 0 0.000000% 73,610,204 10.150000%FUNDO INV PART NEO BIODIESEL BRAZILIAN-RJ No No 12/31/200910.869.515/0001-86 40,761,168 5.620000% 0 0.000000% 40,761,168 5.620000%OTHER 610,877,355 84.230000% 0 0.000000% 610,877,355 84,230000%TREASURY SHARES 0 0.000000% 0 0.000000% 0 0.000000%TOTAL 725.248.727 100.000000% 0 0.000000% 725,248,727 100.000000% 140
  • 146. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 15.3 – Capital distribution Date of last meeting 05/05/2010 Number of individual shareholders (units) 23,986 Number of corporate shareholders (units) 398 Number of institutional investors (units) 194 Outstanding Shares Outstanding shares correspond to all issuer’s shares except for those held by the controller, persons related to the 0 0.000000% controller, issuer’s executives and treasury shares. Number of preferred shares (units) Total 720,149,745 99.300000% 141
  • 147. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 15.5 – Shareholders’ agreement filed at the company’s headquarters or to which the controlling shareholder is party 15.5. Information on shareholders’ agreements regulating the right to vote or the transfer of the Company shares, filed at the Company’s headquarters, and to which the controlling shareholder is party: To date there, we have entered into no agreements with our shareholders. 142
  • 148. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 15.6 – Significant changes to the interest held by other members of the controlling group and to issuer’s Management BRASIL ECODIESEL Total Shares Issued by Consolidated INDÚSTRIA E the Company Shareholding Position COMÉRCIO DE BIOCOMBUSTÍVEIS E ÓLEOS VEGETAIS S.A Shareholder Common shares Common shares Amount % Amount % Controlling Shareholders 80,869,089 64.02% 80,869,089 64.02% Board of Directors 8,251,643 6.53% 8,251,643 6.53% Board of Executive 208,610 0.17% 208,610 0.17% Officers Fiscal Council - - - - Outstanding Shares 36,981,399 29.28% 36,981,399 29.28% Total 126,310,741 100.00% 126,310,741 100.00% 143
  • 149. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Position on December 31, 2008 (in units of shares) BRASIL ECODIESEL Total Shares Issued by Consolidated INDÚSTRIA E the Company Shareholding Position COMÉRCIO DE BIOCOMBUSTÍVEIS E ÓLEOS VEGETAIS S.A. Shareholder Common shares Common shares Amount % Amount % Controlling Shareholders 63,155,370 50.00% 63,155,370 50.00% Board of Directors 3,050,427 2.42% 3,050,427 2.42% Board of Executive 30,315 0.02% 30,315 0.02% Officers Fiscal Council - - - - Outstanding Shares 60,074,629 47.56% 60,074,629 47.56% Total 126,310,741 100.00% 126,310,741 100.00 Position on December 31, 2009 (in units of shares) BRASIL ECODIESEL Total Shares Issued by Consolidated INDÚSTRIA E the Company Shareholding Position COMÉRCIO DE BIOCOMBUSTÍVEIS E ÓLEOS VEGETAIS S.A. Shareholder Common shares Common shares Amount % Amount % Controlling Shareholders - - - - Board of Directors 2, 798,937 0.39% 2,798,937 0.39% Board of Executive 300,015 0.04% 300,015 0.04% Officers Fiscal Council - - - - Outstanding Shares 720,149,775 99.30% 720,149,775 99.30% Total 725,248,727 100.00% 725,248,727 100.00% 144
  • 150. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 15.6 – Significant changes to the interest held by members of the controlling group and to issuer’s Management In a material fact published on March 30, 2009, the Company announced that shareholders Nelson José Côrtes da Silveira, Zartman Services LLC, Carleton Towers LLC and Boardlock Holdings LLC (―Former Controlling Shareholders‖), until then members of the controlling group and jointly holding 50% of the Company‘s capital stock, had filed at the headquarters an Instrument of Mutual Rescission from the Company‘s Shareholders‘ Agreement. In addition, the aforementioned document also stated that the Former Controlling Shareholders had irrevocably and irreversible agreed and declared that in the next five years they would not enter into any other Shareholders‘ Agreement or similar agreement among themselves or with any other shareholder of Brasil Ecodiesel Indústria e Comércio de Biocombustíveis e Óleos Vegetais S.A.; 145
  • 151. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 15.7 – Other significant information 15.7 – Other significant information Financial Restructuring The most notable event in 2009 was the financial restructuring. Hindered by the lack of credit and lacking working capital, the Company survived from early 2008 to June 2009 on receivable-backed bank loans. Without any clear outlook as to when the Company would overcome the crisis, creditor banks, together with Galleas Administração de Carteiras de Valores Mobiliários, proposed a financial restructuring involving the translation of credits into shareholding interest and investment of new resources, which was accepted by the controlling shareholders. The restructuring lasted several months and included two capital increases with the issue of 598,937,986 new shares, with the capital stock amounting to R$808,213,608.80 divided into 725,248,727 shares. With the restructuring, indebtedness decreased from R$291.4 million to R$66.6 million, with new investments amounting to R$235.5 million, completely changing the Company‘s outlook. The Company went from net debt of R$290.4 million into a net cash of R$37.2 million. 146
  • 152. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 16.1 – Description on the Company’s rules, policies and practices regarding transactions with related parties 16.1. Description of the Company’s rules, policies and practices regarding transactions with related parties, as established by the accounting regulations governing this matter Transactions between parent companies and the Company‘s Management, and between the Company and subsidiaries and affiliated companies correspond generally accepted market amounts and terms and under mutual conditions. Brasil Ecodiesel S.A. does not have a formally written policy given that it complies with the legislation in effect and understands that the Brazilian legal framework encompasses the question of related parties, including by means of Law 6,404/76, especially in section IV , which establishes Management duties and obligations. 147
  • 153. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A16.2 – Information on transactions with related partiesRelated party Transaction date Amount (R$) Existing amount Amount (R$) Duration Loan or other Interest type of debt rateEnguia Gen PI Ltda, Enguia Gen BA Ltda e 12/19/2005 40,920,000.00 0.00 N/A Terminated on NO 0.000000Enguia Gen CE Ltda 04/24/2009Relationship with the issuer Common management 3Purpose of the agreement Brasil Ecodiese‘s available production capacity of up to 40,000 m of biodiesel per year, except input processing services provided by the contracted parties to produce biodiesel..Guarantees and insurance Not applicableTermination On April 2, 2009, Enguias agreed to terminate the Private Instrument to Produce Biodiesel, Technical Cooperation Agreement, Commitment to Production Services for Third Parties and Other Agreements, no longer requiring the Brasil Ecodiesel‘s production and/or questioning the services contracted earlier, thus recognizing a total of R$900,000.00 to be paid in up to sixty (60) days of the signature of the document, adjusted according to the CDI to payment date.Nature and purpose of the transactionBuriti Agrícola Ltda. 07/18/2003 0.00 R$6,743.48 N/A 12/31/2010 NO 0.000000Relationship with the issuer SubsidiaryPurpose of the agreement Advance for future capital increaseGuarantees and Insurance Not applicableTermination Not applicableNature and purpose of the transactionBora-Bora Agro-industrial Ltda 09/01/2003 0.00 R$0,00 Not applicable 12/31/2010 NO 0.000000Relationship with the issuer SubsidiaryPurpose of the agreement Advance for future capital increaseGuarantees and Insurance Not applicableTermination Not applicableNature and purpose of the transactionCapão da Canoa Agro-industrial Ltda 09/01/2003 0.00 R$145,205.18 Not applicable 12/31/2010 NO 0.000000Relationship with the issuer SubsidiaryPurpose of the agreement Advance for future capital increaseGuaranties and Insurance Not applicableTermination Not applicableNature and purpose of the transaction 148
  • 154. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/ACrateús Algodoeira S.A. 02/16/1962 0.00 R$3,413,203.87 Not applicable 12/31/2010 NO 0.000000Relationship with the issuer SubsidiaryPurpose of the agreement Advance for future capital increaseGuarantees and Insurance Not applicableTermination Not applicableNature and purpose of the transactionErebango Agro-industrial Ltda 09/01/2003 0.00 R$800,340.05 Not applicable 12/31/2010 NO 0.,000000Relationship with the issuer SubsidiaryPurpose of the agreement Advance for future capital increaseGuarantees and Insurance Not applicableTermination Not applicableNature and purpose of the transactionEcotrans Transp. Serv. E Loc. de Equip. e 07/28/2003 0.00 R$311,505.58 Not applicable 12/31/2010 NO 0.000000Máquinas LtdaRelationship with the issuer SubsidiaryPurpose of the agreement Advance for future capital increaseGuarantees and Insurance Not applicableTermination Not applicableNature and purpose of the transactionGustavia Agro-industrial Ltda 09/01/2003 0.00 R$500,593.49 Not applicable 12/31/2010 NO 0.000000Relationship with the issuer SubsidiaryPurpose of the agreement Advance for future capital increaseGuarantees and Insurance Not applicableTermination Not applicableNature and purpose of the transactionMocuri Agrícola Ltda 07/18/2003 0.00 R$170,706.38 Not applicable 12/31/2010 NO 0.000000Relationship with the issuer SubsidiaryPurpose of the agreement Advance for future capital increaseGuarantees and Insurance Not applicableTermination Not applicableNature and purpose of the transactionMontana Agro-industrial Ltda 09/01/2003 0.00 R$116,743.85 Not applicable 12/31/2010 NO 0.000000Relationship with the issuer SubsidiaryPurpose of the agreement Advance for future capital increaseGuarantees and Insurance Not applicableTermination Not applicableNature and purpose of the transaction 149
  • 155. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/APiatã Agrícola Ltda 07/18/2009 0.00 R$22,749.55 Not applicable 12/31/2010 NO 0.000000Relationship with the issuer SubsidiaryPurpose of the agreement Advance for future capital increaseGuarantees and Insurance Not applicableTermination Not applicableNature and purpose of the transactionRede de Compras Intermediação de 09/01/2003 0.00 R$3,144.83 Not applicable 12/31/2010 NO 0.000000Negócios, Comércio de Produtos e InsumosAgrícolas LtdaRelationship with the issuer SubsidiaryPurpose of the agreement Advance for future capital increaseGuarantees and Insurance Not applicableTermination Not applicableNature and purpose of the transaction 150
  • 156. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A16.3 – Identification of the measures taken to deal with conflicts of interestand to show the strictly mutual nature of the conditions agreed upon orthe appropriate compensating payment16.3 Concerning each transaction or group of transactions mentioned in theforegoing item for the last fiscal year:a) identify the measures taken to deal with conflict of interestsDecisions to engage in transactions with the Company‘s related parties are submittedto analysis by Management bodies according to the authority granted in the Company‘sBylaws.In case of conflict of interest between the matters being analyzed and any member ofour decision-making body, the member must abstain from voting, and the vote must betaken by other members who do not have any relation to the matter being analyzed.b) show the strictly mutual nature of the conditions agreed upon or appropriate compensating paymentShould we enter into transactions and businesses with ourrelated parties, we have policies that drive us to follow market standards and supportthose transactions and businesses with a prior analysis of the conditions of thetransaction and the of the Company‘s interests. 151
  • 157. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 17.1 – Information on Capital Stock Number of Number of Date of authorization Total number of shares Amount of capital (R$) Term of integralization common shares preferred shares or approval (Units) (Units) (Units) Type of capital Authorized capital 08/27/2009 808,213,608.80 725,248,727 0 725,248,727 152
  • 158. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 17.2 – Capital increases Body thatResolution voted on Total issue amount Type of Subscription /date the increase Date of issue (R$) increase Common (Units) Preferred Total shares (Units) previous capital Price of issue Listing Price Board of Private29/04/2009 Directors 08/25/2009 104,000,000.00 subscription 148,571,429 0 148,571,429 117.62000000 0.70 R$ per unit Average weighted by volume of the Company‘s shares traded in the last 15 trade floors prior to March 26, 2009, date in which the Company‘s creditors Nelson José Cortes da Silveira and Spet Participações Ltda presented a proposal to translate their credits into shares issued by the Company, with a negative goodwillCriteria for determining of 13.2%, pursuant to article 17, paragraph first, item III, of Law 6404/76, as amended, for the private subscription and payment in current domestic currency and/orthe issue price credits held against the Company. Type of integralization current domestic currency and credits held against the Company Board of Private25/06/2009 Directors 08/27/2009 315,256,859.90 subscription 450,366,557 0 450,366,557 163.84000000 0.70 R$ per unit Average weighted by volume of the Company‘s shares traded in the last 15 trade floors prior to June 25, 20069, date in which the Company‘s creditors presented a proposal to translate their credits into shares issued by the Company, with a negative goodwill of 21.3%, pursuant to article 170, paragraph first,Criteria for determining item III, of Law 6.404/76, as amended (Brazilian Corporate Law), for the private subscription and payment in current domestic currency and/or credits held againstthe issue price the Company. Type of integralization current currency and credits held against the Company 153
  • 159. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 17.3—Information on splits, reverse splits and stock bonus Justification for not filling out the chart: There were no splits, reverse splits or bonuses. 154
  • 160. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 17.4 – Information on capital decrease Justification for not filling out the chart: Regarding the Company‘s capital reductions, there were no resolutions on the capital stock reduction in the last three years. 155
  • 161. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 17.5 – Other material information 17.5. Other information the Company deems relevant We understand that there is no other relevant information regarding the breakdown of our capital stock. 156
  • 162. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 18.1 – Share rightsType of share or CDA CommonTag along 100.000000Entitled to dividends 25% of net profitEntitled to vote FullConvertibility NoEntitled to capital reimbursement NoTrading restriction NoConditions to change the rights inherent said securities Not applicable Not applicableOther relevant characteristics 157
  • 163. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 18.2 – Description of eventual statutory rules that limit the voting rights of major shareholders or that may oblige them to hold an IPO 18.2 – Description of eventual statutory rules that limit the voting rights of major shareholders or that may oblige them to hold an IPO Brasil Ecodiesel Bylaws defines, in article 39: ―Article 39 - Any Buyer Shareholder that acquires or becomes holder of shares issued by the Company in a quantity equal or superior to 30% (thirty percent) of the total shares issued by the Company shall, within no more than 60 (sixty) days counted from the date of acquisition or the event that resulted in the ownership of shares in a quantity equal or superior to 30% (thirty percent) of the total shares issued by the Company, hold a public offer of acquisition of the whole quantity of shares issued by the Company, in conformity with the provisions set forth in the applicable regulation of CVM, including the need or no need of registration of such public offer, the regulations of BOVESPA and the terms of this Article, where the Buyer Shareholder is obliged to fulfill the occasional requests or requirements of CVM based upon the applicable legislation, related to the public offer of acquisition, within the maximum time limits established in the applicable regulation. First Paragraph - The public offer of acquisition shall be (i) directed indiscriminately to all shareholder of the Company; (ii) held in a bid at BOVESPA; (iii) posted at the price determined in accordance with the provisions of the Second Paragraph of this Article; and (iv) for cash payment in national currency for the acquisition of shares issued by the Company in the public offer. Second Paragraph - The price of acquisition of each share issued by the Company in the public offer may not be inferior to the highest amount of either (i) the Economic Value determined in an evaluation report referred to in Article 42 below; or (ii) 130% (one hundred and thirty percent) of the highest price of issuance of shares in any increase of capital occurred by a public distribution within the period of 12 (twelve) months that precedes the date on which the holding of the public offer of acquisition shalI become mandatory under the terms of this Article, duly updated by IGP-M until the moment of payment; or (iii) 130% (one hundred and thirty percent) of the average unit quotation of the shares issued by the Company during a period of 90 (ninety) days before the public offer of acquisition. Third Paragraph - The event of public offer of acquisition mentioned in the caption of this Article shall not exclude the possibility that another shareholder of the Company, or if applicable, the Company itself, may hold another public offer of acquisition under the terms of the applicable regulation. Fourth Paragraph - If the Buyer Shareholder does not comply with any of the obligations imposed by this Article, the Board of Directors of 158
  • 164. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A the Company shall call an Extraordinary Shareholders Meeting, in which the Buyer Shareholder may not vote, with the purpose of deliberating on the suspension of the exercise of the rights of the Buyer Shareholder that did not comply with any of the obligations imposed by this Article, in accordance with the provisions of Article 120 of Law 6404/76, without prejudice to the liability of the Buyer Shareholder for losses caused to the other shareholders resulting from the non-compliance with the obligations imposed by this Article. Fifth Paragraph - The Buyer Shareholder that acquires or becomes holder of other rights related to the shares issued by the Company, including, but without limitation, usufruct or trust, in a quantity equal or superior to 30% (thirty percent) of the total shares issued by the Company shall be equally obliged to hold a public offer of acquisition, either registered or not at CVM, in accordance with the applicable legislation, under the terms of this Article, within no more than 60 (sixty) days. Sixth Paragraph - The provision set forth in this Article shall not be applied in case when a person becomes owner of shares issued by the Company in a quantity superior to 30% (thirty percent) of the total shares issued by it resulting from (i) legal succession, with the condition that the shareholder alienates the exceeding shares within no more than 60 (sixty) days counted from the event in which such participation was reached; (ii) incorporation of another company by the Company; (iii) incorporation of shares of another company by the Company; or (iv) subscription of shares of the Company by a sole primary issuance that has been approved in the Shareholders Meeting of the Company. Seventh Paragraph - The provision set forth in this Article shall not be applied to the Buyer Shareholders that on the date of closure of the first public offer of shares of the Company are holders of a quantity superior to 30% (thirty percent) of the total shares issued by the Company and that acquire new shares of the Company, either through the exercise of the right of preference or not, provided that after these new acquisitions, this Buyer Shareholder does not hold an interest in the total capital of the Company superior to the interest held by it on the date of closure of the first public offer of shares of the Company. Eighth Paragraph - The involuntary additions of corporate interest resulting from the cancellation of shares in treasury or from the reduction of the capital stock of the Company due to the cancellation of shares shall not be counted for the purpose of calculation of the percentage of 30% (thirty percent) of the total shares. Ninth Paragraph – If the regulation of CVM applicable to the public offer of acquisition defined in this Article determines the adoption of a criterion of calculation for the establishment of the price of acquisition of each share of the Company in the public offer of acquisition that results in a price of acquisition superior to the one determined under the terms of the Second Paragraph of this Article, the price of acquisition calculated under the terms of regulation of CVM shall prevail in the public offer of acquisition. Tenth Paragraph - Any amendment to these By- laws that limits the 159
  • 165. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A right of the shareholders regarding the public offer of acquisition defined in this Article or the exclusion of this Article shall oblige the shareholder(s) that voted in favor of such amendment or exclusion in the deliberation of the Shareholders Meeting to hold a public offer of acquisition jointly and solidarily. The price to be offered shall correspond at least to the Economic Value determined in the report of evaluation referred to in Article 42 of these By laws. 160
  • 166. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 18.3 Description of exceptions and restrictive clauses relative to equity or political rights foreseen in the bylaws There are no exceptions or suspensive clause towards equity or political rights provided for in the Company‘s Bylaws. 161
  • 167. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A18.4 – Trading volume and highest and lowest listing price of tradedsecuritiesFiscalYear 12/31/2009 Financial Highest Lowest volume quotation quotation (R$)Quarter Security Type Class Market Managing entity traded (R$) (Reais) Quotation factor12/31/2009 Shares Common Stock BM&FBOVESPA 3,506,748,625 1.22 0,82 R$ Exchange S.A. - Securities, per unit Commodities, and Futures Exchange09/30/2009 Shares Common Stock BM&FBOVESPA 954,851,835 0.89 0.71 Exchange S.A. - Securities, R$ per unit Commodities, and Futures Exchange06/30/2009 Shares Common Stock BM&FBOVESPA 379,152,740 1.15 0.72 R$ Exchange S.A. - Securities, per unit Commodities, and Futures Exchange03/31/2009 Shares Common Stock BM&FBOVESPA 79,602,105 1.00 0.63 R$ Exchange S.A. - Securities, per unit Commodities, and Futures ExchangeFiscalYear 12/31/2008 Financial Highest Lowest volume quotation cotation (R$)Quarter Security Type Class Market Managing entity traded (R$) (Reais) Quotation factor12/31/2008 Shares Common Stock BM&FBOVESPA 40,376,812 1.37 0.59 R$ exchange S.A. - Securities, per unit Commodities, and Futures Exchange09/30/2008 Shares Common Stock BM&FBOVESPA 204,981,522 4.06 1.37 R$ exchange S.A. - Securities, per unit Commodities, and Futures Exchange06/30/2008 Shares Common Stock BM&FBOVESPA 544,544,659 6.50 4.01 R$ Exchange S.A. - Securities, per unit Commodities, and Futures Exchange03/31/2008 Shares Common Stock BM&FBOVESPA 175,771,261 6.95 3.84 R$ Exchange S.A. - Securities, per unit Commodities, and Futures ExchangeFiscalYear 12/31/2007 Financial Highest Lowest volume quotation cotation (R$)Quarter Security Type Class Market Managing entity traded (R$) (Reais) Quotation factor12/31/2007 Shares Common Stock BM&FBOVESPA 118,314,304 11.98 6.08 R$ Exchange S.A. - Securities, per unit Commodities, and Futures Exchange09/30/2007 Shares Common Stock BM&FBOVESPA 147,746,965 15.00 10.00 R$ Exchange S.A. - Securities, per unit Commodities, and Futures Exchange06/30/2007 Shares Common Stock BM&FBOVESPA 186,923,368 13.78 8.97 R$ Exchange S.A. - Securities, per unit Commodities, and Futures Exchange03/31/2007 Shares Common Stock BM&FBOVESPA 118,874,263 12.59 8.80 R$ Exchange S.A. - Securities, per unit Commodities, and Futures Exchange 162
  • 168. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 18.5 – Details on other securities issued Justification for not filling out the chart: There are no outstanding securities issued by the Company. 163
  • 169. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 18.6 – Brazilian markets that allow securities to be traded 18.6 – Brazilian markets that allow the issuer’s securities to be traded Brasil Ecodiesel common shares are listed in the Novo Mercado and traded at the markets managed by BM&FBOVESPA. 164
  • 170. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 18.7 – Information on the class and type of security tradable in foreign markets 18.7 – Information on the class and type of security tradable in foreign markets a) Country: United States b) Market: Rule 144a and Regulation S c) Entity managing the market: SEC d) Date of issue: 11/22/2006 e) Trading segment: Not applicable f) Date of beginning of listing: Not applicable g) Percentage traded abroad/total trading 0% volume ratio: h) deposit certificates abroad/class of 0% share ratio: i) Depositary bank: Itaú Unibanco S/A j) Custodian bank: The Bank of New York 165
  • 171. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 18.8 – IPOs held by the company or by third parties, including parent companies and associated companies and subsidiaries, corresponding to the issuer’s securities 18.8. IPOs held by the company or by third parties, including parent companies and associated companies and subsidiaries, corresponding to the issuer’s securities The Company or other third parties did not hold IPOs for securities issued by it. 166
  • 172. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 18.9 – Description of IPOs held by the Company relative to shares issued by third parties 18.9. Description of IPOs held by the Company relative to shares issued by third parties: There were no public share offers held by the Company relative to shares issued by third parties: 167
  • 173. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 18.10 – Other material information 18.10. Other material information: There is no other information deemed relevant. 168
  • 174. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 19.1 - Information on issuers share buyback plans Justification for not filling out the chart: The Company does not have a buyback plan or treasury securities. 169
  • 175. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 19.2 – Breakdown of securities held in treasury Justification for not filling out the chart: The Company does not have a buyback plan or treasury securities. 170
  • 176. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A19.3 - Information on securities held in treasury on the closure date of thelast fiscal yearJustification for not filling out the chart:The Company does not have a buyback plan or treasury securities. 171
  • 177. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A20.1 – Information on the policy for trading securities Approval Position Date of approval 4/27/2010 Position and/or function Board of Directors Fiscal Council Board of Executive Officers Internal Audit Investor Relations and Legal Departments Financial Department Main features The executive officers, the members of the Board of Directors and the Fiscal Council, and the participants of any corporate bodies with technical or advising duties, created or to be created according to the provisions of the Bylaws, are obligated to notify the Company, the CVM (through the Investor relations officer as required by the CVM) and the stock exchanges of the amounts, characteristics (common and/or preferred, in the case of shares) and the means of acquisition of such securities issued by the Company, publicly-held subsidiaries and publicly- held parent companies, or related and owned thereby, as well as the changes to their shareholding position. This notice should comply with Exhibit II or any other form required by the CVM or by the stock exchanges. If any executive officer, member of the Board of Directors or of the Fiscal Council, or members of any corporate body with technical or advising duties has taken office prior to the date this instrument took effect, this person must immediately inform the CVM (through the Investor relations officer as required by the CVM) and the stock exchanges, pursuant to Exhibit III (or any form required by the CVM or by the stock exchanges), of the amounts, characteristics (common and/or preferred, in the case of shares) and the means of acquisition of such securities issued by the Company and its subsidiaries. The Company, direct or indirect controlling shareholders, executive officers, members of the Board of Directors, the Fiscal Council or any bodies with technical or advising duties that are created or that come to be created according to the Bylaws, and persons who, by virtue of their positions at the Company, its parent companies, subsidiaries or affiliated companies, are aware of information regarding material acts or facts are forbidden from trading securities issued by the Company or related companies:(i) before the disclosure of material act or fact to the market regarding theCompany‘s business; (ii) whenever an acquisition, total or partial merger, spin-off, transformation 172
  • 178. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A or corporate reorganization is planned; (iii) fifteen (15) days prior to the disclosure of the Company‘s quarterly (ITR) and annual (DFP and IAN) statements.<0} The aforementioned prohibitions apply to trading pursued, either directly or indirectly, by the aforesaid people, even if such are pursued by means of their subsidiaries or third parties to which the Company has entered into fiduciary agreements or agreements to manage security portfolios. Trading through investment funds whose quotaholders include the persons to which the foregoing item refers are not considered indirect trades since the investment funds are not exclusive and the trading decisions of the investment fund manager is not influenced by quotaholders. The prohibition also holds for those who are aware of the information relative to the material act or fact when the information has not yet been disclosed, especially those who maintain a commercial, professional or a privileged relationship with the Company, such as independent auditors, securities analysts, consultants and institutions related to the distribution system, who must check the disclosure of information prior to trading securities issued by the Company or by companies related thereto. The prohibition also applies to managers and executives who resign from the Company before the public announcement of any matter or fact whose working commenced during their management; this prohibition shall remain in place for six months after said resignation.Prohibition periods and Save for the prohibition for fifteen (15) days prior to thedescription of control disclosure of the Company‘s quarterly and annual statements,procedures the other aforementioned prohibitions are no longer effective as soon as the Company discloses the material act or fact to the market, except if the trading interferes in the conditions of the aforementioned business, to the detriment of the Company‘s shareholders or the Company itself; 20.2 – Other material information 20.2. Provide other information the Company deems relevant There is no other information deemed relevant. 173
  • 179. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 21.1 – Description of norms, rules or internal procedures relative to information disclosure 21.1. Norms, rules and internal procedures adopted by the Company to guarantee that the information publicly disclosed is collected, processed and reported in a precise and timely manner. The investor relations officer takes part in the Company‘s decisions given that s/he is an executive officer. As such, and with access to information, it is his/her duty is to disclose such information to the market, 174
  • 180. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 21.2 Description of the disclosure policy for any material act or fact and the procedures regarding confidentiality of yet undisclosed significant information 21.2. Company’s disclosure policy for material acts or facts Main objectives of the disclosure policy for material acts or facts This policy adopted by the Company for the disclosure of a material act or fact seeks to guarantee objectives regarding scope, quality, transparency, efficacy and equal shareholder treatment when disclosing material acts or facts relative to the securities issued by the Company. Additionally, this information disclosure policy aims at maintaining the trust of the investors, employees and stakeholders regarding the veracity and existence of information concerning the Company‘s activities and socio-economic situation at any given moment. This policy also governs disclosure of material information to analysts, to the press and to the Company‘s employees. Responsibility for disclosing material acts or facts The investor relations officer is responsible for disclosing and notifying the Brazilian Securities and Exchange Commission (CVM) and the stock exchanges of any material act or fact related to the Company‘s businesses, pursuant to article 2 of CVM Instruction 358/02; s/he is also responsible for the immediate disclosure of information simultaneously in all domestic and foreign markets where the securities issued by the Company are traded. The executive officers, members of the Board of Directors, members of the Fiscal Council and members of any other body with technical or advising duties created according to Company‘s Bylaws should immediately notify any material act or fact of which they are aware to the investor relations officer, who will then decide whether it is necessary to disclose the information to the market and the extent of the details to be disclosed. If the investor relations officer fails to disclose all necessary information regarding the material act or fact to the market, the aforementioned people aware of the information must immediately notice the CVM. If the CVM or the stock exchanges require additional information on the material act or fact disclosed, or in case of unusual variation in the listing, price or trading amount of the Company or related companies‘ securities, the investor relations officer should question the people who have access to said material acts or facts in order to check whether they are aware of additional information that should be 175
  • 181. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A disclosed to the market. Obligation to maintain confidentiality Controlling shareholders, executive officers, members of the Board of Directors, the Fiscal Council or any other body with technical or advising duties, created or to be created according to the Bylaws, and the Company‘s employees must maintain the confidentiality of information relating to material act or fact to which they have had privileged access due to their positions until the information is disclosed to the market, and they must see that their employees and third parties also maintain said confidentiality. Media for the disclosure of a material act or fact Any material act or fact must be disclosed clearly and accurately in language accessible to the average investor. If securities issued by the Company are traded abroad, disclosure must be in both Portuguese and English. If the securities issued by the Company come to be traded abroad, the investor relations officer must simultaneously disclose the information in all domestic and foreign markets where the securities are traded. The media for the disclose of material acts or facts may include the press, trade association meetings, investors, analysts or a select public, both in Brazil or abroad. As is Company custom, information is also disclosed in a summarized manner in newspapers with high readership, and it includes links to websites where the complete information is available to all investors, with the content identical to that sent to the CVM and the stock exchanges. Information disclosed on the internet is also be constantly updated. Whenever possible, material acts or facts are disclosed before stock exchanges open or after they close for the day. If the securities issued by the Company are simultaneously traded in different countries, whenever possible disclosure occurs before stock exchanges open or after they close for the day in both countries and, if the times are not compatible, disclosure times should be established according to the Brazilian market operating hours. If the disclosure of a material act or fact must occur during trading hours, the investor relations officer can request, upon disclosing the material act or fact, which must occur simultaneously in all domestic and foreign stock exchanges that trade the Company‘s or related companies‘ securities be suspended for the time necessary to disclose the significant information. The suspension will not be valid in Brazil as long as trading of said securities is not suspended in the stock exchanges or over-the-counter markets of any another country in which the securities issued by the Company are traded. 176
  • 182. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Information will not be disclosed to a restricted group of people, but to the market in general. If a material act or fact is accidentally disclosed to a person or to a specific group of people, the Company‘s investor relations officer will immediately disclose the matter, with the same content. Principles and guidelines One of the Company‘s policies is not to disclose comments on expected results. However, in meetings with analysts, the investor relations officer will provide information deemed as relevant to properly evaluate the Company‘s securities, and, therefore, s/he may comment on Company strategies and outlooks. Any disclosed information regarding to any type of projection will (i) state that the information should be carefully analyzed by market participants given that the information has not yet been confirmed and is merely based on the Management‘s projections, and (ii) identify the facts deemed important and that would lead to profits or losses other than those expected by the Company‘s Management. The Company should correct or update the disclosed estimates whenever there are changes to earlier estimates that may materially affect the conclusions disclosed earlier. If estimates are not confirmed, the Company will report the reasons for the differences expressed in the statements. If the Company‘s Management notices that the material act or fact, including any forecast, previously disclosed was or has become significantly incorrect, the investor relations officer will immediately disclose the correct information as soon as the error is identified, also correcting the information sent to the CVM. Regarding profit and loss forecasts and reports prepared by investment analysts, the Company‘s Management will only comment on those facts and premises in accordance with the models considered by those analysts. The Company will not comment on conclusions presented by analysts in their reports. The Company will not disclose any report prepared by investment analysts to any interested party. The Company will not comment on its result statements from the moment the final information is made known until such is completely disclosed to the market. Adverse information concerning the Company will be disclosed in the same manner and at the same speed as favorable information. Exception to the immediate disclosure of a material act or fact 177
  • 183. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A The Company may exceptionally not disclose a material act or fact if the controlling shareholders or the Management understand that disclosure will jeopardize the Company‘s legitimate interest, thus adopting the procedure found in article 7 of CVM Rule 358/02. Controlling shareholders and the Management are, however, obligated to immediately disclose the material act or fact, either directly or through the investor relations officer, if the information is leaked or in the event of unusual variation of the listing, price or trading amount of the Company or related companies‘ securities. Disclosure of quarter and annual results Information will always be disclosed after trading on all stock exchanges trading the Company‘s securities has ended for the day. The results will also be available on the Company‘s website and sent to analysts and investors registered with the Company. During this period, the Company will hold press conferences to explain the quarterly statements. Conference calls Conference calls will be held on the day following the disclosure of results. In addition, other conference calls may be held as necessary, at the discretion of the investor relations officer. At conference calls, the Company and the analysts may discuss announcements to the market through press releases. Conference calls are specially aimed at qualified investors and market analysts who can actively take part in those calls. However, to allow equal access to any person interested in the information discussed in conference calls, the Company will publish, in the newspaper commonly used by the Company, a toll free number or an internet website where the public not formally invited to take part in the discussion with the Management can access the information. Moreover, to guarantee the disclosure of the topics discussed during conference calls, content of the conference calls will be further made available on the Company‘s website. Conference calls are always led by the investor relations officer, and other executive officers are present. Meetings with investment analysts The Company will hold annual presentations after the disclosure of annual statements at APIMEC regional meetings (Brazilian Association of Capital 178
  • 184. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A Market Analysts and Investment Professionals). After disclosing the results for the second quarter, a new presentation will be given at regional meetings in Rio de Janeiro, São Paulo and one of the locations where the Company usually operates. Meetings with a single analyst or with a group of analysts will be held whenever required. In such case, the investor relations officer will only comment on information already disclosed to the public. Road Show The Company will meet its main current or potential investors in biannual visits or conference calls organized by market institutions. Service to Investors Investors and analysts will always be served by the investor relations officer and/or representatives of the Investor Relations Department, who may be aided by other executive officers at the discretion of the investor relations officer. Information already disclosed to the market and requested in meetings or presentations to investors or investment analysts, but not available at the moment, will be subsequently sent to those individuals. Answers to Rumors The Company‘s policy is not to comment on rumors or speculations raised in the market, except in extreme situations that result in or may result in the significant volatility of securities issued by the Company or related companies. Relationship with Strategic Partners Whenever necessary, yet undisclosed significant information with strategic partners will be exchanged by means of a confidentiality agreement. If any of the information is inadvertently disclosed to third parties by any par ty to the confidentiality agreement, the investor relations officer will immediately and fully disclose the information to the market. Information Shared Between the Investor Relations Department and the other Management Areas of the Company The other Company managers of the always provide the investor relations officer with strategic, operating, technical or financial information, who then decides whether it is necessary or not to disclose the matter to the public and the level of details to be provided with the disclosure. 179
  • 185. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 21.3 Executives responsible for the implementation, maintenance, assessment and control of the information-disclosure policy 21.2. Executives responsible for the implementation, maintenance, assessment and control of the information-disclosure policy The person responsible for the implementation, maintenance, assessment and control of the information-disclosure policy is the Investor Relations Officer. 180
  • 186. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 21.4 – Other material information 21.4. Provide other information the Company deems relevant All relevant information regarding this topic was described in foregoing items. 181
  • 187. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 22.1 – Acquisition or sale of any material asset that is not considered a normal operation pursuant to the Company’s business operations 22.1. 22.1 – Show the acquisition or sale of any material asset not considered a normal operation pursuant to the Company’s business operations There were no operations for the acquisition or sale of any material asset not considered a normal operation pursuant to Brasil Ecodiesel‘s business operations. 182
  • 188. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 22.2 Material changes in the Company’s operations 22.2. State the material changes in the Company’s operations There were no material changes in Brazil Ecodiesel‘s operations. 183
  • 189. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A 22.3 Material contracts signed by the Company and its subsidiaries not directly related to their business activities 22.3. Identify the material contracts signed by the Company and its subsidiaries that are not directly related to their business activities: There were no material contracts signed by the Company and its subsidiaries that were not directly related to their business activities. 184
  • 190. 2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A22.4 – Other significant information 22.4. Other significant informationNot applicable 185