Financial Services
Framework Agreement


 


This agreement was entered into by the following parties on
8 November 2013 in Guangzhou:


 


China Southern Airlines Company Limited (hereinafter “Party
A”)


Address: 278 Ji Chang Road, Guangzhou


Legal representative: Si Xian Min


 


Party B: Southern Airlines Group Finance Company Limited (hereinafter
“Party B”)


Address: 17 Hang Yun South Street, Bai Yun District, Guangzhou


Legal representative: Wang Jianjun


 


Party A and Party B unanimously agreed under the principles
of fairness and mutual benefit to enter into the following framework agreement in respect of the provision of deposit, loan businesses
and other related financial services by Party B to Party A (Party A to this agreement includes China Southern Airlines Company
Limited and its controlled subsidiaries):


 


Article 1Deposit service


		1.	Party A deposits some of the temporary idle working capital and
                                         some of receipts of operational funds in the account that it has opened with Party B
                                         under the principle of free deposit and withdrawal in accordance with this agreement.



		2.	Party B should regularly pay interest on deposit at a rate not
                                         less than the benchmark deposit interest rate of the same term specified by the People’s
                                         Bank of China.



		3.	Party B should provide transfer and settlement services to Party
                                         A for its normal operating activities according to the needs of Party A and the relevant
                                         provisions of the State.



		4.	To accelerate the speed of settlement of funds of Party A, Party
                                         B provides online financial services to Party A.



 




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Article 2 Loan services


		1.	Party B should try to meet the loan demand of Party A first according
                                         to its own funds capability. In this agreement the loan services provided by Party B
                                         to Party A include loans and other loan services.



		2.	When Party A applies for a loan from Party B, Party A and Party
                                         B should enter into a loan agreement specifying the loan amount, purposes of the loan
                                         and term of the loan etc.



		3.	Party A should pay interest on the loans that it has obtained from
                                         Party B at a rate not more than the benchmark loan interest rate of the same term specified
                                         by the People’s Bank of China.



		4.	Party A should repay the principal of the loan and pay interest
                                         as scheduled according to the loan service agreement entered into by both parties.



 


Article 3 Other financial services


		1.	Depending on the needs of the normal operating activities of Party
                                         A, Party B can accept the entrustment of Party A to provide the following financial services
                                         to Party A, but when the services are actually provided, Party A and Party B should specify
                                         the provisions by entering into contracts.



		(1)	Financial and financing consultancy, credit search and related
                                         consultancy, agency businesses;



		(2)	Insurance agency business;



		(3)	Other businesses that Party B can conduct subject to the approval
                                         of the China Banking Regulatory Commission.



		2.	Party B can accept the entrustment by Party A to provide bond issuance
                                         or underwriting services to Party A only when Party A is permitted to issue bonds, but
                                         when the services are actually provided, Party A and Party B should specify the provisions
                                         by entering into contracts.



		3.	The handling charges charged by Party B when providing the above
                                         financial services should conform with the relevant provisions whenever they are specified
                                         by the charging scale of the People’s Bank of China and the China Banking Regulatory
                                         Commission; and those handling charges should be higher than the handling charges charged
                                         by an independent third party providing the same type of financial services to Party
                                         A.



 




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Article 4 Special provisions


		1.	In order to better control risks of funds, Party B undertakes that
                                         its idle funds can only be deposited in State-owned commercial banks and listed joint-stock
                                         commercial banks. At the same time Party B undertakes to ensure that Party A can use
                                         the deposit within the deposit amount of Party A any time.



		2.	To guarantee the implementation of this agreement, Party B agrees
                                         that the total amount of the loans that it grants to CSAHC and its other subsidiaries
                                         (other than Party A) shall not exceed the sum of the capital and reserve of Party B and
                                         the deposits of the other companies (other than Party A).



		3.	The pricing of the transactions of both parties should adhere to
                                         the principles of fairness and reasonableness, with the fair value of the market as the
                                         basis, and the prices should not exceed the prices or charging scale of an independent
                                         third party.



 


Article 5 Default responsibilities


If either party of Party A and Party B breaches the provisions
of this agreement, does not perform or not fully perform its duties under this agreement, this will constitute a breach, the defaulting
party should undertake the default responsibilities in accordance with the relevant provisions of the “Contract Law of the
People’s Republic of China”, the other party has the right to discharge this agreement; to avoid disagreement, this
agreement does not constitute a mandatory obligation of Party A to carry out deposit or loan businesses with Party B.


 


Article 6 Dispute resolution


Any disputes between Party A and Party B arising from the interpretation,
effectiveness of this agreement and during the performance process should be resolved by amicable discussion, if the discussion
fails, either party can submit that dispute to a competent People’s Court in Guangzhou for resolution by law suit.


 


Article 7 Validity and validity period of the agreement


		1.	The validity period of this agreement is 3 years from 1 January
                                         2014 to 31 December 2016; this agreement will be legally binding upon both parties starting
                                         from the day it takes effect.



		2.	Both parties agree that all the financial services framework agreements
                                         signed by both parties previously will be automatically terminated starting from the
                                         day it takes effect.



 




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Article 8 Upper limit of transaction


		1.	All parties
                                         to the agreement unanimously agree that starting from the day this agreement takes effect
                                         the balance of deposits (including accrued interest) of Party A with Party B on any single
                                         day shall not exceed RMB6 billion, the balance of the loan services (including total
                                         interest expenses) provided by Party B on any single day shall not exceed the same level
                                         above. 



		2.	All parties
                                         to the agreement unanimously agree that the total amount of expenses that Party A pays
                                         in respect of the provision of the other financial services by Party B shall not exceed
                                         RMB5 million in any single financial year. 



 


Article 9 Risk control


To control the risk of funds, Party B has the duties to assist
Party A to complete the following measures:


		1.	Before Party A and Party B carry out connected transactions, Party
                                         A has the right to inspect if Party B has valid “Financial Permit”, “Business
                                         Licence of the Legal Person”, in the absence of the certificates concerned, or
                                         the certificates concerned have expired, Party A will stop to carry out cooperation of
                                         all types of businesses with Party B.



		2.	Before Party A deposits funds with Party B, Party A has the right
                                         to read the annual report of the latest financial year which has been audited by an accounting
                                         firm with securities, futures business qualifications, Party A will only start business
                                         cooperation with Party B after it has confirmed that the risks are controllable.



		3.	Party A has the right to learn about the operating and financial
                                         conditions of Party B on a regular basis, pay attention to see if Party B violates the
                                         provisions of the “Administrative Measures regarding the Finance Company of a Corporation
                                         Group” promulgated by the China Banking Regulatory Commission. Party A has the
                                         right to request Party B to provide the situations of all regulatory indicators to the
                                         finance department of Party A within 15 working days after the end of each quarter, if
                                         it is discovered that the related indicators do not comply with the relevant provisions
                                         of the “Administrative Measures regarding the Finance Company of a Corporation
                                         Group”, Party A will stop to carry out cooperation of deposit business with Party
                                         B.



 




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		4.	When the following events occur, Party A has the right to adapt
                                         risk response measures such as full or partial withdrawal of the deposits of Party A
                                         placed in Party B, temporarily stoppage of depositing funds with Party B, and to request
                                         Party B to rectify within a deadline etc to actually guarantee the security of deposits
                                         of Party A placed with Party B:



		(1)	When the gearing ratio indicator of Party B does not comply with
                                         the provisions of Article 34 of the “Administrative Measures regarding the Finance
                                         Company of a Corporation Group”;



		(2)	When Party B experiences substantial events such as a bank run,
                                         inability to repay loans due, pastdue of loans of large value or the provision of guarantee
                                         and advances, serious defects of computer system, robbery or frauds, serious breaches
                                         of rules, criminal cases involving the directors or senior management members etc;



		(3)	When the negotiable securities investment business of Party B
                                         suffers huge losses, the loss amount has reached 50% of the registered capital of Party
                                         B;



		(4)	The occurrence of matters such as material organization change,
                                         transactions of equity interest or operational risks which may affect the normal operation
                                         of Party B;



		(5)	When the balance of the deposits of Party A placed with Party
                                         B expressed as a proportion of the balance of deposits accepted by Party B exceeds the
                                         relevant provisions of the securities regulatory department;



		(6)	When administrative punishment is imposed upon Party B by the
                                         China Banking Regulatory Commission or other regulatory departments as a result of the
                                         breaching of law and regulations of the former;



		(7)	When Party B is demanded to carry out rectification by the China
                                         Banking Regulatory Commission;



		(8)	Other matters that Party A considers that they may bring implicit
                                         safety risks for the funds of Party A that it has placed.



		5.	Party A has the right to make full or partial withdrawal of the
                                         deposits of Party A placed with Party B on a non-regular basis to ensure that the security
                                         and liquidity of the deposits concerned.



 




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Article 10 Others


		1.	Without the written consent of both parties in advance, either
                                         party shall not after, revise the terms and contents of this agreement. Only those supplements,
                                         revisions unanimously agreed by both parties and for which a written supplementary agreement
                                         is drawn up will be legally binding upon both parties.



		2.	For matters not covered by this agreement, both parties will discuss
                                         and enter into written supplementary agreements, those written supplementary agreements
                                         shall have the same legal force as this agreement.



		3.	This agreement is prepared in quadruplicate, Party A and Party
                                         B each retains two copies which are equally legally binding.



 




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(No main text below)


 


Party A: China Southern Airlines Company Limited


 


Authorized representative:


 


[signature & seal]


 


	Party B:	Southern Airlines Group Finance
    Company Limited


 


Authorized representative:


 


[signature & seal]


 




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