PILOT totaled $1.1 million and $1.0 million for the year ended December 31, 2020 and 2019, respectively.

The 111 River Realty agreement with the City of Hoboken, which commenced on October 1, 2001 expires in April 2022. The annual PILOT payment is a fixed amount until expiration. The PILOT totaled $1.4 million, $1.4 million and $1.4 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The Monaco Towers agreement with the City of Jersey City, which commenced in 2011, is for a term of 10 years. The annual PILOT is equal to 10 percent of gross revenues, as defined. The PILOT totaled $1.8 million, $2.1 million and $2.4 million for the years ended December 31, 2020, 2019 and 2018, respectively.

The Marbella II agreement with the City of Jersey City, which commenced in 2016, is for a term of 10 years. The annual PILOT is equal to 10 percent of gross revenues for years 1-4, 12 percent of gross revenues for years 5-8 and 14 percent of gross revenue for years 9-10, as defined therein. The PILOT totaled $1.2 million and $1.4 million for the year ended December 31, 2020 and 2019, respectively.

The Port Imperial Parcel South 9 development project agreement with the City of Weehawken is for a term of 25 years following substantial completion, which is anticipated to occur in the first quarter 2021. The annual PILOT is equal to 11 percent of gross revenue for years 1-10, 12.5 percent for years 11-18 and 14 percent for years 19-25, as defined therein.

The Port Imperial South Park Parcel development project agreement with the Township of Weehawken is for a term of 25 years following substantial completion. The project is anticipated to begin construction in late 2021 with Substantial Completion in 2024. The annual PILOT is equal to 10 percent of Gross Revenues, as defined therein.

At the conclusion of the above-referenced agreements, it is expected that the properties will be assessed by the municipality and be subject to real estate taxes at the then prevailing rates.

LITIGATION

The Company is a defendant in litigation arising in the normal course of its business activities. Management does not believe that the ultimate resolution of these matters will have a materially adverse effect upon the Company’s financial condition taken as whole.

GROUND LEASE AGREEMENTS

Future minimum rental payments under the terms of all non-cancelable ground leases under which the Company is the lessee, as of December 31, 2020, are as follows (dollars in thousands):

Ground lease expense incurred by the Company during the years ended December 31, 2020, 2019 and 2018 amounted to $1.6 million, $2.6 million and $2.3 million, respectively.

In conjunction with the adoption of ASU 2016-02 (Topic 842), starting on January 1, 2019, the Company capitalized operating leases, which had a balance of $22.3 million at December 31, 2020 for three ground leases. Such amount represents the net present value (“NPV”) of future payments detailed above. The incremental borrowing rates used to arrive at the NPV ranged from 7.576 percent to 7.618 percent for the remaining ground lease terms ranging from 80.83 years to 82.58 years. These rates were arrived at by adjusting the fixed rates of the Company’s mortgage debt with debt having terms approximating the remaining lease term of the Company’s ground leases and calculating notional rates for fully-collateralized loans.

CONSTRUCTION PROJECTS

The Company is developing a 313-unit multi-family project known as Port Imperial South 9 at Port Imperial in Weehawken, New Jersey, which began construction in third quarter 2018. The construction project, which is estimated to cost $143.8 million, of which construction costs of $98.1 million have been incurred through December 31, 2020, is expected to be ready for occupancy early 2021. The Company has funded $51.8 million as of December 31, 2020, and the remaining construction costs are expected to be funded from a $92 million construction loan (of which $46.3 million was drawn as of December 31, 2020).

The Company is developing a 198-unit multi-family project known as the Upton at Short Hills located in Short Hills, New Jersey, which began construction in fourth quarter 2018. The construction project, which is estimated to cost $99.4 million, of which $77.9 million has been incurred through December 31, 2020, is expected to be ready for occupancy in first quarter 2021. The Company has funded $35.4 million of the construction costs, and the remaining construction costs are expected to be funded from a $64 million construction loan (of which $42.5 million was drawn as of December 31, 2020).

The Company is developing a 750-unit multi-family project at 25 Christopher Columbus in Jersey City, New Jersey, which began construction in first quarter 2019. The construction project, which is estimated to cost $469.5 million, of which $331 million has been incurred through December 31, 2020, is expected to be ready for occupancy in first quarter 2022. The Company has funded $169.5 million of the construction costs, and the remaining construction costs are expected to be funded from a $300 million construction loan (of which $161.5 million was drawn as of December 31, 2020).

MANAGEMENT CHANGES

On July 24, 2020, the Company terminated Michael J. DeMarco as its Chief Executive Officer without cause, pursuant to his employment agreement and the associated equity award agreements he has with the Company. On August 8, 2020, the Company entered into a Consulting and Cooperating Agreement with Mr. DeMarco (the “Consulting Agreement”). Pursuant to the Consulting Agreement, in exchange for Mr. DeMarco’s providing certain consulting, cooperation, and transition services to the Company through December 31, 2020, Mr. DeMarco was considered to have remained employed with the Company through the term of the Consulting Agreement solely for purposes of calculating the prorated vesting of outstanding time-based long-term incentive partnership units to which Mr. DeMarco was entitled upon his termination of employment with the Company.

Mr. DeMarco is eligible to receive the severance payments and benefits upon such a termination without cause (outside of a change in control) described under the heading “Employment Contracts; Potential Payments Upon Termination or Change in Control—Michael J. DeMarco Employment Agreement,” “—Michael J. DeMarco Class AO LTIP Award Agreement,” and “—Long-Term Incentive Plan Award Agreements,” each as set forth in the Company’s definitive revised proxy statement filed with the Securities and Exchange

Commission on June 16, 2020, which description is incorporated by reference herein, and taking into account Mr. DeMarco’s target bonus percentage of 175% of base salary established for the year 2020.

Effective as of July 25, 2020, the Board of Directors appointed MaryAnne Gilmartin, the Chair of the Company’s Board of Directors, as interim Chief Executive Officer of the Company. Ms. Gilmartin will continue to serve as Chair of the Board, but has resigned as a member of the Nominating & Corporate Governance Committee of the Board. Concurrently, Tammy K. Jones, a current director, was appointed to serve as the lead independent director on the Board.

In connection with Ms. Gilmartin’s appointment, the Company has entered into a letter agreement (the “Letter Agreement”) with MAG Partners 2.0 LLC (“MAG Partners”), an entity wholly owned by Ms. Gilmartin. Pursuant to the Letter Agreement, MAG Partners has agreed to make Ms. Gilmartin’s services available to the Company to serve as its interim Chief Executive Officer. The term of this arrangement and Ms. Gilmartin’s appointment as interim Chief Executive Officer (the “Term”) will continue until the earliest to occur of (i) the commencement of employment of a permanent Chief Executive Officer of the Company, (ii) a period of six months has elapsed, or an earlier or later date selected by the Board, and (iii) Ms. Gilmartin’s death or disability, or the termination of the arrangement by MAG Partners (including a resignation by Ms. Gilmartin of her appointment as interim Chief Executive Officer). On January 22, 2021, the Company entered into a six -month extension (the “Extension Letter”) of the Letter Agreement with MAG Partners, pursuant to which MAG Partners has made Ms. Gilmartin’s services available to the Company to serve as its interim Chief Executive Officer. Pursuant to the Extension Letter, the term of the Letter Agreement has been extended until July 25, 2021 (the “Extended Term”). However, Ms. Gilmartin’s appointment as interim Chief Executive Officer will end upon the earlier to occur of (x) the commencement of employment of a permanent Chief Executive Officer of the Company or (y) a date selected by the Board of Directors of the Company, and during any remaining portion of the Extended Term, MAG Partners will continue to make Ms. Gilmartin reasonably available to assist with the transition of Ms. Gilmartin’s duties to her successor and with any other matters that the Company may reasonably request. In addition, if the Extended Term ends at any time prior to July 25, 2021 (other than a termination by the Company for cause), then the Company will continue to pay MAG Partners its monthly $150,000 cash retainer fee through July 25, 2021.

Pursuant to the Letter Agreement, during the Term the Company will pay to MAG Partners a monthly fee of $150,000, subject to proration for any partial month (but continuing for a minimum of three months following commencement of the Term if the Term is ended by the Board for any reason other than for “cause”). MAG Partners is also eligible to receive a one-time cash sign-on bonus of $300,000 and, unless the Term is ended by the Board for “cause,” a one-time completion bonus of $200,000 at the end of the Term (but no later than March 12, 2021). In addition, the Company has granted to MAG Partners fully vested stock options to purchase up to 230,000 shares of common stock with an exercise price of $14.39 per share, and up to 100,000 shares of common stock with an exercise price of $20.00 per share, pursuant to a Stock Option Agreement by and between MAG Partners and the Company (the “Option Agreement”). However, the options, and any shares received upon exercise, will terminate and be forfeited if the Board ends the Term for “cause” or MAG Partners terminates its arrangement with the Company (including a resignation by Ms. Gilmartin of her appointment as interim Chief Executive Officer, but excluding a termination because of a material breach of the arrangement by the Company or because Ms. Gilmartin has been appointed as the permanent Chief Executive Officer of the Company) before six months have elapsed, or if MAG Partners fails to comply with certain covenants in the Letter Agreement. 157,505 of the options have been granted subject to shareholder approval at the Company’s 2021 Annual Meeting of Stockholders; however, if a “change in control” transaction occurs before the date of such 2021 Annual Meeting, then such options would instead be canceled and cashed out upon such transaction for a value equal to their “spread value,” if any.

During the Term, Ms. Gilmartin will not receive any additional fees or other compensation for her service (excluding equity previously granted) as a director on the Company’s Board or on the Roseland Residential Trust board of directors. However, the Company will reimburse MAG Partners for up to $10,000 in legal fees incurred in connection with negotiating the arrangements described above.

In September 2020, the Company terminated without cause Nicholas Hilton, its Executive Vice President of Leasing, and Deidre Crockett, its Chief Administrative Officer, pursuant to their respective employment agreements and associated equity award agreements with the Company.

During the year ended December 31, 2020, the Company’s total costs incurred, net of LTIP forfeitures, related to the management restructuring activities discussed above, including the severance, separation and related costs for the departure of the Company’s former chief executive officer and other executive officers, as well as other terminated employees, amounted to $11.9 million ($10.1 million included in general and administrative expense, and $1.8 million included in the operating services).

OTHER

On November 3, 2020, the General Partner entered into amended and restated employment agreements with each of David Smetana, the General Partner’s Chief Financial Officer, Ricardo Cardoso, the General Partner’s Executive Vice President and Chief Investment

Officer, Gary T. Wagner, the General Partner’s General Counsel and Secretary, and Giovanni M. DeBari, the General Partner’s Chief Accounting Officer (each, an “Employment Agreement” and, collectively, the “Employment Agreements”).

Each of the Employment Agreements with Messrs. Smetana, Cardoso, Wagner and DeBari (each, an “Executive”) provides as follows:

An initial term through December 31, 2022;

An annual base salary of $550,000 for Mr. Cardoso and $450,000 for Messrs. Smetana, Wagner and DeBari;

An annual cash bonus opportunity to be based on performance goals to be established annually by the General Partner’s board of directors or the executive compensation and option committee of the board of directors, with bonus opportunities for 2021 of (a) 50% of base salary for threshold performance for Messrs. Smetana, Cardoso and Wagner and 20% of base salary for threshold performance for Mr. DeBari, (b) 100% of base salary for target performance for Messrs. Smetana, Cardoso and Wagner and 40% of base salary for target performance for M. DeBari, and (c) 200% of base salary for maximum performance for Mr. Cardoso, 150% of base salary for maximum performance for Messrs. Smetana and Wagner, and 60% of base salary for maximum performance for Mr. DeBari;

During the term of the employment agreement, eligibility to be granted long-term incentive or equity awards as may be determined by the General Partner’s board of directors or the executive compensation and option committee of the board of directors, provided that for 2021 and 2022, Mr. Cardoso shall be eligible to receive an award of long-term incentive plan (“LTIP”) units of limited partnership interests (“LTIP Units”) of the Company with a target grant date value of $2 million, which LTIP Units may be earned from 0% to 200% based on the aggregate gross sales price of office properties sold from August 1, 2020 to December 31, 2022 for not less than 85% of its estimated net asset value, with threshold performance of $500 million in sales volume, target performance of $700 million in sales volume and maximum performance of $900 million in sales volume, with linear interpolation of payouts between performance levels. Accordingly, in January 2021, 334,449 LTIP Units were granted to Mr. Cardoso (See Note 6: Mack-Cali Realty Corporation Stockholders’ Equity and Mack-Cali Realty, L.P.’s Partners’ Capital).

Upon a termination on account of death or disability, the Executive, or his beneficiaries in the case of death, will receive payments (payable as and when such amounts would have been payable had the Executive’s employment not ended) consisting of accrued and unpaid base salary, expense reimbursement and benefits under the General Partner’s health and welfare plans through the termination date, any earned but unpaid annual bonus for the previous year, plus a prorated portion of the annual bonus payable for the year of such termination based on actual performance for such year; and

Upon a termination without “cause” (as defined in each of the Employment Agreements) or by the executive for “good reason” (as defined in each of the Employment Agreements) during the term of the applicable Employment Agreement, subject to the Executive signing a release in the form attached to each of the Employment Agreements, the Executive will be entitled to the same benefits as in the event of a termination due to death or disability, plus (a) a lump sum cash payment equal to one and one-half (1.5) times the sum of the Executive’s (i) annual base salary immediately prior to the termination date and (ii) target annual bonus for the year of such termination and (b) COBRA payments for up to 18 months after termination; provided, however, that if such termination occurs during a “change in control period” (as defined in each of the Employment Agreements), the lump sum payment described in clause (a) above shall be equal to two (2.0) times the sum of Executive’s (i) annual base salary immediately prior to the termination date and (ii) target annual bonus for the year of such termination.

Under each of the Employment Agreements, each Executive will be subject to certain restrictive covenants, including non-competition and non-solicitation covenants during his employment with the General Partner and for one year after termination of employment, in each case in circumstances in which the Executive is entitled to receive severance benefits under his Employment Agreement following the termination of employment. In addition, each Executive will be entitled to customary employee benefits under the Company’s health and welfare plans.

Through February 2016, the Company could not dispose of or distribute certain of its properties, which were originally contributed by certain unrelated common unitholders of the Operating Partnership, without the express written consent of such common unitholders, as applicable, except in a manner which did not result in recognition of any built-in-gain (which may result in an income tax liability) or which reimbursed the appropriate specific common unitholders for the tax consequences of the recognition of such built-in-gains (collectively, the “Property Lock-Ups”). Upon the expiration in February 2016 of the Property Lock-Ups, the Company is generally required to use commercially reasonable efforts to prevent any sale, transfer or other disposition of the subject properties from resulting in the recognition of built-in gain to the specific common unitholders, which include members of the Mack Group (which includes William L. Mack, a former director; David S. Mack, a former director; and Earle I. Mack, a former director), the Robert Martin Group,