**Exhibit 10.7**
**EMPLOYMENT AGREEMENT**
     This Employment Agreement, made as of January 1, 2003, by and betweenJeffrey F. Joseph, residing at 19 Stillman Lane, Pleasantville, New York 10570(“Executive”) and PRESIDENTIAL REALTY CORPORATION, a Delaware corporationhaving offices at 180 South Broadway, White Plains, New York 10605 (“Employer”or the “Company”);
**W I T N E S S E T H:**
     WHEREAS, Employer is desirous of employing Executive as its President; and
     WHEREAS, Executive desires to render such services to Employer.
     NOW, THEREFORE, in consideration of the premises and the mutual covenantsherein set forth, the parties hereto agree as follows:
     **1.     Employment.** Employer hereby employs Executive as its President, andExecutive hereby accepts such employment, upon the terms and conditionshereinafter set forth.
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     **2.     Duties.**
     (a)  In his capacity as President of Employer, Executive shall perform forEmployer the executive, administrative and technical duties customarilyassociated with such position, as well as such other duties reasonablyconsistent therewith as may be reasonably assigned to Executive from time totime by the Board of Directors of Employer; provided, however, that the dutiesassigned shall be of a character and dignity appropriate to a senior executiveof a corporation and consistent with Executive’s experience, education andbackground.
     (b)  Except as otherwise set forth in this paragraph, (i) Executive shalldevote his full time and efforts during normal business days and hours to theperformance of this Employment Agreement and (ii) Executive shall not engage inthe real estate business or in any other business which conflicts with orcompetes in any material way with the business of Employer. Notwithstandingthe foregoing, Executive may devote such time and efforts to winding up thebusiness of Ivy Properties Ltd. and its affiliates (collectively, “Ivy”) asExecutive deems reasonably necessary; so long as the devotion of such time andeffort does not conflict (without independent committee review) or interferewith Executive’s performance of his duties as President of Presidential and infact Executive does diligently perform his duties as President of Presidentialto the satisfaction of the
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Board of Directors of Employer.
     **3.     Term.**
     (a)  This Employment Agreement shall commence on the date hereof and shallcontinue until December 31, 2005, unless terminated earlier in accordance withthis Employment Agreement.
     (b)  This Employment Agreement may be terminated at any time by Employerfor “cause,” as defined herein. For the purpose of this Employment Agreement,termination of Executive’s employment shall be deemed to have been for “cause”only if termination of his employment shall have been the result of (i) theconviction of Executive of any crime constituting a felony or any other crimeinvolving moral turpitude, (ii) Executive’s willful refusal to follow adirection of the Board of Directors of Employer after written notice that suchcontinued refusal shall result in termination of his employment for cause, or(iii) Executive’s failure to fulfill his duties hereunder as is required bySection 2(b) above after written notice that such continued failure shallresult in termination of his employment for cause.
     (c)  This Employment Agreement may also be terminated by Employer as setforth in Section 11 below.
     **4.     Compensation.** Employer shall pay to Executive inconsideration of the services to be rendered hereundercompensation in the form of a salary:
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     (a)  for the period beginning on the date hereof andending on December 31, 2003, at the annual rate of Two HundredEighty One Thousand Seven Hundred Thirty One and 30/100 ($281,731.30) Dollarstimes the Cost of Living Adjustment Factor (as hereinafter defined);
     (b)  for the calendar year beginning on January 1, 2004 and ending onDecember 31, 2004, in an amount equal to the salary paid for the calendar yearbeginning January 1, 2003 and ending on December 31, 2003 times the lesser of(i) 1.05 and (ii) the Cost of Living Adjustment Factor; and
     (c)  for the calendar year beginning on January 1, 2005 and ending onDecember 31, 2005, in an amount equal to the salary paid for the calendar yearbeginning on January 1, 2004 and ending on December 31, 2004 times the lesserof (i) 1.05 and (ii) the Cost of Living Adjustment Factor.
     The salary for all such periods shall be paid less appropriate deductions,if any, for federal, state and city income taxes, FICA contributions, N.Y.S.disability and any other deductions required by law.
     The Cost of Living Adjustment Factor as it is applied in calculatingcompensation payable to Executive for any period referred to above (andretirement compensation payable to
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Executive for any period described in Section 12 below) shall be the sum of (x)one (1) plus (y) a fraction (A) which has as its numerator the amount, if any,by which the Revised Consumer Price Index for Urban Wage Earners and ClericalWorkers for the New York-Northern New Jersey area (1982-84=100), published bythe U.S. Department of Labor Statistics (the “Index”) for the last calendarmonth preceding the commencement of such period (which will be December in eachcase of annual salary described in this Section 4) (the “Increase Index Month”)exceeds the Index for the calendar month occurring one year prior to theIncrease Index Month (the “Base Index Month”), and (B) which has as itsdenominator the Index for the Base Index Month.
     In the event that the Index is converted to a different standard referencebase or otherwise revised, the determination of increased compensation underthis Section 4 and/or retirement compensation under Section 12 shall be madewith the use of such conversion factor, formula or table for converting theIndex as may be published by the Bureau of Labor Statistics or, if said Bureaushall not publish the same, then with the use of such conversion factor,formula or table as may be published by Prentice-Hall, Inc., or any othernationally recognized publisher of similar statistical information. If theIndex ceases to be published, and there is no successor thereto, such otherindex as Executive and Employer shall agree upon in writing shall besubstituted for the Index. If Executive and Employer are unable to agree as tosuch substituted index, such substituted index
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shall be that determined by arbitration in accordance with the procedures ofthe American Arbitration Association.
     In the event that the Index is not available for any month provided forabove, the next available Index shall be used instead, and if the nextavailable Index is available following a payment for which an adjustment shouldhave been, then a retroactive adjustment shall also be made.
     (b)  Executive’s compensation shall be payable in equal installments inarrears, in the same frequency as other senior officers of Employer are paid,but in any event not less frequent than twenty-six (26) bi-weekly installments.
     **5.     Indemnification.** The Indemnification Agreements previously executed byExecutive and Employer shall remain in full force and effect during the term ofthis Employment Agreement.
     **6.     Vacations.** Executive shall be entitled, during the term of thisEmployment Agreement to four weeks’ vacation annually at full compensation.
     **7.     FringeBenefits.** Executive shall be entitled, at Employer’s expense,during the term of this Employment Agreement to participate in (a) thefollowing benefit programs which Employer now maintains for its employees: (i)its Defined Benefit
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Pension Plan, (ii) its Section 125 cafeteria plan, (iii) its Section 401(k)plan if any, (iv) its health insurance plan for employees only, (v) itsdisability insurance plan and (vi) its group life insurance plan; and (b) allbenefit programs that Employer hereafter establishes and makes available toeither employees in general or to other senior executive management (withoutintending to provide duplicate coverage to Executive if Employer makes suchavailable to both employees in general and to senior executive management). Ifobtainable, at Executive’s option and, if exercised, at Executive’s sole costand expense, Employer shall include Executive’s spouse and children under thehealth insurance plan maintained by Employer for Executive. In addition,during the term of this Employment Agreement, (i) Employer shall also pay forthe premiums on Executive’s existing life insurance policy up to a maximum of$15,250 per annum and (ii) Employer shall pay and be responsible for all costsof ownership attributable to the automobile which Employer currently owns andprovides Executive for its use, and for any replacement automobile leased orpurchased by Employer pursuant to Section 9 below. In addition, subject toExecutive providing proper documentation, Employer shall reimburse Executivefor reasonable travel, entertainment and other expenses incurred by Executivein providing services hereunder on behalf of Employer. Following anytermination of Executive’s employment by Employer, to the extent permitted bylaw and the party providing such benefits, Executive may, at his sole cost andexpense, continue any fringe benefits, if obtainable, then being provided toExecutive.
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     **8.     Bonus.** (a) Subject to paragraph (b) of this Section 8, in addition tothe compensation set forth above, Executive shall be entitled to a bonuspayable with respect to each of calendar years 2003, 2004 and 2005 (each a“Bonus Year”) in an amount equal to 10% of the product of (i) the amount bywhich the Per Share Net Cash From Operations (as hereinafter defined) for suchBonus Year exceeds $.53 per share and (ii) the number of shares outstanding atthe end of such Bonus Year. Notwithstanding the foregoing, the bonus in anyBonus Year shall not exceed 33-1/3% of the salary compensation set forth inSection 4 for such year (prorated if any partial year is involved). The termPer Share Net Cash from operations shall mean the Net Income for such BonusYear (as shown on the Company’s Audited Financial Statements), with thefollowing adjustments, divided by the number of shares outstanding at the endof such Bonus Year.
     (i)  the addition back of any extraordinary deductions to income;
     (ii) the addition back of depreciation of non-rental property,depreciation on rental real estate and amortization of mortgage andorganization costs;
     (iii) with respect to the sales of property and investments, includingforeclosed property, recognized in any Bonus Year (x) there shall be deductedfrom net gain any discount or deferred gain, and (y) any depreciation taken onthe sold property during the period that it was owned by Employer shall beadded back before calculating the amount of the net loss or net gain.
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     (iv)  the subtraction of all “amortization of discounts on notes and fees”which are included in Net Income.
     The Compensation Committee of Employer shall calculate the Per Share NetCash from Operations in accordance with the formula set forth above, subject tosuch adjustments for extraordinary or unforeseen transactions, including butnot limited to capital gains transactions, as in the reasonable judgment of theCompensation Committee are fair and equitable to Employer and Executive. Saidcalculations shall be made with respect to any Bonus Year without regard to thebonus payable in accordance with this Agreement (or any other employment orsimilar Agreement with senior management) attributable to said year and/orattributable to a prior year or years but paid in said year.
     The bonus for any Bonus Year shall be paid on or before March 30th of thenext following year; provided however that if by March 30th of any year thebonus for the prior Bonus Year has not been finally determined, then the bonusshall be estimated and an amount equal to the estimated bonus will be paid toExecutive on March 30th and as soon as the actual bonus is finally determined,the parties will make an appropriate adjustment.
     Notwithstanding any other provisions of this Agreement, in the event ofany changes in the Company’s outstanding common stock by reason of a stockdividend, recapitalization, merger, consolidation, reorganization, split up,extraordinary dividend, combination or exchange of shares, or the like, theEmployer and
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Executive shall, if applicable, attempt in good faith to agree on appropriateadjustments to the bonus calculations referred to in this paragraph so as tosubstantially carry out the intention of this Agreement.
     (b)  Notwithstanding anything in this Agreement to the contrary (i)Executive shall not be entitled to a bonus on account of any Bonus Year inwhich his employment terminates pursuant to Section 11(e) below or in which hishis employment is terminated for cause, or any Bonus Year thereafter occurring,and (ii) if this Agreement is terminated pursuant to paragraph (b) of Section11 below, Executive’s bonus for the Bonus Year in which such termination occursshall be prorated as of the date on which compensation is no longer payableunder said Section 11(b). In calculating Per Share Net Cash from Operations toany such date (if it is not the last day of a calendar year) the parties shalladjust (by projection to said date or as of said date, as the case may be)based on the Net Income for the period ending on March 31, June 30, September30 or December 31 of such Bonus Year, whichever of said dates is closest to thedate with respect to which the Bonus is calculated.
     **9.     Purchaseof Replacement Automobile.** Upon the request of Executive madesubsequent to April 1, 2003, Employer shall make available to Executive a newautomobile for Executive’s use, said automobile to be of a make and modelreasonably acceptable to Executive. Said automobile shall, at Employer’soption, be
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either leased by Employer or purchased by Employer (title to remain inEmployer’s name). The purchase price of said automobile (exclusive of taxes),regardless of whether said automobile is purchased or leased by Employer, shallnot exceed $47,000 during the term of this contract; provided, however, thatExecutive may select a car costing more than $47,000 if Executive pays for theincreased costs to purchase or lease such automobile. Employer shall beresponsible for all costs of ownership attributable to said vehicle, includingbut not limited to insurance, gas, oil, maintenance, repairs, etc. On thetermination of Executive’s employment, if Employer has purchased the vehicle,Executive may at any time within three (3) weeks following the effective dateof termination purchase the vehicle from Employer at a price equal to the then“blue book” value of the vehicle times a fraction, the numerator of which isthe amount paid for said vehicle by Employer, including sales tax, “dealerprep”, etc., but excluding any contributions made by Executive, and thedenominator of which is the amount (the “Total Purchase Price”) paid for saidvehicle, including sales tax, “dealer prep” etc. and any contributions made byExecutive. In the event Executive does not timely purchase the vehicle andExecutive has made any contribution towards the purchase thereof, if Employerdesires to retain ownership of the vehicle Employer shall, within three weeksfollowing the earlier of (i) the expiration of the aforementioned three (3)week period, or (ii) receipt of notice from Executive that he shall notpurchase said vehicle, pay to Executive the “blue book value” of the vehicle,
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times a fraction, the numerator of which is the amount contributed towards thepurchase of said vehicle by Executive and the denominator of which is the TotalPurchase Price. If (i) Executive does not timely purchase the vehicle, and(ii) Employer does not desire to retain ownership and Executive has contributedtowards the purchase thereof, Employer shall promptly sell the vehicle and theparties shall divide the actual net sales proceeds (after sales taxes andadvertising costs, if any), with Executive receiving a fraction (being the samefraction described in the immediately preceding sentence) thereof and Employerreceiving the balance. Employer agrees that the automobile presently owned orleased by the Company and utilized by Executive, and for which Employer paysthe expenses pursuant to Section 7 above, may be retained or sold by Employerand Executive shall have no interest therein.
     **10.     Stock Options.**The stock options granted by Employer to Executivepursuant to Executive’s Employment Agreement dated as of January 1, 2000 (the“Existing Stock Options”) shall remain in full force and effect on the termsset forth in said Employment Agreement. In addition, Employer agrees that fromtime to time to the extent that any Existing Stock Options are either (i)exercised by Executive or (ii) lapse, if at the time of any such exercise orlapse Executive is employed by Employer, Employer shall (as of the date of suchexercise or lapse) grant new stock options to Executive (the “New StockOptions”) to purchase a number of shares of Employer’s Class B common stock
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equal to the number of shares covered by the Existing Stock Options which havebeen exercised or have lapsed. Any New Stock Options so granted by Employershall be subject to the terms and conditions of the existing Stock Option Plandated January 1, 1999 (the “Stock Option Plan”) and on the following terms andconditions:
     (a)  the exercise price for each New Stock Option granted shall be a priceequal to the closing price of the Class B common stock of Employer on the datethe option is granted;
     (b)  each New Stock Option granted pursuant to the terms of this Section 10shall be exercisable for a period of six years from the date such option isgranted, subject to earlier termination pursuant to the terms of the StockOption Plan.
     (c)  upon termination of Executive’s employment for any reason whatsoever,the Existing Stock Options and any New Stock Options granted pursuant to theterms hereof shall terminate immediately except as provided for in the StockOption Plan.
     **11.     EmploymentTermination; Termination Benefits.** The term of employmenthereunder shall be terminated upon the first to occur of the following:
     (a)  The expiration of the term of employment pursuant to Section 3(a) ofthis Agreement.
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     (b)  Executive’s death or permanent disability. “Permanent Disability”shall mean physical or mental incapacity of a nature which prevents Executive,or will prevent Executive, in the reasonable determination of the Board ofDirectors of Employer, from performing his duties under this Agreement for acontinuous period of four months or any aggregate period of six months in any12 month period. Permanent Disability shall be deemed to have occurred as ofsaid determination. If the term of employment is terminated because ofExecutive’s Permanent Disability, the Employer shall pay, when the same wouldotherwise have been payable in accordance with this Agreement, to Executive orhis representative, (i) Executive’s salary described in Section 4 above, asthen in effect, less any disability benefits payable to Executive from policiesmaintained by Employer, (ii) the bonus described in Section 8 above, subject toparagraph (b) thereof, plus (iii) Executive’s fringe benefits as described inSection 7 only (but not as described in Section 9 if the automobile in questionhad not yet been delivered to Executive as of the date of determination by theBoard), until (again subject to paragraph (b) of Section 8 with respect to anypayment pursuant to Section 8) the later to occur of (A) that day which istwenty-four (24) months after the date of determination of Executive’sPermanent Disability and (B) December 31, 2005; provided however thatsubsequent to that day which is six (6) months after the date of determinationof Executive’s Permanent
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Disability, the payments set forth in subparagraphs (i) and (ii) above shall bereduced to 50% of such amounts, less 100% of any disability payments payable toExecutive from policies maintained by Employer.
     If the term of employment is terminated because of Executive’s death, theEmployer shall pay, when the same would otherwise have been payable inaccordance with this Agreement, to Executive’s beneficiary or beneficiariesdesignated in writing to the Company, or to Executive’s estate in the absenceor lapse of such designation, (i) Executive’s salary described in Section 4above, as then in effect and (ii) the bonus described in Section 8 above,(again subject to paragraph (b) of Section 8 with respect to any paymentpursuant to said Section 8), in each case for a period of six months followingExecutive’s death, whether or not the term of employment would have terminatedpursuant to Section 3(a) prior to the end of such six month period.
     (c)  Executive’s employment being terminated by the Board “for cause”pursuant to Section 3(b) of this Agreement. If Executive’s employment isterminated for cause, the Company’s only obligation to Executive shall bepayment of Executive’s salary as described in Section 4 above and fringebenefits as described in Section 7 above (but not the bonus compensation setforth in Section 8 above for any period in the year in which such terminationoccurs), as in effect at the date of termination, through the date of suchtermination. Any termination of
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Executive’s employment under this Section 11(c) shall not affect Employer’sobligation to make the retirement payments set forth in Section 12(b) below.
     (d)  Executive’s employment being terminated by the Board “without cause”.Termination “without cause” shall mean termination of the term of employment onany basis other than those provided in paragraphs (a), (b), (c) or (e) of thisSection 11. If the term of employment is terminated without cause, the Boardshall give 10 days notice thereof to Executive and Executive shall be entitledto receive Executive’s salary per Section 4 above, fringe benefits per Section7 above but not per Section 9 above (unless the automobile described in saidSection 9 was delivered to Executive prior to said termination without cause),and, subject to paragraph (c) of Section 10 above, all other compensation(including the bonus compensation set forth in Section 8 above, without regardto the provisions of Section 8(b) above) which he would have received hereunderbut for such termination in respect of the unexpired portion of the term ofemployment (in the amounts and at the times provided in Sections 4 and 8 hereofin the case of compensation pursuant to said Sections). Any termination ofExecutive’s employment “without cause” shall not affect the Employer’sobligation to make the retirement payments set forth in Section 12(b) below.
     (e)  Upon Executive voluntarily resigning his employment hereunder. IfExecutive’s employment is terminated because
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Executive voluntarily resigns his employment hereunder, the Company’s onlyobligation to Executive shall be the payment of Executive’s salary pursuant toSection 4 above and fringe benefits pursuant to Section 7 above (but not thebonus provided by Section 8 above) as in effect at the date of such terminationthrough the effective date of such termination. Any termination resulting fromExecutive’s voluntary resignation from his employment hereunder shall notaffect Employer’s obligation to make the retirement payments set forth inSection 12(b) below.
     **12.     TheRetirement Period.**
     (a)  The Retirement Period shall commence on the first day of the firstcalendar month occurring after Executive’s sixty-fifth (65th) birthday, but maybe postponed by mutual agreement between Executive and Employer. TheRetirement Period shall end on the day of Executive’s death. The commencementand continuance of the Retirement Period shall not depend in any way upon theexistence of an active period of employment relationship between Executive andEmployer immediately prior to the commencement of the Retirement Period.
     (b) Commencing at the beginning of the 49th month following thecommencement of the Retirement Period, the Employer agrees to pay to Executiveeach year- during the Retirement Period, in equal monthly installments, the sumof $29,000; provided, however, that the $29,000 annual payment shall beincreased
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annually after the first year of payment to an amount equal to the productderived by multiplying the payment in what is then the immediately precedingyear by the lesser of (i) one (1) plus 50% of the “fraction” forming a part ofthe definition of the Cost of Living Adjustment Factor (as heretofore defined)for the period in question, and (ii) 1.05.
     (c)  Executive’s right to receive the payments provided for in thisSection 12 (i) shall not be contestable by Employer for any reason whatsoeverand (ii) shall be in lieu of any right of Executive to receive retirementpayments under any previous employment agreement with Employer, and Executivehereby waives and relinquishes any such rights.
     (d)  Furthermore, provided that Executive continuously remains an employeeof Employer from the date of this Employment Agreement through Executive’s 65thbirthday, unless otherwise agreed by the parties, during the Retirement Periodthe Employer shall maintain in full force and effect, Group Life policies andMajor Medical and/or “medigap” policies, which (together with Medicare or otherbenefits which may otherwise then be available to Executive without cost toExecutive), shall provide Executive with benefits substantially similar tothose existing for senior employees of the Company at the time of Executive’sretirement. Executive shall continue to be responsible for any and allpremiums attributable to Executive’s spouse and children.
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     **13.     Entire Agreement; Amendment.** This Employment Agreement contains theentire agreement between the parties hereto with respect to the subject mattercontained herein. This Employment Agreement may be amended, modified orsupplemented only by written agreement of Employer and Executive expressly tothat effect.
     **14.     Waiverof Compliance.** Any failure of either party to comply with anyobligation, covenant, agreement or condition on its part contained herein maybe expressly waived in writing by the other party, but such waiver or failureto insist upon strict compliance shall not operate as a waiver of, or estoppelwith respect to, any subsequent or other failure. Whenever this EmploymentAgreement requires or permits consent by or on behalf of any party, suchconsent shall be given in writing.
     **15.     Notices.** All notices, requests, demands and other communicationsrequired or permitted hereunder shall be in writing and shall be deemed givenif delivered by hand or five days after having been mailed, certified orregistered mail with postage prepaid: (a)  if to Employer, to: Presidential Realty Corporation180 South BroadwayWhite Plains, New York 10605Attention: Chairman of the Board of Directors with a copy to: Chairman, Compensation Committee
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 (b)  if to Executive, to: Jeffrey F. Joseph19 Stillman LanePleasantville, New York 10570
     **16.     Assignment.** This Employment Agreement shall inure to the benefit ofExecutive and Employer and be binding upon the successors and general assignsof Employer. Except as expressly provided herein, this Employment Agreementand Executive’s duties hereunder shall not be assigned or delegated.
     **17.     InvalidProvisions.** If any provision hereof is held to be illegal,invalid or unenforceable under present or future laws effective during the termhereof, such provision shall be fully severable; this Agreement shall beconstrued and enforced as if such illegal, invalid or unenforceable provisionhad never comprised a part hereof; and the remaining provisions hereof shallremain in full force and effect and shall not be affected by the illegal,invalid or unenforceable provision or by its severance herefrom. In lieu ofsuch illegal, invalid or unenforceable provision there shall be addedautomatically as a part hereof a provision as similar in terms to such illegal,invalid or unenforceable provision as may be possible and be legal, valid andenforceable.
     **18.     ApplicableLaw.** This Employment Agreement shall be construed andenforced in accordance with the laws of the State
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of New York.
               IN WITNESS WHEREOF, the parties have executed this Employment Agreement asof the day and year first above written.   **EMPLOYER:**   PRESIDENTIAL REALTY CORPORATION   BY: ROBERT E. SHAPIRORobert E. Shapiro, Chairmanof the Board of Directors   **EXECUTIVE:**     JEFFREY F. JOSEPHJeffrey F. Joseph
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