<PAGE>

                                                                    EXHIBIT 10.1

                       TERMINATION AND RELEASE AGREEMENT

     This Termination and Release Agreement (this "Termination Agreement") is
dated September 21, 2000 and is by and among Mack-Cali Realty Corporation, a
Maryland corporation, Mack-Cali Realty, L.P., a Delaware limited partnership
(collectively "Mack-Cali"), Prentiss Properties Trust, a Maryland real estate
investment trust, and Prentiss Properties Acquisition Partners, L.P., a Delaware
limited partnership (collectively "Prentiss" and together with Mack-Cali, the
"Parties").  The Parties recite unto each other and agree as follows:

                                   Recital 1

     The Parties entered an Agreement and Plan of Merger dated as of June 27,
2000 (hereinafter the "Merger Agreement").

                                   Recital 2

     The Parties wish to terminate the Merger Agreement.  The Merger Agreement
provides for the payment to Prentiss Properties Trust by Mack-Cali Realty
Corporation of a Break-Up Fee if the Merger Agreement is terminated under
certain circumstances thereunder (hereinafter the "Break-Up Fee").

                                   Recital 3

     The Parties have agreed to terminate the Merger Agreement in accordance
with this Termination Agreement and Mack-Cali will sell certain real property
generally known as the Cielo Center in Austin, Texas (hereinafter the "Austin
Property") to Prentiss or its designee at an agreed upon price (hereinafter the
"Austin Property Transaction") pursuant to that Agreement of Purchase and Sale
dated September 21, 2000 (hereinafter the "Purchase Agreement") between Prentiss
Properties Acquisition Partners, L.P. and Mack-Cali Texas Property, L.P.
<PAGE>

     NOW, THEREFORE, in consideration of the mutual promises and covenants
contained herein, as well as the recitals, which are incorporated herein and
constitute material consideration for this Termination Agreement, the Parties
agree as follows:

     1.  Termination of Merger Agreement; Mutual Release and Covenant not to
         -------------------------------------------------------------------
Sue.  The Parties hereby terminate the Merger Agreement pursuant to Section
---
7.1(a) thereof. In consideration therewith, Mack-Cali has agreed to deposit $25
million pursuant to the Escrow Agreement with Prentiss of even date (hereinafter
the "Escrow Agreement"). The Parties agree to release, discharge, forget,
acquit, and forever hold one another harmless from any and all past, present,
and future claims, demands, controversies, suits, losses, obligations, disputes,
causes of action, liabilities, debts, expenses, of whatever kind, at common law,
statutory, or otherwise, whether known or unknown, fixed or contingent,
liquidated or unliquidated, directly or indirectly arising out of or relating in
any way to the Merger Agreement, the termination thereof, or any matters
associated therewith, but excepting and excluding this Termination Agreement,
the Purchase Agreement, and the Escrow Agreement, existing from the beginning of
time to the date of this Termination Agreement (hereinafter the "Claims"). This
release runs to the benefit of all attorneys, accountants, agents, independent
contractors, affiliates, subsidiaries, employees, officers, directors, trustees,
and shareholders, of the Parties. This Termination Agreement is binding on the
Parties and their respective successors, heirs, and assigns. The Parties agree
and covenant not to sue one another for any of the Claims.

     2.  Escrow Payment.  As contemplated by paragraph 1, above, Mack Cali shall
         --------------
pay into escrow $25,000,000.00, pursuant to the terms of the Escrow Agreement.

                                       2
<PAGE>

     3.  Complete Defense; Injunctive Relief.  This Termination Agreement may be
         -----------------------------------
pleaded as a full and complete defense to and may be used as a basis for an
injunction against any and every action, suit or any other proceeding which may
be instituted, prosecuted, maintained or attempted by any of the Parties in
breach of this Termination Agreement.

     4.  No Assignment of Claims.  The Parties hereto warrant that none of the
         -----------------------
Claims has been assigned to any third party. The Parties further warrant that
this Termination Agreement is executed without reliance upon any statement or
representation made by a third party which is not contained herein. If any
assignment has been made by any Party, the assigning Party will indemnify and
hold harmless the non-assigning Party or Parties against any claims or
liabilities which may be asserted by any third party.

     5.  Compromise and Settlement.  This Termination Agreement is a settlement
         -------------------------
and compromise of disputed claims and nothing described herein is to be
considered an admission of liability on the part of any of the Parties.

     6.  Attorney's Fees and Expenses.  The Parties agree that each Party hereto
         ----------------------------
will bear such Party's own attorney's fees. The Parties agree that any other
costs which were incurred by a Party hereto shall be born by the Party which
incurred such cost.

     7.  No Pending Matters. The Parties represent and warrant to each other
         ------------------
that, as of the date of this Termination Agreement, they have pending no action
or complaint against any other Party in any municipal, county, state, or federal
court, or before any municipal, county, state, federal, administrative court,
agency, tribunal, or commission. In the event that any Party is found to have
such a claim pending, such Party agrees to dismiss the same within five days
after the Party hereto makes demand upon it to do so. In any event, if a Party
is found to have such a claim pending against another Party, the Party with such
claim hereby agrees to indemnify

                                       3
<PAGE>

the other Parties and to hold them harmless should they be occasioned any costs
or expenses on account thereof.

     8.  No Disparagement.  Prentiss agrees that its Chairman, President, Chief
         ----------------
Executive Officer, Chief Financial Officer, General Counsel, Regional Managing
Directors, and Board of Trustees (the "Prentiss Senior Managers") shall not
state anything, whether written or oral, in the media or in a press release, to
disparage or denigrate Mack-Cali or its Chairman, President, Chief Executive
Officer, Chief Financial Officer, General Counsel, Regional Heads, and Board of
Directors (the "Mack-Cali Senior Managers").  Mack-Cali agrees that the Mack-
Cali Senior Managers shall not state anything, whether written or oral, in the
media or in a press release, to disparage or denigrate Prentiss or the Prentiss
Senior Managers.  The release set forth in paragraph 1, above, includes any and
all claims existing as of the date of this Termination Agreement arising out of
or relating to any past allegedly disparaging, defamatory, or denigrating matter
or statement of any kind whatsoever, relating to any of the Parties, their
respective Senior Managers, shareholders, trustees, directors, or other
affiliates or subsidiaries.  Nothing in this Termination Agreement shall prevent
the Parties or their respective Senior Managers from making factual disclosures
including without limitation disclosures concerning the Merger Agreement, the
Termination Agreement, the termination of the Merger Agreement, the Purchase
Agreement, the Escrow Agreement, or the Austin Property Transaction.

     9.  Confidentiality of Information.  Prentiss agrees and shall cause its
         ------------------------------
subsidiaries, officers, directors, trustees, employees, accountants, counsel,
financial advisors, and other representatives and affiliates to hold any
nonpublic information of Mack-Cali (including any information or analyses
derived from such non-public information) obtained in connection with the Merger
Agreement in confidence.  Mack-Cali agrees and shall cause its subsidiaries,
officers,

                                       4
<PAGE>

directors, trustees, employees, accountants, counsel, financial advisors, and
other representatives and affiliates to hold any nonpublic information of
Prentiss (including any information or analyses derived from such non-public
information) obtained in connection with the Merger Agreement in confidence.

     10.  Authority; Enforceability.  Each of the Parties hereto certify that it
          -------------------------
has the requisite power and authority to enter into this Termination Agreement,
that the execution and delivery of this Termination Agreement has been duly
authorized by all necessary actions on the part of such Party, including all
requisite approvals from the respective Boards of the Parties, and that the
Termination Agreement has been duly executed and delivered by such party and
constitutes the valid and binding agreement of such Party and is not revocable.
This Termination Agreement shall be binding and inure to the benefit of the
Parties hereto and their respective predecessors, heirs, beneficiaries, legal
and personal representatives, successors, and assigns.

     11.  Construction.  This Termination Agreement shall be construed and
          ------------
enforced in accordance with the laws of the State of Maryland.

     12.  Severability.  The invalidity or unenforceability of any particular
          ------------
provision of this Termination Agreement shall not affect the other provisions
hereof, and this Termination Agreement shall be construed and enforced in all
respects to the greatest extent possible as if such invalid or unenforceable
provisions or terms were omitted and ignored.

     13.  Titles.  Certain paragraphs in this Termination Agreement are
          ------
introduced by titles. The titles are intended for convenience only. The content
of each such paragraphs controls the meaning without regard to the titles.

                                       5
<PAGE>

     14.  Execution in Counterparts. This document may be executed separately in
          -------------------------
counterparts, and be of the same force and effect as if executed altogether and
at the same time.  A fax signature shall be as effective as an original
signature.

15.  No Duress or Reliance.  The Parties have not relied on any representations
     ---------------------
made by any other Party with respect to the entry of this Termination Agreement,
except those specifically referenced in this Termination Agreement and all other
agreements referenced herein or related thereto (including without limitation
the Purchase Agreement and the Escrow Agreement).  All verbal and other prior
agreements and representations, covenants, obligations, conditions, inducements,
warranties, or undertakings relating to the subject matter of this Termination
Agreement that are not expressly referenced or incorporated herein are hereby
superseded and merged into this Termination Agreement and are extinguished.  As
a clarification, the Purchase Agreement and the Escrow Agreement are not merged
into this Termination Agreement and are not extinguished.  This Termination
Agreement may not be varied or amended except by a writing signed by all of the
Parties hereto.  Each signatory of this Termination Agreement has entered into
same freely and without duress, and has had the opportunity to consult with
counsel of its choosing in connection with this Termination Agreement.

     16.  Disputes.  The Parties agree to attempt to resolve any disputes
          --------
arising from or relating to this Termination Agreement through mediation, to
take place in Baltimore, Maryland, within 30 days after receipt of a request to
mediate sent by either party. If mediation is unsuccessful, then any controversy
or claim arising out of or relating to this Termination Agreement, or the breach
thereof, shall be settled by binding arbitration administered by the American
Arbitration Association in accordance with its Commercial Arbitration Rules,
with the final

                                       6
<PAGE>

hearing to be conducted within 45 days after a claim has been filed unless
otherwise agreed by the Parties, and judgment on the award rendered by the panel
of three arbitrators may be entered in any court having jurisdiction thereof.
The prevailing party in any arbitration proceeding shall be entitled to an award
that includes its reasonable and necessary attorney's fees and costs incurred in
connection with the arbitration. The venue of any action to confirm or vacate
the arbitration award shall be in Baltimore, Maryland.

     17.  Relationship to Austin Property Transaction Documents. This document
          -----------------------------------------------------
is to be construed in the context of, and consistently with, all documents
prepared and executed by the Parties in connection with the Austin Property
Transaction, including but not limited to the Purchase Agreement and the Escrow
Agreement.

     18.  Press Release. Upon closing the Austin Property Transaction, the
          -------------
Parties will issue the joint press release in the form attached hereto at
Exhibit A.

     19.  Other. Prentiss represents and warrants that, between June 27, 2000
          -----
(the execution of the Merger Agreement) and September 21, 2000 (the execution of
this Termination Agreement), neither Michael V. Prentiss nor Thomas F. August
have either: (a) had any substantive discussions with any company (other than
Mack-Cali) regarding a merger transaction between Prentiss and such company
whereby Prentiss would be acquired by such company; or (b) entered into, on
behalf of Prentiss, any written agreement with any company (other than Mack-
Cali) regarding a merger transaction whereby Prentiss would be acquired by such
company.

     This Termination Agreement has been executed and delivered by the
undersigned this 21st  day of September, 2000.

                                       7
<PAGE>

                              /s/ JAMES A. CLABBY
                              _________________________________________________
                              Mack-Cali Realty Corporation

                                  James A. Clabby
                              By_______________________________________________

                                  Senior Vice President
                              Its______________________________________________

                                       8
<PAGE>

STATE OF TEXAS                     (S)
                                   (S)
COUNTY OF DALLAS                   (S)

  BEFORE ME, that undersigned Notary Public, on this day personally appeared
James A. Clabby, known to me to be the person whose name is subscribed to the
foregoing instrument. He acknowledged to me that he executed and is duly
authorized to execute the foregoing instrument for the purposes and
consideration expressed in the foregoing instrument.

  GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 21st day of
September, 2000.

       [Notary Seal]                     /s/ CAROL PIERCE
                                        ______________________________________
                                        Notary Public in and for this
                                        State of Texas

My Commission Expires:
        1-19-01                          Carol Pierce
 __________________________             _______________________________________
                                        (Printed Name of Notary)


Dated:

                                       9
<PAGE>

                                /s/ JAMES A. CLABBY
                              _______________________________________________
                              Mack-Cali Realty L.P.

                              By: Mack-Cali Realty Corporation

                                  James A. Clabby
                              By_____________________________________________

                                  Senior Vice President
                              Its____________________________________________

                                       10
<PAGE>

STATE OF TEXAS                     (S)
                                   (S)
COUNTY OF DALLAS                   (S)

  BEFORE ME, that undersigned Notary Public, on this day personally appeared
James A. Clabby, known to me to be the person whose name is subscribed to the
foregoing instrument. He acknowledged to me that he executed and is duly
authorized to execute the foregoing instrument for the purposes and
consideration expressed in the foregoing instrument.

  GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 21st day of September,
2000.

                               /s/ CAROL PIERCE
                               _________________________________________

  [Notary Seal]                Notary Public in and for this

                               State of Texas

       1-19-01
_________________________
My Commission Expires:
                                  Carol Pierce
                               _________________________________________
                               (Printed Name of Notary)



Date:

                                       11
<PAGE>

                               /s/ THOMAS F. AUGUST
                              _____________________________________________
                              Prentiss Properties Trust

                                   Thomas F. August
                              By___________________________________________

                                   President
                              Its__________________________________________


                                       12
<PAGE>

STATE OF TEXAS                     (S)
                                   (S)
COUNTY OF DALLAS                   (S)

  BEFORE ME, that undersigned Notary Public, on this day personally appeared
Thomas F. August, known to me to be the person whose name is subscribed to the
foregoing instrument. He acknowledged to me that he executed and is duly
authorized to execute the foregoing instrument for the purposes and
consideration expressed in the foregoing instrument.

  GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 21st day of
September, 2000.

                                    /s/ Carol Pierce
                                 _______________________________________________
                                    Notary Public in and for this
     [Notary Seal]                  State of Texas


My Commission Expires:               Carol Pierce
       1-19-01                     _____________________________________________
______________________             (Printed Name of Notary)


Dated:

                                       13
<PAGE>

                                /s/ THOMAS F. AUGUST
                              ________________________________________________
                              Prentiss Properties Acquisition Partners, L.P.
                              a Delaware limited partnership

                              By: Prentiss Properties I, Inc.

                              By  Thomas F. August
                                  ____________________________________________

                              Its President
                                  ____________________________________________

                                       14
<PAGE>

STATE OF TEXAS                     (S)
                                   (S)
COUNTY OF DALLAS                    (S)

  BEFORE ME, that undersigned Notary Public, on this day personally appeared
Thomas F. August, known to me to be the person whose name is
subscribed to the foregoing instrument.  He acknowledged to me that he executed
and is duly authorized to execute the foregoing instrument for the purposes and
consideration expressed in the foregoing instrument.

  GIVEN UNDER MY HAND AND SEAL OF OFFICE this the 21st day of September,
2000.
                                             /s/ CAROL PIERCE
                                             _________________________________
     [Notary Seal]                           Notary Public in and for this
                                             State of Texas
My Commission Expires:
      1-19-01                                 Carol Pierce
______________________________               _________________________________
                                             (Printed Name of Notary)




Dated:

                                       15