exv10w23



 





Exhibit 10.23




****TEXT OMITTED AND FILED SEPARATELY

CONFIDENTIAL TREATMENT REQUESTED

BY MESA AIR GROUP, INC.

UNDER 17C.F.R. SECTION 200.80(B)(4),

200.83 AND 240.24b-2




JOINT VENTURE CONTRACT



THIS CONTRACT (“Contract”) is made in Beijing, the People’s Republic of China on this twenty second
day of December, 2006 by and between Shenzhen Airlines Co., Ltd. (hereinafter referred to as “Party
A”), Ping Shan SRL (hereinafter referred to as “Party B”), and Shan Yue SRL (hereinafter referred
to as “Party C”). Party A, Party B, and Party C shall hereinafter be referred to individually as a
“Party” and collectively as the “Parties”.




RECITALS




     Whereas, per friendly consultations under the principles of equality and mutual benefit, the
Parties have agreed to establish an equity joint venture (hereinafter referred to as the “Company”)
in accordance with the EJV Law and the EJV Implementing Regulations, other Applicable Laws and
regulations of the People’s Republic of China (hereinafter referred to as the “PRC”);



     Whereas, the Parties intended to establish the Company as the legal entity to establish,
develop, own, operate and manage the Company, a PRC-registered airline with a regional jet fleet to
offer common carrier passenger service to the public on PRC domestic and international markets;



     Whereas, for the purpose stated in the immediately above paragraph, the Parties had entered
into a Letter of Intent on July 25, 2006 to set forth the general principles of understanding
between, as well as the undertakings by, the Parties to achieve the above indicated objectives.



     Now, with such a goal, the JV Parties agree:



1. DEFINITIONS AND INTERPRETATION




          Unless the terms or context of this Contract otherwise provide, this Contract shall be
interpreted in accordance with, and each of the terms used herein shall have the meaning ascribed
to it in, Schedule A.




2. PARTIES TO THE CONTRACT




     2.1 Particulars of Parties



     The Parties to this Contract are:




		(a)		Party A, Shenzhen Airlines, Ltd. (in Chinese:
), a corporation limited by shares established and existing
under the laws of the People’s Republic of China, with its main office at
Shenzhen Bao’an International Airport, Shenzhen, the People’s Republic of
China, 518128;
	 
	 	 	 	Legal Representative of Party A:
	 
	 	 	 	Name: Zhao Xiang
	 
	 	 	 	Title: Chairman of the Board
	 
	 	 	 	Nationality: Chinese
	 
	 	(b)	 	Party B, Ping Shan SRL, a society with restricted liability
organized and existing under the laws of the Barbados, with its main office at
Citco Corporate Management (Barbados) Limited, Whitepark House, White Park
Road, Bridgetown, Barbados







 




			
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	 	 	 	Legal Representatives of Party B:
	 
	 	 	 	Name: Jonathan Ornstein
	 
	 	 	 	Title: Chief Executive Officer
	 
	 	 	 	Nationality: USA
	 
	 	 	 	Name: George P. Murnane III
	 
	 	 	 	Title: Vice President and Assistant Secretary
	 
	 	 	 	Nationality: USA
	 
	 	 	 	Name: Brian Gillman
	 
	 	 	 	Title: Assistant Secretary and Assistant Treasure
	 
	 	 	 	Nationality: USA
	 
	 	 	 	and
	 
	 	(c)	 	Party C, Shan Yue SRL, a society with restricted liability
organized and existing under the laws of Barbados, with its main office at
Citco Corporate Management (Barbados) Limited, Whitepark House, White Park
Road, Bridgetown, Barbados
	 
	 	 	 	Legal Representative of Party C:
	 
	 	 	 	Name: Mo Garfinkle
	 
	 	 	 	Title: President and Assistant Secretary
	 
	 	 	 	Nationality: USA





     2.2 Parties’ Legal or Authorized Representatives



          Each Party shall have the right to change its legal or authorized representative and shall
promptly notify the other Party of such change and the name, position and nationality of its new
legal or authorized representative.




3. ESTABLISHMENT OF THE COMPANY




     3.1 Establishment of Company



          The Parties hereby agree to establish the Company promptly after the Effective Date in
accordance with the EJV Law, the EJV Implementing Regulations, other Applicable Laws and
regulations of the PRC.




     3.2 Name of Company



          The name of the Company shall be  in Chinese, and “Kun Peng Airlines, Co.,
Ltd.” in English.






 




			
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     3.3 Company’s Legal Address



          The legal address of the Company shall be New China Insurance Building, No 8, Lianhuachi Xili,
Fengtai District, Beijing, the PRC (in Chinese: ).




     3.4 Company Branch Offices



          The Company may establish branch offices inside the PRC and/or overseas with the consent of
the Board and the approval from the relevant governmental authorities.




     3.5 Limited Liability Company



          The form of organization of the Company shall be a limited liability company.




4. PURPOSE AND SCOPE OF OPERATION




     4.1 Purpose of Joint Venture



          The purpose of the joint venture shall be to utilize the combined technological, management,
operational and marketing strengths of the Parties within the approved scope of business of the
Company to achieve worthwhile economic results and a return on investment satisfactory to the
Parties.




     4.2 Scope of Business



          The scope of business of the Company shall be to offer common carrier passenger service to the
public on PRC domestic and international markets.




     4.3 Independent Entity



          The Company shall conduct its business as an independent economic entity and will operate
autonomously.




5. TOTAL INVESTMENT AND REGISTERED CAPITAL




     5.1 Total Investment Amount



          The total amount of investment required by the Company is presently estimated by the Parties
to be [****] Renminbi Yuan (RMB [****]).




     5.2 Registered Capital Amount



          The Company’s registered capital shall be [****] Renminbi (RMB [****]).




     5.3 Contributions to Capital




	 	(a)	 	Party A’s contribution to the registered capital of the Company
shall be [****] Renminbi Yuan (RMB [****]), representing a fifty-one percent
(51%) share of the registered capital of the Company.
	 
	 	(b)	 	Party B’s contribution to the registered capital of the Company
shall be [****] Renminbi Yuan (RMB [****]), representing a twenty-five percent
(25%) share of the registered capital of the Company.







 




			
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	 	(c)	 	Party C’s contribution to the registered capital of the Company
shall be [****] Renminbi Yuan (RMB [****]): representing a twenty-four percent
(24%) share of the registered capital of the Company.





     5.4 Payment of Registered Capital; Conditions Precedent




	 	(a)	 	Subject to Article 5.4(c) below, each Party shall make its
contribution to the registered capital of the Company in accordance with
Schedule B to this Contract.
	 
	 	(b)	 	Subject to Article 5.4(c) below, in the event that a Party
fails to make its capital contribution, in whole or in part, in accordance with
the provisions of this Contract, such Party shall be liable to pay simple
interest to the Company at a rate equal to [****] percent ([****]%) per annum
on the unpaid amount from the time due until the time the full outstanding
amount including penalty interest is paid to and received by the Company.
	 
	 	(c)	 	No Party shall have any obligation to make its contribution to
the Company’s registered capital until it has received each of the following
documents:






	 	(i)	 	a copy of the Approval Letter and the Approval
Certificate approving this Contract and the Articles of Association
issued by the Ministry of Commerce or its local counterpart and General
Administration of Civil Aviation;
	 
	 	(ii)	 	a copy of the Business License incorporating the
business scope set out in Article 4.2; and
	 
	 	(iii)	 	the approval of each Party’s board of directors;
provided, however, if the Company has obtained the items listed in (i)
and (ii) above, the approval of each Party’s board of directors shall
not be a condition to such Party’s obligation to make its applicable
contribution to the Company’s registered capital.





          (d) In the event that:




	 	(i)	 	any Approval Document is not issued within ninety
(90) days of the date of submission of the relevant application in
respect thereof, or
	 
	 	(ii)	 	the Examination and Approval Authority rejects
any of the documents submitted for approval and the Parties cannot agree
on the changes needed to obtain such approval within ninety (90) days of
the notification of such rejection to the Parties,




then any Party shall have the right to issue written notice to the other Party(ies) declaring this
Contract and the Articles of Association immediately null and void, whereupon the Parties shall
apply for the cancellation of the Business License (if issued) and, where any capital contributions
have been made to the Company, the liquidation of the Company pursuant to Article 16.4. In such
case, no Party shall have any right whatsoever to require the other Party(ies) to make any further
contribution to the registered capital of the Company or otherwise to require any other performance
of this Contract or (except in cases of willful misconduct) to claim any damages from the other
Party.




     5.5 Investment Certificates




	 	(a)	 	When a Party has made all or any part of its contribution to
the registered capital of the Company, a Chinese registered accountant
appointed by the Board shall verify such contribution and issue a capital
contribution verification report in the form required under Applicable Laws of
the PRC.







 




			
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	 	(b)	 	In accordance with such report, the Parties shall cause the
Company to issue an Investment Certificate to the relevant Party. An interim
certificate shall be issued in respect of each partial contribution made by a
Party. Upon completion of all capital contributions by a Party, any interim
certificate(s) shall be returned to the Company for cancellation and a final
Investment Certificate shall be issued
	 
	 	(c)	 	Any interim or final Investment Certificate shall be signed by
the Chairman and the Vice Chairman of the Board and stamped with the Company
seal, and shall certify the amount of registered capital contributed by such
Party and the date on which such capital contribution was made.





     5.6 Assignment of Registered Capital




	 	(a)	 	A Party may sell, transfer, pledge, encumber or otherwise
dispose of (each a “transfer”) all or any part of its interest in the
registered capital of the Company to any third party only with the prior
written consent of the other two Parties, the unanimous approval of the Board
and the approval of the Examination and Approval Authority, and any transfer of
an interest in the Company must not result in the Company or the ownership
thereof to be in violation of the Applicable Laws in effect at the time of such
transfer.
	 
	 	(b)	 	Upon receipt of approval from the Examination and Approval
Authority, the Parties shall cause the Company to register the change in
ownership with the SAIC. All transfers shall be handled in compliance with the
Applicable Laws in effect at the time of such transfers.
	 
	 	(c)	 	Unless a Party is transferring its interest in the registered
capital of the Company to an Affiliate Assignee (defined in 5.6(f)), if either
(i) Party A or (ii) Party B, or (iii) the aggregate of Party B and Party C (the
“Assigning Party”, as applicable) propose(s) to transfer all or any part of its
or their interest in, the registered capital of the Company to a third party,
the other Parties (which is Party B if Party A is the Assigning Party or which
is Party A if Party B or the aggregate of Party B and Party C is/are the
Assigning Party) shall have a right of first refusal to purchase or have a
designee which does not violate any Applicable Laws relating to the ownership
of the Company purchase such interest at the price offered to the third party.
The Assigning Party shall notify the other Parties in writing on the terms and
conditions of the proposed transfer. If the other Party does not exercise its
right of first refusal of purchase or to have its designee purchase within
thirty (30) days after delivery of such notice, such other Party shall be
deemed to have consented to such transfer and covenants that it will sign all
necessary documents in connection therewith and will cause the directors
appointed by it to attend in person, by proxy or by telecommunications any
Board meeting at which such transfer is to be voted in favor of a resolution
approving such transfer or to sign a written resolution circulated in lieu of
such a meeting of the Board, as the case may be. Unless Party C is transferring
its interest in the registered capital of the Company to an Affiliate Assignee,
if Party C (the “Assigning Party”) propose(s) to transfer all or any part of
its interest in the registered capital of the Company to a third party, Party B
shall have a right of first refusal to have a designee purchase such interest
at the price offered to the third party. The Assigning Party shall notify the
other Parties in writing on the terms and conditions of the proposed transfer
(the “Transferring Notice”). If Party B does not exercise its right of first
refusal of purchase within thirty (30) days after receipt of the Transferring
Notice, Party A shall have a right of refusal to have a designee purchase such
interest at the price offered to the third party. If Party B and/or Party A
do/does not exercise their/its right of refusal of purchase, such Party(ies)
shall be deemed to have consented to such transfer and covenants that it/they
will sign all necessary documents in connection therewith and will cause the
directors appointed by it/them to attend in person, by proxy or by
telecommunications any Board meeting at which such transfer is to be voted in
favor of a resolution approving such transfer or to sign a written resolution circulated
in lieu of such a meeting of the Board, as the case may be.







 




			
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	 	(d)	 	If a Party desires to sell all or part of its interest in the
registered capital of the Company to the other Party(ies), and the other
Party(ies) desire to purchase such interest, the Parties, including the Selling
Party, shall jointly request an Independent Appraiser to conduct a valuation of
the Company using the Industry Valuation Method. The Independent Appraiser
shall complete the valuation of the Company within forty-five (45) days. The
valuation determined by the Independent Appraiser shall be the valuation
adopted by the Parties for purposes of this provision. The purchase price for
all or part of a Party’s share of the registered capital of the Company shall
be calculated by multiplying the value of the Company as determined above by
the percentage of such Party’s share of the registered capital to be
transferred.
	 
	 	(e)	 	To the extent permitted by Applicable laws relating to the
ownership of the Company, in the event of a transfer by Party A or a transfer
by Party B or a transfer by both Party B and Party C, in each case to a
non-Affiliate Assignee, any non-transferring Party shall have the right, but
not the obligation, to participate in the transfer and to sell to the
transferee all or part of such non-transferring Party’s share in the registered
capital of the Company on the same term and conditions as described in the
notice (“Tag Along Right”). Any non-transferring Party that intends to exercise
such Tag-Along Right shall, within thirty (30) days following the delivery of
the notice of an intent to transfer, deliver a written notice of such intention
to the transferring Party(ies), specifying the proportion of its share in the
registered capital of the Company with respect to which it has elected to
exercise its Tag-Along Right.
	 
	 	 	 	If the non-transferring Party, does not exercise its Tag-Along Right in
writing within thirty (30) days of the delivery of the notice from this
transferring Party, the non-transferring Party shall be deemed to have
waived its Tag-Along Right and shall immediately thereafter confirm in
writing its consent to the transfer to the transferee as specified in the
notice of intent to transfer and, if applicable, cause each of the directors
it has appointed to approve such transfer. In such case, the transferring
Party(ies) may assign, sell, transfer or otherwise dispose of such share in
the registered capital of the Company to the proposed transferee on the
terms and conditions set out in the notice of intent to transfer.
	 
	 	(f)	 	Notwithstanding subsections (c), (d) and (e) of this Article
5.6 above, the Assigning Party may transfer all or part of its amount of the
registered capital of the Company to an Affiliate (the “Affiliate Assignee”) of
the Assigning Party under the following conditions:






	 	(i)	 	the Affiliate Assignee shall assume and undertake
to perform fully all of the obligations of the Assigning Party under
this Contract; and
	 
	 	(ii)	 	the Assigning Party shall acknowledge and agree
that to the extent that the Affiliate Assignee fails to perform any
obligation hereunder the Assigning Party is not released from, and
remains jointly and severally liable with the Affiliate Assignee for,
the full performance of the provisions of this Contract and any damages
for the breach thereof.




The Affiliate Assignee and the Assigning Party each shall provide to the other Party a written
indemnification in respect of the foregoing satisfactory to the other Parties. If a Party intends
to transfer its interest or a portion of its interest in the Company to an Affiliate Assignee, such
non-transferring Party(ies) shall be deemed to have consented to such transfer and covenant(s) that
it/they will sign all necessary documents in connection therewith and will cause the directors
appointed by it/them to attend in person, by proxy or by telecommunications any Board meeting at
which such transfer is to be voted in favor of a resolution approving such transfer or to sign a
written resolution circulated in lieu of such a meeting of the Board, as the case may be. For tho
avoidance of doubt, no Party shall have a right of first refusal to purchase or a Tag Along Right
should a Party elect to transfer to an Affiliate Assignee.




     5.7 Encumbrance of Interests in the Company





 




			
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          A Party may not mortgage, pledge or otherwise encumber all or any part of its interest in the
Company without the unanimous approval by the Board of directors of the Company.




     5.8 Increase or Reduction of Registered Capital




	 	(a)	 	Any increase or reduction in the registered capital of the
Company must be (i) approved by a unanimous vote of the members of the Board
present at a meeting or by unanimous written resolution and (ii) submitted to
the Examination and Approval Authority for approval. Upon such approval; the
Parties shall cause the Company to register the increase or reduction with the
SAIC. Except as provided in clause (b) below in respect of unilateral
contributions to increases in the Company’s registered capital, each Party
shall contribute to any increase or bear its proportionate share of such
reduction in proportion to its percentage interest in the registered capital of
the Company at the time of the increase or reduction.
	 
	 	(b)	 	The Parties acknowledge that if the Company achieves the
operations, revenue and earnings targets anticipated by the Parties, one or
more increases in the registered capital of the Company might be required to
support the expansion of the Company’s business. Each Party desires to
facilitate such expansion by contributing its proportionate share of the
required increase(s) in the registered capital of the Company. However, if a
Party (“Declining Party”) for any reason declines to contribute its
proportionate share of any required increase, then such Declining Party hereby
irrevocably agrees that the other Parties may contribute the full amount of
such increase in the registered capital in accordance with the shares of the
other Parties in the Company. The resulting changes in the Parties’ relative
shares of the registered capital shall be handled in accordance with the
Applicable Laws of the PRC. The Declining Party hereby covenants that it will
sign all necessary documents and cause the directors appointed by it to attend
in person, by proxy or by telecommunications any Board meeting at which such
matters are considered and to vote in favor of all resolutions necessary or
desirable to effect such unilateral contribution to the increase in the
registered capital of the Company and the resulting change in the Parties’
relative interests in the registered capital of the Company or to sign a
written resolution circulated in lieu of such a meeting of the Board, as the
case may be.
	 
	 	(c)	 	In the event that the Company’s operations are reduced
substantially from the scale of operation originally anticipated by the
Parties, or the Company experiences substantial and continuing losses resulting
in negative retained earnings not anticipated by the Parties in the agreed
Business Plan, or in any other circumstance permitted under Applicable Laws of
the PRC or agreed by the Parties, the Parties may agree to reduce the
registered capital of the Company on a pro rata basis. In determining the
amount of any reduction in the Company’s registered capital, the Parties may
request an Independent Appraiser to perform a valuation of the Company using
the Industry Valuation Method, and/or applying such other factors as the
Parties mutually deem appropriate.





     5.9 Additional Financing




	 	(a)	 	The Company may borrow from commercial banks and financial
institutions from time to time as the business operation may require. The
Company may obtain loans from sources inside or outside the PRC; provided,
however, that any financing sourced from outside the PRC must be in compliance
with Applicable Laws.
	 
	 	(b)	 	No external financing raised by the Company shall confer any
right on any lender to acquire an interest in the registered capital of the
Company or to participate in the Business.
	 
	 	(c)	 	If any guarantee is required as security for any external
financing of the Company approved by the Board, and if the Parties agree to
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	 	 	 	financing, the Parties shall severally guarantee the obligations of the Company
under such external financing in proportion to their respective interests in the
registered capital of the Company at such time as the guarantee is given (unless
otherwise agreed in writing by the Parties). If the Parties agree to provide
guarantees, each Party shall provide a non-recourse loan payment guarantee (but
shall not be obligated to provide any other type of payment or performance guaranty,
collateral or indemnification) to the applicable lender(s).





6. RESPONSIBILITIES OF THE PARTIES




     6.1 Responsibilities of Party A



          In addition to its other obligations under this Contract, Party A shall have the following
responsibilities:





	 	(a)	 	assist the Company to procure the office and necessary
additional facilities for the Company to run its business, including land,
premises, offices and utility supplies;
	 
	 	(b)	 	assist the Company in recruiting qualified employees according
to the requirements approved by the Board;
	 
	 	(c)	 	assist the Company with public relations;
	 
	 	(d)	 	assist non-citizen employees of other Parties and the Company
to obtain visas to the PRC and/or residence permits and working permits in the
PRC;
	 
	 	(e)	 	assist the Company to secure supplies from domestic suppliers;
	 
	 	(f)	 	assist the Company with the importation of materials or other
kinds of goods necessary to operate the business of the Company;
	 
	 	(g)	 	assist with the branding and marketing of the Company;
	 
	 	(h)	 	obtain relevant Permits, promptly, and in any event, within
three (3) business days provide respectively to Party B and Party C, a copy of
the documents received by Party A from any government agencies in respect of
any Permits or otherwise in relating to the establishment, operations or
business of the Company. After the establishment of the Company, Party A shall
deliver all the originals of such documents to the Company.
	 
	 	(i)	 	assist in obtaining amendments to, or renewals of, any of the
Permits as required by the business of the Company from time to time;
	 
	 	(j)	 	make its contribution to the registered capital of the Company
as provided in Article 5.4 hereof;
	 
	 	(k)	 	handle other matters entrusted to it pursuant to separate
written agreement entered into by the Company and Party A from time to time.





     6.2 Responsibilities of Party B and Party C



          In addition to its other obligations under this Contract, Party B and Party C shall have the
following responsibilities:





	 	(a)	 	make contributions to the registered capital of the Company as
provided herein;







 




			
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	 	(b)	 	handle other matters entrusted to it pursuant to separate
written agreement entered into by the Company and Party B or Party C from time
to time;
	 
	 	(c)	 	secure aircraft and spare part supplies from foreign suppliers
through leases, subleases, purchase agreements or otherwise; and
	 
	 	(d)	 	provide high level executives for the management of the Company
and technical support and training for employees of the Company.





7. BOARD OF DIRECTORS




     7.1 Formation of the Board




	 	(a)	 	The Board shall be formed on the Business License Issuance
Date.
	 
	 	(b)	 	The Board shall consist of seven (7) directors, four (4) of
whom shall be appointed by Party A, two (2) of whom shall be appointed by Party
B, one (1) of whom shall be appointed by Party C.
	 
	 	(c)	 	Each director shall be appointed for a term of four (4) years
and may serve consecutive terms if re-appointed by the Party by which such
directors were originally appointed. A director can be removed at the pleasure
of the Party by which such director was originally appointed. If a seat on the
Board is vacated by the retirement, resignation, illness, disability or death
of a director or by the removal of such director by the Party by which such
director was originally appointed, the Party which originally appointed such
director shall appoint a successor to serve out such director’s term.
	 
	 	(d)	 	A director appointed by Party A shall serve as the Chairman of
the Board (“Chairman”) and a director appointed by Party B shall serve as Vice
Chairman of the Board (“Vice Chairman”). The Chairman shall be the legal
representative of the Company. Whenever the Chairman is unable to perform his
responsibilities for any reason, the Chairman shall designate the Vice Chairman
to perform his responsibilities temporarily in accordance with this Contract
and the Articles of Association.
	 
	 	(e)	 	Directors appointed by a Party shall be individuals of high
integrity with appropriate experience as senior business managers,
professionals, government officials or other similar qualifications. Directors
shall also satisfy all qualification requirements under Applicable Laws of the
PRC. The Party appointing a director shall submit written notice of his
appointment or removal to the other Party and (following formation of the
Board) the Chairman and the Secretary to the Board (“Secretary”). Upon
execution of this Contract, each Party shall notify the other Parties in
writing of the names, titles and nationalities of the initial slate of
directors appointed by such Party. A summary of the qualifications and
experience of each proposed new director shall be attached to the notice of
appointment. Each appointment or removal of a director shall be submitted to
the Board for ratification at the next regular or interim Board meeting. The
Secretary shall record such appointment or removal of a director in the
Company’s books and register the same with the SAIC.
	 
	 	(f)	 	The Chairman, acting in consultation with the Vice Chairman,
shall appoint a Secretary for a term of three (3) years. The Secretary shall be
a responsible and mature individual who is fluent in written and oral English
and Chinese. The Secretary shall perform his duties in accordance with the
provisions of this Contract and the Articles of Association under the
supervision of the Chairman and the Vice Chairman. The Secretary shall not be
appointed from the members of the Board or the Management Personnel but may
be an employee of the Company or one of the Parties. The term of the
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	 	 	 	extended or the Secretary may be removed or replaced by the Chairman acting in
consultation with the Vice Chairman.
	 
	 	(g)	 	The Chairman, Vice Chairman, Secretary and each director shall
bear fiduciary responsibilities to the Company in accordance with Applicable
Laws of the PRC and such additional ethical policies as the Board may adopt
(collectively, “Applicable Ethical Rules”). The Chairman, Vice Chairman,
Secretary and the other directors shall serve without remuneration, but all
reasonable costs, such as round-trip air fares and reasonable accommodation
incurred by the directors in the performance of duties assigned by the Board
shall be borne by the Company in accordance with such policies and guidelines
as the Board may adopt from time to time.
	 
	 	(h)	 	No director shall bear any personal liability for any acts
performed or not performed in good faith in his capacity as a director or as
assigned by the Board, except for willful misconduct, and/or acts in violation
of Applicable Laws of the PRC or applicable ethical rules. Subject to the
foregoing, the Parties shall cause the Company to indemnify each director
against any claims that may be brought against such director for acts performed
in his capacity as a director of the Company.





     7.2 Powers of the Board




	 	(a)	 	The Board shall be the highest authority of the Company.
	 
	 	(b)	 	Adoption of resolutions relating to the following matters shall
require the unanimous affirmative vote of each and every director of the Board
present in person, by proxy or by telecommunications at a duly convened meeting
of the Board:






	 	(i)	 	Any amendment of this Contract and the Articles
of Association;
	 
	 	(ii)	 	Any merger of the Company with another legal
entity or organization, or the investment of capital or assets by the
Company in another legal entity or organization;
	 
	 	(iii)	 	Termination or dissolution of the Company and
resulting liquidation thereof or all Parties agree in writing that the
termination or dissolution of the Company should occur,
	 
	 	(iv)	 	Increase, reduction or assignment of the
registered capital of the Company;
	 
	 	(v)	 	Execution by the Company of any contract with a
Party or an Affiliate of such Party other than contracts entered into in
the ordinary course of the Company’s business on an arm’s length basis;
	 
	 	(vi)	 	Any matter which under Applicable Laws requires
unanimous Board approval; and
	 
	 	(vii)	 	Any other matter which in accordance with the
provisions of this Contract requires unanimous Board approval or which
the Board by unanimous affirmative vote determines shall be adopted only
by unanimous affirmative Board resolution.






	 	(c)	 	Adoption of resolutions relating to the following matters shall
require the affirmative vote of a supermajority (such supermajority being an
affirmative vote of two-thirds of the
directors) of the directors present in person, by proxy or by
telecommunications at a duly convened meeting of the Board:







 




			
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	 	(i)	 	Establishment of bank credit facilities or the
borrowing of loans in a single transaction or a series of related
transactions other than those approved by the Board as part of the
annual business plan or operating budget;
	 
	 	(ii)	 	Review and approval of the Company’s annual
budgets and financial reports, annual profit distribution plan and the
amount and timing of allocations to and use of the reserve fund, the
expansion fund and the employee bonus and welfare fund, and the amount
and timing of allocations of after-tax profit distributions to the
Parties;
	 
	 	(iii)	 	Establishment of and changes to Company policies
and procedures regarding management of financial accounts, execution of
legal documents, applicable ethical rules and ethical practices and
other important matters;
	 
	 	(iv)	 	Decisions on the appointment, compensation,
discipline and dismissal of the Management Personnel; and
	 
	 	(v)	 	Sale, transfer or other disposition of, or the
granting of an Encumbrance over, all or substantially all of the assets
of the Company or the giving of any financial guarantee by the Company
for the obligations of any third party.






	 	(d)	 	Adoption of resolutions relating to the following matters shall
require the affirmative vote of a simple majority of the directors present in
person, by proxy or by telecommunications at a duly convened meeting of the
Board;






	 	(i)	 	Establishment of Company bank accounts and the
appointment of the Company’s Independent Auditor;
	 
	 	(ii)	 	Purchase of capital equipment, land use rights,
buildings or other assets in a single transaction or a series of related
transactions other than such purchases made in accordance with the
operating budget approved by the Board;
	 
	 	(iii)	 	Execution of technology license contracts with
third parties other than as contemplated in this Contract or any other
contract executed by the Parties in connection with this transaction or
other than in the ordinary course of business on customary terms and
conditions;
	 
	 	(iv)	 	Establishment of branch offices and liaison
offices in China and abroad pursuant to Applicable Laws; and
	 
	 	(v)	 	Any other matter which, in accordance with the
provisions of this Contract, requires Board approval or which the Board
determines shall require Board approval.





     7.3 Board Meetings




	 	(a)	 	The first Board meeting shall be held within thirty (30) days
from the Business License Issuance Date. Thereafter, meetings shall be held at
least once each six (6) months subject to always holding at least four (4)
meetings in each calendar year. Meetings generally shall be held at the legal
address of the Company or such other address in China or abroad as is
designated by the Board.






	 	(b)	 	The date of regular Board meetings shall be set by the Chairman
following consultation with the Vice Chairman. Prior to each such regular Board
meeting, the Secretary, under the supervision and direction of the Chairman and
the Vice Chairman, shall prepare the







 




			
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	 	 	 	agenda for such Board meeting together with drafts of proposed resolutions and such
other supplemental materials to be considered by the Board at such meeting as the
Chairman and Vice Chairman deem appropriate. The Chairman and Vice Chairman shall
consult with the General Manager in connection with the preparation of the agenda
and such resolutions and other materials. The General Manager shall be responsible
for the preparation of all reports, plans, policies and procedures to be submitted
to the Board for review and approval as provided under Articles 7.2(b) and (c) above
and otherwise as requested by the Chairman and Vice Chairman. The Secretary, under
the direction of the Chairman and the Vice Chairman, shall give each director at
least ten (10) days written notice in advance of each regular Board meeting,
specifying the date, time and place of such regular Board meeting. Such written
notice shall be accompanied by a copy of the agenda, the proposed draft resolutions
and other materials specified above.
	 
	 	(c)	 	An interim Board meeting shall be scheduled upon the written
request of one-third (1/3) of total number of directors or more of the
directors of the Company. Such request shall specify the matters proposed to be
discussed in reasonable detail and shall be delivered to the Chairman, the Vice
Chairman, the Secretary and each of the other directors. The Chairman following
consultation with the Vice Chairman, shall decide on the timing and location of
such interim Board meeting, provided that such interim Board meeting shall be
held not less than fifteen (15) days and not more than forty-five (45) days
following delivery of such request. The Secretary, under the supervision and
direction of the Chairman and the Vice Chairman, shall prepare an agenda
covering the matters set out in such request. The Secretary, under the
direction of the Chairman and Vice Chairman, shall give each director at least
ten (10) days written notice in advance of such interim meeting, specifying the
date, time and place of such interim Board meeting. Such written notice shall
be accompanied by the agenda and the materials included in the request for
meeting.
	 
	 	(d)	 	In extraordinary circumstances requiring immediate action by
the Board and otherwise as provided in this Contract, the Chairman and the Vice
Chairman acting jointly may call an emergency meeting of the Board. The
Secretary, under the direction of the Chairman and Vice Chairman, shall give
each director at least twenty-four (24) hours written notice in advance of such
emergency meeting, specifying the date, time and place of such emergency Board
meeting. Such written notice shall be accompanied by an agenda and such
additional materials as the Chairman and Vice Chairman deem appropriate.
	 
	 	(e)	 	The Chairman shall be responsible for convening and presiding
over regular, interim and emergency Board meetings. Board meetings may be
attended by directors in person by proxy or by telecommunications. Two-third
(2/3) of total number of directors present in person, proxy or by
telecommunications shall constitute a quorum necessary for the conduct of
business at a meeting of the Board.
	 
	 	(f)	 	If a Board member is unable to participate in a Board meeting
in person or by telecommunications, he or she may issue a written proxy and
entrust a representative to participate in the meeting on his behalf. The
representative so entrusted shall have the same rights and powers as the Board
member, including the right to be counted in the quorum, to vote or
any resolution and to sign relevant documents. Such representative shall
present such written proxy to the Secretary prior to the start of the Board
meeting, and the Secretary shall attach such proxy to the minutes of the Board
meeting.
	 
	 	(g)	 	Management Personnel and other employees of the Company may
attend all or part of any Board meeting at the invitation of the Chairman and
Vice Chairman. In addition, with the prior approval of the Chairman and Vice
Chairman, any director may invite any other person to attend all or part of any
Board meeting, provided that such guest shall sign non-disclosure agreements in
such form as the Chairman and Vice Chairman deem appropriate. No Management Personnel, any other employee or any guest
attending a Board meeting shall have the right to vote on any resolution
presented at the Board







 




			
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	 	 	 	meeting save where acting in their capacity as a director. The Secretary shall note
the presence of such guests in the minutes of the meeting.
	 
	 	(h)	 	Board meetings shall be conducted in English and Chinese. The
Secretary, under the direction of the Chairman and Vice Chairman, shall arrange
for an interpreter to be present at each Board meeting. Such interpreter shall
be an employee of the Company or a Party unless it is impractical to do so, and
shall be subject to the provisions applicable to guests in the immediately
preceding clause.
	 
	 	(i)	 	The Chairman shall present each item on the agenda for
discussion in the order listed in the agenda unless otherwise agreed by the
Chairman and Vice Chairman. The Chairman shall allow each director to have an
opportunity to ask questions and express his opinion in an orderly manner with
respect to each matter presented. Following the conclusion of the discussion on
each matter, the Chairman shall call for a vote to approve, approve with
modifications, reject or defer action on the resolution proposed in respect of
such matter. Each director shall have one vote. The Chairman shall not have an
extra vote under any circumstances. Resolutions shall be adopted by the
affirmative vote of the number of directors present at the meeting in person,
by proxy or by telecommunications in accordance with the requirements of
Articles 7.2(b) and (c).
	 
	 	(j)	 	The Secretary shall prepare and complete accurate minutes of
each Board meeting in accordance with the provisions of this Contract and the
Articles of Association. Such minutes shall be in both English and Chinese and
shall record all items of business presented and transacted at such Board
meeting. A copy of the notice of the Board meeting together with all
attachments thereto shall be attached to the minutes. Within fifteen (15) days
following the date of the Board meeting, the Secretary shall deliver a draft of
the minutes to the Chairman and Vice Chairman for review. Within fifteen (15)
days following their receipt of such draft minutes, the Chairman and Vice
Chairman shall approve the minutes as drafted or approve the draft with
modifications. If either the Chairman or the Vice Chairman does not provide a
response within such time period, he shall be deemed to have approved the
minutes as drafted. Within five (5) days following review and approval of the
minutes by the Chairman and Vice Chairman, the Secretary shall distribute the
minutes to all the Directors. Any director who wishes to propose any amendment
or addition thereto shall submit the same in writing to the Secretary within
five (5) days following receipt of the proposed minutes. If any director does
not provide a response within such time period, he shall be deemed to have
approved the minutes as drafted. The minutes shall be finalized by the
Secretary under the direction of the Chairman and Vice Chairman within five (5)
days following the conclusion of the above comment period for directors. The
finalized minutes shall be signed by the Secretary and the Chairman and/or the
Vice Chairman.
	 
	 	(k)	 	The Secretary shall be responsible for maintaining the
Company’s minute book. The Secretary shall place the complete original of the
finalized and signed minutes of each Board meeting with all attachments thereto
into the Company minute book in chronological order. In addition, the Secretary
shall maintain separate records of signed and/or chopped originals of the
following:






	 	(i)	 	This Contract, the Articles of Association, the
Approval Letter, the Approval Certificate and the Business License;
	 
	 	(ii)	 	The Additional Permits, the government approvals
and registrations (if any) in respect of the Tax Concessions;
	 
	 	(iii)	 	All amendments to and renewals of any of the
foregoing together with the government approvals and registrations in
respect of such amendments;







 




			
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	 	(iv)	 	All changes in the directors or Management
Personnel appointed by either Party together with all registrations in
respect thereof; and
	 
	 	(v)	 	All other official correspondence between the
Company and any relevant government department and other similar
official documents pertaining to the establishment, management,
operation, business or assets of the Company.






	 	(l)	 	Each Party shall have the right, during regular Company
business hours to inspect the Company minute book and the other Company record
books described above and make photocopies of any document contained therein at
such Party’s own cost and expense.
	 
	 	(m)	 	In lieu of any meeting of the Board, a written resolution may
be adopted by the Board if such resolution is sent to all members of the Board
then holding office and is affirmatively signed and adopted by the number of
directors who could adopt such resolution at a duly convened meeting of the
Board in accordance with this Contract. The Secretary shall circulate such
written resolutions at the request or direction of the Chairman, Vice Chairman
or one-third (1/3) of total number of directors or more of the directors of the
Company. Such request shall attach the form of the proposed resolution together
with such supporting materials as the requesting party may deem appropriate. If
made by one-third (1/3) of total number of directors or more of the directors
of the Company, such request shall be delivered to the Chairman, the Vice
Chairman and the Secretary. If made by the Chairman or the Vice Chairman, such
request shall be delivered to the Secretary and (in the case of a request by
the Chairman) the Vice Chairman or (in the case of a request made by the Vice
Chairman) the Chairman. The Chairman and/or the Vice Chairman may prepare
written comments on the matter addressed in the proposed written resolution.
Within ten (10) days following receipt of such request, the Secretary shall
circulate the proposed resolution together with all supporting materials
supplied by the requesting party and any additional comments thereon provided
by the Chairman or the Vice Chairman to each director by hand, fax, email
and/or domestic or international courier service to the current mailing or
email address and/or fax number(s) for such director registered in the records
of the Company. The Secretary, under the direction of the Chairman and Vice
Chairman, shall specify the time within which response by the directors is
required, provided that unless otherwise approved by the Chairman and the Vice
Chairman such response time period shall not be less than fifteen (15) days or
more than forty-five (45) days following the delivery of the proposed written
resolution by the Secretary to the directors. A director shall signify his
approval of the proposed resolution by signing and returning the same to the
Secretary in accordance with the instructions given and within the response
time designated by the Secretary. Signed resolutions delivered to the Secretary
by hand, fax or email photo-image shall be deemed timely if delivered or
transmitted prior to the expiration of the response time designated by the
Secretary. Signed resolutions delivered to the Secretary by fax or email
photo-image shall be followed by delivery of the original signed resolution to
the Secretary by hand, post or domestic or international courier as promptly as
possible. If a director or his valid proxy fails to sign and return such
written resolution within the response time designated by the Secretary, or if
he approves the resolution with modifications, such director shall be deemed to
have voted against the resolution. Such written board resolution may be signed
in counterparts by the approving directors. The Secretary shall inform the
Board of the results of the voting on such written resolution within five (5)
days of the conclusion of the designated response time. If approved, such
written resolution shall be filed with the minutes of the Board proceedings and
shall have the same force and effect as a vote taken by members present in
person, by proxy or by telecommunications at a duly convened Board meeting. If
a non-counterpart original resolution signed by all approving directors is
required for submission to any government department, the Secretary will be
responsible to arrange for the signature of the same, and all directors shall
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	 	(n)	 	Neither the Chairman nor the Vice Chairman nor any other
director or other officer of the Company shall have the power to bind the
Company except pursuant to authority expressly granted pursuant to a resolution
of the Board approved in accordance with the provisions of this Contract and
the Articles of Association.





8. OPERATION AND MANAGEMENT




     8.1 Management Personnel



          Management Personnel shall be individuals of high integrity with appropriate professional
qualifications and experience. The General Manager, Deputy General Manager for Sales, and the Chief
Financial Officer shall be nominated by Party A, the Chief Deputy General Managers, Deputy General
Manager for Safety and Maintenance, and the Deputy Financial Officer of the Company shall be
nominated by Party B. All other Management Personnel shall be appointed by the Board of Directors.




     8.2 Employment of Management Personnel



          Management Personnel shall be employed by the Company in accordance with the terms of
individual employment contracts entered into between the Management Personnel and the Company and
approved by the Board. The Management Personnel may be rewarded, disciplined or removed by the
Board. The General Manager shall have the right to submit recommendations to the Board for the
reward, discipline or dismissal of the Deputy General Managers) or the Chief Financial Officer for
consideration and action by the Board, and the Board shall give such recommendations of the General
Manager due deference and consideration.




     8.3 General Manager’s Duties



          The General Manager shall be responsible for all of the day-to-day operations and management
of the Company other than those matters expressly reserved for decision and action by the Board.
The General Manager shall be responsible to the Board and shall carry out all matters under the
authority granted to him by the Board. The General Manager shall have the authority at his sole
discretion to hire and dismiss all employees of the Company other than the other Management
Personnel. The General Manager shall have the power to decide the internal operational structure of
the Company. The General Manager shall appoint department managers as appropriate to be responsible
for the work of their respective departments. The other Management Personnel and such department
managers shall report to and work under the supervision and direction of the General Manager. The
General Manager has the power to use funds, within the budgetary parameters approved by the Board
of Directors.




     8.4 Deputy General Manager(s)



          Deputy General Manager(s) shall assist the General Manager in the performance of his
responsibilities as requested by the General Manager. The Deputy General Manager(s) shall also
oversee and manage all operating, maintenance and flight safety issues associated with the Company.




     8.5 Exclusivity



          General Manager and the Deputy General Manager(s) shall perform their respective duties on a
full time basis and shall not hold posts concurrently as general manager or deputy general manager
in any other economic entity.




9. EQUIPMENT AND SERVICE PROCUREMENT




     9.1 Procurement Policy



          The Parties shall cause the Company to purchase, lease or rent equipment, software, material,
means of transportation and articles for office use and other supplies in or outside the PRC on the
basis of the competitiveness of the terms and conditions of procurement, quality, quantity,
pricing, and delivery terms of the




 




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products and in accordance with the procurement policy formulated by the General Manager and the
Deputy General Manager(s) and approved by the Board from time to time.




     9.2 Preference for the Parties



          Where each Party or any of its respective Affiliates is willing to provide services to the
Company, the Parties shall cause the Company to give preference to such respective Affiliates over
other service suppliers, provided that the terms, conditions, price and quality offered by such
Party or any of their respective Affiliates (as the case may be) are equal to, or more favorable
than those offered by the other service suppliers, and the experience and expertise of such Party
or any of their respective Affiliates (as the case may be) is equal to or better than that of the
other service suppliers.




10. INTELLECTUAL PROPERTY




     10.1 The Company’s Intellectual Property




	 	(a)	 	Any Intellectual Property Rights (other than those owned or
licensed by a Party or any third party) arising in the course of the Company’s
activities or developed by the Company shall belong to the Company. The Parties
agree to work together to procure that the Management Personnel and other
employees of the Company establish a system for identifying, filing and/or
registering all relevant Intellectual Property Rights developed by employees of
the Company in the name of the Company.
	 
	 	(b)	 	The Parties shall use their best endeavours to procure that all
employees of the Company will enter into standardized employment contracts
which shall include customary and reasonable and consistent non-competition and
invention assignment provisions, so as to ensure that as far as possible under
the Applicable Laws of the PRC, the benefit of all inventions by the employees
of the Company shall be reserved to, and shall be the property of, the Company.





     10.2 Use of Intellectual Property Rights by the Company




     Each Party shall use its best endeavours to procure the Company to:




	 	(a)	 	Use all Intellectual Property Rights of the Company in
connection with the Business (“Business IP”) solely for the benefit of the
Company and not for any other purposes which may directly or indirectly
prejudice the Business;
	 
	 	(b)	 	Promptly notify each Party of any circumstance coming to the
attention of the Company, any director or any employee of the Company which may
constitute an infringement of, or any suspected passing off in respect of, any
Business IP;
	 
	 	(c)	 	Not take any action, which, in the opinion of a Party, may
bring the interests of such Party or any of its Affiliates into disrepute or
damage the interests of such Party or any of its Affiliates in any way; and
	 
	 	(d)	 	Take such action in relation to the use of the Business IP
owned by a Party as such Party may require in connection with the protection of
that Business IP or any infringement or passing off in relation to that
Business IP.





     10.3 Trade Secrets



          Without prejudice to the generality of the foregoing, where any Party provides to the Company
or the other Party documents containing Trade Secrets, it shall mark on the document in a prominent
place “Confidential”. The General Manager shall formulate internal rules and regulations for the
management and






 




			
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protection of Trade Secrets which shall be applied by the staff of the Company. Relevant
provisions oh the protection of Confidential Information and Trade Secrets shall be included in
each of the Company’s labor contracts with its employees.




11. LABOR MANAGEMENT




     11.1 Company Staff



          Matters relating to the recruitment, employment, dismissal, resignation, wages and welfare of,
and other matters concerning the staff and workers of the Company shall be determined autonomously
by the Company without outside interference, in accordance with the Applicable Laws of the PRC and
the policies adopted by the Company from time to time.




     11.2 Labor Union



          Working Personnel of the Company shall have the right to establish a Labor Union under the
Applicable Laws of the PRC. Working Personnel shall be employed by the Company via either
collective or individual labor contracts between the Company and the Working Personnel.




     11.3 General Manager’s Discretion



          The General Manager shall determine the qualification and number of employees in accordance
with the operating needs of the Company.




12. FINANCIAL AFFAIRS AND ACCOUNTING




     12.1 Accounting System




	 	(a)	 	The Chief Financial Officer, under the direction by the General
Manager, shall prepare two accounting systems and procedures in accordance with
each of the following and shall cause both to be consistent to the maximum
extent possible: (i) the Enterprise Accounting System and supplementary
stipulations promulgated by the Ministry of Finance and (ii) any accounting
requirements required by Party B and/or Party C, if any, as such Party(ies) or
its/their accountants notify the Chief Financial Officer from time to time. The
accounting systems and procedures to be adopted by the Company shall be
submitted to the Board for approval. Once approved by the Board, the accounting
system and procedures described in (i) shall be filed with the relevant local
government agencies as required by the Applicable Laws of the PRC.
	 
	 	(b)	 	The Parties shall cause Company to adopt Renminbi as its
bookkeeping base currency, but may also adopt United States Dollars or other
foreign currencies as supplementary bookkeeping currencies.
	 
	 	(c)	 	All accounting records, vouchers, books and statements of the
Company shall be made and kept in both Chinese and English.
	 
	 	(d)	 	For the purposes of preparing the Company’s accounts and
statements, calculation of declared dividends to be distributed to the Parties,
and for any other purposes where it may be necessary to effect a currency
conversion, such conversion shall be in accordance with the posted exchange
rate, as determined by the median rate for buying and selling announced by the
People’s Bank of China or other legally recognized rate on the date of actual
payment.





     12.2 Auditing





 




			
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	 	(a)	 	The Parties shall cause the Company to engage an Independent
Auditor to examine and verify the annual financial report. The Company’s
Independent Auditor shall be appointed by the Board.
	 
	 	(b)	 	Quarterly and annual financial statements, and such other
reports as the General Manager and Chief Financial Officer may direct, shall be
prepared and submitted to the Board. Such statements shall be in both Chinese
and English and shall reference both RMB and United States Dollars. The annual
financial statements shall include, but not limited to, the following
(including footnotes):






	 	(i)	 	balance sheet;
	 
	 	(ii)	 	profit and loss statement;
	 
	 	(iii)	 	cash flow statement;
	 
	 	(iv)	 	statement of changes in financial position; and
	 
	 	(v)	 	profit distribution recommendations.






	 	(c)	 	Quarterly financial statements shall be presented to the
General Manager and the Board in sufficient time for the Board to approve and
then for the General Manager to arrange for filing with the appropriate
authorities. The annual financial statements shall be audited and presented to
the Board within the first three (3) months of the succeeding year for
approval. The annual financial statements shall be certified by the Independent
Auditor. The General Manager shall file the certified annual financial
statements with the appropriate authorities prior to the expiration of the
fourth month of the succeeding year.
	 
	 	(d)	 	Each Party may, at its own expense, appoint either the internal
staff of such Party or an independent accountant (which may be either an
accountant registered abroad or in China) to audit the books, accounts and
other financial, commercial and legal records of the Company on behalf of such
Party. Reasonable access to such records shall be granted to such internal or
independent auditor. The Party which conducted such audition shall bear the
responsibility of assurance on such auditor’s obligation to keep confidential
all documents under such auditing.





     12.3 Bank Accounts and Foreign Exchange Control



          The Parties shall cause the Company to separately open and maintain a foreign exchange account
and a Renminbi account at an authorized bank within the PRC approved by the SAFE. With the approval
of SAFE, the Company may open a bank account in the name of the Company outside the PRC. The
Company’s foreign exchange transactions shall be handled in accordance with the Applicable Laws of
the PRC.




     12.4 Fiscal Year



          The Parties shall cause the Company to adopt the calendar year as its fiscal year, which shall
begin on January 1 and end on December 31 of the same year except that the first fiscal year of the
Company shall commence on the Business License Issuance Date and shall end on the immediately
succeeding December 31.




     12.5 Profit Distribution




	 	(a)	 	If the Company incurs losses at the end of a fiscal year, the
Parties shall share the loss [****].







 




			
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	 	(b)	 	If the Company is carrying forward losses from any previous
years, the profit of the current year shall first be used to cover any losses
from any prior fiscal year. No profit shall be distributed unless the
cumulative deficit from the previous years is made up in accordance with
Applicable Laws. The profit retained by the Company and carried over from the
previous years may be distributed together with the distributable profit of the
current year, or after the deficit of the current year is made up therefrom.
	 
	 	(c)	 	After the payment of income tax by the Company, the Board will
determine the annual allocation to the reserve fund and expansion fund of the
Company and the bonus and welfare fund for the workers and the staff from the
after-tax net profits for such fiscal year, if any.
	 
	 	(d)	 	The after-tax net profit of the Company (after the deduction of
the allocations to the funds mentioned in subsection (c) of this clause above)
shall be distributed in accordance with Applicable Laws and, unless otherwise
agreed by the Parties in writing, to the Parties [****] unless the Board
determines that such profits should be reinvested in the Company. Losses shall
be allocated in accordance with Applicable Laws and in the manner agreed to by
the Parties. If for any reason Party B and/or Party C’s share of the Company’s
after-tax net profits for any period cannot be remitted to Party B and/or Party
C outside of the PRC in United States dollars or any other foreign currency
acceptable to Party B and/or Party C, then the Company shall not make any
distribution of profits to Party A for such period until such time as such
Party B and/or Party C profit share can be so remitted.
	 
	 	(e)	 	The distribution of profits to any Party shall be subject to
offset by any indemnification obligations agreed by the Parties.





13. TAXATION AND INSURANCE




     13.1 Income Tax, Customs Duties and Other Taxes




	 	(a)	 	The Parties shall cause the Company to timely pay the Company’s
Taxes under the Applicable Laws of the PRC or any other governing body.
	 
	 	(b)	 	Promptly following the Business License Issuance Date, the
Parties shall cause the Company to file all tax-related applications to the
relevant government authorities under the Applicable Laws of the PRC.
	 
	 	(c)	 	Chinese and expatriate employees of the Company shall pay tax
on their individual income in accordance with the relevant provisions of the
Applicable Laws of the PRC.
	 
	 	(d)	 	The Parties shall cause the Company to make all efforts
reasonable to assure that Party B and/or Party C is not subject to double
taxation by the PRC and any other sovereignty.





     13.2 Insurance




	 	(a)	 	The Parties shall cause the Company, at its own cost and
expense, at all times to maintain full and adequate insurance for the Company
against loss or damage by fire and such other risks as are customarily insured
against, including, without limitation, any risks specific to the Company’s
business, by taking out insurance policies with issuers established in the PRC.
	 
	 	(b)	 	The property, transportation and other items of insurance of
the Company will be denominated in Chinese and foreign currencies, as
appropriate. The types, scope and amounts of insurance coverage shall be
determined by the General Manager and the Deputy General Manager(s).







 




			
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	 	(c)	 	The Company shall, at its own cost and expense, at all times
maintain full and adequate insurance against loss or damage claims by
passengers, under the Applicable Laws of the PRC and international conventions
on aviation liability limitation which either the PRC or the United States has
ratified.






	 	(d)	 	Insurance against other claims or damages, such as aircraft
hull and liability insurance, shall be maintained by the Company under the
Applicable Laws of the PRC and international conventions on aviation liability
limitation which either the PRC or the United States has ratified.





14. REPRESENTATIONS AND WARRANTIES




     14.1 Mutual Representations and Warranties



          Each Party represents and warrants to the other Parties that on the effective date of this
Joint Venture Contract:





	 	(a)	 	It is an independent legal entity duly organized, validly
existing and in good standing under the laws of the jurisdiction of its
establishment or incorporation;
	 
	 	(b)	 	It has obtained all consents and approvals and taken all
actions necessary for it to validly enter into and give effect to this Contract
and it has full authority to enter into this Contract and to perform its
obligations hereunder;
	 
	 	(c)	 	It duly authorized its legal representative to sign on this
Contract, and from and after the Effective Date, the provisions of this
Contract shall constitute valid, lawful and legally binding obligations of such
Party;
	 
	 	(d)	 	No steps have been taken or legal proceedings commenced or
threatened against such Party for winding-up or bankruptcy or insolvent or for
a liquidation committee or administrator to be appointed in respect of its
assets or business;
	 
	 	(e)	 	Its execution of this Contract and its performance of its
obligations hereunder: (i) will not violate any provision of its business
license, articles of incorporation, articles of association or similar
organizational documents; (ii) will not violate any Applicable Laws or any
governmental authorization or approval; (iii) will not violate or result in a
default or breach under any other contract or agreement to which it is a party
or any unilateral commitment or undertaking which binds it or give any third
party a right to take action against such Party or the other Parties; and (iv)
will not violate any judgment or arbitration award of any tribunal to which it
is subject or the order or ruling of any government or regulatory body to whose
jurisdiction it is subject;
	 
	 	(f)	 	No lawsuit, arbitration or other legal or governmental
proceeding is pending or, to its knowledge, threatened against it that would
affect its ability to perform its obligations under this Contract; and
	 
	 	(g)	 	It has disclosed to the other Parties all documents issued by
any governmental department that may have a material adverse effect on its
ability to fully perform its obligations under this Contract, or the ability of
the Parties to realize the objectives of the Company and the documents
previously provided by it to the other Party do not contain any falsehoods,
untruths, misstatements or omissions of material facts.





     14.2 Consequences of Inaccuracy in Representations and Warranties





 




			
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          If any of the above representations and warranties of a Party were not accurate in all
material respects on any date, then such Party shall be in material breach to this Contract.




     14.3 Liability for Breach



          If a Party breaches any of the representations or warranties made in this Contact, then in
addition to any other remedies available to the other Parties under this Contract or under the
Applicable Laws of the PRC, it shall indemnify and keep indemnified the other Parties and the
Company against any losses, damages, costs, expenses, liabilities and claims that such Party or
Parties or the Company may suffer as a result of such breach.




15. THE TERMS OF THE JOINT VENTURE




     15.1 Joint Venture Term



          The joint venture term of the Company (“Term”) shall be [****] ([****]) years, commencing on
the Business License Issuance Date.




     15.2 Extension



          If the Parties unanimously approve the extension of the Term, the Parties shall cause the
Company to submit an application to the Examination and Approval Authority for approval no less
than six (6) months prior to the expiry of the Term.




16. TERMINATION, DISSOLUTION, BUYOUT AND LIQUIDATION




     16.1 Termination




	 	(a)	 	This Contract shall terminate upon the expiration of the Term
unless extended pursuant to the decision otherwise by the Parties.
	 
	 	(b)	 	This Contract may be terminated at any time prior to expiration
of the Term by the mutual written agreement of the Parties.
	 
	 	(c)	 	A Party (“Notifying Party”) may notify the other Parties in
writing at any time prior to the expiration of the Term that it desires to
terminate this Contract if:






	 	(i)	 	Any other Party materially breaches this Contract
or materially violates the Articles of Association, and such breach or
violation is not cured within sixty (60) days of the Notifying Party’s
written notice of such breach to the breaching Party; provided that if
such breach or violation cannot be cured, no notification or cure period
shall be required; or
	 
	 	(ii)	 	Any other Party becomes bankrupt or insolvent, or
is the subject of proceedings for liquidation or dissolution, or ceases
to carry on business or becomes unable to pay its debts as they come
due; or
	 
	 	(iii)	 	The Company becomes bankrupt or insolvent, or is
the subject of proceedings for liquidation or dissolution, or ceases to
carry on business or becomes unable to pay its debts as they come due;
or
	 
	 	(iv)	 	Any Additional Permit is not issued by the
relevant government agencies within ninety (90) days of application; or
	 
	 	(v)	 	A Material Modification is made at any time by
any government authority to this Contract, the Articles of Association,
the Approval Letter, the Approval







 




			
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	 	 	 	Certificate, the business scope set out in the Business License, any
Additional Permit or any Tax Concession and it cannot be resolved to
the satisfaction of the Party concerned within sixty (60) days of the
issue of the relevant document containing or imposing the Material
Modification; or
	 
	 	(vi)	 	The conditions or consequences of Force Majeure
(as hereinafter defined) have a material adverse effect on the business,
assets or operations of the Company and continue for a period in excess
of six (6) months and the Parties have been unable to find an equitable
solution; or
	 
	 	(vii)	 	The Company is denied access to foreign exchange
for a period in excess of six (6) months, which denial has a material
adverse effect on the business, assets or operations of the Company; or
	 
	 	(viii)	 	The Company incurs for [****] ([****]) consecutive years aggregate
operating losses in excess of [****] percent ([****]%) of the Company’s
registered capital; or
	 
	 	(ix)	 	The Company is unable due to Applicable Laws to
remit or otherwise pay after-tax profits to Party B and/or Party C; or
	 
	 	(x)	 	Any Party materially breaches any other contract
or agreement, including, without limitation, any licensing agreement and
service agreement, which was entered into by the Parties and/or their
Affiliates and/ or any Party and the Company in connection with the
establishment and operation of the Company’s business; or
	 
	 	(xi)	 	The legal or beneficial ownership of [****]
percent ([****]%) or more of the equity capital of the other Party is
acquired by a person or entity which directly, or through its
Affiliates, competes against the Company.




The mere submission by the Notifying Party of a notice indicating an intention to terminate this
Contract shall not by itself constitute a termination of this Contract. Upon the occurrence of any
of the foregoing events, in addition to its other rights under this Contract or under Applicable
Laws of the PRC, a Party entitled to give notice of intent to terminate this Contract shall have
the right to suspend performance of its obligations under this Contract until such time as such
event is resolved.




     16.2 Notification and Termination Procedure




	 	(a)	 	In the event that the Notifying Party gives written notice of a
desire to terminate this Contract, the Parties shall conduct negotiations for a
thirty (30) day period after such notice is given in an effort to resolve the
situation which resulted in the giving of such notice. In the event such
matters are not resolved to the satisfaction of the Parties within such thirty
(30) day period, or such longer period as the Parties may agree in writing, the
Notifying Party shall have the right by written notice to the other Party:






	 	(i)	 	to declare this Contract terminated, or
	 
	 	(ii)	 	to initiate the equity buy-out procedures;
provided that the equity buy-out procedures do not result in a violation
of Applicable Laws associated with ownership restrictions. The Parties
agree that if Party B or Party C elects to initiate the equity buy-out
procedure, the buy-out shall be of both Party B’s and Party C’s interest
in the Company, unless Party B or Party C otherwise notify Party A in
writing to the contrary. If the Parties opt-out of the equity buy-out







 




			
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	 	 	 	process, then, the Notifying Party again shall have the right to
declare this Contract terminated.






	 	(b)	 	As soon as practicable following termination of this Contract
upon the expiration of the Term, the early termination of this Contract by the
agreement of the Parties, or the Notifying Party’s declaration of termination,
an emergency Board meeting shall be held at which each Party shall cause the
directors appointed by it to attend such Board meeting in person, by proxy or
by telecommunications and to vote in favor of an unanimous resolution approving
the termination of this Contract or to sign a written resolution circulated in
lieu of such a meeting of the Board, as the case may be.
	 
	 	(c)	 	Following such Board approval of the termination of this
Contract, the Board shall submit a dissolution application to the original
Examination and Approval Authority for approval. Following such approval, such
approved dissolution application shall be registered with the SAIC. If the
other Party fails to co-operate in such termination and dissolution procedures,
then to the extent permitted under Applicable Laws, the Notifying Party shall
have the unilateral right to submit an application for termination and
dissolution to the Examination and Approval Authority and register such
approved termination and dissolution application with the SAIC.
	 
	 	(d)	 	Following such registration with the SAIC, the Parties shall
cause the Company to then be dissolved and liquidated in accordance with the
relevant procedures under the Applicable Laws of the PRC and this Contract.





     16.3 Equity Buy-Out Provision




	 	(a)	 	If the Notifying Party elects to proceed with the equity
buy-out provisions in this Contract, then the Parties shall determine the value
of the Company in accordance with the following provisions:






	 	(i)	 	The Parties shall conduct negotiations on the
valuation of the Company for a period of thirty (30) days after the date
of such notice (“negotiation period”). If the Parties are unable to
agree on the valuation of the Company by the end of such negotiation
period, or such longer period as the Parties may agree in writing; the
Parties shall jointly conduct a valuation of the Company in accordance
with subsection (ii) below, or






	 	(ii)	 	An Independent Appraiser appointed by the
Company, at the cost and expenses of the Company, shall conduct a
valuation of the Company using the Industry Valuation Method. The
Independent Appraiser shall complete the valuation of the Company within
forty-five (45) days. The value determined by the Independent Appraiser
shall be the value adopted by the Parties for purposes of this buy-out
provision.






	 	(b)	 	The purchase price (“Buy-out Price”) for a Party’s share of the
registered capital of the Company shall be calculated by multiplying the value
of the Company as determined by the percentage of such Party’s share of the
registered capital of the Company at the time of valuation.






	 	(c)	 	Upon completion of the valuation:






	 	(i)	 	The Parties shall conduct negotiations within
thirty (30) days to decide whether either a Party or the Parties desire
to purchase any or all of the Selling Party’s interest in the registered
capital of the Company at the applicable Buy-out Price. If so, the
Parties shall proceed with the buy-out provisions in this Contract. If







 




			
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	 	 	 	not, or if at the end of such thirty (30) day period no agreement is
reached, then unless the Parties otherwise agree in writing, the
Parties shall be deemed to have opted-out of these equity buy-out
provisions and the Notifying Party shall have the right to declare
this Contract terminated and proceed with dissolution and liquidation
of the Company.






	 	(ii)	 	If only one Party has indicated an interest in
purchasing any or all of the other Party’s share of the registered
capital of the Company, then such proposed purchasing Party shall
promptly provide written confirmation of such intention to the other
Party. If such proposed purchasing Party fails to provide such
confirmation to the other Party in writing within thirty (30) days after
completion of the valuation of the Company, such purchasing Party shall
be deemed to have elected to decline to proceed with such purchase.






	 	(iii)	 	If no Party elects to purchase the other Party’s
share of the registered capital of the Company at the applicable Buy-out
Price, and the Parties are not otherwise able to reach agreement on the
purchase by one Party of the other Party’s share of the registered
capital of the Company, then the Parties shall be deemed to have
opted-out of these equity buy-out provisions, and the Notifying Party
shall have the right to declare this Contract terminated and proceed
with dissolution and liquidation of the Company.






	 	(d)	 	Such sale and purchase of a Party’s share of the registered
capital of the Company shall comply with the requirements of the Applicable
Laws of the PRC. The Buy Out Price shall be paid in accordance with the
provisions of the relevant contracts to be signed by the Parties.
	 
	 	(e)	 	Until such time as the sale and purchase of a Party’s share of
the registered capital of the Company is completed, the Parties shall cause the
Company, to the fullest extent possible, to maintain the conduct of its
business in the ordinary course and no Party shall hinder the Company from
conducting its business.
	 
	 	(f)	 	If the purchasing Party under these equity buy-out provisions
cannot complete the buy-out due to ownership restrictions pursuant to
Applicable Laws, such purchasing Party may elect to have a designee purchase
such Selling Party’s interest.





     16.4 Liquidation




	 	(a)	 	Within fifteen (15) days following approval and registration of
the dissolution application, the Board shall appoint a liquidation committee
which shall have the power to represent the Company in all legal matters. The
liquidation committee shall perform its responsibilities in accordance with
Applicable Laws and the principles set out herein.
	 
	 	(b)	 	The liquidation committee shall consist of at least four (4)
numbers of directors of the Board, of whom at least one (1) of director
appointed by Party A, Party B, and Party C, respectively shall be included.
Members of the liquidation committee may be Board directors, senior employees
of the Company or relevant professionals. The members of the liquidation
committee shall bear fiduciary responsibilities to the Company and comply in
all respects with the requirements of Applicable Laws of the PRC in the
discharge of their duties. The liquidation committee shall act by majority vote
following consultation save where otherwise required under Applicable Laws of
the PRC.
	 
	 	(c)	 	The liquidation committee shall appoint the Independent
Appraiser to conduct a valuation of the Company’s assets on a current fair
market value basis.







 




			
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	 	(d)	 	On completion of all liquidation procedures in accordance with
Applicable Laws, the liquidation committee shall submit a final report to the
Board for confirmation. The Board shall convene an emergency meeting to review
and confirm such report. Following such confirmation by the Board the report
shall be submitted to the Examination and Approval Authority for the record.
The liquidation committee shall then carry out all de-registration procedures
in accordance with the Applicable Laws of the PRC. Each Party shall have a
right to obtain copies of all of the Company’s accounting books and other
documents at its own expense but the originals thereof shall be left in the
care of Party A.





     16.5 Continuing Obligations



          The provisions of Article 7 (Board of Directors) (but only in respect of Board action required
to be taken following termination of this Contract and prior to de-registration of the Company),
Article 15 (The Joint Venture Term), Article 16 (Termination, Dissolution, Buyout and Liquidation),
Article 17 (Breach of Contract) (but only with respect to claims arising prior to the termination
hereof or with respect to other continuing obligations), Article 18 (Confidentiality) and Article
20 (Dispute Resolution) and the provisions of Schedule A (Definitions and Interpretation) (to the
extent required to interpret the aforesaid) shall survive the termination of this Contract and the
termination, dissolution, liquidation and de-registration of the Company.




17. BREACH OF CONTRACT




     17.1 Remedies for Breach of Contract



          Except as otherwise provided herein, if a Party (“breaching Party”) fails to perform any of
its material obligations under this Contact or otherwise is in material breach of this Contract,
then the other Parties (“aggrieved Parties”) may, collectively or individually:





	 	(a)	 	Give written notice to the breaching Party describing the
nature and scope of the breach and demanding that the breaching Party cure the
breach at its cost within a reasonable time specified in the notice (“Cure
Period”) (provided that if any representation and warranty of a Party is not
true and correct in all material respects when made, then there shall be no
Cure Period); and






	 	(b)	 	If the breaching Party fails to cure the breach within the Cure
Period (or, if there is none, at any time following such breach), then in
addition to its other rights under this Contort or the Applicable Laws of the
PRC, the aggrieved Party may claim direct and foreseeable damages arising from
the breach.





     17.2 Limitation on Liability



          Notwithstanding any other provision of this Contract, except for a breach of confidentiality
or infringement of the other Party’s IPR, no Party shall be liable to the other Party or Parties
for damages for loss of revenues or profits, loss of goodwill or any indirect consequential
damages in connection with the performance or non-performance of this Contract. Except for a breach
of confidentiality or infringement of the other Party’s IPR, the aggregate liability of a Party for
all claims for any loss, damage or indemnity whatsoever resulting from such Party’s performance or
non-performance of this Contract shall in no case exceed [****] United States Dollars (US$[****])
or the RMB equivalent thereof.




18. CONFIDENTIALITY




     18.1 Confidentiality Obligations



          From time to time prior to and during the Term, either Party (“disclosing Party”) has
disclosed or may disclose Confidential Information to the other Party (“receiving Party”). The
receiving Party shall, during the Term of this Contract and for two (2) years thereafter:






 




			
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	 	(a)	 	Maintain the confidentiality of Confidential Information;
	 
	 	(b)	 	Not use Confidential Information for any purposes other than
those specifically set out in this Contract; and
	 
	 	(c)	 	Not disclose any such Confidential Information to any person or
entity, except to its employees or employees of its Affiliates, its agents,
attorneys, accountants and other advisors who need to know such information to
perform their responsibilities and who have signed written confidentiality
agreements containing terms at least as stringent as the terms provided in this
Article (collectively “Permitted Disclosure Parties”).





     18.2 Confidentiality Exceptions




     The provisions of Article 18.1 above shall not apply to information that:




	 	(a)	 	Known by the receiving Party;
	 
	 	(b)	 	Is or becomes public knowledge otherwise than through the
receiving Party’s breach of this Contract; or
	 
	 	(c)	 	Is obtained by the receiving Party from a third party having no
obligation of confidentiality with respect to such information.





     18.3 Confidentiality Rules



          Each Party shall formulate rules and regulations to inform its directors, senior staff, and
other employees, and those of their Affiliates of the confidentiality obligation set forth in this
Article.




     18.4 Return of Materials



          Upon the Expiration Date, or upon the disclosing Party’s request at any time, the receiving
Party shall (i) return to the disclosing Party, or upon such disclosing Party’s direction, destroy
all materials (including any copies thereof) embodying the other Party’s Confidential Information,
and (ii) certify in writing to the disclosing Party, within ten (10) days following the disclosing
Party’s request, that all of such materials have been returned or destroyed.




19. FORCE MAJEURE




     19.1 Definition of Force Majeure



          “Force Majeure” shall mean all events which are beyond the control of the Parties to this
Contract, and which are unforeseen, unavoidable and insurmountable, and which prevent total or
partial performance by either of the Parties; provided, however, a “Force Majeure” event shall not
occur with respect to remittance or distribution of after-tax profits or termination for breach due
to the creation, adoption, or existence of Applicable Laws. Such Force Majeure events shall include
earthquakes, typhoons, epidemic, flood, fire, war, strikes, riots, acts of governments, changes in
law or the application thereof or any other instances which cannot be foreseen, prevented or
controlled, including instances which are accepted as Force Majeure in general international
commercial practice.




     19.2 Consequences of Force Majeure




	 	(a)	 	If an event of Force Majeure occurs, a Party’s contractual
obligations affected by such an event under this Contract shall be suspended
during the period of delay caused by the Force Majeure and shall be
automatically extended, without penalty or liability, for a period equal to
such suspension.







 




			
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	 	(b)	 	The Party claiming Force Majeure shall promptly inform the
other Parties in writing and shall furnish within fifteen (15) days thereafter
sufficient proof of the occurrence and duration of such Force Majeure. The
Party claiming Force Majeure shall also use all reasonable endeavours to
terminate the Force Majeure.






	 	(c)	 	In the event of Force Majeure, the Parties shall immediately
consult with each other in order to find an equitable solution and shall use
all reasonable endeavours to minimize the consequences of such Force Majeure.





20. DISPUTE RESOLUTION




     20.1 Friendly Consultations



          In the event of any dispute, controversy or claim arising out of or relating to this Contract,
or the breach, termination or invalidity hereof (“dispute”), any Party may send written notice of
such dispute (a “Dispute Notice”) to the other applicable Parties. The Parties shall promptly make
all reasonable attempts to resolve such dispute through friendly consultations.




     20.2 Arbitration




	 	(a)	 	In the event the dispute is not resolved by such friendly
consultations, any Party may at any time that is not less than thirty (30)
days-after the date of the Dispute Notice, submit the dispute to Singapore
International Arbitration Centre (“SIAC”) for arbitration in Singapore in
accordance with the Arbitration Rules of the SIAC then in force, and as amended
by this Article 20.2 (“Arbitration Rules”), including its rules with respect to
choice of law and conflict of laws.






	 	(b)	 	The tribunal shall consist of three (3) arbitrators to be
appointed by the Chairman of the SIAC. At least one of the three arbiters shall
be neither a citizen of the PRC nor of the United States.






	 	(c)	 	The language of the arbitration shall be English.





     20.3 Procedural Compliance




     The Parties undertake:




	 	(a)	 	To comply strictly with the time limits specified in the
Arbitration Rules for the taking of any step or the performance of any act in
or in connection with any arbitration; and






	 	(b)	 	To comply with and to carry out, in full and without delay, any
procedural orders (including, without limitation to, any interim measures of
protection ordered) or any award (interim or final) made by the arbitral
tribunal.





     20.4 Enforcement of Award




     Each Party irrevocably:




	 	(a)	 	Agrees that any arbitral award reached by the Tribunal shall be
final and binding with no right of appeal;






	 	(b)	 	Undertakes that it will execute and perform the arbitral award
fully and without delay. In the event of judicial acceptance and an order of
enforcement, each party expressly waives all rights to object thereto,
including any defense of sovereign immunity and any other







 




			
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	 	 	 	defense based on the fact or allegation that it is an agency or
instrumentality of a sovereign state; and






	 	(c)	 	Waives any rights which it may have to contest the validity of
the arbitration agreement set forth in this Article or the jurisdiction of the
relevant arbitration institution to hear and to determine any arbitration begun
pursuant to this Article 20.





          When any dispute occurs and is the subject of friendly consultations or arbitration, the
Parties shall continue to exercise their remaining respective rights and fulfill their remaining
respective obligations under this Contract, except in respect of those matters under dispute.




     20.5 Injunctive Relief



          Notwithstanding the foregoing, each Party has the right to seek temporary or permanent
injunctive or other similar relief in any court or other authority of competent jurisdiction in
respect of any claims of breach of order of specific performance or other injunctive relief as
permitted under the Applicable Laws of the PRC.




21. APPLICABLE LAW




          The establishment, effectiveness, validity, interpretation, implementation of, and dispute
resolution with respect to, this Contract shall be governed by the laws of the People’s Republic of
China.




22. GENERAL PROVISIONS




     22.1 Independent Contractor Relationship




     Nothing in this Contract shall be construed or implied as:




	 	(a)	 	Constituting any of the Parties hereto as the agent of the
other Party or Parties (except with the other Party’s prior written consent);
or






	 	(b)	 	Authorizing any Party to incur any expenses or any other form
of obligation on behalf of the other Party or the Parties (except with the
other Party’s prior written consent).





     22.2 Binding Effect



          This Contract is made for the benefit of the Parties hereto and their respective lawful
successors and assignees and is legally binding on them.




     22.3 Amendment



          In no circumstance can this Contract be amended, modified or changed verbally. No amendment,
modification or change to any part of this Contact may be effective unless by written instrument
signed by all the Parties under the Applicable Laws of the PRC, and, if required by the Applicable
Laws of the PRC, by approval by the relevant Examination and Approval Authority.




     22.4 No Publicity





 




			
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          The contents of this Contract shall be deemed to fall within the scope of Confidential
Information and shall be subject to Article 18 and shall not be disclosed in whole or in part to
any person or entity, except to (i) Permitted Disclosure Parties, (ii) to authorized securities
regulators or exchanges in accordance with the Applicable Laws of the PRC or the relevant rules of
the securities exchange to which the Party in question is subject, (iii) to officials in relevant
government departments pursuant to the requirements of the Applicable Laws of the PRC, (iv) in
order to fulfill any conditions precedent to the effectiveness of this Contract, (v) for the
purpose of the performance by a Party of its obligations or exercise of its rights hereunder or
relating hereto, (vi) for the other bona fide purposes of the Company after its establishment,
(vii) as required under the law of the jurisdiction where any Party is incorporated, or (viii) as
otherwise jointly agreed to by the Parties.




     22.5 Notices



	 	(a)	 	Any notice or written communication provided for in this
Contract by any Party to the other, including but not limited to any and all
offers, writings, or notices to be given hereunder, shall be made in Chinese
and English either:







	 	(i)	 	By hand delivery; or
	 
	 	(ii)	 	By courier service delivered letter;
	 
	 	(iii)	 	By facsimile, or
	 
	 	(iv)	 	By electronic approach, including e-mail.





	 	(b)	 	Notices shall be deemed to have been delivered at the following
times:






	 	(i)	 	If by hand delivery, on reaching the designated
address and subject to return receipt or other proof of delivery;
	 
	 	(ii)	 	If by courier, on the date shown the delivery was
completed by the courier;
	 
	 	(iii)	 	If by fax, on the next Business Day following
the date marked on the confirmation of transmission report by the
sender’s fax machine, indicating completed, uninterrupted transmission
to the relevant facsimile number, and
	 
	 	(iv)	 	If by E-mail or any electronic approach, on the
next Business Day following the date on which the message was
transmitted as shown on the sending device.






	 	(c)	 	During the Term, each Party may change its particulars for
receipt of notices at any time by notice given to the other Party in accordance
with this Article.





 If Party A;




	 	 	 
	Shenzhen Airlines

	 	 
	 
	 	 
	Shenzhen Bao’An International Airport
	 	 
	 
	 	 
	Shenzhen, People’s Republic of China
	 	 
	 
	 	 
	Facsimile No:
	 	 
	 
	 	 
	Attention:
	 	 






If Party B:




	 	 	 
	Mailing address:

	 	Ping Shan SRL
	 
	 	 
	 

	 	Citco Corporate Management (Barbados) Limited








 




			
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	 	Whitepark House, White Park Road
	 
	 	 
	 

	 	Bridgetown, Barbados
	 
	 	 
	Facsimile Number:

	 	1-246-426-8913
	 
	 	 
	With a copy to:
	 	 
	 
	 	 
	Mailing Address:

	 	Mesa Air Group, Inc.
	 
	 	 
	 

	 	410 N. 44th Street
	 
	 	 
	 

	 	Suite 700
	 
	 	 
	 

	 	Phoenix, Arizona 85008
	 
	 	 
	 

	 	United States of America
	 
	 	 
	Facsimile Number:

	 	1-602-685-4554
	 
	 	 
	Attention:

	 	Mr. George Murnane III
	 
	 	 
	 

	 	Executive Vice President and CFO; and
	 
	 	 
	 

	 	Mr. Brian Gillman
	 
	 	 
	 

	 	Vice President and General Counsel
	 
	 	 
	E-mail address:

	 	peter.murnane@mesa-air.com
	 
	 	 
	 

	 	brian.gillman@mesa-air.com






If Party C:




	 	 	 
	Mailing address:

	 	Shan Yue SRL
	 
	 	 
	 

	 	Citco Corporate Management (Barbados) Limited
	 
	 	 
	 

	 	Whitepark House, White Park Road
	 
	 	 
	 

	 	Bridgetown, Barbados
	 
	 	 
	Facsimile Number:

	 	1-246-426-8913
	 
	 	 
	With a copy to:
	 	 
	 
	 	 
	Mailing address:

	 	Wilmington Trust Company
	 
	 	 
	 

	 	Rodney Square North
	 
	 	 
	 

	 	1100 North Market Street
	 
	 	 
	 

	 	Wilmington, Delaware 19890-0001
	 
	 	 
	 

	 	United States of America
	 
	 	 
	Facsimile Number:

	 	l-302-636-4140
	 
	 	 
	Attention:

	 	Corporate Trust Administration






     22.6 Severability



          Wherever possible, the terms of this Contract shall be construed and interpreted so as to be
valid, enforceable, and permissible under Applicable Laws. If any provision of this Contract or any
document contemplated hereby shall be deemed invalid, unenforceable, or prohibited under Applicable
Laws, such provision shall be invalid, unenforceable, or prohibited only to the extent of such
invalidity, unenforceability, or prohibition, and the Parties shall consult and attempt in good
faith to agree on a legally acceptable modification that gives effect to the






 




			
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commercial objectives of the invalid, unenforceable, or prohibited provision, and every other
provision of such document shall remain in full force and effect. Should any provision of this
Contract be invalid because of its territorial or factual scope of application or because of its
duration, the provision shall be reduced to the maximum allowed by Applicable Laws.




     22.7 Entire Agreement



          This Contract and the Schedules and Annexes hereto constitute the entire agreement between the
Parties hereto with respect to the subject matter of this Contract and supersede all prior
discussions, negotiations and agreements between them, including, the Letter of Intent between
Shenzhen Airlines and the Mesa Air Group, Inc. Dated on July ___, 2006.




     22.8 Waiver



          Any Party’s failure to exercise or delay in exercising any right, power or privilege under
this Contract shall not operate as a waiver thereof, and any single or partial exercise of any
right, power or privilege shall not preclude the exercise of any other right, power or privilege.




     22.9 Further Endeavour



          Each Party shall, at any time, upon the request of the other Party or Parties, execute or
procure the execution of such documents, agreements, contracts or deeds and do or procure the doing
of such acts and things as may be reasonably necessary to give full effect to the provisions of
this Contract.




     22.10 Costs



          Unless provided otherwise in this Contact, each Party shall bear its own legal and other
professional costs in relation to the preparation, negotiation and entry into of this Contract.




     22.11 Articles of Association



          In case of any inconsistency between the Articles of Association of the Company and this
Contract, this Contract shall prevail.




     22.12 Schedules and Annexes



          The Schedules and Annexes hereto are made integral parts to this Contract and are equally
binding with the main body of the Contract. In the event of any conflict between the terms and
provisions of the main body of the Contract and the Schedules or Annexes, the terms and provisions
of the main body of this Contract shall prevail.




     22.13 Language



          This Contract is executed in the Chinese language in five (5) originals and in the English
language in five (5) originals. Both language versions shall be equally authentic.




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IN WITNESS WHEREOF, each of the Parties hereto has caused this Contract to be executed by its duly
authorized representative on the date first set forth above in Beijing, People’s Republic of China.




Shenzhen Airlines as Party A




	 	 	 	 	 
	Signed By:
	 	 	 	 
	 

	 	 
	Name in English: Li Kun
	 	 
	 

	 	 	 	 
	Name in Chinese:
	 	 	 	 
	 

	 	 
	Title: President

	 		 	 






Ping Shan SRL as Party B




	 	 	 	 	 	 	 
	Signed By:
	 	 	 	 
	 	 	 	 	 
	Name in English: Jonathan Ornstein	 	 
	Name in Chinese:

	 	 	 	 
	 

	 	 	 	 	 	 
	Title: CEO

	 	 	 		 	 






Shan Yue SRL as Party C




	 	 	 	 	 	 	 
	Signed By:
	 	 	 	 	 	 
	 	 	 	 	 
	Name in English: Mo Garfinkle	 	 
	Name in Chinese:

	 	 	 	 
	 

	 	 	 	 	 	 
	Title: President

	 	 	 		 	 








 




			
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SCHEDULE A — DEFINITIONS AND INTERPRETATION




Part A – Definitions



Unless the terms or context of this Contract otherwise provide, the following terms shall have the
meanings set out below:



“Additional Permits” means any other permits, approvals or consents required by Applicable Law or
any governing body with authority over the Company in order to establish the Company or enable the
Company to operate its business as contemplated under this Contract.



“Affiliate” means any company which, directly or indirectly, is controlled by, under common control
with, or in control of, a Party; the term “control” being used in the sense of power to elect or
appoint a majority of directors or to direct the management of a company.



“Applicable Laws” means the laws, regulations, rules, notices, and other legislative, executive or
judicial decisions or pronouncements binding on either Party, the Company or in relation to the
subject matter of this Contract.



“Approval Certificate” means the certificate issued by the Examination and Approval Authority
approving the establishment of the Company and this Contract and the Articles of Association.



“Approval Document” means the documents or instruments required pursuant to Article 5.4(c)(i) and
(ii) of this Contract.



“Approval Letter” means the approval reply issued by the Examination and Approval Authority
approving the establishment of the Company and this Contract and the Articles of Association of the
Company.



“Articles of Association” means the Articles of Association of the Company executed by the Parties.



“Board” means the board of directors of the Company, as constituted from time to time.



“Business” means the business undertaken by the Company from time to time in accordance with the
Business Plan.



“Business Day” means:





	 	(a)	 	In respect of any action to be taken in the PRC, any day on
which companies in the PRC are generally open for business in the PRC,
including a Saturday or Sunday which the PRC government temporarily declares to
be a working day (“Working Rest Day”), but excluding statutory holiday, or
Saturday or Sunday other than a Working Rest Day; and
	 
	 	(b)	 	In respect of any action to be taken in the United States of
America, any day on which companies in the United States of America are
generally open for business in the United States of America.




“Business License” means the first business license of the Company issued by the SAIC.



“Business License Issuance Date” means the date the Business License is issued to the Company by
the SAIC.



“Business Plan” means the business plan for the Company as approved by the Board from time to time.



“Chief Financial Officer” means the Chief Financial Officer or Chief Accountant of the Company.



“China” and “PRC” mean the mainland of the People’s Republic of China.






 




			
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“Company” means the Sino-foreign Equity Joint Venture Company to be established by the Parties
pursuant to this Contract and the Articles of Association.



“Confidential Information” means any business, marketing, technical, scientific or other
information disclosed by any Party (or its Affiliates) which, at the time of disclosure, is
designated as confidential (or like designation), is disclosed in circumstances of confidence, or
would be understood by the Parties, exercising reasonable business judgment, to be confidential.



“Effective Date” means the effective date of this Contract, being the date on which this Contract
has been approved by the Examination and Approval Authority.



“EJV Law” means the Law of the PRC on Sino-Foreign Equity Joint Ventures passed on 1 July, 1979, as
amended.



“EJV Implementing Regulations” means the Regulations for the Implementation of the Law of the PRC
on Equity Joint Ventures promulgated on 20 September 1983, as amended.



“Encumbrance” means any claim, deposit, charge, mortgage, security, pledge, lien, option, equity,
power of sale or hypothecation or other third party right, retention of title arrangement, right of
pre-emption, right of first refusal of security interest of any kind.



“Enterprise Accounting System” means the general Accounting System for Enterprises promulgated by
the MOF on Feb. 15, 2006 to replace the Accounting System for Foreign Investment Enterprises
promulgated on 24 June 1992, which was applicable to foreign investment enterprises as of 1 January
2002.



“Examination and Approval Authority” means the MOFCOM or other authority entrusted by it to approve
this Contract and the establishment of the Company.



“Independent Appraiser” means a leading independent, competent, and industry recognized appraiser
registered in China and authorized to perform appraisals of state-owned and other assets selected
by the Company’s Independent Auditor at the request of either Party.



“Independent Auditor” means the internationally recognized independent and competent accountant
registered in China.



“Industry Valuation Method” means valuation method(s) selected by the Independent Appraiser in
consultation with the Parties, including the Selling Party, which shall be valuation methods(s)
commonly used in international practice in valuing enterprises in the Company’s industry on a going
concern basis, but, where the assets or equity interests in question constitute State-owned assets
under Applicable Laws, it shall refer to a valuation method which complies with, and satisfies the
requirements of Applicable Laws relating to State-owned assets.



“Intellectual Property Rights” or “IPR” means any and all rights in any invention, discovery,
improvement, utility, model, copyrightable work, industrial design or mask work, algorithm, data
structure, trade secrets or know-how, Confidential Information, or any idea having commercial
value. IPR shall include any trademark, trade dress, trade name, domain name, or other marks that
serve to identify and distinguish goods or services as coming from, or falling under the control
of, a single source. IPR shall include all rights of whatsoever nature in computer software and
data, all intangible rights or privileges of a nature similar to any of the foregoing in every case
in any part of the world and whether or not registered, and all rights in any applications and
granted registrations for any of the foregoing rights.



“Investment Certificate” means a certificate issued by the Company to any person in accordance with
the provisions of Article 5.5, in respect of any capital contribution made by that person to the
Company.



“Labour Union” means the labour union of the Company established in accordance with the PRC Labour
Union Law, the EJV Law and other relevant Applicable Laws and regulations of the PRC.






 




			
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“Management Personnel” means the Company’s General Manager, Deputy General Manager, Chief Financial
Officer and other personnel designated as such by the Board.



“Material Modification” means a modification (whether by means of the imposition of additional
terms and conditions or otherwise) by the relevant government departments to, as the case may be,
this Contract, the Articles of Association or the intended business scope of the Company, the
Additional Permits or Tax Concessions as agreed or anticipated by the Parties, which in the opinion
of either Party, will have a material adverse effect on the ability of Parties to achieve through
the Company, their respective economic and operational objectives.



“MOFCOM” means the Ministry of Commerce of China or any of its predecessors.



“MOF” means the Ministry of Finance of China.



“Permits” means all Additional Permits, Pre-Establishment Permits, and a “Permit” means any of
them.



“Renminbi” or “RMB” means the lawful currency of China from time to time.



“SAFE” means the State Administration of Foreign Exchange or its local branch.



“SAIC” means the State Administration of Industry and Commerce of China or the relevant local
Administration for Industry and Commerce,



“Tax Concessions” means any concessions or incentives with respect to Taxes granted to the Company
by the taxing bodies of the PRC.



“Taxes” means any and all applicable tax and taxes (including, but not limited to any value added
tax or sales tax, stamp or other duty, levy, impost, charge, fee, deduction, or withholding of any
nature and howsoever called or described) by whomsoever and wheresoever imposed, levied, collected
or assessed.



“Trade Secrets” means any technology, information or business operation information which is
unknown to the public, is capable of bringing about economic benefits to the rightful holder, has
practical utility and which is subject to measures in place and carried out in order to keep it
secret.



“United States Dollars” or “US$” means the lawful currency of the United States of America.



“Working Personnel” means all employees and staff of the Company other than the Management
Personnel and the members of the Board.






 




			
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Part B — Interpretation





	1.	 	A reference to any Applicable Laws or to any legislation, or to any provision of Applicable
Laws or of any legislation includes a reference to such Applicable Laws or legislation as
amended or modified from time to time.
	 
	2.	 	A reference to a “person” includes any individual or entity (including any company, business
or other enterprise or entity, joint venture, institution, state or government department), as
the context permits,
	 
	3.	 	References in this Contract to contracts, agreements or other documents, shall mean the same
as amended from time to time.
	 
	4.	 	A reference to any PRC government authority, agency or department includes such authority or
department at State, provincial, municipal and other levels.
	 
	5.	 	References in this Contract to government ministries, bureau, departments, commissions,
agencies, etc. shall include all successor entities thereto.
	 
	6.	 	Headings are for convenience of reference only and shall not affect the construction or
interpretation of this Contract.
	 
	7.	 	The words “includes” or “including” mean “includes without limitation” and “including without
limitation” respectively.







 




			
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SCHEDULE B — CAPITAL CONTRIBUTION SCHEDULE





	1.	 	Party A’s Registered Capital Contributions





     Party A’s total contribution to the registered capital of the Company representing a
51% share in the registered capital of the Company shall be the amount of [****] million Renminbi (RMB
[****]).



     Party A shall make its contributions to the registered capital of the Company in accordance
with the following schedule:



     Initial installment in the amount of [****] Renminbi (RMB [****]), or [****] percent ([****]%)
of Party A’s total registered capital contribution to be made by Party A on or before the First
Capital Contribution Date.



     Subsequent installments of payments to be made in accordance with the Company’s operational
requirements as determined by the Board, provided that in any event the full amount of Party A’s
registered capital contributions shall be made in full no later than the Final Capital Contribution
Date.



     Subsequent installments of capital contribution by Party A can be made in cash or in kind. If
in kind, the value of the property shall be evaluated and certified by an independent auditor, who
shall be selected by the Parties from the pool of such auditors under the authorization by the
appropriate government agencies of the PRC.




	2.	 	Party B’s Registered Capital Contributions .





     Party B’s total contribution to the registered capital of the Company representing a
25% share in the registered capital of the Company shall be the amount of [****] million Renminbi
([****] RMB).



     Party B shall make its contributions to the registered capital of the Company in accordance
with the following schedule:



     Initial installment in the amount of [****] RMB ([****] RMB), or [****] percent ([****]%) of
Party B’s total registered capital contribution to be made by Party B on or before the First
Capital Contribution Date. Such contribution shall be made via wire transfer in United States
Dollar at the exchange rate as provided in the Contract.



     Subsequent installments to be made in accordance with the Company’s operational requirements
as determined by the Board, provided that in any event the full amount of Party B’s registered
capital contributions shall be made in full no later than the Final Capital Contribution Date.



     Subsequent installments of capital contribution by Party B can be made in cash or in kind. If
in kind, the value of the property shall be evaluated and certified by an independent auditor, who
shall be selected by the Parties from the pool of such auditors under the authorization by the
appropriate government agencies of the PRC.




	3.	 	Party C’s Registered Capital Contributions





     Party C’s total contribution to the registered capital of the Company representing a
24% share in the registered capital of the Company shall be the amount of [****] million Renminbi
([****] RMB).



     Party C shall make its contributions to the registered capital of the Company in accordance
with me following schedule:



     Initial installment in the amount of [****] RMB ([****] RMB), or [****] percent ([****]%) of
Party C’s total registered capital contribution to be made by Party C on or before the First
Capital Contribution Date. Such contribution shall be made via wire transfer in United States
Dollar at the exchange rate as provided in the Contract.





 




			
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     Subsequent installments to be made in accordance with the Company’s operational requirements
as determined by the Board, provided that in any event the full amount of Party C’s registered
capital contributions shall be made in full no later than the Final Capital Contribution Date.



     Subsequent installments of capital contribution by Party C can be made in cash or in kind. If
in kind, the value of the property shall be evaluated and certified by an independent auditor who
shall be selected by the Parties from the pool of such auditors under the authorization by the
appropriate government agencies of the PRC.




	4.	 	Miscellaneous






	 	4.1	 	To the extent practicable, each Party shall make each of its initial and
subsequent registered capital contribution installments at the same time as the
corresponding installment to be made by the other Parties
	 
	 	4.2	 	With respect to the in-kind registered capital contributions (each an “In-kind
Contribution Asset”) to be made by a Party (“Contributing Party”) hereunder, such
Contributing Party hereby represents and warrants to the other Parties that as of the
date of the signing of this Contract, the Effective Date, the Business License Issuance
Date and the date of contribution of each such In-kind Contribution Asset:






	 	(a)	 	The Contributing Party possesses all rights, title and interest in
and to each such In-kind Contribution Asset;
	 
	 	(b)	 	No In-kind Contribution Asset is jointly owned by or subject to any
Encumbrance in favor of or claim of any third party, and
	 
	 	(c)	 	If in-kind contribution is land or land use rights, the Contributing
Party shall provide sufficient legal approval of its right over the land, the
duration of the assigned granted land use rights, compliance by the Contributing
Party with the terms of the underlying land grant contract, whether the land grant
premium and land price have been paid in full, whether the land has any
contamination or other environmental issues etc.





 




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Schedule B-2