This
English version is a translation of the original Chinese version of the
agreement.  The English translation shall have no legal
effect.

       

      
        
          

        

            

      

      AGREEMENT
ON SUBSCRIPTION OF A SHARES TO BE ISSUED BY

      CHINA
SOUTHERN AIRLINES COMPANY LIMITED BY WAY OF

      NON-PUBLIC
ISSUE

         

      
        
    

      Dated:
March 8, 2010


      
        
           


        

        
          
          

          
            

          

        

        
           


        

      


      This
subscription agreement (hereinafter referred to as the “Agreement”) is entered into by
and between the following parties in Guangzhou, Guangdong province, the PRC on
March 8, 2010:

       

      Party A:
China Southern Airlines Company Limited

       

      
        	
                Address:

              	
                Guangzhou
      Economic & Technology Development Zone, Guangdong Province, the
      PRC

              


      

       

      Legal
representative: Si Xianmin

       

      Party B:
China Southern Air Holding Company

       

      Address:
Guangzhou Baiyun International Airport, Guangdong province

       

      Legal
representative: Si Xianmin

       

      (Both
parties are hereinafter referred to as the “Parties” collectively, or the
“Party”
respectively)

       

      Whereas:

       

      
        	
                1.

              	
                Party
      A is a joint stock limited company duly organized and validly existing
      under the laws of the PRC with a registered capital of RMB 8, 003,567,000.
      Its shares are listed on the Shanghai Stock Exchange and the Stock
      Exchange of Hong Kong Limited. Its total share capital comprises 8,
      003,567,000 shares, among which 4,021,150,000 A shares are held by the
      promoter, 1,500,000,000 A shares are held by domestic public investors and
      2,482,417,000 H shares are held by overseas
  investors.

              


      

       

      
        	
                2.

              	
                Party
      B is a state-owned enterprise duly organized and validly existing under
      the laws of the PRC, which is also the promoter and controlling
      shareholder of Party A, legitimately directly holding 50.24% equity
      interest in the total issued share capital of Party
  A;

              


      

       

      
        
           


        

        
          1

          
            

          

        

        
           


        

      


      
        	
                3.

              	
                Party
      A intends to increase its registered capital by way of a non-public issue
      of A shares, while Party B intends to subscribe for part of the A shares
      to be issued by Party A by way of a non-public issue in order to increase
      the proportion of its shareholding in Party
A.

              


      

       

      
        	
                4

              	
                Party
      A intends to increase its registered capital by way of a non-public issue
      of H shares to Nan Lung Holding Limited (a wholly-owned subsidiary of
      Party B, hereinafter referred to as "Nan
Lung").

              


      

       

      The
Agreement is entered into between the Parties after friendly negotiation to
specify the rights and obligations of both Parties in the subscription of A
shares to be issued by way of a non-public issue.

       

      
        	
                1.

              	
                Definitions
      and Interpretation

              


      

       

      
        	
              	
                1.1

              	
                In
      the Agreement, unless otherwise agreed, the following terms shall have the
      following meanings:

              


      

       

      
        	
                 
      

              	
                1.1.1.

              	
                “Agreement” refers
      to the Agreement dated March 8, 2010 on subscription of A Shares
      to be issued by China Southern Airlines Company Limited by way of
      non-public issue.

              


      

       

      
        	
                 
      

              	
                1.1.2.

              	
                “Non-public Issued A Shares” refers to
      the part of new A shares (no more than 132,510,000) to be issued to
      Party B by way of non-public issue in accordance with the Agreement.
      Pursuant to the requirements of the Agreement, the par value of each Share
      is RMB 1.00.

              


      

       

      
        	
                 
      

              	
                1.1.3.

              	
                “Non-public Issue of H
      shares” refers to new H Shares to be issued by Party A to
      Nan Lung by way of non-public issue
..

              


      

       

      
        	
                 
      

              	
                1.1.4.

              	
                “Non-public Issue of A
      shares” refers to new A Shares to be issued  to not
      more than 10 specific qualified investors by Party A by way of non-public
      issue .

              


      

       

      
        	
                 
      

              	
                1.1.5.

              	
                “Completion of the Non-public
      Issue” refers to the date on which the A shares to be
      issued under the Non-public Issue are registered under the name of Party B
      in the Securities Depository and Clearing
  Corporation.

              


      

       

      
        
           


        

        
          2

          
            

          

        

        
           


        

      


      
        	  
    	
                1.1.6.

              	
                “CSRC”
      refers to China Securities Regulatory
Committee.

              


      

       

      
        	
                 
      

              	
                1.1.7.

              	
                “SHSE” refers to the
      Shanghai Stock Exchange.

              


      

       

      
        	
                 
      

              	
                1.1.8.

              	
                “Securities Depository and Clearing
      Corporation” refers to China Securities Depository and Clearing
      Corporation Limited, Shanghai
Branch.

              


      

       

      
        	
                 
      

              	
                1.1.9.

              	
                “Public Disclosure”
      refers to the disclosure on the media of information disclosure designated
      by CSRC.

              


      

       

      
        	  	
                1.2

              	
                Interpretation

              


      

       

      
        	
                 
      

              	
                1.2.1.

              	
                Headings
      used herein are for easy reference purpose only, and shall not be used to
      construe the Agreement.

              


      

       

      
        	
                 
      

              	
                1.2.2.

              	
                Any
      reference to an article, a clause, a paragraph, an annex or an appendix
      shall mean the article, clause, paragraph, annex or appendix in the
      Agreement.

              


      

       

      
        	
                 
      

              	
                1.2.3.

              	
                Any
      reference to “including” herein, whether or not followed by “but not
      limited to”, shall mean “including but not limited
  to”.

              


      

       

      
        	
                2.

              	
                Consideration

              


      

       

      
        	
              	
                2.1

              	
                Both
      Parties agree that the price determination date for the Non-public Issued
      A Shares shall be the announcement date of the resolution passed at the
      Board meeting of Party A held on March 9, 2010; the par value per share
      shall be RMB1.00; and the issue price shall not less than RMB5.66, which
      is not less than 90% of the average trading price of the A shares for the
      20 trading days immediately prior to the price determination date of this
      non-public issue of A shares. Party B will not attend the price
      sounding-out process and will accept the final issue price determined
      according to the results of the price sounding-out
  process.

              


      

       

      
        	
              	
                2.2

              	
                Based
      on the issue price specified in Article 2.1 above, Party A shall issue not
      more than 132,510,000 A shares to Party B by way of a Non-public Issue.
      Party B agrees to subscribe for the aforesaid number of shares in cash. In
      the event of ex-rights or ex-dividend of Shares of Party A during the
      period between the price determination date and the issue date, the number
      of Shares to be issued and the issue price shall be adjusted
      accordingly.

              


      

       

      
        
           


        

        
          3

          
            

          

        

        
           


        

      


      
        	
              	
                2.3

              	
                Party
      B agree that as soon as the “Conditions Precedent” as set out in Article 3
      are all satisfied, Party B shall subscribe the Non-public Issued A Shares
      according to the notification of Party A and this agreement and make one
      lump-sum payment of the consideration for the Non-public Issued A Shares
      in cash to the bank account designated by Party A in
    writing.

              


      

       

      
        	
              	
                2.4

              	
                Both
      Parties confirm that after Completion of A share non-public issue, Party B
      shall enjoy corresponding rights (including the rights over the retained
      profit) and undertake corresponding obligations proportionate to its
      shareholding percentage in Party A.

              


      

       

      
        	
                3.

              	
                Conditions
      precedent

              


      

       

      
        	
              	
                3.1

              	
                The
      Agreement shall become effective upon fulfillment of all the conditions
      set out below:

              


      

       

      
        	
                 
      

              	
                3.1.1.

              	
                The
      implementation of the Non-public Issue of A shares under the Agreement and
      the Non-public Issue of H shares to Nan Lung Holding Limited being
      approved at the board meeting, shareholders’ general meeting and class
      meeting of Party A;

              


      

       

      
        	
                 
      

              	
                3.1.2.

              	
                The
      subscription of the Non-public Issued A Shares of Party A under the
      Agreement being approved at the General Manager Meetings of Party
      B;

              


      

       

      
        	
                 
      

              	
                3.1.3.

              	
                The
      receipt of all the licenses, authorizations, permits, consents and
      approvals from the relevant approval authorities and other relevant
      approvals for the implementation of the Non-public Issue of A shares under
      the Agreement and the Non-public Issue of H shares to Nan Lung Holding
      Limited by Party A.

              


      

       

      
        	
              	
                3.2

              	
                Party
      A and Party B shall do or procure to be done with their best efforts all
      such acts and things necessary to fulfill the above-mentioned conditions
      precedent and for the implementation of the Non-public Issue of A shares
      pursuant to the applicable laws and
regulations.

              


      

       

      
        
           


        

        
          4

          
            

          

        

        
           


        

      


      
        	
              	
                3.3

              	
                If
      the above-mentioned conditions precedent cannot be fulfilled within twelve
      months from the date of approval of the Agreement by shareholders of Party
      A in a general meeting, the Agreement shall cease to be effective, and
      neither Party A nor Party B shall lodge any claim against the other party
      (except for any claim against any previous breach of the
      Agreement).

              


      

       

      
        	
                4.

              	
                Completion
      of the Non-public Issue

              


      

       

      The
completion of the Non-public Issue under the Agreement will take place upon the
Securities Depository and Clearing Corporation confirms that all subscriptions
related to the Non-public Issue are finished.

       

      
        	
                5.

              	
                Undertakings
      and guarantees given by Party A

              


      

       

      
        	
              	
                5.1

              	
                Party
      A guarantees to Party B that:

              


      

       

      
        	
                 
      

              	
                5.1.1.

              	
                Party
      A is a corporate legal person duly incorporated and existing under the PRC
      laws;

              


      

       

      
        	
                 
      

              	
                5.1.2.

              	
                Party
      A will enter into and execute the
Agreement:

              


      

       

      
        	
                 
      

              	
                5.1.2.1.

              	
                The
      requirements of its Articles of Association have been
  met;

              


      

       

      
        	
                 
      

              	
                5.1.2.2.

              	
                It
      has taken or will take necessary corporate actions to obtain all necessary
      authorisation and approvals;

              


      

       

      
        	
                 
      

              	
                5.1.2.3.

              	
                It
      will not breach any restrictions imposed by laws or contracts which are
      binding or have effect on Party A.

              


      

       

      
        	
              	
                5.2

              	
                Party
      A guarantees that in the process of bargaining and negotiation for the
      signing of the Agreement, all the information provided by Party A to Party
      B is true, accurate and complete.

              


      

       

      
        	
              	
                5.3

              	
                Party
      A undertakes that it will comply with all the terms of the
      Agreement.

              


      

       

      
        	
              	
                5.4

              	
                Party
      A undertakes that it will assume economic obligation and legal obligation
      for breach of any of these guarantees and undertakings mentioned above,
      and compensate Party B for the actual loss and expenses so
      incurred.

              


      

       

      
        
           


        

        
          5

          
            

          

        

        
           


        

      


      
        	
                6.

              	
                Undertakings
      and guarantees given by Party B

              


      

       

      
        	
              	
                6.1

              	
                Party
      B guarantees to Party A that:

              


      

       

      
        	
                 
      

              	
                6.1.1.

              	
                Party
      B is a corporate legal person duly incorporated and existing under the PRC
      laws;

              


      

       

      
        	  
    	
                6.1.2.

              	
                Party
      B will enter into and execute the
  Agreement:

              


      

       

      
        	
                 
      

              	
                6.1.2.1.

              	
                The
      requirements of its Articles of Association have been
  met;

              


      

       

      
        	
                 
      

              	
                6.1.2.2.

              	
                It
      has taken or will take necessary corporate actions to obtain all necessary
      authorisation and approvals;

              


      

       

      
        	
                 
      

              	
                6.1.2.3.

              	
                It
      will not breach any restrictions imposed by laws or contracts which are
      binding or have effect on Party B.

              


      

       

      
        	  	
                6.2

              	
                Party
      B guarantees that in the process of bargaining and negotiating for the
      signing of the Agreement, all the information provided by Party B to Party
      A is true, accurate and complete.

              


      

       

      
        	  	
                6.3

              	
                Party
      B undertakes that it will comply with all the terms of the
      Agreement.

              


      

       

      
        	  	
                6.4

              	
                Party
      B undertakes that it will assume economic obligation and legal obligation
      for breach of any of these guarantees and undertakings mentioned above,
      and compensate Party A for the actual loss and expenses so
      incurred.

              


      

       

      
        	  	
                6.5

              	
                Party
      B undertakes that it will not transfer any of the said shares it obtains
      in a period of 36 months from the date of registration of the Non-public
      Issued A Shares under its name.

              


      

       

      
        	
                7.

              	
                Liability
      for breach of the Agreement

              


      

       

      A party
under the Agreement is deemed to be a party in default if it breaches any
obligation, undertaking, statement and guarantee stipulated in the Agreement.
The party in default shall assume the relevant compensation liability if its
breach lead to the failure in fulfilling the Agreement in full, in part or on a
timely basis, which in turn results in losses to the other
party.


      
        
           


        

        
          6

          
            

          

        

        
           


        

      


      
        	
                8.

              	
                Alterations,
      Amendments and Assignment of the
Agreement

              


      

       

      
        	  	
                8.1

              	
                Alterations
      or amendments of the Agreement shall be subject to negotiation between the
      Parties and made in writing.

              


      

       

      
        	  	
                8.2

              	
                Alterations
      and amendments of the Agreement form an integral part of the
      Agreement.

              


      

       

      
        	  	
                8.3

              	
                Neither
      Party shall have the right to assign in whole or in part their rights or
      obligations under the Agreement without the written consent of the other
      party.

              


      

       

      
        	
                9.

              	
                The
      Entire Agreement

              


      

       

      
        	
              	
                9.1

              	
                The
      Agreement shall constitute the entire agreement in connection with the
      subject matter of the Agreement between the Parties hereto and shall
      supersede any and all previous oral and written proposals, statements,
      guarantees, commitments, letters of intention, Memorandums of
      understanding, agreements and contracts between the Parties. The Parties
      shall not and have no right to rely on those proposals, statements,
      guarantees, commitments, letters of intention, Memorandums of
      understanding, agreements and
contracts.

              


      

       

      
        	
                10.

              	
                Sharing
      of Taxes and Expenses

              


      

       

      
        	  	
                10.1

              	
                Save
      as otherwise agreed between the Parties, taxes and expenses incurred in
      connection with the Non-pubic Issue of A shares shall be shared by the
      Parties in accordance with the relevant regulations of the
      state.

              


      

       

      
        	
                11.

              	
                Notice

              


      

       

      
        	  	
                11.1

              	
                Relevant
      notices under or relating to the Agreement from either Party shall be
      dispatched in written form. A notice shall be deemed effectively received
      if delivered by hand or registered post to the Parties at the following
      addresses, or other addresses as instructed by the recipients in ten days
      prior written notice:

              


      

       

      
        
           


        

        
          7

          
            

          

        

        
           


        

      


      
        	  	
                Party A: 

              	
                China
      Southern Airlines Company Limited

              


      

      
        	  	
                Address: 

              	
                278
      Ji Chang Road, Guangzhou

              


      

      
        
          	  	
                  Post code:

                	
                  510406

                


        

      

      
        	  	
                Recipient: 

              	
                Qin
      Haifeng

              


      

       

      
        	  	
                Party B: 

              	
                China
      Southern Airlines Group
  Corporation

              


      

      
        	  	
                Address: 

              	
                27
      Hang Yun Nan Jie, Ji Chang Road,
Guangzhou

              


      

      
        	  	
                Post code:

              	
                510405

              


      

      
        	  	
                Recipient: 

              	
                Shi
      Chaomin

              


      

       

      
        	 	
                11.2

              	
                A
      notice if delivered by hand shall be deemed effectively received upon the
      recipient’s signature. A notice, when delivered by registered post, shall
      be deemed received seven days after the dispatch of the same at the
      address of the recipient.

              


      

       

      
        	
                12.

              	
                Termination
      of the Agreement

              


      

       

      
        	  	
                12.1

              	
                The
      Agreement may be terminated upon the occurrence of one or more of the
      circumstances as follows:

              


      

       

      
        	
                 
      

              	
                12.1.1.

              	
                Both
      Parties to the Agreement have unanimously agreed through
      consultation;

              


      

       

      
        	
                 
      

              	
                12.1.2.

              	
                Should
      the Agreement fail to meet the conditions precedent prescribed in Article
      3 or cannot be performed under the laws, orders, government bans or
      judicial rulings, either party shall be entitled to terminate the
      Agreement unilaterally by a written
notice.

              


      

       

      
        	  	
                12.2

              	
                Should
      any circumstance mentioned above occur owing to the fault of either party
      or both Parties, each party shall assume its respective liability for
      breach of the Agreement as prescribed in Article 7
  hereof.

              


      

       

      
        
           


        

        
          8

          
            

          

        

        
           


        

      


      
        	
                13.

              	
                Settlement
      of Disputes

              


      

       

      
        	  	
                13.1

              	
                The
      Agreement is subject to the laws of the People’s Republic of
      China.

              


      

       

      
        	
              	
                13.2

              	
                All
      disputes arising from the implementation of the Agreement shall be settled
      through friendly negotiation between the two Parties. Where negotiation is
      not successful, any party may refer the dispute to the people’s court with
      competent jurisdiction in Guangzhou for legal
  proceedings.

              


      

       

      
        	
              	
                13.3

              	
                Except
      for the disputes submitted for legal proceedings, each party shall
      continue to perform other provisions of the
  Agreement.

              


      

       

      
        	
                14.

              	
                Confidentiality

              


      

       

      
        	
              	
                14.1

              	
                After
      the signing of the Agreement, unless prior written consent of the other
      party has been obtained, each party shall, regardless whether the
      Non-public Issue of A shares under the Agreement is completed or not, or
      whether the Agreement is terminated, rescinded, revoked, deemed to be
      void, or fulfilled, undertake the following obligations of
      confidentiality:

              


      

       

      
        	
                 
      

              	
                14.1.1.

              	
                The
      Parties shall not disclose to any third party the Agreement and the
      transaction contemplated hereunder and any other documents related to the
      transaction (hereinafter referred to as “Confidential
      Documents”);

              


      

       

      
        	
                 
      

              	
                14.1.2.

              	
                The
      Parties shall use the Confidential Documents and their contents only for
      the purpose of the transaction contemplated hereunder, but not for any
      other purpose.

              


      

       

      
        	
              	
                14.2

              	
                The
      Parties to the Agreement shall not be subject to the restrictions of
      Article 14.1 if they disclose the Confidential Documents for the following
      reasons:

              


      

       

      
        	
                 
      

              	
                14.2.1.

              	
                Disclosure
      to the Parties to the Agreement and any of the intermediaries including
      the sponsor of the non-public issue of A shares, the financial advisors of
      the non-public issue of H shares , accountants, lawyers, and underwriters
      engaged by such Party;

              


      

       

      
        	
                 
      

              	
                14.2.2.

              	
                Disclosure
      made according to the mandatory requirements of laws and
      regulations;

              


      

       

      
        	
                 
      

              	
                14.2.3.

              	
                Disclosure
      made according to the mandatory requirements of the competent government
      authorities.

              


      

       

      
        
           


        

        
          9

          
            

          

        

        
           


        

      


      
        	
                15.

              	
                Other
      Provisions

              


      

       

      
        	
              	
                15.1

              	
                The
      Agreement shall be formed from the date of signing by the legal
      representatives of the Parties or their duly authorized representatives,
      and shall come into force pursuant to the provisions of Article 3 of the
      Agreement.

              


      

       

      
        	
              	
                15.2

              	
                The
      Parties can, through negotiation, sign a separate written supplementary
      agreement on any matter not covered by the Agreement. The supplementary
      agreement shall have the same legal effect as the
    Agreement.

              


      

       

      
        	
              	
                15.3

              	
                The
      Agreement shall be signed in 12 copies. Party A and Party B shall hold one
      copy each, and the other 10 copies shall be filed with the relevant
      authorities.

              


      

       

      
        
           


        

        
          10

          
            

          

        

        
           


        

      


      (This
page does not carry any text, and is designated for signing and sealing of the
Agreement)

       

      
        
          	
                  China
      Southern Airlines Company Limited

                
	 
      	 
      
	
                  By:

                	
                  /s/
      Si Xianmin (Company Seal)

                
	
                  Name:  

                	
                  Si
      Xianmin

                
	
                  Title:

                	
                  Legal
      representative

                


        

      

      


      
        
          	
                  China
      Southern Air Holding Company

                
	 
      	 
      
	
                  By:

                	
                  /s/
      Wang Quanhua (Company Seal)

                
	
                  Name:  

                	
                  Wang
      Quanhua

                
	
                  Title:

                	
                  Authorized
      representative

                


        

      


      
        
           


        

        
          11