exv10w2



 









Exhibit 10.2



May 16, 2005




Mr. John Vuko

Chief Financial Officer

Genitope Corporation

525 Penobscot Drive

Redwood City, CA 94063



	 	 	 
	RE:

	 	CONSTRUCTION AGREEMENT RELATED TO LEASE AGREEMENT DATED MAY 16, 2005 FOR BUILDING 5, BY AND
BETWEEN THE JOHN ARRILLAGA SURVIVOR’S TRUST AND THE RICHARD T. PEERY SEPARATE PROPERTY TRUST,
AS LANDLORD, AND GENITOPE CORPORATION, A DELAWARE CORPORATION, AS TENANT, FOR ALL OF THAT
CERTAIN 109,786+ SQUARE FOOT BUILDING LOCATED AT 6900 DUMBARTON CIRCLE, FREMONT,
CALIFORNIA.





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:



	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	RESPONSIBLE	 	 
	ACTION ITEMS 	 	DUE DATE	 	PARTY	 	 
	A.

	 	Delivery of Shell Plans to Tenant
	 	Tenant acknowledges
that said Shell
Plans were provided
to Tenant prior to
the execution of
this Agreement.
	 	Landlord	 	 
	 
	 	 	 	 	 	 	 	 
	B.

	 	Delivery to Landlord of
Preliminary Interior Improvement
Plans
	 	As soon as
reasonably possible
following the Lease
Commencement Date
	 	Tenant	 	 






 









 







	 	 	 	 	 	 	 
	C.

	 	Approval of Preliminary Interior
Improvement Plans by Landlord
	 	Within 10 days
after Landlord
receives
Preliminary
Interior
Improvement Plans
	 	Landlord
	 
	 	 	 	 	 	 
	D.

	 	Delivery of Final Interior
Improvement Plans to Landlord
	 	Within 30 days
after Landlord
approves
Preliminary
Interior
Improvement Plans
	 	Tenant
	 
	 	 	 	 	 	 
	E.

	 	Approval by Landlord of Final
Interior Plans
	 	Within 10 days
after Landlord
receives Final
Interior Plans
	 	Landlord
	 
	 	 	 	 	 	 
	F.

	 	Submittal of Final Interior
Improvement Plans to City for Plan
Check/Permit
	 	Within 30 days
after Tenant
receives Landlord’s
approval of the
Final Interior
Plans
	 	Tenant
	 
	 	 	 	 	 	 
	G.

	 	Obtain Building Permit for Interior
Improvements
	 	As soon as
reasonably possible
after submittal of
Interior
Improvement Plans
for Permit
	 	Tenant
	 
	 	 	 	 	 	 
	H.

	 	Deliver Letter of Credit to
Landlord as required by Paragraph
4.C (“Letter of Credit Requirement”)
below
	 	10 business days
prior to
commencement of
construction of
Interior
Improvements
	 	Tenant
	 
	 	 	 	 	 	 
	I.

	 	Commencement of Construction of
Interior Improvements
	 	As soon as
reasonably possible
after receipt of
Building Permits
for Interior
Improvements
	 	Tenant
	 
	 	 	 	 	 	 
	J.

	 	Substantial Completion of
Interior Improvements
	 	May 15, 2008
	 	Tenant






     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 to Acts of God,
inclement weather, labor strikes, material shortages and other causes beyond Tenant’s reasonable
control (collectively “Force Majeure Conditions”); provided that Tenant shall give Landlord written
notice of any Force Majeure Conditions within five (5) business days of first experiencing any
Force Majeure Condition. Notwithstanding the foregoing or anything to the contrary in the Lease,
Basic Rent and other sums due under the Lease shall nevertheless be due and payable on the dates
referenced in the Lease regardless of whether or not Tenant has obtained permits and/or started
and/or completed construction of the Interior Improvements. All construction shall be done in
accordance with all applicable federal, state and local laws, rules and regulations. In the event
Tenant fails to complete construction of the Interior Improvements within thirty-six (36) months,
subject to any delay due to Force Majeure Conditions, such failure shall constitute a material
default by Tenant hereunder, in which event Landlord may, at its option, terminate the Lease upon
written notice to Tenant provided Tenant does not complete said construction within six (6) months
from the date of said notice, and Landlord shall reserve all rights and remedies thereunder against
Tenant for breach of the Lease. Landlord shall cooperate with Tenant in Tenant’s processing of all
necessary permits for construction of the Interior Improvements, however, Landlord shall assume no
responsibility nor incur any out of pocket costs in connection with Tenant’s processing activities,
and Landlord shall not be required to attend any meetings or hearings with the City of Fremont (the
“City”) staff or the City Council.




          C. Letter of Credit Requirement: Prior to commencement of construction of the
Interior Improvements, Tenant shall deliver to Landlord an irrevocable unconditional letter of
credit issued for a period of forty-two (42) months (the “Letter of Credit”) in the total dollar
amount reasonably estimated by Tenant to be necessary to construct the Interior Improvements (less
the amount of Landlord’s Interior Improvement Allowance) issued by an institutional lender
acceptable to Landlord. In the event Tenant and/or Landlord subsequently and reasonably determines
that the amount of said Letter of Credit does not




 









 






cover the cost of the Interior Improvements,
Tenant shall increase the Letter of Credit amount accordingly within ten (10) days of receipt of
written notice from Landlord if Landlord is the party who discovers the deficiency or within ten
(10) days of Tenant’s discovery of such deficiency. The Letter of Credit shall be unconditionally
payable upon demand by Landlord, and Landlord shall be entitled to draw upon the Letter of Credit,
without proof, for the purpose of completing construction of the Interior Improvements upon ten
(10) days’ notice to Tenant, in the event Tenant fails to pay any sums when due under any
construction contract for the Interior Improvements or to complete such construction as and when
required hereunder or in the event any liens are filed against the Property. Upon delivery to
Landlord of evidence of each interim payment by Tenant of its portion of the cost of the
construction of the Interior Improvements from time to time during the course of such construction,
Tenant shall be entitled to cause a reduction in the face amount of the Letter of Credit by a sum
equal to such evidenced payment. Any amount drawn thereon which is not so applied by Landlord
shall be returned to Tenant. Upon written request from Tenant, Landlord agrees to release the
Letter of Credit to Tenant after the following have been completed by Tenant: (a) completion of
the Interior Improvements; (b) Tenant’s delivery to Landlord of proof of payment for all
construction costs (including copies of signed checks, the related invoices and unconditional lien
releases from the General Contractor and all subcontractors); (c) Tenant’s delivery to Landlord of
a recorded Notice of Completion for the Interior Improvements.




          D. Licensed Contractor Requirement: All construction of Interior Improvements in the
Premises shall be done by a licensed general contractor approved by Landlord. The terms of the
general contract for construction of the Interior Improvements shall be reasonably agreed upon by
and between Tenant and such general contractor following consultation by Tenant with Landlord
and/or Landlord’s consultant (if Landlord so desires).




          E. Written Notice: Notwithstanding that Landlord has approved plans as aforesaid,
neither Tenant, its agents, employees, contractors, or subcontractors, including without limitation
engineers and surveyors, shall enter upon the Premises to commence any work of construction or in
preparation of construction of the Interior Improvements except upon prior written notice to
Landlord, which notice shall be deemed given on the Execution Date.




          F. Construction of Interior Improvements by Tenant: Pursuant to the Performance
Schedule in Paragraph 2 above, Tenant shall construct Interior Improvements within the Premises in
accordance with plans and specifications to be approved by Landlord. Tenant specifically agrees to
build out and finish the entire building and Tenant agrees to construct the Interior Improvements
in the offices and corridors based on Landlord’s standards as follows: (i) ten foot ceilings with
uniform grid; (ii) USG ultrawall panels (floor to ceiling) for all non-load bearing walls; and
(iii) ten foot by three foot single doors and ten foot by six foot double doors, if any, and the
doors leading to general lab areas shall also be Landlord’s standard doors. All other finishes
shall be subject to Landlord’s reasonable approval. Landlord and Tenant agree, upon the completion
of the Interior Improvements, that the “as built” construction plans for the Interior Improvements
shall become Exhibit B to the Lease, and become the interior configuration for Tenant’s
surrender responsibilities as described in Lease Paragraph 5, “Acceptance and Surrender of
Premises” and Tenant shall not be obligated or allowed to remove any Interior Improvements shown on
the “as built” construction plans added to the Lease as Exhibit B upon completion of the
Interior Improvements, unless such removal is requested by Tenant and approved in writing by
Landlord. Tenant hereby warrants to Landlord that all materials shall be new or from Tenant’s
currently existing inventory of new materials, and all workmanship used by Tenant in the
construction of said Interior Improvements shall be of a quality which is, and shall conform to the
standards which are, consistent and compatible with the quality and specifications of Building 6.
Upon completion of construction of the Interior Improvements, Tenant shall, at Tenant’s sole cost,
deliver (i) three (3) copies of as-built plans on reproducible mylars drawn to a minimum of 1/8”
scale and (ii) a complete set of as-built plans on CAD saved on one or more compact disks prepared
by a licensed engineer or architect of the Interior Improvements and Tenant shall file or cause to
be filed a Notice of Completion in accordance with all applicable laws, a copy of which shall be
delivered to Landlord within five days of said filing. Such as-built plans shall certify that all
Interior Improvements have been constructed substantially in accordance with such plans.



Landlord’s approval of such Interior Improvements shall not be construed as approval of any
construction detail with respect to conformance to any applicable City or governmental ordinance or
code, and by approving such Interior Improvements, Landlord assumes no liability or responsibility
therefor, or for any defect in any Interior Improvements constructed by Tenant.



Tenant shall be liable and shall fully and completely indemnify and hold Landlord harmless from any
cost, expense, claim, damage, obligation or liability of any kind or nature whatsoever (including
Landlord’s attorneys’ fees) which occurs as a result of, in connection with, or in any way relating
to said Interior Improvements within the Leased Premises as set forth herein, including, but not
limited to faulty workmanship and loss, damage, injury or death related to the construction of the
Interior Improvements,




 









 









during the course of construction and continuing during the Term of the
Lease. In the event of any claim assessed which is covered by the foregoing indemnity, Tenant
shall defend Landlord with legal counsel reasonably acceptable to Landlord. Tenant shall, at
Tenant’s sole cost and expense, obtain all necessary permits required to construct and complete
said Interior Improvements, and shall comply with all applicable City or Governmental codes and
ordinances in relation to said Interior Improvements.



It is agreed that in the event Tenant does not complete the construction of the approved Interior
Improvements as required herein, said Lease is terminated early as a result thereof, Tenant shall,
at its sole cost and expense, upon receipt of written notice by Landlord, immediately remove any
and/or all
Interior Improvements (as requested to be removed by Landlord) made by Tenant and return the
Premises to the condition that existed prior to the installation and/or construction of said
Interior Improvements made by Tenant. In the event Tenant does not immediately and timely comply
with said request for removal and restoration, it is hereby agreed that Landlord may have any
and/or all of said Interior Improvements removed and the Premises restored to its Shell condition
at the sole cost and expense of Tenant and with no liability to Landlord.



Tenant hereby assigns to Landlord, effective upon the later of (i) the Lease Commencement Date, or
(ii) the date said plans are approved, all of its interest in and to the plans and specifications
prepared for the Interior Improvements, all studies, data and drawings with respect thereto
(excluding any confidential programming) prepared by or for Tenant, and the contracts and
agreements relating to such plans and specifications or studies, data and drawings, or to the
construction of the Interior Improvements, including but not limited to the general contract
therefor, but Landlord shall not have any obligation under those contracts or agreements unless
Landlord expressly agrees to assume such obligation in writing. Following said assignment,
Landlord shall not have the right to exercise any rights of Tenant under those contracts and
agreements or with respect to such plans, specifications, studies, data and drawings except (a) in
the event of an uncured monetary default or material non-monetary default by Tenant or (b) upon the
termination of said Lease.



All of the terms of the Lease shall apply to any entry by Tenant pursuant to this Paragraph 4F
(including provisions of the Lease regarding indemnification and insurance) with the exceptions
related to the payment of monthly Basic Rent and Additional Rent (except as otherwise noted in said
Lease or this Construction Agreement). Any entry or construction work by Tenant and its agents in
the Premises pursuant to Paragraphs 4.B and 4.F shall be undertaken at Tenant’s sole risk. Tenant
shall indemnify, defend and hold Landlord harmless from any and all loss, damage, liability,
expense (including reasonable attorneys fees), claim or demand of whatsoever character direct or
consequential, including, but without limiting thereby the generality of the foregoing, injury to
or death of persons and damage to or loss of property arising out of the exercise by Tenant of any
early entry right granted hereunder. The obligations of Tenant contained in this Paragraph 4.F
shall survive the expiration of this Construction Agreement.




          G. Interior Improvements Part of the Premises: All Interior Improvements to the
real property shall become and remain a part of the Premises upon installation or construction and
shall be the property of Landlord. Tenant shall have only a leasehold interest therein, subject to
all of the terms and conditions of the Lease; however, all improvements to the Premises paid for
directly by Tenant shall remain the property of Tenant during the Lease Term, for accounting
purposes only, and Tenant shall have the right to depreciate the same and claim and collect
investment tax credits and all other tax savings with respect to such improvements. None of the
Interior Improvements shall be encumbered, transferred, removed or materially altered, except as
otherwise provided in the Lease. Provided Tenant is not in default hereunder, Landlord shall
within ten (10) business days of receipt of Tenant’s written request to Landlord to provide a
waiver agreement for Tenant’s leased and/or financed trade fixtures, equipment and other personal
property within the Premises (which request shall include a detailed itemization of said leased
and/or financed items to be referenced under said waiver). Landlord shall, after its review and
approval of said list, submit Landlord’s standard form waiver agreement (“Waiver Agreement”) to
Tenant and the respective third party for their execution. Upon receipt of the fully executed
Waiver Agreement, Landlord shall execute and return Landlord’s Waiver Agreement to Tenant as soon
as possible thereafter.




          H. Liens and Claims: During the construction of the Interior Improvements and the
installation of Tenant’s trade fixtures, Tenant shall keep the Premises and the Property free from
any liens arising out of any work performed, materials furnished or obligation incurred by Tenant.
In the event that Tenant shall not, within twenty (20) days following notice of the imposition of
any such lien, cause the same to be released of record. Tenant may bond such lien with a bond in
accordance with applicable California law to pay off said lien(s). In the event Tenant does not
remove said lien as provided herein, Landlord shall have, in addition to all other remedies
provided herein and by law, the right, but not the obligation, to cause the same to be released by
such means as Landlord shall deem proper, including




 









 







payment of the claim giving rise to such lien.
All sums paid by Landlord for such purpose, and all expenses incurred by Landlord in connection
therewith, shall be payable to Landlord by Tenant within five (5) business days after demand with
interest at the highest interest rate allowable by law or Landlord may at its option, draw or make
a demand under the Security Deposit and/or Letter of Credit to pay said Lien and have said Lien
removed. Notwithstanding the foregoing, Tenant shall have the right to contest any lien so filed,
however, Tenant must have said lien removed by a bond as described above or otherwise removed from
the Premises within twenty (20) days as referenced above.




          I. Inspection Following Completion of Interior Improvements: As soon as the Interior
Improvements are Substantially Completed (as that term is defined herein), Landlord (or Landlord’s
representative) and Tenant shall conduct a joint walk-through of the Premises, and inspect such
Interior
Improvements, using their best efforts to discover all incomplete or defective construction
related thereto. After such inspection has been completed, Landlord or its representative shall
prepare, and both parties shall sign, a list of all “punch list” items which the parties agree are
to be corrected by Tenant. Tenant shall use reasonable efforts to complete and/or repair such
“punch list” items within thirty (30) days after executing such list.




     5. PAYMENT OF CONSTRUCTION COSTS:



          A. Shell Improvements: Landlord has furnished the Shell Improvements existing as of
the date of this Agreement at its cost. In the event any additional cost related to the Shell
Improvements are necessary as a result of the Tenant’s Interior Improvements, said costs shall be
paid one hundred percent (100%) by Tenant.




          B. Landlord’s Interior Improvements Allowance: Landlord agrees to furnish Tenant with
an Interior Improvement allowance of One Hundred Twenty and no/100 Dollars ($120.00) per square
foot of gross leasable area within the building (e.g., $13,174,320.00 based on the
109,786+ square foot Building and not on the total Building size of 111,465 ± square feet)
(hereinafter referred to as the “Interior Improvement Allowance”). In addition to the Interior
Improvement Allowance, Landlord agrees to reimburse Tenant for fifty percent (50%) of Tenant’s out
of pocket cost, up to a maximum of an aggregate total amount of $50,000 for both Buildings 5 and 6,
for any costs incurred by Tenant which are necessary to remediate problems in the slab floor of the
Premises caused by moisture and cracking in excess of what would be expected for a building in the
Ardenwood area. The excess moisture and excess cracking, if any, shall reasonably be determined by
a third party professional by making moisture vapor tests and by taking floor core samples from the
first floor of the Premises. The parties hereto understand and agree, that said reimbursement
shall not include any cost Tenant may incur for testing or samples or for any cost other than the
cost to correct the excessive moisture and excessive cracking of said floor as reflected in the
results from the aforementioned tests (which cost to correct excludes normal cement floor cracking
and normal moisture vapor for buildings in the Ardenwood area). Said test shall be performed as
soon as reasonably possible under Tenant‘s direction and a report shall be delivered to both
parties within thirty (30) days of the execution of this Lease. Landlord shall reimburse Tenant
for its share as referenced above within thirty (30) days of receipt of proof of payment from
Tenant and an unconditional signed lien release. Notwithstanding anything to the
contrary herein, Landlord shall not provide an allowance on the Building Connector. The Interior
Improvement Allowance shall be considered Landlord’s total monetary contribution with respect to
the Interior Improvements, which allowance shall be used for the payment of the direct cost of
constructing the approved Interior Improvements. Tenant is obligated to pay directly all costs for
permits, license, and fees of any type, builder’s risk insurance, real property taxes (as
referenced in Paragraph 8 (“Tax Increases During Construction Period”) and for its furniture, lab
equipment, personal property, trade fixtures, and the Building Connector (collectively
“Non-Interior Improvement Items”) The parties agree that none of Landlord’s Interior Improvement
Allowance shall be used for Non-Interior Improvement Items. Notwithstanding anything to the
contrary herein, the Interior Improvement Allowance shall be used only for real property
improvements.




          C. Liability for Interior Improvement Costs Above Landlord’s Interior Improvement
Allowance: It is further agreed that Tenant shall be responsible for and pay one hundred
percent (100%) of the interior improvement costs relating to the Interior Improvements in excess of
those that are paid for with the Interior Improvement Allowance (collectively “Interior Improvement
Costs”). In addition, Tenant shall be responsible for and pay any additional construction costs
and expenses related to modification of the Shell Improvements occasioned by changes or
modifications, if any, to the existing shell that are necessary to accommodate the approved
Interior Improvements, including, but not limited to the Other Tenant Improvements.




          D. Manner of Reimbursement to Tenant: If the total Interior Improvement Costs exceeds
the Interior Improvement Allowance, Tenant shall pay one hundred percent (100%) of each progress
payment due to the contractor constructing the Interior Improvements, and submit to Landlord a
request for reimbursement which bears the same relationship to the total amount of the progress
payment in question




 









 








as the amount Landlord is obligated to pay for the cost of constructing the
Interior Improvements. For purposes of illustration only, if the total Interior Improvement cost
(excluding the Non-Interior Improvement Items) of constructing the Interior Improvements is
estimated to be $30,000,000.00 then Tenant’s share thereof would be $16,825,680.00 (the excess over
Landlord’s total Interior Improvement Allowance of $13,174,320.00 assuming the area of the building
is 109,786+ square feet), or 56.09% of the total Interior Improvements Cost. If the first
progress payment due the contractor is $100,000.00 then Tenant’s share of such progress payment
would be $56,090.00 (or 56.09% of such progress payment), and Tenant would submit a request to
Landlord for reimbursement of 43.91% of such progress payment, or $43,910.00. With each request
for reimbursement, Tenant shall provide Landlord with a copy of the related invoice(s), copies of
the paid check(s) representing payment of said invoice(s) and copies of conditional lien releases
signed by the general contractor in charge of the Interior Improvements. Landlord shall pay within
fifteen (15) business days of receipt of all the required documents its prorata share of said
payment. For each succeeding progress payment, Tenant would likewise be obligated for
56.09% thereof, with the exception that Landlord, at its option, may retain (i) a pro rata share of
the final ten percent (10%) of the Interior Improvement contract until 62 days after recordation of
a Notice of Completion on the Premises for which Tenant is responsible for having recorded, and
(ii) if applicable, the amount of one hundred fifty percent (150%) of the claim secured by any lien
which may, notwithstanding the conditional lien releases signed by such general contractor, have
been filed against the Premises. If Tenant fails to pay any amount when due, then Landlord may
after five (5) days written notice (but without the obligation to do so) draw on the Letter of
Credit or the Security Deposit and advance such funds on Tenant’s behalf, and Tenant shall be
obligated to restore the Letter of Credit to its original amount and reimburse Landlord for all
costs incurred by Landlord in advancing such funds.




          E. Construction Contract for Interior Improvements: The Interior Improvements shall
be constructed, in conformance (except as provided above) with the Final Interior Plans approved by
Landlord and Tenant and Tenant shall within a reasonable period thereafter enter into a contract
with the Prime Contractor to construct said Interior Improvements. A copy of said executed
contract shall be provided to Landlord immediately thereafter.




     6. CHANGES, MODIFICATIONS, OR ADDITIONS TO THE PLANS, SPECIFICATIONS AND/OR PREMISES:
Once the Final Interior Plans have been finally approved by Landlord and Tenant, then thereafter
Tenant shall not have the right to order extra work or change orders (except for de minimis changes
which will not materially or substantially impact or affect Tenant’s use of the Premises) with
respect to the construction of the Interior Improvements without the prior written consent of
Landlord, which consent shall not be unreasonably withheld. All extra work or change orders
requested by Tenant shall be made in writing, shall specify the amount of delay or the time saved
resulting therefrom, and shall become effective and a part of the approved plans once approved in
writing by both parties.



     7. DELIVERY OF DOCUMENTS: Tenant shall, within thirty (30) days after issuance,
deliver to Landlord any temporary or permanent certificate of occupancy issued by the City of
Fremont with respect to any of the Interior Improvements. Notwithstanding anything to the
contrary, Tenant shall diligently pursue obtaining any and all such certificates of occupancy.



     8. TAX INCREASES DURING CONSTRUCTION PERIOD: Notwithstanding anything to the contrary
in this agreement, in the event prior to the Commencement Date there is an interim or supplemental
reassessment of the Premises based upon the added value of the Interior Improvements, then upon the
Lease Commencement Date, Tenant shall pay to Landlord, within thirty (30) days prior to the due
date reflected on the related tax statement received from the tax assessor for Alameda County, any
interim or supplemental taxes (but no penalties or interest in connection therewith unless Tenant
fails to pay said amounts due by the respective dates referenced above) that have been levied
against the Premises and are attributable to the added value of the Interior Improvements during
the period prior to the Lease Commencement Date and any such supplemental taxes that may be levied
against the Premises thereafter.



     9. AUTHORITY TO EXECUTE. The parties executing this Agreement hereby warrant and
represent that they are properly authorized to execute this Agreement and that the individuals
executing this Agreement are authorized to bind the parties to all of the terms, covenants and
conditions of this Agreement.



     10. CHOICE OF LAW/VENUE; SEVERABILITY. This Agreement shall in all respects be
governed by and construed in accordance with the laws of the County of Santa Clara in the State of
California and each party specifically stipulates to venue in Santa Clara County. If any
provisions of this Agreement shall be invalid, unenforceable, or ineffective for any reason
whatsoever, all other provisions hereof shall be and remain in full force and effect.



 









 








(SIGNATURES ON FOLLOWING PAGE)




     IN WITNESS WHEREOF, Landlord and Tenant have executed this Agreement as of the day and year
last written below.



	 	 	 	 	 	 	 	 	 
	LANDLORD:	 	 	 	TENANT:
	 
	 	 	 	 	 	 	 	 
	JOHN ARRILLAGA SURVIVOR’S TRUST	 	 	 	GENITOPE CORPORATION
	 	 	 	 	 	 	a Delaware corporation
	 
	 	 	 	 	 	 	 	 
	By

	 	/s/ John Arrillaga	 	 	 	By	 	/s/ Dan  W. Denney, Jr.
	 

	 	 
	 	 	 	 	 	 
	 

	 	John Arrillaga, Trustee
	 	 	 	 	 	Dan W. Denney, Jr., Ph.D., CEO
	 
	 	 	 	 	 	 	 	 
	Date:

	 	May 18, 2005	 	 	 	Date:	 	May 19, 2005
	 

	 	 
	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	RICHARD T. PEERY SEPARATE	 	 	 	By	 	/s/ John Vuko
	 

	 	 	 	 	 	 	 	 
	PROPERTY TRUST	 	 	 	 	 	John Vuko, Chief Financial Officer
	 
	 	 	 	 	 	 	 	 
	By

	 	/s/ Richard T. Perry	 	 	 	Date:	 	May 19, 2005
	 

	 	 
	 	 	 	 	 	 
	 

	 	Richard T. Peery, Trustee	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Date:
	 	May 18, 2005