CONSTRUCTION AGREEMENT RELATED TO LEASE AGREEMENT

Exhibit 10.2

May 16, 2005

Mr. John Vuko
Chief Financial Officer
Genitope Corporation
525 Penobscot Drive
Redwood City, CA 94063

Gentlemen:

     This construction agreement (“Agreement”) will confirm our agreement relative to the shell of the building and interior improvements related thereto to be constructed by Landlord on the property leased under the lease referenced above, hereinafter referred to as the “Lease”, and shall be considered a part of the Lease.

     1.  DEFINITIONS : As used in this Agreement, the following terms shall have the following meanings, and terms which are not defined below, but which are defined in the Lease which are used in this Agreement, shall have the meanings ascribed to them by the Lease:

          A. Shell Improvements : The term “Shell Improvements” shall mean the following which have been constructed by Landlord: (i) the shell of a two story industrial building containing approximately 109,786 ± square feet (not including (a) any atriums, covered entrances or egresses and covered Building loading areas which would bring the total Building size to 111,465 ± square feet, and (b) any potential bridge between this Building 5 and adjacent Building 6 (the “Building Connector”)), consisting of foundation, first and second story floor slab, building exterior precast concrete panels, building exterior window wall system (including standard ten foot high exterior doors and standard exterior door hardware), load bearing walls, roof system for standard loading, roof membrane, roof screen; (ii) sitework improvements consisting of offsite sanitary sewer piping from street main to property line, offsite domestic water and fire service from street mains to property line, full “shell” fire-sprinkler systems; functional interior stairs per plan (concrete-filled metal stair tread pans in unfinished gypsum-board enclosures with no hand rails or finishes); 2-elevator core with one elevator installed and functional (State inspected and signed off); (iii) primary electrical power to pad-mounted transformers adjacent to Building, electrical power to panels within electrical room of Building sufficient to support elevator, emergency interior lighting, utility power and lighting in electrical and elevator equipment rooms; exterior parking lot standards & lighting; interior roof insulation; Building security system; telephone utility conduits from telephone utility vault at the street to electrical room in the Building; gas line stubbed from street to proposed gas meter pad location outside Building proximate to transformer; domestic water stubbed into interior of building; sanitary sewer gut line installed under slab from end stair well to end stair well connected to the exterior service of the Building; storm offsite and onsite storm sewer (for exterior water drainage system), paving and parking areas, striping, sidewalks, parking curbs, gutters, irrigation system and landscaping. The plans for the Shell Improvements are known hereafter as the “Shell Plans”. Notwithstanding anything to the contrary herein, (i) all Shell Improvements provided by Landlord are Landlord’s standard items, and (ii) Landlord shall not be responsible or liable to construct any other improvements, of any type whatsoever, to the shell or to the exterior or interior of said Building and/or Premises.

          B. Interior Improvements : The term “Interior Improvements” shall mean all improvements to be constructed by Tenant and paid for by Tenant as hereinafter set forth, and not included in the Shell Improvements set forth in Paragraph 1B above e.g. , by way of example the Interior Improvements shall include and not be limited to, interior and exterior fire protection system to the extent not already existing at or in the shell as of the date of this Agreement; interior domestic water piping and electrical system; heating and air-conditioning system complete including associated roof screen(s), building interior sanitary system, interior water and gas piping systems, processing piping (if any), standard stair handrails, standard ten foot high suspended ceilings, standard ten foot high interior doors

with standard door hardware in office areas and areas leading into the general laboratories and ceiling systems and heights, door heights and hardware in laboratories and manufacturing areas specific to and appropriate for their function and typical of a biotech laboratory/manufacturing environment, interior walls and movable or non-movable floor to ceiling partitioning, toilet cores and restrooms, painting, interior carpeting, vinyl floor covering, loading docks (if any), additional utility pads (including all construction elements of subject utility pads, including but not limited to enclosures), all permit and plan fees of any type whatsoever related to the Interior Improvements and Builder’s Risk insurance premiums as related to the Interior Improvements. Notwithstanding the foregoing, the term “Interior Improvement Costs” shall not include real property taxes and assessments accruing prior to the Commencement Date. Such costs are covered in Paragraph 8 (“Tax Increases During Construction Period”) below.

          C. Improvements : The term “Improvements” shall mean the Shell Improvements and the Interior Improvements.

          D. Performance Schedule : The term “Performance Schedule” shall mean the estimated times for commencement and performance of construction obligations contained in Paragraph 2 of this Agreement.

          E. Architect : The term “Architect” shall mean Dowler-Gruman Architects or such other licensed architect selected by Tenant and reasonably approved by Landlord with respect to the Interior Improvements.

          F. Prime Contractor(s) : The term “Prime Contractor” shall mean XL Construction, Rudolph & Sletten, DPR or Dome Construction or such other licensed general contractor selected by Tenant and reasonably approved by Landlord with respect to the Interior Improvements.

          G. Substantial Completion : The term “Substantial Completion” (and “Substantially Completed”) shall mean the date when all of the following have occurred with respect to the Interior Improvements in question: (i) the construction of the Interior Improvements in question have been substantially completed in accordance with the approved plans therefore except for “punch list” items which, for purposes of this Construction Agreement, shall mean minor details of the Construction which are incomplete or defective; and (ii) Tenant has executed a certificate or statement representing that such Interior Improvements have been substantially completed in accordance with the plans and specifications therefore except for punch lists items; and (iii) the Building Department of the City of Fremont has completed its final inspection of such Interior Improvements and has “signed off” the building inspection card approving such work as complete except for punch list items.

          H. Lease Commencement Date : The term “Lease Commencement Date” shall mean May 16, 2005. The requirement of Tenant to pay Basic Rent commences six (6) months from the Lease Commencement Date (May 16, 2005).

     2.  Performance Schedule : Tenant desire to cause the Interior Improvements to be Substantially Completed by May 15, 2008 or three (3) years following the Lease Commencement Date. Set forth in this Paragraph is a schedule of certain dates relating to Tenant’s and Landlord’s obligations regarding the approval of plans and the construction of the Interior Improvements (the “Performance Schedule”) that must be adhered to in order to achieve Substantial Completion of all Interior Improvements by three (3) years following the Lease Commencement Date. Tenant and Landlord shall be obligated to use commercially reasonable efforts to perform their respective obligations within the time periods set forth in the Performance Schedule and elsewhere in this Agreement. The parties acknowledge that the Performance Schedule is only an estimate of the time needed to complete certain stages of the construction process, and the failure to accomplish any step in the process set forth in the Performance Schedule within the applicable time period shall not constitute a default unless such failure constitutes a breach of the obligation to use reasonable efforts to perform its obligations within the time periods set forth in the Performance Schedule and elsewhere in this Agreement and appropriate notice has been given and any applicable cure period has expired. The Performance Schedule is as follows:

     3.  DEVELOPMENT OF PLANS FOR INTERIOR IMPROVEMENTS : Plans for the Interior Improvements shall be developed in accordance with the following:

          A. Development of Preliminary Interior Plans : On or before the due date specified in the Performance Schedule, Tenant shall cause the Architect to prepare and deliver to Landlord for its review and approval preliminary plans for the Interior Improvements (the “Preliminary Interior Plans”). Within ten (10) days of receipt of the Preliminary Interior Plans, Landlord shall either approve such plans in writing or notify Tenant in writing of its specific objections to the Preliminary Interior Plans. Landlord shall not unreasonably withhold its approval to Preliminary Interior Plans. If the Landlord so objects, Tenant shall revise the Preliminary Interior Plans to address such objections in a manner consistent with the parameters for the Interior Improvements set forth in this Construction Agreement and shall resubmit such revised Preliminary Interior Plans as soon as reasonably practicable to Landlord for its approval. It is agreed that Tenant’s Preliminary Interior Improvement plans shall not affect the exterior appearance of the Building, Shell, or the structural integrity of the Building Shell. Landlord understands that Tenant may want, at its sole cost and expense, to incorporate a connecting link between Buildings 5 and 6; a service and utility yard which are specific to and appropriate for biotech laboratory and/or manufacturing facilities (“Other Tenant Improvements”). Provided such Other Tenant Improvements (i) are approved by the governing authorities, (ii) do not adversely affect the structural integrity or the appearance of the Building Shell (it being agreed by Landlord and Tenant that such connecting link between Buildings 5 and 6, whether by a bridge or a building structure which is designed to be structurally and esthetically compatible with Buildings 5 and 6 shall not be deemed to adversely affect the appearance of the Building Shell and shall not be required by Landlord to be removed at the end of the Term of the Lease), and (iii) comply with the covenant, condition, or restriction affecting the subject property, Landlord shall not unreasonably object to said Other Tenant Improvements (which Tenant shall be one hundred percent (100%) responsible and liable for all cost and expense related thereto, including but not limited to the cost and expense of construction, the related fees and permits, the maintenance, repair and replacement of said Other Tenant Improvements).. When the revised Preliminary Interior Plans are resubmitted to Landlord, Landlord shall either approve such plans in writing or notify Tenant of any further objections in writing within five (5) days after receipt thereof. If Landlord has further objections to the revised Preliminary Interior Plans, Landlord and Tenant shall immediately meet and confer and together shall apply the standards set forth in this Construction Agreement to resolve Landlord’s objections and incorporate such resolution into the Preliminary Interior Plans, which process Landlord and Tenant shall cause to be completed within five (5) days after the conclusion of the five (5) day period referred to in the immediately preceding sentence. In resolving Landlord’s objections, the parties agree to act reasonably so as to promptly finalize the Preliminary Interior Plans.

          B. Development of Final Interior Plans : Once the Preliminary Interior Plans have been approved by Landlord and Tenant, Tenant shall cause Architect to complete and submit to Landlord for its approval final plans for the Interior Improvements by the due date specified in the Performance Schedule which are the logical and reasonable development of the Preliminary Interior Plans. Landlord shall approve in writing the final plans for the Interior Improvements or notify Tenant in writing of its specific objections by the due date specified in the Performance Schedule. The final plans so approved by Landlord and Tenant (including all changes made to resolve Landlord’s objections approved by Landlord and Tenant pursuant to the above) are referred to herein as the “Final Interior Plans” and shall be considered Exhibit “B” to the Lease.

          C. Interior Improvement Permit : As soon as the Final Interior Plans have been approved by Landlord and Tenant, Tenant shall apply for a building permit for the Interior Improvements, and shall diligently prosecute to completion pursuant to the Performance Schedule such approval process.

          D. Commencement of Interior Improvements : By the due date specified in the Performance Schedule, Tenant shall commence construction for the Interior Improvements and shall diligently prosecute such construction to completion, using all reasonable efforts to achieve Substantial Completion of the Interior Improvements by the date specified in the Performance Schedule.

     4.  CONSTRUCTION OF IMPROVEMENTS : The Improvements to be constructed as part of the Premises in connection with the Lease shall be paid for by the parties as hereinafter set forth in Paragraph 5 and constructed in the following manner:

          A. Construction of Shell Improvements by Landlord : The Shell Improvements have been constructed by Landlord in accordance with the Shell Plans; it being agreed, however, that if the Shell Improvements, as constructed, do not conform exactly to the plans and specifications as set forth in the Shell, and the general appearance, structural integrity, and Tenant’s use and occupancy of the Premises and the time required to construct the Interior Improvements relating thereto are not unreasonably affected by such deviation, it is agreed that the Commencement Date of the Lease, and Tenant’s obligation to pay Rent thereunder, shall not be affected, and Tenant hereby agrees, in such event, to accept the Shell as constructed by Landlord.

          B. Development and Construction of Interior Improvements by Tenant : Within the time period reflected in the Performance Schedule, Tenant shall commence and diligently cause to be completed all plans and specifications for the Interior Improvements and obtain the required permits. Copies of all permits and approvals shall be delivered to Landlord, at no cost to Landlord. Upon obtaining all such permits and approvals, Tenant thereupon shall cause to be constructed the Interior Improvements in accordance with the plans and specifications approved by Landlord. Tenant shall, upon final approval by Landlord of the Interior Improvement Plans, enter into a contract for the construction of the Interior Improvements with the Prime Contractor, and shall provide Landlord with a copy of said contract. Construction of the Interior Improvements shall be completed three (3) years from the Lease Commencement Date, subject t