Consulting Services Agreement - Ctrip Computer Technology (Shanghai) Co. Ltd. and Shanghai Ctrip Commerce Co. Ltd.
Execution Copy
Dated as of November ___, 2000
CTRIP COMPUTER TECHNOLOGY (SHANGHAI) CO., LTD.
AND
SHANGHAI CTRIP COMMERCE CO., LTD.
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CONSULTING SERVICES AGREEMENT
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EXHIBIT 10.17
TABLE OF CONTENTS
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1. DEFINITIONS................................................................2
2. RETENTION AND SCOPE OF SERVICES............................................3
3. PAYMENT....................................................................4
4. FURTHER TERMS OF COOPERATION...............................................5
5. UNDERTAKINGS OF PARTY A....................................................5
6. NEGATIVE COVENANTS.........................................................7
7. TERM AND TERMINATION.......................................................9
8. PARTY B'S REMEDY UPON PARTY A'S BREACH....................................10
9. AGENCY....................................................................10
10. GOVERNING LAW AND JURISDICTION............................................10
11. ASSIGNMENT................................................................11
12. NOTICES...................................................................11
13. GENERAL...................................................................12
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EXHIBIT 10.17
THIS AGREEMENT is made as of the November ____, 2000
BETWEEN:
(1) Shanghai Ctrip Commerce Co., Ltd., a company with limited liability
organized under the laws of the PRC, with a business address at
22nd Floor, Gong Tai Plaza, 700 Yan An Road East, Shanghai, PRC
("Party A");
(2) Ctrip Computer Technology (Shanghai) Co., Ltd., a wholly foreign-owned
enterprise organized under the laws of the PRC, with a business address
at 22nd Floor, Gong Tai Plaza, 700 Yan An Road East, Shanghai, PRC
("Party B").
WHEREAS:
(1) Party A is licensed in the PRC to engage in the business of hotel
booking services, conference services, business consulting, business
information services and the wholesale and retail sale of travel
necessities and handicrafts;
(2) Party B has been established under the laws of the PRC to engage in,
inter alia, development of software and hardware technology and systems
formation for computers; sale of self-manufactured goods; technology
consultancy; marketing consultancy; investment consultancy; information
services (including consultancy services relating to Internet traveling
services); and
(3) Party A wishes to engage Party B to provide such services and Party B
wishes to provide such services to Party A, upon the terms and
conditions of this Agreement;
IT IS AGREED as follows:
1. DEFINITIONS
1.1 In this Agreement:
"Affiliate", with respect to any Person, shall mean any other Person
that directly or indirectly controls, or is under common control with,
or is controlled by, such Person. As used in this definition, "control"
shall mean possession, directly or indirectly, of power to direct or
cause the direction of management or policies (whether ownership of
securities or partnership or other ownership interests, by contract or
otherwise);
"Consulting Services Fee" shall be as defined in Clause 3.1;
"Indebtedness" shall mean, as to any Person, without duplication, (i)
all indebtedness (including principal, interest, fees and charges) of
such Person for borrowed money for the deferred purchase price of
property or services, (ii) the face amount of all letters of credit
issued for the amount of such Person and all drafts drawn thereunder,
(iii) all liabilities secured by any Lien on any property owned by such
person, whether or not such liabilities have been assumed by such
Person, (iv) the aggregate amount required to be capitalized under
leases under which such Person is the lessee and (v) all contingent
obligations (including, without limitation, all guarantees to third
parties) of such Person;
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EXHIBIT 10.17
"Lien" shall mean any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other),
preference, priority or other security agreement of any kind or nature
whatsoever (including. without limitation, any conditional sale or
other title retention agreement, any financing or similar statement or
notice filed under recording or notice statute, and any lease having
substantially the same effect as any of the foregoing);
"Person" shall mean any individual, corporation, company, voluntary
association, partnership, joint venture, trust, unincorporated
organization, entity or other organization or any government body;
"PRC" means the People's Republic of China;
"Services" means the services to be provided under the Agreement by
Party B to Party A, as more specifically described in Clause 2;
In this Agreement a reference to a Clause, unless the context otherwise
requires, is a reference to a clause of this Agreement.
1.2 The headings in this Agreement shall not affect the interpretation of
this Agreement.
2. RETENTION AND SCOPE OF SERVICES
2.1 Party A hereby agrees to retain the services of Party B, and Party B
accepts such appointment, to provide to Party A services in relation to
the current and proposed operations of Party A's business in the PRC
upon the terms and conditions of this Agreement. The services subject
to this Agreement shall include, without limitation:
General Business Operation
Advice and assistance relating to development of technology and
provision of consultancy services, particularly as related to travel
services.
Human Resources
2.1.1 Advice and assistance in relation to the staffing of Party A,
including assistance in the recruitment, employment and
secondment of management personnel, administrative personnel
and staff of Party A;
2.1.2 Training of management, staff and administrative personnel;
2.1.3 Assistance in the development of sound payroll administrative
controls in Party A;
2.1.4 Advice and assistance in the relocation of management and
staff of Party A;
Systems/Networks
2.1.5 Advice and assistance in relation to information systems for
the operations of Party A;
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EXHIBIT 10.17
2.1.6 Advice and assistance in the establishment of local area
networks and wide area networks for the centralized management
of accounts and information; and
Others
2.1.7 Such other advice and assistance as may be agreed upon by the
Parties.
2.2 Exclusive Services Provider
During the term of this Agreement, Party B shall be the exclusive
provider of the Services. Party A shall not seek or accept similar
services from other providers unless the prior written approval is
obtained from Party B.
2.3 Intellectual Properties Related to the Services
All patents, trademarks, trade name, copyrights and other intellectual
properties developed or used by Party B for provision of the Services
or derived from the provision of the Services shall belong to Party B.
3. PAYMENT
3.1 (a) In consideration of the Services provided by Party B
hereunder, Party A shall pay to Party B during the term of
this Agreement a consulting services fee (the "Consulting
Services Fee"), payable in RMB each quarter, equal to all of
its revenue for such quarter based on the quarterly financial
statements provided under Clause 5.1 below. Such quarterly
payment shall be made within 15 days after receipt by Party B
of the financial statements referenced above.
(b) Party A will permit, from time to time during regular business
hours as reasonably requested by Party B, or its agents or
representatives (including independent public accountants,
which may be Party A's independent public accountants), (i) to
conduct periodic audits of books and records of Party A, (ii)
to examine and make copies of and abstracts from all books,
records and documents (including, without limitation, computer
tapes and disks) in the possession or under the control of
Party A (iii) to visit the offices and properties of Party A
for the purpose of examining such materials described in
clause (ii) above, and (iv) to discuss matters relating to the
performance by Party A hereunder with any of the officers or
employees of Party A having knowledge of such matters. Party B
may exercise the audit rights provided in the preceding
sentence at any time, provided that Party B provides ten days
written notice to Party A specifying the scope, purpose and
duration of such audit. All such audits shall be conducted in
such a manner as not to interfere with Party A's normal
operations.
3.2 Party A shall not be entitled to set off any amount it may claim is
owed to it by Party B against any Consulting Services Fee payable by
Party A to Party B unless Party A first obtains Party B's written
consent.
3.3 The Consulting Services Fee shall be paid in RMB by telegraphic
transfer to Party B Account No.044094-018252400017 at: Bank of China,
Shanghai Branch, Huangpu
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EXHIBIT 10.17
District Sub-Branch or to such other account or accounts as may be
specified in writing from time to time by Party B.
3.4 Should Party A fail to pay all or any part of the Consulting Service's
Fee due to Party B in RMB under this Clause 3 Within the time limits
stipulated, Party A shall pay to Party B interest in RMB on the amount
overdue based on the three (3) month lending rate for RMB announced by
the Bank of China on the relevant due date.
3.5 All payments to be made by Party A hereunder shall be made free and
clear of and without deduction for or on account of tax, unless Party A
is required to make such payment subject to the deduction or
withholding of tax.
4. FURTHER TERMS OF COOPERATION
4.1 All business revenue of Party A shall be directed in full by Party A
into a bank account(s) nominated by Party B.
5. UNDERTAKINGS OF PARTY A
Party A hereby agrees that, during the term of the Agreement:
5.1 Information Covenants
Party A will furnish to Party B:
5.1.1 Preliminary Monthly Reports. Within five (5) days of the end
of each calendar month the preliminary income statements and
balance sheets of Party A made up to and as at the end of such
calendar month, in each case prepared in accordance with the
PRC generally accepted accounting principles, consistently
applied;
5.1.2 Final Monthly Reports. Within ten (10) days after the end of
each calendar month, a final report from Party A on the
financial position and results of operations and affairs of
Party A made up to and as at the end of such calendar month
and for the elapsed portion of the relevant financial year,
setting forth in each case in comparative form figures for the
corresponding period in the preceding financial year, in each
case prepared in accordance with the PRC generally accepted
accounting principles, consistently applied;
5.1.3 Quarterly Reports. As soon as available and in any event
within forty-five (45) days after each Quarterly Date (as
defined below), unaudited consolidated and consolidating
statements of income, retained earnings and changes in
financial position of the Party A and its subsidiaries, if
any, for such quarterly period and for the period from the
beginning of the relevant fiscal year to such Quarterly Date
and the related consolidated and consolidating balance sheets
as at the end of such quarterly period, setting forth in each
case actual versus budgeted comparisons and in comparative
form the corresponding consolidated and consolidating figures
for the corresponding period in the preceding fiscal year,
accompanied by a certificate of the chief financial officer of
the Party A, which certificate shall state that said financial
statements fairly present the consolidated and consolidating
financial
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EXHIBIT 10.17
condition and results of operations, as the case may be, of
the Party A and its subsidiaries, if any, in accordance with
PRC general accepted accounting principles applied on a
consistent basis as at the end of, and for, such period
(subject to normal year-end audit adjustments and the
preparation of notes for the audited financial statements);
5.1.4 Annual Audited Accounts. Within six (6) months of the end of
the financial year, the annual audited accounts of Party A to
which they relate (setting forth in each case in comparative
form the corresponding figures for the preceding financial
year), in each case prepared in accordance with, among others,
the PRC generally accepted accounting principles, consistently
applied;
5.1.5 Budgets. At least 90 days before the first day of each
financial year of Party A, a budget in form satisfactory to
Party B (including budgeted statements of income and sources
and uses of cash and balance sheets) prepared by Party A for
each of the four financial quarters of such financial year
accompanied by the statement of the chief financial officer of
Party A to the effect that, to the best of his knowledge, the
budget is a reasonable estimate for the period covered
thereby.
5.1.6 Notice of Litigation. Promptly, and in any event within one
(1) business day after an officer of Party A obtains knowledge
thereof, notice of (i) any litigation or governmental
proceeding pending against Party A which could materially
adversely affect the business, operations, property, assets,
condition (financial or otherwise) or prospects of Party A and
(ii) any other event which is likely to materially adversely
affect the business, operations, property, assets, condition
(financial or otherwise) or prospects of Party A.
5.1.7 Other Information. From time to time, such other information
or documents (financial or otherwise) as Party B may
reasonably request.
For purposes of this Agreement, "a Quarterly Date" shall mean the last
day of March, June, September and December in each year, the first of
which shall be the first such day following the date of this Agreement;
provided that if any such day is not a business day in the PRC, then
such Quarterly Date shall be the next succeeding business day in the
PRC.
5.2 Books, Records and Inspections
Party A will keep proper books of record and account in which full,
true and correct entries in conformity with generally accepted
accounting principles in the PRC and all requirements of law shall be
made of all dealings and transactions in relation to its business and
activities. Party A will permit officers and designated representatives
of Party B to visit and inspect, under guidance of officers of Party A,
any of the properties of Party A, and to examine the books of record
and account of Party A and discuss the affairs, finances and accounts
of Party A with, and be advised as to the same by, its and their
officers, all at such reasonable times and intervals and to such
reasonable extent as Party B may request.
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EXHIBIT 10.17
5.3 Corporate Franchises
Party A will do or cause to be done, all things necessary to preserve
and keep in full force and effect its existence and its material
rights, franchises and licenses.
5.4 Compliance with Statutes, etc.
Party A will comply with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental
bodies, in respect of the conduct of its business arid the ownership of
its property, including without limitation maintenance of valid and
proper government approvals and licenses necessary to provide the
services, except that such noncompliances could not, in the aggregate,
have a material adverse effect on the business, operations, property,
assets, condition (financial or otherwise) or prospects of Party A.
6. NEGATIVE COVENANTS
Party A covenants and agrees that, during the term of this Agreement,
without the prior written consent of Party B.
6.1 Equity
Party A will not issue, purchase or redeem any equity or debt
securities of Party A.
6.2 Liens
Party A will not create, incur, assume or suffer to exist any Lien upon
or with respect to any property or assets (real or personal, tangible
or intangible) of Party A whether now owned or hereafter acquired,
provided that the provisions of this Clause 6.1 shall not prevent the
creation, incurrence, assumption or existence of:
6.2.1 Liens for taxes not yet due, or Liens for taxes being
contested in good faith and by appropriate proceedings for
which adequate reserves have been established; and
6.2.2 Liens in respect of property or assets of Party A imposed by
law, which were incurred in the ordinary course of business,
and (x) which do not in the aggregate materially detract from
the value of such property or assets or materially impair the
use thereof in the operation of the business of Party A or (y)
which are being contested in good faith by appropriate
proceedings, which proceedings have the effect of preventing
the forfeiture or sale of the property of assets subject to
any such Lien.
6.3 Consolidation, Merger, Sale of Assets, etc.
Party A will not wind up, liquidate or dissolve its affairs or enter
into any transaction of merger or consolidation, or convey, sell, lease
or otherwise dispose of (or agree to do any of the foregoing at any
future time) all or any part of its property or assets, or purchase or
otherwise acquire (in one or a series of related transactions) any part
of the property or assets (other than purchases or other acquisitions
of inventory, materials and equipment in the ordinary course of
business) of any Person, except that (i) Party A may make sales of
inventory in the ordinary course of business and (ii)
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Party A may, in the ordinary course of business, sell equipment which
is uneconomic or obsolete.
6.4 Dividends
Party A will not declare or pay any dividends, or return any capital,
to its shareholders or authorize or make any other distribution,
payment or delivery of property or cash to its shareholders as such, or
redeem, retire, purchase or otherwise acquire, directly or indirectly,
for a consideration, any shares of any class of its capital stock now
or hereafter outstanding (or any options or warrants issued by Party A
with respect to its capital stock), or set aside any funds for any of
the foregoing purposes.
6.5 Leases
Party A will not permit the aggregate payments (including, without
limitation, any property taxes paid as additional rent or lease
payments) by Party A under agreements to rent or lease any real or
personal property to exceed US$1 million in any fiscal year of Party A.
6.6 Indebtedness
Party A will not Contract, create, incur, assume or suffer to exist any
indebtedness, except accrued expenses and current trade accounts
payable incurred in the ordinary course of business, and obligations
under trade letters of credit incurred by Party A in the ordinary
course of business, which are to be repaid in full not more than one
(1) year after the date on which such indebtedness is originally
incurred to finance the purchase of goods by Party A.
6.7 Advances, Investment and Loans
Party A will not lend money or credit or make advances to any Person,
or purchase or acquire any stock, obligations or securities of, or any
other interest in, or make any capital contribution to, any other
Person, except that Parry A may acquire and hold receivables owing to
it, if created or acquired in the ordinary course of business and
payable or dischargeable in accordance with Customary trade terms.
6.8 Transactions with Affiliates
Party A will not enter into any transaction or series of related
transactions, whether or not in the ordinary course of business, with
any Affiliate of Party A, other than on terns and conditions
substantially as favorable to Party A as would be obtainable by Party A
at the time in a comparable arm's-length transaction with a Person
other than an Affiliate and with the prior written consent of Party B.
6.9 Capital Expenditures
Party A will not make any expenditure for fixed or capital assets
(including, without limitation, expenditures for maintenance and
repairs which should be "capitalized in accordance with generally
accepted accounting principles in the PRC and including capitalized
lease obligations) during any period set forth below (taken as one
accounting period) which exceeds in the aggregate for Party A the
amount of RMB 500,000 commencing in the 2000 fiscal year.
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EXHIBIT 10.17
6.10 Limitation on Voluntary Payments and Modifications of Indebtedness;
Modifications of Articles of Association and Certain Other Agreements;
etc.
Party A will not (i) make any voluntary or optional payment or
prepayment on or redemption or acquisition for value of (including,
without limitation, by way of depositing with the trustee with respect
thereto money or securities before due for the purpose of paying when
due) any Existing Indebtedness or (ii) amend or modify, or permit the
amendment or modification of, any provision of any Existing
Indebtedness or of any agreement (including, without limitation, any
purchase agreement, indenture, loan agreement or security agreement)
relating to any of the foregoing or (iii) amend, modify or change its
Articles of Association or Business License, or any agreement entered
into by it, with respect to its capital stock, or enter into any new
agreement with respect to its capital stock.
6.11 Business
Party A will not engage (directly or indirectly) in any business other
than those types of business prescribed within the business scope of
Party A's business license except with the prior written consent of
Party B.
7. TERM AND TERMINATION
7.1 This Agreement shall take effect on the date of execution of this
Agreement and shall remain in full force and effect unless terminated
pursuant to Clause 7.2.
7.2 This Agreement may be terminated:
7.2.1 by either Party giving written notice to the other Party if
the other Party has committed a material breach of this
Agreement (including but not limited to the failure by Party A
to pay the Consulting Services Fee) and such breach, if
capable of remedy, has not been so remedied within, in the
case of breach of a non-financial obligation, 14 days,
following receipt of such written notice;
7.2.2 either Party giving written notice to the other Party if the
other Party becomes bankruptcy or insolvent or is the subject
of proceedings or arrangements for liquidation or dissolution
or ceases to carry on business or becomes unable to pay its
debts as they come due;
7.2.3 by either Party giving written notice to the other Party if,
for any reason, the operations of Party B are terminated;
7.2.4 by either Party giving written notice to the other Party if
the business licence or any other license or approval material
for the business operations of Party A is terminated,
cancelled or revoked;
7.2.5 by either Party giving written notice to the other Party if
circumstances arise which materially and adversely affect the
performance or the objectives of this Agreement; or
7.2.6 by election of Party B with or without reason.
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EXHIBIT 10.17
7.3 Any Party electing properly to terminate this Agreement pursuant to
Clause 7.2 shall have no liability to the other Party for indemnity,
compensation or damages arising solely from the exercise of such right.
The expiration or termination of this Agreement shall not affect the
continuing liability of Party A to pay any Consulting Services Fees
already accrued or due and payable to Party B.
Upon expiration or termination of this Agreement, all amounts then due
and unpaid to Party B by Party A hereunder, as well as all other
amounts accrued but not yet payable to Party B by Party A, shall
forthwith become due and payable by Party A to Party B.
8. PARTY B'S REMEDY UPON PARTY A'S BREACH
In addition to the remedies provided elsewhere under this Agreement,
Party B shall be entitled to remedies permitted under PRC laws,
including without limitation compensation for any direct and indirect
losses arising from the breach and legal fees incurred to recover
losses from such breach.
9. AGENCY
The Parties are independent Contractors, and nothing in this Agreement
shall be construed to constitute either Party to be the agent, Partner,
legal representative, attorney or employee of the other for any Purpose
whatsoever. Neither Party shall have the power or authority to bind the
other except as specifically set out in this Agreement.
10. GOVERNING LAW AND JURISDICTION
10.1 This Agreement shall be governed by, and construed in accordance with,
the laws of the PRC.
10.2 Arbitration
Any dispute arising from, out of or in connection with this Agreement
shall be settled through friendly consultations between the Parties.
Such consultations shall begin immediately after one Party has
delivered to the other Party a written request for such consultation.
If within ninety (90) days following the date on which such notice is
given, the dispute cannot be settled through consultations, the dispute
shall, upon the request of any Shareholder with notice to the other
Party, be submitted to arbitration in China under the auspices of China
International Economic and Trade Arbitration Commission (the "CIETAC").
The Parties shall jointly appoint a qualified interpreter for the
arbitration proceedings and shall be responsible for sharing in equal
portions the expenses incurred by such appointment.
10.3 There shall be three (3) arbitrators. Party A shall select one (1)
arbitrator and Party B shall select one (1) arbitrator, and both
arbitrator shall be selected within thirty (30) days after giving or
receiving the demand for arbitration. Such arbitrators shall be freely
selected, and the Parties shall not be limited in their selection to
any prescribed list. The chairman of the CIETAC shall select the third
arbitrator. If a Party does not appoint an arbitrator who has consented
to participate within thirty (30) days after the
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EXHIBIT 10.17
selection of the first arbitrator, the relevant appointment shall be
made by the chairman of the CIETAC.
10.4 Unless otherwise provided by the arbitration rules of CIETAC, the
arbitration proceeding shall be conducted in English. The arbitration
tribunal shall apply the arbitration rules of the CIETAC in effect on
the date of the signing of this Agreement. However, if such rules are
in conflict with the provisions of this Clause, including the
provisions concerning the appointment of arbitrators, the provisions of
this Clause shall prevail.
10.5 Each Party shall cooperate with the other Party in making full
disclosure of and providing complete access to all information and
documents requested by the other Party in connection with such
proceedings, subject only to any confidentiality obligations binding on
such Parties.
10.6 Judgement upon the award rendered by the arbitration may be entered
into by any court having jurisdiction, or application may be made to
such court for a judicial recognition of the award or any order of
enforcement thereof.
10.7 During the period when a dispute is being resolved, the Parties shall
in all other respects continue their implementation of this Agreement.
11. ASSIGNMENT
11.1 No part of this Agreement shall be assigned or transferred by either
Party without the prior written consent of the other Party. Any such
assignment or transfer shall be void. Party B, however, may assign its
rights and obligations hereunder to an Affiliate.
12. NOTICES
Any notice or other communication provided for in this Agreement shall
be in writing in the English and Chinese languages and shall be
delivered personally or sent by telefax and confirmed by registered
mail as follows:
12.1.1 if a Party B, to:
Address: 22nd Floor, Gong Tai Plaza
700 Yan An Road East
Shanghai
People's Republic of China
Telefax: (8621) 5385 0923
12.1.2 if a Party A, to:
Address: 22nd Floor, Gong Tai Plaza
700 Yan An Road East
Shanghai
People's Republic of China
Telefax: (8621) 5385 0923
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EXHIBIT 10.17
to such other person, address or telefax number as either Party may
specify by notice in writing to the other.
12.2 In the absence of evidence or earlier receipt, any notice or other
communication shall be deemed to have been duly given:
12.2.1 if delivered personally, when left at the address referred to
in Clause 11.1 and a receipt of acknowledgement is obtained;
or
12.2.2 if sent by telefax, when confirmed by registered mail.
13. GENERAL
13.1 The failure to exercise or de]ay in exercising a right or remedy under
this Agreement shall not constitute a waiver of the right or remedy or
waiver of any other rights or remedies and no single or partial
exercise of any right or remedy under this Agreement shall prevent any
further exercise of the right or remedy or the exercise of any other
right or remedy.
13.2 Should any Clause or any part of any Clause contained in this Agreement
be declared invalid or unenforceable for any reason Whatsoever, all
other Clauses or parts of Clauses contained in this Agreement shall
remain in full force and effect.
13.3 This Agreement constitutes the entire agreement between the Parties
relating to the subject matter of this Agreement and supersedes all
previous agreements.
13.4 No amendment or variation of this Agreement shall be valid unless it is
in writing and signed by or on behalf of each of the Parties.
13.5 This Agreement shall be executed in two originals in English.
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EXHIBIT 10.17
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to be executed
by their duly authorized representatives as of the date first above written.
CTRIP COMPUTER TECHNOLOGY SHANGHAI CTRIP COMMERCE
(SHANGHAI) CO., LTD. CO., LTD.
By: By:
--------------------------------- ---------------------------------
Name: Name:
Title: Title:
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