2010 reference form

2010 REFERENCE FORM - BRASIL ECODIESEL IND. E COM. DE BIOCOMB. E ÓLEOS VEGETAIS S/A

Index

1. Persons responsible for the form
1.1 – Statement and identification of persons responsible 1

2. Independent auditors
2.1/2.2 – Auditor information and compensation 2

2.3 – Other material information 3
3. Selected financial information
3
3.1 – Financial information

3.2 – Non-accounting measurement 3
3.3 – Subsequent events to the last financial statements 6
3.4 – Policy for the allocation of net income 7
3.5 – Dividend distribution and net income retention 8
3.6 – Statement of dividends on retained income or reserves 9
3.7 - Indebtedness
9
3.8 – Obligations pursuant to nature and maturity 9
4. Risk factors
4.1 – Description of risk factors 10

4.2 – Comments on the expectations for the amendment of risk factor exposure 16
4.3 – Non-confidential and material lawsuits, administrative or arbitration proceedings 19
4.4 - Non-confidential lawsuits, administrative or arbitration proceedings whose opposing parties are managers,
former managers, controllers, former controllers or investors 24

4.5 – Material confidential proceedings 24
4.6 – Repetitive or connected, non-confidential and material lawsuits, administrative or arbitration proceedings 25
4.7 – Other material contingencies 26
4.8 – Rules from the origin country of securities and from the country the securities are under custody 27
5. Market risk
5.1 – Description of the main market risks 28

5.2 – Description of market risk management policy 29
5.3 – Material changes on the main market risks 30
6. Company history
6.1/ 6.2/ 6.4 – Incorporation of the issuer, duration and date of registration with CVM 32

6.3 - History 33
6.5 – Main corporate events of the company, subsidiaries or affiliated companies 34
6.6 - Information on bankruptcy petition based on relevant amount or court-supervised reorganization or out-of-
court reorganization 36

7. Company’s activities
38
7.1 – Description of the activities of the company and its subsidiaries

1


7.2 – Information on the operating segments 39
7.3 – Information on products and services related to the operating segments 40
7.4 – Clients responsible for more than 10% of total net income 41
7.5 – Material effects of the state regulation on the company‘s activities 41
7.6 – Material income arising from foreign activities 45
7.7 – Effect of foreign regulation on the company‘s activities 46
7.8 – Material long-term relations 47
8. Economic group
8.1 – Description of economic group 51

8.2 – Economic group‘s organization chart 52
8.3 – Corporate restructuring transactions 52
9. Material assets
9.1 – Material, non-current assets – other 53

9.1 – Material non-current assets/ 9.1.a – Fixed assets 53
9.1 - Material non-current assets/ 9.1.b – Patents, trademarks and brands, licenses, concessions, franchises and
agreements for transfer of technology 53

9.1 - Material non-current assets/ 9.1.c – Interest in other companies 54
10. Executive Officers’ Comments
10.1 – General financial and equity conditions 62

10.2 – Operating and financial income 77
10.3 - Events with material, incurred and expected effects in the financial statements 81
10.4 – Material changes on the accounting practices – Qualified opinions and emphasis in the auditor‘s report 82
10.5 – Critical accounting policies 83
10.6 – Internal controls relating to the preparation of financial statements – Efficiency and deficiency level and
recommendations in the auditor‘s report 85

10.7 – Allocation of funds from IPOs and distribution and eventual deviations 87
10.8 – Material items not presented in the financial statements 87
10.9 – Comments on material items not presented in the financial statements 89
10.10 – Business plan 90
10.11 – Other material factors 93
11. Outlooks
11.1 – Disclosed outlooks and assumptions 94

11.2 – Monitoring and amendment on the disclosed outlooks 94
12. General meeting and management
12.1 – Description of the administrative structure 94

12.2 – Rules, policies and practices related to the general meetings 98
12.3 – Dates and newspapers for publishing the information required by Law 6,404/76 99


12.4 – Rules, policies and practices of the Board of Directors 99
12.5 – Description of the arbitration clause to resolve conflicts by means of arbitration 100
12.6/8 - Composition and professional experience of the management and fiscal council 101
12.7 – Composition of the statutory committees, as well as audit, financial and compensation committees 117
12.9 – Marital relation, stable union or relatives up to second degree related to executives at the issuer,
subsidiaries and parent company 118

12.10 – Subordinate, service-provision or stakeholder relationship between executives and subsidiaries, parent
companies and others 118

12.11 - Agreements, including insurance policies, for the payment or reimbursement of Management‘s expenses 118
13. Management compensation
13.1 – Description of the compensation policy or practice, including non-statutory board of executive officers 119

13.2 – Overall compensation to the Board of Directors, Executive Board and Fiscal Council 121
13.3 – Variable compensation to the Board of Directors, Statutory Executive Board and Fiscal Council 122
13.4 – Compensation plan based on actions of the Board of Directors, Statutory Executive Board and Fiscal
Council 122

13.5 - Interest in shares, quotas and other securities convertible into shares or quotas, held by the Management
and Fiscal Council members – by body 123

13.6 – Share-based compensation plan of the Board of Directors and Statutory Executive Board 124
13.7 – Information on outstanding shares held by the Board of Directors and Statutory Executive Board 125
13.8 – Options exercised and shares delivered corresponding to the share-based compensation plan of the Board
of Directors and the Statutory Executive Board: 126

13.9 – Necessary information to understand data disclosed in items 13.6 to 13.8 – Method used for share and
option pricing 127

13.10 – Information on pension plans granted to Board members and statutory executive officers 128
13.11 – Maximum, minimum and average individual compensation to the Board of Directors, Executive Board and
Fiscal Council 129

13.12 – Compensation or indemnification mechanisms for the Management when removed from office or retired. 130
13.13 – Percentage of total compensation held by the Management and members of the Fiscal Council, who are
related parties to controlling shareholders 131

13.14 – Management and Fiscal Council compensation received not related to their duties, by body 132
13.15 – Compensation of the Management and members of the Fiscal Council recognized in the statements of
income of direct or indirect controlling shareholders, companies under common control and subsidiaries 133

13.16 - Other material information 134
14. Human resources
14.1 – Description of human resources 135

14.2 – Material changes – Human resources 137
14.3 – Description of employees‘ compensation policy 138
14.4 – Description of the relationship between the company and the unions 140
15. Control
15.1/15.2 - Shareholder position 141


15.3 – Capital distribution 142
15.5 – Shareholders‘ agreement filed in the company‘s headquarters or which the controlling shareholder is part of 143
15.6 – Material changes to the interest of other members of the control group and issuer‘s management 144
16. Transactions with related parties
16.1 – Description of the issuer‘s rules, policies and practices regarding the transaction with related parties 148

16.2 – Information on transactions with related parties 149
16.3 – Identification of the measures taken to deal with conflicts of interest and to show the strictly commutative
feature of the conditions agreed upon or the appropriate compensation payment 152

17. Capital stock
17.1 – Information on Capital Stock 153

17.2 – Capital increases 154
17.3—Information on splits, reverse splits and stock bonus 155
17.4 – Information on capital decrease 156
18. Securities
18.1 – Share rights 158

18.2 – Description of eventual statutory rules that limit the voting rights of major shareholders or that may oblige
them to hold an IPO 159

18.3 – Description of exceptions and restrictive clauses relative to equity or political rights set forth in the bylaws 162
18.4 – Trading volume and highest and lowest listing price of traded securities 163
18.5 – Details on other securities issued 164
18.6 – Brazilian markets that allow securities to be traded 165
18.7 – Information on the class and type of security tradable in foreign markets 166
18.8 – IPOs held by the issuer or by third parties, including controlling shareholders and subsidiaries and affiliated
167
companies, relative to the Company‘s securities
18.9 – Description of IPOs held by the issuer relative to shares issued by third parties 168
19. Buybacks and Treasury Stock
19.1 - Information on issuer's share buyback plans 170

19.2 – Breakdown of securities held in treasury 171
19.3 - Information on securities held in treasury on the closure date of the last fiscal year 172
20. Trading policy
173
20.1 – Information on the policy for trading securities
20.2 - Other material information 174
21. Information disclosure policy
21.1 – Description of norms, rules or internal procedures relative to information disclosure 175

21.2 – Description of the disclosure policy of material act or fact and the procedures corresponding to the
maintenance of confidentiality on material information not disclosed 176

21.3 - Management responsible for the implementation, maintenance, assessment and control of the information
disclosure policy 181



22. Extraordinary business
22.1 – Acquisition or sale of any material asset not eligible as normal operation at the issuer's business 183

22.2 – Material changes to the issuer‘s operations 184
22.3 – Material contracts executed by the issuer and its subsidiaries not directly related to its operating activities 185


1.1 – 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 Officer

The 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.

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2.1/2.2 – 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

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2.3 – 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 419,777,672.41 104,337,584.85 301,438,734.74
Total Assets 549,303,917.40 499,570,620.00 577,705,945.90
Net Rev./Interm. Financ.
Rev./Insurance Premiums
Earned 349,321,755.79 350,981,906.49 327,905,131.71
Gross Income 59,115,457.33 -30,013,821.07 -12,504,987.58
Net Income -88,493,027.55 -197,100,915.62 -45,981,434.99
Number of Shares, Ex-
725,248,727 126,310,741 126,310,741
Treasury (units)
Share book value (Reais
0.578800 0.826000 2.386500
unit)
Net income per share -0.120000 -1.560000 -0.360000

3.2 – 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


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


3.2 – 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.

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3.3 – 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.

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3.4 – 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


3.5 – Dividend distribution and net income retention

Reason 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


3.6 – 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 - Indebtedness

Fiscal Year Total debt, any nature Description ratio and reason
to use another debt ratio
31/12/2009 129,525,643.00 Debt ratio 30.86000000

3.8 – 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
Note


3.9 – Provide other information the Company deems relevant

All material information regarding this topic was described in items above.

9


4.1 – 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.

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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



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



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



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



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


4.2 – 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


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


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


4.3 – Non-confidential and material lawsuits, administrative or arbitration
proceedings

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


proceedings

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.

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


proceedings

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.

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


proceedings

2.c) Labor Claim – Marcos Cesar de Morais
a) Court
nd
2 Labor Court of Dourados, Mato Grosso do Sul

b) Jurisdiction
Appellate court

03/17/2009

d) Parties
Plaintiff/Claimant: Marcos Cesar de Morais
Defendant: Brasil Ecodiesel Ind. Com. de Biocombustíveis e Óleos Vegetais S.A.

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.

02/28/2010

22


proceedings

d) Parties
Plaintiff: Brasil Ecodiesel Indústria e Comércio de Biocombustíveis e Óleos Vegetais
S.A.

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.

Remote

h) Impact analysis
The definite loss of the lawsuit means that the Company would have to pay a large
amount of money.

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


4.4 – Non-confidential lawsuits, administrative or arbitration proceedings
whose opposing parties are managers, former managers, controllers, former
controllers 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


4.6 – 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
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
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


4.7 – Other material contingencies

4.7 – Describe other material contingencies not included in the previous items
Not applicable

26


4.8 – Rules from the origin country and from the country where securities
are 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


5.1 – 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


5.2 – 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


5.3 – 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



5.4. Provide other information the Issuer deems relevant

All relevant information regarding this topic was described in items above.

31


6.1/ 6.2/ 6.4 – Incorporation of the issuer, duration and date of registration
with 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

2010 reference form

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