Embraer S A : Shareholders Extraordinary Meeting - Policy on Funding of Defense Expenses and Reimbursement of Payments

Free Translation

POLICY ON FUNDING OF DEFENSE EXPENSES AND REIMBURSEMENT OF PAYMENTS INCURRED BY EMPLOYEES, DIRECTORS, OFFICERS AND MEMBERS OF THE FISCAL COUNCIL

1. POLICY

This Policy governs the Embraer's funding of defense expenses incurred by, as well as the reimbursement by Embraer of fines and other amounts awarded against and payments made under settlements entered into by, certain current or former employees, members of the Board of Directors and of its committees, officers and members of the Fiscal Council (each an "Eligible Person") of Embraer S.A. ("Embraer"or "Company")in connection with investigations or administrative, judicial, arbitration or similar proceedings commenced or filed at any time with respect to or as a result of such Eligible Person carrying out its functions at Embraer ("Proc eedings"), provided that such covered events are not as a result of acts (1) beyond the scope the Eligible Person's functions, (2) in bad faith, willful misconduct, with gross negligence or upon fraud (3) in one's or a third-party's own interest, detrimental to the interest of Embraer, or (4) in breach of Embraer's policies and procedures, the law, agreements entered into by Embraer or the Eligible Person's fiduciary duties (the "Excluded C onducts"), as established by a final and unappealable judicial or administrative decision or arbitration award, or as acknowledged or demonstrated at any time prior to such decision.

The economic risk of business activities will be borne by to Embraer. However, Eligible Persons are required to carry out their respective functions at Embraer in accordance with the law, the Company's policies and procedures, and its Bylaws. Eligible Persons must also follow high ethical standards and good professional practices. Failure to comply with such duties may lead to personal liability by an Eligible Person to Embraer and/or others, as provided by law. Carrying out their functions at Embraer exposes Eligible Persons to the risk of being held liable for their own actions as well as actions of Embraer, in each country where Embraer does business.

As is the case with any other company, inquiries or involvement of an Eligible Person in Proceedings are risks inherent to carrying out business activities and performance of professional duties by such Eligible Person.

As a rule, Embraer will bear the expenses related to the defense of an Eligible Person in Proceedings, in accordance with the terms of this Policy. However, Embraer may refuse or interrupt the funding of such expenses. Embraer may also seek reimbursement for amounts disbursed under this Policy and its related Corporate Procedure.

Additionally, as a rule Embraer will bear the cost of fines and other amounts awarded against Eligible Persons as well as payments made under settlements entered into by Eligible Persons, in the absence of Excluded Conducts, in accordance with the terms of this Policy and its related Corporate Procedure.

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2. PURPOSE

The purpose of this Policy is to establish the terms and conditions under which:

• Embraer will fund defense expenses, including attorneys' fees, of Eligible Persons in Proceedings ("Defense Expenses") or will reimbur se the cost of fines, other amounts awarded against Eligible Persons and payments made under settlements entered into in connection with Proceedings ("Payme nt Reimbursements");
• Embraer may refuse or interrupt any such funding or reimbursement; and
• Embraer may seek reimbursement of amounts disbursed as Defense Expenses and/or Payment Reimbursement.

3. APPLICABILITY

This Policy applies to Embraer and its direct and indirect subsidiaries, in Brazil and abroad. Management of each such subsidiary must ensure this Policy's enforcement, incorporate it into the internal regulations of such subsidiary, and provide adequate procedures and funding for its enforcement.

In the sole discretion of the Board of Directors of the Company, the Eligible Persons may include additional executives selected by Embraer to serve in the management of companies in which Embraer holds an equity interest, but which have not adopted this Policy. In such case, Defense Expenses and Payment Reimbursement will be funded by Embraer in accordance with the terms of this Policy.

Insofar as application of this Policy to a subsidiary of Embraer abroad would lead to violation of a local laws, adjustments will be made as required at the time when each specific case is reviewed, with due regard for the objectives of this Policy.

4. FUNDING OF DEFENSE EXPENSES

Embraer strives to provide Eligible Persons with a suitable environment for carrying out their functions safely and diligently. A part of these efforts consists in supporting Eligible Persons that become involved in Proceedings. To this end, Embraer purchases each year directors & officers liability insurance ("D&O Insu rance") in such amounts and with such coverage as are consistent with current market practices.

Additionally, Embraer funds or advances from its own resources Defense Expenses incurred by Eligible Persons. In so doing, Embraer protects Eligible Persons insured by D&O Insurance against any delays or errors by insurance companies when reviewing or processing claims for Defense Expenses, and Embraer also protects employees that are not covered by insurance against such expenses.

The terms and procedures for funding of Defense Expenses and Payment Reimbursements are described in a specific Corporate Procedure approved by the Board of Directors of the Company.

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The protection afforded by this Policy is independent of D&O Insurance coverage and is not contingent on availability of D&O Insurance in any given case. An Eligible Person that wishes to obtain Payment Reimbursement or funding for Defense Expenses, as well as the Company, must take all action required to preserve their own rights, including rights under D&O Insurance. Additionally, an Eligible Person must agree to reimburse Embraer for all amounts recovered from an insurance company that has provided D&O Insurance, to the extent required to reimburse Embraer for its applicable costs.

5. FUNDING OR REIMBURSEMENT REFUSED OR INTERRUPTED

Embraer will refuse (if it has not started) or will interrupt funding of Defense Expenses or Payment Reimbursement on behalf of an Eligible Person, after considering all of the necessary information available at the time, if:

• there is a conflict of interest between Embraer and an Eligible Person, as determined by the Board of Directors;
• the Board of Directors of Embraer, advised by its Personnel and Governance Committee, after reviewing a request submitted by an Eligible Person, determines, in a preliminary assessment, based on all information then available, that an Excluded Conducts applies to the requested funding of Defense Expenses or Payment Reimbursements. Such preliminary assessment may be later reviewed and amended upon new facts and evidence, and the request may be later granted.
• The requested Defense Expenses are deemed excessive, disproportional or unjustified, in the sole discretion of the Company, or have been incurred in violation of the terms of this Policy or its related Corporate Procedure;
• the service provider involved in the defense of the Eligible Person fails to comply with any term or condition of its respective agreement for funding of fees and expenses;
• the Defense Expenses and/or Payment Reimbursement arise from a civil liability suit filed by Embraer under Section 159 of Brazilian Law No. 6,404/76;
• the Eligible Person fails to take the action he or she is required to take in order to assist the Company in preserving its rights under D&O Insurance, as requested by the Company or the relevant insurance company, including the giving of notice to the Company of a suit as promptly as possible;
• the Board of Directors, advised by its Personnel and Governance Committee, denies the funding of a Defense Expense and/or Payment Reimbursement, after review of a claim made under this Policy;
• Payment Reimbursement is related to a settlement not approved in advance by the Company in writing;
• the Payment Reimbursement is related to a fine or award issued against the Eligible Person in a case in which the defense is deemed by the Board of Directors, advised by its Personnel and Governance Committee, to have been conducted in such manner as to prevent Embraer from directing or participating in the defense.

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In its sole discretion, Embraer may resume funding of Defense Expenses and/or reconsider a Payment Reimbursement, if circumstances that previously prevented funding cease.

Furthermore, Embraer will not cover losses that an Eligible Person may incur due to clawbacks of variable compensation by the Company, in the case of a restatement of financial statements, as contemplated under the Policy on Clawback of Variable Compensation.

6. RECOVERY OF AMOUNTS DISBURSED

Whenever possible, Embraer will seek to recover any amounts incurred as Defense Expenses and Payment Reimbursements. The sums, including attorneys' fees, advanced or paid for the defense of, or as reimbursement of payments made by, Eligible Persons covered by D&O Insurance will be recovered from the appropriate insurance company or repaid by such Eligible Person (net of any tax incurred by such Eligible Person), as the case may be, provided that such sums are covered by the applicable D&O Insurance policy. The sums disbursed with respect to uninsured persons or corresponding to losses that are not covered by D&O Insurance will be recovered from liable third parties, if any.

If an Eligible Person whose defense was funded by Embraer is found to be legally liable for the events at hand, Embraer may, in its discretion recover from such Eligible Person the funds disbursed as Defense Expenses, without prejudice to any other liability of such Eligible Person to Embraer under the law.

7. EFFECTIVENESS OF POLICY

This Policy and its related Corporate Procedure will come into effect: (i) with respect to the employees and officers of Embraer, on the date as of which this Policy is approved at a meeting of the Board of Directors; and (ii) with respect to the directors and members of the Fiscal Council, on the date as of which this Policy is approved at a shareholders' meeting that approves an amendment to the Company's Bylaws, authorizing the inclusion of a specific section regarding the indemnification regime.

This Policy may be amended at any time and for any reason, particularly, to adjust this Policy to changes in laws and regulations or the interpretation thereof, by the Board of Directors of Embraer. The amended version of this Policy will take effect as of its adoption or as provided by the Board of Directors.

This Policy will remain in effect for an indefinite period of time, provided, however, that it may be suspended or terminated by the Board of Directors at any time. Termination of this Policy will not affect the validity of any rights previously granted hereunder.

8. TITLE TO AND MANAGEMENT OF POLICY

Management of this Policy is incumbent on the Board of Directors of Embraer, with the assistance of the Personnel and Governance Committee.

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The Board of Directors, advised by the Personnel and Governance Committee, will be responsible for deciding on each request from Eligible Persons under this policy, including decisions regarding Excluded Conducts.

The Board of Director must assure that its members and the members of the Personnel and Governance Committee observe the rules and procedures of Brazilian Law No. 6,404/76, including its article 156, in the case of a conflict of interest with Embraer.

The Board of Directors, advised by the Personnel and Governance Committee, will also be responsible for evaluating conflicts of interest and the need of additional procedures to those available under this policy in order to ensure that decisions made hereunder regarding the funding of Defense Expenses or Reimbursement Payments, or any other decisions related to this policy, are independent and are made in the best interests of the Company.

Embraer will ensure that it has appropriate procedures for adequately documenting its decision process, including the reasons for determining that any act of an Eligible Person which resulted in the coverage of Defense Expenses or in Reimbursement of Payments under this Policy was eligible to be covered.

When deemed necessary, the Board of Directors will approve additional governance procedures to ensure that decisions made under this Policy are made independently and in the best interests of the Company. This includes, but is not limited to, the following circumstances: (i) more than half of the members of the Board of Directors are direct beneficiaries of the decision on the expenditure of resources; (ii) there are opposing votes from two independent members of the Board of Directors regarding the conduct of the administrator as being eligible or not for indemnification; or (iii) the financial exposure of the Company becomes significant, given the amounts involved.

The Board of Directors of the Company will assess the cases as to which this Policy is silent or which may warrant an exception to its provisions, with due regard for applicable laws and regulations, the internal rules of the Company and the principles set forth in this Policy.

9. CONFLICT RESOLUTION

All disputes relating to this Policy will be settled by arbitration conducted by the Market Arbitration Panel, according to its Rules of Arbitration and in strict compliance with applicable legislation, particularly Brazilian Law No. 9,307/96, as amended. The arbitration costs will be borne separately by each party involved.

10. FINAL PROVISIONS

No provision of this Policy will entitle any Eligible Person to remain as an employee, officer, director or member of the Fiscal Council of the Company, or will in any manner, interfere with the right of the Company, at any time and subject to applicable legal and contractual terms, to terminate the employment agreement of an employee, or terminate the term of office of an officer or director.

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The rights granted under this Policy are personal and non-transferable. In no event may an Eligible Person assign, transfer or otherwise dispose of such rights to any third-party, except in the case of death of an Eligible Person; in such case, all applicable payments or reimbursements will be made to the successors of such Eligible Person.

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Free Translation

CORPORATE PROCEDURE RELATED TO THE CORPORATE POLICY ON

FUNDING OF DEFENSE EXPENSES AND REIMBURSEMENT OF

PAYMENTS INCURRED BY EMPLOYEES, DIRECTORS, OFFICERS AND

MEMBERS OF THE FISCAL COUNCIL

1. Overview

This Corporate Procedure ("Corporate Procedure") is adopted under and for the purposes of the Corporate Policy on Funding of Defense Expenses and Reimbursement of Payments Incurred by Employees, Officers, Directors and Members of the Fiscal Council ("Indemnity Policy"), as amended, approved by Embra er S.A. ("Company"or "Embraer").

In connection with the Indemnity Policy, certain general guidelines were established for

1. funding of Defense Expenses by the Company, and (ii) reimbursement of Payments by the Company, in either case incurred and/or made by an Eligible Person as a result of a Proceeding.

1. Definitions

For the purposes of this Corporate Procedure, the capitalized terms that are not defined in this section will have the meaning assigned to them by the Indemnity Policy, and the terms below will have the following meanings:

"Proceeding"means, as against an Eligible Person, any suit, claim, action, assessment, administrative, judicial or arbitration proceedings, investigation or inquiry or any notice that threatens or expresses an intention to commence any of the foregoing with respect to or as a result of such Eligible Person carrying out its functions at Embraer, provided that such covered events are not as a result of acts (1) beyond the scope the Eligible Person's functions, (2) in bad faith, willful misconduct, with gross negligence or upon fraud, (3) in one's or a third-party's own interest, detriment al to the interest of Embraer, or (4) in breach of Embraer's policies and procedures, the law, agreements entered into by Embraer or the Eligible Person's fiduciary duties (the "Excluded Conducts"), as established by a final and unappealable judicial, or administrative decision or arbitration award, or as acknowledged or demonstrated at any time prior to such decision.

"Defense Expenses"mean any amounts to be disbursed by the Company for defense in any Proceeding filed against an Eligible Person, including, without limitation, costs and expenses for reasonable Law Firm fees, expert investigations, reports, opinions and similar expenses, as well as court costs of any kind whatsoever.

"Business Day"means any day other than (i) Saturda y, (ii) Sunday, or (iii) a day on which banks are required or authorized to close in the city of São José dos Campos, State of São Paulo, and/or the place where the Eligible Person carries out his or her activities.

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"Law Firm"means a law firm that is reasonably acce ptable to the Company and the Eligible Person, given the complexity and characteristics of the Proceeding at hand, the qualifications of such firm to defend against the Proceeding, and the terms and costs for engagement of such firm.

"Payments"mean any losses, damages or disbursement s incurred by an Eligible Person with regard to a Proceeding, including interest, contractual or legal collection amounts, as well as Defense Expenses that remain unfunded by the Company for any reason whatsoever in connection with such Proceeding.

"Eligible Persons"mean certain current and former employees, officers, directors and members of the Fiscal Council of the Company.

1. Notice of Proceeding

Upon receipt or knowledge of a Proceeding, an Eligible Person will give notice to the Office of the Executive Vice President, General Counsel of the Company within two (2) business days after such receipt or knowledge ("Not ice of Proceeding"), as applicable, apprising the Company of such Proceeding. Should an Eligible Person fail to give Notice of Proceeding to the Company within two (2) business days, as described above, such Eligible Person will forfeit his or her rights under the Indemnity Policy. As an integral part of a Notice of Proceeding, an Eligible Person will provide the Company with a statement indicating his or her express agreement with all terms and conditions of the Indemnity Policy and the arbitration procedure set out in item VII below, in the event a dispute arises in connection with the Indemnity Policy or this Corporate Procedure.

Upon reviewing any Notice of Proceeding received from an Eligible Person, the Board of Directors, advised by the Personnel and Governance Committee, will determine, as a preliminary assessment and based on all information then available, whether such Notice of Proceeding is related to any of the Excluded Conducts preventing the funding of Defense Expenses or Reimbursement Payments. Such preliminary assessment may be later reviewed and amended upon new facts and evidence, and the request may be later granted.

Should the Company determine that the sender of a Notice of Proceeding does not qualify as an Eligible Person for the purposes of the Indemnity Policy or this Corporate Procedure, or that the alleged proceeding does not qualify as a Proceeding under the Indemnity Policy or this Corporate Procedure, then the Company will so notify the sender. In this case, the Company will in no event be required to cover any expenses incurred by the sender regarding the proceeding so notified, which will not be deemed a Proceeding for the purposes of this Corporate Procedure.

Should the Company confirm the eligibility of a Proceeding and an Eligible Person for coverage under the Indemnity Policy, the Company will have the right to participate in the defense of such Eligible Person, and the Company may require that the defense of such Eligible Person be coordinated with the defense of the Company itself, to the extent that no conflict of interest would arise between such Eligible Person and the Company or any third parties, and to the extent permitted by law.

IV. Funding of Defense Expenses

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The Company will retain on an ongoing basis at least three (3) reputable Law Firms of recognized experience to defend against Proceedings, and an Eligible Person wishing to request funding of Defense Expenses and/or reimbursement of Payment will select one of such Law Firms. In the event an Eligible Person cannot be represented by one of such Law Firms on account of the expertise required in a specific Proceeding, a conflict of interest or any other reason, such Eligible Person will ensure that the Law Firm to be retained and the costs and fees thereof are reasonably acceptable to the Company.

The Company will not cover Defense Expenses or Payments incurred in or compelled by a Proceeding to which the defense is conducted by a law firm that was not accepted by the Company, or if the defense is not coordinated with the Company, should coordination be appropriate under this Corporate Procedure.

If an Eligible Person is required or needs to make a payment for Defense Expenses at any time after a Notice of Proceeding has been served on the Company, such Eligible Person will give notice thereof to the Office of the Executive Vice President, General Counsel of the Company together with copies of any related documents, also informing the amount of anticipated Defense Expenses in connection with the Proceeding, as well as its reasons and the amount in dispute ("Notice of Defense Expen ses").

Should the Company deny or have any questions regarding Defense Expenses to be incurred by an Eligible Person in connection with a Proceeding, the Company will give notice to such Eligible Person informing the reasons for its denial or questions as to the sum requested in the Notice of Defense Expenses.

Upon reviewing any Notice of Proceeding received from an Eligible Person, the Board of Directors, advised by the Personnel and Governance Committee, will determine, as a preliminary assessment and based on all information then available, whether such Notice of Proceeding is related to any of the Excluded Conducts preventing the funding of Defense Expenses or Reimbursement Payments. Such preliminary assessment may be later reviewed and amended upon new facts and evidence, and the requested payment to be later granted.

If the Company agrees to make a payment requested through a Notice of Defense Expenses, the amount stated therein will become due and payable by the Company to the Eligible Person within twenty (20) Business Days after the Company's decision regarding the Defense Expenses stated in the Notice of Defense Expenses.

Should the Company disagree with any aspect of a Notice of Defense Expenses, the Eligible Person and the Company will use their best efforts to discuss in good faith and reach an agreement on reimbursement of Defense Expenses by the Company, within ten

1. Business Days after notice of the denial is given. If an amicable solution cannot be reached, the matter will be resolved as provided in item VII below.

In the event the Company pays any Defense Expense that proves to be ineligible for payment under the Indemnity Policy or this Corporate Procedure, or that was insufficiently or improperly demonstrated to the Company, including in light of subsequent findings, the Company may demand that the Eligible Person repay all

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amounts previously disbursed by the Company as Defense Expenses in connection with a Proceeding.

1. Reimbursement of Payments

If an Eligible Person actually incurs a Payment covered by this Corporate Procedure at any time after Notice of Proceeding has been served on the Company, such Eligible Person will give notice thereof to the Office of the Executive Vice President, General Counsel of the Company, accompanied by a detailed and well-grounded description of the reasons for and amount of such Payment ("Notice of Payment"). Additionally, such Eligible Person will attach to the Notice of Payment any and all supporting documents and/or invoices paid, so as to unequivocally identify all Payments incurred in connection with the Proceeding. Any Payment not adequately demonstrated in the Notice of Payment may be disregarded by the Company, in its sole discretion.

Should the Company deny or have any questions regarding a Payment claimed in a Notice of Payment, the Company will give notice to the Eligible Person informing the reasons for its questions or denial.

If the Company agrees to make or reimburse a Payment claimed in a Notice of Payment, the amount stated therein will become due and payable by the Company and will be transferred to an Eligible Person within twenty (20) Business Days after the Company's decision regarding such Payment as stated in the Notice of Payment.

Should the Company disagree with a Notice of Payment, the Eligible Person and the Company will use their best efforts to discuss in good faith and reach an agreement on reimbursement of the Payment in question by the Company, within (10) Business Days after notice of denial is given. If an amicable solution cannot be reached, the matter will be resolved as provided in item VII below.

In the event the Company reimburses a Payment that proves to be ineligible for reimbursement under the Indemnity Policy or this Corporate Procedure, or that was insufficiently or improperly demonstrated to the Company, including in light of subsequent findings, the Company may demand that the Eligible Person repay all amounts previously disbursed by the Company as reimbursement of Payment in connection with the Proceeding in question.

VI. D&O Insurance

Coverage of an Eligible Person under the Indemnity Policy will be ancillary to any insurance coverage, particularly directors & officers liability insurance (D&O insurance) purchased by the Company. The Company will seek to preserve its rights under D&O insurance as an insured party or subrogee of the rights of an insured party under D&O insurance, to the greatest extent possible.

In the event the Company (i) pays any Defense Expense, and/or (ii) reimburses any Payment to an Eligible Person, and the amounts involved in either case are subsequently required to be paid by the insurance company that provides D&O insurance to the Company, in accordance with the terms of the applicable policy, then such amounts will be paid directly to the Company by the insurance company through subrogation, or will

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be reimbursed to the Company by the Eligible Person, if previously paid by the insurance company to such Eligible Person. For the avoidance of doubt, in no event will an Eligible Person be entitled to receive or retain double indemnity for any given Defense Expense and/or Payment.

In order to be covered under the Indemnity Policy, an Eligible Person will be required to take action with the insurance company providing D&O insurance, as required to preserve the rights of such Eligible Person under D&O insurance, as well as take action to secure D&O insurance coverage, to the greatest extent possible.

Should any controversy or conflict arise concerning the duties of an Eligible Person under the Indemnity Policy or this Corporate Procedure, such controversy or conflict will be resolved by the Board of Directors of the Company, provided that if such Eligible Person is a director of the Company, he or she will recuse himself or herself and will refrain from voting on the matter at hand.

VII. Conflict Resolution

Subject to item 9 of the Indemnity Policy, any disputes relating to the Indemnity Policy or this Corporate Procedure will be settled by arbitration conducted by the Market Arbitration Panel, according to its Rules of Arbitration and in strict compliance with applicable legislation, particularly Brazilian Law No. 9,307/96, as amended, pursuant to Section 62 of the Company's Bylaws. The arbitration costs will be borne separately by each party involved.

VIII. General

The terms and conditions of the Indemnity Policy will apply to this Corporate Procedure, as though set out in full herein.

Embraer will ensure that it has appropriate procedures for adequately documenting its decision process, including the reasons for determining that any act of an Eligible Person which resulted in the coverage of Defense Expenses or in Reimbursement of Payments under this Policy was eligible to be covered.

Without prejudice to the foregoing, in the event of a conflict between this Corporate Procedure and the Indemnity Policy, the terms and conditions of the latter will unconditionally and fully prevail in all cases, regardless of any request made by an interested party. In such case, the Company will amend this Corporate Procedure in order to eliminate the conflict.

All notices referred to in this Corporate Procedure will be sent by letter or e-mail, with proof of receipt (in the case of an e-mail, a delivery receipt by the recipient's email will be deemed proof of receipt), provided that (i) if to the Company, notice will be sent to the attention of the Executive Vice President, General Counsel, at Avenida Dra. Ruth Cardoso, 8501 (previously Avenida Nações Unidas, 85 01), 30th floor, Eldorado Business Tower, Pinheiros, CEP 05425-070, in the City and State of São Paulo, and (ii) if to an Eligible Person, notice will be sent to the addresses informed by such Eligible Person in the Notice of Eligibility.

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