Form of Operation and Management



 EXHIBIT 10.16 
 OPERATION AND MANAGEMENT AGREEMENT 
 This Operation and Management Agreement (the
“Agreement”) is entered into on                     , 2006 in
                , China among: 
 Party A: 
 Acorn Information Technology (Shanghai) Co., Ltd. 
  

	 	


			
	 Legal Address:
	 	Room 669-05, No. 2 Building, No. 351 Guoshoujing Road, Zhangjiang High-tech Park, Shanghai
		
	 Legal Representative:
	 	Yang Dongjie

 Party B: 
  

			
	  

		
	 Legal Address:
	 	  

		
	 Legal Representative:
	 	  


 Party C: 
 Yang Dongjie 
  

			
	 ID Card No.:
	 	140106196803232637
		
	 Address:
	 	Room 301, Apt 6, Building 1, No.5 North Jia Heping Li, Chaoyang District, Beijing
		 	

 He Chenghong 
  

			
	 ID Card No.:
	 	610113196410102199
		
	 Address:
	 	Room 602, No. 41, Lane 2885, Qixin Road, Minhang District, Shanghai

 Party A, Party B and Party C are hereinafter collectively referred to as the “Parties” and individually
as a “Party.” 
 Whereas: 
  

	(1)	Party A is a wholly foreign owned enterprise established in China; 

  

	(2)	Party B is a limited liability company registered in China with an independent legal person status; 

  


					
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	(3)	Party A and Party B have established business relationship by entering into a Exclusive Technical Services Agreement (the “Service Agreement”);


  

	(4)	Party A and Party C have entered into a certain Equity Pledge Agreement (the “Equity Pledge Agreement”) to ensure Party B’s payment of the technical service
fee to Party A based on the Service Agreement; 

  

	(5)	Pursuant to the Service Agreement, Party B shall pay to Party A certain technical service fee. However, up to now, the technical service fee is still not yet paid and the daily
operation of Party B has a material effect on its ability to pay to Party A the technical service fee; 

  

	(6)	Party C constitutes the shareholders of Party B and has a 100% equity interest in Party B. Yang Dongjie and He Chenghong hold a 75% equity interest and a 25% equity interest
respectively in             . 

 NOW THEREFORE, in consideration of the
foregoing premises and the mutual agreements contained herein, the Parties hereby agree as follows: 
  

	1.	To ensure Party B’s daily operation and management, Party A agrees to provide guarantee for Party B’s obligations to a third party under any contract or agreement entered
into between Party B and a third party or other transactions at the request of a third party and then a guarantee agreement will be entered into. Party B agrees to provide counter-guarantee with its accounts receivable and its assets in connection
with the aforesaid Party A’s guarantee. 

  

	2.	As a condition precedent to Article 1 hereof and to ensure the performance of other operation agreements between Party A and Party B (for example, the payment of Party B’s
technical service fee), Party B and Party C (i.e., Party B’s shareholder) hereby agree that without the prior written consent of Party A, Party B shall not carry out any transaction which may materially affect its assets, obligations, rights or
operation or management, including, but not limited to: 

  

	 	(1)	borrow money from or assume debt for any third party; 

  

	 	(2)	purchase or sell any assets or rights or interests from or to any third party, including, but not limited to, any intellectual property rights; 

  

	 	(3)	provide any third party with guarantee interest in Party B’s assets or intellectual property rights; 

  

	 	(4)	transfer to any third party any agreement with respect to Party B’s business. 

  

	3.	To ensure the performance of other operation agreements between Party A and Party B (for example, the payment of Party B’s technical service fee), Party B and Party C (i.e.,
Party B’s shareholder) hereby agree to accept company policies and guidance provided by Party A from time to time with respect to Party B’s employment and dismissal of employees, daily operation and management and financial management
policies. 

  

	4.	 Party B and Party C (i.e., Party B’s shareholder) hereby agree that: (1) the persons appointed by Party A or its affiliates will attend and exercise the
voting right at the meeting of shareholder of Party B on behalf of Party C (i.e., Party B’s shareholder); (2)



  


					
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Party B and Party C will appoint candidates nominated by Party A or its affiliates (including SB Asia Investment Fund II, L.P.) as Party B’s directors
and undertake that the constitution of the board of directors of Party B and the directors’ rights shall be in consistency with those of the board of directors of Party A; (3) Party B will appoint persons employed and designated by Party A
as Party B’s general manager and other senior management persons; (4) Party B and Party C will amend Party B’s articles of association in accordance with the above agreement. If such candidates as nominated by Party A or its affiliate
no longer act as a director of Party A or its affiliate or are no longer employed by Party A or its affiliate, whether they are voluntarily resigned or dismissed by Party A, they will accordingly no longer hold any positions in Party B. In such
case, Party B shall appoint other management persons employed or designated by Party A. 


  

	5.	Party B and Party C (i.e., Party B’s shareholder) hereby agree and acknowledge that, in addition to relevant provisions in Article 1 hereof, if Party B needs to fulfill any
guarantee or needs any guarantee for its working capital to be borrowed during its operation, Party B shall first apply to Party A for such guarantee. In such case, Party A shall have the right but no obligation to provide Party B with proper
guarantee. If Party A does not provide such guarantee, it shall promptly send a written notice to Party B for Party B’s seeking guarantee from a third party. If Party A is willing to provide guarantee, Party A will enter into a contract with
Party B or the parties may otherwise enter into a guarantee agreement. Party A’s warrant hereunder does not by itself constitute Party A’s obligation to act as a guarantor under any guarantee agreement which has not yet been signed by
Party A. 

  

	6.	If any of the agreements between Party A and Party B is expired or terminated, Party A shall have the right but no obligation to terminate all of the agreements between Party A and
Party B, including but not limited to the Service Agreement. 

  

	7.	This Agreement may be amended or supplemented only by agreement in writing executed by each of the Parties. Any such amendment or supplement is an integral part of this Agreement
with the same force and effect as this Agreement. 

  

	8.	Unless there is a written notice regarding change of address, all notices relating to this Agreement shall be addressed to the following address and delivered by personal delivery,
fax or registered mail. If notice is given through registered mail, the date on the confirmation slip shall be deemed the date of delivery. If notice is given by personal delivery or via fax, the date of actual receipt shall be deemed the date of
delivery. In the case of delivery via fax, the original copy of the notice shall be sent to the following relevant address by personal delivery or by registered mail. 

  

			
	 Party A:
	 	Acorn Information Technology (Shanghai) Co., Ltd.
		
	 Address:
	 	Room 669-05, No. 2 Building, No. 351 Guoshoujing Road, Zhangjiang High-tech Park, Shanghai
		
	 Party B:
	 	  

		
	 Address:
	 	  


  


					
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 Party C: 
 Yang Dongjie

  

	Address:    Room	301, Apt 6, Building 1, No.5 North Jia Heping Li, Chaoyang District, Beijing 

 He Chenghong 
  

	Address:	    Room 602, No. 41, Lane 2885, Qixin Road, Minhang District, Shanghai 

  

	9.	The validity, interpretation, performance and settlement of disputes under this Agreement shall all be governed by the laws of the People’s Republic of China.


  

	10.	Disputes arising out of or in connection with this Agreement shall first be resolved through consultation among the Parties. If a dispute can not be resolved within 30 days after
consultation begins, any Party may bring the dispute to the China International Economic and Trade Arbitration Commission in Beijing for arbitration under the auspices of three arbitrators designated in accordance with its rules. The arbitration
award shall be final and binding upon the Parties. 

  

	11.	This Agreement shall be concluded after it is signed or affixed seals by the Parties. The Parties agree that this Agreement shall take effect as of January 23, 2005. During the
valid existence of Party A and Party B hereunder, unless this Agreement is early terminated in accordance with its relevant provisions herein, this Agreement shall continue to be valid for ten years from the effective date hereof. The term of this
Agreement shall be automatically extended for another ten years except Party A may terminate this Agreement in writing three months before its expiration. 

  


	12.	Any successor to a Party hereto shall assume the rights and obligations of such Party hereunder as if it were a Party to this Agreement. 

  

	13.	This Agreement is executed in four original copies, with one for each of the Parties. The Parties may execute more counterparts if necessary. 

  

	14.	This Agreement constitutes the entire agreement among the Parties with respect to the subject matter hereof, and supersedes all oral and written understandings and agreements among
the Parties with respect to the subject matter prior the effective date of this Agreement. This Agreement shall not be amended without the consent of Party A’s auditing committee or other independent institution of its board of directors.


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 (This is the signature page, which does not contain any part of the text of this Agreement) 
 Acorn Information Technology (Shanghai) Co., Ltd. (Corporate Seal) 
 Legal
Representative: Yang Dongjie (Signature) 
  

			
	  
 
	 Legal Representative:
	 	  

		
	Yang Dongjie (Signature)	 	
		
	He Chenghong (Signature)	 	

  


					
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