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                                                                   EXHIBIT 10.86

                    SECOND AMENDMENT TO EMPLOYMENT AGREEMENT

         This Second Amendment (this "Second Amendment") is dated effective July
1, 2003 by and among Kramont Operating Partnership, L.P., a Delaware limited
partnership (the "Company"), Kramont Realty Trust, a Maryland real estate
investment trust ("Kramont") and Carl E. Kraus ("Executive").

                                   BACKGROUND

         WHEREAS, the parties hereto entered into an Employment Agreement
effective as of March 21, 2002, as amended by First Amendment dated July 1,
2002, (herein referred to as "Employment Agreement"), wherein the parties agreed
to the terms and conditions of Executive's employment with the Company; and

         WHEREAS, the parties hereto desire to further amend certain of the
terms and conditions of the Employment Agreement.

         NOW THEREFORE, in consideration of the mutual promises and covenants
herein contained, and intending to be legally bound hereby, the parties hereto
agree as follows:

         1.       All capitalized terms used herein, but not otherwise defined,
shall have the meanings ascribed in the Employment Agreement.

         2.       Subject to the provisions contained in Paragraph 3 of the
Employment Agreement, the Term of Employment is hereby extended to June 30, 2004
(the "Extended Term of Employment").

         3.       During the Extended Term of Employment, Executive's Base
Salary shall be $210,000.00 payable in equal bi-weekly installments in
accordance with the Company's normal payroll practices.

         4.       Subject to the provisions contained in Paragraph 5 of the
Employment Agreement, it is agreed and understood that that Executive shall be
entitled to four (4) weeks of vacation.

         5.       In accordance with the Kramont 2000 Incentive Plan, the
Company hereby grants the Executive 5,981 restricted shares of common stock
under the terms and conditions contained in a share grant letter agreement (the
"Share Grant Agreement"), the form of which is attached hereto and made a part
hereof as Exhibit "A". Simultaneous with the execution of this Third Amendment,
Executive agrees to execute and deliver to the Company the Share Grant
Agreement.

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         6.       This Second Amendment and the Employment Agreement represent
the entire understanding between the parties and supercede all other oral or
written agreements between the parties. The Employment Agreement, as amended by
this Second Amendment, is hereby ratified and confirmed and remains in full
force and effect.

         IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Second Amendment as of the date and year first above written.

         KRAMONT OPERATING PARTNERSHIP, L.P.

                                    By: ________________________________________
                                        Louis P. Meshon, Sr.
                                        President

                                    KRAMONT REALTY TRUST

                                    By: ________________________________________
                                        Louis P. Meshon, Sr.
                                        President

                                    Executive

                                    By: ________________________________________
                                        Carl E. Kraus