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8X8 INC /DE/
FORM 10-K
(Annual Report)
Filed 05/31/16 for the Period Ending 03/31/16
Address 2125 O'NEL DRIVE
SAN JOSE, CA 95131
Telephone 4087271885
CIK 0001023731
Symbol EGHT
SIC Code
4813 - Telephone Communications, Except Radiotelephone
Industry Communications Services
Sector Services
Fiscal Year 03/31
http://www.edgar-online.com
© Copyright 2016, EDGAR Online, Inc. All Rights Reserved.
Distribution and use of this document restricted under EDGAR Online, Inc. Terms of Use.

Table of contents

  • Page 1
    8X8 INC /DE/ FORM 10-K (Annual Report) Filed 05/31/16 for the Period Ending 03/31/16 Address Telephone CIK Symbol SIC Code Industry Sector Fiscal Year 2125 O'NEL DRIVE SAN JOSE, CA 95131 4087271885 0001023731 EGHT 4813 - Telephone Communications, Except Radiotelephone Communications Services ...

  • Page 2
    ... Number) 2125 O'Nel Drive San Jose, CA 95131 (Address of Principal Executive Offices including Zip Code) (408) 727-1885 (Registrant's Telephone Number, Including Area Code) Securities registered pursuant to Section 12(b) of the Act: Title of each class COMMON STOCK, PAR VALUE $.001 PER SHARE Name...

  • Page 3
    ... was 89,370,746. DOCUMENTS INCORPORATED BY REFERENCE Items 10, 11, 12, 13 and 14 of Part III incorporate information by reference from the Proxy Statement to be filed within 120 days of March 31, 2016 for the 2016 Annual Meeting of Stockholders. 8X8, INC. INDEX TO ANNUAL REPORT ON FORM 10-K FOR THE...

  • Page 4
    ... of the United States, and general economic conditions that could adversely affect our business and operating results. The forward-looking statements may also be impacted by the additional risks faced by us as described in this Annual Report, including those set forth under the section entitled...

  • Page 5
    ... about the operation of the Public Reference Room by calling the SEC at 1.800.SEC.0330. In addition, the SEC maintains a website (www.sec.gov) that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC, including 8x8. Our...

  • Page 6
    ..., 8x8's solutions have been designed to allow users to communicate and collaborate with others in an integrated and fluid manner. For example, a user who initiates a voice call on a desk phone and then needs to leave the office can seamlessly transfer the call to a mobile device without the person...

  • Page 7
    ...We offer qualifying customers an end-to-end service level agreement (SLA) with commitments regarding service availability and voice quality for calls transmitted over the public Internet. This SLA provides for at least 99.99% uptime and a voicequality mean opinion score (MOS) of 3.0 or higher for at...

  • Page 8
    ... 8x8 Virtual Office, delivers high quality voice as a service globally with a robust business feature set. 8x8 Virtual Office is a self-contained, end-to-end solution that enables a customer to use a single business phone number to place and receive calls from any supported device (including desktop...

  • Page 9
    ... number of the employee, and makes key Virtual Office features accessible such as access to the corporate directory, presence information, voicemail access, chat and SMS texting, access to Virtual Office Meetings (with content sharing and video, if subscribed). Our mobility software application...

  • Page 10
    ... the product. Third Party Integrations Our software uses a combination of open application program interfaces (APIs) and pre-built integrations to enhance functionality with data from other third-party back office management systems, including cloud-based solutions from Salesforce.com, NetSuite, and...

  • Page 11
    ... closely with inside technical support, sales engineers and deployment specialists to develop customized proposals based on individual customer requirements. Sales representatives are paid a base salary or hourly rate and monthly commission for selling our products and services. The commission is...

  • Page 12
    ..., detailed call record storage and billing and integration with third-party applications. We maintain a call switching platform in software that manages call admission, call control, call rating and routes calls to an appropriate destination or customer premises equipment. Network Operations Center...

  • Page 13
    ...services provider. We currently employ more than 140 individuals in research, development and engineering activities in our facilities in San Jose, California as well as outsourced software... materially adversely affect our business, financial condition and results of operations. Please refer to...

  • Page 14
    ... duties, which could have a material adverse effect on our operating results, cash flows and financial condition. The communications and software industries are subject to frequent litigation regarding patent and other intellectual property rights. Moreover, the VoIP service provider community has...

  • Page 15
    ... sophisticated and costly sales efforts. Similarly, the rate at which our customers purchase new or enhanced services depends on a number of factors, including general economic conditions and their reactions to any price changes related to these additional features and services. If our efforts...

  • Page 16
    ... face challenges building and training an integrated sales force capable of fully addressing the services and features contained in all of the components in our communications and collaboration suite, as well as a staff of expert engineering and customer support personnel capable of addressing the...

  • Page 17
    ... could have a material adverse effect on our business, financial condition or operating results. Because we recognize revenue from customer subscriptions over the term of the relevant contract, the effects of customer additions, cancellations and changes in subscribed services are not immediately...

  • Page 18
    ... contract lengths. We may not accurately predict cancellation rates for our customers. Our cancellation rates may increase or fluctuate as a result of a number of factors, including customer usage, pricing changes, number of applications used by our customers, customer satisfaction with our service...

  • Page 19
    ... all of the PTSN calls using our cloud-based services. We leverage the infrastructure of third party network service providers to provide telephone numbers, PSTN call termination and origination services, and local number portability for our customers rather than deploying our own network throughout...

  • Page 20
    ...incur significant costs and possible service interruption in connection with doing so. In addition, any financial difficulties, such as bankruptcy or foreclosure, faced by our third-party data center operators, or any of the service providers with which we or they contract, may have negative effects...

  • Page 21
    ... contract, early termination rights or other remedies against us. If a sufficient number of customers exercise these remedies, the resulting reduction in revenue could have a material adverse effect on our results of operations. We depend on third-party vendors for IP phones and software endpoints...

  • Page 22
    ... could materially adversely affect our operating results. Our inability to use software licensed from third parties, or our use of open source software under license terms that interfere with our proprietary rights, could disrupt our business. Our technology platform incorporates software licensed...

  • Page 23
    ...third-party lawsuits, regulatory fines or other action or liability, which could materially and adversely affect our business and operating results. Our customers are increasingly asking us to assume liability for security breaches in excess of the amount of revenue we receive from them. In addition...

  • Page 24
    ... examining companies' data collection, processing, use, storing, sharing and transmitting or personal data and data linkable to individuals. Self-regulatory codes of conduct, enforcement actions by regulatory agencies, and lawsuits by private parties impose additional compliance costs on us negative...

  • Page 25
    ... a material adverse effect on our business, financial condition and operating results. In addition, software and security flaws in our software can result in unauthorized access to our core network resulting in damages such as fraudulent toll usage on our network. Additionally, third parties have...

  • Page 26
    ... terms, could force us to cease using such technology and offering products and services incorporating such technology. We have recently been named as defendants in two patent infringement lawsuits. On February 22, 2011, we were named a defendant in a lawsuit, Bear Creek Technologies, Inc. v. 8x8...

  • Page 27
    ... in a specific country or region's regulatory requirements, taxes, trade laws, or political or economic conditions; more stringent regulations relating to data security and the unauthorized use of, or access to, commercial and personal information, particularly in the European Union; differing labor...

  • Page 28
    ... acquisitions in fiscal 2016, DXI Limited, API Telecom Limited, Easycallnow Limited and RAS Telecom Limited (collectively, "DXI") and Quality Software Corporation ("QSC") on May 29, 2015 and June 3, 2015, respectively. On November 29, 2013, we acquired Voicenet Solutions Limited ("Voicenet"), a UK...

  • Page 29
    ... stock price to fall. On an annual and a quarterly basis, there are a number of factors that may affect our operating results, many of which are outside our control. These include, but are not limited to: changes in market demand; the timing of customer subscriptions for our cloud software solutions...

  • Page 30
    ... preempted states from regulating VoIP services like ours in the same manner as providers of traditional telecommunications services. We cannot predict how this issue will be resolved or its impact on our business at this time. The FCC adopted rules concerning call completion rates to rural areas of...

  • Page 31
    ... accessing our services from outside of the United States. The FCC's current VoIP E-911 order or follow-on orders or clarifications or their impact on our customers due to service price increases or other factors could have a material adverse effect on our business, financial condition or operating...

  • Page 32
    ... condition, results of operations and cash flows. We anticipate that these risks will increase as we begin to market and sell our EasyContactNow service (which is currently sold in the United Kingdom) in the United States. Increased energy costs, power outages, and limited availability of electrical...

  • Page 33
    ... limits the ability of minority stockholders to elect director candidates; the ability of our board of directors to issue shares of preferred stock and to determine the price and other terms of those shares, including preferences and voting rights, without stockholder approval, which could be used...

  • Page 34
    ... and under Delaware law could discourage potential takeover attempts. ITEM 1B. UNRESOLVED STAFF COMMENTS None. ITEM 2. PROPERTIES Our principal operations are located in San Jose, CA in two facilities that are approximately 140,831 square feet of leased office space. Outside the United States our...

  • Page 35
    ...an injunction due to the patent expiration and 2-Way's alleged damages are limited to a time frame beginning in about 2010 and ending with the patent's expiration in 2012. On April 16, 2015, we were named as a defendant in a lawsuit, Slocumb Law Firm v. 8x8, Inc., filed in the United States District...

  • Page 36
    ...The graph is furnished, not filed, and the historical return cannot be indicative of future performance. Issuer Purchases of Equity Securities The activity under the Repurchase Plans for the three months ended March 31, 2016 is summarized as follows: Total Number of Shares Purchased Total Number of...

  • Page 37
    consolidated financial statements for further discussion. 33

  • Page 38
    ... that typically involve multiple sites, global implementations or integration with CRM or other back end systems. Fourth, we continued to build on our Global Reach® initiative by broadening our presence and service delivery capabilities to support our customers who currently are operating in 114...

  • Page 39
    ... Discussion and Analysis of Financial Condition and Results of Operations where such policies affect our reported and expected financial results. Use of Estimates The preparation of the consolidated financial statements in conformity with accounting principles generally accepted in the United States...

  • Page 40
    ...stand-alone basis. BESP is generally used for offerings that are not typically sold on a stand-alone basis or for new or highly customized offerings. We determine BESP for a product or service by considering multiple factors including, but not limited to: the price list established by its management...

  • Page 41
    ...an allowance. Therefore, we decreased our valuation allowance by approximately $1.1 million and $1.5 million, as certain California net operating losses will not be utilized as they have expired in fiscal 2016 and 2015. During the fourth quarters of fiscal 2014, we evaluated the need for a valuation...

  • Page 42
    ... the Equity Compensation Plans for stock-based compensation, we used the BlackScholes option valuation model. Fair value determined using the Black-Scholes option valuation model varies based on assumptions used for the expected stock prices volatility, expected life, risk-free interest rates and...

  • Page 43
    ... period and dividing the result by the number of months in the period. Excludes DXI business customer service revenue churn for the periods ended June 30, September 30, December 31, 2015, and March 31, 2016. DXI churn is excluded because revenue recorded by DXI is tied to usage levels and are not...

  • Page 44
    ... consists of costs associated with network operations and related personnel, communication origination and termination services provided by third party carriers and technology license and royalty expenses. The increase in cost of service revenue for fiscal 2016 from fiscal 2015 was primarily due...

  • Page 45
    ... to a $3.5 million increase in third party network service expenses, a $1.5 million increase in payroll and related expenses, a $1.0 million increase in depreciation, and a $0.3 million increase in stock-based compensation expenses. Years Ended March 31, 2016 2015 2014 (dollar amounts in thousands...

  • Page 46
    ... consist primarily of personnel and related overhead costs for sales, marketing, and customer service which includes deployment engineering. Such costs also include outsourced customer service call center operations, sales commissions, as well as trade shows, advertising and other marketing and...

  • Page 47
    ... in the second fiscal quarter of 2015 due to the third party purchaser entering into a license agreement with its customer. The gain on patent sale has been recorded as a reduction of operating expenses in the consolidated statements of operations. INTEREST INCOME AND OTHER, NET Years Ended March 31...

  • Page 48
    ... million were related to our stock repurchase program, and $0.5 million related to shares withheld for employee payroll taxes. We currently have no borrowing arrangements. We believe we have sufficient liquidity to fund operations for the foreseeable future. In addition, we have a shelf registration...

  • Page 49
    ... our employee stock purchase plan and the issuance of shares related to the exercise of options, which was offset by approximately $19.3 million ($19.2 million under our stock repurchase program and $0.1 million for shares withheld for payroll taxes). Contractual Obligations Future operating lease...

  • Page 50
    ... March 31, 2016. We have entered into contracts with multiple vendors for third party network service which expire on various dates in fiscal 2017 through 2018. At March 31, 2016, the total remaining obligations under these contracts were $3.5 million. At March 31, 2016, we had open purchase orders...

  • Page 51
    ...DATA INDEX TO FINANCIAL STATEMENTS AND FINANCIAL STATEMENT SCHEDULE Page FINANCIAL STATEMENTS: Report of Independent Registered Public Accounting Firm Consolidated Balance Sheets at March 31, 2016 and 2015 Consolidated Statements of Operations for each of the three years in the period ended March 31...

  • Page 52
    ..., in all material respects, the information set forth therein. Also in our opinion, 8x8, Inc., maintained, in all material respects, effective internal control over financial reporting as of March 31, 2016, based on criteria established in Internal Control - Integrated Framework (2013) issued by the...

  • Page 53
    ...: Authorized: 5,000,000 shares; Issued and outstanding: no shares at March 31, 2016 and 2015 Common stock, $0.001 par value: Authorized: 200,000,000 shares; Issued and outstanding: 89,213,205 shares and 88,065,528 shares at March 31, 2016 and 2015, respectively Additional paid-in capital Accumulated...

  • Page 54
    ... 31, 2016 2015 192,241 $ 148,208 $ 17,095 14,205 209,336 162,413 2014 116,607 11,990 128,597 Service revenue Product revenue Total revenue Operating expenses: Cost of service revenue Cost of product revenue Research and development Sales and marketing General and administrative Gain on patent sale...

  • Page 55
    8X8, INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) (IN THOUSANDS) Years Ended March 31, 2016 2015 (5,120) $ 1,926 $ (50) (2,025) (7,195) $ (26) (2,513) (613) $ 2014 2,514 (41) 507 2,980 Net income (loss) Other comprehensive income (loss), net of tax Unrealized ...

  • Page 56
    ... plans Cost of issuance of common stock Repurchase of common stock Stock-based compensation expense Issuance of common stock for acquisition of DXI Income tax benefit from stockbased compensation Unrealized investment loss Foreign currency translation adjustment Net loss Balance at March 31, 2016...

  • Page 57
    ... acquired Proceeds from disposition of discontinued operations, net of transaction costs Net cash used in investing activities Cash flows from financing activities: Capital lease payments Payment of contingent consideration Repurchase of common stock Tax benefit from stock-based compensation expense...

  • Page 58
    The accompanying notes are an integral part of these consolidated financial statements. 53

  • Page 59
    ... of the Company's board of directors participated in the offering and purchased 30,000 shares at the public offering price. Acquisitions In November 2013, the Company entered into a share purchase agreement with the shareholders and option holders of Voicenet Solutions Limited, a provider of cloud...

  • Page 60
    ... of the 8x8 cloud service with the accompanying 8x8 IP telephone constitutes a revenue arrangement with multiple deliverables. For arrangements with multiple deliverables, the Company allocates the arrangement consideration to all units of accounting based on their relative selling prices. In such...

  • Page 61
    ... basis. BESP is generally used for offerings that are not typically sold on a stand-alone basis or for new or highly customized offerings. The Company determines BESP for a product or service by considering multiple factors including, but not limited to: the price list established by its management...

  • Page 62
    ... are computed using the straight-line method. Estimated useful lives of three years are used for equipment and software and five years for furniture and fixtures. Amortization of leasehold improvements is computed using the shorter of the remaining facility lease term or the estimated useful life of...

  • Page 63
    ...% of accounts receivable. The Company purchases all of its hardware products from suppliers that manufacturer the hardware directly. The inability of any supplier to fulfill supply requirements of the Company could materially impact future operating results, financial position or cash flows. If any...

  • Page 64
    ... Equity Compensation Plans for stock-based compensation the Company used the Black-Scholes option valuation model. Fair value determined using the Black-Scholes option valuation model varies based on assumptions used for the expected stock prices volatility, expected life, risk-free interest rates...

  • Page 65
    ...group of executives with vesting that is contingent on both market performance and continued service. For the marketbased restricted performance stock units issued during the fiscal year ended March 31, 2015: the number of shares of the Company's stock to be received at vesting if applicable service...

  • Page 66
    ...amortized over the lease term. Tenant Improvement Allowance . The tenant improvement allowance is deferred and amortized on a straight-line basis over the life of the lease as a reduction to rent expense. In January 2016, the Company entered into a 48-month lease for additional office space near the...

  • Page 67
    ... February 2016, the FASB issued 2016-02, Leases (Topic 842) . Topic 842 requires companies to generally recognize on the balance sheet operating and financing lease liabilities and corresponding right-of-use assets. The update also requires qualitative and quantitative disclosures designed to assess...

  • Page 68
    In March 2016, the FASB issued ASU 2016-09, Compensation - Stock Compensation (Topic 718): Improvements to Employee Share-Based Payment Accounting ("ASU 2016-09"), which is intended to simplify several aspects of the accounting for share-based payment transactions, including the income tax ...

  • Page 69
    ... Quality Software Corporation (QSC) acquisition made in the first quarter of fiscal 2016. Amounts held in escrow were measure at fair value using present ... using a Level 3 input (in thousands): Years Ended March 31, 2016 2015 $ - $ 541 (200) $ 341 $ - Balance at beginning of period Purchase price...

  • Page 70
    ... During the year ended March 31, 2016, the Company decided to end-of-life its hosted virtual desktop service (Zerigo). The Company evaluated long-lived assets related to Zerigo including the technology, customer relationships, and trade name intangible assets for impairment. The Company determined...

  • Page 71
    ...material impact on the Company's operating results, financial position or cash flows. Under some of these agreements, however, the Company's potential indemnification liability might not have a contractual limit... headquarters facility in San Jose, California under an operating lease agreement that ...

  • Page 72
    ... rates. At March 31, 2016, future minimum annual lease payments under non-cancelable capital leases were as follows (in thousands): Year ending March 31: 2017 2018 2019 Total minimum payments Less: Amount representing interest Less: Short-term portion of capital lease obligations Long-term portion...

  • Page 73
    ...'s attention and could upon resolution, have a material adverse effect on the Company's business, results of operations, financial condition and cash flows. On February 22, 2011, the Company was named a defendant in Bear Creek Technologies, Inc. v. 8x8, Inc. et al. , along with 20 other defendants...

  • Page 74
    ... be granted at any price approved by the administrator, which generally will be the compensation committee of the board of directors. Options generally vest over four years and expire ten years after grant. In 2009, the 2006 Plan was amended to provide for the granting of stock purchase rights. The...

  • Page 75
    ...assumed the Amended and Restated Contactual, Inc. 2003 Stock Option Plan (the "2003 Contactual Plan") and registered an aggregate of 171,974 shares of the Company's common stock that may be issued upon the exercise of stock options previously granted under the 2003 Contactual Plan and assumed by the...

  • Page 76
    ...Outstanding at March 31, 2015 Granted Exercised Canceled/Forfeited Outstanding at March 31, 2016 Vested and expected to vest at March 31, 2016 Exercisable at March 31, 2016 Stock Purchase Right activity since March 31, 2013 is summarized as follows: Number of Shares 5,991,544 $ 1,465,400 (1,283,470...

  • Page 77
    ...-based compensation expense related to shares issued as part of the DXI acquisition (see Note 13) was approximately $1.9 million, which will be recognized over a weighted average period of 3.17 years. Cash received from option exercises and purchases of shares under the Equity Compensation Plans for...

  • Page 78
    ... rights granted under the Employee Stock Purchase Plan was estimated using the Black-Scholes pricing model with the following weighted-average assumptions: 2016 Expected volatility Expected dividend yield Risk-free interest rate Weighted average expected rights term Weighted average fair value of...

  • Page 79
    ... with available cash. Repurchases under the Repurchase Plan may be made through open market purchases at prevailing market prices or in privately negotiated transactions. The timing, volume and nature of share repurchases are subject to market prices and conditions, applicable securities laws and...

  • Page 80
    ... capital rather than as a reduction of the provision for income taxes. In addition, at March 31, 2016, the Company had research and development credit carryforwards for federal and California tax reporting purposes of approximately $4.5 million and $6.2 million, respectively. The federal income tax...

  • Page 81
    ... provided by Section 382 of the Internal Revenue Code and similar state provisions. Such an annual limitation could result in the expiration or elimination of the net operating loss and tax credit carryforwards before utilization. The Company has performed an analysis of its changes in ownership...

  • Page 82
    ... antidilutive (in thousands): 2016 Common stock options Stock purchase rights 12. SEGMENT REPORTING ASC 280, Segment Reporting , establishes annual and interim reporting standards for an enterprise's business segments and related disclosures about its products, services, geographic areas and major...

  • Page 83
    ...Executive Officer, the Chief Financial Officer, and the Chief Technology Officer or the Company's Chief Operating...sales and marketing, general and administrative, amortization expense, stock-based compensation...shipments and the customer's service address) was as follows: 2016 Americas (principally US)...

  • Page 84
    ... the right to receive approximately 53,000 shares of common stock that were valued at approximately $482,000 to certain continuing employees of DXI, which will be amortized as stock-based compensation over the requisite service period. The Company recorded the acquired tangible and identifiable...

  • Page 85
    ... quarter of fiscal 2016 statement of operations was not material. Therefore, no measurement period adjustment was required. Quality Software Corporation On June 3, 2015, the Company entered into an asset purchase agreement with the shareholder of QSC and other parties affiliated with the shareholder...

  • Page 86
    .... Under the terms and conditions of the patent purchase agreement, the Company has retained certain limited rights to continue to use the patents. The patent purchase agreement contains representations and warranties customary for transactions of this type. 16. DISCONTINUED OPERATIONS On September...

  • Page 87
    ...any changes in the Company's internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended (the "Exchange Act") during the most recent fiscal quarter that have materially affected, or are reasonably likely to...

  • Page 88
    ....8x8.com. ITEM 11. EXECUTIVE COMPENSATION Information relating to executive compensation will be presented in our definitive proxy statement for our 2016 Annual Meeting of Stockholders to be held on or about July 22, 2016, which information is incorporated into this Annual Report by reference...

  • Page 89
    ... Meeting of Stockholders to be held on or about July 22, 2016, which information is incorporated into this Annual Report by reference. In addition, descriptions of our equity compensation plans are set forth in Part II, Item 8 "FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA âˆ' NOTES TO CONSOLIDATED...

  • Page 90
    ... Description Total Allowance for Doubtful Accounts: Year ended March 31, 2014: Year ended March 31, 2015: Year ended March 31, 2016: of Year $ $ $ 327 $ 466 $ 416 $ Additions Charged to Expenses 571 $ 279 $ 509 $ Deductions (a) (432) $ (329) $ (339) $ Balance at End of Year 466 416 586 (a) The...

  • Page 91
    ... caused this Annual Report on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of San Jose, State of California, on May 31, 2016. 8X8, INC. By: /s/ VIKRAM VERMA Vikram Verma, Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENT...

  • Page 92
    ..., between Registrant and O'Nel Office Holdings, LLC Reserved Reserved Reserved Annual Executive Incentive Plan. Amended and Restated Contactual, Inc. 2003 Stock Option Plan Form of Stock Option Agreement under the Amended and Restated Contactual, Inc. 2003 Stock Option Plan Amended and Restated 2012...

  • Page 93
    ... as of January 20, 2016, by and between MNCVADSeagate 2665 North First LLC, and the Company Subsidiaries of Registrant Consent of Independent Registered Public Accounting Firm Power of Attorney (included on page 83) Certification of Chief Executive Officer of the Registrant pursuant to Rule 13a-14...

  • Page 94
    ...to the Registrant's Report on Form 8-K filed October 23, 2013 (File No. 000-21783). Incorporated by reference to the same numbered exhibits to the Registrant's Registration Statement on Form S-1 Commission (File No. 333-15627) as amended, declared effective July 1, 1997. Incorporated by reference to...

  • Page 95
    ...the Registrant's Form 10-Q filed July 31, 2015 (File No. 000-21783). Incorporated by reference to exhibit 10.2 to the Registrant's Form 10-Q filed July 31, 2015 (File No. 000-21783). Incorporated by reference to exhibit 10.3 to the Registrant's Form 10-Q filed July 31, 2015 (File No. 000-21783). 90

  • Page 96
    ... mail: MNCVAD-Seagate 2665 North First LLC DEPT LA 24356 PASADENA, CA 91185-4356 By check, if by courier/overnight delivery: MNCVAD-Seagate 2665 North First LLC Lockbox 24356 14005 Live Oak Ave. Irwindale, CA 91706-1300 2. Premises Address: 2665 North First Street, Suite 300 San Jose, California...

  • Page 97

  • Page 98
    3. Address of Tenant: 2125 O'Nel Drive San Jose, California 95131 Attn: Chief Financial Officer 4. Tenant's Trade Name: 8x8, Inc. 5. Tenant's Contact: _____ Telephone: _____ 6. Premises Square Footage: Approximately 36,174 rentable square feet, consisting of (i) 10,757 rentable square feet in ...

  • Page 99
    ..." is defined in Section 7.1 . " Guarantor " means the person(s) or entity identified in Item 14 of the Basic Lease Provisions, if any. " HVAC " means the heating, ventilating and air conditioning system serving the Building. " Hazardous Materials " is defined in Article VI . " Holidays " is defined...

  • Page 100
    ... to other tenants on such floor; and (b) an amount equal to Tenant's Share of the lobby areas, corridors, restrooms, mechanical rooms, janitorial rooms, electrical rooms and telephone closets in the Building. The Premises Square Footage as of the execution of this Lease is set forth in Item 6 of the...

  • Page 101
    ...the terms and conditions set forth herein, Landlord hereby leases the Premises to Tenant, and Tenant hereby leases the Premises from Landlord. The Premises are part of that certain office building commonly known as 2665 North First Street, San Jose, California (" Building "). The...

  • Page 102
    ... pay all separately metered utility, service and maintenance charges for the Premises attributable to Tenant's early entry and use of the Premises as reasonably determined by Landlord, (d) prior to such entry, Tenant shall have delivered to Landlord an executed original...

  • Page 103
    ... is located in the Building and in other comparable office buildings in San Jose, California, taking into consideration all free rent and other out-of-pocket concessions generally being granted at such time for such comparable space for the Option Term. All other terms and conditions of this Lease...

  • Page 104
    ... Rental Rate on or before the last day of the sixth (6 th ) full calendar month prior to the expiration of the Term, then each party's determination shall be submitted to arbitration in accordance with clause (d) below. Tenant's failure to deliver the Exercise Notice on or before the applicable...

  • Page 105
    ..., Additional Rent for Tenant's Share of Operating Expenses shall be payable on the first (1 st ) day of each calendar month of the Term, without... California Code of Civil Procedure Section 1161.1(c). ARTICLE V USE 5.1 Tenant's Use . Tenant shall use the Premises solely for the purposes set ...

  • Page 106
    ... and all applicable federal, state and local laws, regulations or ordinances pertaining to air and water quality, Hazardous Materials (as defined in Article VI ), waste disposal, air emissions and other environmental or health and safety matters, zoning, land use and utility...

  • Page 107
    ...reasonable prior notice to Tenant, may cause an engineer selected by Landlord, to review (a) the Tenant's operations including materials used, generated, stored, disposed, and manufactured in the Tenant's business, and (b) the Tenant's compliance with terms of this Article VI . Tenant shall provide...

  • Page 108
    ... in any such statute, ordinance, rule, or regulation. ARTICLE VII OPERATING EXPENSES; TAXES; UTILITIES 7.1 Tenant to Bear Tenant's Share of Operating Expenses . Tenant shall pay to Landlord, as an item of Additional Rent, Tenant's Share (as defined in Section 7.2 ) of...

  • Page 109
    ... Tenant's Share . The term " Tenant's Share " means that portion of an Operating Expense determined by multiplying the cost of such item by a fraction, the numerator of which is the Premises Square Footage and the denominator of which is the total square footage of the floor area of the Building or...

  • Page 110
    ...limited to, removal of any obstructions not reasonably required for the Common Area uses, prohibition and removal of the sale or display of merchandise or the storing of materials and/or equipment in the Common Area, and payment of all electrical, water and other utility charges or fees for services...

  • Page 111
    ... shall at all times have free access to all mechanical installations of the Building and Premises, including, but not limited to, air conditioning equipment and vents, fans, ventilating and machine rooms and electrical closets. Tenant shall be solely responsible...

  • Page 112
    ...conforming in quality and design with the Premises existing as of the Commencement Date and in accordance with the provisions of Section 22.1 below. No Hazardous Materials, including, but not limited to, asbestos or asbestos-containing materials, shall be used by Tenant or Tenant...

  • Page 113
    ... to the Premises, all glass, windows, window casements, show window moldings, partitions, doors, doorjambs, door closures, hardware, fixtures, electrical lighting and outlets, plumbing fixtures, sewage facilities, interior walls, floors, ceilings, skylights, fans and exhaust equipment, and fire...

  • Page 114
    ...or cause to be erected, installed, or placed any structure, building, trailer, fence, wall, signs or other obstructions on the Common Area, and Tenant shall not store or sell any merchandise, equipment or materials on the Common Area. 10.3 Control of Common Area . Subject to provisions of the...

  • Page 115
    .... If Tenant commits, permits or allows a violation of any of the terms and conditions of this Lease relating to the use of the Common Area or the rules then in effect with respect thereto, or if a vehicle is being operated by Tenant or its agents, employees, guests, customers, invitees or subtenants...

  • Page 116
    ... " policy (as such term is used in ...general liability insurance, including, but not limited to, blanket contractual liability (including the indemnity set forth in Section 11.1 ), fire and water legal liability, broad form property damage, contractual liability, personal injury, completed operations...

  • Page 117
    ... extent permitted by Applicable Law, Landlord and Landlord's Agents shall not be liable for any loss or damage to persons or property resulting from theft, vandalism, fire, explosion, falling materials, glass, tile or sheetrock, steam, gas, electricity, water or rain which...

  • Page 118
    ... Tenant shall pay Tenant's Share of such deductible), regardless of whether such unavailability is due to coverage or other policy limits or the ...not be entitled to any compensation or damages from Landlord for loss of the use of the Premises, Tenant's Personal Property or other damage ...

  • Page 119
    ... the degree to which there is substantial interference with Tenant's use of the Premises, as reasonably determined by Landlord or Landlord's Architect. Each party hereby waives the provisions of Section 1265.130 of the California Code of Civil Procedure and any present or future law allowing either...

  • Page 120
    ... violation of the terms of this Article XIV , whether voluntary or involuntary, by operation of law, under...Code of 1978, 11 U.S.C. Section 101 et seq. (as amended, the " Bankruptcy Code "), Tenant on behalf of itself, creditors, administrators and assigns waives the applicability...

  • Page 121
    ...actions or use of the property in question, or (B) is subject to any enforcement order issued by any governmental authority in connection with the use, disposal or storage of Hazardous Materials...any exterior sign rights under this Lease, such rights are personal to the original Tenant named herein ...

  • Page 122
    ...in such corporation, association, limited liability company or partnership in the aggregate in excess of forty percent (40%) (except for publicly traded shares of stock constituting a transfer of forty percent (40%) or more in the aggregate, so long as no change in the controlling interests of...

  • Page 123
    ... or conditions contained in this Lease or those set forth in any other agreements or rules or regulations which Tenant is obligated to observe or perform. The Notice required by this Subparagraph 15.1(h) shall be in lieu of, and not in addition to, any notice required under Section 1161, et seq...

  • Page 124
    ... for Landlord's consent as are contained in this Lease (which standards and conditions Tenant acknowledges and agrees are reasonable at the time this Lease is executed by Tenant). In addition, if Tenant has entered into a sublease which is valid under the terms of this Lease, Landlord may also...

  • Page 125
    ... by Tenant to Landlord on demand, and shall bear interest at the Applicable Rate from the date of such demand until paid by Tenant. In addition, if any action shall be instituted by either of the parties hereto for the enforcement of any of its rights in and under this...

  • Page 126
    ...due and payable by Tenant to Landlord, as an item of Additional Rent, on demand by Landlord, together with interest thereon at the Applicable Rate from the date of such demand until paid by Tenant. 15.11 Limitation of Actions Against Landlord . Any claim, demand or right of any kind...

  • Page 127
    ...conform to the sign criteria established by Landlord from time to time for such signage. Tenant grants to Landlord a non-exclusive and royalty-free license and limited right to use Tenant's Trade Name(s), trademark(s), logo(s) and design(s), whether registered or unregistered (the...

  • Page 128
    ... signage on the exterior of the Building, identifying the name and/or logo of the Original Tenant (i.e., "8x8, Inc.") (the" Exterior Sign "). All aspects of the Exterior Sign, including, without limitation, the location, graphics, materials, color, design, lettering, size, quality and...

  • Page 129
    ..., designate a different address than that set forth above for the purposes of Notice, but such modified address must include a street address to which overnight couriers will deliver. If Tenant's address for Notices is an address not located in California, then, notwithstanding anything contained in...

  • Page 130
    ... agent of Landlord, it being the sole purpose and intent of the parties hereto to create a relationship of landlord and tenant. 21.15 Successors . The terms, covenants, conditions and agreements contained in this Lease shall, subject to the provisions as to assignment, subletting...

  • Page 131
    ... writing and signed by the parties hereto. 21.19 Authority . If Tenant is a corporation, limited liability company or a partnership, each individual executing this Lease on behalf of the corporation, limited liability company or partnership, as the case may be, represents...

  • Page 132
    ...to any work or service performed at the Building or on the Premises by Tenant or Tenant's contractors (including, without limitation, Alterations, repairs, maintenance, janitorial and cleaning services), which terms and conditions are in addition to those set forth in the Lease...

  • Page 133
    ... have no right of access to or within the Building or the Property for the installation or operation of telecommunications services or systems, including, but not limited to, voice, video, data, and other telecommunications services provided over wire, fiber optic, microwave, wireless, or any other...

  • Page 134
    ...Wiring, and such Wiring shall be free of all liens and encumbrances; and II. All wiring shall be left in good condition, working order, properly labeled at each end and in each telecommunications/electrical closet and junction box, and in safe condition. D. Notwithstanding anything to the contrary...

  • Page 135
    ... executed this Lease as of the date of this Lease. LANDLORD: MNCVAD-SEAGATE 2665 NORTH FIRST LLC, a Delaware limited liability company By: _____ Name: _____ Its: _____ TENANT: 8x8, INC., a Delaware corporation By: _____ Name: _____ Its: _____ By: _____ Name: _____ Its: _____ TENANT'S ADDRESS...

  • Page 136
    ...part of that certain Standard Form Office Lease dated January 20, 2016, by and between MNCVADSEAGATE 2665 NORTH FIRST LLC, as " Landlord ", and 8x8, INC., as "Tenant", for the Premises known as 2665 North First Street, Suite 300, San Jose, California. [TO BE ATTACHED] EXHIBIT...

  • Page 137
    ... _____ RE: Standard Form Office Lease dated _____, by and between MNCVAD-SEAGATE 2665 NORTH FIRST LLC, as " Landlord ", and 8x8, INC., as " Tenant ", for the Premises known as 2665 North First Street, Suite 300, San Jose, California. Agreement Capitalized terms used herein without further definition...

  • Page 138
    ... upon the roof of the Building. 3. No awnings or other projection shall be attached to the outside walls of the Building. No security bars or gates, curtains, blinds, shades or screens shall be attached to or hung in, or used in connection with, any window or door of the Premises without the...

  • Page 139
    ...only between those hours as may be designated by, and only upon previous written Notice to, Landlord, and the persons employed to move those objects in or out of the Building must be reasonably acceptable to Landlord. No freight, furniture or bulky matter of any description shall be received into or...

  • Page 140
    ... and economic heating, cooling, cleaning or other servicing of the Building or the Premises. 25. Tenant shall furnish and utilize masonite or plastic floor mats so as to minimize carpet damage resulting from the use of rollers on chairs. Tenant agrees to comply with all such Rules and Regulations...

  • Page 141
    ... and remove all existing phone, IT and data cabling in such interior walls; (iv) install new light fixtures and additional lighting in Suite 300 of the Premises as depicted on Schedule 1 attached hereto; and (v) cause all lights on the second (2 nd ) floor of the Premises to...

  • Page 142
    Schedule 1 to Work Letter EXHIBIT D -2-

  • Page 143

  • Page 144
    ... OF REGISTRANT Name Netergy Microelectronics, Inc. Visit, Inc. Contactual, Inc. Zerigo, Inc. Voicenet Solutions Limited 8x8 UK Investments Limited 8x8 Research and Innovations SRL 8x8 Canada, Inc. 8x8 Australia Pty Ltd. Jurisdiction of Incorporation California, USA California, USA Delaware...

  • Page 145
    ...to the consolidated financial statements of 8x8, Inc., and the effectiveness of internal control over financial reporting of 8x8, Inc., appearing in this Annual Report (Form 10-K) for the year ended March 31, 2016. /s/ Moss Adams LLP San Francisco, California May 31...

  • Page 146
    ... and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): A. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the...

  • Page 147
    ... and the audit committee of the registrant's board of directors (or persons performing the equivalent functions): A. All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the...

  • Page 148
    ...1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ V IKRAM V ERMA Vikram Verma Chief Executive Officer May 31, 2016 This certification accompanies this Report pursuant to § 906 of the...

  • Page 149
    ... of 1934; and 2. The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company. /s/ M ARY E LLEN G ENOVESE MaryEllen Genovese Chief Financial Officer and Secretary May 31, 2016 This certification accompanies this...