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 H 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, Gangdong Province, the
PRC

    

    Legal
representative: Si Xianmin

     

    Party B:
Nan lung Holding Limited

    Address:
Unit 1106-7, K.Wah Centre, 191 Java Road, North Point, HK

    Directors:
Wang Quanhua, Tang Yong, Wu Yingxiang, Jin Gongbin

     

    (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 RMB8,003,567,000.
      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 limited liability company duly organized and validly existing under
      the laws of Hong Kong holding 9.01% of the issued capital of Party
      A;

            


    

     

    
      	
              3.

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

            


    

     

    
      
         


      

      
        1

        
          

        

      

      
         


      

    


    
      	
              4.

            	
              Party
      A intends to increase its registered capital by way of a non-public issue
      of A shares, while China Southern Air Holding Company intends to subscribe
      for part of A shares to be issued by Party A by way of a non-public
      issue.

            


    

     

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

     

    
      	
              1.

            	
              Definitions
      and Interpretation

            


    

     

    
      	
            	
              1.1

            	
              In
      the Agreement, unless the context requires otherwise, the following
      expressions shall have the following
meanings:

            


    

     

    
      	
               
      

            	
              1.1.1.

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

            


    

     

    
      	
               
      

            	
              1.1.2.

            	
              “Non-public Issued H Shares” refers to
      no more than 312,500,000 new H Shares to be issued by Party A 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
      non-public issued H Share is RMB
1.00.

            


    

     

    
      	
               
      

            	
              1.1.3.

            	
              “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 .

            


    

     

    
      	
               
      

            	
              1.1.4.

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

            


    

     

    
      	
               
      

            	
              1.1.5.

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

            


    

     

    
      	
               
      

            	
              1.1.6.

            	
              “CSRC” refers to China
      Securities Regulatory Committee.

            


    

     

    
      
         


      

      
        2

        
          

        

      

      
         


      

    


    
      	
            	
              1.1.7.

            	
              “SHSE” refers to the
      Shanghai Stock Exchange.

            


    

     

    
      	
               
      

            	
              1.1.8.

            	
              “Securities Depository and
      Clearing Corporation” refers to Hong Kong Registrars Limited., the
      registrar of H Shares of Party A in Hong
Kong.

            


    

     

    
      	
               
      

            	
              1.1.9.

            	
              “SEHK” refers to Stock Exchange
      of Hong Kong Limited.

            


    

     

    
      	
               
      

            	
              1.1.10.

            	
              “Public Disclosure”
      refers to the disclosure on the media of information disclosure designated
      by SEHK or 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 of the Non-public Issued H Shares shall be
      not less than HK$2.73 per share,the average
      trading price for the twenty trading days immediately prior to the pricing
      ex-date.

            


    

     

    
      	
            	
              2.2

            	
              Based
      on the issue price specified in Article 2.1 above, Party A shall issue not
      more than 312,500,000 H Shares to Party B by way of a Non-public Issue.
      Party B agrees to subscribe for the aforesaid number of Non-public Issued
      H Shares in cash. In the event of ex-rights or ex-dividend of the Shares
      of Party A during the period between the pricing ex-date and the issue
      date, the number of H Shares to be issued and the issue price shall be
      adjusted accordingly.

            


    

     

    
      	
            	
              2.3

            	
              Both
      Parties 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
      H 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 H Shares in cash to the bank account designated by
      Party A in writing.

            


    

     

    
      
         


      

      
        3

        
          

        

      

      
         


      

    


    
      	
            	
              2.4

            	
              Both
      Parties confirm that after Completion of H 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 H shares under the Agreement and
      the Non-public Issue of A shares 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 H Shares of Party A under the
      Agreement being approved at the board of Party B; and the subscription of
      the Non-public Issued A shares of Party A being approved at the General
      Manager office meeting of China Southern Air Holding
    Company;

            


    

     

    
      	
            	
              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 H shares under
      the Agreement by Party A and the Non-public Issue of A shares to China
      Southern Air Holding Company and other investors;
  and

            


    

     

    
      	
            	
              3.1.4.

            	
              The
      approval of the Listing Committee of SEHK for the listing and trading of
      Non-public Issued Shares.

            


    

     

    
      	
            	
              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 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.

            	
              Change
      Registration for the Non-public
Issue

            


    

     

    
      After the
Completion of the Non-public Issue, both Party A and Party B shall register
relevant changes with registration authority on a timely
basis.

    

     

    
      	
              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.

            


    

     

    
      	
              6.

            	
              Undertakings
      and Guarantees Given by Party B

            


    

     

    
      	
            	
              6.1

            	
              Party
      B guarantees to Party A that:

            


    

     

    
      
         


      

      
        5

        
          

        

      

      
         


      

    


    
      	
            	
              6.1.1.

            	
              Party
      B is a limited liability company duly organized and validly existing under
      the laws of Hong Kong;

            


    

     

    
      	
            	
              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.

            


    

     

    
      	
            	
              6.1.2.4.

            	
              Party
      B will comply with the regulations promulgated by PRC and Hong Kong in
      connection with the prohibition of insider trading and market
      misconduct;

            


    

     

    
      	
            	
              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.

            


    

     

    
      	
              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.

     

    
      	
              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.

            


    

     

    
      
         


      

      
        6

        
          

        

      

      
         


      

    


    
      	
            	
              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 H 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 to the written notice:

            


    

     

    
      
        
          
            
              	
                      Party
      A:

                    	
                      China
      Southern Airlines Company Limited

                    
	 	 
	
                      Address:

                    	
                      278
      Ji Chang Road, Guangzhou

                    
	 	 
	
                      Post
      code:

                    	
                      510406

                    
	 	 
	
                      Recipient:

                    	
                      Qin
      Haifeng

                    


            

          

        

      

      


      
        
          
             


          

          
            7

            
              

            

          

          
             


          

        

      

       

      
        
          
            
              	
                      Party
      B:

                    	
                      Nan
      Lung Holding Company Limited

                    
	 	 
	
                      Address:

                    	
                      Unit
      1106-7, K.Wah Centre, 191 Java Road, North Point, HK

                    
	 	 
	
                      Recipient:

                    	
                      Wang
      Xiaohui

                    


            

          

        

      

       

    

    
      	
            	
              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 discharge 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.

            


    

     

    
      	
              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 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.

            


    

     

    
      
         


      

      
        8

        
          

        

      

      
         


      

    


    
      	
              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 H 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
      sponsors of the A shares, the financial advisors of the non-public issue
      of H shares, accountants, and lawyers 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.

            


    

     

    
      	
              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.

            


    

     

    
      
         


      

      
        9

        
          

        

      

      
         


      

    


    
      	
            	
              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, with each Party holding one copy,
      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

                  


          

        

      

    

    


    
      
        
          
            	
                    Nan
      lung Holding Limited

                  
	 
      	 
      
	
                    By:

                  	
                    /s/
      Wang Quanhua (Company Seal)

                  
	
                    Name:

                  	
                    Wang
      Quanhua

                  
	
                    Title:

                  	
                    Authorized
      representative

                  


          

        

      

    

     

    
      
         


      

      
        11