Exhibit 10.7


 


Mack-Cali Realty Corporation


343 Thornall Street


Edison, NJ 08837-2206


 


December 9, 2008


 


Mr. Mark Yeager


c/o Mack-Cali Realty Corporation


343 Thornall Street


Edison, NJ 08837-2206


 


Re:                               Section 409A
Amendments


 


Dear Mark:


 


As you know, Section 409A of the Internal Revenue Code of 1986, as
amended, and Final Regulations under that Section (together referenced
herein as “Section 409A”) require that all agreements providing for
severance payments and other forms of deferred compensation be amended by the
end of this year to the extent the agreements are not in compliance with Section 409A.


 


A.                                   In order to
ensure such compliance, you agree that your Employment Agreement dated as of May 9,
2006 (the “Employment Agreement”) is hereby amended, effective as of such dates
as are set forth in Section C hereof, as follows:


 


1.                                       Subparagraph
4(c) shall be amended in the penultimate sentence (relating to the timing
of gross up payments for Restricted Share Awards) to read as follows:


 


 “In
the event vesting occurs with respect to any Restricted Shares as a result of
the achievement of the required performance goals, such payment shall be made
as soon as practicable after a determination that the performance goals have
been achieved but in no event later than 30 days after such determination.”  [New language underlined; deleted language
not shown.]


 


2.                                       Paragraph 7
shall be amended so that the last sentence of the first subparagraph (relating
to the Medical Continuation) shall read as follows:


 


 “Executive
(and Executive’s dependents) shall also receive continuation of health coverage
through the end of the Unexpired Employment Period on the same basis as health
coverage is provided by the Company for active employees and as may be amended
from time to time (“Medical


 

















 


Mr. Mark Yeager


December 9, 2008


Page 2


 


Continuation”), and any reimbursements
under such plan will be made no later than the last day of the year after the
year in which the expense was incurred.”  [New language underlined.]


 


3.                                       Paragraph 8
shall be amended so that the first sentence of the first subparagraph (relating
to payments of certain amounts upon termination) shall read as follows:


 


 “In the event the Company
terminates Executive’s employment for any reason other than Cause or Executive
terminates his employment for Good Reason, the Company shall pay to Executive
and Executive shall be entitled to receive the aggregate of (i) the Fixed
Amount and (ii) Vested Incentive Compensation, Total Vested Options and
the Vested Option Exercise Election, the Vested Tax Gross-Up Payment, Expense
Reimbursement and Medical Continuation at such time as provided in
subparagraph 4(c) and Paragraph 7 above.”  [New language underlined.]


 


4.                                       A new Section 27
shall be added to the end of the Employment Agreement, to read as follows:


 


“27.                           Section 409A
Requirements.  Notwithstanding
anything to the contrary in this Agreement, the following provisions shall
apply to any payments and benefits otherwise payable to or provided to
Executive under this Agreement:


 


(a)           For purposes of Section 409A, (i) each
“payment” (as defined by Section 409A) made under this Agreement shall be
considered a “separate payment,” and (ii) payments shall be deemed exempt
from the definition of deferred compensation under Section 409A to the
fullest extent possible under the “short-term deferral” exemption of Treasury
Regulation § 1.409A-1(b)(4), which exemption is hereby incorporated by
reference.


 


(b)           If Executive is a “specified employee”
as determined by the Compensation Committee of the Board consistent with Section 409A
as of his separation from service, to the extent any payment under this
Agreement constitutes deferred compensation subject to Section 409A, and
to the extent required by Section 409A, no payments due under this
Agreement may be made until the earlier of: 
(i) the first day of the seventh month following Executive’s separation
from service, or (ii) Executive’s date of death; provided, however,
that any payments delayed during this six-month period shall be paid in a lump
sum on the first day of the seventh month following Executive’s separation from
service.  Such lump sum payments shall
include interest from the scheduled payment date to the date of actual payment
at an annual rate equal to the prime rate as set forth in the Eastern edition
of The Wall Street Journal on the business day immediately preceding
Executive’s date of separation from service. 
Any payment due under this Agreement upon termination of employment that
is subject to Section 409A shall only be


 

















 


Mr. Mark Yeager


December 9, 2008


Page 3


 


made upon a “separation
from service” as that term is defined under Section 409A.


 


(c)           In the event there is a 6-month delay
in payments under subparagraph 27(b) above, the Company shall establish
and fund an irrevocable “rabbi” trust, in form and substance reasonable
satisfactory to Executive, effective as of the beginning of the 6-month period
and ending upon the close of such period, to secure the payment of all such
delayed amounts to Executive.


 


B.                                     In addition,
in order to ensure compliance with Section 409A, your Tax Gross-Up
Agreement effective as of September 12, 2007 will be amended to revise
Sections 1 and 2 thereof, and to add new sections 9 and 10 at the end thereof,
as follows:


 


“1.           Employee shall be entitled to receive
a tax gross-up payment (the “Tax Gross-Up Payment”) from the Company with
respect to each tax year in which the Restricted Shares granted pursuant to the
Restricted Share Award Agreement cease to be subject to a substantial risk
of forfeiture within the meaning of Section 83 of the Internal Revenue
Code of 1986, as amended (the “date of vesting”).  Each Tax Gross-Up Payment shall be a dollar
amount equal to forty-three percent (43%) of the fair market value of the
Restricted Shares on the date of vesting, exclusive of dividends.”  [New language underlined; deleted language
not shown.]


 


“2.           The Tax Gross-Up Payment shall be
made as soon as practicable following the date of vesting, but in no event
later than March 15 of the calendar year following the calendar year in
which the date of vesting occurs.” 
[New language underlined.]


 


“9.           Notwithstanding anything in this
agreement to the contrary, all payments herein shall be deemed exempt from the
definition of deferred compensation under Section 409A and the regulations
thereunder to the fullest extent possible under the “short-term deferral”
exemption of Treasury Regulation § 1.409A-1(b)(4), which exemption is
hereby incorporated by reference.”


 


“10.         If Employee is a “specified
employee” as defined in section 409A as of his separation from service, to the
extent any payment under this Agreement constitutes deferred compensation under
Section 409A, and to the extent required by Section 409A, no payments
due under this Agreement as a result of separation from service may be made
until the earlier of:  (i) the first
day of the seventh month following Employee’s separation from service, or (ii) Employee’s
date of death; provided, however, that any payments delayed
during this six-month period shall be paid in a lump sum on the first day of
the seventh month following Employee’s separation from service.  Such lump sum payments shall include interest
from the scheduled payment date to the date of actual payment at an annual rate
equal to the prime rate as set forth in the Eastern edition of The Wall Street
Journal on the business day immediately preceding Employee’s date of separation
from service.  In the event


 

















 


Mr. Mark Yeager


December 9, 2008


Page 4


 


there is a 6-month delay in payments under this paragraph, the Company
shall establish and fund an irrevocable “rabbi” trust, in form and substance
reasonably satisfactory to Executive, effective as of the beginning of the
6-month period and ending upon the close of such period, to secure the payment
of all such delayed amounts to Executive.”


 


C.                                     The
effective date for the above amendments shall be December 31, 2008, provided,
that provisions required to be effective as of an earlier date in order to
comply with Section 409A shall be effective as of such earlier date.


 


If the above changes are acceptable to you, please sign in the space
provided below.


 


	
   

  	
  Sincerely
  yours,

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  Mack-Cali
  Realty Corporation

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Mitchell
  E. Hersh

  
	
   

  	
   

  	
  Mitchell E. Hersh

  
	
   

  	
   

  	
  President and

  
	
   

  	
   

  	
  Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
  Accepted and Agreed as of the date

  	
   

  	
   

  
	
  of this Letter of Amendment:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  /s/ Mark Yeager

  	
   

  	
   

  	
   

  
	
  Mark Yeager