AMENDMENT NO. 10 TO AGREEMENT OF LEASE

Exhibit 10.1

AMENDMENT NO. 10 TO AGREEMENT OF LEASE

This Amendment No. 10 to Agreement of Lease, dated as of July 24, 2006 (this “Amendment”), is between RREEF AMERICA REIT II CORP. PPP, a Maryland corporation, by RREEF Management Company, a Delaware corporation, Authorized Agent (“Landlord”), and PEGASYSTEMS INC., a Massachusetts corporation (“Tenant”), for certain premises in the building located at 101 Main Street, Cambridge, MA 02142 (“Building”).

RECITALS:

A. Pursuant to the provisions of that certain Lease dated as of February 26, 1993 between Riverfront Office Park Joint Venture, a predecessor in interest of Landlord, and Tenant, as amended by Amendment No. 1 to Agreement of Lease dated as of August 17, 1994, Amendment No. 2 to Agreement of Lease dated as of February 28, 1997, Amendment No. 3 to Agreement of Lease dated as of March 31, 1998, Amendment No. 4 to Agreement of Lease dated as of September 9, 1998, Amendment No. 5 to Agreement of Lease dated as of November 30, 1998, Amendment No. 6 to Agreement of Lease dated June 30, 2000, Amendment No. 7 to Agreement of Lease dated as of November 15, 2001, Amendment No. 8 to Agreement of Lease dated as of July 31, 2002, and Amendment No. 9 to Agreement of Lease dated as of August 5, 2004 (as so amended, the “Lease”), Tenant leases from Landlord and Landlord leases to Tenant certain premises (the “Demised Premises”) and certain other areas in the Building.

B. Landlord and Tenant desire to enter into this Amendment No. 10 to add certain additional space on terms and conditions set forth herein.

C. All terms, covenants and conditions contained in this Amendment shall have the same meaning as in the Lease, except that the Letter of Credit will not be increased as a result of adding the Additional Space (hereinafter defined), and, shall govern should a conflict exist with previous terms and conditions.

AGREEMENT:

NOW, THEREFORE, in consideration of the foregoing recitals and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, Landlord and Tenant hereby agree as follows:

1. Defined Terms. All terms defined in the Lease retain their meaning herein, unless specified herein to the contrary.

2. Additional Space. Tenant wishes to lease from Landlord, and Landlord wishes to lease to Tenant, in addition to the Demised Premises, approximately 23,350 rentable square feet of space on Floor 11, as approximately depicted on Exhibit A, attached hereto and incorporated herein (the “Additional Space”) in the Building. Effective January 1, 2007, the Demised Premises subject to the Lease shall consist of the Demised Premises as expanded to include the Additional Space less the Temporary Space as hereinafter defined, and all references in the Lease to the “Demised Premises” shall refer to such expanded space less the Temporary Space, except as otherwise provided in this Amendment.

3. Rent Schedule. Effective January 1, 2007, Yearly Fixed Rent for the Additional Space shall be payable as follows, net of Tenant electricity:

4. Tenant’s Proportionate Share. Effective January 1, 2007, Tenant’s Proportionate Share for the Demised Premises shall be

29.0885%.

5. Condition of Premises and Reimbursement of Relocation Costs.

(a) Tenant acknowledges that Landlord shall have no obligation to perform any construction or make any additional improvements or alterations, or to afford any allowance to Tenant for improvements or alterations, in connection with this Amendment, other than as is set forth in this Paragraph 5 and Paragraph 11 and Exhibits B, C and D hereto. Except as is provided in this Paragraph 5, Tenant accepts the Additional Space in its “as is” condition.

(b) Landlord shall tender possession of the Additional Space to Tenant no later than July 1, 2006 in order for Tenant to commence and diligently pursue its work to completion pursuant to Exhibit B to this Lease.

(c) Any entry by Tenant to the Additional space pursuant to Section 5(b) above shall be at no additional cost to Tenant until January 1, 2007, except for its use of utilities, and such entry, use or occupancy shall be subject to all the provisions of this Lease other than the payment of any increase in rent pursuant to this Amendment.

6. Temporary Space. Landlord will make available up to February 28, 2007, subject to force majeure delays or Landlord’s Delays (hereinafter defined), Tenant’s existing 9,413 square foot space on Floor 12 (“Temporary Space”). Tenant shall continue to be obligated to meet all of its obligations, including the payment of all rent, on the Temporary Space through October 31, 2006. Thereafter, except for the payment of its electrical usage, Tenant shall not be responsible for any rent accruing thereafter on the Temporary Space, except as hereinafter provided. Occupancy of the Temporary Space after October 31, 2006 shall be subject to all of the terms, conditions and covenants of this Lease, other than the payment of rent for use of such space. Tenant will be responsible to return the Temporary Space to the Landlord by March 1, 2007 in the condition that is required under the Lease for the surrender of the Demised Premises. If Tenant fails to vacate the Temporary Space before March 1, 2007, subject to force majeure delays or Landlord’s Delays, Tenant shall be liable for rent on the Temporary Space per diem at the annual rate of $32.00 per square foot effective March 1, 2007 until the return of such Temporary Space to Landlord.

7. Parking. Effective as of January 1, 2007, Article 1(10) of the Lease shall be amended to read in its entirety as follows:

“(10) Parking Spaces: One hundred forty-two (142).”

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8. Commissions. Each of the parties represents and warrants that it has not dealt with any broker or finder in connection with this Amendment.

9. Tenant’s Authority. Each of the persons executing this Amendment on behalf of Tenant represents and warrants that such entity has been and is qualified to do business in the state in which the Building is located, that the entity has full right and authority to enter into this Amendment, and that all persons signing on behalf of the entity were authorized to do so by appropriate actions.

10. Incorporation. Except as modified herein, all other terms and conditions of the Lease shall continue in full force and effect and Tenant hereby ratifies and confirms its obligations thereunder. Each party acknowledges that, as of the date of the Amendment, the other party (i) is not in default under the terms of the Lease; (ii) has no defense, set off or counterclaim to the enforcement by the other party of the terms of the Lease; and (iii) is not aware of any action or inaction by the other party that would constitute an Event of Default by the other party under the Lease.

11. Landlord’s Work. Landlord hereby covenants and represents that Landlord’s Work (hereinafter defined) is a critical element of Tenant’s entering into this Lease Amendment and covenants and agrees to endeavor to perform Landlord Work on or before October 1, 2006, but no later than November 1, 2006. Landlord’s Work shall consist of the following:

(a) Landlord shall renovate the existing public restrooms on Floor 1 of the Building to be “building standard” or equivalent with finishes to be selected by the Landlord, subject to the reasonable approval of Tenant. As part of the renovation, Landlord will provide three (3) stall fixtures in the women’s restroom and one (1) stall and three(3) urinals in the men’s restroom as indicated in Exhibit C; and

(b) Landlord shall supply for Tenant’s installation any required heat pumps to replace any failing heat pumps with respect to the renovation of the Floor 1 premises.

In addition, Landlord’s payment of Tenant’s allowance (“Allowance” as defined in Exhibit “D”, which is annexed hereto and made a part hereof), is a pivotal element of this Lease Amendment. Landlord’s failure to make the Allowance payments pursuant to the terms of Exhibit “D” in a timely manner shall entitle Tenant to offset such amounts that are then currently due against the next rents due under the Lease until recouped.

12. Limitation of Landlord’s Liability. Redress for any claims against Landlord under the Lease or this Amendment shall only be made against Landlord to the extent of Landlord’s interest in the property to which the Premises are a part (Landlord’s interest shall include, without limitation, insurance proceeds, condemnation awards, rents and profits from the property of which the Premises is a part). The obligations of Landlord under the Lease shall not be personally binding on, nor shall any resort be had to the private properties of, any of its trustees or board of directors and officers, as the case may be, the general partners thereof or any beneficiaries, stockholders, employees or agents of Landlord, or the investment manager. In no case shall Landlord be liable to Tenant hereunder for any lost profits, damage to business, or any form of special, indirect or consequential damages.

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IN WITNESS WHEREOF, Landlord and Tenant have executed this Amendment as of the day and year first written above.

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EXHIBIT A

attached to and made a part of First Amendment to Lease

dated of April 24, 2006 between

RREEF AMERICA REIT II CORP. PPP, as Landlord and

PEGASYSTEMS INC., as Tenant

101 Main Street, Cambridge, Massachusetts

ADDITIONAL SPACE

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EXHIBIT B

attached to and made a part of First Amendment to Lease

dated of April 24, 2006 between

RREEF AMERICA REIT II CORP. PPP, as Landlord and

PEGASYSTEMS INC., as Tenant

101 Main Street, Cambridge, Massachusetts

TENANT’S WORK

Space Planning Drawings - Cubellis Associates Inc.

Architectural Working Drawings - Cubellis Associates Inc.

Mechanical Working Drawings - Cubellis Associates Inc.

Electrical Working Drawings - Cubellis Associates Inc.

or such other consultants designated by Tenant from time to time, with the approval of Landlord, which shall not be unreasonably withheld or delayed. Tenant, at its expense, shall furnish Landlord with architectural and design plans and specifications (the “Tenant’s Plans”) prepared first in preliminary form (“Preliminary Plans”), and thereafter in working form (“Working Drawings”), and covering the Work. Tenant shall pay all costs and expenses relating to Tenant’s Plans. All Tenant’s Plans shall meet the requirements set forth in Schedule I. Tenant shall deliver the completed Plans to Landlord.

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SCHEDULE I

STANDARDS FOR PLANS

(a) A layout of the Additional Space showing demising, corridor and exterior walls in relationship to the Building core. The locations of exterior window mullions, columns, stairways and other building features shall also be shown on the Space Plans.

(b) The location and composition of all walls. Non-standard improvements, such as walls requiring insulation, half walls, vinyl wall coverings or walls requiring special construction must be clearly noted on the Space Plans. Sectional details must be provided to adequately describe the construction of any non-standard wall.

(c) The location, size and swing of all doors. All doors shall conform with Landlord’s standard door specifications, unless otherwise noted on the Space Plans.

(d) A description of flooring materials.

(e) A reflected ceiling plan showing the layout of lighting fixtures, switches, and any other non-standard improvements which are to be located within the ceiling system.

(f) The location of all telephone and electrical outlets. Non-standard improvements, such as outlets to be located more than twelve (12) inches above the floor, dedicated circuit outlets or high amperage/voltage outlets must be clearly noted on the Space Plans.

(a) Insulated walls, special wall coverings, graphics, special painting or special wall materials such as plate glass or glass block.

(b) Door dimensions, thickness, hardware or locks.

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(c) Flooring materials.

(d) Electrical outlets requiring a dedicated circuit, more than 120 volts or more than 15 amperes.

(e) Telephone outlets requiring more than 3/4 inch diameter conduit.

(f) Light fixtures, exhaust fans, ceiling heights, or ceiling designs using non-standard materials.

(g) Any special conduits, receptacles or electrical devices necessary to serve communications equipment, computers or other facilities to be installed by Tenant.

(h) Any special requirements to accommodate handicapped employees of Tenant within the Premises.

(i) Any requirements for fire protection of computers, other equipment or materials installed by Tenant.

(j) Any requirements for special fire detection or life safety equipment not required by applicable building codes in effect at the time of construction.

(k) Any special reinforcing of the floor system which will be necessary to support computers, filing systems, equipment or furnishings having a load exceeding fifty pounds per square foot of floor area.

(l) Any special requirements for humidity control, temperature control, extra air-conditioning capacity, ventilation or heating which would not be provided by Landlord’s standard building systems. Such special requirements may arise as a result of Tenant’s desire to install a computer or other equipment which generates heat, food preparation facilities, bathrooms, laboratories, microfilm storage or other special facilities, equipment or products.

(m) Any private bathrooms, wet-bars, kitchens, vending machines or other installations requiring plumbing work or ventilation.

(n) Any cabinetry, wood paneling, reception desks, built-in shelving or furniture.

(o) Any improvement which will require modification of the Building’s structural, mechanical or electrical components.

(p) Sufficient details, specifications and other information as may be necessary for accurate pricing of any other non-standard Improvements.

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SCHEDULE II

INSURANCE REQUIREMENTS

1. Tenant shall cause to be maintained for Landlord’s benefit insurance in an insurance company or companies which are “A” rated, Class VII or better in Best’s Key Rating Guide or such lesser standard as shall be acceptable to Landlord and authorized to transact business in the state in which the Building is located, protecting Landlord against liabilities arising out of the operations of subcontractors and sub-subcontractors as well as Tenant’s contractor (“Contractor”) with respect to all the Work, including at least and in amounts not less than:

(a) Worker’s Compensation & Employers Liability: Statutory limits required by applicable Worker’s Compensation Law and $500,000 per occurrence for Employers Liability, without limitation including all liability arising under any applicable structural work act and any other statute for the protection of employees.

(b) Commercial or Comprehensive Liability including Landlord’s and Contractor’s Protective, products, and completed operations coverage, contractual liability including Contractor’s indemnity agreements contained in the Contract Documents, personal injury (employees’ exclusion deleted) $5,000,000 per occurrence Bodily Injury and Property Damage, $5,000,000 combined single limit. Landlord may require deletion of the “x, c, u” exclusion, if applicable.

(c) Comprehensive Auto Liability including owned, non-owned, or hired vehicles coverage: $1,000,000 per occurrence Bodily Injury and Property Damage Liability (Combined Single Limit).

(d) Builder’s Risk in an “all risk” form covering the Tenant Work against loss by fire and other casualty in an amount equal to the full insurable value of the Tenant Work.

Notwithstanding the foregoing, upon Tenant’s request Landlord shall provide the coverages set forth in subparagraph (d) above and Tenant shall reimburse Landlord for the actual cost thereof.

2. Contractor shall either have the Landlord added as an additional named insured to the preceding Commercial or Comprehensive General Liability insurance policy or shall supply a separate Landlord’s Protective policy, with limits as specified, naming the Landlord as named insured, and said General Liability or Landlord’s Protective policy shall be maintained in force until the completion of the Work.

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3. Each insurance policy shall be written to cover all claims arising out of occurrences taking place within the period of coverage; insurance written to cover only claims made within the policy period is not acceptable without the express advance written consent of Landlord. To the extent the policy is not a Landlord’s Protective policy, it shall be endorsed to indicate that it is primary as respects Landlord, not contributory with any other insurance available to the Landlord and not subject to reduction of coverage as to Landlord by reason of any claim asserted against Contractor other than in connection with the Work or by reason of any misstatement, act or omission of any party other than Landlord applying for or insured by such insurance.

4. Each insurance policy and any certificate furnished in lieu of a policy shall state that it will not be cancelled, reduced or materially changed without twenty (20) days’ prior written notice to Landlord. In the event Tenant fails to provide replacement coverage at least fifteen (15) days prior to the expiration of any policy of insurance, Landlord may at its option secure such insurance and Tenant shall reimburse Landlord for the cost thereof as additional rent; but Landlord shall not have any obligation to secure any such insurance.

5. If and so long as any monies shall be or be about to be owed to any lender upon the security of an interest in the Premises or the Building, at Landlord’s request any insurance required hereunder for Landlord’s protection shall also protect Landlord’s mortgagee and whenever Landlord is to be an additional insured, Landlord’s mortgagee shall also be so insured.

6. Each of the aforesaid insurance coverages shall be placed into effect before any of the Work is commenced and shall be maintained in force at all times while and for at least so long as any of the Work is carried on, including without limitation, any and all activities performed in fulfillment of any obligation of Contractor or any Subcontractor to correct defects in the Work or under any other warranty. Before commencing any of the Work, and as often thereafter as reasonably requested by Landlord, Tenant shall supply Landlord with either the policies themselves or certificates of insurance satisfactory to Landlord, evidencing compliance with all the foregoing requirements.

7. No insurance policy purporting to insure Landlord or Landlord’s lender, as the case may be, shall without the prior written consent of said party be so written as to limit or condition any of the insurer’s obligations to said party with respect to any insured loss or liability by any condition or requirement that said party bear, assume or pay any portion of such loss or liability before the insurer’s obligation to said party shall come into effect.

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EXHIBIT C

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EXHIBIT D

TENANT ALLOWANCE PAYMENT

Provided the Lease is in full force and effect and Tenant is not in default thereunder beyond any applicable cure period, Landlord hereby agrees to pay to Tenant an amount equal to $863,950.00 (the “Allowance”). Landlord shall pay Tenant draws against the Allowance making their best efforts to do so within 15 days but no later than thirty (30) days of each written staged request or demand for payment from Tenant, which accompanies with it (i) lien waivers applicable to the work performed for which payment is requested; (ii) copies of paid invoices for such work; (iii) copies of checks issued to vendors or contractor for such work; and (iv) any other information or documentation reasonably requested by Landlord to evidence lien-free completion of such work and payment of all of the cost thereof. The final draw will be paid by the Landlord with the last to occur of: (w) Tenant’s occupying the Additional Space for office purposes; (x) completion of the Work; and (y) satisfaction of the provisions of Paragraph 5 of Exhibit B.

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