**Exhibit 10.7**

 

FIRSTAMENDMENT TO DEED OF LEASE

 

THIS FIRST AMENDMENT TO DEED OF LEASE (“First Amendment”) is made this 22ndday of April, 2005, by and between ARLINGTON OFFICE, L.L.C., a Delaware limitedliability company (“Landlord”), and WATSON WYATT & COMPANY, a Delawarecorporation (“Tenant”).

 

**W I T N E S S E T H:**

 

WHEREAS, by that certain Deed of Lease dated as of April 27, 2004(the “Lease”), Landlord leased to Tenant, and Tenant leased from Landlord,approximately 119,111 square feet of rentable area (the “Original Premises”)consisting of (i) the entire fourth (4th) floor of the Building containingapproximately 28,591 square feet of rentable area, (ii) the entire fifth(5th) floor of the Building containing approximately 28,591 square feet ofrentable area, (iii) the entire sixth (6th) floor of the Buildingcontaining approximately 28,591 square feet of rentable area, (iv) theentire seventh (7th) floor of the Building containing approximately 28,591square feet of rentable area, and (v) approximately four thousand sevenhundred forty-seven (4,747) square feet of rentable area located on the eighth(8th) floor of the Building (also referred to specifically as the “InitialEighth Floor Space”), in the building located at 901 North Glebe Road, Arlington,Virginia (the “Building”), upon the terms and conditions set forth in theLease;

 

WHEREAS, Tenant desires to lease from Landlord, and Landlord desires tolease to Tenant, an additional approximately 2,975 square feet of rentable arealocated on the eighth (8th) floor of the Building (the “Additional Eighth FloorSpace”), upon the terms and conditions hereinafter set forth;

 

WHEREAS, the Original Premises and the Additional Eighth Floor Space arehereinafter collectively referred to as the “Premises”;

 

WHEREAS, Landlord and Tenant desire to amend the Lease (i) toprovide for the performance of certain Common Area improvements on the eighth(8th) floor of the Building by Tenant; (ii) to provide for theconstruction by Tenant of certain storage space on the eighth (8th) floor ofthe Building; (iii) to reflect their understanding and agreement withregard to the lease of the Additional Eighth Floor Space; and (iv) tootherwise amend the Lease, as more particularly set forth herein.

 

NOW, THEREFORE, for and in consideration of the mutual promises hereincontained, and other good and valuable consideration, the receipt andsufficiency of which are hereby acknowledged, the parties hereto mutually agreeas follows:

 

Any capitalized terms used inthis First Amendment and not otherwise defined herein shall have the meaningsascribed to them in the Lease.

 

The definition of “Premises” inSection 1.B. of the Lease is hereby amended with respect to all periodsbeginning on and after the date of this First Amendment by inserting thefollowing language at the end thereof:

 

“Notwithstanding theforegoing, Landlord and Tenant acknowledge that Tenant has exercised its rightto increase the total rentable area of the Premises by leasing certainadditional space located on the eighth (8th) floor of the Building, andLandlord and Tenant mutually agree that, as of the date of that certain FirstAmendment to Deed of Lease (the ‘First Amendment’), the portion of the Premiseslocated on said eighth (8th) floor of the Building comprises 7,722 square feetof rentable area on the eighth (8th) floor of the Building, as shown on Exhibit A-1attached hereto and made a part hereof, so that, as of the date of said FirstAmendment, the Premises comprises one hundred twenty-two thousand eighty-six(122,086) square feet of rentable area, subject to Tenant’s right to remeasurethe Premises pursuant to Section 1.B. of this Lease.”

 

Section 4.A. of the Lease(captioned “Base Rent”) is hereby amended as of the date of this FirstAmendment as follows:

 

TheBase Rent schedule set forth in said Section 4.A. is deleted in itsentirety and the following Base Rent schedule is hereby inserted in lieuthereof:

 

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| **Lease  Year** | ** ** | **Base Rent****Per Square Foot****   P****er Annum** | ** ** | **Base  Rent  Per Annum** | ** ** | **Monthly  Base Rent** | ** ** |
|-----------------|------------|-----------------------------------------------------------|------------|---------------------------|------------|------------------------|------------|
| 1               |       | $                                                         | 32.50      |                      | $          | 3,967,795.00           |       | $ | 330,649.58 |   |
| 2               |       | $                                                         | 33.31      |                      | $          | 4,066,684.66           |       | $ | 338,890.39 |   |
| 3               |       | $                                                         | 34.14      |                      | $          | 4,168,016.04           |       | $ | 347,334.67 |   |
| 4               |       | $                                                         | 34.99      |                      | $          | 4,271,789.14           |       | $ | 355,982.43 |   |
| 5               |       | $                                                         | 35.86      |                      | $          | 4,378,003.96           |       | $ | 364,833.66 |   |
| 6               |       | $                                                         | 36.76      |                      | $          | 4,487,881.36           |       | $ | 373,990.11 |   |
| 7               |       | $                                                         | 37.68      |                      | $          | 4,600,200.48           |       | $ | 383,350.04 |   |
| 8               |       | $                                                         | 38.62      |                      | $          | 4,714,961.32           |       | $ | 392,913.44 |   |
| 9               |       | $                                                         | 39.59      |                      | $          | 4,833,384.74           |       | $ | 402,782.06 |   |
| 10              |       | $                                                         | 40.58      |                      | $          | 4,954,249.88           |       | $ | 412,854.16 |   |
| 11              |       | $                                                         | 43.08      |                      | $          | 5,259,464.88           |       | $ | 438,288.74 |   |
| 12              |       | $                                                         | 44.16      |                      | $          | 5,391,317.76           |       | $ | 449,276.48 |   |

 

In thefirst sentence of the paragraph immediately following the Base Rent schedule insaid Section 4.A., the language “one hundred nineteen thousand one hundredeleven (119,111)” is hereby deleted and the following language is inserted inlieu thereof: “one hundred twenty-two thousand eighty-six (122,086)”.

 

Notwithstanding anything to thecontrary contained in the Lease, including, but not limited to Section 3of the Lease, the Work Agreement (Exhibit C to the Lease) and the ShellCondition (Exhibit E to the Lease), Landlord and Tenant hereby acknowledgeand agree that Tenant shall perform those improvements in the Common Area onthe eighth (8th) floor of the Building which are set forth on Exhibit Battached hereto and made a part hereof (the “8th Floor Common Area Improvements”)in conjunction with Tenant’s performance of Tenant’s Work.  Under the Lease, Landlord had been obligatedto perform certain improvements in the Common Area on the eighth (8th) floor tothe Building standard level of finishes for Common Areas, but Tenant herebywaives such requirement and shall instead perform such work in lieu ofLandlord, and therefore Landlord agrees to pay to Tenant the reasonable costsof performance of such 8th Floor Common Area Improvements(including, but not limited to, all architectural, engineering and buildingpermit fees incurred by Tenant with respect to such 8th Floor CommonArea Improvements) (“Landlord’s Common Area Allowance”) in consideration ofTenant’s performance of such work. Tenant acknowledges and agrees that Tenant shall pay all costs of Tenant’supgrades (i.e., improvements above the Building standard level of finishes) tothe eighth (8th) floor Common Area.

 

Tenant shall provide completed, finished and detailed architecturaldrawings and specifications for the 8th Floor Common Area Improvements forLandlord’s review and written approval. The provisions of Section II of the Work Agreement shall govern theperformance of the 8th Floor Common Area Improvement (except that the timewithin which Landlord must deliver to Tenant notice of Landlord’s approval ordisapproval of Tenant’s Engineering Plans and Specifications pursuant toParagraph 3.a of Section II of the Work Agreement shall be within five (5) businessdays following Landlord’s receipt of same, rather than within thirteen (13)business days following Landlord’s receipt of same).

 

Landlord hereby acknowledges that the 8th Floor Common AreaImprovements do not include the installation of bathrooms, mechanical rooms,telephone closets, elevator shafts, doors or janitorial closets on the 8thfloor of the Building, which continue to constitute a portion of Landlord’sWork and for the performance of which Landlord remains responsible under theLease.

 

Landlord shall reimburse Tenant for the costs incurred by Tenant for the8th Floor Common Area Improvements, in the amount of Fifty ThousandEight Hundred Dollars ($50,800.00), in accordance with the disbursementprocedures set forth in the

 

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Work Agreement.

 

Notwithstanding anything to thecontrary contained in the Lease, including, but not limited to, Section 35of the Lease (captioned “Storage Space”), Tenant hereby waives the obligationof Landlord to make improvements to the Storage Space and shall instead buildout the storage space, comprising one thousand eight (1,008) usable square feetof area on the eighth (8th floor of the Building, as more particularlydesignated on Exhibit A-1 attached hereto and made a part hereof, in lieuof Landlord.  Tenant shall providecompleted, finished and detailed architectural drawings and specifications forthe storage space buildout for Landlord’s review and written approval, and theprovisions of Section II of the Work Agreement shall govern Tenant’sperformance of the Storage Space Improvements (as hereinafter defined).  Tenant shall perform those improvements tothe Storage Space set forth on Exhibit C attached hereto and made a parthereof (the “Storage Space Improvements”). Landlord shall reimburse Tenant for the reasonable costs incurred byTenant for the Storage Space Improvement (including, but not limited to, allarchitectural, engineering and building permit fees incurred by Tenant withrespect to the Storage Space Improvements) in accordance with the disbursementprocedures set forth in the Work Agreement.

 

Landlord and Tenant agree thatthe Storage Space shall not be considered part of the Premises for purposes ofcalculation of the Base Rent under the Lease, and that, instead, Tenant shallpay to Landlord the annual rent (the “Storage Space Rent”) set forth below, inequal monthly installments (the “Monthly Storage Space Rent”), as follows:

 
| **Lease Year** | ** ** | **Storage Space  Rent Per  Usable  Square Foot  Per Annum** | ** ** | **Storage Space  Rent  Per Annum** | ** ** | **Monthly  Storage Space  Rent** | ** ** |
|----------------|------------|-------------------------------------------------------------|------------|------------------------------------|------------|----------------------------------|------------|
| 1              |       | $                                                           | 15.00      |                               | $          | 15,120.00                        |       | $ | 1,260.00 |   |
| 2              |       | $                                                           | 15.45      |                               | $          | 15,573.60                        |       | $ | 1,297.80 |   |
| 3              |       | $                                                           | 15.91      |                               | $          | 16,037.28                        |       | $ | 1,336.44 |   |
| 4              |       | $                                                           | 16.39      |                               | $          | 16,521.12                        |       | $ | 1,376.76 |   |
| 5              |       | $                                                           | 16.88      |                               | $          | 17,015.04                        |       | $ | 1,417.92 |   |
| 6              |       | $                                                           | 17.39      |                               | $          | 17,529.12                        |       | $ | 1,460.76 |   |
| 7              |       | $                                                           | 17.91      |                               | $          | 18,053.28                        |       | $ | 1,504.44 |   |
| 8              |       | $                                                           | 18.45      |                               | $          | 18,597.60                        |       | $ | 1,549.80 |   |
| 9              |       | $                                                           | 19.00      |                               | $          | 19,152.00                        |       | $ | 1,596.00 |   |
| 10             |       | $                                                           | 19.57      |                               | $          | 19,726.56                        |       | $ | 1,643.88 |   |
| 11             |       | $                                                           | 20.16      |                               | $          | 20,321.28                        |       | $ | 1,693.44 |   |
| 12             |       | $                                                           | 20.76      |                               | $          | 20,926.08                        |       | $ | 1,743.84 |   |

 

Landlord hereby approves Tenant’sArchitectural Drawings and Specifications and Tenant’s Engineering Plans andSpecifications as described on Exhibit O attached hereto and made a parthereof.

 

Tenant hereby acknowledges thatall items contained in the Landlord’s Turnover Condition Punch-List ( as defined in said Paragraph 1.f of Section I of theWork Agreement) have been completed.

 

The Tenant Allowance is herebyincreased by One Hundred Sixty-Four Thousand Nine Hundred Fifty-One and 50/100Dollars ($164,951.50) (the “Tenant Allowance Increase”), as follows:

 

infull resolution of a controversy which has arisen between Landlord and Tenantas to whether Landlord’s construction of dropped ceilings in the Premises aspart of Landlord’s Work complies with the Base Building Plans, Landlord shallpay to Tenant

 

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thesum of Fifteen Thousand Dollars ($15,000), and Tenant hereby irrevocably waivesany claims which it has or may have had with respect to the compliance of suchdropped ceilings with the Base Building Plans

 

in accordance with the lastsentence of Paragraph 1.a. of Section I of the Work Agreement, and insettlement of any claims that Tenant has or may have had concerning whethercertain VAV boxes were installed by Landlord in places other than as requiredby the Base Building Plans (Tenant hereby irrevocably waiving all such claims),Landlord shall pay to Tenant the sum of Thirty-Four Thousand Four HundredEighty-Six Dollars ($34,486.00); 

 

also in accordance with thelast sentence of Paragraph 1.a. of Section I of the Work Agreement,Landlord shall pay to Tenant the sum of One Hundred Eight Thousand Four HundredSixty-Five and 50/100 Dollars ($108,465.00) as reimbursement for certain VAVboxes which have been requested by Tenant in excess of the number of such VAVboxes which were provided for in the Base Building Plans and which additionalVAV boxes were not installed by Landlord; 

 

as provided in the Lease,Landlord shall pay to Tenant the sum of Five Thousand Dollars ($5,000.00) asreimbursement of costs incurred by Tenant in bringing fiber cable from theBuilding to the Premises; and

 

aswas set forth in the Landlord’s Turnover Condition Punch-List, Landlord shallpay to Tenant the sum of Two Thousand Dollars ($2,000.00) for switchgearconduit removal.

 

The Tenant Allowance Increase shall become part of the Tenant Allowanceand shall be paid by Landlord to Tenant at the time that installments of theTenant Allowance are required to be paid pursuant to the Work Agreement.

 

Notwithstanding anything to thecontrary set forth in the Lease (including, but not limited to, the WorkAgreement), Tenant acknowledges that it has requested that Landlord ceaseinstallation of window blinds in the Premises until Tenant’s general contractorwho is performing Tenant’s Work requests Landlord in writing to install suchwindow blinds, at which time Landlord shall install such window blinds withinthirty (30) days following Landlord’s receipt of Tenant’s general contractor’swritten request; provided, however, that in no event shall the fact that thewindow blinds were not installed as and when originally provided in the Leaseconstitute a Landlord Delay.

 

Landlord and Tenant acknowledgethat, because of Landlord’s placement of a certain strobe light in the lobby ofthe Building, the Approved Lobby Sign which is provided for in Section 39.B.of the Lease can not be installed in the location shown on Exhibit J-3 tothe Lease, and that Landlord and Tenant have agreed as follows:  Notwithstanding anything to the contrary insaid Section 39.B., in lieu of Tenant having the right to install oneApproved Lobby Sign, (i) Tenant shall have the right to install two (2) signsin the main lobby of the Building, (ii) Exhibit J-3 attached heretoshall become Exhibit J-3 to Lease, (iii) the second sign which Tenantshall have the right to install in the main lobby of the Building shall be inthe location shown on Exhibit J-4 attached hereto and made a part hereof,which Exhibit J-4 attached hereto shall become Exhibit J-4 to theLease, and (iv) wherever used in the Lease, the term “Approved Lobby Sign”is hereby deleted and the term “Approved Lobby Signs” is hereby inserted in itsplace.  In consideration of Landlord’sgranting the right to install the Approved Lobby Signs to Tenant, Tenant herebyirrevocably waives any claims which it has or may have had as a result of theinability to place the previously Approved Lobby Sign in the locationcontemplated by original Exhibit J-3 to the Lease.

 

Attached hereto as Exhibit P and made a part hereof is (a) Tenant’splan for each of the signs to be placed in the location shown on Exhibit J-3,and the size of said sign shown on said Exhibit J-3 is hereby approved byLandlord, and Tenant’s plan for the sign to be placed in the location shown on Exhibit J-4,and the size of said sign shown on said Exhibit J-4 is hereby approved byLandlord.

 

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Landlord and Tenant herebyacknowledge and agree that Landlord delivered possession of the Premises toTenant in Turnover Condition on January 15, 2005 and that thus January 15,2005 constitutes the Turnover Date under the Lease.

 

Landlord and Tenant herebyacknowledge and agree that, as of the date of this First Amendment, there doesnot exist and has not previously existed any Landlord Delays, Force MajeureDelays, or Unavoidable Delays with respect to Tenant’s Work or Landlord’s Work.

 

The Lease is further amended (i) bydeleting Exhibit A in its entirety and inserting Exhibit A-1 in lieuthereof, which Exhibit A-1 is attached hereto and incorporated into theLease, (ii) by deleting Exhibit J-3 in its entirety and inserting Exhibit J-3hereto in lieu thereof, and (iii) by inserting Exhibits J-4, O and Ptherein, which Exhibits J-4, O and P are attached hereto and incorporated intothe Lease.

 

Landlord and Tenant representand warrant to each other that the person signing this First Amendment on itsbehalf has the requisite authority and power to execute this First Amendmentand to thereby bind the party on whose behalf it is being signed.

 

Landlord and Tenant eachwarrants to the other that in connection with this Lease it has not employed ordealt with any broker, agent or finder, other than the Brokers set forth in Section 1.K.of the Lease.  Landlord acknowledges thatLandlord shall pay any commission or fee due to Jones Lang LaSalle, as agent ofLandlord, and Equis Corporation, as agent of Tenant, pursuant to a separateagreement.  Each party shall indemnifyand hold the other harmless from and against any claim for brokerage or othercommissions asserted by any broker, agent or finder employed by such party orwith whom such party has dealt other than the Brokers.

 

Except asexpressly amended and modified herein, all terms, conditions and provisions ofthe Lease shall remain unmodified and in full force and effect.  In the event of any conflict between theterms and conditions of the Lease and the terms and conditions of this FirstAmendment, the terms and conditions of this First Amendment shall govern andcontrol.

 

IN WITNESS WHEREOF, Landlord and Tenant have executed this FirstAmendment to Deed of Lease as of the day and year first hereinabove written.

 
| WITNESS:              | LANDLORD:                                                       |
|-----------------------|-----------------------------------------------------------------|
|                  |                                                            |
|                  | ARLINGTON OFFICE, L.L.C.,  a Delaware limited liability company |
|                  |                                                            |
|                  | By:                                                             | JBG/Company Manager,  L.L.C., |   |
|                  |                                                            | a Delaware limited  liability company  Its Managing Member |
|                  |                                                            |   |
| By:                   | /s/ Ken Finkelstein                                             |   |   | By: | /s/ Michael Glosserman | [SEAL] |
| Name: Ken Finkelstein |                                                            | Name:  Michael Glosserman  Managing Member |
|                       |                                                                 |  |  |  |  |  |  |

 
| WITNESS:              | TENANT:                                                   |
|-----------------------|-----------------------------------------------------------|
|                  |                                                      |
|                  | WATSON WYATT &  COMPANY,  a Delaware corporation |
|                  |                                                      |
| By:                   | /s/ Michael Brendes                                       |   | By: | /s/ Carl D. Mautz | [SEAL] |
| Name: Michael Brendes |                                                      |   | Carl D. Mautz |
|                  |                                                      |   | Vice President and Chief  Financial  Officer |
|                       |                                                           |  |  |  |  |  |

 

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