Lease Exhibit 7: Issue Rankings

Lease

Exhibit 7: Issue Rankings

Tenant

Landlord

The Parties

Buildings and Premises

Use of the Premises

Term

Additional Rent

Quiet Enjoyment

Assignment / sublet

Inspection & Repair

Damage to Premises

Eminent Domain

Legal Requirements

Tenant's Obligations

Landlord's Obligation

Default by Tenant

Default by Landlord

Subordination etc.

Parking

Option to Renew

Recording

Management of Property

Holding Over

Expansion Option

Consents

Tenant Improvements

Letter of Credit Guarantee

Three most important issues for landlord: Buildings and Premises, Consents,

Assignment/Sublet

Three most important issues for tenant: Inspection & Repair, Consents, Expansion Option

Fair Outcomes

Consents form the one issue of greatest importance that is shared between the landlord and the tenants in this case, and so will be discussed first. For the landlord, it is important that no substantive and easily correctable changes be made to leased space or its structure/exterior without detailed prior consent, in order to ensure that the space can be leased to another party if and when the current prospective tenant vacates. Ideally, no changes other than furnishing the space would take place without the explicit consent of the landlord, though agreeing to painting in a variety of neutral colors, installing and rearranging temporary walls, and other largely superficial changes can be agreed to in a more general sense. For the tenant, consent would ideally not be required on a case-by-case and specific-by-specific basis, allowing greater freedom in the cosmetic and utilitarian arrangements of the space for their use. It is likely that a basic agreement for many changes can be made, however, and though issues could of course arise it is likely that an agreement could be reached in all desired changes. With so much space available on the market, the landlord will likely be the one that has to make concessions when it comes to consents.

The other issues of most importance to the landlord, the Building and Premises and Assignment/Subletting, both have to do with specific definitions of the basic contract. The latter limits the space actually being leased, and it is important that no type of tenancy, modification or other action is taken by the tenants on any buildings or sections of the premises not explicitly covered in the lease, and that any assignments or sublets are made only with the full knowledge and consent of the landlord. In truth, it would be preferable on the part of the landlord not to allow assignments or sublets of any type, but it is likely that the tenant will want this option in order to allow them greater flexibility should their need for space prove to be less than estimated and again, due to the amount of space available on the market in China it is largely a buyer's market. The tenant will likely request some subletting allowance for at least a portion of the space rented, and this concession should be made.

One of tenant's other issues of greatest importance, the Expansion Option, also relates to this desire for flexibility. Should more space be required, the tenant would want to be able to expand without undue constraints or complications, and ensuring that this could be accomplished would be a major concern of the contract agreed upon. The tenant would also need repairs to be completed immediately and would certainly prefer to have these be the landlord's responsibility, and the market size again gives the tenant more negotiating power in this area. Though the landlords would undoubtedly like to absolve themselves of repair responsibilities, it is unlikely that they will be able to do so in the current environment.