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                             Notice to Shareholders

                        Interest on Shareholders' Equity


The Board of Directors of Embraer - Empresa Brasileira de Aeronautica S.A. (the
"Company"), at a meeting held on June 25, 2004 approved:

     a) the distribution of Interest on Shareholders' Equity for the Second
        Quarter of 2004 in the aggregate amount of R$ 160,001,996.89, in
        accordance with the following conditions:

     1.   holders of common shares will be entitled to interest on shareholders'
          equity in the amount of R$ 0.20923 per share, and holders of preferred
          shares will be entitled to interest on shareholders' equity in the
          amount of R$ 0.23015 per share equal to R$ 0.9206 per American
          Depositary Shares (ADSs). This interest on shareholders' equity
          complies with the right of the holders of preferred shares to receive
          dividends 10% above the holders of common shares, according to article
          17, II, a, paragraph 1, of Law 6404//76, as amended by Law 10,303
          dated October 31, 2001;

     2.   the interest on shareholders' equity is subject to the retention of
          15% withholding tax or 25% if the beneficiary is a resident in a tax
          haven, except in the case of holders who are exempt from such tax;

     3.   this interest on shareholders' equity will be included in the
          computation of the compulsory dividends to be distributed by the
          company for the current fiscal year; the total amount shall include
          the dividends distributed by the Company for all the purposes of the
          Brazilian corporate legislation;

     4.   record date for the shares negotiated on the Sao Paulo Stock Exchange
          (Bovespa) is June 25, 2004, and record date for the ADSs negotiated on
          the New York Stock Exchange (NYSE) is June 30, 2004;

     5.   the payment of the interest on shareholders' equity in Brazil will be
          on July 15, 2004, and the holders of ADSs will be paid on July 22,
          2004, both without any compensation;

     6.   the shares will be negotiated on the Sao Paulo Stock Exchange
          (Bovespa), and New York Stock Exchange (NYSE), ex-interest right, on
          and including June 28, 2004.

     b) The increase in Embraer's capital due to the exercise of employees
        stock options from R$ 3,136,968,129.42 to R$ 3,140,080,762.07,
        consisting of a total of 717,254,081 shares without par value, of
        which 242,544,448 are common shares, including one of a special class,
        and 474,709,633 are preferred shares.

        As a consequence, the new wording of Art. 5 of Embraer's bylaws is as
        follows:


     Art. 5 - EMBRAER's subscribed and paid in share capital is three billion,
        one hundred and forty million, eighty thousand, seven hundred and
        sixty-two Reais and seven cents (R$3,140,080,762.07) divided into seven
        hundred and seventeen million, two


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        hundred and fifty-four thousand, and eighty-one (717,254,081) shares
        without par value, of which two hundred and forty-two million, five
        hundred and forty-four thousand, four hundred and forty-eight
        (242,544,448) are common shares, including one (1) share of a special
        class, and four hundred and seventy-four million, seven hundred and nine
        thousand, six hundred and thirty-three (474,709,633) are preferred
        shares.



Sao Jose dos Campos, June 25, 2004

Antonio Luiz Pizarro Manso
Executive Vice-President Corporate & CFO



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