China (Shanghai) Free Trade Zone
Jia Tai Road No. 29, Building No. 2
East Side Room 604-A04
Shanghai, China

Claimant is a subsidiary of Zhongzhi Enterprise Group Co. Ltd. ("ZEG"), a financial organisation.

Mr. Robert L. Sills
Mr. Geoffrey Sant
Mr. Eric Epstein
Ms. Carol Lee
Ms. Michelle K. Ng
Pillsbury Winthrop Shaw Pittman LLP
1540 Broadway
New York, NY 10036, USA
Tel. +1 212 858 1000
Email: robert.sills@pillsburylaw.com
geoffrey.sant@pillsburylaw.com
eric.epstein@pillsburylaw.com
carol.lee@pillsburylaw.com
michelle.ng@pillsburylaw.com

12/F Huaye International Center Tower A
No. 39 East 4th Ring Middle Road
Chaoyang District
Beijing 10025, China
Tel. + 86 10 5634 9888
Email: paul.kraus@jetmidwest.com
luxcool@126.com

The Joint Venture is a joint venture between Claimant and Second Respondent.

Jet Midwest Group, LLC
1105 North Market Street
Wilmington, DE 19801, USA
Tel. +1 310 652 0296
Email: paul.kraus@jetmidwest.com

Sky is a subsidiary of Third Respondent.

1105 North Market Street Wilmington, DE 19801, USA
Tel. +1 310 652 0296
Email: paul.kraus@jetmidwest.com

JMG is in the business of buying used aircraft, aircraft engines and aircraft parts, reconditioning them and re-selling them.

Mr. Sacha M. Cheong
K&L Gates
44/F Edinburgh Tower The Landmark
15 Queen's Road Central, Hong Kong
Tel. +852 2230 3590
Email: sacha.cheong@klgates.com

Mr. Leon Ho
Sir Oswald Cheung's Chambers
10/F, New Henry House
10 Ice House Street
Central, Hong Kong
Tel. +852 2524 2156
Email: leon@siroswald.com

Mr. Dan Tan
Dan Tan Law
155 Sansome Street, Suite 500
San Francisco, CA 94104, USA
Tel. +1 646 580 0080
Email: dan@dantanlaw.com

Dr. Michael Hwang S.C.
Michael Hwang Chambers LLC
150 Beach Road
#06-01 Gateway West
Singapore 189720
Tel: +(65) 6391 9390
Email: michael@mhwang.com

Ms. Jennifer Kirby
Kirby
68 rue du Faubourg Saint-Honoré
75008 Paris, France
Tel. +33 1 42 74 64 55
Email: jennifer.kirby@kirbyarbitration.com

Mr. Tan is the presiding arbitrator.

38/F, Two Exchange Square
8 Connaught Place
Central, Hong Kong
Tel. +852 2525 2381
Email: arbitration@hkiac.org

9.2. Dispute Resolution. Any dispute, controversy or claim arising out of or relating to this Agreement, or the interpretation, breach, termination, validity or invalidity thereof, shall be submitted to and settled by arbitration in Hong Kong by the Hong Kong International Arbitration Centre (the "HKIAC") in accordance with the Hong Kong International Arbitration Centre Administered Arbitration Rules (the "HKIAC Rules") in force in accordance with the HKIAC Rules then in force. The place of arbitration shall be in Hong Kong. There shall be three (3) arbitrators. The claimants to the dispute shall collectively choose one arbitrator, and the respondents shall collectively choose one arbitrator, within thirty (30) days after the delivery of the Notice to the other Party. Both arbitrators shall agree on the third arbitrator within thirty (30) days of their appointment. If any of the members of the arbitral tribunal have not been appointed within thirty (30) days after the Arbitration Notice is given, the relevant appointment shall be made by the Secretary-General of the HKIAC. The arbitration shall comply with the Arbitration Ordinance Chapter 341 of the Laws of Hong Kong. [¹]

9.1. Governing Law. This Agreement shall be governed by and construed under the Laws of Hong Kong, without regard to principles of conflict of Laws thereunder.

1. an order that the First Respondent complete the redemption of all Shares held by the Claimant in the capital of the First Respondent, being 10,000 Shares, at the Redemption Price determined in accordance with the terms of the Redemption Right;

2. an order that the Second Respondent and the Third Respondent refrain from taking any action that could have the effect of delaying, undermining or restricting such redemption and take, without delay, any actions reasonably requested by the Claimant to increase the amount of funds legally available within the Group Companies [i.e., the Joint Venture, Yortime and Sheng Ze] for such redemption including, without limitation, actions necessary to enable [Yortime] and the [Sheng Ze] to distribute any and all available funds to the First Respondent for purposes of paying the Redemption Price;

3. an order that, should the assets of the First Respondent be insufficient to pay the Redemption Price as so determined, the Second Respondent and the Third Respondent jointly and severally pay to the Claimant the remaining balance thereof plus a premium or interest thereon equal to 15% per annum of the remaining balance from the Second Payment Date to the date of payment;

4. an award to the Claimant as against the Second Respondent and the Third Respondent of damages in amounts to be determined by the tribunal for breaches by those Respondents of their obligations under the Share Purchase Agreement and the Shareholders Agreement;

5. such other relief and remedies as the tribunal may deem just and equitable; and

6. an award to the Claimant of the costs of the arbitration, including the Claimant's own legal and other costs incurred in connection therewith.⁶

1. To reject the Claimant's claims in their entirety;

2. To reject the Claimant's Prayers for Relief and Remedies in their entirety;

3. Award to the Second Respondent as against the Claimant, damages in amounts to be determined by the tribunal for breaches of the Claimant's obligations under the Share Purchase Agreement, the Shareholding Agreement and the Side Letter;

4. Award such other relief and remedies to the Second Respondent as the tribunal may deem just and equitable; and

5. Award to the Second Respondent the costs of the arbitration, including the Second Respondent's own legal and other costs incurred in connection therewith.⁷

1. To reject the Claimant's claims in their entirety;

2. To reject the Claimant's Prayers for Relief and Remedies in their entirety;

3. Award to the Third Respondent as against the Claimant of damages in amounts to be determined by the tribunal for breaches of the Claimant's obligations under the Share Purchase Agreement, the Shareholding Agreement and the Side Letter;

4. Award such other relief and remedies to the Third Respondent as the tribunal may deem just and equitable; and

5. Award to the Third Respondent of the costs of the arbitration, including the Third Respondent's own legal and other costs incurred in connection therewith.⁸

(A) an order that the First Respondent complete the redemption of all Shares held by the Claimant in the capital of the First Respondent, being 10,000 Shares, at the Redemption Price determined in accordance with the terms of the Redemption Right as set out in Section 8.4(i) of the SHA;

(B) an order that the Second Respondent and the Third Respondent refrain from taking any action that could have the effect of delaying, undermining or restricting such redemption and take, without delay, any actions reasonably requested by the Claimant to increase the amount of funds legally available within the Group Companies for such redemption including, without limitation, actions necessary to enable [Yortime] and Sheng Ze to distribute any and all available funds to the First Respondent for purposes of paying the Redemption Price;

(C) an order that, should the combined assets of the Group Companies [i.e., the Joint Venture, Yortime and Sheng Ze] be insufficient to pay the Redemption Price as so determined, or should the Redemption Price as so determined not otherwise be paid within thirty (30) days after the date of the final award save as to costs herein, the Second Respondent and the Third Respondent must jointly and severally pay to the Claimant the remaining balance of the Redemption Price plus a premium or interest thereon equal to 15% per annum of the remaining balance from 30 June 2016 to the date of payment;

(D) an award to the Claimant, as against the Second Respondent and the Third Respondent, jointly and severally, of damages in amounts to be established in these proceedings for breaches by those Respondents of their obligations under the SPA and the SHA;

(E) an award to the Claimant, as against the Second Respondent and the Third Respondent, jointly and severally, of the costs of the arbitration, including the Claimant's own legal and other costs incurred in connection therewith;

(F) interest on the amounts awarded under heads (D) and (E) at rates determined in accordance with applicable law; and

(G) such other relief and remedies as the Tribunal may deem just and equitable.⁹

1. Reject the Top Jet's claims in their entirety;

2. Reject Top Jet's Prayers for Relief and Remedies in their entirety;

3. Award to Skyblueocean as against the Top Jet, damages in amounts to be determined by the tribunal for breaches of Top Jet's obligations under the SHA, SPA and related agreements;

4. Award such other relief and remedies to Skyblueocean as the tribunal may deem just and equitable; and

5. Award to Skyblueocean the costs of the arbitration, including Skyblueocean's own legal and other costs incurred in connection therewith.¹⁰

1. Reject the Top Jet's claims in their entirety;

2. Reject Top Jet's Prayers for Relief and Remedies in their entirety;

3. Award to JMG as against the Top Jet, damages in amounts to be determined by the tribunal for breaches of Top Jet's obligations under the SHA, SPA and related agreements;

4. Award such other relief and remedies to JMG as the tribunal may deem just and equitable; and

5. Award to JMG the costs of the arbitration, including JMG's own legal and other costs incurred in connection therewith.¹¹

(A) an order that the First Respondent complete the redemption of all Shares held by the Claimant in the capital of the First Respondent, being 10,000 Shares, at the Redemption Price determined in accordance with the terms of the Redemption Right as set out in Section 8.4(i) of the SHA;

(B) an order that the Second Respondent and the Third Respondent refrain from taking any action that could have the effect of delaying, undermining or restricting such redemption and take, without delay, any actions reasonably requested by the Claimant to increase the amount of funds legally available within the Group Companies [i.e., the Joint Venture, Yortime and Sheng Ze] for such redemption including, without limitation, actions necessary to enable [Yortime] and Sheng Ze to distribute any and all available funds to the First Respondent for purposes of paying the Redemption Price;

(C) an order that, should the combined assets of the Group Companies be insufficient to pay the Redemption Price as so determined, or should the Redemption Price as so determined not otherwise be paid within thirty (30) days after the date of the final award save as to costs herein, the Second Respondent and the Third Respondent must jointly and severally pay to the Claimant the remaining balance of the Redemption Price plus a premium or interest thereon equal to 15% per annum of the remaining balance from 30 June 2016 to the date of payment;

(D) an award to the Claimant, as against the Second Respondent and the Third Respondent, jointly and severally, of damages in amounts to be established in these proceedings for breaches by those Respondents of their obligations under the SPA and the SHA and for the tortious deceit resulting from their fraudulent representations to Top Jet in connection with the conclusion of those agreements;

(E) an award to the Claimant, as against the Second Respondent and the Third Respondent, jointly and severally, of the costs of the arbitration, including the Claimant's own legal and other costs incurred in connection therewith;

(F) interest on the amounts awarded under heads (D) and (E) at rates determined in accordance with applicable law; and

(G) such other relief and remedies as the Tribunal may deem just and equitable.¹²

1. To reject the Claimant's claims in their entirety;

2. To reject the Claimant's Prayers for Relief and Remedies in their entirety;

3. Award to the Second Respondent as against the Claimant, damages in amounts to be determined by the tribunal for breaches of the Claimant's obligations under the Share Purchase Agreement, the Shareholding Agreement and related agreements;

4. Award such other relief and remedies to the Second Respondent as the tribunal may deem just and equitable; and

5. Award to the Second Respondent the costs of the arbitration, including the Second Respondent's own legal and other costs incurred in connection therewith.¹⁴

1. To reject the Claimant's claims in their entirety;

2. To reject the Claimant's Prayers for Relief and Remedies in their entirety;

3. Award to the Third Respondent as against the Claimant, damages in amounts to be determined by the tribunal for breaches of the Claimant's obligations under the Share Purchase Agreement, the Shareholding Agreement and related agreements;

4. Award such other relief and remedies to the Third Respondent as the tribunal may deem just and equitable; and

5. Award to the Third Respondent the costs of the arbitration, including the Third Respondent's own legal and other costs incurred in connection therewith.¹⁵

(A) a declaration that, by its failure to make the Second Payment, the Second Respondent has materially breached and repudiated the SPA and the SHA;

(B) a declaration that the Second Respondent and the Third Respondent are jointly and severally liable to the Claimant in the amount of the Redemption Price determined in accordance with the terms of the Redemption Right as set out in Section 8.4(i) of the SHA;

(C) an order that, in partial discharge and satisfaction of the said liability, the Second Respondent transfer to the Claimant all of the shares in the capital of the First Respondent held by the Second Respondent, being 10,000 ordinary shares, without additional consideration for such transfer;

(D) an order that, in discharge and satisfaction of the remainder of the said liability, the Second Respondent and the Third Respondent jointly and severally pay to the Claimant damages in the amount by which (i) the Redemption Price, being the sum of US$50,000,000 plus an annual return on that sum of 15% per annum, compounded annually, from 30 June 2016 to the date of the award herein, exceeds (ii) the net asset value of the Group Companies [i.e., the Joint Venture, Yortime and Sheng Ze], being the First Respondent and its wholly-owned subsidiaries, determined on a consolidated basis but without taking into account the value, if any, of goods consigned under the Consignment Agreement except to the extent of any proceeds thereof that shall have been remitted to the any of the Group Companies as at the date of the award herein;

(E) an order that the Second Respondent and the Third Respondent jointly and severally pay to the Claimant damages in an amount to be determined by the Tribunal in its discretion for the tortious deceit consisting of the fraudulent misrepresentations of the said Respondents to the Claimant in connection with the conclusion of the SPA, the SHA and the related agreements;

(F) an award to the Claimant, as against the Second Respondent and the Third Respondent, jointly and severally, of the costs of the arbitration, including the Claimant's own legal and other costs incurred in connection therewith;

(G) interest on the amounts awarded under heads (D) and (E) at rates determined in accordance with applicable law; and

(H) such other relief and remedies as the Tribunal may deem to be just and equitable.¹⁶

144. For the reasons set forth above, this Tribunal should find that Top Jet has proven its claims against the JMW Parties [i.e., Sky and JMG], and should dismiss the JMW Parties' Counterclaim. This Tribunal therefore should award Top Jet the relief requested in Paragraph 61 of the SASC.

145. Such requested relief includes:

a. A declaration that all claims and counterclaims asserted herein come within the scope of the parties' arbitration agreement;

b. A declaration that Skyblueocean materially breached and repudiated the SPA and SHA;

c. A declaration that the JMW Parties are jointly and severally liable to pay the Redemption Price in accordance with SHA § 8.4(i);

d. An order directing Skyblueocean to transfer to Top Jet, in partial satisfaction of the Redemption Price, the 10,000 shares of Sino Jet currently held by Skyblueocean;

e. An order that Skyblueocean and JMG must pay the Remaining Balance;

f. Damages for fraud;

g. The costs of this arbitration, including reasonable attorney fees;

h. Ongoing interest at 15% per annum on the Redemption Price, commencing on the date of breach;

i. Such other relief as this Tribunal deems proper.

146. As previously noted, the Redemption Price is $76,043,750.00 as of 30 June 2019.

147. If this Tribunal orders Skyblueocean to transfer, to Top Jet, the 10,000 shares of Sino Jet that currently are held by Skyblueocean, and if Skyblueocean promptly complies with that order, Top Jet will be able to reassume full control over Sino Jet and direct Sino Jet to transfer its remaining cash to Top Jet in partial satisfaction of the Redemption Price. In this scenario, the Remaining Balance owed by the JMW Parties as of 30 June 2019 will be approximately $47,072,629.57, as shown in Table 3 above. If this Tribunal chooses not to order Skyblueocean to transfer all of its remaining shares of Sino Jet to Top Jet, the Tribunal should: (i) order Sino Jet to transfer all of its remaining cash to Top Jet in partial satisfaction of the Redemption Price by a date certain following the conclusion of this arbitration; (ii) order the JMW Parties to pay, by another date certain, the Remaining Balance that Sino Jet fails to pay, and (iii) enjoin Skyblueocean from transferring its shares of Sino Jet to any person or entity other than Top Jet until such time as the Remaining Balance is paid in full.¹⁷

RELIEF SOUGHT IN CONNECTION WITH BREACH OF CONTRACT CLAIM

1. In connection with its breach of contract claim, Top Jet is seeking the following relief:

i) A declaration that, by failing to make the Second Payment, Second Respondent Skyblueocean Ltd. ("Skyblueocean") materially breached and repudiated the SPA and SHA. See Second Amended Statement of Claim ("SASC") ¶ 61(A).

ii) A declaration that Skyblueocean and Third Respondent Jet Midwest Group, LLC ("JMG") are jointly and severally liable to Top Jet in the amount of the Redemption Price determined in accordance with the terms of the Redemption Right as set forth in SHA § 8.4(i). See SASC ¶ 61(B).

iii) An order that, in partial discharge and satisfaction of such liability, Skyblueocean must transfer to Top Jet all 10,000 of the shares of Sino Jet Holdings, Ltd. ("Sino Jet") held by Top Jet, without any additional consideration for such transfer. See SASC ¶ 61(C). In the alternative, the Tribunal should issue an order enjoining Skyblueocean from transferring such shares to any person or entity other than Top Jet until such time as any and all monetary relief awarded in favor of Top Jet in this arbitration is paid in full. See Opening Written Submission of Claimant Top Jet Enterprises, Ltd. (the "Opening Written Submission") ¶ 147.

iv) An award of damages in favor of Top Jet and against the JMW Parties [i.e., Sky and JMG] in the amount by which the Redemption Price exceeds Sino Jet's ability to pay the Redemption Price. See SASC ¶ 61(D). Top Jet's position is that, as of 30 June 2019, the Redemption Price is $76,043,750.00 pursuant to SHA § 8.4(i). See Opening Written Submission ¶ 121, Table 3. Top Jet's position is that Sino Jet is unable to pay any of the Redemption Price because Sino Jet's board and management are deadlocked as a result of the disputes at issue in this arbitration. Id. ¶ 120. If Sino Jet's board and management were not deadlocked, Sino Jet still would be able to pay no more than $28,971,120.43 of the Redemption Price as of 30 June 2019, thus leaving a remaining balance of at least $47,072,629.56. Id. ¶ 121, Table 3.

RELIEF SOUGHT IN CONNECTION WITH FRAUD CLAIM

2. If this Tribunal decides Top Jet's breach of contract claim in favor of Top Jet and grants the relief requested by Top in connection with that breach of contract claim, Top Jet's fraud claim will be mooted because the breach of contract relief being sought by Top Jet would be sufficient to make Top Jet whole. See Opening Written Submission ¶ 124.

3. If, for any reason, the Tribunal chooses not to grant the relief by sought by Top Jet in connection with its breach of contract claim, the Tribunal should consider Top Jet's fraud claim. See Opening Written Submission ¶ 125. Based on Top Jet's fraud claim, the Tribunal should award Top Jet monetary damages. See SASC ¶ 61(E). Top Jet's position is that such damages should be in the amount of $76,043,750.00. This amount is equivalent to the Redemption Price to which Top Jet is entitled under SHA § 8.4(i) and therefore is an appropriate measurement of the economic damages that Top Jet has sustained.

OTHER RELIEF SOUGHT

4. Top Jet also is seeking the following additional relief against the JMW Parties:

i) An award of the costs of this arbitration, including Top Jet's legal costs and other costs incurred in connection with this arbitration. See SASC ¶ 61(F).

ii) Interest on all monetary damages awarded to Top Jet at a rate determined in accordance with applicable law. See SASC ¶ 61(G).

iii) Dismissal of the counterclaim that has been asserted against Top Jet by the JMW Parties. See Opening Written Submission ¶¶ 133-137.¹⁹

a. Determine that the Redemption Price was $76,043,750.00 as of 30 June 2019.

b. Determine that the Redemption Price accrued compound interest of 15% per year, or $31,250.00 per day, from 30 June 2019 through the date of the award.

c. Grant a monetary award against Sino Jet and [Sky/JMG], jointly and severally, in the amount of the Redemption Price.

d. Grant post-award interest of 15% per year until the Redemption Price is paid in full.

e. Until the Redemption Price has been paid in full, enjoin Skyblueocean from transferring the 10,000 Sino Jet shares owned by Skyblueocean.

f. Declare that once the Redemption Price has been paid in full – but not before – Top Jet shall relinquish its Sino Jet shares in order to complete the share redemption process.²²

9.12. Joint Liabilities. [Sky] and [JMG] shall be jointly and severally liable for the performance and observance of any and all of their obligations and liabilities whatsoever hereunder.²⁸

(ii) From time to time after the Closing and prior to the Second Payment Date, the Group Companies shall only, and the JMW Parties [i.e., Sky and JMG] shall cause the Group Companies only to, use up to (i) the amount of capital which has already been contributed to [the Joint Venture] by [Sky] then (the "[Sky] Paid-in Contribution"); plus (ii) an amount equaling to the [Sky] Paid-in Contribution from the Original Investment (i.e. US$50,000,000) to [the Joint Venture] made by [Claimant] ; plus (iii) any financing from financial institutions obtained by the Group Companies pursuant to Section 5.8 hereof.

Financing and Guarantee the Obligations of [the Joint Venture]. As soon as possible after the Closing, [the Joint Venture] shall obtain financing from financial institutions but such amount, in aggregate, shall not exceed ten times the amount of the capital contribution of [the Joint Venture] made by both shareholders (i.e., US$100 million). If necessary, [Claimant] shall cause [Claimant's] Affiliates to help [the Joint Venture] to obtain a lower interest rate on the loan(s) by guaranteeing [the Joint Venture's] obligation under such financing arrangements.

7.3 Asset Transfer Agreement and Assignment Agreement.

[The Joint Venture], the existing shareholder of [the Joint Venture] or one of its Affiliates (each an "Asset Buyer") shall enter into both of the following agreements on or before January 15, 2016: i) one or more asset purchase agreements with [Sky] or an Affiliate of [Sky] for the purchase of certain airframe, engine and parts inventory owned by [Sky] or an Affiliate of [Sky] (the "Asset Purchase Agreements") and ii) an Assignment Agreement (the "Assignment Agreement") with respect to certain future cash inflows from existing leases and joint ventures of [Sky], on terms and conditions acceptable to [Sky] and the Asset Buyer(s), as payment in kind part of the considerations. The closing date for the first tranche of airframes, engines and parts inventory chosen by [Sky] and listed in the first Asset Purchase Agreement shall be no later than March 15, 2016 and the minimum aggregate purchase price for such airframes, engines and parts inventory shall be US$32,000,000, provided, however that an appraisal of such airframes, engines and/or parts inventory issued by an independent third party appraiser chosen by [Sky] shall list the appraised value of such assets as a value not less than the product of 1.5 times the purchase price for such airframes, engines and/or parts inventory. On or before May 31, 2016, [Sky] or an Affiliate of [Sky] and the Asset Buyer shall enter in not less than one other Asset Purchase Agreement for additional airframes, engines and/or parts inventory chosen by [Sky] which are owned by [Sky] or an Affiliate of [Sky] and (i) the closing date(s) for the sale of such airframes, engines and/or parts inventory shall be on or before June 30, 2016 and (ii) the purchase price for such airframes, engines and/or parts inventory shall be in an amount not greater than 66% of the appraised value for such airframes, engines and/or parts inventory issued by an independent third party appraiser chosen by [Sky].

Notwithstanding anything in the Share Purchase Agreement to the contrary, [Sky] hereby agrees to the following:

A For the benefit of [the Joint Venture], that the appraisers referred to in Section 7.3 of the Share Purchase Agreement shall satisfy the following criteria: (a) in the case of airframes and engines, such appraiser shall be an independent, third party appraiser certified by the International Society of Transport Aircraft Trading that is mutually acceptable to [Sky] and [the Joint Venture] and/or (b) in the case of parts, such appraiser shall be an independent, third party, industry recognized appraiser for commercial aircraft parts that is mutually acceptable to [Sky] and [the Joint Venture] (an appraiser specified in (a) or (b) above is hereinafter referred to as an "Approved Appraiser").

B With respect to any of the sales contemplated under Section 7.3 of the Share Purchase Agreement, [Sky] shall provide or cause to be provided to [the Joint Venture] purchase agreements, bills of sale, security agreements, releases or any other documents which evidence the ownership of the airframes, engines and/or parts inventory being sold and any liens or encumbrances applicable thereto and [the Joint Venture] shall receive reasonable assurance from [Sky] in writing, individually or together with other selling parties, as applicable, that at the time of such sale the Asset Buyer will receive good title to such airframes, engines and/or parts inventory free and clear of any liens or encumbrances.

C In the event that any of the foregoing criteria is not satisfied, [the Joint Venture] and/or its Affiliate may choose not to purchase such airframes, engines and/or parts inventory at its discretion.

(1) make the US$6 million Interim Payment by 1 March 2016; and

(2) pay the US$34 million balance of the $40 million Second Payment by the final deadline of 30 June 2016.

(i) Without limiting any other rights that [Claimant] may have hereunder, in the event that: (a) [the Joint Venture] fails to have Net Profit within 20% of the 2016 Performance Target; (b) [the Joint Venture] fails to have Net Profit within 10% of the 2017 Performance Target; (c) [the Joint Venture] fails to meet the 2018 Performance Target; or (d) there is a material breach by [Sky or JMG] or any Group Company under any Transaction Document, [⁷²] which breach cannot be cured or, if curable, is not cured within 90 days after being notified in writing of the same, [Claimant] shall have the right (the "[Claimant's] Redemption Right") but not the obligation to have all or a portion of the Shares held by [Claimant] redeemed by [the Joint Venture] at a price (the "[Claimant's]Redemption Price") equal to the higher of (x) the proportion of the Original Investment paid for such Shares to be redeemed (calculated based on a total investment cost of US$50,000,000 paid for all of the Shares held by [Claimant] ), plus a premium calculated at an annual return of 15% of such original investment cost, compounded annually from and including the date of the Second Payment up to the date of redemption, plus all declared but unpaid dividends thereon up to the date of redemption), or (y) the then fair market value of such Shares to be redeemed, the valuation of which shall be determined through an independent appraisal performed by an appraiser selected by [Claimant].

(ii) [Claimant's] Redemption Right shall be exercisable by a written notice of [Claimant] to [the Joint Venture] and [Sky] (the "[Claimant's] Redemption Notice"). [The Joint Venture] shall complete such redemption within six (6) months after the date on which such written notice is delivered by [Claimant] or such other period as agreed by the Parties. If the Redemption Price for all of the Shares to be redeemed is not paid in full by [the Joint Venture] within six months (6) months after the date on which the written notice is issued by [Claimant] or such other time as agreed by the Parties, [Claimant] shall have the right, during the period from the expiration of such six-month period to the date on which the Redemption Price for all of the Shares to be redeemed is paid in full, to require the Group Companies to take all actions necessary in order to enable [the Joint Venture] to pay the full amount of the Redemption Price, including borrowing funds, selling assets, distributing available dividends, applying for and obtaining approval for reduction of capital of any Group Company or liquidating and making liquidation distributions, and/or causing any Group Company to do any of the foregoing. If the assets of [the Joint Venture] are insufficient to pay the full [Claimant's] Redemption Price, then [Sky and JMG] shall pay the remaining balance of the [Claimant's] Redemption Price as follows: (a) [Sky and JMG] shall pay interest on the remaining balance at an interest rate equal to 15% per annum monthly in arrears until such remaining balance is paid in full; and (b) [Sky and JMG] shall pay such remaining balance in full no later than the first anniversary of the date the [Claimant's] Redemption Price was due and payable to [Claimant]. If [Sky and JMG] fail to make any of the payments specified in clause (a) of the immediately preceding sentence when due, the entire remaining balance of the [Claimant's] Redemption Price shall become immediately due and payable.

…

(iv) Once [the Joint Venture] and/or [Sky] have received [Claimant's] Redemption Notice, [the Joint Venture] and [Sky] shall not, and shall not permit any other Group Companies to, take any action which could have the effect of delaying, undermining or restricting the redemption, and [the Joint Venture] and [Sky and JMG] shall in good faith use all reasonable efforts as expeditiously as possible to increase the amount of legally available redemption funds including without limitation, causing any other Group Company to distribute any and all available funds to [the Joint Venture] for purposes of paying the [Claimant's] Redemption Price.

The fundamental breaches of the SHA and SPA by the JMW Parties [i.e., Sky, JMG and JMW] and the unambiguous statements in the letter of 9 September 2016 make it amply clear that the JMW Parties do not intend to perform their obligations under the SHA and SPA and have thus repudiated those agreements. [Claimant, the Joint Venture, Yortime] and Sheng Ze (the "Sheng Ze Parties") hereby accept the JMW Parties' repudiation of the SHA and SPA and declare those agreements terminated, without prejudice to the rights of the Sheng Ze Parties to claim damages and other available remedies under applicable law for the breaches by the JMW Parties.⁸¹

While the SHA itself has since been terminated and is no longer in force, clause 8.4 thereof set out the redemption rights as agreed between [Claimant] and the [Joint Venture] when the Shares were issued, which, pursuant to Article 15 of the [Joint Venture's] Articles of Association, became attached to the Shares upon such issuance. Those rights, accordingly, have survived termination of the SHA itself. [Sky] and [JMG] (the "JMW Parties") are reminded that the right of redemption of the Shares in the present instance arises from, inter alia, their anticipatory breach and repudiation of their obligations under clauses 8.1 and 8.4 of the SHA, for which obligations, as stated in clause 9.12 of the SHA, they are jointly and severally liable. That being the case, under the terms of clause 9.9 of the SHA, the JMW Parties continue to be bound by their obligations under clause 8.4 notwithstanding the termination of the SHA. This constitutes notice to them that [Claimant] intends to enforce those obligations.⁸³

a. Determine that the Redemption Price was $76,043,750.00 as of 30 June 2019.

b. Determine that the Redemption Price accrued compound interest of 15% per year, or $31,250.00 per day, from 30 June 2019 through the date of the award.

c. Grant a monetary award against the Joint Venture and Sky and JMG, jointly and severally, in the amount of the Redemption Price.

d. Grant post-award interest of 15% per year until the Redemption Price is paid in full.

e. Until the Redemption Price has been paid in full, enjoin Sky from transferring the 10,000 Joint Venture shares owned by Sky.

f. Declare that once the Redemption Price has been paid in full—but not before—Claimant shall relinquish its Sino Jet shares in order to complete the share redemption process.⁸⁹

(1) Section 5.6 of the original Share Purchase Agreement provided for JMG to make payment in kind.

(2) Section 7.3 was added to the SPA under the First Side Letter requiring the Joint Venture to purchase assets from JMG.⁹¹

(1) Is Claimant entitled to invoke the Redemption Right as a result of a material breach of the SPA or SHA by Sky and JMG?

(2) If Sky and JMG are in material breach, are Sky and JMG nevertheless excused from the consequences of the material breach?

(3) Did Claimant properly invoke its Redemption Right under Section 8.4 of the SHA?

(4) If Claimant properly invoked the Redemption Right, what remedy is it entitled to?

(1) On 1 March 2016, Sky and JMG materially breached the Third Side Letter by failing to make the Interim Payment.

(2) On 31 May 2016, Claimant sent a Default Notice regarding the failure of Sky and JMG to make the Interim Payment. In the Default Notice, Claimant demanded that Sky and JMG make the Interim Payment and that Sky and JMG confirm their ability and intent to make the Second Payment by the 30 June 2016 deadline. Sky and JMG failed to respond to the Default Notice prior to the Second Payment Date.

(3) The SHA required Sky and JMG to provide 30-days' advance notice, in writing, of any anticipated difficulty in making the US$40 million Second Payment.⁹⁷ Sky and JMG once again materially breached the SHA by failing to send any such advance notice.⁹⁸

(4) On 30 June 2016, Sky and JMG once again materially breached the SPA and SHA by failing to make the Second Payment.⁹⁹

(1) The financials of the JMW Group, which showed that the JMW Group had much less than US$50 million before the execution of the SPA;

(2) The asset appraisal done in November 2015, which showed that the JMW Group had assets worth US$200 million;

(3) Section 5.6 of the original Share Purchase Agreement, which was subsequently replaced by the First Side Letter and the Supplemental Agreement (reflected in Section 7.3 of the SPA), which showed that the Top Jet Parties and the JMW Group had an arrangement for the latter to sell assets as a means of making Sky's cash contribution; and

(4) The further provision of the security interest report and appraisal report on 28 December 2015.¹⁰⁵

5.6 Asset Transfer Agreement and Assignment Agreement. The Company, the existing shareholder of the Company or one of its Affiliates (each an "Asset Buyer") shall enter into i) one or more asset purchase agreements with the Purchaser or an Affiliate of Purchaser (the "Asset Purchase Agreement") for the purchase of certain airframe, engine and parts inventory owned by the Purchaser or an Affiliate of the Purchaser and ii) an Assignment Agreement (the "Assignment Agreement") with respect to certain future cash inflows from existing leases and joint ventures of the Purchaser, on terms and conditions acceptable to the Purchaser and the Asset Buyer(s), as payment in kind for part of the considerations.¹⁰⁶

We understand from Sheng Ze that [JMG] may have difficulty in contributing the $40,000,000 capital in cash to the New Co before June 30, 2015, and to solve this problem, [JMG] has proposed to transfer some airplane asset ("Asset") to the New Co and uses the proceeds from selling the Asset as capital contribution....

Sheng Ze finds this proposal worth considering based on the following pre-conditions:

(i) [JMG] makes its US$10,000,000 capital contribution and becomes New Co's shareholder; and (ii) the parties agree on other major terms. To conduct further consultation, Sheng Ze wants to make some clarification in the first place and needs some further information from [JMG]: (Note to Sheng Ze Team: Please correct me if our understanding is inaccurate) 1. Clarification Sheng Ze understands [JMG] 's proposal as below. Please kindly confirm if our understanding is correct:

(1) The Assets have been evaluated by an independent third party appraisal firm and in aggregate worth no less than $200 million ;

…

A separate contract (i.e. an "Asset Transfer Agreement") will be entered among Sheng Ze, [JMG] and New Co to outline the entire proposed arrangement.¹⁰⁸

(1) First, that Claimant has itself breached its obligations under the relevant Transaction Documents.

(2) Second, that this breach prevented Sky and JMG from performing their obligation to contribute the remaining US$40 million of capital that they were to contribute.

8.1 Capital Contribution.

[Sky] shall make its capital contribution of US$50,000,000 to [the Joint Venture] as follows: (i) US $10,000,000 on or before December 31, 2015, provided that such date shall be postponed accordingly by [the Joint Venture] in the event that [the Joint Venture's] bank account has not been opened by December 31, 2105, and (ii) US$40,000,000 on or prior to June 30, 2016 (the "Second Payment Date") pursuant to the Share Purchase Agreement. If [Sky] is unable to make all or a portion of the Second Payment on or before June 30, 2016, [Sky] shall notify [the Joint Venture] in writing (the "Second Payment Notice") not less than thirty (30) days prior to the Second Payment Date. Upon receipt of the Second Payment Notice by [the Joint Venture], [Claimant] and [Sky] shall negotiate in good faith for a period not exceeding thirty (30) days to determine if alternative arrangements can be made for payment by [Sky] of the balance of the Second Payment during the next sixty (60) days; provided, however, that such alternative arrangements shall include the requirement that [Sky] pays interests for the period commencing on the Second Payment Date and ending on the date the entire amount of the Second Payment has been made at a rate of 15% compounded annually.¹²³

7.3 Asset Transfer Agreement and Assignment Agreement.

[The Joint Venture], the existing shareholder of [the Joint Venture] or one of its Affiliates (each an "Asset Buyer") shall enter into both of the following agreements on or before January 15, 2016: i) one or more asset purchase agreements with [Sky] or an Affiliate of [Sky] for the purchase of certain airframe, engine and parts inventory owned by [Sky] or an Affiliate of [Sky] (the "Asset Purchase Agreements") and ii) an Assignment Agreement (the "Assignment Agreement") with respect to certain future cash inflows from existing leases and joint ventures of [Sky], on terms and conditions acceptable to [Sky] and the Asset Buyer(s), as payment in kind part of the considerations. The closing date for the first tranche of airframes, engines and parts inventory chosen by [Sky] and listed in the first Asset Purchase Agreement shall be no later than March 15, 2016 and the minimum aggregate purchase price for such airframes, engines and parts inventory shall be US$32,000,000, provided, however that an appraisal of such airframes, engines and/or parts inventory issued by an independent third party appraiser chosen by [Sky] shall list the appraised value of such assets as a value not less than the product of 1.5 times the purchase price for such airframes, engines and/or parts inventory. On or before May 31, 2016, [Sky] or an Affiliate of [Sky] and the Asset Buyer shall enter in not less than one other Asset Purchase Agreement for additional airframes, engines and/or parts inventory chosen by [Sky] which are owned by [Sky] or an Affiliate of [Sky] and (i) the closing date(s) for the sale of such airframes, engines and/or parts inventory shall be on or before June 30, 2016 and (ii) the purchase price for such airframes, engines and/or parts inventory shall be in an amount not greater than 66% of the appraised value for such airframes, engines and/or parts inventory issued by an independent third party appraiser chosen by [Sky].

Notwithstanding anything in the Share Purchase Agreement to the contrary, [Sky] hereby agrees to the following:

A For the benefit of [the Joint Venture], that the appraisers referred to in Section 7.3 of the Share Purchase Agreement shall satisfy the following criteria: (a) in the case of airframes and engines, such appraiser shall be an independent, third party appraiser certified by the International Society of Transport Aircraft Trading that is mutually acceptable to [Sky] and [the Joint Venture] and/or (b) in the case of parts, such appraiser shall be an independent, third party, industry recognized appraiser for commercial aircraft parts that is mutually acceptable to [Sky] and [the Joint Venture] (an appraiser specified in (a) or (b) above is hereinafter referred to as an "Approved Appraiser").

B With respect to any of the sales contemplated under Section 7.3 of the Share Purchase Agreement, [Sky] shall provide or cause to be provided to [the Joint Venture] purchase agreements, bills of sale, security agreements, releases or any other documents which evidence the ownership of the airframes, engines and/or parts inventory being sold and any liens or encumbrances applicable thereto and [the Joint Venture] shall receive reasonable assurance from [Sky] in writing, individually or together with other selling parties, as applicable, that at the time of such sale the Asset Buyer will receive good title to such airframes, engines and/or parts inventory free and clear of any liens or encumbrances.

C In the event that any of the foregoing criteria is not satisfied, [the Joint Venture] and/or its Affiliate may choose not to purchase such airframes, engines and/or parts inventory at its discretion.

5.6 Asset Transfer Agreement and Assignment Agreement.

The Company, the existing shareholder of the Company or one of its Affiliates (each an "Asset Buyer") shall enter into i) one or more asset purchase agreements with the Purchaser or an Affiliate of Purchaser (the "Asset Purchase Agreement") for the purchase certain airframe, engine and parts inventory owned by the Purchaser or an Affiliate of the Purchaser and ii) an Assignment Agreement (the "Assignment Agreement") with respect to certain future cash inflows from existing leases and joint ventures of the Purchaser, on terms and conditions acceptable to the Purchaser and the Asset Buyer(s), as payment in kind for part of the considerations.

(1) Courts are reluctant to find an agreement to be too vague and uncertain to be enforced where it is found that the parties had the intention of being contractually bound and have acted on their agreement.¹²⁴

(2) The parties were able to reach agreements based on clauses similar to Section 7.3 of the SPA, for example the service agreements referred to in Section 5.7 of the SPA.

(3) The parties had agreed in Section 9.10 of the SHA to use their "reasonable

best efforts to take or cause to be taken all action, to do or cause to be done, to execute such further instruments, and to assist and cooperate with the other Parties hereto in doing, all things necessary, proper or advisable under applicable Laws or otherwise to consummate and make effective, in the most expeditious manner practicable, the transactions contemplated by this Agreement."

(1) Without the subject matter and price terms of the agreements identified, the agreement to agree in Section 7.3 of the SPA is too vague and uncertain to be enforceable. Section 7.3 merely refers to "certain airframe, engine and parts inventory" and "certain future cash inflows". Sky and JMG's argument that the "price is to be ascertained by an independent, third party appraiser that is mutually acceptable to [Sky] and [the Joint Venture]" does not assist. The appraiser must first be mutually acceptable to both parties, and even then, Section 7.3 does not say that the appraisal would set the price, but merely that the purchase price shall be in an amount "not greater than 66% of the appraised value". This means that the parties have still to agree on a price for these "certain airframe, engine and parts inventory", so long as the agreed price does exceed 66% of the appraised value. Last, the explicit statement that these agreements would be "on terms and conditions acceptable to [Sky] and the Asset Buyers" makes it clear that any such agreements are subject to contract and further agreement by the parties.

(2) The fact that the parties were able to conclude agreements referred to in other agreements to agree does not render enforceable an agreement to agree that the parties could not themselves abide by.

(3) The reasonable efforts and cooperation clause in Section 9.10 of the SHA cannot convert a vague, uncertain, and unenforceable agreement to agree that does not have sufficiently certain subject matter and price terms, which are explicitly "on terms and conditions acceptable to Sky and the Asset Buyers" into an enforceable agreement to agree.

(1) Price is to be ascertained by an independent, third party appraiser that is mutually acceptable to Sky and the Joint Venture, and "the purchase price for such airframes, engines and/or parts inventory shall be in an amount not greater than 66% of the appraised value for such airframes, engines and/or parts inventory issued by an independent third party appraiser chosen by [Sky]".

(2) Goods are "airframes, engines and parts inventory owned by [Sky] or an Affiliate of [Sky]".

(3) Other minor terms are not spelled out, but other terms can be implied with reasonableness. Further, the parties had prior experience in agreeing to minor terms in the Consignment Agreement and the Servicing Agreement.

(4) The date of closing is specified.

Thus, Sky and JMG consider that Section 7.3 of the SPA is sufficiently certain, and the Top Jet Parties were in breach of it, and this directly caused Sky to be unable to make the Second Payment.¹²⁵

(1) Under Section 7.3, the independent, third party appraiser does not ascertain the price, but merely indirectly sets a ceiling for the purchase price that the parties would still have to agree on.

(2) Under Section 7.3, the goods are not "airframes, engines and parts inventory owned by [Sky] or an Affiliate of [Sky]", but rather "certain airframe, engine and parts inventory owned by the Purchaser or an Affiliate of the Purchaser" (emphasis added). The word "certain" means that the subject goods are still to be identified or agreed on, and could consist of some goods, some specific goods, or all of the goods owned by Sky or its affiliates. Either way, the subject goods have not been identified with any degree of certainty.

(3) Even if we accept arguendo that other minor terms can be implied with reasonableness, this cannot render enforceable an agreement to agree that does not sufficiently identify either the price or the subject matter of any agreement.

(4) The date of closing has only been identified to take place on or before 30 June 2016.

(1) This supposed funding arrangement—which was allegedly to be the source of the majority of the capital contribution from Sky and JMG, was not mentioned until the Second Payment Date—30 June 2016—had passed. If this was in fact the arrangement through which Sky would come into funds to make the Second Payment, one would have expected that the parties would have been discussing this arrangement prior to the Second Payment Date.

(2) One would also have expected Sky, JMG, or Mr. Kraus to have told Claimant in contemporaneous correspondence prior to the Second Payment Date that Sky and JMG obviously could not meet their obligation to make the Second Payment because Claimant and the Joint Venture had failed to enter into the agreements that would put them in funds, but no such statements appear to have been made until after the Second Payment Date had passed.

(3) We also note that Sky had to give 30 days prior notice pursuant to Section 8.1(i) of the SHA if it anticipated being unable to make the Second Payment in full by the Second Payment Date. Yet, no such notice was given, and no demand was made to Claimant or the Joint Venture demanding that they conclude the agreements that would allow Sky to make the Second Payment by 30 June 2016.

(4) In fact, in Sky's letter of 30 June 2016, Mr. Kraus only asked for the "full support and commitment from Sheng Ze Financial Leasing on cooperation with us to sell all related assets and ensure normal operation".¹²⁶ There was no mention of the alleged breaches by Claimant and the Joint Venture that he now claims caused Sky and JMG to breach their obligation to contribute capital that very day.

(5) It was only in the 9 September 2016 Sky/JMG Default Notice, written in response to the First Redemption Notice sent on 18 August 2017, that Mr. Kraus took the position that the failure of Sheng Ze and related companies to (i) obtain financing, and (ii) enter into purchase agreements for the acquisition of assets, were material breaches of the SPA that, among other things, "terminated the Purchaser's obligation to make the Second Payment."¹²⁷

(1) The relevant party's wrong involves his breach of the contract in respect of an obligation owed to the other party.

(2) The contractual rights or benefits which the party in question is seeking to assert or claim arise as a direct consequence of that party's prior breach.¹²⁹

(1) Before the SHA was executed, the Top Jet Parties (through Ms. Meng) fully knew that Sky and JMG did not have sufficient liquidity to meet the Second Payment.

(2) Because the Top Jet Parties knew that Sky and JMG did not have sufficient liquidity to meet the Second Payment, the parties devised a number of mechanisms to assist Sky and JMG to meet the Second Payment:

(a) Section 5.6 of the original Share Purchase Agreement specifically provided for JMG to make payment in kind.

(b) Section 7.3 was added to the SPA under the First Side Letter requiring the Joint Venture to purchase assets from JMG.

(3) In order to alleviate the Top Jet Parties' concern about whether JMG actually had sufficient assets to inject into the Joint Venture as payment in kind, the following steps were carried out:

(a) In November 2015, Mr. Kraus provided an asset appraisal to show that the aircraft parts owned by the JMW Group were appraised at US$200 million.¹³⁰

(b) The Supplemental Agreement was signed on 27 December 2015. The next day, on 28 December 2015, Mr. Kraus provided another asset appraisal report and a security interest report.¹³¹

(4) In light of the above, Claimant and other parties to the SHA were obligated to cooperate with Sky and JMG. However, Claimant through its representatives in the Joint Venture failed to cooperate, and such failure directly caused Sky and JMG to be unable to make the Second Payment.

(5) Claimant confirms that it has no documentary evidence to show that it made any further follow up request for information from Mr. Kraus in relation to the aircraft parts to be sold under Section 7.3 of the SPA.

(6) Even if one ignores the earlier appraisal in November 2015 showing that the JMW Group had over US$200 million worth of aircraft parts, the Appraisal Report alone shows that JMG had aircraft parts of fair market value of US$55,187,840. This would translate to close to US$37 million capital under Section 7.3 of the SPA. There would be a very real possibility that Sky would be able to make the Second Payment on time if the sale of the aircraft parts was actually done, by using funds in the JMW Group or financing from Mr. Ken Woolley, a business associate of Mr. Kraus.¹³²

(7) In the circumstances, Claimant should be prevented from taking advantage of its own wrong and cannot blame Sky and JMG for their inability to make the Second Payment on time.¹³³

(1) Tin Shui Wai Dev. Ltd. v. Yiu Sun Hung & Woo Kwan Lee & Lo Solicitors, [2005] H.K.E.C. 75 at para 41 ("To invoke the Prevention Principle, there must be a breach of a term of the contract.... I also disagree that this principle can operate independently of any breach of any term of a contract."); and

(2) Ricacorp Prop. Ltd. v. Profit City Holdings Ltd., [2016] H.K.E.C. 2074 at para 33 ("the 'prevention principle' is simply not engaged here, as I have found that [Kwok Chin Man] and his subordinates had not been guilty of any breaches of duty or contract whatsoever against the defendants.").

(1) Sky and JMG claim that Claimant breached Section 5.1 of the SHA. Sections 5.1(i) and (iii) of the SHA provide that three directors shall be appointed by each of Sky and Claimant in the board of directors of the Group Companies. However, eventually no directors were appointed by Sky in Yortime and Sheng Ze. Ms. Meng at all material times either served as the president or as the sole director of Yortime and Sheng Ze.¹³⁵ As the Top Jet Parties acted in breach of Section 5.1 of the SHA, nobody from Sky or the JMW Group was appointed as a director of Yortime and Sheng Ze. The upshot is that the Top Jet Parties were in full control of all banking and finance matters to the exclusion of Mr. Kraus and the JMW Group.¹³⁶

(2) Sky and JMG also argue that Claimant breached Section 5.8 of the SHA, which obliges the Joint Venture to obtain financing. Section 8.1(ii) of the SHA provides that "after the Closing and prior to the Second Payment date", the Group Companies shall only use two times the capital paid in by Sky, plus any financing from financial institutions obtained by the Group Companies pursuant to Section 5.8 of the SHA. Thus, it was plainly contemplated the Joint Venture would obtain financing during the first half of 2016. It is wrong to suggest at para 62 of Claimant's Post-Hearing Written Submissions that Claimant's obligation to obtain financing was "mooted", because there was the obligation to obtain financing from the first day the SHA was executed until Claimant issued the Termination Letter in 2017. However, the Group Companies did not obtain any financing in 2016.¹³⁷

(3) Sky and JMG point out that it was the Top Jet Parties that had the obligation to obtain financing.¹³⁸ Section 6.1 of the SHA provides that Claimant shall be entitled to appoint the Chief Financial Officer and the Chief Risk Officer. Conversely, Mr. Kraus had no control over the bank accounts of the Group Companies, and he believed Ms. Meng and Ms. Fu had the signing authority.¹³⁹

(4) Sky and JMG also point out that there appear to be several irregularities with Yortime's accounts that need explanation¹⁴⁰

8.4 Redemption

(i) Without limiting any other rights that [Claimant] may have hereunder, in the event that: (a) [the Joint Venture] fails to have Net Profit within 20% of the 2016 Performance Target; (b) [the Joint Venture] fails to have Net Profit within 10% of the 2017 Performance Target; (c) [the Joint Venture] fails to meet the 2018 Performance Target; or (d) there is a material breach by any JMW Party or any Group Company under any Transaction Document, which breach cannot be cured or, if curable, is not cured within 90 days after being `notified in writing of the same, [Claimant] shall have the right (the "Top Jet Redemption Right") but not the obligation to have all or a portion of the Shares held by [Claimant] redeemed by [the Joint Venture] at a price (the "Top Jet Redemption Price") equal to the higher of (x) the proportion of the Original Investment paid for such Shares to be redeemed (calculated based on a total investment cost of US$50,000,000 paid for all of the Shares held by [Claimant] ), plus a premium calculated at an annual return of 15% of such original investment cost, compounded annually from and including the date of the Second Payment up to the date of redemption, plus all declared but unpaid dividends thereon up to the date of redemption), or (y) the then fair market value of such Shares to be redeemed, the valuation of which shall be determined through an independent appraisal performed by an appraiser selected by [Claimant].¹⁴⁷

(ii) Top Jet Redemption Right shall be exercisable by a written notice of [Claimant] to [the Joint Venture] and [Sky] (the "Top Jet RedemptionNotice"). [The Joint Venture] shall complete such redemption within six (6) months after the date on which such written notice is delivered by [Claimant] or such other period as agreed by the Parties. If the Redemption Price for all of the Shares to be redeemed is not paid in full by [the Joint Venture] within six months (6) months after the date on which the written notice is issued by [Claimant] or such other time as agreed by the Parties, [Claimant] shall have the right, during the period from the expiration of such six-month period to the date on which the Redemption Price for all of the Shares to be redeemed is paid in full, to require the Group Companies to take all actions necessary in order to enable [the Joint Venture] to pay the full amount of the Redemption Price, including borrowing funds, selling assets, distributing available dividends, applying for and obtaining approval for reduction of capital of any Group Company or liquidating and making liquidation distributions, and/or causing any Group Company to do any of the foregoing. If the assets of [the Joint Venture] are insufficient to pay the full Top Jet Redemption Price, then JMW Parties shall pay the remaining balance of the Top Jet Redemption Price as follows : (a) JMW Parties shall pay interest on the remaining balance at an interest rate equal to 15% per annum monthly in arrears until such remaining balance is paid in full; and (b) JMW Parties shall pay such remaining balance in full no later than the first anniversary of the date the Top Jet Redemption Price was due and payable to [Claimant]. If JMW Parties fail to make any of the payments specified in clause (a) of the immediately preceding sentence when due, the entire remaining balance of the Top Jet Redemption Price shall become immediately due and payable.¹⁴⁸

However, absent immediate payment by JMW of the Second Payment and other amounts owing under the Term Loan Agreement identified below, Sheng Ze reserves the right to submit a further redemption notice in due course. In this regard, we note that the Default and Redemption Notice contained a clear written notification, within the meaning of clause 8.4(i) of the SHA, of material breaches by JMW under the SHA and SPA respectively....

The fundamental breaches of the SHA and SPA by the JMW Parties and the unambiguous statements in the letter of 9 September 2016 make it amply clear that the JMW Parties do not intend to perform their obligations under the SHA and SPA and have thus repudiated those agreements. Top Jet, Sino Jet, JMI and Sheng Ze (the "Sheng Ze Parties") hereby accept the JMW Parties repudiation of the SHA and SPA and declare those agreements terminated, without prejudice to the rights of the Sheng Ze Parties to claim damages and other available remedies under applicable law for the breaches by the JMW Parties. Acceptance of such repudiation by the Sheng Ze Parties and the termination of the SPA and SHA do not affect any other agreements among the parties which for the avoidance of doubt, are hereby affirmed by the Sheng Ze Parties.¹⁵⁰

(1) There has been a material breach of the Third Side Letter and Section 8.1 of the SHA to make the Interim Payment and the Second Payment.

(2) Claimant properly gave a notice of default and a notice of redemption pursuant to Section 8.4(ii).

(3) At no time was the default cured.

(4) Claimant withdrew the First Redemption Notice, but not the notice of default, in order to give Sky and JMG a final opportunity to cure.

(5) When the default was still not cured, Claimant issued a final notice of redemption on 27 March 2017 (i.e. the Second Redemption Notice).

(1) Sky and JMG argue that Section 8.4 of the SHA is a clause that confers rights, and is not a liquidated damages provision.

(2) Because it is a clause that confers rights, any claim for specific performance of those rights should be denied because Claimant already accepted repudiation of the SHA before it sought to exercise its rights under Section 8.4 of the SHA. Also, Claimant does not have clean hands and specific performance should therefore not be ordered.

(3) If Section 8.4 is a liquidated damages clause, it cannot be enforced because of the reflective loss doctrine, or because it is an unenforceable penalty clause.¹⁵²

C. Is Section 8.4 a Liquidated Damages Provision or a Clause Conferring Rights?

(1) A liquidated damages clause means a clause providing that in the event of a breach, the contract-breaker shall pay to the other a specified sum of money.¹⁵⁴

(2) Section 8.4(i) of the SHA provides that "[Claimant] shall have the right... but not the obligation to have all or a portion of the Shares held by [Claimant] redeemed by [the Joint Venture]". On the other hand, Section 8.4 of the SHA does not use the word "damages" or "compensation".

(3) Section 8.4(ii) of the SHA requires optional positive steps to be taken by Claimant, i.e., to issue a written notice to redeem its shares of the Joint Venture. On the other hand, a liquidated damages clause will invariably provide that if a party is in breach of a term, the secondary obligation (e.g., to pay a fixed sum) will automatically be triggered.

(4) Section 8.4 of the SHA enables Claimant to give up control of its shares of the Joint Venture. This is not the function of a liquidated damages clause.

(5) The nature of a liquidated damages clause is that where a breach occurs, only the contract-breaker is to take action, i.e., to pay a sum. However, Section 8.4 requires all parties to the SHA to take action in order to carry out the redemption. The ownership of Yortime and Sheng Ze will be affected, even if Yortime and Sheng Ze may not be the contract-breaker.¹⁵⁵

The fundamental breaches of the SHA and SPA by the JMW Parties and the unambiguous statements in the letter of 9 September 2016 make it amply clear that the JMW Parties do not intend to perform their obligations under the SHA and SPA and have thus repudiated those agreements. [Claimant], [the Joint Venture], [Yortime] and Sheng Ze (the "Sheng Ze Parties") hereby accept the JMW Parties' repudiation of the SHA and SPA and declare those agreements terminated, without prejudice to the rights of the Sheng Ze Parties to claim damages and other available remedies under applicable law for the breaches by the JMW Parties.¹⁵⁶

It is easy to see that a party who has chosen to put an end to a contract by accepting the other party's repudiation cannot afterwards seek specific performance. This is simply because the contract has gone — what is dead is dead.¹⁵⁷

27-012 Scope of the remedy The jurisdiction to order specific performance of a contractual obligation is based on the existence of a valid, enforceable contract.¹⁵⁸

As discussed above, under Hong Kong law, "it is a question of construction whether or not the parties intended the contractual obligation in question to survive the termination of the contract." See Chitty on Contracts § 24-050. Here, each party to the SHA is entitled to " enforce specifically the terms and provisions of" the SHA.¹⁵⁹ (emphasis added). Moreover, "[i]f any Party breaches [the SHA] before the termination of [the SHA], it shall not be released from its obligations arising from such breach on termination ".¹⁶⁰

Termination. This Agreement shall terminate upon mutual consent of the Parties hereto or upon the closing of a Qualified IPO. If this Agreement terminates, the Parties shall be released from their obligations under this Agreement, provided that Sections 8.6, 9.1, 9.2 and 9.9 shall survive the termination of this Agreement. If any Party breaches this Agreement before the termination of this Agreement, it shall not be released from its obligations arising from such breach on termination.¹⁶¹

Before Top Jet sent its 18 January Letter, R2/R3 breached the SHA, and its contractual obligations to Top Jet, twice: first, by failing to make mandatory capital contributions to the JV, and second, by wrongfully declaring Top Jet's Redemption Right to be terminated. These were material breaches of the SHA. Under SHA § 8.4, these material breaches of the SHA led to an obligation on the part of Sino Jet and R2/R3 to pay the Redemption Price. In the words of SHA § 9.9, the obligation to pay the Redemption Price is an obligation "arising from" pre-termination breaches....¹⁶²

The innocent party, or in some cases, both parties, are excused from further performance of their primary obligations under the contract; but there is then substituted for the primary obligations of the party in default a secondary obligation to pay monetary compensation for his non-performance.¹⁶³

Rights Cumulative; Specific Performance. Each and all of the various rights, powers and remedies of a party hereto will be considered to be cumulative with and in addition to any other rights, powers and remedies which such Party may have at Law or in equity in the event of the breach of any of the terms of this Agreement. The exercise or partial exercise of any right, power or remedy will neither constitute the exclusive election thereof nor the waiver of any other right, power or remedy available to such Party. Without limiting the foregoing, the Parties hereto acknowledge and agree irreparable harm may occur for which money damages would not be an adequate remedy in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the Parties shall be entitled to injunction to prevent breaches of this Agreement and to enforce specifically the terms and provisions of this Agreement.

Top Jet Redemption Right shall be exercisable by a written notice of [Claimant] to [Sky and JMG] (the "Top Jet Redemption Notice"). [The Joint Venture] shall complete such redemption within six (6) months after the date on which such written notice is delivered by [Claimant] or such other period as agreed by the Parties. If the Redemption Price for all of the Shares to be redeemed is not paid in full by [the Joint Venture] within six months (6) months after the date on which the written notice is issued by [Claimant] or such other time as agreed by the Parties, [Claimant] shall have the right, during the period from the expiration of such six-month period to the date on which the Redemption Price for all of the Shares to be redeemed is paid in full, to require the Group Companies to take all actions necessary in order to enable [the Joint Venture] to pay the full amount of the Redemption Price, including borrowing funds, selling assets, distributing available dividends, applying for and obtaining approval for reduction of capital of any Group Company or liquidating and making liquidation distributions, and/or causing any Group Company to do any of the foregoing. If the assets of [the Joint Venture] are insufficient to pay the full Top Jet Redemption Price, then [Sky and JMG] shall pay the remaining balance of the Top Jet Redemption Price as follows: (a) [Sky and JMG] shall pay interest on the remaining balance at an interest rate equal to 15% per annum monthly in arrears until such remaining balance is paid in full; and (b) [Sky and JMG] shall pay such remaining balance in full no later than the first anniversary of the date the Top Jet Redemption Price was due and payable to [Claimant]. If [Sky and JMG] fail to make any of the payments specified in clause (a) of the immediately preceding sentence when due, the entire remaining balance of the Top Jet Redemption Price shall become immediately due and payable.

(1) "Top Jet Redemption Right shall be exercisable by a written notice of [Claimant] to [the Joint Venture] and [Sky] (the "Top Jet Redemption Notice")"

(2) "[The Joint Venture] shall complete such redemption within six (6) months after the date on which such written notice is delivered by [Claimant] or such other period as agreed by the Parties."

(3) "If the Redemption Price for all of the Shares to be redeemed is not paid in full by [the Joint Venture] within six months (6) months after the date on which the written notice is issued by [Claimant] or such other time as agreed by the Parties, [Claimant] shall have the right, during the period from the expiration of such six-month period to the date on which the Redemption Price for all of the Shares to be redeemed is paid in full, to require the Group Companies to take all actions necessary in order to enable [the Joint Venture] to pay the full amount of the Redemption Price, including borrowing funds, selling assets, distributing available dividends, applying for and obtaining approval for reduction of capital of any Group Company or liquidating and making liquidation distributions, and/or causing any Group Company to do of the foregoing." … (emphasis added)

(4) "If the assets of [the Joint Venture] are insufficient to pay the full Top Jet Redemption Price, then [Sky and JMG] shall pay the remaining balance of the Top Jet Redemption Price as follows..."¹⁶⁷

(1) The Joint Venture shall complete the redemption within six months after the Redemption Notice is issued. This means that the Joint Venture shall pay the full Redemption Price in exchange for the shares within six months from the date of the Redemption Notice.

(2) If the Joint Venture does not pay the Redemption Price in full, then Claimant "shall have the right" after this six-month period, "to require the Group Companies to take all actions necessary in order to enable [the Joint Venture] to pay the full amount of the Redemption Price" (emphasis added).

(3) "If the assets of [the Joint Venture] are insufficient to pay the full Top Jet Redemption Price, then [Sky and JMG] shall pay the remaining balance of the Top Jet Redemption Price."

[Sky and JMG] shall pay the remaining balance of the Top Jet Redemption Price as follows: (a) [Sky and JMG] shall pay interest on the remaining balance at an interest rate equal to 15% per annum monthly in arrears until such remaining balance is paid in full; and (b) [Sky and JMG] shall pay such remaining balance in full no later than the first anniversary of the date the Top Jet Redemption Price was due and payable to Top Jet. If [Sky and JMG] fail to make any of the payments specified in clause (a) of the immediately preceding sentence when due, the entire remaining balance of the Top Jet Redemption Price shall become immediately due and payable.¹⁷⁴

If the assets of [the Joint Venture] are insufficient to pay the full Top Jet Redemption Price, then [Sky and JMG] shall pay the remaining balance of the Top Jet Redemption Price as follows : (a) [Sky and JMG] shall pay interest on the remaining balance at an interest rate equal to 15% per annum monthly in arrears until such remaining balance is paid in full; and (b) [Sky and JMG] shall pay such remaining balance in full no later than the first anniversary of the date the Top Jet Redemption Price was due and payable to Top Jet. If [Sky and JMG] fail to make any of the payments specified in clause (a) of the immediately preceding sentence when due, the entire remaining balance of the Top Jet Redemption Price shall become immediately due and payable.¹⁷⁵

Once [the Joint Venture] and/or [Sky] have received a Top Jet Redemption Notice, [the Joint Venture] and [Sky] shall not, and shall not permit any other Group Companies to, take any action which could have the effect of delaying, undermining or restricting the redemption, and [the Joint Venture] and [Sky and JMG] shall in good faith use all reasonable efforts as expeditiously as possible to increase the amount of legally available redemption funds including without limitation, causing any other Group Company to distribute any and all available funds to [the Joint Venture] for purposes of paying the Top Jet Redemption Price.¹⁷⁶

(1) The sum stipulated is extravagant and unconscionable in comparison with the greatest loss that could conceivably be proved to have flowed from the breach.

(2) Section 8.4(i) provides for a single lump sum regardless of whether one event or several events occurred, some which might be serious and others not.

(3) Section 8.4(i) does not take into account the loss suffered in that Claimant would be able to ask for the US$50,000,000 plus 15% compound interest if the performance targets fall just short of the threshold, or if Sky only failed to make half of the capital contribution, and a breach in the third year would still result in interest running from the Second Payment Date and result in the same amount of interest as a breach in the first year.

(4) Claimant cannot possibly suffer any loss from the inability of Sky to contribute capital to the Joint Venture.

(5) Section 8.4 is not compensatory in nature.

(6) Claimant could have provided internal funding at around 10% per annum interest rate and therefore should not be able to ask for 15% per annum compound interest under Section 8.4(i).¹⁷⁸

Except possibly in the case of situations where one of the parties to the contract is able to dominate the other as to the choice of the terms of a contract, it will normally be insufficient to establish that a provision is objectively penal to identify situations where the application of the provision could result in a larger sum being recovered by the injured party than his actual loss. Even in such situations so long as the sum payable in the event of non-compliance with the contract is not extravagant, having regard to the range of losses that it could reasonably be anticipated it would have to cover at the time the contract was made, it can still be a genuine pre-estimate of the loss that would be suffered and so is a perfectly valid liquidated damage provision. The use in argument of unlikely illustrations should therefore not assist a party to defeat a provision as to liquidated damages. As the Law Commission stated in Working Paper No. 61 (page 30): - 'The fact that in certain circumstances a party to a contract might derive a benefit in excess of his loss does not... outweigh the very definite practical advantages of the present rule upholding a genuine estimate, formed at the time the contract was made of the probable loss.'¹⁸¹

(1) Claimant need not technically suffer loss itself from the failure of Sky to make a capital contribution to provide for an enforceable contractual rate of return in the event that it has to leave the joint venture.

(2) We have found that Section 8.4(i) is a genuine pre-estimate of loss and it is irrelevant whether it can be characterised as compensatory or not.

(3) Whatever rate Claimant could have provided internal funding at is irrelevant where parties have agreed on a contractual rate of interest, and there are no grounds to refuse enforcement of the agreed rate of interest.

(1) Claimant properly sent its Second Redemption Notice on 27 March 2017.

(2) The Joint Venture was then obliged to, but did not, complete the redemption of Claimant's shares within six months of 27 March 2017.

(3) Claimant then properly elected not to invoke its right to require the Group Companies to take all actions necessary to enable the Joint Venture to pay the full amount of the Redemption Price.

(4) Because the assets of the Joint Venture were insufficient to pay the Redemption Price, Sky and JMG are obliged to pay the remaining balance of the Redemption Price as follows:

(a) Sky and JMG shall pay interest on the remaining balance at an interest rate equal to 15% per annum monthly in arrears until such remaining balance is paid in full; and

(b) Sky and JMG shall pay such remaining balance in full no later than the first anniversary of the date the Redemption Price was due and payable to Claimant.

If Sky and JMG fail to make any of the payments specified in clause (a) of the immediately preceding sentence when due, the entire remaining balance of the Redemption Price shall become immediately due and payable.

Original Investment = US$50,000,000.00

Three years of compound interest at 15% PA from 30 June 2016 (Second Payment Date) = US$26,043,750.00

Redemption Price as of 30 June 2019 = US$76,043,750.00.¹⁹⁹

a. Determine that the Redemption Price was $76,043,750.00 as of 30 June 2019.

b. Determine that the Redemption Price accrued compound interest of 15% per year, or $31,250.00 per day, from 30 June 2019 through the date of the award.

c. Grant a monetary award against Sino Jet [the Joint Venture] and R2/R3 [Sky and JMG], jointly and severally, in the amount of the Redemption Price.

d. Grant post-award interest of 15% per year until the Redemption Price is paid in full.

e. Until the Redemption Price has been paid in full, enjoin Skyblueocean from transferring the 10,000 Sino Jet shares owned by Skyblueocean.

f. Declare that once the Redemption Price has been paid in full – but not before – Top Jet shall relinquish its Sino Jet shares in order to complete the share redemption process.²⁰⁰

9.12. Joint Liabilities. [Sky] and [JMG] shall be jointly and severally liable for the performance and observance of any and all of their obligations and liabilities whatsoever hereunder.²⁰³

82. I explained the rationale of the principle in Johnson v Gore Wood & Co (supra) at p.62, where I said: If the shareholder is allowed to recover in respect of such loss, then either there will be double recovery at the expense of the defendant or the shareholder will recover at the expense of the company and its creditors and other shareholders. Neither course can be permitted. This is a matter of principle; there is no discretion involved. Justice to the defendant requires the exclusion of one claim or the other; protection of the interests of the company's creditors requires that it is the company which is allowed to recover to the exclusion of the shareholder.

85. It is impossible not to share the determination of the Court of Appeal not to allow a defendant who has been guilty of such conduct to escape liability. But with respect it could not be right to allow the shareholder to bring an action for its own benefit; this would entail recovery by the wrong party to the prejudice of the company and its creditors. It would produce precisely the result which I identified as unacceptable in Johnson v Gore Wood & Co (supra) at p.64D; it would allow the plaintiff to obtain by a judgment of the court the very same extraction of value from the company at the expense of its creditors that it alleged the defendant had obtained by fraud. The Court of Appeal vouchsafed no explanation to justify this result, an explanation which might be thought to be particularly necessary given that the company was in administrative receivership.

87. The Court of Appeal may have assumed that the principle established in Johnson v Gore Wood & Co is not engaged where the company has lost the right to sue. But the House of Lords expressly applied the principle not only where the company had the right to sue but also where it had declined or failed to sue. There was nothing new in this. In Prudential (supra) it had been submitted that a personal action at the suit of the shareholder will lie to recover reflective loss if the company's remedy is for some reason not pursued. The Court of Appeal countered the argument (at p.223) by posing the rhetorical question: "How can the failure of the company to pursue its remedy against the robber entitle the shareholder to recover for himself?"

(1) The Plaintiff was the sole beneficial owner of Ever Brian Inc. ("Ever Brian"). The Plaintiff agreed to transfer shares of Ever Brian to the 2nd Defendant at HK$35,000,000.²¹¹

(2) However, the Plaintiff was asked to transfer shares of Ever Brian to a China Dragon Ventures Inc. ("China Dragon"), before the shares of Ever Brian are transferred to the 2nd Defendant.²¹²

(3) The 3rd Defendant (the executive director of the 1st Defendant) proposed that he and the 1st Defendant jointly and severally guarantee the full payment of HK$35,000,000.²¹³

(4) An agreement was entered between the 2nd Defendant and China Dragon for the transfer of shares of Ever Brian. As to the purchase price of HK$35,000,000, the 3rd Defendant provided his oral guarantee personally and also for and on behalf of the 1st Defendant.²¹⁴

(5) However, the Plaintiff only received HK$1,500,000.²¹⁵

(6) The Plaintiff sued the 1st Defendant and the 3rd Defendant under the guarantee.

26. Faced with such dilemma, I consider it necessary to resort to the rationale of the rule against reflective loss, which was set out by the Court

of Final Appeal in Waddington v. Chan Chun Hoo (2008) 11 HKCFAR 370 at §82...

27. Here, Lord Millet is referring to the situation of a shareholder claiming recovery of loss. The question whether such claim will amount to reflective loss depends upon whether there will be double recovery at the expense of the defendant, which Mr. Cheung is quite entitled to say that the present case involves not just one defendant, but other defendants too. But the next question is whether the shareholder will recover at the expense of the company and its creditors and other shareholders, which will pose difficulty for Mr. Cheung because if the plaintiff is allowed to claim damages against the 1st defendant and the 3rd defendant, which will be the balance of the price for the Ever Brian Shares, the recovery of which will certainly take away China Dragon's claim against the 2nd defendant for the same Outstanding Consideration. Viewed in this way, the plaintiff's claims against the 1st defendant and the 3rd defendant, though they are different parties, will also be reflective loss too. As such, the plaintiff's claim against the 1st defendant and the 3rd defendant must be struck out because as Lord Millet said this is a matter of principle; there is no discretion involved.²¹⁷

(1) Sky's inability to pay the Second Payment is the essential element of the cause of action for both the Joint Venture and Claimant.

(2) Even if Claimant is allowed to claim against Sky and JMG, the Joint Venture can also sue Sky for failure to make the Second Payment under Section 7.2 of the SPA and Section 8.1(i) of the SHA. Thus, there will be double recovery in the sense that the Joint Venture can rely on the same wrong to claim against Sky.

(3) Realistically, if Claimant redeems its shares and relinquishes control of the Joint Venture, the Joint Venture will not claim against Sky. However, if this is the case, Claimant (as shareholder of the Joint Venture) will recover at the expense of the Joint Venture. This again is not permissible.

(4) In short, Section 8.4 of the SHA will inevitably trigger the reflective loss principle because it is drafted such that Claimant will benefit from a breach or wrong done to the Joint Venture.

But the next question is whether the shareholder will recover at the expense of the company and its creditors and other shareholders, which will pose difficulty for Mr. Cheung because if the plaintiff is allowed to claim damages against the 1st defendant and the 3rd defendant, which will be the balance of the price for the Ever Brian Shares, the recovery of which will certainly take away China Dragon's claim against the 2nd defendant for the same Outstanding Consideration. Viewed in this way, the plaintiff’s claims against the 1st defendant and the 3rd defendant, though they are different parties, will also be reflective loss too.²²⁰