LEASE AGREEMENT by 8X8 INC /DE/
Company: 8X8 INC /DE/
SEC CIK: 1023731
SEC Type: EX-10.12
SIC Code: 4813
SIC Industry: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE)
Date Filed: 2012-05-24
2125 O'Nel Drive, San Jose, California
This Lease Agreement (this "Lease") is entered into as of April 27, 2012, between O'Nel Office Holdings, LLC, a Delaware limited liability company ("Landlord"), and 8x8, Inc., a Delaware corporation("Tenant"), who agree as follows with respect to the Premises described below.
1. Agreement to Let. From the date of this Lease until the Expiration Date or earlier termination in accordance with this Lease (the "Term"), Landlord leases to Tenant, and Tenant leases from Landlord, the Premises within the Project. The "Project" is comprised of the real property located at 2125 O'Nel Drive, San Jose, County of Santa Clara, California, more particularly described on the attached Exhibit A, on which is located a single building of approximately 104,657 rentable square feet (the "Building"), with parking and landscaped areas. The "Premises" is the interior of the Building and those portions of the Project owned by Landlord and intended for use by tenants and invitees of the Project, including the common passageways, walkways, hallways, parking areas, and driveways.
2. Principal Lease Provisions and Definitions. The following are the principal provisions of, and definitions applicable, to this Lease.
2.1. "Basic Monthly Rent" means the following, on a fully net basis, which amount is unaffected by the actual size of the Premises, regardless of any re-measurements from time to time: (a) zero, for the 3-month period beginning on the Rent Commencement Date; then (b) $130,821.25 plus the Additional Allowance Rent, if any (as defined and described in the attached Exhibit C), for the period beginning on the first day after the period described in clause (a) (prorated for such month if less than 30 days) and continuing until the last day of the 15th calendar month following the month in which the Rent Commencement Date occurs. Thereafter, Basic Monthly Rent automatically increases by 3.0% on the first day after the period described in clause (b) of the preceding sentence and again on each anniversary of such date.
2.2. "Brokers" means CBRE, Inc. (through Tom Taylor, Dave Fukuda, and Matthew Taylor), as Tenant's broker, and Colliers International and Cassidy Turley Northern California jointly, as Landlord's broker. (See Section 31 below).
2.3. Dates: "Rent Commencement Date" means the earliest of: (a) August 1, 2012, (b) the date on which Tenant begins operating out of any portion of the Premises, and (c) the date on which the TI Work is substantially completed (as defined in the general construction contract for the TI Work). "Expiration Date" means the date that is the last day of the 87th calendar month following the Rent Commencement Date. Tenant may once extend the Expiration Date in accordance with the attached Addendum No. 1.
2.4. Notice Addresses for Tenant: Before the Rent Commencement Date: 810 W. Maude Avenue, Sunnyvale, California 94085. After the Rent Commencement Date: at the Premises.
2.5. Notice and Payment Address for Landlord: c/o Orchard Commercial, 2055 Laurelwood Road, Suite 130, Santa Clara, CA 95054; with copies of all notices concurrently delivered to JP Morgan Asset Management - Global Real Assets, Attention Michael Yoo, 2029 Century Park East, Suite 4150, Los Angeles CA 90067, and to Cannae Corporation, Attention Jay Atkinson, 155 Montgomery St., Suite 1605, San Francisco, CA 94104.
2.6. "Operations Plan" means a plan prepared by Tenant in reasonable detail describing Tenant's intended use of each area of the Premises, including detailed lists of chemicals (including all codes and classifications) and major equipment (including specific make, model, and specifications) to be used or located in each such area of the Premises or to be used or transported by Tenant or any of its Invitees on or around the Project. The initial Operations Plan is attached as Exhibit B to this Lease. If, at any time during the Term, Tenant desires to modify the Operations Plan, Tenant must first obtain Landlord's written approval (which approval shall not unreasonably be withheld).
2.7. "Permitted Use" means Tenant's use of the Premises for general office and research and development, and associated receiving, storage, and shipping, in accordance with the Operations Plan and all Applicable Regulations (as defined in Section 36.5 below).
2.8. "Security Deposit" means cash in an amount equal to $156,000.00, to be deposited with Landlord concurrently with Tenant's execution of this Lease. (See Section 19)
2.9. "TI Allowance" means up to $1,690,210.55 plus the Additional Allowance, if any (as defined and described in the attached Exhibit C), to be funded by Landlord and used exclusively for the design and construction in accordance with the attached Exhibit C.
2.10. TI Work: Tenant shall (at Tenant's cost to the extent exceeding the TI Allowance) improve the Premises with the improvements (the "Tenant Improvements") described in, and designed and completed in accordance with, the attached Exhibit C (the "TI Work").
3. Possession. Landlord will deliver possession of the Premises to Tenant within one business day after the mutual execution of this Lease and Tenant's delivery to Landlord of the Security Deposit, the portion of Tenant's first month's rent set forth in Section 8 of this Lease, and the certificates of insurance required by this Lease. Tenant has thoroughly inspected the Premises and accepts the Premises in its as-is condition with no right to require Landlord to perform any work to the Premises, other than Landlord's obligation to replace the HVAC units as provided in this paragraph and except as otherwise expressly provided below in this paragraph. From the date Tenant initially takes possession of any portion of the Premises, Tenant will be solely responsible for all utilities and services provided to the Project and payment or reimbursement of the costs for all such items. Tenant waives all warranties, whether express or implied (including any warranties of merchantability or fitness for a particular purpose), with respect to the Premises, except as follows: (a) Landlord represents that to its actual knowledge the Project does not contain any Hazardous Materials in violation of Applicable Regulations, (b) Landlord represents that the plumbing, electrical, and life-safety systems (the "Building Systems") at the Project are, or by the Rent Commencement Date will be, in good working order, and (c) before the Rent Commencement Date, at Landlord's cost, Landlord shall replace the existing HVAC box car units at the Project with new HVAC units capable of approximately 200 tons of capacity. Notwithstanding anything to the contrary set forth in this Lease, Tenant is not obligated to pay for and Landlord will pay for any repair or replacement costs incurred during the 12 months after the Rent Commencement Date resulting from defects in the Building Systems, except to the extent that such repairs or replacements are necessitated by Tenant's use of the Building Systems in excess of their capacity or by Tenant's negligence or willful misconduct (and this sentence does not affect Tenant's obligations to pay all normal maintenance costs during such one-year warranty period for the Building Systems). Landlord shall assign its rights to Tenant, on a non-exclusive basis, under any roof and HVAC warranties with respect to the Project.
4. Use of Premises. Tenant and its employees, agents, guests, invitees, customers, service- providers, and licensees (collectively, "Tenant's Invitees") may use the Premises for the Permitted Use and for no other use. Any change in the Permitted Use requires Landlord's prior written consent, which consent will not be unreasonably withheld. Tenant may not do, bring, or keep anything in or about the Premises that will cause a cancellation of any insurance covering the Premises or the Project. Tenant shall comply with all Applicable Regulations concerning the Project or Tenant's or Tenant's Invitees' use of the Project, including the obligation at Tenant's sole cost to alter, improve, maintain, and restore the Project in compliance with all applicable laws, even if the laws are enacted before or after the date of this Lease, even if compliance entails costs to Tenant of a substantial nature but subject to Section 9.1 below regarding amortization of the cost of certain capital improvements as set forth therein. Such obligation to comply with laws includes compliance with the Americans with Disabilities Act of 1990 (42 U.S.C. 12181 et seq.), as amended (the "ADA").
5. Parking. Tenant and Tenant's Invitees may use all of the parking area for parking within the Project, consisting of approximately 376 parking spaces (the "Parking Area") and the driveways leading to them on an exclusive basis for the benefit of the Premises, subject to all Applicable Regulations. Landlord reserves the right to establish reasonable rules and regulations regarding parking (and the parking lot may not be used for anything but parking for Tenant and Tenant's Invitees). Tenant shall comply with Landlord's request, from time to time, to remove all vehicles from the Parking Area for purposes of maintenance and repair. No personal property of any type may be stored or located in the Parking Area. Landlord shall provide Tenant with a diagram indicating the 376 spaces at the Project that are appurtenant to the Premises and available for Tenant's parking. At Tenant's request, Landlord shall (at Tenant's cost) mark up to eight spaces near the Building for "Visitor Parking Only." Landlord shall use commercially reasonable efforts to minimize the likelihood of unpermitted parking at the Project by neighboring owners and tenants.
6. Signs. Tenant is entitled to all signage rights on any building signage, monument sign, and interior lobby signage in accordance with all Applicable Regulations. Nevertheless, Tenant may not place, construct, or maintain any sign, advertisement, awning, banner, or other exterior decoration in the Premises which is visible from the exterior of the Premises (including inside the windows of the Premises), without Landlord's prior written consent, which consent shall not be unreasonably withheld. Tenant shall, at Tenant's sole cost, make any changes to any of Tenant's signage on the Project as required by any new or revised Applicable Regulation. Tenant shall pay all costs to install, maintain, repair, and replace its signs and to remove them before expiration of the Term (at which time Tenant must restore the Project to the condition it would have been in absent installation and removal of the signage). Tenant's signage rights under this Lease are personal to Tenant and Tenant's permitted assignees and sublessees under this Lease, and in no event may Tenant transfer any signage rights hereunder separately from a bona fide assignment of this Lease or sublease of the Premises. In no event may any signage include an Objectionable Name. An "Objectionable Name" means any name or trade name or logo that relates to an entity that is of a character or reputation, or is associated with a political faction or orientation that is materially inconsistent with the quality of the Project, or that would otherwise be reasonably objectionable to an institutional quality landlord of a building comparable to the Building (e.g., Hustler, Viagra, the KKK, etc.).
7. Communication Equipment. Strictly in accordance with all Applicable Regulations, Tenant and Tenant's contractors (who must first be reasonably approved by Landlord) may have access to install, repair, replace, remove, operate and maintain satellite dishes or other similar devices, such as antennae or similar devices, together with all cable, wiring, conduits and related equipment (collectively, "Communication Equipment"), for the non-commercial (i.e., non-revenue generating) purpose of receiving and sending radio, television and other communication signals to and from the Premises in connection with Tenant's use of the Premises, at a location reasonably approved by Landlord on the roof of the Building. Tenant shall ensure that any Communication Equipment installed by Tenant does not unreasonably interfere with any other equipment installed on the roof. Tenant shall retain Landlord's designated roofing contractor to make any necessary penetrations and associated repairs to the roof in order to preserve Landlord's roof warranty. All plans and specifications for the Communication Equipment are subject to Landlord's prior written approval (which shall not be unreasonably withheld, conditioned or
delayed) and all costs of installation, operation and maintenance of the Communication Equipment and any necessary related equipment (including costs of obtaining any necessary permits and connections to the applicable Building's electrical system) must be borne by Tenant. Landlord retains the right to use the roof of the Building for any purpose whatsoever, except signage, provided that Landlord does not unduly interfere with Tenant's use of the Communication Equipment. Landlord will have no obligations with respect to the Communication Equipment. Tenant shall remove the Communication Equipment and related equipment at Tenant's sole cost and expense before the expiration or sooner termination of this Lease or upon the imposition of any Applicable Regulation requiring removal, and shall repair any damage to the Building arising from such removal. Tenant may, at no additional charge, use the existing risers of the Building to install its Communications Equipment; provided that Landlord makes no representation regarding the capacity of such risers. If additional capacity is needed, Tenant may provide such additional capacity, subject to Landlord's prior written approval of the methods and manner of providing such additional capacity, which consent may be withheld in Landlord's reasonable discretion. Tenant represents and warrants that the operation of the Communications Equipment will not cause the Building rooftop to violate the maximum permissible exposure rules established by OSHA. At Landlord's option (to be exercised only if reasonable), Tenant shall (i) pay the cost of a study of the rooftop to ensure that Tenant's Communications Facilities will not cause the rooftop to be in violation of any RF emissions requirements, which study shall be performed by a contractor reasonably approved by Landlord, and (ii) take any steps required by any applicable laws to cause the use of the Communications Equipment to comply with such laws, including implementation of an RF safety program. Before expiration of the Term, Tenant shall remove all of its cabling and Communications Equipment, whether installed as part of the TI Work or otherwise and whether not approved by Landlord, and shall return the Building to the condition it would have been in without the installation or addition of the Communications Equipment or cabling.
8. Monthly Rent. Tenant shall pay to Landlord as minimum monthly rent, without deduction, setoff, prior notice, or demand, the Basic Monthly Rent in advance, on or before the first day of each calendar month throughout the Term commencing on the Rent Commencement Date. Concurrent with execution of this Lease, Tenant shall deposit with Landlord $130,821.25 to be credited to Tenant's first full month of Basic Monthly Rent. This Lease is intended to be an absolute "net lease" and Tenant is solely responsible for the cost of all care, maintenance, taxes, insurance, utilities, repair and operating expenses of the Premises, except to the extent specifically provided to the contrary in this lease. All monetary obligations of Tenant under this Lease constitute "rent" under this Lease. All payments received by Landlord from Tenant must be applied to the oldest payment obligation owed by Tenant to Landlord and no designation by Tenant, either in a separate writing or on a check or otherwise, will modify this clause or have any force or effect.
9. Operating Expenses.
9.1. Definition of Operating Expenses. Beginning on the Rent Commencement Date (regardless of any obligation at the time to pay Basic Monthly Rent), Tenant is responsible for payment of all costs and expenses paid or incurred by Landlord or Tenant relative to the ownership, operation, repair, restoration, replacement, maintenance, and management of the Project ("Operating Expenses"), including: (i) water, sewage disposal, drainage, refuse collection and disposal, gas, electricity, and other utility services, and the maintenance of all components, systems, and apparatus by which such utilities and services are provided; (ii) general maintenance and repair of the Project, and including rental and purchase costs of parts, supplies, tools, and equipment; (iii) expenses payable by Landlord pursuant to the provisions of any recorded covenants, conditions, and restrictions, reciprocal easement agreements, and any other recorded documents affecting the Project (other than Landlord's loan(s) secured by the Premises), (iv) all real property or real estate taxes, assessments, association dues, and other impositions, whether general, special, ordinary, or extraordinary, and of every kind and nature, which may be levied, assessed, imposed on the Project or against Landlord on account of the Project, including gross receipts taxes, assessments for special improvement districts and building improvement districts, governmental charges, fees and assessments for police, fire, traffic mitigation or other governmental service of purported benefit to the Project, taxes and assessments levied in substitution or supplementation in whole or in part of any such taxes or assessment, and all costs and fees incurred in connection with seeking reductions in any tax liabilities described above, which reductions Landlord will also seek,
if not already seeking, if so requested by Tenant ("Real Estate Taxes"); (v) any personal property taxes, assessments, or other impositions levied, assessed, or imposed upon any personal property of Landlord or Tenant used in connection with the Project, (vi) Insurance Expenses (as defined below); (vii) a property management fee to Landlord or its agent, not to exceed 3% of Basic Monthly Rent (except that during the period for which Basic Monthly Rent is zero, such fee will $3,925 per month), plus reimbursement of Landlord's and its agent's actual costs in connection with management of the Project, as well as all other labor and labor related costs, including wages, salaries, taxes, insurance, and employee benefits (except for employees of positions of property manager or higher); provided that if any employee performs services in connection with the Project and any other property, costs associated with such employee may be proportionally included in Operating Expenses based on the percentage of time the employee devotes to the Project versus the other properties, (viii) all legal, accounting, inspection, consultation, janitorial, and other service fees and costs; and (ix) capital improvements or modifications deemed reasonably necessary by Landlord or appropriate to reduce other Operating Expenses or to comply with Applicable Regulations; provided, however, any costs of such capital improvements or modifications shall be amortized (with interest based on a rate equal to 2.0% above the Prime Rate in effect in the U.S. as of the date such capital costs are paid, as published in the Wall Street Journal, or, if necessary, a reasonable substitute index reasonably selected by Landlord) over the anticipated useful life of such capital improvements or modifications.
Notwithstanding the foregoing, Operating Expenses shall not include any of the following:
- costs to repair the structural exterior walls, foundations, or structural support of the roof of the Building;
- legal fees, brokerage commissions, and advertising costs incurred in connection with the sale of any portion of the Project or the leasing of other premises within the Project;
- costs incurred in connection with damage or repairs to the extent reimbursed from any insurance policy carried by Landlord (or required to be carried by Landlord under Article 12 below) in connection with the Project;
- expenses for repair or replacement paid by condemnation awards;
- salaries for positions of property manager or higher;
- the cost of offsite service personnel to the extent that such personnel are not engaged in the management, operation, repair or maintenance of the Project;
- Landlord's or its property manager's general overhead expenses to the extent not related to the Project;
- all principal, interest, loan fees, and other carrying costs related to any mortgage or deed of trust encumbering the Project, unless such costs are directly attributable to Tenant's, its agents' or employees' activities in, on or about the Project, or as a result of a Tenant's breach or default under this Lease; or
- legal fees, accountant fees and other expenses incurred in disputes regarding or associated with the enforcement or defense of Landlord's title to or interest in the Project or any part thereof.
Additionally, notwithstanding anything to the contrary set forth in this Lease, "Real Estate Taxes" do not include Landlord's federal or state income, franchise, inheritance or estate taxes, capital, stock, succession, transfer, gift, or estate tax. Landlord shall reimburse Tenant, by means of a credit against future Operating Expenses or a direct payment from Landlord to Tenant, for any amount paid by Tenant for Real Estate Taxes that is later refunded to Landlord or otherwise reduced after first deducting Landlord's costs of obtaining the refund or credit.
9.2. Payment of Operating Expenses. Landlord shall deliver to Tenant an annual statement setting forth the estimated Operating Expenses Landlord expects to incur for the applicable year ("Expense Statement"). The Expense Statement for calendar year 2012 is attached to this Lease as Exhibit F. Tenant shall pay one-twelfth of the amount set forth in the Expense Statement with each payment of Basic Monthly Rent. Tenant's payment obligations under this paragraph