EX-1 2 eb5316ex1.htm EXHIBIT 1

Exhibit 1

EMBRAER - EMPRESA BRASILEIRA DE AERONÁUTICA S.A.
PUBLIC COMPANY
CNPJ Nº 60.208.493/0001-81
NIRE 35.300.026.420

MINUTES OF THE EXTRAORDINARY GENERAL SHAREHOLDERS’ MEETING
HELD ON MARCH 31, 2006

Date, Time and Place: On March 31, 2006, at 10:30 am, at the head offices of Embraer - Empresa Brasileira de Aeronáutica S.A. (“Embraer”, “Company” or “Merged Company”), in the city of São José dos Campos, State of São Paulo, at Av. Brigadeiro Faria Lima, No. 2170.

Publications: Call Notice published pursuant to article 124, paragraph 1, of Law No. 6404/76, in the newspapers “Diário Oficial do Estado de São Paulo” (the Official Gazette of the State of São Paulo) and “Valeparaibano”, on March 16, 17 and 18, 2006, and also in the newspaper “Gazeta Mercantil”, on March 16, 17 and 20, 2006. Notice to Market published pursuant to Instructions CVM 319/99 and 358/2002, in the same newspapers, on January 20, 2006 and March 21, 2006.

Attendance: Shareholders representing 63.73% of the total stock capital, being 91.17% of the common shares and 49.88% of the preferred shares, and 44.74% of the outstanding shares of the Company. The legal representative of the Federal Government, holder of the special class share, also attended the meeting. Also present were: (i) the Chairman of the Board of Directors, Mr. Vitor Sarquis Hallack, (ii) the Chief Executive Officer, Mr. Maurício Novis Botelho; (iii) the Corporate Vice-President and Investor Relations Executive Officer, Mr. Antonio Luiz Pizarro Manso; (iv) the President of the Conselho Fiscal of Embraer, Mr. José Mauro Laxe Vilela; (v) the representative of Deloitte Touche Tohmatsu Auditores Independentes, Mr. José Domingos do Prado; (vi) the representative of Acal Consultoria e Auditoria S/S, Mr. Elias da Silveira Cerqueira; and (vii) the representative of Goldman Sachs & Companhia, Mr. Jairo Loureiro Filho.

Desk: Chairman: Vitor Sarquis Hallack. Secretary: Sergio Spinelli Silva Junior. Also participating, upon invitation of the Chairman, the Chief Executive Officer and the Corporate Vice-President and Investors Relation Executive Officer.

Agenda: (1) The inclusion of a temporary provision to the By-laws of the Company in order to grant, in accordance with the corporate governance practices recommended by CVM, voting rights to all shareholders of the Company, regardless of the type of share (including the depositary of the ADR program, which shall vote in accordance with the instructions provided by the holders of American Depositary Shares – ADS), in the resolutions concerning the proposed merger of the Company (“Merger”) with and into Rio Han Empreendimentos e Participações S.A. (“Rio Han” or “Merging Company”) and related matters; (2) The ratification of the appointment, by the administration of Embraer, of the specialized companies responsible for the valuation of the Company and of Rio Han, under different criteria, as follows: (i) ascertainment of the net equity interest of the Company, based on the financial statements duly audited, in order to determine the amount of the corporate capital increase of Rio Han resulting from the Merger; (ii) appraisal based on their respective net worth value, according to the same criteria and on the same date base, at market prices, according to Article 264 of the Law no. 6,404/76; and (iii) financial analysis as to determine the exchange ratio for the shares and ADS issued by the Company for others issued by Rio Han; (3) Approval of the reports prepared by the specialized companies referred to in item 2 above; (4) Approval of the Protocol and Justification of Embraer into Rio Han and its Exhibits (“Merger Agreement”), prepared pursuant to articles 224 and 225 of Law No. 6,404/76 and the CVM Instruction No. 319/99, containing, therefore, all terms, conditions, and information necessary to the comprehension of the proposal of the Merger; and (5) Approval of the Merger of the Company with and into Rio Han, pursuant to the terms of the Merger Agreement and other documents related to the transaction.

Draft and Publication: The Chairman proposed that the minutes of this Extraordinary General Shareholders’ Meeting be drawn up as a summary, being the voting declarations and or disagreements numbered and certified by the Desk, for further filing in the Company’s head office. The Desk also proposed the publication of these minutes to be carried out without the shareholders’ signatures, pursuant to paragraph 1 and 2 of article 130 of Law No. 6,404/76. Upon their submission to the approval of all present, the proposals were approved by more than 99.8% of the shareholders owners of voting shares present to the meeting.

Proposal of the Board of Directors: Preliminarily, the Chairman informed to all attendants that on January 19, 2006, the Board of Directors of the Company held a meeting to discuss and approve the proposed Merger of the Company with and into Rio Han, a corporation with head office in the city of São José dos Campos, State of São Paulo, at Av. Brigadeiro Faria Lima, 2170, building F56, ground floor, suite 2656, enrolled before the Brazilian Taxpayer’s Registry CNPJ/MF under No. 07.689.002/0001-89.

Upon the approval of the proposed Merger by the managements of the Company and of the Merging Company, the Executive Committees of the referred companies executed the Merger Agreement, which is attached hereto as Exhibit I. Additionally, on March 20, 2006, a second Meeting of Board of the Directors of Embraer was held, in which the final terms of the amendment to the By-laws of the Merging Company were approved (Exhibit V to the Merger Agreement), which By-laws shall become effective if the Merger is approved. The Merger Agreement, as well as all other reports, evaluations, opinions, project By-laws, information and documents ancillary to the Merger process were previously made available to the shareholders, and sent to the Brazilian Securities and Exchange Commission – CVM, to the São Paulo Stock Exchange (“BOVESPA”), pursuant of Law No. 6,404/76 and Instructions CVM No. 319/99 and 358/02, and to the U.S. Securities and Exchange Commission (“SEC”), in accordance with the North American applicable legislation.

Opinion of the Conselho Fiscal: After exemption of the reading of the items of the Agenda by the shareholders, the Chairman informed all attendants that the Conselho Fiscal of Embraer, during a meeting held on January 19, 2006, rendered a favorable unanimous opinion in relation to (i) the approval of the Merger Agreement and supporting documents thereto; and (ii) the approval of the proposed Merger. Since there were no requests regarding the reading of the opinion of the Conselho Fiscal, the Chairman proceeded with the meeting.

Presentation: Having rendered the initial necessary explanations, the Chief Executive Officer presented to the shareholders the main goals and benefits of the Merger. After the presentation, the Chief Executive Officer of the Company made himself available to the attending shareholders to clarify any information.

Clarifications on the Voting Process: The Desk presented the following clarifications to the shareholders:

	“According to item 1 of the Agenda, the proposal of amendment to the Company’s By-laws shall be submitted for the approval to the shareholders owners of common shares of the Company. Such proposal will allow all shareholders of the Company (including the Depositary of ADRs Program of Embraer, which shall vote pursuant to instructions received from the owners of American Depositary Shares – ADS), independently of the type of the shares owned, to participate of the voting of the subjects related to the Merger of the Company with and into Rio Han, pursuant to items 2 to 5 of the Agenda.

	In case the proposal of item 1 of the Agenda is approved by shareholders representing more than 50% of the common shares issued by the Company, then, according to the recommendations of CVM on the best practices of corporate governance, all further subjects related to the proposed Merger (items 2 to 5 of the Agenda) shall be submitted for the appreciation of all shareholders of the Company, regardless of the type of shares held by them, the voting process being related to each of items 2 to 5 of the Agenda, effected in two distinct stages, as follows.

	In a first stage, the proposal of each item of the Agenda shall be submitted to all shareholders owners of outstanding shares of the Company, to verify if it is rejected by more than 50% of the outstanding shares. In this sense, all common and preferred shares issued by the Company traded in the market shall be considered as outstanding shares, excluding the shares held by Rio Han, Cia. Bozano, Bozano Holdings Ltd., Fundação Sistel de Seguridade Social – SISTEL and Caixa de Previdência dos Funcionários do Banco do Brasil – PREVI (“Current Controlling Shareholders”), and by the respective management and the management of Embraer (“Administrators”), but including the golden share and the shares bound to the ADR Program of Embraer, which voting right shall be exercised by the Depositary Bank according to the instructions of the ADS holders. Therefore, in this first voting stage, the Current Controlling Shareholders and the Management shall not exercise their voting rights.

	In case any proposals of items 2 to 5 of the Agenda is not rejected in the first voting stage by holders of more than 50% of the outstanding shares of the Company, the Current Controlling Shareholders and the Administrators shall be free to cast their vote. In case any of the proposals of items 2 to 5 of the Agenda is rejected by holders of more than 50% of the outstanding shares, then the Current Controlling Shareholders and Administrators shall vote contrary to the approval of the Merger.

The voting of the proposals of items 2 to 5 of the Agenda shall be subject to the veto right of the Federal Government, as holder of the golden share. In this sense, prior to the commencement of the voting process for the proposals of items 2 to 5 of the Agenda, the Attorney General of the National Treasury, present at the meeting as representative of the Federal Government, will be invited to express its opinion as representative of the Federal Government, being entitled to exercise its veto right in relation to the Merger transaction, as per the terms of the By-laws of the Company”.

Having rendered the clarifications regarding the mechanics of the voting process to be adopted for the resolutions related to the proposals of items 2 to 5 of the Agenda, the Desk was available to provide any further clarifications to the attendants, as necessary for the comprehension of the matters.

Resolutions: Being the Agenda submitted to voting, the following resolutions were adopted:

	Item 1 of the Agenda. The proposal for inclusion in the By-laws of Embraer of a temporary provision to assure, in this Meeting, voting rights to all shareholders of the Company (including the Depositary Bank of the ADR Program, which shall vote pursuant to the instructions received by the holders of American Depositary Shares – ADS), regardless of the type of shares held, in the resolutions regarding the Merger and other related matters, pursuant to items 2 to 5 of the Agenda, was approved by the affirmative vote of shareholders representing more than 99.8% of the voting capital of the Company present to the Meeting.

	Due to the resolution adopted above, the following provision is included in By-laws of the Company:

“CHAPTER VII. TEMPORARY PROVISIONS. Art. 35 – The preferred shares issued by the Company shall have voting rights in the same conditions as the common shares, exclusively for the approval of the proposals of items 2 to 5 of the Agenda of the Extraordinary General Shareholders’ Meeting of the Company to be held at 10:30 a.m., on March 31, 2006, to approve the Merger of Embraer with and into Rio Han Empreendimentos e Participações S.A., and all related matters, including, but not limited to, if necessary, the ratification of the appointment of the specialized companies responsible for the valuation of the companies and the approval of the acts taken by the Executive Committee.”

Statement of the Federal Government: As holder of the golden share, the Federal Government informed that it would not exercise its veto rights as provided in the Company’s By-laws, since it had nothing to oppose as to matters related to the Merger, object of the proposals of items 2 to 5 of the Agenda, in the form of the statement (doc. 1) registered by the Desk and filed in the head office of the Company.

Item 2 of the Agenda: After submission of the matter to discussion in the first voting stage, it was not rejected by the holders of more than 50% of the outstanding shares of the Company. In the second voting stage, which contemplated the voting of all shareholders of the Company regardless of the type of shares held, the matter was approved by shareholders representing more than 99.9% of the shares present to the meeting, being, therefore, the appointment of the following specialized companies responsible for the preparation of the valuations of the Company under different criteria duly ratified: (a) Acal Consultoria e Auditoria S/S, with head office in the City of São Paulo, State of São Paulo, at Av. Paulista, No. 2300, Pilotis, room 60, enrolled before the Brazilian Taxpayer’s Registry CNPJ/MF under No. 28.005.734/0003-44 and the CRC under No. 2RJ001144/F-4, appointed to evaluate the net equity interest of the Company on 09.30.2005 – base date established for the Merger – and to prepare the respective report that will provide basis for the capital increase of Rio Han resulting from the Merger, as well as to prepare the evaluation of the Company and Rio Han based on their respective net equity, according to the same criteria and the same base date, at market prices, according to Article 264 of the Law no. 6,404/76, with the preparation of the corresponding report; and (b) Goldman Sachs & Companhia, with head office in the City of São Paulo, State of São Paulo, at Av. Presidente Juscelino Kubitschek, No. 510 – 6º floor, enrolled before the Brazilian Taxpayer’s Registry CNPJ/MF under No. 30.892.178/0001-55, responsible for the financial analysis of the Company and of Rio Han in order to determine the exchange ratio of shares and ADSs issued by Embraer – which shall be extinguished as result of the Merger – by new shares and ADSs issued by Rio Han;

	Item 3 of the Agenda: Being the matter submitted to discussion, it was not rejected by the owners of more than 50% of the outstanding shares of the Company in a first stage of voting. At the second voting stage, which contemplated the vote of all shareholders of the Company regardless of the type of shares held, the reports prepared by the specialized companies referred in item (2) above, attached to the Merger Agreement, were approved by shareholders representing more than 99.9% of the shares present to the meeting;

	Item 4 of the Agenda: Being the matter submitted to discussion, it was not rejected by the owners of more than 50% of the outstanding shares of the Company in a first stage of voting. At the second voting stage, which contemplated the vote of all shareholders of the Company regardless of the type of shares held, shareholders representing more than 99.9% of the shares present to the meeting approved the Merger Agreement that, initialized by the Desk, shall be filed in the Company’s head office, attached hereto as Exhibit I;

	Item 5 of the Agenda: The resolution regarding the Merger was submitted to the shareholders and the Desk informed that the matter, if also approved by the General Shareholders’ Meeting of Rio Han to be held on the date hereof, will result in the extinguishment of the Company, and the Merging Company shall, as of April 1, 2006, but not before such date, succeed the Company in all of its assets, rights, liabilities and contractual obligations, without interruption, including, but not limited to:

the maintenance of the activities of the current branches of Embraer, which shall be developed by the branches of Rio Han, being the addresses of the branches of Rio Han altered to the addresses of Embraer’s branches, as set forth in Exhibit II hereto. Upon the extinguishment of Embraer, its branches will be consequently extinguished, being their activities respectively transferred to the corresponding branch of Rio Han;

	b)	the succession of Embraer by Rio Han, as owner of all real estate properties currently owned by Embraer, according to the list submitted to the Shareholders and filed in the Company’s head office (Exhibit III);

	c)	the succession of Embraer by the Company in relation to all rights and obligations related to the drawback concession acts identified below:

	ANO	AC No.
1	2001	1560-01/000122-1
2	2001	1560-01/000441-7
3	2003	2003/0075700
4	2003	2003/0195268
5	2005	2005/0157493
6	2001	1560-01/000084-5
7	2002	2002/0129319
8	2004	2004/0003027
9	2004	2004/0240045
10	2005	2005/0210262
11	2004	2004/0299538
12	2005	2005/0341820
13	2005	2005/0307509
14	2006	2006/0027240
15	1999	0175-99/000011-5
16	2002	2002/0118821
17	2003	2003/0178681

the succession of Embraer by Rio Han regarding the ADRs Program, upon execution, by Rio Han, as successor of Embraer, of the Amended and Restated Deposit Agreement, and the protocol of the Registration Statement on Form F-6 before the U.S. Securities and Exchange Commission - SEC. After the Merger, each holder of one (1) ADS of Embraer shall become holder of one (1) ADS of Rio Han.

It was clarified to the shareholders that pursuant to the terms of the Merger Agreement, as a result of the approval of the proposed Merger of the Company with and into Rio Han, the current shareholders of the Company, except for the Merging Company, shall be entitled to receive shares issued by Rio Han, according the following exchange ratio: (i) the Federal Government shall be entitled to receive one (1) golden share issued by Rio Han; (ii) each one (1) preferred share of the Company shall be replaced by one (1) common share issued by Rio Han; and (iii) each one (1) common share of the Company shall be replaced by one (1) common share issued by Rio Han. The shares of Rio Han to be issued as a result of the Merger shall be distributed among the shareholders of Embraer, observing the amount of shares previously held by them, except for the common shared held by dissenting shareholders, who may exercise their appraisal rights within thirty (30) days as from the date of publication of these minutes.

	Additionally, it was clarified that the approval of the proposed Merger submitted herein to the shareholders, and to be submitted to the shareholders of Rio Han on the date hereof, will result in the adhesion of the Merging Company to the rules of BOVESPA’s Novo Mercado and in the trading of its shares in such trading segment. Moreover, the shareholders Cia. Bozano, PREVI and SISTEL and the administrators of the Merging Company, reinforced their obligation set forth in the Merger Agreement not to negotiate their shares in stock markets during the term of six (6) months as from the date of the approval of the Merger.

	Being the matter submitted to discussion in the first voting stage, it was not rejected by the holders of more than 50% of the outstanding shares of the Company. At the second voting stage, which contemplated the vote of all shareholders of the Company regardless of the type of shares held by them, the matter was approved by shareholders representing more than 99.9% of the attending shares, with the approval, therefore, of the Merger, being the administration of the Company authorized to practice all acts necessary towards its implementation, including the subscription of the capital increase of Rio Han resulting from the Merger.

	Finally, it was clarified that pursuant to the Merger Agreement and according to paragraph 3 of article 137 of Law No. 6,404/76, the Company has the right of reexamine the Merger in case payments deriving from withdrawal requests of shareholders owners of common shares of the Company that timely manifest their disagreement would put in risk the financial stability of the Company and Rio Han.

Closing: There being no further business, the meeting was adjourned and the resolutions of this meeting were drafted in the form of minutes, signed by everyone present. Chairman: Vitor Sarquis Hallack; Secretary: Sergio Spinelli Silva Junior. Attending Shareholders: RIO HAN EMPREENDIMENTOS E PARTICIPAÇÕES S.A.; CAIXA DE PREV. DOS FUNC. B. BRASIL-PREVI; CIA BOZANO; BOZANO HOLDINGS; FUNDAÇÃO SISTEL DE SEG. SOCIAL; DASSAULT AVIATION; THALES AIRBORNE SYSTEMS; EADS-EUROPEAN AERON.DEF.SPACE COMP.; SAFRAN; BNDES - Participações S/A BNDESPAR; UNIÃO – REPRESENTADA PELA PROCURADORIA GERAL DA FAZENDA NACIONAL; CLUB DE INV.EMPREG.EMBRAER-CIEMB; EDSON FERREIRA DE SOUZA FILHO; J.P.MORGAN CHASE BANK; J.P.MORGAN CHASE BANK; BLACK RIV GLOBAL EQUITY LA LLC; WHITEWATER FIN SERV BRAZIL LCC; OTARIO MUNICIPAL EMPLOYEES RET.BOARD; THE MASTER T B OF JAPAN LTD; FORD MOTOR CO DEFINED BENEF MASTER TRUST; NORGES BANK; FRANKLIN TEMPLETON INVESTMENT FUNDS; TEMPLETON EMERGING MARKETS FUND; TEMPLETON DEVELOPING MARKETS TRUST; TEMPLETON EMERGING MARKETS SERIES; FRANKLIN TEMPLETON TAX CLASS CORP; ZEPHYR LATIN AMERICAN FUND, L.P; TA IDEX OPPENHEIMER EMERGING MARKETS; THE CALIFORNIA STATE TEACHERS RET.SYS; TEACHER RETIREMENT SYSTEM OF TEXAS; BELL ATLANTIC MASTER PENSION TRUST; KANSAS PUBLIC EMPLOYEES RETIREMENT SYSTEM; BARCLAYS GLOBAL INVESTORS NA; MASSMUTUAL PREMIER INTERNATIONAL EQUITY FUND; VANGUARD EMERGING MARKETS STOCK INDEX FUND; AEGONTRANSAMERICA SER FUND INC V K AC INT ALL; ISHARES MSCI BRAZIL INDEX FUND; PROVENTIA PRIMA TRUST; MORGAN STANLEY INST F INC A I A PORTFOLIO; THE NEW YORK STATE COMMON RETIREMENT FUND; PIBB FD IND BR 50 BR TRACKER; ITAU INDEX FUNDO INV EM ACOES; ITAU IND FUND FUNDO INV ACOES; ITAU MIRANTE IBX ACOES FUNDO INV; BORIS TABACOF; WALTERS BARTELS; FUNDAÇÃO VALE DO RIO DOCE SEG.SOCIAL; CREDIT S FIR BOS INTERNATIONAL; FUNDAÇÃO ELETROBRÁS DE SEGURIDADE SOCIAL; MAURICIO NOVIS BOTELHO; ANTONIO LUIZ PIZARRO MANSO; SATOSHI YOKOTA; HORACIO ARAGONES FORJAZ; FREDERICO PINHEIRO F. CURADO; ARTUR APARECIDOV.COUTINHO; LUIZ CARLOS SIQUEIRA AGUIAR; CYNTHIA MARCONDES F BENEDETTO; DIMAS LAZARINI; EDSON CARLOS MALLACO; EDUARDO BONINI SANTOS PINTO; EMILIO KAZUNOLI MATSUO; FLÁVIO RIMOLI; JORGE RAMOS DE O. JUNIOR; JOSE LUIS D AVILA MOLINA; JOSE RENATO OLIVEIRA MELO; LUIZ ANTONIO LOPES DE OLIVEIRA; LUIZ TOSHIHIRO MASSUDA; MARCO TULIO PELLEGRINI; PAULO ESTEVÃO CARVALHO TULIO; SERGIO MAURO M. REGO COSTA; ANDRÉ LUIZ SORIANI; THEOBALDO VICENTINI NETO; ROMUALDO MONTEIRO DE BARROS; REAL GRANDEZA FUNDO PREVIDENCIA; ORLANDO JOSE FERREIRA NETO; ANTONIO CARLOS V VICTORAZZO; ALBERT P.CLOSE; HUMBERTO LUIZ PEREIRA; MAURICIO MARTINS DE ALMEIDA; CHIEN CHIN SHENG; LUIS CARLOS AFFONSO; CARLYLE WILSON; and JOSÉ MAURO LAXE VILELA.

I hereby certify that these minutes correspond to a faithful copy of the minutes filed in the appropriate corporate book.

São José dos Campos, March 31, 2006.

Sergio Spinelli Silva Junior
Secretary

EXHIBIT I

Free Translation
From the Portuguese

PROTOCOL OF Merger AND JUSTIFICATION OF
EMBRAER – EMPRESA BRASILEIRA DE AERONÁUTICA S.A. WITH AND
INTO RIO HAN EMPREENDIMENTOS E PARTICIPAÇÕES S.A.

Under this private agreement, the managers of the companies below,

EMBRAER – EMPRESA BRASILEIRA DE AERONÁUTICA S.A., a public company with head offices in the City of São José dos Campos, State of São Paulo, at Av. Brigadeiro Faria Lima, 2,170, enrolled with CNPJ/MF under no. 60.208.493/0001-81, with articles of incorporation filed with the Commercial Registry of the State of São Paulo – JUCESP, under NIRE 35.300.026.420, represented herein in accordance with its By-laws (“Embraer” or “Merged Company”); and

RIO HAN EMPREENDIMENTOS E PARTICIPAÇÕES S.A., a closed company with head offices in the City of São José dos Campos, State of São Paulo, at Av. Brigadeiro Faria Lima, 2,170, building F56, ground floor, room 2,565, enrolled with the CNPJ/MF under no. 07.689.002/0001-89, with articles of incorporation filed with the Commercial Registry of the State of São Paulo – JUCESP under NIRE 35.300.325.761, represented herein in accordance with its By-laws (“Rio Han”, “New Embraer” or “Mergor Company” and, together with Embraer, the “Companies”),

WHEREAS:

(A) The development of new products by Embraer, as well as the sustainability, growth and continuity of its businesses and activities depends on the improvement of its capacity to access the national and international capital markets, to allow for the raising of funds;

(B) The current capital structure of Embraer not only limits such access to the capital markets, but also precludes the obtaining of higher stock liquidity, since it restricts the adoption of higher corporate governance standards, including, for example, the granting of voting rights to all shareholders and the strengthening and independence of its management;

(C) As a result of the transaction described herein, New Embraer will become the first major Brazilian company with dispersed capital and decision-making powers only exercised by Brazilian shareholders. The new structure will also allow the Rio Han to be listed on the BOVESPA’s Novo Mercado segment, thus increasing the liquidity and market valuation of its shares, by improving the corporate governance standards arising from the extension of voting rights to all shareholders of New Embraer (the “Restructuring”);

(D) The above mentioned proposal, as structured by the management of the Companies, will represent a landmark in the Brazilian capital market, not only for mechanisms introduced to restrict the acquisition of control and hostile take over, but also due to the high levels of corporate governance to be implemented, both initiatives without precedent in Brazil;

(E) Rio Han is a privately-held company, whose only shareholders are Cia. Bozano (“Bozano”), Caixa de Previdência dos Funcionários do Banco do Brasil – PREVI (“Previ”) and Fundação Sistel de Seguridade Social (“SISTEL” and, collectively, the “Controlling Shareholders”), which was specifically organized to serve as a vehicle for the transactions described herein; and

(F) The management of Rio Han and Embraer, after conducting the necessary studies, believes that the implementation of the transactions described herein will benefit the Companies, their shareholders and the market in general;

the Companies hereby DECIDE, based on articles 224, 225, 227 and 264 of Law 6,404/76 (the “Brazilian Corporation Law”) and CVM Instruction no. 319/99, to enter into this Protocol of Merger and Justification of Embraer – Empresa Brasileira de Aeronáutica S.A. into Rio Han Empreendimentos e Participações S.A. (the “Merger Agreement”), which terms and conditions shall guide the proposal of the Merger to be submitted to the shareholders of each of the Companies, as follows:

1.	DESCRIPTION OF THE TRANSACTION

1.1.	This Protocol provides for the Merger of Embraer with and into its controlling shareholder, Rio Han, which will succeed Embraer in all its rights and obligations, pursuant to articles 224, 225, 227 and 264 of the Brazilian Corporate Law (the “Merger”).

1.2.	As a preliminary measure to the Merger, the Controlling Shareholders, as sole shareholders of Rio Han, approved, on January 18, 2006, the capital increase of Rio Han, through the transfer of all the total common shares subject to the Shareholders’ Agreement of Embraer, entered into on July 24, 1997, as amended (“Control Shares” and “Shareholders’ Agreement”, respectively). As a result of such capital increase, Rio Han currently holds 60% of the voting capital and 20.16% of the total capital stock of Embraer, and holds the control of Embraer.

1.3.	Upon approval of the Merger, both the Shareholders’ Agreement and Embraer will automatically cease to exist. The shareholders and holders of American Depositary Shares – ADS of the Merged Company, regardless of the type of shares held, will receive, respectively, common shares or ADS issued by New Embraer, according to the exchange ratio set forth in Section 6.4 below. The golden share issued by Embraer and held by the Federal Government (“Golden Share”) will be replaced by another golden share issued by New Embraer.

1.4.	The common and preferred shares issued by Embraer, as well as the ADS, will be replaced by voting common shares or ADS, as the case may be, issued by New Embraer.

1.5.	The By-laws of New Embraer will prohibit the issuance of preferred shares.

2.	RATIONALE, PURPOSES AND INTERESTS OF THE COMPANIES IN THE IMPLEMENTATION OF THE TRANSACTION

2.1.	The primary purpose of the Restructuring is to create a basis for the sustainability, growth and continuity of the business of Embraer, through its successor, New Embraer. Such goals will be achieved through a greater access of New Embraer to the capital markets, increase of its capacity for fund raising for the development of new products and expansion of its businesses and markets.

2.2.	The management of the Companies expect that the following benefits will result from the Restructuring:

(A)	Benefits to Embraer resulting from the Restructuring, after its Merger into New Embraer:

	(i)	To enhance the capacity to attract resources to support its expansion programs because of increased access to capital markets, currently limited due to: (a) the share control structure of the Embraer; and (b) the maximum proportion allowed by the Brazilian Corporate Law between common and preferred shares;

	(ii)	Possibility of use of New Embraer’s shares as acquisition currency of assets, which shall allow its potential international expansion.

(B)	Benefits to the current shareholders of Embraer:

	(i)	Extension of voting rights to all shareholders – including to the depositary of the ADR program, which will vote instructed by the ADS holders – since the shares of New Embraer will be common shares, thus allowing New Embraer’s admission to BOVESPA’s Novo Mercado segment;

	(ii)	Potential liquidity of shares, thus impacting its quotation on the stock exchanges;

	(iii)	Improvement of the corporate governance practices and higher transparency in the management of New Embraer; and

	(iv)	For the Current Controlling Shareholders, establishment of a premium for the termination of the Shareholders’ Agreement and relinquishing of the control of Embraer. Based on the Restructuring proposal, such premium shall be attributed to the Control Shares upon the attribution of a differentiated exchange ratio when compared to that attributed to the other shares issued by Embraer, at the moment of the Merger.

(C)	Benefits to the Brazilian Capital Markets:

	(i)	creation of the first major Brazilian company with dispersed corporate control and adequate structure to be listed on BOVESPA’s Novo Mercado, creating a standard that may be used as model for similar transactions; and

	(ii)	creation of a new corporate governance benchmark.

	(D)	Benefits to the Federal Government:

		(i)	maintenance of the rights attributed to the Golden Share and improvement of the conditions for its application;

		(ii)	assurance of the majority of voting rights being held by Brazilian shareholders, due to the limitation of foreign shareholders’ voting rights set forth in the By-Laws of New Embraer, in order to maintain the principle established in the Privatization Notice of Embraer;

		(iii)	control over the concentration of equity interest in the capital stock of New Embraer equal to or greater than 35%;

		(iv)	statutory assurance of maintenance of a capital dispersed structure, due to the adoption of mechanisms restricting the number of votes that can be casted by each shareholder or group of shareholders; and

		(v)	assurance that New Embraer will remain as the technological and industrial partner of the Brazilian Army strategic actions, thus taking into consideration the maintenance of the control of New Embraer with Brazilian shareholders and the strengthening of the rights of the Golden Share.

3.	NECESSARY APPROVALS

3.1.	On the date hereof, the Conselho Fiscal of Embraer analyzed the terms of the transaction and rendered a favorable opinion regarding the Merger and the contents of all documents related to the Proposal of the Executive Committee dated as of January 13, 2006 (“Proposal of the Executive Committee”), whose minutes were provided, as set forth in art. 163 of the Brazilian Corporate Law.

3.2.	Also on the date hereof, the Board of Directors of Embraer approved the execution of this Merger Agreement and all other documents related to the transaction, whose minutes were provided for further submission to the General Shareholders’ Meeting, in accordance with the Proposal of the Executive Committee of the Merged Company, dated as of January 13, 2006, as filed in the head offices of Embraer. On the same occasion, the Board of Directors decided to call the shareholders of the Embraer to approve the Merger proposal.

3.3.	The Merger will be submitted to the General Meetings of Embraer and Rio Han shareholders, which shall be called and convened as set forth in the Brazilian Corporate Law and the respective By-laws of the Companies.

3.4.	The effective holding of the General Shareholders’ Meetings of the Companies to approve the Restructuring and the subsequent issue of new shares and ADS by the Mergor Company is conditioned upon the registration of such securities with the U.S. Securities and Exchange Commission – SEC.

4.	CAPITAL STOCK OF THE COMPANIES

4.1.	On the date hereof, the capital stock of Rio Han, fully paid-in, amounts to R$962,017,769.89, divided into 162,306,763 nominative common shares, no par, entirely held by the Controlling Shareholders.

4.2.	As set forth in Whereas “E” above, Rio Han has the sole purpose to serve as vehicle for implementation of the Restructuring, and has as its sole asset the Control Shares, not having any liability or obligation of any kind that could adversely impact its net equity.

4.3.	Rio Han holds, on the date hereof, 145,527,000 common shares issued by Embraer, corresponding to 60% of its voting capital and 20.16% of its total capital. These shares will be cancelled as a result of the Merger.

4.4.	On the date hereof, the capital stock of Embraer, fully paid-in, amounts to R$3,592,804,215.87 and comprises 721,832,057 nominative book-entry shares, no par, from which 242,544,447 are common shares, one is the Golden Share and 479,287,609 are preferred shares.

4.5.	On the date hereof, the Controlling Shareholders hold common and preferred shares of Embraer not subject to the Shareholders’ Agreement. These shares, as well as the other currently existing shares, will be cancelled as a result of the Merger and replaced by common shares issued by Rio Han, in observance with the exchange ratio established in Section 5.6 herein.

5.	VALUATION REPORTS AND EXCHANGE RATIO

	Valuation Report of Market Value of Shareholders’ Equity

5.1.	As set forth in article 264 of the Brazilian Corporate Law, the valuation report of market value of shareholders’ equity of Embraer and Rio Han, for purposes of calculation of the withdrawal price described in item 9.7 below, was conducted by Acal Consultoria e Auditoria S/S (“ACAL”), with head offices in the City of São Paulo, State of São Paulo, at Av. Paulista, 2,300, Pilotis, Cj. 60, enrolled with CNPJ/MF under no. 28.005.734/0003-44, on January 18, 2006, according to the valuation reports attached hereto as Exhibits I and II. Such valuation reports were prepared according to the same criteria and same base date (September 30, 2005), based on the duly audited financial statements of the Merged Company and Rio Han. For such purposes, ACAL accounted the necessary adjustments in the balance sheets of Rio Han, in order to reflect the transfer of the Control Shares into its capital stock, dated as of January 18, 2006, having as assumptions that Rio Han: (i) has the Control Shares as its sole assets; and (ii) does not have any liability or obligations that could adversely affect its net equity. The results of the valuation carried out by ACAL are presented as follows:

EXCHANGE RATIO – MARKET VALUE	EMBRAER	RIO HAN

Valuation of market value (in thousands of reais)	2,756,720.00	555,776.40
Shares comprising the capital stock	721,832,057	162,306,763
Exchange ratio of the common and preferred shares based on the valuation of market value	1.11543 shares of Rio Han for 1 share of Embraer

	Valuation Report of Shareholders’ Equity

5.2.	The capital increase of Rio Han resulting from the Merger, as set forth in Section 7 below, will be calculated based on the Valuation Report of Shareholders’ Equity of Embraer, as prepared on January 18, 2006 by ACAL, above qualified, attached hereto as Exhibit III. The valuation carried out by ACAL was prepared based on the accounting net equity of Embraer, according to its balance sheet dated as of September 30, 2005, duly audited by Deloitte Touche Tohmatsu Auditores Independentes. According to this accounting valuation report, Embraer’s net equity on September 30, 2005 amounted to R$4,771,725,554.66.

	Financial Analyses

5.3.	In order to support the determination of the exchange ratio between the shares issued by Embraer for those issued by Rio Han, Goldman, Sachs & Companhia, with head offices in the City of São Paulo, State of São Paulo, at Av. Presidente Juscelino Kubitschek, 510, 6^th floor, enrolled with the CNPJ/MF under no. 30.892.178/0001-55 (“Goldman Sachs”) was retained to prepare the financial analyses of Embraer (“Financial Analysis”) attached hereto as Exhibit IV.

5.4.	The management of the Companies understand that, among the several valuation methods addressed in the Financial Analysis, the discounted cash flow method is the one which best reflects the value of the Merged Company and, consequently, of the Mergor Company, since the assets of the latter comprise exclusively the Control Shares held by the Controlling Shareholders.

5.5.	Considering that New Embraer: (i) has the sole purpose to serve as a vehicle for implementation of the Restructuring; (ii) has as sole assets the Control Shares; and (iii) does not have any liability or obligation of any kind which could adversely affect its net equity, the management of the Companies concluded that each share or ADS issued by Embraer not subject to the Shareholders’ Agreement, regardless of the type of share, will correspond to one common share or ADS issued by Rio Han.

5.6.	Consequently, the management of the Companies recommend that all shares or ADS issued by Embraer and not subject to the Shareholders’ Agreement be replaced by shares or ADSs issued by the Mergor Company, as follows:

SHAREHOLDER/HOLDER OF ADS OF EMBRAER		TYPE AND NUMBER OF SHARES/ADS ISSUED BY RIO HAN TO BE RECEIVED

Shareholder owner of one common share of Embraer		One common share of Rio Han
Shareholder owner of one preferred share of Embraer		One common share of Rio Han
Holder of one ADS of Embraer		One ADS of Rio Han

6.	PREMIUM PERCEIVED BY EMBRAER’S SHARES SUBJECT TO THE SHAREHOLDERS’ AGREEMENT

6.1.	Based on the contents of the Financial Analysis, the management of the Companies understands that there is a legitimate and justified expectation of the Current Controlling Shareholders that the Control Shares receive an amount higher than that applied to the other shares that are not subject to the Shareholders’ Agreement. The Merger will result in the dilution of New Embraer’s shareholding composition and, therefore, will equalize the amount of all New Embraer shares, granting to its shareholders, indistinctly, higher chances of influencing management.

6.2.	The Financial Analysis examines the elements that would justify the payment of a premium of up to 24.4% to the holders of the Control Shares, on the valuation value of the shares of Embraer not subject to the Shareholders’ Agreement, regardless of their type. The management of the Companies understands that the approval of the Restructuring proposal by the Current Controlling Shareholders provides incentives that justify the waiver of rights currently set forth in the Shareholders’ Agreement and the power to control the Company.

6.3.	On the other hand, the management of the Companies must consider the best interests of the Companies and the group represented by all their shareholders, without favoring any group, whether controlling or minority. Due to the assumptions above, and based on the opinions of the most renowned Brazilian scholars, the management of the Company and Rio Han proposed the implementation of the Restructuring, based on the following exchange ratio:

SHARE/ADS OF EMBRAER		TYPE AND NUMBER OF SHARES/ADS ISSUED BY RIO HAN TO BE RECEIVED

1 Control Share		1.1153 common shares
1 share/ADS not subject to the Shareholders’ Agreement		1 common share or ADS

6.4.	Due to the Restructuring: (i) the transfer of the Control Shares to the capital stock of the Mergor Company will be made at the ratio of 1.1153 share of New Embraer for each Control Share; and (ii) the Proposal of the Executive Committee and the Merger Agreement determine that, upon the Merger, each ADS or share of the Company not subject to the Shareholders’ Agreement, regardless of the type, will be replaced by one ADS or common share of New Embraer, as the case maybe, such proposal to be submitted to the shareholders of Embraer includes the concession of a premium of 9.0%, exclusively to the Control Shares.

6.5.	The implementation of the Restructuring will result in the increase in the interest participation of the Control Shares, from 20.16% of the Company’s capital stock to 21.97% of New Embraer’s capital stock. On the other hand, the interest of the shares not subject to the Shareholders’ Agreement, including those held by the Current Controlling Shareholders, will be reduced from 79.84% of the Company’s capital stock to 78.03% of New Embraer’s capital stock, resulting in a dilution of 2.3%.

6.6.	Embraer’s common and preferred shares held by the Current Controlling Shareholders, but not subject to the Shareholders’ Agreement, will not be entitled to the premium referred to above and will receive the same treatment given to the shares held by the non-controlling shareholders.

7.	CAPITAL INCREASE OF RIO HAN

7.1.	The Merger will be effected by transferring the net assets of Embraer to Rio Han, as valued by ACAL based on the balance sheets of Embraer dated as of September 30, 2005, duly audited by Deloitte Touche Tohmatsu Auditores Independentes. The balances of the accounts of assets and liabilities of Embraer will be recorded in the accounting books of Rio Han with the necessary adjustments. The shares issued by Embraer and held by Rio Han will be cancelled.

7.2.	According to the valuation report prepared by ACAL, the net equity of Embraer to be merged into Rio Han, based on the balance sheet prepared on September 30, 2005, amounts to R$3,809,708,284.77, corresponding to the total net equity of Embraer, less the portion corresponding to the investment of Rio Han in Embraer’s capital stock. The net equity variation verified at Embraer between September 30, 2005, and the date the General Shareholders’ Meeting approves the Merger, will be appropriated by the Mergor.

7.3.	As a result of the Merger, Rio Han will succeed Embraer in all its assets, rights and obligations, without interruption of corporate continuity. Upon the approval of the Merger, Embraer will cease to exist for all legal purposes. The shareholders of Embraer will become shareholders of Rio Han based on the exchange rate determined herien and proportionally to their equity interest.

7.4.	Therefore, as a result of the Merger, the capital stock of Rio Han will be increased by R$3,809,708,284.77, from R$962,017,769.89 to R$4,771,726,054.66, and the shares issued by Rio Han subscribed by Embraer, to be distributed amongst the shareholders of the latter, may vary based on the decision of the common shareholders of Embraer to exercise or not exercise their withdrawal right due to the Merger.

7.5.	After the Merger, the capital stock of New Embraer will comprise 738,611,819 common shares and one Golden Share, all nominative, book-entry and with no par value.

8.	SHARES TO BE RECEIVED BY THE PREFFERRED SHAREHOLDERS OF EMBRAER DUE TO THE Merger

8.1.	The common and preferred shares issued by Embraer, as well as the ADS, will be exclusively replaced by common shares or ADS, as the case may be, issued by Rio Han; therefore, the preferred shareholders of Embraer will no longer be granted, as of the Merger, with the following rights: (i) priority in capital reimbursement; and (ii) priority in receiving dividends per share 10% higher than those granted to the common shares, acquiring, however, voting rights.

8.2.	The management of the Companies consider equitable the application of the same exchange rate between the Company’s common and preferred shares (ADS included) and New Embraer’s shares and ADS, since the equity losses suffered by the preferred shares (including those in form of ADS) of Embraer will be offset against the acquisition of the voting rights granted to the shareholders of Rio Han.

8.3.	New Embraer’s shares and ADS issued on behalf of the Company’s shareholders as a result of the Merger will be entitled to all rights prescribed in New Embraer’s By-Laws, and will have full participation in the financial results for 2006.

9.	DISSENTERS’ OR APPRAISAL RIGHTS

9.1.	The Merger will grant appraisal rights to the shareholders of the Merged Company who expressly disagree with the proposal within 30 days as from the publication of the minutes of the General Shareholders’ Meeting which approves the Merger Agreement, and the payment of the respective reimbursement will depend on the effective conclusion of the transaction, as set forth in article 230 of the Brazilian Corporate Law.

9.2.	In accordance with article 137, item II of the Brazilian Corporate Law, the withdrawal rights are not granted to holders of shares of any type that cumulatively presents: (i) liquidity, typified by the listing of such shares in a trading index; and (ii) dispersed ownership, in which case the controlling shareholder, the controlling company or other companies under its control, hold less than half of the shares of such type or class.

9.3.	Both Embraer’s common shares and preferred shares are listed in the Bovespa Index, but only preferred shares are dispersely held. Accordingly, appraisal rights will be assured to the shareholders of Embraer’s common shares who timely and formally express their disagreement with the Merger, being these shareholders entitled to claim the auditing of the special balance sheet of Embraer, as set forth in paragraph 2 of article 45 of Law 6,404/76, for purposes of calculation of the reimbursement price.

9.4.	The express disagreement will be considered as timely if received within 30 days as from the publication of the minutes of the General Shareholders’ Meeting of the Company that approves the Merger. In the cases in which auditing of the special balance sheet is requested, according to paragraph 2 of article 45 of the Brazilian Corporate Law, the shareholder will receive 80% of the reimbursement price, and the balance, if any, will be paid within 120 days from the date of the resolution in the respective Meeting, as set forth in paragraph 3 of article 137 of the Brazilian Corporate Law.

9.5.	The appraisal rights of Embraer’s shareholders dissenting from the Merger will be limited to the shares held by these shareholders until the day of the first publication of the call notice to the General Shareholders’ Meeting, and cannot be exercised in relation to the shares purchased afterwards, as set forth in paragraph 1 of article 137 of the Brazilian Corporate Law.

9.6.	Since the Merger involves two companies respectively controlled by and controller of each other, pursuant to article 264 of the Brazilian Corporate Law, ACAL must determine, based on the valuation report mentioned in item 5.1 above, the shareholders’ equity of the Companies on the base date September 30, 2005, as indicated in line “1” of the following chart:


		EMBRAER	RIO HAN

(1)	Market value per share	R$3.82	R$3.42
(2)	Exchange ratio at market value (article 264 of the Brazilian Corporation Law)	1 share of Embraer for each 1,1153 shares of New Embraer
(3)	Exchange ratio proposed at economic value (per share)	1 share of New Embraer for each share of Embraer
(4)	Reimbursement price per share calculated based on the Embraer’s book value	R$6.61
(5)	Reimbursement price per share calculated based on the Embraer’s market value	R$3.82

9.7.	As set forth in the main section and paragraph 3 of article 264 of the Brazilian Corporate Law and considering that the exchange ratio of Embraer’s shares for New Embraer’s shares proposed in line 2 above is more benefic than the one proposed in line 3 above, the reimbursement to the shareholders of Embraer that timely and formally express their disagreement with the Merger will be guaranteed and made based on the greater of the following amounts: (i) Embraer’s book value, calculated on September 30, 2005, as presented in line “4” of the chart above; and (ii) Embraer’s market value, calculated on September 30, 2005, as presented in line “5” of the chart above.

10.	PROPOSAL REGARDING RENAMING OF RIO HAN

10.1.	Upon approval of the Merger, Rio Han will be renamed as “Embraer – Empresa Brasileira de Aeronáutica S.A.”, thus assuming the name of the Merged Company, provided that such change is subject to the approval of the General Shareholders’ Meeting of Rio Han that approves the Merger, in accordance with the Brazilian Corporation Law.

11.	BOARD OF DIRECTORS OF RIO HAN – GENERAL RULE AND TRANSITION PERIOD

11.1.	The proposed By-laws of New Embraer sets forth that, after the Merger, the Board of Directors of New Embraer will be comprised of 11 members and respective alternates. The Federal Government, as holder of the Golden Share, will have the right to appoint one member and respective alternate, and the employees of New Embraer will have the right to appoint two (2) members and their alternates. The eight (8) remaining members and their alternates will be elected by the other shareholders, gathered at the General Shareholders’ Meeting, in due observance to the vote limitations mentioned in Section 14 below.

11.2.	According to the Novo Mercado Regulation, the members of the Board of Directors will have a unified two year term. However, in order to ensure the stability of the social businesses and the continuity of management guidelines during the period immediately subsequent to the Restructuring approval, the first term of the Board of Directors will be of three (3) years, ending at the Annual General Shareholders’ Meeting which approves the financial statements for the fiscal year ended in 2008. This measure intends to avoid any breach in short and medium-term strategies already planned by the current management, in addition to provide for the Company’s transition to the new structure without prejudice to the its business.

11.3.	Additionally, in order to ensure the stability and continuity of the management during the transition period above mentioned, the members of the Board of Directors of New Embraer will be elected at the General Shareholders’ Meeting of Rio Han immediately before the decision on the approval of the Merger.

11.4.	The first term of office of the Board of Directors will comprise the transition period following the Merger. The management of Rio Han believes that its shareholders will appoint Mr. Maurício Novis Botelho (Brazilian, married, engineer, resident and domiciled in the city of São Paulo, State of São Paulo, bearer of the identity card RG no. 01.641.893-1 IFP/RJ, enrolled before the CPF/MF under no. 044.967.107-06 – current Chief Executive Officer of the Company) as the Chairman of the Board of Directors of Rio Han, who will then also being appointed as Chief Executive Officer of Rio Han, in accordance with the rules mentioned above. The other positions in the Board of Directors will be filled by one member appointed by the Federal Government; two members appointed by the Company’s employees; and one member will be appointed by each one of the Current Controlling Shareholders. Four members shall be independent, thus not related to Rio Han, the Company or the Current Controlling Shareholders, following the criteria set forth in the Novo Mercado Regulation.

11.5.	After the approval of the Merger by the General Shareholders’ Meeting of Rio Han, a meeting of the Board of Directors of Rio Han will be held for the election of the Officers. The Officers’ term will follow the same criteria applicable to the Board of Directors, including in what concerns the initial period of three years after the Restructuring. After the transition period, the terms of the members of the Board of Directors and Executive Board will be of two years and necessarily concurring. Until the Annual Shareholders’ Meeting to be held in 2009, the quorum for dismissal of members of the Executive Committee shall be the majority of the members of the Board of Directors.

11.6.	The Chairman of the Board of Directors of New Embraer, Mr. Maurício Novis Botelho, above qualified, will also be its Chief Executive Officer until the Ordinary General Meeting at which it will decide on the financial statements for the fiscal year ended on December 31, 2006, as part of the procedures to ensure the coordinated and stable transition of New Embraer to the dispersed control environment. After the mentioned Shareholders’ Meeting, the Board of Directors of New Embraer will appoint a new Chief Executive Officer, and it will be expressly prohibited to accumulate seats in Board of Directors and Executive Committee of said company.

12.	PROPOSAL FOR LISTING OF RIO HAN AS A PUBLIC COMPANY

12.1.	Upon implementation of the Merger described herein, and as the last step in the Restructuring process, a proposal for listing of New Embraer as a public company with be submitted to its General Shareholders’ Meeting. The listing of New Embraer shall be implemented within 120 days as of the General Shareholders’ Meeting that approves the Merger, pursuant to paragraph 3 of article 223 of the Brazilian Corporate Law.

12.2.	The shares issued by New Embraer will be listed at BOVESPA’s Novo Mercado segment, and the ADSs program currently in force in Embraer will be implemented in New Embraer.

13.	PROPOSAL FOR LOCK UP OF THE SHARES HELD BY THE CONTROLLING SHAREHOLDERS AND ADMINISTRATORS

13.1.	Immediately after the approval of the Merger, a proposal will be submitted to the General Shareholders’ Meeting of New Embraer, in order to confirm that, within six months as from the Merger, the Current Controlling Shareholders, as shareholders of New Embraer, and the Management of New Embraer cannot trade the shares held by them in the capital stock of New Embraer.

13.2.	Besides showing to the market that the Current Controlling Shareholders and the management remain committed to New Embraer and believe in its future, this measure intends to prevent the sale of a volume of shares of New Embraer immediately after approval of the transaction which may adversely impact the quotation of its shares in the market.

14.	PROPOSED RESTATEMENT OF THE BYLAWS OF NEW EMBRAER

14.1.	Before the approval of the Merger, the General Shareholders’ Meeting of Rio Han will resolve on the approval of the new By-laws of New Embraer, in accordance with the proposed By-laws attached hereto as Exhibit V.

14.2.	After the Restructuring, the By-laws of New Embraer will have provisions to assure: (i) the adoption of best practices of corporate governance; (ii) the maintenance of the shareholding control dilution among its shareholders; and (iii) the limitation to the participation of foreign shareholders in the social meetings, thus ensuring that the Brazilian Shareholders will maintain the majority of the voting rights therein, in accordance with the restrictions created when Embraer was privatized.

14.3.

Among other matters, including those related to the management of New Embraer, as described in Clause 11 above, the By-laws after the Merger will include the following provisions:

	(A)	General Limitation to the Exercise of Voting Rights at General Meetings. The maximum number of votes allowed to any shareholder (or group of shareholders) at any General Shareholders’ Meeting of New Embraer will correspond to 5% of the capital stock, regardless of the number of shares or ADS held by such shareholder. This measure, set forth based on article 110, paragraph 1 of the Brazilian Corporate Law, intends to avoid the excessive concentration of shares in the hands of a sole shareholder or group of shareholders. With due observance to the privileges granted to the Golden Share, which aims to avoid the excessive concentration of shares in the hands of one shareholder or group of shareholders, as set forth in item (C) hereunder, this restriction does not impose any limitation to the ownership of shares or to the economical rights of the shares, including in relation to the distribution of dividends.

	(B)	Limitation to the Exercise of the Voting Rights of Foreign Shareholders at General Meetings. In addition to the limitation described above, imposed to all shareholders of New Embraer, the total votes that may be cast in any General Shareholders’ Meeting by foreign shareholders, individually or collectively, will be limited to 40% of the total votes present at such meeting. The inclusion of such limitation in the By-Laws of New Embraer takes into consideration the principles established in the Privatization Notice of Embraer, as published in the Official Gazette dated April 4, 1994, and ratified by the Attorney General’s Office in the Opinion GQ-215, of January 6, 2000, approved by the Presidency of the Federative Republic of Brazil on January 17, 2000, according to the order published in the Official Gazette dated January 20, 2000, which limits the participation of foreign shareholders to 40% of Embraer’s voting capital. Therefore, the limitation to the exercise of the political rights of the foreign shareholders of New Embraer will be maintained, however without any prejudice or limitation to the free float of these shares, or the economical and equity rights inherent to them.

	(C)	Federal Government Approval for Acquisition of Equity Interest Equal or Higher than 35% of the Capital Stock and Requirement of a Public Tender Offering for Acquisition of Shares. The acquisition of interest in amounts equal or higher than 35% of the capital stock of New Embraer, whether in shares or ADS, by any shareholder or group of shareholders, will be subject to the approval of the Federal Government. In case an authorization by the Federal Government is obtained, such increase in participation will also be subject to a Public Tender Offer for Acquisition of Shares (OPA) of the total shares and ADS of New Embraer, at the price calculated based on the criteria established in the By-Laws. This mechanism ensures, at once, that: (i) the Federal Government will have the control over the acquisition of interest equal or higher than 35% of the capital stock of New Embraer; and (ii) in case such authorization is granted, the other shareholders of New Embraer may sell their shares to the offering shareholder.

	(D)	Rights of the Golden Share. Besides the provisions set forth in item (C) above, the By-Laws of New Embraer maintain all prerogatives currently granted to the Federal Government, as holder of the Golden Share, as established in the Privatization Notice, and, furthermore, assures the veto right, by the Federal Government, in any decision related to: (i) changes in the vote restrictions described in items (A) and (B) above; (ii) statutory amendments involving changes to the rights granted to the Golden Share; and (iii) statutory changes to the provisions related to the acquisition of interest equal or higher than 35% of the capital stock.

	(E)	Monitoring of Equity Shareholdings. Without prejudice to the other legal duties, the Officer of Investor Relations of New Embraer will be responsible to coordinate a force task in charge of monitoring alterations in New Embraer’s shareholding composition, whether in relation to the equity interest held by each shareholder or group of shareholders (including ADS holders) of New Embraer, or in relation to the shareholders’ nationality, alerting to the proper authorities possible breaches to the By-Laws.

	(F)	Breaches to Legal and Statutory Provisions. Pursuant to article 120 of the Brazilian Corporate Law, the violations with the law or the By-Laws of New Embraer will subject the violating shareholder to the suspension of its political rights (i.e., the temporary loss of its voting rights), upon decision of the General Shareholders’ Meeting in this sense, such suspension to be ceased as soon as the obligation is complied with. The provision mentioned above is also included in the proposed By-Laws of New Embraer, in order to emphasize that such measure may also be adopted upon proposal of the management of New Embraer, in case of breach to the statutory provisions, especially those mentioned in items (A), (B), (C) and (D) above.

14.4.	The By-laws of New Embraer will prohibit issuance of preferred shares.

15.	GENERAL PROVISIONS

15.1.	The Companies may reconsider the Merger proposal described herein in the case the reimbursement price to be paid deriving from the withdrawal rights exercised by the disagreeing common shareholders of Embraer risks the financial stability of the merged company resulting from the Merger, as set forth in paragraph 3, article 137, of the Brazilian Corporate Law.

15.2.	Upon approval of the Merger by the shareholders of the Companies, the related managements shall register and publish all acts related to the Merger.

15.3.	All valuations, evaluations, opinions, documents, proposals and proposed By-laws related to the Merger are attached to and are an integral part of this Protocol for all legal purposes.

15.4.	The Companies and their respective managements hereby elect the Forum of São Paulo for settlement of any doubts that may result from this Merger Agreement.

São José dos Campos, January 19, 2006.

/s/Antonio Luiz Pizarro Manso
EMBRAER – EMPRESA BRASILEIRA DE AERONÁUTICA S.A.

/s/Antonio Luiz Pizarro Manso
RIO HAN EMPREENDIMENTOS E PARTICIPAÇÕES S.A.

Witnesses:

1. _____________________________________
Name:
Id.:
CPF/MF:

2. _____________________________________
Name:
Id.:
CPF/MF:

EXHIBIT I

VALUATION REPORT OF MARKET VALUE OF SHAREHOLDERS’ EQUITY
OF EMBRAER PREPARED BY ACAL

EXHIBIT II

VALUATION REPORT OF MARKET VALUE OF SHAREHOLDERS’ EQUITY
OF RIO HAN PREPARED BY ACAL

EXHIBIT III

SHAREHOLDERS’ EQUITY VALUATION REPORT OF EMBRAER PREPARED BY ACAL

EXHIBIT IV

FINANCIAL ANALYSES REGARDING THE RESTRUCTURING OF THE
CAPITAL STOCK OF EMBRAER PREPARED BY GOLDMAN SACHS

EXHIBIT V

PROPOSED BY-LAWS OF RIO HAN AFTER THE Merger

VALUATION REPORT OF MARKET VALUE OF SHAREHOLDERS’ EQUITY
EMBRAER – EMPRESA BRASILEIRA DE AERONÁUTICA S.A.
CNPJ/MF 60.208.493/0001-81

ACAL CONSULTORIA E AUDITORIA S/S, a company specialized in valuations, with office at Avenida Paulista 2300, andar Pilotis – conj. 60, São Paulo – SP, registered with the CRC/SP (Regional Accounting Council of São Paulo State) under number 2RJ001144/F-4, and registered in the CNPJ (National Register of Legal Entities) of the Ministry of Finance under number 28.005.734/0003-44, and whose technical person in charge is Mr. Elias da Silveira Cerqueira, after having conducted the necessary studies and research, hereby presents the Valuation Report of the Market Value of the Shareholders’ Equity of EMBRAER - EMPRESA BRASILEIRA DE AERONÁUTICA S.A, a corporation with principal place of business at Av. Brigadeiro Faria Lima, 2.170, – São José dos Campos - SP, registered in the CNPJ/MF under number 60.208.493/0001-81, for purposes of its Merger with and into the holding company Rio Han Empreendimentos e Participações S.A.

This valuation report is divided into sections as follows:

•	Objectives
•	Bases and Approaches for the Valuation
•	Approach Adopted and Summary of Work Performed
•	Conclusion

I. OBJECTIVES

The purpose of this Valuation Report is to record the valuation, at market value, of the shareholders’ equity of EMBRAER for purposes of its Merger with and into the holding company (Rio Han), as a result of a corporate reorganization, of EMBRAER in accordance with the requirement of article 264 of Law No. 6404/76, and according to the methodology established in article 183, § 1, of the same law. There were also observed, the technical requirements from the Instruction CVM No. 319 issued on December 3rd 1999, and the related update from the Instructions CVM No. 320/99 and 349/01.

II. BASES AND APPROACHES FOR THE VALUATION

Determining the value of a company’s shares is subject to different variables, as well as various uncontrollable factors, considering that it will always take certain subjective aspects into account. As examples, we cite some of the main aspects that affect such determination:

EMBRAER Empresa Brasileira de Aeronáutica S.A.
Shareholders’ Equity Valuation Report – Market Value
Base Date September 30, 2005
2

(a)	The perspectives of the owners versus the perspectives of a potential buyer;
(b)	The economic conditions that allowed for past results may be better or worse in the future;
(c)	Political and economic conditions, which may fluctuate completely out of control;
(d)	The strategic interests of economic groups or specific programs, such as the privatization program;
(e)	The existence of several valuation approaches that generate quite different results.

Accordingly, the work of determining the value of shares in capital is not precise, and contains subjective aspects, depending on the owner’s expectations and the use of the shares.

However, there are various approaches used to estimate the fair value of shares. Although such approaches vary in their applicability, depending on specific facts and circumstances, they may at least indicate a range of reasonable values for a preliminary determination of such value.

2.1. EXAMPLES OF APPROACHES BASED ON THE VALUE OF NET ASSETS

Equity Valuation

This valuation approach is used to determine the fair market value of specific assets, provide a basis for certain adjustments to net book value (as mentioned above) and as a starting point to estimate the liquidation value. In addition, equity valuation also provides an adequate basis for the business’ value and is frequently used in negotiations of companies, with the value being adjusted according to applicable depreciations and obsolescence.

Liquidation Value

The liquidation value has been used as a basis for negotiations of prices and, therefore, represents an initial range of interest to both buyers and sellers.

The liquidation value is determined through the estimate of the value of the company’s assets, assuming its conversion into currency in a reasonably short period of time, deducting all the company’s obligations, as well as the liquidation cost of the business, including valuation fees, brokerage commissions, taxes and legal fees.

The liquidation value may be determined considering both an orderly liquidation as well as a faster and forced liquidation of the business. This last approach will obviously result in a lower value.

However, this criterion would not be the most adequate one for purposes of valuation of shares in companies with ongoing operating activities.

EMBRAER Empresa Brasileira de Aeronáutica S.A.
Shareholders’ Equity Valuation Report – Market Value
Base Date September 30, 2005
3

2.2. EXAMPLES OF METHODS BASED ON RETURN ON INVESTMENT

Price/Profit Ratio

For publicly-trade companies, the price/profit ratio is known and could easily be used to obtain the estimated value of the shares of such companies, through the multiplication of the price/profit by the expected aggregated results. The average price/profit for the industry or for several comparable publicly-trade companies may be used to arrive at an indication of the value. Often, a shareholder control premium is added to this estimated value.

A valuation through the price/profit approach may also be used to estimate the value of a certain company. Assuming a profit growth rate estimated by the current shareholders and a return on investment desired by the acquirer, the latter may determine the multiple of profit that would still allow it to achieve its return target. This approach allows the buyer to determine the price it is willing to pay, to compare it with that desired by the seller.

Discounted Net Cash Flow

The analysis of discounted net cash flow may be used to estimate the value of a company and, consequently, its shares, based on the present value of its cash flow estimates. In theory, this approach should result in the same value as that determined using the price/profit ratio, since the latter reflects the current perception of how much a company will be worth in the future.

In practice, this analysis is growingly used to determine a company’s value because it is based on an effective estimate of cash flows, incorporating factors such as cost reductions due to synergies, product development, etc., and not on the simple market perception of future profits for the company. Other factors that affect the stock market and, consequently, the price/profit ratio, are also eliminated in the analysis of the discounted cash flow.

EMBRAER Empresa Brasileira de Aeronáutica S.A.
Shareholders’ Equity Valuation Report – Market Value
Base Date September 30, 2005
4

III. APPROACH ADOPTED AND SUMMARY OF WORK PERFORMED

As mentioned previously, there are various approaches to determine a company’s market value.

To determine the value of EMBRAER’s shareholders’ equity at market prices, as of September 30, 2005, considering its characteristics as an operating company and a holding company, the application of the usual criteria for valuation of assets inevitably entails determining the value of the investments that the company holds in its subsidiaries EMBRAER Aircraft Holding, EMBRAER Liebherr Equip. Brasil, EMBRAER Representation LLC, EMBRAER Spain Holding CO and HARBIM Embraer Airc. Ind. Co. These investments, in the amount of R$ 948,770,000, as of the valuation date, equal 6.74% of the company’s total assets, therefore being significant assets in the value of the shareholders’ equity of the investor (EMBRAER).

For purposes of this Report, we adopted as valuation criterion, as prescribed by article 264 of the Law 6.404/76, the adjustment to market value of EMBRAER`s and its subsidiaries net assets, on the base date September 30 2005, and the recognition of these adjustments, under the equity method, in the shareholders’ equity of EMBRAER.

The market value adjustment of the net assets of the parent company EMBRAER and its subsidiaries took into consideration legal definitions and precepts, notably article 264 of Law No. 6404/76, and according to the approach established in article 183, § 1, of the same law. That methodology consider that the assets have to be evaluated by their net market value for the purpose to be sold to a third party, assuming that the company will stop its operations immediately.

Under the provisions of this article, market value is considered:

	(a)	For raw materials and storeroom supplies, the price at which they may be replaced, through purchase in the market;
	(b)	For goods and rights intended for sale, the net realization price through sales to the market, less taxes and other expenses necessary for the sale, and the profit margin;
	(c)	For investments, the net value at which they can be sold to third parties.

Within the parameters defined for the preparation of this valuation, the determination of the equity value – net value at market prices – of the shareholders’ equity of EMBRAER and its subsidiaries, as of the base date of September 30, 2005, is also based on a limited review performed by our firm on these companies’ financial statements, as of that date.

EMBRAER Empresa Brasileira de Aeronáutica S.A.
Shareholders’ Equity Valuation Report – Market Value
Base Date September 30, 2005
5

This procedure was performed according to certain generally accepted auditing standards and, accordingly, included tests on the accounting records necessary in the circumstances for the specific purpose of determining the equity value – at market prices of said equity. These examinations found that the aforementioned records and elements were in accordance with all legal formalities, including regarding the observance of generally accepted accounting principles, being uniform and consistently applied by the entity. In addition, the financial statements of the parent company EMBRAER and its subsidiaries have been examined by other independent auditors as of September 30, 2005, whose Auditor’s Reports dated November 10^th 2005 were unqualified.

These audited financial statements, as of the aforementioned base date, with the purpose of showing the assets stated with the respective realization values, already contain, for example, the following provisions:

	–	Allowance for doubtful accounts;
	–	Provision for adjustment to realization value;
	–	Provision for depreciation; and
	–	Provision for amortization.

In addition, in order to adjust the aforementioned financial statements to market price, as shown in the following table, we added adjustments in the following accounts:

	–	Prepaid expenses
	–	Deferred tax assets calculated on tax losses, available for offset against future income
	–	Unamortized goodwill/negative goodwill on the acquisition of investments
	–	Deferred assets

EMBRAER Empresa Brasileira de Aeronáutica S.A.
Shareholders’ Equity Valuation Report – Market Value
Base Date September 30, 2005
6

The adjustments performed by us are as follows:

Description	Value - R$1,000.00

Value of Book Shareholders’ Equity of EMBRAER as of 09/30/2005		4,771,726
(-) Debit Adjustments to Shareholders’ Equity:		(2,146,399	)
Write-off of deferred income tax and social contribution(Current Assets)		(207,816	)
Write-off of prepaid expenses (Current Assets)		(239,021	)
Write-off of deferred income and social contribution taxes (Long-Term Liabilities)		(294,547	)
Write-off of prepaid expenses (Long-Term Liabilities)		(151,442	)
Write-off of deferred assets		(1,149,861	)
Equity loss on adjustments to shareholders’ equity of Harbim		(134	)
Equity loss on adjustments to shareholders’ equity of Liebherr		(31,048	)
Equity loss on adjustments to shareholders’ equity of Aircraft		(23,128	)
Equity loss on adjustments to shareholders’ equity of Aviation Europe		(3,370	)
Write-off of unrecoverable escrow deposits		(46,032	)
(+) Credit Adjustments to Shareholders’ Equity:		131,393
Equity gain on adjustments to shareholders’ equity of Spain Holding		50,903
Tools recorded in deferred charges		80,490

Value of shareholders’ equity of EMBRAER adjusted to market value as of 09/30/2005		2,756,720

In light of the above, and considering the provisions of Article 8 of Law No. 6404, of December 15, 1976, and subsequent amendments, verifications were performed on the accounting books and records that gave rise to the Balance Sheet, as well as the respective documents that gave rise to it, although based on selective tests and by sampling.

For all legal purposes, ACAL states that: (i) it has no direct or indirect interest in any of the companies involved in this work or in their operations, and there is no significant circumstance that may characterize a conflict of interest for the issuance of this Report; and (ii) there has been no attempt by EMBRAER’s controlling shareholders or management to direct, limit, hinder, or perform any action that might have affected the access to and the use and knowledge of any information, assets, documents or work methodologies relevant to our conclusions.

EMBRAER Empresa Brasileira de Aeronáutica S.A.
Shareholders’ Equity Valuation Report – Market Value
Base Date September 30, 2005
7

IV. CONCLUSION

After the due technical examinations and verifications we performed on EMBRAER – EMPRESA BRASILEIRA DE AERONÁUTICA S.A., and based on the data referred to in this Valuation Report, we consider that the company’s shareholders’ equity, valued based on the equity value approach – net value at market prices, as of September 30, 2005 is two billion, seven hundred fifty-six million, seven hundred twenty thousand Brazilian reais (R$2,756,720,000.00).

The document referred to as Appendix I – Shareholders’ Equity at Market Price of EMBRAER - EMPRESA BRASILEIRA DE AERONÁUTICA S.A. - as of September 30, 2005, is an integral part of this Valuation Report.

This being our best technical understanding, we hereunder sign this Valuation Report.

São Paulo, January 18, 2006.

ACAL Consultoria e Auditoria S/S
CRCSP- 2RJ001144/F-4

Elias da Silveira Cerqueira
Partner in Charge
Certified Accountant CRCSP – 1RJ053136/T-O

EMBRAER Empresa Brasileira de Aeronáutica S.A.
Shareholders’ Equity Valuation Report – Market Value
Base Date September 30, 2005
8

APPENDIX I

EMBRAER – Empresa Brasileira de Aeronáutica S.A.

SHAREHOLDERS’ EQUITY AT MARKET PRICES
(Amounts in thousands of Brazilian reais – R$1,000.00)
As of September 30, 2005

				ADJUSTMENTS
	Book Value									Market Price
	Book Value			Debit			Credit			Market Price

ASSETS
Total current assets		6,667,009			—			446,837			6,220,172
Cash and Cash Equivalents		893,618									893,618
Trade accounts receivable		1,629,432									1,629,432
Allowance for doubtful accounts		(10,434	)								(10,434	)
Recoverable taxes		88,150									88,150
Other Credits		211,729									211,729
Inventories		3,407,677									3,407,677
Deferred income taxes		207,816						207,816	(a)		—
Prepaid expenses		239,021						239,021	(b)		—
Total long-term assets		4,682,165			—			492,021			4,190,144
Recoverable Taxes		1,660									1,660
Accounts receivable from subsidiaries		4,092,601									4,092,601
Guarantee deposits		78,176									78,176
Other credits		63,739						46,032	(k)		17,707
Deferred income taxes		294,547						294,547	(c)		—
Prepaid expenses		151,442						151,442	(d)		—
Total fixed assets		2,727,624			131,393			1,207,541			1,651,476
Investments		948,770						134	(f)		941,993
								31,048	(g)
					50,903	(h)
								23,128	(i)
								3,370	(j)
Property, Plant and Equipment		628,993			80,490	(l)					709,483
Deferred charges		1,149,861						1,149,861	(e)		—

TOTAL ASSETS		14,076,798			131,393			2,146,399			12,061,792

EMBRAER Empresa Brasileira de Aeronáutica S.A.
Shareholders’ Equity Valuation Report – Market Value
Base Date September 30, 2005
9

	Book Value		ADJUSTMENTS						Market Price

			Debit			Credit

LIABILITIES AND SHAREHOLDERS’ EQUITY
Total current liabilities		4,684,033		—			—			4,684,033
Loans		1,164,902								1,164,902
Suppliers		1,140,766								1,140,766
Accounts Payable		117,315								117,315
Contributions from partners		10,008								10,008
Accounts payable to subsidiaries		231,864								231,864
Advances from Customers		865,866								865,866
Taxes and social Charges Payable		71,123								71,123
Other Provisions		685,593								685,593
Contingencies		170,987								170,987
Dividends		100,730								100,730
Deferred income taxes		124,879								124,879
Total long-term liabilities		4,621,039		—			—			4,621,039
Loans		2,319,175								2,319,175
Accounts Payable		12,345								12,345
Accounts Payable to Subsidiaries		238,286								238,286
Contributions from Partners		231,722								231,722
Advances from Customers		229,776								229,776
Long-term refinanced taxes		104,732								104,732
Contingencies		1,139,468								1,139,468
Deferred income taxes		345,535								345,535
Total shareholders’ equity		4,771,726		2,146,399			131,393			2,756,720
Capital		3,580,851								3,580,851
Capital Reserves		142,250								142,250
Income Reserves		903,500								903,500
Retained earnings		145,125		207,816	(a)		50,903	(h)		(1,869,881	)
				239,021	(b)		80,490	(l)
				294,547	(c)
				151,442	(d)
				1,149,861	(e)
				134	(f)
				31,048	(g)
				23,128	(i)
				3,370	(j)
				46,032	(k)

TOTAL LIABILITIES		14,076,798		2,146,399			131,393			12,061,792

EMBRAER Empresa Brasileira de Aeronáutica S.A.
Shareholders’ Equity Valuation Report – Market Value
Base Date September 30, 2005
10

Nature of Adjustments:

a)	Write-off of deferred income and social contribution taxes (Current Assets)
b)	Write-off of prepaid expenses (Current Assets)
c)	Write-off of deferred income and social contribution taxes (Long-Term Assets)
d)	Write-off of prepaid expenses (Long-Term Assets)
e)	Write-off of deferred assets
f)	Equity loss on adjustments to shareholders’ equity of Harbim
g)	Equity loss on adjustments to shareholders’ equity of Liebherr
h)	Equity gain on adjustments to shareholders’ equity of Spain Holding
i)	Equity loss on adjustments to shareholders’ equity of Aircraft Holding
j)	Equity loss on adjustments to shareholders’ equity of Aviation Europe
k)	Write-off of unrecoverable escrow deposits
l)	Tools recorded in deferred assets.

*********

VALUATION REPORT OF MARKET VALUE OF SHAREHOLDERS’ EQUITY
OF RIO HAN EMPREENDIMENTOS E PARTICIPAÇÕES S.A.
CNPJ/MF 07.788.085/0001-63

ACAL CONSULTORIA E AUDITORIA S/S, a company specialized in valuations, with office at Avenida Paulista 2300, andar Pilotis - conj. 60, São Paulo – SP, registered with the CRC/SP (Regional Accounting Council of São Paulo State) under number 2RJ001144/F-4, and registered in the CNPJ (National Register of Legal Entities) of the Ministry of Finance under number 28.005.734/0003-44, and whose technical person in charge is Mr. Elias da Silveira Cerqueira, after having conducted the necessary studies and research, hereby presents the Valuation Report of the Market Value of the Shareholders’ Equity of RIO HAN EMPREENDIMENTOS E PARTICIPAÇÕES S.A., a corporation with principal place of business at Av. Brigadeiro Faria Lima, 2.170, prédio F56, sala 2656, São José dos Campos - SP, registered in the CNPJ/MF under number 07.689.002/0001-89 (“Rio Han”), to establish the Merger with one of the Company’s subsidiaries – Embraer – Empresa Brasileira de Aeronáutica S.A.

This valuation report is divided into sections as follows:

•	Objectives
•	Bases and Approaches for the Valuation
•	Approach Adopted and Summary of Work Performed
•	Conclusion

I. OBJECTIVES

The purpose of this Valuation Report is to record the valuation, at market value, of the shareholders’ equity of Rio Han for purposes of Merger with a subsidiary (Embraer), due to a corporate reorganization involving Rio Han and Embraer, in accordance with the requirement of article 264 of Law No. 6404/76, and according to the methodology established in article 183, § 1, of the same law. The provisions contained in CVM Instruction No. 319, of December 3, 1999, with the due amendments enacted by CVM Instructions No. 320/99 and 349/01, were also observed.

II. BASES AND APPROACHES FOR THE VALUATION

Rio Han Empreendimentos e Participações S.A.
Valuation Report of Market Value of Shareholders’ Equity (Pro-forma)
As of September 30, 2005
2

(a)	The perspectives of the owners versus the perspectives of a potential buyer;

(b)	The economic conditions that allowed for past results may be better or worse in the future;

(c)	Political and economic conditions, which may fluctuate completely out of control;

(d)	The strategic interests of economic groups or specific programs, such as the privatization program; and

(e)	The existence of several valuation approaches that generate quite different results.

Accordingly, the work of determining the value of shares in capital is not precise, and contains subjective aspects, depending on the owner’s expectations and the use of the shares.

2.1. EXAMPLES OF APPROACHES BASED ON THE VALUE OF NET ASSETS

Equity Valuation

Liquidation Value

The liquidation value has been used as a basis for negotiations of prices and, therefore, represents an initial range of interest to both buyers and sellers.

The liquidation value may be determined considering both an orderly liquidation as well as a faster and forced liquidation of the business. This last approach will obviously result in a lower value.

Rio Han Empreendimentos e Participações S.A.
Valuation Report of Market Value of Shareholders’ Equity (Pro-forma)
As of September 30, 2005
3

However, this criterion would not be the most adequate one for purposes of valuation of shares in companies with ongoing operating activities.

2.2 EXAMPLES OF METHODS BASED ON RETURN ON INVESTMENT

Price/Profit Ratio

For publicly-traded companies, the price/profit ratio is known and could easily be used to obtain the estimated value of the shares of such companies, through the multiplication of the price/profit by the expected aggregated results. The average price/profit for the industry or for several comparable publicly-traded companies may be used to arrive at an indication of the value. Often, a shareholder control premium is added to this estimated value.

Discounted Net Cash Flow

Rio Han Empreendimentos e Participações S.A.
Valuation Report of Market Value of Shareholders’ Equity (Pro-forma)
As of September 30, 2005
4

III. APPROACH ADOPTED AND SUMMARY OF WORK PERFORMED

As mentioned previously, there are various approaches to determine a company’s market value.

For the purpose of this report, we adopted as valuation criterion, in accordance with article 264 of Law No. 6.404/76 the adjustment to market value of the net assets of Rio Han, as of September 20, 2005, except in regard to Rio Han’s interest in Embraer, adding to 145,527,000 registered common shares, which make up its control block and represent 20.16% of its capital. These shares have been transferred to the company’s capital valuated on the date this report was written. Thus, this Report contemplates Rio Han’s net assets as of September 30, 2005, adjusted by the effect of the capital subscription of Issued Embraer shares on that date.

Within the parameters defined for the preparation of this valuation, the determination of the market value of the shareholders’ equity of Rio Han, as of September 30, 2005, is also based on a limited review performed by us on the company’s financial statements, duly audited as of that date. This procedure was performed according to certain generally accepted auditing standards and, accordingly, included tests on the accounting records necessary in the circumstances for the specific purpose of determining the equity value – at market prices of said equity. These examinations found that the aforementioned records and elements were in accordance with all legal formalities, including regarding the observance of generally accepted accounting principles, being uniform and consistently applied by the entity. In addition, the financial statements of the subsidiary Embraer and its main investees have been audited by other independent auditors as of September 30, 2005, whose opinion thereon, dated November 10, 2005, was unqualified.

These reviewed financial statements, as of the aforementioned base date, with the purpose of showing the assets stated with the respective realization values, already contain, for example, the following provisions:

	-	Allowance for doubtful accounts;
	-	Provision for adjustment to realization value;
	-	Provision for depreciation; and
	-	Provision for amortization.

Additionally, with the purpose of adjusting the said financial statements to the valuation criterion of the shareholders’ equity at market prices, as shown in the chart below, we have adjusted the amounts related to the investments in Embraer (shares transferred to Rio Han’ shareholders), owing to adjustments to the following financial accounts of that company:

	-	Prepaid expenses
	-	Deferred tax assets calculated on tax losses, available for offset against future income
	-	Unamortized goodwill/negative goodwill on the acquisition of investments
	-	Deferred assets

Rio Han Empreendimentos e Participações S.A.
Valuation Report of Market Value of Shareholders’ Equity (Pro-forma)
As of September 30, 2005
5

The adjustments performed by us are as follows:

Description	Value - R$1.00

Book Value of Rio Han’s Shareholders’ equity as of 09/30/2005		50.00
(-) Adjustments to Debit of Net Assets:		(406,240,912.29	)
Adjustment to Market Price of Shares Paid in - EMBRAER		(406,240,912.29	)
(+) Adjustments to Credit of Net Assets:		962,017,269.89
Value of EMBRAER’s shares relate to 20.16% of total capital		962,017,269.89

Value of Rio Han’s Shareholder’s equity adjusted to market as of 09/30/2005		555,776,407.60

For all legal purposes, ACAL states that: (i) it has no direct or indirect interest in any of the companies involved in this work or in their operations, and there is no significant circumstance that may characterize a conflict of interest for the issuance of this Report; and (ii) there has been no attempt by Rio Han’s controlling shareholders or management to direct, limit, hinder, or perform any action that might have affected the access to and the use and knowledge of any information, assets, documents or work methodologies relevant to our conclusions.

IV. CONCLUSION

After the due technical examinations and verifications we performed on RIO HAN EMPREENDIMENTOS E PARTICIPAÇÕES S.A., and based on the data referred to in this Valuation Report, we consider that the company’s shareholders’ equity, valued based on the equity value approach – net value at market prices, as of September 30, 2005, and adjusted to the effect of the capital transfer of Embraer’s shares, on January 18, 2006 is five hundred fifty-five million, seven hundred seventy-six thousand, four hundred and seven Brazilian reais and sixty cents (R$ 555,776,407.60).

This being our best technical understanding, we hereunder sign this Valuation Report.

Rio Han Empreendimentos e Participações S.A.
Valuation Report of Market Value of Shareholders’ Equity (Pro-forma)
As of September 30, 2005
6

São Paulo, January 18, 2006.

ACAL Consultoria e Auditoria S/S
CRCSP- 2RJ001144/F-4

Elias da Silveira Cerqueira
Partner in Charge
Certified Accountant CRCSP - 1RJ053136/T-O

Rio Han Empreendimentos e Participações S.A.
Valuation Report of Market Value of Shareholders’ Equity (Pro-forma)
As of September 30, 2005
7

Rio Han Empreendimentos e Participações S.A.

SHAREHOLDERS’ EQUITY AT MARKET PRICES–(PRO-FORMA)
(Amounts expressed in Brazilian reais)
Base date – September 30, 2005 (except with regard to the transfer of EMBRAER’s shares on January 18, 2006).

ADJUSTMENTS

Book
Value

Market
Value

Debtors

Creditors

ASSETS

Current Assets

—

Cash and banks

Permanent Assets

—

961,933,470

406,205,577

555,727,893

Investments

—

961,933,470

(a)

406,205,577

(b)

555,727,893

TOTAL ASSETS

961,933,470

406,205,577

555,727,943

LIABILITIES

Shareholders’ Equity

406,205,577

961,933,470

555.,27,943

Paid in Social Capital

406,205,577

(b)

961,933,470

(a)

555,727,943

TOTAL LIABILITIES

406,205,577

961,933,470

555,727,943

Nature of the adjustments:


a)	Value of EMBRAER’s shares, which related to the 20.16% of the total capital, to be paid in on January 18, 2006.
b)	Adjustment to market value of the shares to be paid in.

*********

SHAREHOLDERS’ EQUITY VALUATION REPORT
EMBRAER – EMPRESA BRASILEIRA DE AERONÁUTICA S.A.
CNPJ/MF 60.208.493/0001-81

ACAL CONSULTORIA E AUDITORIA S/S, a company specialized in valuations, with office at Avenida Paulista 2300, andar Pilotis - conj. 60, São Paulo – SP, registered with the CRC/SP (Regional Accounting Council of São Paulo State) under number 2RJ001144/F-4, and registered in the CNPJ (National Register of Legal Entities) of the Ministry of Finance under number 28.005.734/0003-44, and whose technical person in charge is Mr. Elias da Silveira Cerqueira, after having conducted the necessary studies and research, hereby presents the Valuation Report of the Market Value of the Shareholders’ Equity of EMBRAER - EMPRESA BRASILEIRA DE AERONÁUTICA S.A., a corporation with principal place of business at Av. Brigadeiro Faria Lima, 2.170, – São José dos Campos - SP, registered in the CNPJ/MF under number 60.208.493/0001-81, for purposes of its Merger with and into the holding company Rio Han Empreendimentos e Participações S.A.

This valuation report is divided into sections as follows:

•	Objectives
•	Bases and Approaches for the Valuation
•	Approach Adopted and Summary of Work Performed
•	Conclusion

I. OBJECTIVES

The purpose of this Valuation Report is to record the valuation, at book value, of the shareholders’ equity of EMBRAER for purposes of its Merger with and into the holding company (Rio Han), as a result of a corporate reorganization of EMBRAER in accordance with the requirement of article 264 of Law No. 6404/76, and according to the methodology established in article 183, § 1, of the same law. The provisions contained in CVM Instruction No. 319, of December 3, 1999, with the due amendments enacted by CVM Instructions No. 320/99 and 349/01, were also observed.

EMBRAER – EMPRESA BRASILEIRA DE AERONÁUTICA S.A.
Shareholder’s Equity Valuation Report – As of September 30, 2005
2

II. BASES AND APPROACHES FOR THE VALUATION

Determining the value of a company’s shareholders’ equity is subject to different variables, as well as various uncontrollable factors, considering that it will always take certain subjective aspects into account. As examples, we cite some of the main aspects that affect such determination:

(a) The perspectives of the owners versus the perspectives of a potential buyer;

(b) The economic conditions that allowed for past results may be better or worse in the future;

(d) The strategic interests of economic groups or specific programs, such as privatization programs;

(e) The existence of several valuation approaches that generate quite different results.

Accordingly, the work of determining the value of shares in capital is not precise, and contains subjective aspects, depending on the owner’s expectations and the use of the shares.

2.1. EXAMPLES OF APPROACHES BASED ON THE VALUE OF NET ASSETS

Equity Valuation

Liquidation Value

The liquidation value has been used as a basis for negotiations of prices and, therefore, represents an initial range of interest to both buyers and sellers.

EMBRAER – EMPRESA BRASILEIRA DE AERONÁUTICA S.A.
Shareholder’s Equity Valuation Report – As of September 30, 2005
3

The liquidation value may be determined considering both an orderly liquidation as well as a faster and forced liquidation of the business. This last approach will obviously result in a lower value.

However, this criterion would not be the most adequate one for purposes of valuation of shares in companies with ongoing operating activities.

2.2 EXAMPLES OF METHODS BASED ON RETURN ON INVESTMENT

Price/Profit Ratio

Discounted Net Cash Flow

EMBRAER – EMPRESA BRASILEIRA DE AERONÁUTICA S.A.
Shareholder’s Equity Valuation Report – As of September 30, 2005
4

III. APPROACH ADOPTED AND SUMMARY OF WORK PERFORMED

As mentioned previously, there are various approaches to determine a company’s value.

To determine the book value of EMBRAER’s shareholders’ equity, as of September 30, 2005, we chose the book valuation approach, since it seems to be the most adequate one under the circumstances - a Merger of companies of the same business group - and since the shares that represent this equity have not been exposed to any fact that may be used to justify their overvaluation.

Within the parameters defined for the preparation of this valuation, the determination of the book value of the shareholders’ equity of EMBRAER, as of September 30, 2005, is also based on a limited review performed by us of the company’s financial statements, as of that date. This procedure was performed according to certain generally accepted auditing standards and, accordingly, included tests on the accounting records necessary in the circumstances for the specific purpose of determining the book value of said equity. These examinations found that the aforementioned records and elements were in accordance with all legal formalities, including regarding the observance of generally accepted accounting principles, being uniform and consistently applied by the entity, including the fact that the book value did not exceed the market value. In addition, the financial statements of the parent company EMBRAE R and its main subsidiaries have been audited by other independent auditors as of September 30, 2005, whose opinion thereon, dated November 10, 2005, was unqualified.

EMBRAER – EMPRESA BRASILEIRA DE AERONÁUTICA S.A.
Shareholder’s Equity Valuation Report – As of September 30, 2005
5

IV. CONCLUSION

After the due technical examinations and verifications performed by us, and based on the data referred to in this Valuation Report, we consider that the shareholders’ equity of EMBRAER – EMPRESA BRASILEIRA DE AERONÁUTICA S.A., due to a corporate reorganization, as of September 30, 2005, is four billion, seven hundred seventy-one million, seven hundred twenty-five thousand, five hundred fifty-four Brazilian reais, and sixty six cents (R$4,771,725,554.66).

The document referred to as Appendix I – Shareholders’ Equity at Book Value of EMBRAER - EMPRESA BRASILEIRA DE AERONÁUTICA S.A. - as of September 30, 2005, is an integral part of this Valuation Report.

This being our best technical understanding, we hereunder sign this Valuation Report.

São Paulo January 18, 2006.

ACAL CONSULTORIA E AUDITORIA S/S
CRCSP- 2RJ001144/F-4

Elias da Silveira Cerqueira
Partner in Charge
Certified Accountant CRCSP - 1RJ053136/T-O

EMBRAER – EMPRESA BRASILEIRA DE AERONÁUTICA S.A.
Shareholder’s Equity Valuation Report – As of September 30, 2005
6
APPENDIX I

EMBRAER – EMPRESA BRASILEIRA DE AERONÁUTICA S.A.
Shareholders’ Equity at Book Value as of
September 30, 2005
(Amounts expressed in thousands of Brazilian reais – R$1,000.00)

ASSETS
Total current assets	6,667,009

Cash and cash equivalents	893,618
Trade accounts receivable	1,629,432
Allowance for doubtful accounts	(10,434	)
Recoverable taxes	88,150
Other credits	211,729
Inventories	3,407,677
Deferred Income Taxes	207,816
Prepaid expenses	239,021
Total long-term assets	4,682,165

Recoverable taxes	1,660
Accounts Receivable from subsidiaries	4,092,601
Guarantee deposits	78,176
Other credits	63,739
Deferred Income Taxes	294,547
Prepaid expenses	151,442
Total fixed assets	2,727,624

Investments	948,770
Property, plant and equipment	628,993
Deferred charges	1,149,861

TOTAL ASSETS	14,076,798

EMBRAER – EMPRESA BRASILEIRA DE AERONÁUTICA S.A.
Shareholder’s Equity Valuation Report – As of September 30, 2005
7

LIABILITIES
Total current liabilities			4,684,033

Loans			1,164,902
Suppliers			1,140,766
Accounts payable			117,315
Contribuitions from partners			10,008
Accounts Payable to subsidiaries			231,864
Advances from customers			865,866
Taxes and social charges payable			71,123
Other provisions			685,593
Contingencies			170,987
Dividends			100,730
Deferred Income Taxes			124,879

Total long-term liabilities			4,621,039

Loans			2,319,175
Accounts payable			12,345
Accounts Payable to Subsidiaries			238,286
Contributions from partners			231,722
Advances from customers			229,776
Long-term refinanced taxes			104,732
Contingencies			1,139,468
Deferred Income taxes			345,535
Total shareholders’ equity			4,771,726

Capital			3,580,851
Capital reserves			142,250
Income reserves			903,500
Retained earnings			145,125
TOTAL LIABILITIES			14,076,798

**********

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Financial Analyses

Regarding the Restructuring of the Capital Stock of Embraer

Goldman Sachs & Cia.

January-2006

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Disclaimers

Goldman Sachs & Co. together with Goldman, Sachs & Cia. (“Goldman Sachs”) has been engaged by EMBRAER – Empresa Brasileira de Aeronáutica S.A. (“Embraer”, or the “Company”) as financial advisor to assist the Company in its analysis and consideration of a potential restructuring of the capital stock of the Company which would result in the consolidation of the Company’s voting shares (ONs) and non-voting shares (PNs) into a single, voting (ON) class (the “Transaction”). In connection with our engagement, we have been requested to perform financial analyses (the “Financial Analyses”) for the consideration of the Board of Directors of Embraer in its determination of a proposed exchange ratio applicable to the shares of the Company held by Cia. Bozano (“Bozano”), Previ – Caixa de Previdência dos Funcionários do Banco do Brasil (“Previ”) and Fundação Sistel de Seguridade Social (“Sistel”, and together with Bozano and Previ, the “Controlling Shareholders”) that are party to of a Shareholders’ Agreement between the Controlling Shareholders, dated as of July 24, 1997, as amended (the “Control Shares”), relative to the remaining shares of the Company (the “Non-control Shares”). References herein to “Shares” shall include both the ONs and the PNs.

Our Financial Analyses have been prepared for the exclusive use of Embraer’s Board of Directors in connection with its analysis of the Transaction, as described above, and should not be used for any other purposes, including, without limitation, for capital formation under the terms of the Corporation Law, including, but not limited to, its Article 8. This Report should is not, and should not be construed as, an opinion as to the fairness of the Transaction, from a financial point of view, to the holders of Non-control shares or to the Controlling Shareholders. Our Financial Analyses have been prepared in both the Portuguese and English languages, and the Portuguese version shall prevail for all purposes.

In connection with preparing our analyses, we have reviewed, among other things: (i) certain internal financial analyses and forecasts for the Company prepared and approved by its senior management; (ii) publicly available financial statements for the years ended December 31, 2002, 2003 and 2004 of the Company, which were audited by Deloitte Touche Tohmatsu - Auditores Independentes (“Auditors”); (iii) certain other financial information with respect to the Company, including the cash and bank balances, loans and other debt obligations and hedging and contingencies provisions of the Company as of September 30, 2005 reflecting the best judgment of the Auditors in conformity with generally accepted accounting procedures in Brazil. We also have held discussions with members of the senior management of the Company with respect to its assessment of the past and current business operations, financial condition and prospects of the Company.

In preparing our Financial Analyses, we have assumed and relied, with the express consent of the Company and without independent verification, on the accuracy, content, truthfulness, consistency, completeness, sufficiency and integrity of the financial, accounting, legal, tax and other information reviewed by or discussed with us, and we have not assumed, and do not hereby assume, any responsibility to independently verify any of the information or to make an independent verification or appraisal of any of the assets or liabilities (contingent or otherwise) of the Company, nor have we examined the solvency or fair value of the Company under any laws concerning bankruptcy, insolvency or similar matters. To this effect, we assume no responsibility or liability with respect to the accuracy, truthfulness, integrity, consistency, or sufficiency of such information, for which the Company is solely and exclusively responsible. In addition, we have not assumed any obligation to conduct, and have not conducted, any physical inspection of the properties or facilities of the Company. With your consent, we have assumed that the financial analyses and forecasts prepared by the senior management of the Company, have been reasonably prepared on a basis reflecting the best currently available estimates and judgments of the Company.

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Disclaimers

(Continued)

Our Financial Analyses assume a stable macroeconomic scenario for Brazil. The Financial Analyses and the results therefrom do not purport to reflect the prices at which the Company or its securities could be sold, nor do they take into account any element of value that may arise from the accomplishment or expectation of the proposed Transaction. You should further note that we are not an accounting firm and we did not provide accounting or audit services in connection with these Financial Analyses. In addition, because these analyses are based upon forecasts of future financial results, they are not necessarily indicative of actual future results, which may be significantly more or less favorable than those suggested by such analyses. Given, further, that these analyses are intrinsically subject to uncertainties and various events or factors outside the control of the Company and Goldman Sachs, neither Goldman Sachs, nor any of its affiliates and representatives, assume any responsibility or liability if future results differ substantially from the projections presented in the Financial Analyses and make no representation or warranty with respect to such projections.

Our Financial Analyses are necessarily based on economic, monetary, market and other conditions as in effect on, and the information made available to us as of, the date hereof. As a result, the analyses are valid exclusively as of the date hereof as future events and developments may affect their conclusions. We do not assume any obligation to update, review, revise or revoke the Financial Analyses as a result of any subsequent event or development. With respect to the Financial Analyses, Embraer and its Board of Directors have not authorized us to solicit, nor have we solicited, any indication of interest from third parties to acquire, in whole or in part, any of the Shares. As a result, the results determined in the Financial Analyses do not necessarily correspond to, and should not be construed as representative of, the prices at which any Company could be sold in a third-party acquisition transaction, at which any of the Shares trade on the date hereof or will trade at any future time, or at which the ON shares of Embraer will trade after the Transaction.

The preparation of economic and financial analyses such as those conducted in the preparation of the Financial Analyses is a complex process that involves subjective judgment and is not susceptible to partial analysis or summary description. In arriving at its conclusions, Goldman Sachs did not attribute any particular weight to any particular factor considered by it; rather, Goldman Sachs made qualitative judgments as to the importance and relevance of all the factors considered therein. Accordingly, Goldman Sachs believes that the Financial Analyses should be considered as a whole and that selecting portions of its analyses or the factors considered therein could result in an incomplete and incorrect understanding of the conclusions of the Financial Analyses. The results presented herein refer solely to the Transactions and do not extend to any other present or future matters or transactions regarding the Company, the economic group to which they belong or to the sector in which they operate.

The Financial Analyses are exclusively addressed to Embraer and do not address the underlying business decision by Embraer to engage in the Transaction and do not constitute a recommendation to the Company and/or the holders of the Shares (including, but not limited to, as to whether any such holder should vote in favor of the Transaction or exercise any appraisal rights or other rights with respect thereto). In addition, the Financial Analyses (i) treat the Company as stand-alone operations and therefore, the Financial Analyses do not include any operational, tax or other benefits or losses, or synergies, incremental value and/or costs for the Company, if any, which may arise from the consummation of the Transaction and (ii) do not address the treatment of the different classes of Shares, and any adjustments intended to offset, or that may reflect, any specific rights associated with any specific class of Shares. We are therefore not expressing, and the Financial Analyses do not contain, any views relating to the distribution of economic value among the various classes of Shares.

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Disclaimers

(Continued)

Goldman Sachs and its affiliates, as part of their investment banking business, are continually engaged in performing financial analyses with respect to businesses and their securities in connection with Mergers and acquisitions, negotiated underwritings, competitive biddings, secondary distributions of listed and unlisted securities, private placements and other transactions as well as for estate, corporate and other purposes. We have been engaged by Embraer and we will receive a fee for the services provided by us. Moreover, Embraer has agreed to reimburse our expenses and indemnify us for certain liabilities that may arise as a result of our engagement. We also may provide investment banking services to the Company and its affiliates in the future. In connection with the above-described services we have received, and may receive, compensation.

Goldman Sachs is a full service securities firm engaged, either directly or through its affiliates, in securities trading, investment management, financial planning and benefits counseling, risk management, hedging, financing and brokerage activities for both companies and individuals. In the ordinary course of these activities, Goldman Sachs and its affiliates may provide such services to the Company and its affiliates, may actively trade the debt and equity securities (or related derivative securities) of the Company and its affiliates for their own account and for the accounts of their customers and may at any time hold long and short positions of such securities. Goldman Sachs does not have a direct or indirect interest in the Transaction, provided however that, in accordance with usual market practice, part of the compensation payable by the Company in connection with the services rendered by Goldman Sachs depends on the implementation of the Transaction. Except as may result from the activities described in the first and second sentences of this paragraph, Goldman Sachs does not have a direct or indirect interest in the Company. Without limiting any other statement set forth herein, to the best of our knowledge, neither the Controlling Shareholders nor the managers of the Company have directed, limited, obstructed or otherwise taken any action that has or could have compromised the access to, or use or knowledge of, information, documents or work methodologies relevant to the quality of the Financial Analyses.

In preparing the Financial Analyses, in accordance with applicable laws and regulations, we did not take into account (i) the tax consequences of the Transaction for the holders of the Shares, and (ii) the impact of any fees and expenses that may result from the consummation of the Transaction, including, but not limited to, those related to any depositary services that may be charged to the holders of the Company’s ADRs. The financial calculations contained in the Financial Analyses may not always result in a precise sum due to rounding.

GOLDMAN SACHS & COMPANHIA

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Table of Contents

I.	Considerations on Control Premium

II.	Discounted Cash Flow Valuation Analysis

III.	Historical Transactions

IV.	Historical Valuation Parameters for Embraer

V.	Impact of Transaction to Current Shareholders

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I. Considerations on Control Premium

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Summary of Premium Analyses

Methodology		Description	Implied premium

Discounted Cash Flow Analyses (DCF)	•	The DCF method is utilized to determine the intrinsic value of the company based on its projected cash flows	Implied premium over: 60-day average of ADR price: 1.6% – 24.4%

	•	The DCF analyses treat the Company as a stand-alone operation and therefore do not include any benefits or losses which may arise from the consummation of the Transaction, such as operating benefits, fiscal benefits, synergies etc.

	•	The DCF analyses performed for Embraer were based on forecasts provided by and discussed with its management. Management projections were expressed in US dollars and based in projections in US GAAP	30-day average of ADR price: (0.9%) – 21.4%

	•	The DCF analyses do not consider the differences among the classes of shares of the Company, and any adjustments intended to offset any specific rights associated with any specific class of shares of the Company. We are not expressing any views relating to the distribution of economic value among the various classes of shares of the Company	Current ADR price: (3.1%) – 18.6%

	•	The implied values per ADR were obtained by subtracting the net financial debt and minority interest of Embraer as of September 30, 2005 from the range of the Company’s Enterprise Value, and dividing the result by the number of ADRs outstanding

	•	The range of Enterprise Values was obtained by the sum of (i) the present value of the unlevered free cash flows (operating income less income taxes, plus depreciation and amortization, less increases in working capital and less capital expenditures) that Embraer projects to generate from 2005 and 2014, using a range of discount rates between 11.3% and 12.3%; and (ii) the present value of the terminal value of Embraer in 2014 using a perpetuity growth rate between 4.0% and 5.0%. DCF valuation analyses were performed as of September 30, 2005

	•	The DCF valuation analyses result in an indicative ADR value range between US$39.92 and US$48.87

	•	For more information and details on the DCF valuation analyses, please refer to Section II of this document




Note: Implied premium as of 13-Jan-2005

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Summary of Premium Analyses

Methodology		Description	Implied Premium

Analysis of Historical Share Reclassification Transactions	•	We identified and analyzed 17 reclassification transactions of international companies occurring among publicly traded companies from 2000 to 2005	With relinquishment of control: 0.0% – 19.4%

	•	In each reclassification transaction, two classes of stock of a single company with different voting rights were reclassified or combined into a single class of common stock	Without change in control: 0.0% – 8.2%

	•	For each of the companies identified for the reclassification transaction analysis, we determined the premium paid to the high-vote shares or controlling shareholder by dividing the total value that those shares represented after and before the transaction, respectively

	•	In transactions where a payment or a targeted repurchase was made by the company, we added the cash component to the value received by the high-vote shares or controlling shareholder, and adjusted the proforma market capitalization of the company to reflect the cash payment and shares repurchased

	•	The analysis of Share Reclassification Transactions aims at identifying similar precedents to the Transaction and verifies the range of premium historically paid in this kind of transaction

	•	We have divided the universe of selected transactions in two groups: (i) situations in which a controlling shareholder with more than 50% of the votes reduced its voting power to less than 50% after the reclassification, and (ii) situations in which there was no controlling shareholder

	•	Of the transactions examined in the reclassification transaction analysis, 4 transactions involved a controlling shareholder with greater than 50% of the votes reducing its voting power to less than 50%. The premium paid for the controlling shareholder in these transactions varied from 0.0% to 19.4%, and the average is 7.6%

	•	13 of the transactions analyzed did not involve a change of control. Of these, 11 transactions had no implied premium to the high-vote shares. The premium paid for the high-vote shares in these transactions varied from 0.0% to 8.2%, and the average is 1.1%

	•	No company utilized in the analysis of historical reclassification transactions is identical to the Company. In evaluating historical reclassification transactions, we have made judgments and assumptions with regard to, among other things, the capital structure and shareholder base of such companies

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Summary of Premium Analyses

Methodology		Description	Implied Premium

Analysis of Multiples of Selected Private Market Transactions in the Aerospace Industry	•	We selected and examined 16 change-of-control transactions in the aerospace and defense industry	Implied premium over: 60-day average of ADR price: (23.2%) – 11.5%

	•	We applied the implied EV/LTM EBITDA¹ multiples resulting from those transactions to the LTM EBITDA figures of Embraer and translated the resulting range of per share prices into implied premiums over the 60-day average, 30-day average and current Embraer’s ADR prices as of January 13, 2006
			30-day average of ADR price: (25.0%) – 8.8%
	•	The EV/LTM EBITDA multiple of private change of control transactions is a metric that depends, among other things, on the potential growth of the target company, competition for target (if existent) and potential synergies forecasted by the acquirer	30-day average of ADR price: (25.0%) – 8.8%

	•	No company utilized in the private market transactions analyses is identical to the Company. In evaluating private market transactions, we have made judgments and assumptions with regard to, among other things, the capital structure and shareholder base of such companies	Current ADR price: (26.8%) – 6.3%




Note: Implied premium as of 13-Jan-2006

¹ EBITDA = Earnings before interest, tax, depreciation and amortization

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Summary of Premium Analyses

Considerations on Control Premium and Implied Exchange Ratio⁴

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¹	DCF valuation range assumes a WACC from 11.3% to 12.3% and a perpetuity growth rate from 4.0% to 5.0%. Premium determined by the comparison of the following share prices as of 13-Jan-06: current (US$41.2), 30-days average (US$40.3) and 60-days average (US$39.3)
²	Based on the range of implied premiums in selected share reclassification transactions
³	Share price based on the range of EV / LTM EBITDA multiples from 9.0x to 13.1x, applied to Embraer’s LTM EBITDA of US$599mm. Assumes net debt (including minority interest) of US$51mm, and 180.5mm shares outstanding. Premium determined by the comparison of the following share prices as of 13-Jan-06: current (US$41.2), 30-days average (US$40.3) and 60-days average (US$39.3)
⁴	Implied exchange ratio to Control Shares relative to that of Non-control Shares, which results in corresponding premium. Note that, if as a result of the Transaction New Embraer ends up with more than shares than Embraer, a premium of Z% requires an exchange ratio greater than (1+Z/100):1. If p is the premium, y the implied exchange ratio to Control Shares relative to that of Non-control Shares, St the number of total shares of the Company and Sc the number of Control Shares, then y = [(1+p) x (St - Sc)] / [St - (1+p) x Sc)]

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Control Premium in the Brazilian Corporation Law

•	The new Brazilian Corporation Law (Lei 10,303), enacted in 2001, establishes that, in the event of change of control, minority ON (voting) shareholders have the right to receive 80% of the price per share received by controlling shareholders

	—	In effect, this provision of the Brazilian Corporation Law implies in a control premium of 25% (i.e. 100/80 -1)

	—	Non-voting (PN) shares have no tag-along rights in the event of change of control

	—	The acquiring party is obliged to launch a mandatory tender offer to acquire all of the outstanding non-control ON shares within 30 days of the closing of the control acquisition. Minority ON shareholders have to be offered the same conditions offered to the controlling shareholders

•	Companies listed in Bovespa’s “Nível 2” of corporate governance have to extend tag-along at 70% of the price per share paid to the controlling shareholder to all its PN shareholders. Companies listed in Bovespa’s “Novo Mercado” segment (which allows for ON shares only) must offer a 100% tag-along to all shareholders in the event of change of control

•	Prior to 1997, the Brazilian Corporation Law established a 100% tag-along right for ONs and PNs. That provision was eliminated in order to make privatizations viable, and the 80% tag-along provision for ONs was reintroduced in 2001

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II. Discounted Cash Flow Valuation Analysis

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Discounted Cash Flow Valuation Analyses

Methodology

•	Valuation analyses were performed as of September 30, 2005 based on a projection period from 2005 to 2014. All projections used for purposes of the valuation of the Company were prepared by the senior management of that company

•	Unlevered free cash flows (before financing costs) were projected by the Company in US Dollars and based on financial statements of the Company in US GAAP

•	Illustrative enterprise values of each of the Companies were determined by the sum of:

	—	Net present value indication calculated as of September 30, 2005 with respect to the unlevered free cash flows for the projection period, and

	—	Net present value indication calculated as of September 30, 2005 with respect to the illustrative terminal value, determined using the perpetuity growth methodology applied to a normalized unlevered free cash flow (capex equal to depreciation and excluding temporary tax benefits)

•	The illustrative present value of the unlevered free cash flows was calculated using a weighted average cost of capital (“WACC”) between 11.3% and 12.3%. The perpetuity growth rate for the unlevered free cash flow was between 4.0% and 5.0%

•	The equity value indications calculated for the Company were determined by subtracting from the illustrative enterprise value previously calculated the total value of the net debt and minority interest, as set forth in the audited balance sheets as of September 30, 2005

•	The indicative equity value indication per share for each of the Company was determined by dividing the equity value indication by the total number of shares outstanding

	—	Total shares outstanding: 721,832,057

	—	Control Shares outstanding: 145,527,000

•	The valuation analyses result in aggregate equity value indication for the Company and do not allocate value between any classes of shares. No adjustments were made as to potential benefits that may arise from the transaction, such as synergies or tax gains

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Summary of Discounted Cash Flow Valuation

	Indicative Range of Enterprise Values (US$ MM)				Indicative Range of Equity Values (US$ MM) (1)

	Perpetuity Growth Rate (%)				Perpetuity Growth Rate (%)

WACC		4.0%	4.5%	5.0%		4.0%	4.5%	5.0%

11.3%		8,069	8,392	8,767		8,119	8,443	8,818
11.6%		7,817	8,114	8,456		7,868	8,165	8,507
11.8%		7,582	7,854	8,167		7,633	7,905	8,218
12.1%		7,361	7,612	7,898		7,412	7,663	7,949
12.3%		7,153	7,385	7,648		7,204	7,436	7,699

	Indicative Range of Equity Values per ADR (US$) (2)				Indicative Range of Implied Premium over ADR Market Price (3)

	Perpetuity Growth Rate (%)				Perpetuity Growth Rate (% )

WACC		4.0%	4.5%	5.0%		4.0%		4.5%		5.0%

11.3%		45.0	46.8	48.9		14.5	%	19.1	%	24.4	%
11.6%		43.6	45.2	47.1		11.0	%	15.1	%	20.0	%
11.8%		42.3	43.8	45.5		7.6	%	11.5	%	15.9	%
12.1%		41.1	42.5	44.0		4.5	%	8.1	%	12.1	%
12.3%		39.9	41.2	42.7		1.6	%	4.9	%	8.6	%


(1)	Equity value after net cash of US$97.0mm and minority interest of US$46.1mm as of 30-September-2005. Source: Embraer's audited financial statements in US GAAP as of 30-September-2005
(2)	Assumes 721.8mm shares outstanding as of 30-September-2005, equivalent to 180.5mm ADRs
(3)	Indicative implied premium over the average ADR price of US$39.3 (ticker ERJ) during the last 60 days as of January 13, 2006

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Macroeconomic Assumptions

	Projected Fiscal Year Ending December 31,

	2006			2007			2008			2009			2010			2011			2012			2013			2014

*Inflation*
US Inflation (CPI %)		2.9	%		2.2	%		2.2	%		2.2	%		2.2	%		2.2	%		2.2	%		2.2	%		2.2	%
US Inflation (PPI %)		3.4	%		2.0	%		2.0	%		2.0	%		2.0	%		2.0	%		2.0	%		2.0	%		2.0	%
Brazilian Inflation (IPC-A %)		4.5	%		4.5	%		4.5	%		4.5	%		4.5	%		4.5	%		4.5	%		4.5	%		4.5	%
Inflation Differential (IPC-A vs. US CPI)		1.6	%		2.3	%		2.3	%		2.3	%		2.3	%		2.3	%		2.3	%		2.3	%		2.3	%
*Interest Rates*
Nominal Interest Rate (Selic / EOP)		15.0	%		13.5	%		13.0	%		12.5	%		11.5	%		11.5	%		11.5	%		11.5	%		11.5	%
*Exchange Rate*
EOP Rate (R$/US$)		2.40			2.55			2.68			2.80			2.85			2.92			2.98			3.05			3.12
Average Rate (R$/US$)		2.35			2.45			2.59			2.74			2.82			2.88			2.95			3.01			3.08

Source: Pesquisa Focus do Banco Central do Brasil as of December 30, 2005, GS Economic Research

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Cost of Capital Calculation Assumptions

Discount rates used for the purpose of the Discounted Cash Flow Analyses set forth herein are based on the WACC methodology (“Weighted Average Cost of Capital”)

•	Basic WACC formula for emerging countries



•	Cost of debt component: estimation of the expected cost of the company’s marginal financing sources

•	Cost of equity component: estimated by the CAPM (“Capital Asset Pricing Model”)

	—	The opportunity cost of capital is equal to the return of the risk-free bonds plus the company’s systematic risk (beta), multiplied by the market risk premium

	—	Adjustment for the calculation of the country risk, considering the difference between the expected average yield of the Brazilian Global 40 bond (callable in 2015) and the equivalent US Treasury Bond

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Cost of Capital Calculation for Embraer

Risk-Free Rate

10-year US Treasury (a)	4.4	%
(+) Brazil Sovereign Spread Average (b)	4.4	%

(=) Assumed Risk-Free Rate	8.9	%


Cost of Equity

US Equity Risk Premium (c)	5.6	%
Beta (d)	0.95
(+) Assumed Risk-Free Rate	8.9	%

(=) Cost of Equity	14.2	%

Cost of Debt

Pre-tax Cost of Debt (e)	6.9	%
(x) Marginal Tax Rate	34.0	%

(=) Cost of Debt	4.5	%


WACC Calculation

Target Debt / Total Capitalization	25.0	%
Target Equity / Total Capitalization	75.0	%

WACC (Nominal US$)	11.8	%


(a)	Average yield of the 10 year on-the-run U.S. Treasury Bond in January 13, 2005 (average for the last 3 months) (Source: Factset)
(b)	Average spread of the 2040 Brazilian Government Bond (callable in 2015) over the 10 year on-the-run US Treasury Bond in January 13, 2005 (average for the last 3 months) (Source: Factset)
(c)	Equity Risk Premium based on US Long-Horizon Equity Risk Premia in US dollars from 1974 to 2003 (Source: “International Equity Risk Premia Report 2004” Ibbotson 2004 report)
(d)	Predicted levered beta (Source: BARRA as of November 30, 2005)
(e)	Assumes a negative spread of 200 bps between Company’ cost of debt and the Brazilian Government Bond

Message

Summary of Discounted Cash Flow Valuation

Main Valuation Assumptions


Base of Projections	•	Discounted cash flow analyses were based on Embraer’s business plan (“Plano de Ação”) as of December 2005, as well as public information and discussions with Embraer’s management

	•	Analyses reflect valuation of Embraer on a stand-alone basis

	•	Currency: nominal US$

	•	Financial statements: based on the company’s financials in US GAAP, as of September 30, 2005

	•	Projection period: 2005 to 2014

Revenue and Cost Build-up	•	Aircraft delieveries based on Embraer’s current backlog for the commercial, corporate and defense segments, as well as the Company’s 20-year market study

	•	Evolution of prices according to Embraer contracts, linked to the US PPI

	•	Defense revenue accrued throughout project life

	•	Cost of goods sold reflect specific margins for each of Embraer product segment

Capex and Research & Development	•	Projections include capex and R&D expenses related to the maintenance of Embraer’s current commercial and corporate product line. Projections do not assume development of new products for these segments

	•	Capex and R&D for the defense sector is accounted for as cost of goods sold and accrued throughout the project life

	•	R&D includes expenses for new project of Light Jets / Very Light Jets, from 2005 to 2010. R&D expense in DCF model include only Embraer’s share of the total disbursement; approximately 50% of total investment is being made by the contributing partners

	•	Capex in perpetuity assumed as 3% of 2014E net revenues, to reflect management’s projections of future investment needs

Working Capital	•	Working capital assumptions reflect Embraer’s cash cycle and company policy related to aircraft financing

Message

Summary DCF Projections

										Compounded Annual Growth Rate (%)

	2005E			2006E			2007E			2008E - 2014E

Financial Projections (US$mm)

Consolidated Net Revenues	$	3,772		$	4,243		$	4,534			5.7	%

Gross Profit		1,129			1,339			1,432			6.1	%

Operating Expenses		(632	)		(727	)		(750	)		2.6	%

EBIT		496			612			683			9.0	%

EBITDA		560			682			757			7.9	%


Projected Deliveries (Number of Airplanes)

Commercial aviation		118			122			126

Corporate aviation (1)		14			19			21

Defense (2)		9			4			3

Total		141			145			150

Source: Projections provided by the management of the Company

¹ Includes new Light Jets segment

² Only includes transportation aircrafts

Message

Summary DCF Projections

(US$ mm)

	For the Fiscal Year Ending on December 31

	2005E			2006E			2007E			2008E			2009E			2010E			2011E			2012E			2013E			2014E

Unlevered Operating Income (1)		351			441			494			574			681			763			812			868			911			974
(+) Depreciation and Amortization		64			69			74			79			83			88			56			38			43			48
(-) Capex		(59	)		(72	)		(62	)		(62	)		(62	)		(62	)		(63	)		(65	)		(66	)		(68	)
(-) Change in Working Capital		118			202			(1	)		(13	)		(60	)		(51	)		(33	)		(12	)		(55	)		(48	)
Free Cash Flow		473			641			504			577			642			737			772			829			833			906
Terminal Year Free Cash Flow (2)																													727

Source: Projections provided by the management of the Company


¹	Net Income before interest, depreciation and amortization less adjusted taxes
²	Free Cash Flow for terminal value indication adjusted to (i) eliminate temporary tax benefits and (ii) normalized Capex with index Capex / Net Revenues equal to 3.0%

Message

III. Historical Transactions

Message

Selected Reclassification Transactions

Simplification of Share Classes with Differentiated Voting Rights

Date	Company	Consideration	Ratio		Premium		Minority Shareholders

Transactions with Relinquishment of Control

Sep-05	Sotheby’s	Stock + Cash	1.00	x	19.4	%	(5.5	) %

Mar-05	Royal Group	Stock + Cash (1)	1.00	x	5.6	%	(1.1	) %

Oct-02	Reader’s Digest	Stock + Cash	1.22	x	5.3	%	(1.1	) %

Jun-00	Mitchell Energy	Stock	1.00	x	0.0	%	0.0	%

Max			1.22	x	19.4	%	0.0	%
Average			1.06	x	7.6	%	(1.9	) %
Median			1.00	x	5.4	%	(1.1	) %
Min			1.00	x	0.0	%	(5.5	) %

Transactions without Change of Control

Jun-05	Gartner , Inc.	Stock	1.00	x	0.0	%	0.0	%

Feb-04	Gildan Activewear	Stock	1.00	x	0.0	%	0.0	%

Nov-03	MIPS Technologies	Stock	1.00	x	0.0	%	0.0	%

Nov-03	Jo-Ann Stores	Stock	1.15	x	6.6	%	(7.3	) %

Sep-03	Commonwealth Telephone Enterprises	Stock	1.09	x	8.2	%	(0.8	) %

May-03	Florida East Coast Industries	Stock	1.00	x	0.0	%	0.0	%

May-03	Home Capital Group	Stock	1.00	x	0.0	%	0.0	%

May-02	Cabot Oil & Gas	Stock	1.00	x	0.0	%	0.0	%

May-02	Freeport McMoRan Copper & Gold	Stock	1.00	x	0.0	%	0.0	%

Sep-01	Conoco Phillips	Stock	1.00	x	0.0	%	0.0	%

May-01	Waddell & Reed Financial	Stock	1.00	x	0.0	%	0.0	%

May-01	Raytheon	Stock	1.00	x	0.0	%	0.0	%

May-01	SAP	Stock	1.00	x	0.0	%	0.0	%

Max			1.15	x	8.2	%	0.0	%
Average			1.02	x	1.1	%	(0.6	)%
Median			1.00	x	0.0	%	0.0	%
Min			1.00	x	0.0	%	(7.3	)%

Source: Press releases issued at a announcement and companies’ financial statements

¹	Value to controlling shareholder includes shares and the cancellation of certain consideration owned to the company

Message

Selected Private Transactions

Transactions above US$ 500 mm in the Aerospace & Defense Sector

Announcement

Acquiror

Target

Descripton of Target’s Sector

Transaction
Value (US$
milhões)

EV / LTM
EBITDA Multiple

Premium -
1 day
before
announcement

Recent Selected Transactions

2005

Sep-05

DRS Technologies

Engineered Support Systems Inc

Manufacturer of Military Equipment

1,852

12.1 x

28.9

Jul-05

Zodiac SA

C&D Aerospace Group

Aircraft accessories

600

Mar-05

BAE Systems

United Defense Industries

Ammunition and Combat Vehicles

4,192

12.7 x

28.7

Feb-05

Pratt & Whitney

Boeing Rocketdyne Propulsion and Power

Rocket Engine Developer and Builder

700

Feb-05

Onex Corporation

Boeing Commercial Airplanes-Tulsa Div.

Commercial Airplane Facilities

1,200

2004

Nov-04

Aurora Capital

K&F Industries

Aircraft Components

1,006

Jul-04

Meggitt/Carlyle

Dunlop Standard

Aerospace and Defense Components

1,442

9.2 x

Jun-04

BAE

Alvis

Armored Vehicles Manufacturer

729

13.1 x

15.5

May-04

Finmeccanica

AgustaWestland

Helicopters

1,902

2003

Dec-03

Kohlberg Kravis Roberts

MTU Aero Engines (Daimler Chrysler)

Aircraft Engines

1,729

Aug-03

Precision Castparts

SPS Technologies

Aircraft Components

729

9.0 x

27.6

Aug-03

DRS

Integrated Defense

Defense Electronics

550

11.3 x

16.7

Jun-03

Warburg Pincus

TransDigm

Aircraft Components

1,100

9.7 x

Aircraft Manufacturers Selected Transactions

1999

Oct-99

EU Consortium

Embraer

Aircraft Manufacturer

834

11.0 x

25.0

May-99

General Dynamics

Gulfstream

Aircraft Manufacturer

4,800

10.2 x

27.3

1996

Dec-96

Boeing

McDonnell Douglas

Aircraft Manufacturer

13,343

9.6 x

26.4

Max:

4,192

13.1 x

28.9

Average:

1,364

11.0 x

23.5

Median:

1,100

11.3 x

27.6

Min:

550

9.0 x

15.5

Source: Companies press releases and financial reports

Message

IV. Historical Valuation Parameters for Embraer

Message

Comparison of Selected Companies in the Aerospace and Defense Sector

US$ mm

										Enterprise Value Multiples (1)												Calendarized P/E Multiples (2)						5-Year EPS CAGR (2)			2007 PE/5-Year EPS CAGR			LTM Margins (1) EBITDA
	Closing Price 01/13/06		% of 52 Week High			Equity Market Cap (1)		Enterprise Value (1)
										Sales			EBITDA

										LTM			LTM			2006			2007			2006			2007

Aircraft Manufacturers

Boeing (3)(4)	$	69.48		97	%	$	56,709	$	55,497		1.0	x		16.2	x		9.2	x		8.5	x		21.1	x		16.8	x		14.0	%		1.2	x		6.3	%

Bombardier (4)		2.49		80			4,355		6,072		0.5			7.3			6.3			5.5			23.2			18.9			NA			NA			6.1

EADS		38.19		95			31,529		29,029		0.7			5.0			6.8			6.1			18.8			16.1			10.9			1.5			14.3

Embraer		41.21		99			7,437		7,386		2.1			12.3			9.8			9.7			17.3			15.2			16.7			0.9			16.7

Aircraft Components

BE Aerospace (5)	$	21.20		96	%	$	1,341	$	1,933		2.3	x		15.6	x		15.6	x		11.9	x		19.1	x		18.4	x		17.5	%		NA			14.7	%

Heico (5)		25.45		96			691		758		2.7			13.6			10.4			9.0			23.5			20.0			18.0			1.1			19.7

Hexcel (5)		19.56		98			1,425		1,903		1.6			10.9			9.1			7.8			20.8			17.0			10.0			1.7			14.7

K&F Industries (5)		16.60		93			657		1,407		3.7			9.5			9.1			8.4			13.8			11.9			16.0			NA			38.9


		Max		99	%	$	56,709	$	55,497		3.7	x		16.2	x		15.6	x		11.9	x		23.5	x		20.0	x		18.0	%		1.7	x		38.9	%

		Average		94			13,018		12,998		1.8			11.3			9.5			8.4			19.7			16.8			14.7			1.3			16.4

		Median		96			2,890		4,003		1.8			11.6			9.1			8.4			19.9			16.9			16.0			1.2			14.7

		Min		80			657		758		0.5			5.0			6.3			5.5			13.8			11.9			10.0			0.9			6.1


Defense

General Dynamics	$	117.20		97	%	$	23,906	$	25,449		1.2	x		10.4	x		8.7	x		8.1	x		14.6	x		13.2	x		10.0	%		1.3	x		11.9	%

Northrop Grumman		60.94		99			21,883		25,671		0.8			8.8			7.8	x		8.0	x		14.3			13.2			10.3			1.3			9.5

Raytheon		40.86		100			18,253		22,991		1.1			11.0			9.5	x		9.0	x		16.3			14.1			12.0			1.2			9.8


		Max		100	%	$	23,906	$	25,671		1.2	x		11.0	x		9.5	x		9.0	x		16.3	x		14.1	x		12.0	%		1.3	x		11.9	%

		Average		99			21,348		24,704		1.0			10.0			8.7			8.3			15.1			13.5			10.8			1.3			10.4

		Median		99			21,883		25,449		1.1			10.4			8.7			8.1			14.6			13.2			10.3			1.3			9.8

		Min		97			18,253		22,991		0.8			8.8			7.8			8.0			14.3			13.2			10.0			1.2			9.5


¹	Source: Latest publicly available financial statements. Equity Market Cap based on diluted shares outstanding. Enterprise Value includes minority interest
²	Source: IBES estimates
³	Includes equity gain (loss) in income from affiliates
⁴	Includes finance operations, but excludes finance-related debt
⁵	EV/LTM Sales EV/LTM EBITDA multiples reflect latest 2005E figures for revenues and EBITDA as of January 13, 2006 as per the latest IBES consensus

Message

Volatility Analysis of Embraer’s ADRs

Historical Daily Return

Message

Source: Factset

Message

Embraer’s Stock Price Performance

Local Market (EMBR 3, EMBR 4 in R$)

Message

Source: Factset

Message

Embraer’s Stock Price Performance

ADR Performance (US$)

US$

Message

Source: Factset

Message

V. Impact of Transaction to Current Shareholders

Message

Impact of Transaction to Current Shareholders

Share Exchange Analysis – Assumes No Change in Market Value Post-Transaction

US$ MM, except per share data

	Premium for Control Shares to Current Price

		0.0%			5.0%			10.0%			15.0%			20.0%

Implied price per Control Share	$	39.3		$	41.3		$	43.2		$	45.2		$	47.2

Implied Exchange ratio		1.00	x		1.06	x		1.13	x		1.20	x		1.26	x

Pro-forma number of shares

Control - ON Control Shares (1)		36.4			38.7			41.1			43.5			46.0

Control - Others (2)		23.8			23.8			23.8			23.8			23.8

Minorities (2)		120.3			120.3			120.3			120.3			120.3

Total number of shares (mm ADRs)		180.5			182.8			185.1			187.6			190.1

Current market cap (3)	$	7,091		$	7,091		$	7,091		$	7,091		$	7,091

Implied price per share affected by transaction	$	39.3		$	38.8		$	38.3		$	37.8		$	37.3


Control Group

Value $ of ON Control Shares	$	1,430		$	1,501		$	1,573		$	1,644		$	1,716

Additional ON shares		0.0			2.3			4.7			7.1			9.6

Number of shares - ON Control Shares		36.4			38.7			41.1			43.5			46.0

Number of shares - PN + ON outside Shareholders Agreement		23.8			23.8			23.8			23.8			23.8

Number of shares (mm ADRs)		60.1			62.4			64.8			67.2			69.7

Total $ value of stake	$	2,363		$	2,423		$	2,482		$	2,542		$	2,602

Difference from current value		0			60			119			179			239

Equivalent current share price - $(4)		39.3			40.3			41.3			42.3			43.3

Premium/(discount) %		0.0	%		2.5	%		5.1	%		7.6	%		10.1	%

Implied 2006E EBITDA multiple (5)		10.3	x		10.6	x		10.9	x		11.1	x		11.4	x

% Ownership		33.3	%		34.2	%		35.0	%		35.8	%		36.7	%


Minorities - Others		180.5			182.8			185.1			187.6			190.1

Number of shares (mm ADRs)		120.3			120.3			120.3			120.3			120.3

Total $ value of stake	$	4,728		$	4,668		$	4,609		$	4,549		$	4,489

Difference from current value		0			(60	)		(119	)		(179	)		(239	)

Equivalent current share price - $ (4)		39.3			38.8			38.3			37.8			37.3

Premium/(discount)%		0.0	%		(1.3	)%		(2.5	)%		(3.8	)%		(5.1	)%

Implied 2006E EBITDA multiple (5)		10.3	x		10.2	x		10.1	x		9.9	x		9.8	x

% Ownership		66.7	%		65.8	%		65.0	%		64.2	%		63.3	%

EV/2006E EBITDA multiple expansion to breakeven		0.0	x		0.1	x		0.3	x		0.4	x		0.6	x
Share Price appreciation post transaction to breakeven		0.0	%		1.3	%		2.6	%		3.9	%		5.3	%


¹	Assumes controlling group to be Bozano, Sistel and Previ (ON Control Shares only).
²	Assumes minority group to be remaining ON shareholders and all of PN shareholdes. If premium is different from 0 %, analysis assumes market cap is unchanged and minorities decrease their number of shares.
³	Current market cap assumes 180.5mm SDR equivalent shares and 60-days average share price of US$39.3, as of 1/13/2006.
⁴	Total US$ value of stake/initial number of shares.
⁵	Assumes market cap to be implied current share price x initial number of shares, net cash of US$46mm and 2006E EBITDA of US$682mm as per Company’s projections.

Free Translation
from the Portuguese

BY-LAWS OF

EMBRAER – EMPRESA BRASILEIRA DE AERONÁUTICA S.A.

CHAPTER I

CORPORATE NAME, HEAD OFFICES, BUSINESS PURPOSE

AND TERM OF DURATION

ARTICLE 1 –	EMBRAER – Empresa Brasileira de Aeronáutica S.A. (“Company”) is a joint stock company that is governed by these By-Laws and by applicable legislation.

	Sole Paragraph – The Company was incorporated as a publicly-held company with private participation, authorized by Decree-Law No. 770, of August 19, 1969, and was privatized pursuant to Law No. 8031, of April 12, 1990, and to Public Notice No. PND-A-05/94-Embraer, of the Executive Committee of the National Privatization Program, published in the Official Gazette, Session 3, on pages 5774 to 5783.

HEAD OFFICES

ARTICLE 2 –

The Company has its head offices and jurisdiction in the City of São José dos Campos, State of São Paulo, and may incorporate subsidiaries and open branches, offices or agencies, as well as appoint agents or representatives in any part of Brazil or abroad, subject to resolution by the Board of Directors.

BUSINESS PURPOSE

ARTICLE 3 –

The Company has as its business purpose:

To project, build and commercialize aircraft and aerospace materials and respective accessories, components and equipment, maintaining the highest standards of technology and quality;

	II.	To promote and carry out technical activities related to the production and maintenance of aerospace material;

	III.	To contribute to the development of skilled technical personnel as required by the aerospace industry; and

	IV.	To carry out other technological, industrial and commercial activities, as well as provide services that are related to the aerospace industry.

PRINCIPLES

ARTICLE 4 –

The organization and operation of the Company shall observe the following principles:

I.	The securities issued by the Company shall be traded on the national and/or international capital markets, with due observance to all the legal requisites and the requirements of the institutions of such markets, in order to secure in such markets the financial resources that are necessary for its growth, maintenance of its competitiveness and continuation;

II.	The capital stock of the Company shall be solely represented by common shares;

III.	In the resolutions of the Shareholders’ Meeting:

		a)	no shareholder or group of shareholders, whether Brazilian or foreign, may exercise voting rights representing more than 5% of the number of shares into which the capital stock is divided; and

		b)	foreign shareholders and groups of foreign shareholders shall not exercise voting rights representing more than 2/3 of the total of the votes conferred on the entirety of Brazilian shareholders present;

	IV.	With due regard for the provisions of Article 55, the pre-establishment of majority of shareholders in the Shareholders’ Meeting by means of shareholders agreements concerning the exercise of voting rights, in order to form scales with a number of votes greater than the individual limit established in letter “a” of item III of this Article shall be prohibited;

	V.	The resolutions and acts of the bodies of the Company referred to in Article 9 herein shall be subject to the veto of the Federal Government; and

	VI.	The issuance of founders’ shares is prohibited.

ARTICLE 5 –	The Company shall have indefinite term of duration.

CHAPTER II

CAPITAL STOCK AND SHARES

CAPITAL STOCK

ARTICLE 6 –	The capital stock of the Company, fully subscribed and paid in, amounts to [•] Reais [R$ [•]], divided into [•] ([•]) common shares and one common Golden share (article 9), all with no par value.

	PARAGRAPH ONE – The capital stock shall always and exclusively be divided into common shares, being prohibited the issuance of preferred shares.

	PARAGRAPH TWO – The Golden share held by the Federal Government shall always comprise one single share, which shall preserve all of its prerogatives for as long as it is held by the Federal Government (pursuant to Article 8 of Law No. 9491/97).

ARTICLE 7 –	The capital stock may be increased, pursuant to Article 168 of Law No. 6404/76, upon issuance of up to 1,000,000,000 new common shares, by resolution of the Board of Directors, without any amendment to theses By-laws.

EXHIBIT II

BRANCHES OF THE COMPANY

(I) Branch Eugênio de Melo – Rodovia Presidente Dutra, Km 134, Eugênio de Melo, 12240-420 – São José dos Campos – SP, enrolled before NIRE 35.902.398.988, CNPJ 60.208.493/0010-72, State enrollment 645.416.850.119, Local Enrollment 14103374.15-2/00 and Activity Code - 74.15-2/00 – Head offices of companies, administrative local units;

(ii) Branch Gavião Peixoto - Estrada Municipal Euclides Martins, 2170, 14813-000, Gavião Peixoto – SP, enrolled before NIRE 35.902.665.277, CNPJ 60.208.493/0009-39, State enrollment 787.051.470.119, and Activity Code - 35.31-9-00-Construction and Assembly of Aircrafts;

(iii) Escritório São Paulo - Edifício J.K. Financial Center, Av. Juscelino Kubitschek, 510, 8th floor, room 82, Itaim Bibi, 04543-000, São Paulo – SP, enrolled before NIRE 35.901.962.553, CNPJ 60.208.493/0005-05, State enrollment 116.490.290.114, and Activity Code - 35.31-9-00-Construction and Assembly of Aircrafts;

(iv) Branch São José dos Campos – Trainment Center - Av. Brigadeiro Faria Lima, 1941 – Building F-122 e F-123,12227-000, São José dos Campos – SP, enrolled before NIRE 35.902.665.269, CNPJ 60.208.493/0008-58, State enrollment 645.410.807.113, and Activity Code - 74.15-2/00 – Head offices of companies, administrative local units;

(v) Branch São José dos Campos – Av. Brig. Faria Lima w/no., 12227-000, São José dos Campos, enrolled before NIRE 35.902.665.251, CNPJ 60.208.493/0007-77, State enrollment 645.410.825-115, and Activity Code - 35.31-9-00-Construction and Assembly of Aircrafts;

(vi) Branch Botucatu - Av. Alcides Cagliari, 2281, Building N-03, 18608-900 - Botucatu – SP, enrolled before NIRE 35.902.668.870, CNPJ 60.208.493/0011-53, State enrollment 224.162.606.110, and Activity Code - 35.31-9-00-Construction and Assembly of Aircrafts;

(vii) Branch Botucatu - Rua Nossa Senhora de Fátima, 360, Area A, 18.608-900 - Botucatu – SP, enrolled before NIRE 35.902.764.411, CNPJ 60.208.493/0012-34, State enrollment 224.164.956.111, and Activity Code - 35.31-9-00-Construction and Assembly of Aircrafts; and

(viii) Branch Guarujá - Via Santos Dumont w/no, TECON, Warehouse 4, Conceiçãozinha, 11460-000 - Guarujá – SP, enrolled before NIRE 35.902.782.583, CNPJ 60.208.493/0013-15, State enrollment 335.200.036.116, and Activity Code - 35.31-9-00-Construction and Assembly of Aircrafts.

EXHIBIT III TO THE MINUTES OF THE SPECIAL GENERAL MEETING HELD ON MARCH 31, 2006

LIST OF PROPERTIES – CURRENT STATUS

PLOT 1

AN AREA of 224,562.00 m2, with the improvements existing in the same, located at Estrada da Brejauveira Brejauveira Highway (Projetada Avenida Brigadeiro Faria Lima), in this city, judicial district and 1^st real estate district of São José dos Campos, São Paulo State, described as follows: from stake 89 and 1.40 m from the center of the landing strip of São José dos Campos Airport, towards 15/33, 90º to the left of this center and at a 225.50-m distance is vertex No. 01 of the area; vertex No. 2 is located at a 560.00-m distance and straight across vertex 1; bending to the right at a 40.00-m radius and a central angle of 61º15’ vertex No. 3 may be found; from this point it stretches perpendicularly until the fence that divides said area with Estrada de Brejauva (Projetada Av. Faria Lima), determining a distance of 34.00 meters and reaching vertex No. 4, continuing alongside the dividing fence of Estrada da Brejauva and following it across 1,185.00 meters up to the intersection of the same with the perpendicular line of the center of the landing strip of São José dos Campos Airport; at stake 139 and at a distance of 277.50 meters of said center vertex No. 5 may be found, stretching perpendicularly 52.00 meters until it reaches vertex No. 6, which is located on the strip’s building line at a 225.50-m distance from said center; from vertex No. 6, with a right angle of 90º, it stretches across the strip’s building line 998.60 meters up to vertex No. 1. The land described above is part of a larger area of 9,280,000.00 m2 and was obtained by virtue of transcript No. 40.618 and is currently enrolled under No. 5.427, Book No. 02 – General Register of the 1^st Real Estate Registry of this city. Said property is registered with the Municipal Government of this city under Real Estate Registration No. 99.0099.0040.0000 and is mortgaged in favor of International Finance Corporation (IFC), pursuant to R-21/M-5427, on June 27, 2005, at the 1^st Real Estate Registry of this city.

Book Value	R$ 112,544.094.76

Assessed Value	R$ 91,944.466.72

PLOT 2

A LAND, without improvements, with an area of 15,720.00 square meters, located at Bairro do Putim, in this city, judicial district and 1^st real estate district of São José dos Campos, São Paulo State, included within the following limits and boundaries: From stake 127 of the center of the taxiing area of Centro Técnico Aeroespacial [Technical Airspace Center], 90º on the left side of the center, towards runway threshold 15-33, at a 165-m distance is vertex No. 0 of said land, from which point with a 73º30’ left angle it stretches 505.00 m up to vertex No. 1; from vertex No. 1, bending to the right and with a 75-m radius and a central angle of 43º30’, the arch of which measures 42.47 meters, vertex No. 2 may be found. Vertex No. 3 is located at a 22.50-m distance from this point and has the same alignment of the Intersection Point and the Tangency Point. From this point with a right angle of 81º00’ at a distance of 135.00 meters (radius) one may find the center of the curve formed with a central angle of 51º00’ to the left and an arch of 119.85 meters, where vertex No. 4 is located; vertex No. 5 is located at a 105.00–m distance from this point following the Intersection Point and the Tangency Point alignment; with a curve to the right of a 101.00-m radius, a central angle of 28º30’ and an arch of 50.15 meters from vertex No. 5 vertex No. 6 may be found. It follows the Intersection Point and the Tangency Point alignment of this curve and stretches 251.00 meters up to vertex No. 7. From vertex No. 7 with a curve to the left of a 347.00-m radius and a central angle of 9º00’ and an arch of 54 meters vertex No. 0 may be found, thus closing the polygon, the larger area of which was obtained by virtue of transcript No. 39.423 of book 3-X on August 17, 1972, currently enrolled under No. 113.650, book No. 02 – General Register of the 1^st Real Estate Registry of this city. Said property is registered with the Municipal Government of this city under Real Estate Registration No. 99.0099.0040.0000 and is mortgaged in favor of International Finance Corporation (IFC), pursuant to R-11/M-113.650, on June 27, 2005, at the 1^st Real Estate Registry of this city.

Book Value	R$ 321,637.50

Assessed Value	R$ 383,473.52

NOTE:

Smaller area under Public Deed of Exchange with the Municipal Government of São José dos Campos on September 13, 1996 (attached copy).

A LAND, without improvements, with an area of 1,050.00 square meters, located at Bairro do Putim, in this city, judicial district and 1^st real estate district of São José dos Campos, São Paulo State, included within the following limits and boundaries: from stake 100 + 3.00 meters from the center of the taxiing area of São José dos Campos airport, 90º00’ on the left side and at a distance of 368.00 meters is vertex No. 0 of the area that constitutes the intersection at Embraer’s entrance. From this point, with a left angle of 30º00’ and at a 104.00-m distance vertex No. 1 may be found, from which point vertex No. 2 is located from a right at angle of 163º30’ and a distance of 10.00 meters. Vertex No. 3 is located at a right angle of 16º30’ and a distance of 20.00 meters from vertex 2. The center of the curve – whose central angle measures 54º00’ on the left and constitutes vertex 4 – is located at a left angle of 90º00’ and a distance of 18.00 meters (equal to the radius) from vertex 3. Straight across this alignment for an additional 23.00 meters is the center of the second curve, whose radius measures 23.00 meters and the central angle is 75º00’ to the right, thus constituting vertex No. 5. From vertex No. 5 with a right angle of 97º30’ and a distance of 40.00 meters vertex No. 0 may be found, thus closing the polygon, the larger area of which was obtained by virtue of transcript No. 39.423 of book No. 03-X on August 17, 1972, currently enrolled under No. 113.651, book No. 02 – General Register of the 1^st Real Estate Registry of this city. Said property is registered with the Municipal Government of this city under Real Estate Registration No. 99.0099.0040.0000 and is mortgaged in favor of International Finance Corporation (IFC), pursuant to R-11-113.651, on June 27, 2005, at the 1^st Real Estate Registry of this city.

Book Value	R$ 21.483,42

Assessed Value	R$ 26.145,92

NOTE:

Smaller area under Public Deed of Exchange with the Municipal Government of São José dos Campos on September 13, 1996 (attached copy).

PLOT 3

A LAND, without improvements, with an area of 30,760.40 square meters, located at Bairro do Putim, in this city, judicial district and 1^st real estate district of São José dos Campos, São Paulo State, included within the following limits and boundaries: from stake 111 + 3.00 meters from the center of the taxiing area of CTA airport – São José dos Campos, 90º00’ on the left side and at a distance of 317.00 meters is vertex No. 0 of said area. Vertex No. 1 is located at a right angle of 94º20’ and a distance of 260.00 meters from vertex No. 0. Vertex No. 2 is located at a right angle of 21º13’ and a distance of 200.00 meters from vertex No. 1. Vertex No. 3 is located at an angle of 13º38’ and a distance of 150.30 meters from vertex No. 2. Vertex No. 4 is located at a right angle of 147º11’ and at a distance of 208.50 meters from this point. Vertex No. 5 is located at a right angle of 9º28’ and a distance of 71.20 meters from vertex No. 4. Vertex No. 6 is located at a right angle of 6º00’ and a distance of 264.40 meters from vertex No. 5. Vertex No. 0 is located at left angle of 17º00’ and a distance of 36.70 meters from that point, thus closing the polygon, and bordering Avenida Brigadeiro Faria Lima on the front side and the lands of EMBRAER - Empresa Brasileira de Aeronáutica S/A on the sides and back part, obtained by virtue of transcript No. 40.592 of book No. 03-Y on December 21, 1972, currently enrolled under No. 113.652, book No. 02 – General Register of the 1^st Real Estate Registry of this city. Said property is registered with the Municipal Government of this city under Real Estate Registration No. 99.0099.0040.0000 and is mortgaged in favor of International Finance Corporation (IFC), pursuant to R-11/M-113.652, on June 27, 2005, at the 1^st Real Estate Registry of this city.

Book Value	R$ 629,370.11

Assessed Value	R$ 751,695.26

NOTE:

Smaller area under Public Deed of Exchange with the Municipal Government of São José dos Campos on September 13, 1996 (attached copy).

PLOT 4

A LAND with an area of 43,442.15 square meters, located at Bairro do Putim in the ninth (9th) perimeter of the Industrial Area, facing Avenida Brigadeiro Faria Lima, former Estrada da Brejauveira, in this Municipality, Judicial District and Real Estate District of São José dos Campos, São Paulo State, name Plot No. 01, described as follows: from stake 112 and 17.00 meters from the center of the landing strip of the Centro Técnico Aeroespacial [Technical Airspace Center] Airport of São José dos Campos, 90º on the left of said center, towards runway threshold 15/33 and at a 498.00-m distance is vertex 0, next to the fence that divides the land described and Avenida Brigadeiro Faria Lima and the beginning of this description: From vertex No. 0, with a left angle of 63º00’00’’, it stretches 63.20 meters until it reaches vertex No. 01; From vertex No. 01, with a right angle of 16º16’00’’, it stretches 50.60 meters until it reaches vertex No. 02; From vertex No. 02, with a right angle of 20º38’54’’ it stretches 69.35 meters until it reaches vertex No. 03; From vertex No. 03, with a right angle of 13º34’48’’, it stretches 39.00 meters until it reaches vertex No. 04; From vertex No. 04, with a right angle of 15º13’18’’, it stretches 42.90 meters until it reaches vertex No. 05; From vertex No. 05, with a right angle of 03º18’00’’, is stretches 68.28 meters until it reaches vertex No. 06; From vertex No. 06, with a right angle of 15º19’18’’, it stretches 39.82 meters until it reaches vertex No. 07; From vertex No. 07, with a right angle of 6º03’18’’, it stretches 33.00 meters until it reaches vertex No. 08. From vertex No. 08, with a left angle of 86º07’00’’, it stretches 18.53 meters until it reaches the boundary line of the described land with Sociedade Construtora Aeronáutica Neiva Ltda. From this boundary line, with a left angle of 82º33’00’’, it continues alongside the boundary of the land belonging to Sociedade Construtora Aeronáutica Neiva Ltda. for a 331.15-m distance until it reaches – next to the fence of Avenida Brigadeiro Faria Lima – another boundary line of Sociedade Construtora Neiva Ltda; from that point, it bends to the left and follows said fence towards the starting point until it reaches it again at a distance of 382.85 meters, thus closing the polygon, containing A BUILDING referred to as F-59/3 – Prédio de Almoxarife [Store Building] of RIE/ICO as improvement, which was built on the land and registered under No. 113.654, with an area of 2,297.10 m2, the larger area of which was obtained by virtue of transcript No. 55.234, book 03-AG, on November 25, 1974, currently enrolled under No. 113.653, Book No. 02 – General Register of the 1^st Real Estate Registry of this city. Said property is registered with the Municipal Government of this city under Real Estate Registration No. 99.0099.0040.0000 and in mortgaged in favor of International Finance Corporation (IFC), pursuant to R-11/M-113.653, on June 27, 2005, at the 1^st Real Estate Registry of this city.

Book Value	R$ 21,771,971.42

Assessed Value	R$ 17,850,113.52

NOTAS:

	1)	An area of 2.067,72 m2 of the larger area was swapped with the Municipal Government of São José dos Campos on August 09, 2001 (attached copy of the Deed of Exchange and Other Covenants).

	2)	Smaller area under Public Deed of Exchange with the Municipal Government of São José dos Campos on September 13, 1996 (attached copy).

A LAND with an area of 12,660.12 m2., located at Bairro do Putim, in the ninth (9th) perimeter of the Industrial Area, facing Avenida Brigadeiro Faria Lima, former Estrada da Brejauveira, in this city, judicial district and 1^st real estate district of São José dos Campos, São Paulo State, named PLOT 02, described as follows: from stake 138 and 11.00 meters from the center of the landing strip of Centro Técnico Aeroespacial [Technical Airspace Center] Airport of São José dos Campos, 90º on the left, towards runway threshold 15/33 and at a 294.00-m distance is the starting point of this description that has been named vertex 0 and is located next to the dividing fences between Cerâmica Paulo Becker S/A. and Sociedade Aerotec Ltda., at Avenida Brigadeiro Faria Lima. From vertex 0 a right angle of 31º08’00’’, it stretches 182.60 meters until it reaches vertex No. 01, next to the dividing fence of Sociedade Aerotec Ltda. – From vertex No. 01, with a left angle of 93º51’00’’, it stretches 15.12 meters until the point at which vertex No. 02 is located. – From vertex No. 02, with a left angle of 77º04’54’’, it stretches

30.69 meters until it reaches vertex No. 03 – From vertex No. 03, with a right angle of 24º44’06’’, it stretches 48.22 meters up to vertex No. 04 – From vertex No. 04, with a right angle of 08º34’48’’, it stretches 49.22 meters until it reaches vertex No. 05 – From vertex No. 05, with a right angle of 20º50’30’’, it stretches 103.64 meters until the point at which vertex No. 06 is located, next to the fence that limits the property with Avenida Brigadeiro Faria Lima; from that point, it continues left next to said fence towards vertex No. 0, at a distance of 175.33 meters until it reaches vertex No. 0 again, thus closing the polygon, containing as improvements three (03) buildings that were assigned number 2.170 at Avenida Brigadeiro Faria Lima, named F-8, with an area of 84.70 m2, F-9/1, with an area of 496.00 m2, and F-9/2, with an area of 61.20 m2, totaling to a built-up area of 641,90 m2 and the building named F-59/3 – Prédio de Almoxarife da RIE/ICO, built in the land and registered under No. 113.653, with an area of 2,297.10 m2, the larger area of which was obtained by virtue of transcript No. 55.234, book 03-AG, on November 25, 1974, currently enrolled under No. 113.654, book No. 02 – General Register of the 1^st Real Estate Registry of this city. Said property is registered with the Municipal Government of this city under Real Estate Registration No. 99.0099.0040.0000 and is mortgaged in favor of International Finance Corporation (IFC), pursuant to R-11/M-113.654, on June 27, 2005, at the 1^st Real Estate Registry of this city.

Book Value	R$ 6,344.892.48

Assessed Value	R$ 5,124,487.17

NOTA:

Smaller area under Public Deed of Exchange with the Municipal Government of São José dos Campos on September 13, 1996 (attached copy).

PLOT 5

A LAND, without improvements, with an area of 12,790.18 m2, parceled out from Sítio Santa Cruz, located at Bairro do Putim, facing Avenida Brigadeiro Faria Lima, former Estrada da Brejauveira, in this Municipality, Judicial District and 1st Real Estate District of São José dos Campos, São Paulo State, named Plot A, described as follows: from stake 111 + 4.00 meters from the center of the landing strip of Centro Técnico de Aeronáutica [Technical Center of Aeronautics] Airport, 90º on the left and at a distance of 837.00 meters is landmark No. 0, the beginning of said description. From landmark No. 0, with a right angle of 71º45’00’’, it stretches 82,05 meters until it reaches landmark No. 01; from landmark No. 01, with a left angle of 93º23’00’’, it stretches 43.22 meters until it reaches landmark No. 02; from landmark No. 02, with a left angle of 49º25’00’’, it stretches 268.90 meters up to landmark No. 03, which coincides with the fence that divides the described land and that belonging to Sociedade Construtora Aeronáutica Neiva Ltda. From that point, with a left angle of 160º24’12’’, it continues alongside the boundary of the land belonging to Sociedade Construtora Aeronáutica Neiva Ltda. at a 226.40-m distance until it reaches landmark No. 04. From landmark No. 04, with a left angle of 00º47’00’’, it stretches 18.53 meters until it reaches landmark No. 0 again, thus closing the polygon, and obtained by virtue of transcript No. 55.233, page 99 do of book No. 03-AG on November 25, 1974, currently enrolled under No. 113.655, book No. 02 – General Register of the 1^st Real Estate Registry of this city. Said property is registered with the Municipal Government of this city under Real Estate Registration No. 99.0099.0040.0000 and is mortgaged in favor of International Finance Corporation (IFC), pursuant to R-11/M-113.655, on June 27, 2005, at the 1^st Real Estate Registry of this city.

Book Value	R$ 261,692.21

Assessed Value	R$ 314,840.48

NOTES:

	1)	An area of 7,990.00m2 was bailed to Associação Desportiva Classista Embraer- ADCE on May 31, 1989 for a 30-year period (a copy of the Free Lease Agreement is attached);

	2)	An area of 2.150,22m2 was bailed to Associação Desportiva Classista Embraer – ADCE on September 16, 2002 for an indefinite period of time (a copy of the Free Lease Agreement is attached);

	3)	An area of 2,946.14m2 of the larger area is the purpose of the Deed of Exchange and Other Covenants, executed with the Municipal Government of São José dos Campos on August 09, 2001 (attached copy).

A land, with a total area of 66.856,70 m2, named Plot B, facing Avenida Brigadeiro Faria Lima, located at Bairro de Putim, in this city, was obtained by virtue of transcript No. 55.233, page 99 of book No. 03-AG in November 25, 1974 and registered under Real Estate Registration No. 99.099.040.03/3, with following characteristics and boundaries: “A LAND, without improvements, with an area of seventy-nine thousand, six hundred and forty-six and eighty-eight square meters (79,646.88m2), parceled out from “Sítio Santa Cruz”, located at Bairro do Putim, a rural area of this municipality, judicial district and real estate district of São José dos Campos, facing Avenida Brigadeiro Faria Lima, former Estrada da Brejauveira, composed of two plots whose description follows: PLOT A: “From stake 111 + 4.00 m from the center of the landing strip of Centro Técnico de Aeronáutica [Technical Center of Aeronautics] Airport, 90º on the left and at a distance of 837.00 meters is landmark No. 0, the beginning of said description. – From landmark No. 0, with a right angle of 71º45’00’’, it stretches 82,05 meters until it reaches landmark No. 01; from landmark No. 01, with a left angle of 93º23’00’’, it stretches 43.22 meters until it reaches landmark No. 02; from landmark No. 02, with a left angle of 49º25’00’’, it stretches 268.90 meters up to landmark No. 03, which coincides with the fence that divides the described land and that belonging to Sociedade Construtora Aeronáutica Neiva Ltda. - From that point, with a left angle of 160º24’12’’, it continues alongside the boundary of the land belonging to Sociedade Construtora Aeronáutica Neiva Ltda. at a 226.40-m distance until it reaches landmark No. 04. - From landmark No. 04, with a left angle of 00º47’00’’, it stretches 18.53 meters until it reaches landmark No. 0 again, thus closing the polygon. – Said land has an area of 12,790.18 m2; and PLOT B: “From stake 87 + 12.00 m from the center of the landing strip of the airport of Centro Técnico Aeroespacial of São José dos Campos, 90º on the left side of the center, towards runway threshold 15/33, at a distance of 994.00 m is vertex No. “0” of said description, which coincides with the boundary of the property belonging to Sociedade Construtora Aeronáutica Neiva Ltda. and the heirs of Paulo Becker, facing Avenida Brigadeiro Faria Lima. – From that point, with a right angle of 57º30’00”, it continues alongside the boundary of Sociedade Construtora Aeronáutica Neiva Ltda at a 196.80-m distance until it reaches vertex No. 1. – From vertex No. 1, with a left angle of 81º59’00”, it stretches 60.00 m until it reaches vertex No. 2. – From vertex No. 2, with a right angle of 62º20’12”, it stretches 105.90 m until in reaches vertex No. 3; from that point, with a left angle of 62º04’06”, it stretches 126.60 m until it reaches vertex No. 4. – From vertex No. 4, with a right angle of 03º53’00”, it stretches 32.70 m until it reaches vertex No. 5. – From vertex No. 5, with a left angle of 93º29’24”, it stretches 245.20 m up to the point at which vertex No. 6 is located, next to Avenida Brigadeiro Faria Lima. – From vertex No. 6, with a left angle of 83º23’06, it stretches parallel to Avenida Brigadeiro Faria Lima at a 313.00-m distance, until it reaches vertex No. “0” again, thus closing the polygon.– Said land has an area of 66,856.70 m2”.

By reason of Embraer’s privatization process, this area was parceled out upon Embraer’s request to the Municipal Government of São José dos Campos, thus resulting in two Plots, described and characterized as follows: (Public Deed of Payment in Kind and Land Parceling Certificate attached).

PLOT B-01, facing Avenida Brigadeiro Faria Lima, at Bairro de Putim, in this city, enrolled under Real Estate Registration No. 99.099.040.03-3, has the following measures and boundaries for exclusively tax purposes: From stake 87 + 12.00 m from the center of the landing strip of the airport of Centro Técnico Aeroespacial de São José dos Campos, 90º on the left side of the center, towards runway threshold 15/33, at a distance of 994.00 m is vertex No. “0”, facing Avenida Brigadeiro Faria Lima. From that point, with a left angle of 15º38’37”, it is situated at a 149.64-m distance, parallel to Avenida Brigadeiro Faria Lima, until it reaches vertex No. “7”, where plot 01 begins. From vertex No. “7”, with a right angle of 83º35’03”, it stretches 266.00 m until it reaches vertex No. “3”. From vertex No. “3”, with a left angle of 92º09’13”, it stretches 126.60 m until it reaches vertex No. “4”. From vertex No. “4”, with a right angle of 03º53’00”, it stretches 32.70 m until it reaches vertex No. “5”. From vertex “5”, with a left angle of 93º29’24”, it stretches 245.20 m until it reaches vertex No. “6”, next to Avenida Brigadeiro Faria Lima. From this point, with a left angle of 83º23’06”, it stretches 163.36 m, parallel to Avenida Brigadeiro Faria Lima, until it reaches vertex No. “7” again, thus closing the polygon. Said measures encircle an area of 40,549.70m2.

Plot B-02, facing Avenida Brigadeiro Faria Lima, at Bairro de Putim, in this city, enrolled under Real Estate Registration 99.0099.0040.0004, has the following characteristics and boundaries: From stake 87 + 12.00 m from the center of the landing strip of the airport of Centro Técnico Aeroespacial of São José dos Campos, 90º on the left side of the center, towards runway threshold 15/33, at a distance of 994.00 m is vertex No. “0” of said description, which coincides with the boundary of the property belonging to Sociedade Construtora Aeronáutica Neiva Ltda. and the heirs of Paulo Becker, facing Avenida Brigadeiro Faria Lima. From that point, with a right angle of 57º30’00”, it continues alongside the boundary of Sociedade Construtora Aeronáutica Neiva Ltda at a 196.80-m distance until it reaches vertex No. 1. – From vertex No. 1, with a left angle of 81º59’00”, it stretches 60.00 m until it reaches vertex No. 2. – From vertex No. 2, with a right angle of 62º20’12”, it stretches 105.90 m until in reaches vertex No. 3. From vertex No. “3”, with a left angle of 149º54’43”, it stretches 266.00m until it reaches vertex No. “7”, next to Avenida Brigadeiro Faria Lima. From vertex No. “7”, with a left angle of 83º35’03”, it stretches 149.64m parallel to Avenida Brigadeiro Faria Lima until it reaches vertex No. “0” again, thus closing the polygon. Said measures encircle area of 26,307.00m2.

Book Value	R$ 13,184,321.04

Assessed Value	R$ 500,880.02

NOTE:

An area of 3,760.00m2 was assigned to Associação Desportiva Classista Embraer – ADCE on June 18, 1998 for an indefinite period of time (a copy of the Free Lease Agreement is attached);

PLOT 6

A PLOT OF LANDS, with an area of 105.313,00 m2, located at Bairro do Putim, at Avenida Brigadeiro Faria Lima, former Estrada da Brejauveira, in this city, judicial district and 1^st real estate registry of São José dos Campos, São Paulo State, included in the following limits and boundaries: it starts at stake one (1), which is placed at Avenida Brigadeiro Faria Lima, former Estrada Brejauveira, at an approximate distance of 403.00 meters from the bridge at the entrance of the company, Paulo Becker S/A - Agrícola e Industrial, on the left side towards downtown-residential areas; from this point it continues straight across a distance of 330.00 meters until it reaches stake two (2), bordering on lands belonging to Embraer - Empresa Brasileira de Aeronáutica S/A.; from that point it bends to the left at an angle of 99º, forming an internal angle of 81º northbound and stretches in the same direction over 300.00 meters, bordering on lands belonging to Embraer - Empresa Brasileira de Aeronáutica S/A. and Sítio Santa Cruz until it reaches stake three (3); at this point it bends 13º30’ to the left, forming an internal angle of 166º30’ and continues in this direction for 90.00 meters, bordering on the land of the so-called Sítio Santa Cruz, until it reaches stake four (4); at this point it bends 63º for the left, forming an internal angle of 117º and stretches 196.75 meters, bordering on the land belonging to Embraer - Empresa Brasileira de Aeronáutica S/A., until it reaches stake five (5), which is placed next to Avenida Brigadeiro Faria Lima, former Estrada da Brejauveira; from stake five (5) it stretches 403.00 meters alongside Avenida Brigadeiro Faria Lima, former Estrada da Brejauveira, until it reaches stake one (1), the starting point of this description. The property contains several improvements and was obtained by virtue of transcript No. 56.959 and is currently enrolled under No. 39.604, book No. 02 - General Register of the 1^st Real Estate Registry of this city. Said property is registered with the Municipal Government of this city under Real Estate Registration No. 99.0099.0040.0000 and is mortgaged in favor of International Finance Corporation (IFC), pursuant to R-15/M-39.604, on June 27, 2005, at the 1^st Real Estate Registry of this city.

Book Value	R$ 52,779,883.73

Assessed Value	R$ 43,112,916.10

NOTA:

Smaller area under Public Deed of Exchange with the Municipal Government of São José dos Campos on September 13, 1996 (attached copy).

PLOT 7

Areas which have not been enrolled

EXHIBIT 2 to the Special General Meeting held on December 30, 1999 – (Decree 88,619 of August 15, 1983, amended by Decree 94,308 of May 5, 1987 and Decree 97,167 of December 7, 1988) (attached copies)