Execution
copy










TRADEMARK
LICENSE AGREEMENT










by and
between





CHINA
SOUTHERN AIRLINES COMPANY LIMITED





and





SOUTHERN
AIRLINES (GROUP)





May
22, 1997





1





TABLE OF
CONTENTS





PAGEPRELIMINARY
      STATEMENT
                  3ARTICLE
      1.
                  DEFINITIONS
                  3ARTICLE
      2.
                  GRANT
      OF LICENSE
                  4ARTICLE
      3.
                  ASSURANCES
      AND UNDERTAKINGS
                  5ARTICLE
      4.
                  SUPERVISION
      AND QUALITY CONTROL
                  7ARTICLE
      5.
                  INFRINGEMENT
      AND INDEMNITY
                  7ARTICLE
      6.
                  EFFECTIVENESS
      AND TERMINATION
                  8ARTICLE
      7.
                  DISPUTE
      SETTLEMENT
                  9ARTICLE
      8.
                  GOVERNING
      LAW
                  9ARTICLE
      9.
                  MISCELLANEOUS
                  9SIGNATURES
                  
                  10ANNEX
      1
                  -   LICENSED
      MARKSANNEX
      2
                  -   BUSINESS
      LICENSE OF THE LICENSORANNEX
      3
                  -   BUSINESS
      LICENSE OF THE LICENSEE




2





TRADEMARK
LICENSE AGREEMENT





THIS
TRADEMARK LICENSE AGREEMENT (this "Agreement") is entered into on May 22, 1997
in Guangzhou Municipality, Guangdong Province, the People's Republic of China,
by and between China Southern Airlines Company Limited, a company limited by
shares organized and existing under the laws of the People's Republic of China
(the "Licensee"), with its legal address at Guangzhou Baiyun International
Airport, Guangzhou Municipality, Guangdong province, the People's Republic of
China, and Southern Airlines (Group), a state-owned enterprise organized and
existing under the laws of the People's Republic of China (the "Licensor"), with
its legal address at Guangzhou Baiyun International Airport, Guangzhou
Municipality, Guangdong Province, the People's Republic of China (the
"PRC").





PRELIMINARY
STATEMENT





WHEREAS,
the Licensee and Licensor were established through the restructuring of China
Southern Airlines (Group) Company; upon which restructuring, the Licensee
becomes a wholly-owned subsidiary of the Licensor;





WHEREAS,
the Licensee and the Licensor entered into a Demerger Agreement dated March 25,
1995 (the "Demerger Agreement");





WHEREAS,
in the Demerger Agreement, the Licensor has agreed to enter into a trademark
license contract with the Licensee to permit the Licensee to use the Licensed
Marks (as defined in Article 1.1 (d)); and





WHEREAS,
the Licensee desires to obtain, and the Licensor is willing to grant, such
license on the terms and conditions set forth herein.





NOW AND
THEREFORE, the Parties hereto hereby agree as follows:





ARTICLE
1.   DEFINITIONS





Article
1.1.   Definitions.  Unless
the context of this Agreement otherwise requires, the following terms shall have
the meanings set forth below:





(a)           "Affiliated Person"
means any subsidiary in which the Licensor or the Licensee has an equity
interest.





(b)           "Airline Services"
means the airline passenger, air cargo, air mail, other air services and any
other services reasonably incidental thereto provided by the Licensee or its
Affiliated Persons in any part of the world (including Taiwan, Hong Kong and
Macao in the PRC and the rest of the PRC's territory) (“Licensed Areas”), as
well as any business operation related to any of the above services or other
activities.





3





(c)           “Relevant Activities”
means any supplemental business activities conducted by the Licensee or its
Affiliated Persons for the reasonable promotion of Airline
Services.





(d)           “Licensed Marks” means
the service mark depicting red kapok against a blue background as shown in Annex
1 hereto.





ARTICLE
2.   GRANT OF LICENSE





Article
2.1.   License.  The
Licensor hereby grants to the Licensee a royalty-free exclusive license to
permit the Licensee to use, upon the terms and conditions set forth herein, the
Licensed Marks in connection with the Airline Services and Relevant Activities
in the Licensed Areas.





Notwithstanding
the foregoing, the Licensor retains the rights to use the Licensed Marks in
connection with its own business, and to permit any Affiliated Person of the
Licensor to use the Licensed Marks in accordance with such terms and conditions
as the Licensor may deem appropriate in connection with any other business or
activity that does not compete, directly or indirectly, with the Airline
Services and relevant services provided at any time by the Licensee or its
Affiliated Persons.





Article
2.2.   Right to
Sublicense.  The Licensee shall not, without the prior written
consent of the Licensor, sublicense, transfer or dispose of the Licensed Marks
to any third party. Notwithstanding the foregoing, the Licensee may sublicense,
without the consent of the Licensor, its Affiliated Persons to use the Licensed
Marks in connection with the Airline Services and Relevant Activities; provided, however, that (a) the
rights of any sublicensed Affiliated Person shall not exceed the Licensee’s
rights under this Agreement, and the obligations and liabilities assumed by such
Affiliated Person shall be identical in all material respects to those of the
Licensee under this Agreement; (b) the Licensee shall promptly provide the
Licensor with a true copy of such sublicense agreement, as executed; and (c) the
Licensor shall have the right to require that the Licensee terminate any
sublicense, immediately upon written notice to the Licensee, if this Agreement
is terminated, or the sublicensed Affiliated Person fails to comply in all
material respects with the terms of this Agreement or the sublicense agreement
or any law or governmental regulations applicable to the use of the Licensed
Marks in the conduct of its business, and the Licensee shall terminate the
applicable sublicense.





Article
2.3.   Recognized
Rights.  The Licensor hereby recognize that the Licensee shall
have the full right during the term of this Agreement to use the Chinese and
English names of “China Southern”, “China Southern Airlines” and similar names
in connection with the Airline Services and Relevant Activities in the Licensed
Areas.





4





Article
2.4.   Waiver.  The
Licensor hereby waive any claim which the Licensor may have as a result of the
use of the Licensed Marked and the names described in Article 2.3 above by the
Licensee during the period from March 25, 1995 to the date hereof.





ARTICLE
3.    ASSURANCES AND UNDERTAKINGS





Article
3.1.   Representations and
Warranties.  Each of the Licensor and the Licensee represents
and warrants that:





(a)           It
is a duly organized and validly existing legal person under the laws of the
PRC.





(b)           A
true and correct copy of its business license is attached hereto as Annex 2 (in
the case of the Licensor) and as Annex 3 (in the case of the
Licensee).





(c)           It
has full power and authority to enter into this Agreement and to perform its
obligations hereunder.





(d)           Its
representations, whose signature is affixed hereto, has been fully authorized to
sign this Agreement.





(e)           Upon
the signature by each of the Parties hereto, this Agreement shall constitute its
legal, valid and binding obligation, enforceable against it in accordance with
its terms.





Article
3.2.   Licensor
Warranty.  The Licensor warrants to the Licensee that, as of
the date hereof, the Licensor has the right to license the Licensed Marks to the
Licensee, and that there are no conflicting claims to, or registrations by any
third party of, the Licensed Marks in the Licensed Areas.





Article
3.3.   Licensor Agreement to
Maintain and Register Marks; Abandonment.  The Licensor shall
maintain and renew all registrations for the Licensed Marks. Upon written notice
form the Licensee to the Licensor that the Licensee proposes to provide Airline
Services or engage in Relevant Activities in any country or jurisdiction in
which the Licensed Marks are not registered with the applicable governmental
authorities by the Licensor or the Licensor has not otherwise acquired the right
to use the Licensed Marks, the Licensor shall promptly take all steps as are
reasonably necessary and will use its best efforts, at the expense of the
Licensee, to register the Licensed Marks or to acquire such right. The Licensee
shall cooperate with the Licensor.





If the
Licensor intends to abandon any of the Licensed Marks, the Licensor shall give
the Licensee sixty days written notice thereof.





5





Article
3.4.   No Sale or Assignment; No
Rights to Register.  Nothing herein shall be deemed, intended
or implied to constitute a sale or assignment of the Licensed Marks to the
Licensee, and no rights are conveyed hereunder to the Licensee except the rights
to use the Licensed Marks and to sublicense the Licensed Marks under the terms
of this Agreement. The Licensee recognizes the Licensor’s exclusive rights to
the Licensed Marks (including without limitation the ownership thereof and the
rights to apply for registration and to renew the registration with respect
thereto and any other rights related thereto) and, to the fullest extent
permitted by applicable law, agrees that it will at no time question the
validity of such rights.





In the
event that the Licensee shall, by virtue of this Agreement, acquire under the
laws of any applicable country or jurisdiction any rights with respect to the
Licensed Marks or if, for any other reason, any court, arbitral panel or
governmental agency of any country or jurisdiction determines that the Licensee
is the owner of any Licensed Mark or may become such owner through appropriate
registration (whether as the sole owner or co-owner of such Licensed Mark), the
Licensee shall transfer such rights to the Licensor without further
consideration and subject to no further condition.





The
Licensee shall have no right to apply for or to contest the registration or
renewal of registration of any Licensed Mark or of any similar marks in any
country or jurisdiction without the prior written consent of the
Licensor.





If
permitted by applicable laws and regulations and with the consent of the
Licensor, the Licensee may register, at its own expense, with the appropriate
governmental authority in any country or jurisdiction as an agent of the
Licensee or registered user of any Licensed Mark, and may record or register
this Agreement with such governmental authority. The Licensor shall cooperate
with the Licensee in any such registration, including the execution of all
documents necessary or useful to effect such registration.





Article
3.5.   Right to
Enjoin.  The Licensor shall have the right to enjoin any action
of the Licensee or any sublicensed Affiliated Person in conflict with this
Agreement and to seek any other appropriate legal relief available to protect
its rights to the Licensed Marks.





Article
3.6.   Assistance to
Licensor.  The Licensee hereby agrees to provide to the
Licensor and, at the request of the Licensor, to its Affiliated Persons, all
reasonable assistance in protecting the Licensed Marks.





Article
3.7.   Further
Assurances.  The Parties agree that, subsequent to the
execution and delivery of this Agreement and without any additional
consideration, each of them shall execute and deliver any further legal
instruments and perform such acts that are or may become necessary to effectuate
the purposes of this Agreement.





6





ARTICLE
4.   SUPERVISION AND QUALITY CONTROL





Article
4.1.   Maintenance of Quality
Standards. The Licensee shall, when providing the Airline Services and
engaging in Relevant Activities using the Licensed Marks, make sure that the
quality of such Services and Activities conform to the standards achieved and
established by the Licensor prior to the date of execution of the Demerger
Agreement. The Licensee shall permit the Licensor to make reasonable inspections
during normal business hours in order to confirm whether the Licensee has
satisfied such quality standards. If the Licensor considers that the Licensee
has failed to reach such standards, the Licensee shall promptly take such
remedial measures as necessary or as the Licensor may reasonably recommend to
correct any deviation from such standards. If the Licensee still fails to meet
such standards, then the Licensor shall have the right to terminate this
Agreement with immediate effect.





Article
4.2.   Compliance with Applicable
Law.  The Licensee shall comply with all applicable laws and
regulations and obtain all necessary governmental approvals pertaining to the
Airline Services and Relevant Activities.





Article
4.3.   Prohibited
Uses.  The Licensee shall not use any Licensed Mark in any
manner that damages the business of the Licensor or its reputation nor create or
use a new mark containing any Licensed Mark or similar to the Licensed Marks.
The Licensor shall have the right to prohibit any such activity of the
Licensee.





ARTICLE
5.   INFRINGEMENT AND INDEMNITY





Article
5.1.   Infringement by Others;
Right to Control.  Either Party hereto (“Defaulting Party”)
shall defend, indemnify and hold harmless the other Party and its Affiliated
Persons, and the directors or employees of either Party (“Non-defaulting Party”)
from and against any and all claims, damages and expenses (including the
reasonable fees and expenses of attorneys and experts) incurred as a result of
the performance or breach of this Agreement by the Defaulting Party. The
Non-defaulting Party shall submit the claim to the Defaulting Party for defense.
In the event that the Defaulting Party fails to defend, the Non-defaulting Party
shall have the rights to defend and to claim from the Defaulting Party the
expenses incurred by the Non-defaulting Party from such defense.





Article
5.2.   Providing
Information.  Either Party hereto shall promptly provide the
other Party with detailed information regarding any claim or cause of action
asserted by a third party.





7





Article
5.3.   Survival.  The
terms of this Article 5 shall survive the expiration or termination of this
Agreement.





ARTICLE
6.   EFFECTIVENESS AND TERMINATION





Article
6.1.   Term.  This
Agreement shall be effective on the date of execution by both Parties and shall
remain in full force and effect for ten years. This Agreement shall be renewed
automatically for ten years unless the Licensor notifies the Licensee in writing
three months prior to the expiration of this Agreement, in which case, this
Agreement shall terminate. This Agreement shall be renewed for many times based
on such principle.





Article
6.2.   Early
Termination.  Either Party shall have the right to terminate
this Agreement under any of the following circumstances:





(a)           if
the other Party has committed a material breach of this Agreement or any
representation or warranty contained herein, and such breach is not cured within
thirty days after written notice from the Non-defaulting Party to the Defaulting
Party;





(b)           the
Licensor has ceased to hold, directly or indirectly, any shares of the
Licensee;





(c)           if
the other Party has become bankrupt 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 become due.





Article
6.3.   Termination
Procedure.  Termination as set out under Article 6.2 may be
effected by the terminating Party giving the other Party thirty days’ prior
written notice specifying the reason for such termination. The termination of
this Agreement shall become effective upon the expiration of such thirty-day
period.





Article
6.4.   Effect of
Termination.





(a)           Upon
the termination of this Agreement:





(1)           The
Licensee’s right to use the Licensed Marks shall immediately cease, the Licensee
shall discontinue all use of the Licensed Marks, and the Licensee shall not
attempt to register or use any mark that in the reasonable determination of the
Licensor is similar to any Licensed Mark.





(2)           The
Licensee shall remove the Licensed Marks from all times of the Licensee and the
Licensor shall pay to the Licensee a reasonable compensation
therefor.





8





(3)           The
Licensee shall cancel any registration of the trademark license with the
relevant governmental department with respect to the termination of this
Agreement.





(b)           The
terms of this Article 6.4 shall survive the termination of this
Agreement.





ARTICLE
7.    DISPUTE SETTLEMENT





Article
7.1.   Dispute
Resolution.  If a dispute arises in connection with the
interpretation or implementation of this Agreement, the Parties shall attempt to
settle such dispute through friendly consultation. If friendly consultation
fails to resolve such dispute, either Party may, at any time, institute legal
proceedings regarding such dispute with the People’s Court having jurisdiction
over such matter.





ARTICLE
8.   GOVERNING LAW





Article
8.1.   Applicable
Law.  The validity, interpretation and implementation of this
Agreement shall be governed by the laws of the PRC.





ARTICLE
9.   MISCELLANEOUS





Article
9.1.   No
Assignment.  Neither Party may assign any of its rights or
obligations under this Agreement without the prior written consent of the other
Party, except that the Licensor may without such consent delegate to any of
its Affiliated Persons its rights to quality control, inspection and
supervision hereunder. This Agreement is binding upon and made for the benefit
of the Parties hereto and their respective successors and permitted
assigns.





Article
9.2.   Severability.  This
Agreement is severable in that if any provision hereof is determined to be
illegal or unenforceable, such provision shall be removed without affecting the
remaining provisions of this Agreement.





Article
9.3.   Chinese Version to Govern;
Counterparts.  This Agreement is written in Chinese. In the
event of any discrepancy between the Chinese version hereof and any translation
hereof in any other language, the Chinese version shall prevail. The Parties
shall execute four (4) originals of this Agreement and each shall retain two (2)
originals. Each original shall be equally valid.





Article
9.4.   Entire Agreement;
Amendments.  This Agreement constitutes the entire agreement
between the Parties with respect to the subject matter hereof, supersedes any
prior expression of intent or understanding relating hereto and may only be
modified or amended by a written instrument signed by the authorized
representatives of the Parties.





9





Article
9.5.   No
Waiver.  Failure or delay on the part of any Party to exercise
any right under this Agreement shall not operate as a waiver, nor shall any
partial exercise of any right preclude any future exercise thereof.





Article
9.6.   Registration.  The
Licensor and the Licensee shall as soon as possible file a copy of this
Agreement with the appropriate authority of the PRC.





Article 9.7.   Notices.  Any
notice or other written communication that is required hereunder shall be in
writing and shall be delivered personally or by post to the other Party hereto
at the address of such other Party set forth in the introductory paragraph of
this Agreement or by facsimile to the facsimile number of the other
Party.





IN
WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed by
their duly authorized representatives as of the date indicated in the first
paragraph of this Agreement.





CHINA
      SOUTHERN AIRLINES COMPANY LIMITED
              Licensee




By:
                                /s/
      Yan Zhi Qing  (Company Seal)Name:
                                Yan Zhi QingTitle:


SOUTHERN
      AIRLINES (GROUP)
                        Licensor




By:
                                /s/
      Yu Yan En  (Company Seal)Name:
                                Yu
      Yan EnTitle:









10