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                                                                   Exhibit 10.25

                              EMPLOYMENT AGREEMENT
                                     BETWEEN
                               SHELLEY D. SCHORSCH
                                       AND
                            FIRST STATES GROUP, L.P.

             This Employment Agreement (the "Agreement"), dated as of May 15,
2003 ("Effective Date"), between First States Group, L.P., a Delaware limited
partnership (the "Company"), and Shelley D. Schorsch (the "Executive"):

             WHEREAS, American Financial Realty Trust, a Maryland real estate
investment trust (the "REIT"), is a limited partner and the sole owner of the
general partner of the REIT;

             WHEREAS, this Agreement amends and restates the Employment
Agreement between the REIT (which was assigned to the Company) and the
Executive, dated September 10, 2002 (the "Original Agreement"); and

             WHEREAS, the Company wishes to continue to employ the Executive in
the capacities and on the terms and conditions set out below, and the Executive
has agreed to continue such employment, in the capacities and on the terms and
conditions set forth below.

             NOW, THEREFORE, the Company and the Executive, in
consideration of the respective covenants set out below, hereby agree as
follows:

     1. EMPLOYMENT.

                  (a) POSITIONS. The Executive shall be employed by the Company
as Senior Vice President - Corporate Affairs. The Executive shall also be an
officer of the REIT as its Senior Vice President - Corporate Affairs.

                  (b) DUTIES. The Executive shall report to the Chief Executive
Officer of the Company (the "Chief Executive Officer") and her principal
employment duties and responsibilities shall be those duties and
responsibilities customary for the position of Senior Vice President.

                  (c) EXTENT OF SERVICES. Except for illnesses and vacation
periods, the Executive shall devote a substantial majority of her business time
and attention and her best efforts to the performance of her duties and
responsibilities under this Agreement. Notwithstanding the foregoing, Executive
(i) shall be permitted to continue to manage, operate and devote time and
attention to those properties and businesses she owned, operated or controlled
at the time of the 144A Offering (collectively referred to herein as the
"Excluded Businesses"), (ii) may make any passive investment where she is not
obligated or required to, and shall not in fact, devote any managerial efforts,
(iii) may participate in charitable, academic or community activities, and in
trade or professional organizations, or (iv) may hold directorships in other
companies consistent with the Company's conflict of interest policies and
corporate governance guidelines as in effect from time to time.

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     2. TERM. This Agreement shall become effective as of the Effective Date and
shall continue in full force and effect thereafter for a term of three (3) years
and shall be automatically extended for an additional one (1) year at the end of
the three (3) year term and on each one-year anniversary of the extended one (1)
year term thereafter (referred to herein as a "Term Date"), unless either party
terminates this Agreement not later than sixty (60) days prior to a Term Date by
providing written notice to the other party of such party's intent not to renew,
or it is sooner terminated pursuant to Section 7. For purposes of this
Agreement, "Term" shall mean the actual duration of the Executive's employment
hereunder, taking into account any extensions pursuant to this Section 2 or
early termination of employment pursuant to Section 7.

     3. BASE SALARY. The Company shall pay the Executive a base salary annually
(the "Base Salary"), which shall be payable in periodic installments according
to the Company's normal payroll practices. The initial Base Salary shall be
$125,000. The Board of Trustees of the REIT (the "Board") or the Compensation
and Human Resources Committee of the REIT (the "Compensation Committee") shall
review the Base Salary at least once a year to determine whether the Base Salary
should be increased effective January 1 of each year during the Term; provided,
however, that on January 1, 2004, the initial Base Salary shall be increased to
$132,500, and on each January 1 thereafter during the Term, the Base Salary
shall be increased by a minimum positive amount equal to the Base Salary in
effect on January 1 of the prior year multiplied by the increase in the Consumer
Price Index for such year. The amount of the increase shall be determined before
March 31 of each year and shall be retroactive to January 1. The Base Salary,
including any increases, shall not be decreased during the Term. For purposes of
this Agreement, the term "Base Salary" shall mean the amount established and
adjusted from time to time pursuant to this Section 3.

     4. ANNUAL CASH INCENTIVE AWARDS.

             (a) ANNUAL INCENTIVE BONUS. The Executive shall be entitled to
receive an annual cash incentive bonus for each fiscal year during the Term of
this Agreement consistent with a bonus policy adopted by the Compensation
Committee (the "Bonus Policy"). For the period beginning on the Effective Date
and ending on December 31, 2002, if the Executive or the Company, as the case
may be, satisfies the performance criteria contained in such Bonus Policy for
the 2002 fiscal year, the Executive shall receive an annual incentive bonus in
an amount equal to two (2) times her Base Salary, with her Base Salary for this
purpose being pro rated and adjusted to reflect the short fiscal year. Beginning
January 1, 2003, and for each year thereafter, if Executive or the Company, as
the case may be, satisfies the performance criteria contained in such Bonus
Policy for a fiscal year, she shall receive an annual incentive bonus of up to
two (2) times her Base Salary, as in effect for such fiscal year, as recommended
by the Chief Executive Officer and subject to approval by the Compensation
Committee. If Executive or the Company, as the case may be, fails to satisfy the
performance criteria contained in such Bonus Policy for a fiscal year, she may
be eligible to receive an incentive bonus for such fiscal year, in such amount
as is recommended by the Chief Executive Officer and subject to approval by the
Compensation Committee. Beginning January 1, 2004, the Bonus Policy shall
contain both individual and group goals established by the Compensation
Committee. The annual incentive bonus shall be paid to the Executive no later
than thirty (30) days after the date the Board ratifies the annual incentive
bonus payable to the Executive for such fiscal year. For purposes of this
Agreement, the term "Incentive Bonus" shall mean the amount established pursuant
to this Section 4(a).

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             (b) OUTPERFORMANCE PLAN BONUS. The REIT has established the 2003
Outperformance Plan (the "OPP") as an incentive compensation plan for key
employees with awards determined based on the annual and the three-year total
return to shareholders of the REIT. The Executive shall be eligible to
participate in the OPP in an amount as determined by the Compensation Committee.

     5. STOCK BASED AWARDS.

             (a) 2002 EQUITY INCENTIVE PLAN OPTION GRANTS. The REIT has
established the 2002 Equity Incentive Plan ("Equity Incentive Plan"). The
Executive shall be eligible to receive future option grants as recommended by
the Chief Executive Officer, subject to review and approval by the Compensation
Committee.

             (b) 2002 EQUITY INCENTIVE PLAN RESTRICTED SHARE AWARDS. The Equity
Incentive Plan provides for the issuance of Common Shares as restricted Common
Shares ("Restricted Share Grants") to the extent that such Common Shares are
available thereunder. The Executive shall be eligible to receive Restricted
Share Grants as recommended by the Chief Executive Officer, subject to
Compensation Committee review and approval. Awards of Restricted Share Grants
shall be on the following terms: vesting at the rate of 33.33% of the underlying
Common Shares on the one-year anniversary of the effective date of the grant of
Common Shares as Restricted Share Grants and 8.33% of the underlying Common
Shares on the last day of each fiscal quarter thereafter until fully vested;
provided, however, that the Executive will be 100% vested and all restrictions
will lapse upon (i) a Change in Control (as defined herein), (ii) a termination
by the Company without Cause (as defined herein), (iii) a termination by the
Executive for Good Reason (as defined herein), (iv) her death, (v) her becoming
Permanently Disabled (as defined herein), or (vi) the Company's failure to renew
this Agreement. Executive will forfeit all vested and unvested Restricted Share
Grants if she is terminated for Cause and will forfeit all unvested Restricted
Share Grants if she voluntarily terminates her employment with the Company for
other than Good Reason. The Common Shares issued as Restricted Share Grants will
have voting and dividend rights.

     6. BENEFITS.

             (a) VACATION. The Executive shall be entitled to eight (8) weeks of
vacation per full calendar year. The Executive shall be entitled to cash in lieu
of any unused vacation time.

             (b) SICK AND PERSONAL DAYS. The Executive shall be entitled to sick
and personal days on an as needed basis.

             (c) EMPLOYEE BENEFITS.

                     (i) PARTICIPATION IN EMPLOYEE BENEFIT PLANS. The Executive
and her spouse and eligible dependents, if any, and their respective designated
beneficiaries where applicable, will be eligible for and entitled to participate
in any Company sponsored employee benefit plans, including but not limited to
benefits such as group health, dental, accident, disability insurance, group
life insurance, and a 401(k) plan, as such benefits may be

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offered from time to time, on a basis no less favorable than that applicable to
other executives of the Company.

                    (ii)  DISABILITY INSURANCE. The Company shall maintain, at
its cost, supplemental renewable long-term disability insurance as agreed to by
the Company and the Executive.

             (d) OTHER BENEFITS.

                    (i)   ANNUAL PHYSICAL. The Company shall provide, at its
cost, a medical examination for the Executive on an annual basis by a licensed
physician in the Philadelphia, Pennsylvania area selected by the Executive.

                    (ii)  CAR ALLOWANCE. The Company shall pay Executive a
monthly car allowance as determined by the Chief Executive Officer provided such
allowance is consistent with amounts paid to other similarly situated executives
of the Company and is not less than $750.00 per month.

                    (iii) DIRECTORS AND OFFICERS INSURANCE. During the Term and
the Severance Period, the Executive shall be entitled to directors and officers
insurance coverage for her acts and omissions while an officer and director of
the Company and the REIT on a basis no less favorable to her than the coverage
provided to current officers and directors.

                    (iv)  EXPENSES, OFFICE AND SECRETARIAL SUPPORT. The
Executive shall be entitled to reimbursement of all reasonable expenses, in
accordance with the Company's policy as in effect from time to time and on a
basis no less favorable than that applicable to other executives of the Company,
including, without limitation, telephone, reasonable travel and reasonable
entertainment expenses incurred by the Executive in connection with the business
of the Company, promptly upon the presentation by the Executive of appropriate
documentation. The Executive shall also be entitled to appropriate office space,
administrative support, and such other facilities and services as are suitable
to the Executive's positions and adequate for the performance of the Executive's
duties.

     7. TERMINATION. The employment of the Executive by the Company pursuant to
this Agreement shall terminate upon the occurrence of any of the following:

             (a) DEATH OR PERMANENT DISABILITY. Immediately upon Death or
Permanent Disability of the Executive. As used in this Agreement, "Permanent
Disability" shall mean an inability due to a physical or mental impairment to
perform the material services contemplated under this Agreement for a period of
six (6) months, whether or not consecutive, during any 365-day period. A
determination of Permanent Disability shall be made by a physician satisfactory
to both the Executive and the Company, provided that if the Executive and the
Company do not agree on a physician, the Executive and the Company shall each
select a physician and these two together shall select a third physician, whose
determination as to Permanent Disability shall be binding on all parties. The
appointment of one or more individuals to carry out the offices or duties of the
Executive during a period of the Executive's inability to perform such duties
and pending a determination of Permanent Disability shall not be considered a
breach of this Agreement by the Company.

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             (b) FOR CAUSE. At the election of the Company and subject to the
provisions of this Section 7(b), immediately upon written notice by the Company
to the Executive of her termination for Cause. For purposes of this Agreement,
"Cause" for termination shall be deemed to exist solely in the event of (i) the
conviction of the Executive of, or the entry of a plea of guilty or nolo
contendere by the Executive to, a felony (exclusive of any felony relating to
negligent operation of a motor vehicle and not including a conviction, plea of
guilty or nolo contendere arising solely under a statutory provision imposing
criminal liability upon the Executive on a per se basis due to the Company
offices held by the Executive, so long as any act or omission of the Executive
with respect to such matter was not taken or omitted in contravention of any
applicable policy or directive of the Board, (ii) a willful breach of her duty
of loyalty which is materially detrimental to the Company, (iii) a willful
failure to perform or adhere to explicitly stated duties that are consistent
with the terms of this Agreement, or the Company's reasonable and customary
guidelines of employment or reasonable and customary corporate governance
guidelines or policies, including without limitation any business code of ethics
adopted by the Board, or to follow the lawful directives of the Board (provided
such directives are consistent with the terms of this Agreement), which, in any
such case, continues for thirty (30) days after written notice from the Board to
the Executive, or (iv) gross negligence or willful misconduct in the performance
of the Executive's duties. For purposes of this Section 7(b), no act, or failure
to act, on the Executive's part will be deemed "gross negligence" or "willful
misconduct" unless done, or omitted to be done, by the Executive not in good
faith and without a reasonable belief that the Executive's act, or failure to
act, was in the best interest of the Company. The parties agree that in order to
terminate the Executive pursuant to Subsections (ii) and (iv) hereof, the
Company shall first be required to prove to the reasonable satisfaction of the
Executive that she engaged in improper conduct under these Subsections, and if
the Executive shall not agree with the Company's assessment of her conduct, then
the Executive shall not be terminated until an arbitrator, as provided for in
Section 13(b), has determined that the Executive's conduct constituted improper
conduct under the applicable Subsection.

             (c) WITHOUT CAUSE; WITHOUT GOOD REASONS. At the election of the
Company, without Cause, and at the election of the Executive, without Good
Reason, in either case upon thirty (30) days prior written notice to the
Executive or the Company, as the case may be.

             (d) FOR GOOD REASON. At the election of the Executive, for Good
Reason. For purposes of this Agreement, "Good Reason" shall mean, absent the
Executive's prior written consent, the requirement by the Company that the
principal place of business at which the Executive performs her duties be
changed to a location that is outside of a 50 mile radius of Jenkintown,
Pennsylvania. The parties acknowledge that for these purposes, Executive's
principal place of business will be Jenkintown, Pennsylvania for approximately
36 to 38 weeks per calendar year, and the remainder, as the Executive decides,
will be in Richmond, Virginia and Avalon, New Jersey.

     8. EFFECTS OF TERMINATION.

             (a) TERMINATION ON PERMANENT DISABILITY; BY THE COMPANY WITHOUT
CAUSE; BY THE EXECUTIVE FOR GOOD REASON. If the employment of the Executive
should terminate by reason of her becoming Permanently Disabled, a termination
by

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the Company for any reason other than Cause, or by the Executive for Good
Reason, then the Company shall pay all compensation and benefits for the
Executive as follows:

              (i)   any Base Salary, Incentive Bonus, expense reimbursements and
all other compensation related payments that are payable as of her termination
of employment date that are related to her period of employment preceding her
termination date, and

              (ii)  any Incentive Bonus that has been allocated, awarded or
otherwise determined but unpaid as of the effective date of her termination, and

              (iii) the amount equal to her Base Salary at the rate in effect on
the effective date of her termination of employment, that would have been paid
or payable during the three (3) year period immediately following the effective
date of her termination (the "Severance Period").

        The sum of the amount payable under subsections (ii) and (iii) hereof is
referred to herein as her "Severance Payment".

              (iv)  The Severance Payment shall be made in a single, lump sum
cash payment no later than thirty (30) days after the effective date of the
Executive's termination of employment. With respect to any Severance Payment
attributable to a period after the expiration of the Noncompete Period (as
defined herein), such payment shall be reduced for compensation earned from
other employment or self-employment after that date, and the Executive shall
refund to the Company any amount due as a result of such reduction; provided,
however, that there shall be no reduction for amounts earned or paid to her with
respect to the Excluded Businesses.

              (v)   The Company shall allow the Executive to continue to
participate during the Severance Period in any and all of the employee benefit
and welfare plans and programs of the Company, excluding the 401(k) plan, in
which the Executive was entitled to participate immediately prior to her
termination, to the same extent and upon the same terms as the Executive
participated in such plans prior to her termination, provided that the
Executive's continued participation is permissible or otherwise practicable
under the general terms and provisions of such benefit plans and programs.
During the Severance Period, the Company shall pay for the Executive's continued
participation in said employee benefit and welfare plans, including but not
limited to premiums for group health, dental, accident, disability insurance,
directors and officers insurance, group life insurance, and her car allowance,
but excluding the 401(k) plan. To the extent that continued participation is
neither permissible nor practicable, the Company shall take such actions as may
be necessary to provide the Executive with substantially comparable benefits
(without additional cost to the Executive) outside the scope of such plans
including, without limitation, reimbursing the Executive for her costs in
obtaining such coverage, such as COBRA premiums paid by the Executive and/or her
eligible dependents. If the Executive engages in regular employment after her
termination of employment (whether as an executive or as a self-employed person
but excluding her management or operation of the Excluded Business), any
employee benefit and welfare benefits received by the Executive in consideration
of such employment which are similar in nature to the employee benefit and
welfare benefits provided by the Company will relieve the Company of its
obligation under this Section 8(a) to provide comparable benefits to the extent
of the benefits so received.

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              (vi)   The Executive's stock options awarded under the Equity
Incentive Plan (or any other or successor plan) shall immediately become 100%
vested and she shall have the period specified in the option grant in which to
exercise her vested stock options, including those stock options that vested
upon her Termination of Employment.

              (vii)  The Executive's restricted Common Shares awarded under the
Equity Incentive Plan (or any other or successor plan) shall immediately become
100% vested and all restrictions shall lapse.

              (viii) The Executive would be entitled to receive a percentage of
her OPP allocation equal to (x) the number of complete months the Executive had
participated in the OPP through the effective date of her termination of
employment, divided by (y) 36 (representing the total number of months in the
OPP term), in lieu of her scheduled vesting under the OPP. This OPP allocation
would be paid to the Executive after the OPP reward is determined at the end of
the OPP plan term.

              (ix)   All Severance Payments are contingent on Executive signing
a release of claims, substantially in the form attached hereto as Exhibit A.

        (b) TERMINATION ON DEATH. Upon a termination of employment due to the
Executive's death, the Executive shall become 100% vested in her stock options
and restricted Common Shares awarded under the Equity Incentive Plan. The
Executive's personal representative shall have the period specified in the
option grant in which to exercise her vested stock options, including those
stock options that vested on death. The Company shall pay to the Executive's
personal representative any Base Salary, Incentive Bonus, expense reimbursements
and all other compensation related payments that are payable as of her date of
death and that are related to her period of employment preceding her date of
death.

        (c) BY THE COMPANY FOR CAUSE OR BY THE EXECUTIVE WITHOUT GOOD REASON. In
the event that the Executive's employment is terminated by the Company for Cause
or by the Executive without Good Reason, the Company shall pay the Executive her
Base Salary, Incentive Bonus, expense reimbursements and all other compensation
related payments that are payable as of her termination of employment date and
that are related to her period of employment preceding her termination date.
Executive shall forfeit all of her vested and unvested options and restricted
Common Shares if she is terminated for Cause and she shall forfeit only her
unvested options and restricted Common Shares if she terminates her employment
with the Company without Good Reason.

        (d) TERMINATION OF AUTHORITY. Immediately upon the Executive terminating
or being terminated from her employment with the Company for any reason,
notwithstanding anything else appearing in this Agreement or otherwise, the
Executive will stop serving the functions of her terminated or expired
positions, and shall be without any of the authority or responsibility for such
positions. On request of the Board at any time following her termination of
employment for any reason, the Executive shall resign from the Board if then a
member.

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      9. CHANGE OF CONTROL.

           (a) CHANGE OF CONTROL. For purposes of this Agreement, a "Change
of Control" will be deemed to have taken place upon the occurrence of any of the
following events:

                  (i)   any person, entity or affiliated group, excluding the
Company or any employee benefit plan of the Company, acquiring more than 50% of
the then outstanding voting shares of the REIT,

                  (ii)  the consummation of any merger or consolidation of the
REIT into another company, such that the holders of the voting shares of the
REIT immediately prior to such merger or consolidation is less than 50% of the
voting power of the securities of the surviving company or the parent of such
surviving company,

                  (iii) the complete liquidation of the REIT or the sale or
disposition of all or substantially all of the REIT's assets, such that after
the transaction, the holders of the voting shares of the REIT immediately prior
to the transaction is less than 50% of the voting securities of the acquiror or
the parent of the acquiror, or

                  (iv)  a majority of the Board votes in favor of a decision
that a Change of Control has occurred.

           (b) CERTAIN BENEFITS UPON A CHANGE OF CONTROL. In the event of a
Change of Control, the Executive shall become 100% vested in the stock options
and restricted Common Shares awarded under the Equity Incentive Plan (or any
other or successor plan).

           (c) EXCISE TAX.

                  (i)   In the event that any payment or benefit received or to
be received by the Executive in connection with a change in control or a
termination of the Executive's employment (whether pursuant to the terms of this
Agreement or any other plan, arrangement or agreement with the Company, any
person whose actions result in a change in control or any person affiliated with
the Company or such person) (all such payments and benefits being hereinafter
called "Total Payments"), such that the Executive will be subject (in whole or
in part) to the excise tax imposed under Code Section 4999 ("Excise Tax") on
such payments and benefits, then the Company shall pay to the Executive an
additional amount (the "Gross-Up Payment") such that the net amount retained by
the Executive, after deduction of the Excise Tax and any federal, state and
local income tax on the Gross-Up Payment, will be equal to the total amount of
payments required to be paid pursuant to this Agreement. For purposes of
determining the amount of the Gross-Up Payment, the Executive shall be deemed to
pay federal income taxes at the highest marginal rate of federal income taxation
in the calendar year in which the Gross-Up Payment is to be made and state and
local income taxes at the highest marginal rate of taxation in the state and
locality of the Executive's residence on such date, net of the maximum deduction
in federal income taxes which could be obtained from deduction of such state and
local taxes.

                  (ii)  The Executive or the Company may request, prior to the
time any payments under this Agreement are made, a determination of whether any
or all of the Total

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Payments will be subject to the Excise Tax and, if so, the amount of such Excise
Tax and the federal, state and local income tax imposed on the Gross-Up Payment.
If such a determination is requested, it shall be made promptly, at the
Company's expense, by tax counsel selected by the Executive and approved by the
Company (with such approval not being unreasonably withheld), and such
determination shall be conclusive and binding on both parties. The Company
agrees to provide any information reasonably requested by such tax counsel. Tax
counsel may engage accountants or other experts, at the Company's expense, to
the extent deemed necessary or advisable for them to reach a determination. For
these purposes, the term "tax counsel" shall mean a law firm with expertise in
federal income tax matters.

                  (iii) In the event that the Excise Tax is subsequently
determined to be less than the amount taken into account hereunder, the
Executive will repay to the Company, at the time that the amount of such
reduction in Excise Tax is finally determined, the portion of the Gross-Up
Payment attributable to such reduction plus that portion of the Gross-Up Payment
attributable to the Excise Tax and federal, state and local income tax imposed
on the Gross-Up Payment, without any interest thereon. In the event that the
Excise Tax is determined to exceed the amount taken into account hereunder, the
Company will make an additional Gross-Up Payment in respect of such excess and
in respect of any portion of the Excise Tax with respect to which the Company
had not previously made a Gross-Up Payment (plus any interest, penalties or
additions payable by the Executive with respect to such excess and such portion)
at the time that the amount of such excess is finally determined, without any
interest thereon.

                  (iv)  Each party agrees to notify the other party, in writing,
of any claim that, if successful, would require the payment by the Company of a
Gross-Up Payment or might entitle the Company to a refund of all or part of any
previous Gross-Up Payment. Such notification shall be given as soon as
practicable but no later than ten (10) business days after the Executive or
Company is informed in writing of such claim or otherwise becomes aware of such
claim. If notice of the claim arose as a result of a claim made against the
Executive by a taxing authority, Executive shall not pay such claim prior to the
expiration of the thirty (30) day period following the date on which she gives
notice to the Company. If the Company notifies the Executive in writing prior to
the expiration of such period that it desires to contest such claim, the
Executive shall: (A) give the Company any information reasonably requested by
the Company relating to such claim, (B) take such action in connection with
contesting such claim as the Company shall reasonably request in writing from
time to time, including, without limitation, accepting legal representation with
respect to such claim by an attorney selected by the Executive and approved by
the Company (with such approval not being unreasonably withheld), (C) cooperate
with the Company in good faith in order to effectively contest such claim, and
(D) permit the Company to reasonably participate in any proceedings relating to
such claim. The Company shall bear and pay directly all costs and expenses
(including legal fees and additional interest and penalties) incurred in
connection with such contest and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses.

                  (v)   Notwithstanding the foregoing, the Company shall control
all audits and proceedings taken in connection with any claim, audit or
proceeding involving Excise Taxes or Gross-Up Payments and, at its sole option,
may pursue or forego any and all administrative

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appeals, proceedings, hearings and conferences with the taxing authority in
respect of any such claim, audit or proceeding and may, at its sole option,
either direct the Executive to pay the tax claimed and sue for a refund or
contest the tax in any permissible manner, and the Executive agrees to prosecute
such contest to a determination before any administrative tribunal, in a court
of initial jurisdiction and in one or more appellate courts, as the Company
shall determine; provided, however, that if the Company directs the Executive to
pay such tax and sue for a refund, the Company shall advance the amount of such
payment to the Executive, on an interest-free basis (including interest or
penalties with respect thereto) and shall indemnify and hold the Executive
harmless, on an after-tax basis, for any Excise Tax or income tax (including
interest or penalties with respect thereto) imposed with respect to such advance
or with respect to any imputed income with respect to such advance. The Company
shall be required to consult with and keep the Executive fully apprised of
developments and actions being considered or taken with respect to such claim,
audit or proceeding. The Company's control of the contest shall be limited to
issues with respect to which such a Gross-Up Payment would be payable or
refundable hereunder and the Executive shall be entitled to settle or contest,
as the case may be, any other issue. Each party agrees to keep the other party
fully apprised of developments concerning such claim, audit or proceeding and to
cooperate with the other in good faith in order to effectively resolve such
claim, audit or proceeding.

                  (vi)  For purposes of this Subsection (c), a determination of
whether a payment is subject to Excise Taxes, including but not limited to, a
determination of change in control, shall be made pursuant to Code Section 280G.

        10. CONFIDENTIAL INFORMATION. The Executive recognizes and acknowledges
that certain assets of the Company constitute Confidential Information. The term
"Confidential Information" as used in this Agreement shall mean all information
which is known only to the Executive or the Company, other employees of the
Company, or others in a confidential relationship with the Company, and relating
to the Company's business including, without limitation, information regarding
clients, customers, pricing policies, methods of operation, proprietary Company
programs, sales products, profits, costs, markets, key personnel, formulae,
product applications, technical processes, and trade secrets, as such
information may exist from time to time, which the Executive acquired or
obtained by virtue of work performed for the Company, or which the Executive may
acquire or may have acquired knowledge of during the performance of said work.
The Executive shall not, during or after the Term, disclose all or any part of
the Confidential Information to any person, firm, corporation, association, or
any other entity for any reason or purpose whatsoever, directly or indirectly,
except as may be required pursuant to her employment hereunder, unless and until
such Confidential Information becomes publicly available other than as a
consequence of the breach by the Executive of her confidentiality obligations
hereunder. In the event of the termination of her employment, whether voluntary
or involuntary and whether by the Company or the Executive, the Executive shall
deliver to the Company all documents and data pertaining to the Confidential
Information and shall not take with her any documents or data of any kind or any
reproductions (in whole or in part) or extracts of any items relating to the
Confidential Information. The Company acknowledges that prior to her employment
with the Company, the Executive has lawfully acquired extensive knowledge of the
industries and businesses in which the Company engages in business, and that the
provisions of this Section 10 are not intended to restrict the Executive's use
of such previously acquired knowledge.

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          In the event that the Executive receives a request or is required (by
deposition, interrogatory, request for documents, subpoena, civil investigative
demand or similar process) to disclose all or any part of the Confidential
Information, the Executive agrees to (a) promptly notify the Company in writing
of the existence, terms and circumstances surrounding such request or
requirement, (b) consult with the Company on the advisability of taking legally
available steps to resist or narrow such request or requirement, and (c) assist
the Company in seeking a protective order or other appropriate remedy. In the
event that such protective order or other remedy is not obtained or that the
Company waives compliance with the provisions hereof, the Executive shall not be
liable for such disclosure unless disclosure to any such tribunal was caused by
or resulted from a previous disclosure by the Executive not permitted by this
Agreement.

     11. NON-COMPETITION AND NONSOLICITATION. During the Term and for a period
of 18 calendar months after the termination of the Executive's employment (the
"Noncompete Period"), the Executive shall not, directly or indirectly, either as
a principal, agent, employee, employer, stockholder, partner or in any other
capacity whatsoever: (a) engage or assist others engaged, in whole or in part,
in any business which is engaged in a business or enterprise that is
substantially similar to the business of the Company that the Company was
engaged in during the period of the Executive's employment with the Company, or
(b) without the prior consent of the Board, employ or solicit the employment of,
or assist others in employing or soliciting the employment of, any individual
employed by the Company at any time while the Executive was also so employed.
Notwithstanding anything else herein to the contrary, the provisions of this
Section 11 shall not apply in the event the Executive's employment is terminated
for any reason other than a termination by the Company for Cause or a
termination by the Executive without Good Reason.

          Nothing in this Section 11 shall impede, restrict or otherwise
interfere with the Executive's management and operation of the Excluded
Businesses. Further, nothing in this Section 11 shall prohibit Executive from
making any passive investment in a public company, or where she is the owner of
five percent (5%) or less of the issued and outstanding voting securities of any
entity, provided such ownership does not result in her being obligated or
required to devote any managerial efforts.

          The Executive agrees that the restraints imposed upon her pursuant to
this Section 11 are necessary for the reasonable and proper protection of the
Company and its subsidiaries and affiliates, and that each and every one of the
restraints is reasonable in respect to subject matter, length of time and
geographic area. The parties further agree that, in the event that any provision
of this Section 11 shall be determined by any court of competent jurisdiction to
be unenforceable by reason of its being extended over too great a time, too
large a geographic area or too great a range of activities, such provision shall
be deemed to be modified to permit its enforcement to the maximum extent
permitted by law.

     12. INTELLECTUAL PROPERTY. During the Term, the Executive shall promptly
disclose to the Company or any successor or assign, and grant to the Company and
its successors and assigns without any separate remuneration or compensation
other than that received by her in the course of her employment, her entire
right, title and interest in and to any and all inventions, developments,
discoveries, models, or any other intellectual property of any type or

                                       11

<PAGE>

nature whatsoever ("Intellectual Property"), whether developed by her during or
after business hours, or alone or in connection with others, that is in any way
related to the business of the Company, its successors or assigns. This
provision shall not apply to books or articles authored by the Executive during
non-work hours, consistent with her obligations under this Agreement, so long as
such books or articles (a) are not funded in whole or in part by the Company,
and (b) do not contain any Confidential Information or Intellectual Property of
the Company. The Executive agrees, at the Company's expense, to take all steps
necessary or proper to vest title to all such Intellectual Property in the
Company, and cooperate fully and assist the Company in any litigation or other
proceedings involving any such Intellectual Property.

     13. DISPUTES.

          (a) EQUITABLE RELIEF. The Executive acknowledges and agrees that upon
any breach by the Executive of her obligations under Sections 10, 11, or 12
hereof, the Company will have no adequate remedy at law, and accordingly will be
entitled to specific performance and other appropriate injunctive and equitable
relief.

          (b) ARBITRATION. Excluding only requests for equitable relief by the
Company under Section 13(a), in the event that there is any claim or dispute
arising out of or relating to this Agreement or the breach hereof, and the
parties hereto shall not have resolved such claim or dispute within 60 days
after written notice from one party to the other setting forth the nature of
such claim or dispute, then such claim or dispute shall be settled exclusively
by binding arbitration in Montgomery county, Pennsylvania, in accordance with
the Employment Dispute Resolution Rules of the American Arbitration Association
("Rules"), by an arbitrator mutually agreed upon by the parties hereto or, in
the absence of such agreement, by an arbitrator selected according to such
Rules. Notwithstanding the foregoing, if either the Company or the Executive
shall request, such arbitration shall be conducted by a panel of three (3)
arbitrators, one selected by the Company, one selected by the Executive and the
third selected by agreement of the first two arbitrators, or, in the absence of
such agreement, in accordance with such Rules. Judgment upon the award rendered
by such arbitrator(s) shall be entered in any Court having jurisdiction thereof
upon the application of either party. The parties agree to use their reasonable
best efforts to have such arbitration completed as soon as is reasonably
practicable. Notwithstanding anything herein to the contrary, the losing party
shall pay the reasonable costs and expenses (including reasonable attorney fees
and expenses) of the prevailing party with respect to such arbitration, except
the Executive, if she is the losing party, shall not be required to pay such
expenses and costs if the claim relates to statutory discrimination claims that
she would not otherwise be required to pay if such claim had been brought in a
court of competent jurisdiction.

          (c) LEGAL FEES. The Company shall pay or promptly reimburse the
Executive for the reasonable legal fees and expenses incurred by the Executive
in successfully enforcing or defending any right of the Executive pursuant to
this Agreement.

     14. INDEMNIFICATION. The Company shall indemnify the Executive, to the
maximum extent permitted by applicable law, against all costs, charges and
expenses incurred or sustained by the Executive, including the cost of legal
counsel selected and retained by the Executive in connection with any action,
suit or proceeding to which the Executive may be made

                                       12

<PAGE>

a party by reason of the Executive being or having been an officer, director, or
employee of the Company.

     15. COOPERATION IN FUTURE MATTERS. The Executive hereby agrees that for a
period of 18 months following her termination of employment she shall cooperate
with the Company's reasonable requests relating to matters that pertain to the
Executive's employment by the Company, including, without limitation, providing
information or limited consultation as to such matters, participating in legal
proceedings, investigations or audits on behalf of the Company, or otherwise
making himself reasonably available to the Company for other related purposes.
Any such cooperation shall be performed at scheduled times taking into
consideration the Executive's other commitments, and the Executive shall be
compensated at a reasonable hourly or per diem rate to be agreed upon by the
parties to the extent such cooperation is required on more than an occasional
and limited basis. The Executive shall not be required to perform such
cooperation to the extent it conflicts with any requirements of exclusivity of
services for another employer or otherwise, nor in any manner that in the good
faith belief of the Executive would conflict with her rights under or ability to
enforce this Agreement.

     16. GENERAL.

          (a) NOTICES. All notices and other communications hereunder shall be
in writing or by written telecommunication, and shall be deemed to have been
duly given if delivered personally or if sent by overnight courier or by
certified mail, return receipt requested, postage prepaid or sent by written
telecommunication or telecopy, to the relevant address set forth below, or to
such other address as the recipient of such notice or communication shall have
specified in writing to the other party hereto, in accordance with this Section
16(a).

     If to the Company, to:     First States Group, L.P.
                                c/o American Financial Realty Trust
                                1725 The Fairway
                                Jenkintown, PA 19046
                                Attn: Nicholas S. Schorsch, President and
                                      Chief Executive Officer
                                Facsimile: 215-887-2585

     If to Executive, at her last residence shown on the records of the
Company.

Any such notice shall be effective (i) if delivered personally, when received,
(ii) if sent by overnight courier, when receipted for, (iii) if mailed, five (5)
days after being mailed, and (iv) on confirmed receipt if sent by written
telecommunication or telecopy, provided a copy of such communication is sent by
regular mail, as described above.

          (b) SEVERABILITY. If any provision of this Agreement is or becomes
invalid, illegal or unenforceable in any respect under any law, the validity,
legality and enforceability of the remaining provisions hereof shall not in any
way be affected or impaired.

          (c) WAIVERS. No delay or omission by either party hereto in exercising
any right, power or privilege hereunder shall impair such right, power or
privilege, nor shall any

                                       13

<PAGE>

single or partial exercise of any such right, power or privilege preclude any
further exercise thereof or the exercise of any other right, power or privilege.

          (d) COUNTERPARTS. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument. In making proof of this
Agreement, it shall not be necessary to produce or account for more than one
such counterpart.

          (e) ASSIGNS. This Agreement shall be binding upon and inure to the
benefit of the Company's successors and the Executive's personal or legal
representatives, executors, administrators, heirs, distributees, devisees and
legatees. This Agreement shall not be assignable by the Executive, it being
understood and agreed that this is a contract for the Executive's personal
services. Otherwise, this Agreement shall not be assignable by the Company
except that the Company may assign it in connection with a transaction involving
the succession by a third party to all or substantially all of the Company's
business and/or assets (whether direct or indirect and whether by purchase,
merger, consolidation, liquidation or otherwise). When assigned to a successor,
the assignee shall assume this Agreement and expressly agree to perform this
Agreement in the same manner and to the same extent as the Company would be
required to perform it in the absence of such an assignment. For all purposes
under this Agreement, the term "Company" shall include any successor to the
Company's business and/or assets that executes and delivers the assumption
agreement described in the immediately preceding sentence or that becomes bound
by this Agreement by operation of law.

          (f) ENTIRE AGREEMENT. This Agreement contains the entire understanding
of the parties, supersedes all prior agreements and understandings, including
the Original Agreement, whether written or oral, relating to the subject matter
hereof and may not be amended except by a written instrument hereafter signed by
the Executive and the Chief Executive Officer or a duly authorized
representative of the Board (other than the Executive).

          (g) GOVERNING LAW. This Agreement and the performance hereof shall be
construed and governed in accordance with the laws of the Commonwealth of
Pennsylvania, without giving effect to principles of conflicts of law.

          (h) CONSTRUCTION. The language used in this Agreement shall be deemed
to be the language chosen by the parties to express their mutual intent, and no
rule of strict construction shall be applied against any party. The headings of
sections of this Agreement are for convenience of reference only and shall not
affect its meaning or construction. Whenever any word is used herein in one
gender, it shall be construed to include the other gender, and any word used in
the singular shall be construed to include the plural in any case in which it
would apply and vice versa.

          (i) PAYMEN PAYMENTS AND EXERCISE OF RIGHTS AFTER DEATH. Any amounts
payable hereunder after the Executive's death shall be paid to the Executive's
designated beneficiary or beneficiaries, whether received as a designated
beneficiary or by will or the laws of descent and distribution. The Executive
may designate a beneficiary or beneficiaries for all purposes of this Agreement,
and may change at any time such designation, by notice to the Company making
specific reference to this Agreement. If no designated

                                       14

<PAGE>

beneficiary survives the Executive or the Executive fails to designate a
beneficiary for purposes of this Agreement prior to her death, all amounts
thereafter due hereunder shall be paid, as and when payable, to her spouse, if
she survives the Executive, and otherwise to her estate.

          (j) CONSULTATION WITH COUNSEL. The Executive acknowledges that she has
had a full and complete opportunity to consult with counsel or other advisers of
her own choosing concerning the terms, enforceability and implications of this
Agreement, and that the Company has not made any representations or warranties
to the Executive concerning the terms, enforceability and implications of this
Agreement other than as are reflected in this Agreement.

          (k) WITHHOLDING. Any payments provided for in this Agreement shall be
paid net of any applicable income tax withholding required under federal, state
or local law.

          (l) CONSUMER PRICE INDEX. For purposes of this Agreement, the term
"CPI" refers to the Consumer Price Index as published by the Bureau of Labor
Statistics of the United States Department of Labor, U.S. City Average, All
Items for Urban Wage Earners and Clerical Workers (1982-1984=100). If the CPI is
hereafter converted to a different standard reference base or otherwise revised,
the determination of the CPI adjustment shall be made with the use of such
conversion factor, formula or table for converting the CPI, as may be published
by the Bureau of Labor Statistics, or, if the bureau shall no longer publish the
same, then with the use of such conversion factor, formula or table as may be
published by an agency of the United States, or failing such publication, by a
nationally recognized publisher of similar statistical information.

          (m) SURVIVAL. The provisions of Sections 10, 11, 12, 13, 14 and 15
shall survive the termination of this Agreement.

                                       15

<PAGE>

     IN WITNESS WHEREOF, and intending to be legally bound hereby, the parties
hereto have caused this Agreement to be duly executed as of the date first above
written.

FIRST STATES GROUP, L.P.                   SHELLEY D. SCHORSCH
By:     First States Group, LLC
        Its general partner


    By: ___________________________        ______________________________
        Name:
        Title:

Dated:  May ___, 2003                      Dated:  May __, 2003



GUARANTEE:

The obligations of First States Group, L.P. under this Employment Agreement,
dated May 15, 2003, with Shelley D. Schorsch, shall be guaranteed by American
Financial Realty Trust.


AMERICAN FINANCIAL REALTY TRUST


By:     ______________________________
        Name:
        Title:

Dated:  May __, 2003

                                       16

<PAGE>

                                    EXHIBIT A

                               RELEASE AND WAIVER

          This release and waiver (the "Termination Release") is made as of the
___ day of __________, 200__by ______________________ (the "Executive").

          WHEREAS, the Executive and First States Group, L.P. (the "Company")
have entered into an Employment Agreement (the "Agreement") dated as of May 15,
2003 that provides for certain compensation and severance amounts upon her
termination of employment; and

          WHEREAS, the Executive has agreed, pursuant to the terms of the
Agreement, to execute a release and waiver in the form set forth in this Release
and Waiver ("Termination Release") in consideration of the Company's agreement
to provide the compensation and severance amounts upon her termination of
employment set out in the Agreement; and

          WHEREAS, the Executive has incurred a termination of employment
effective as of _________, 20__; and

          WHEREAS, the Company and the Executive desire to settle all rights,
duties and obligations between them, including without limitation all such
rights, duties, and obligations arising under the Agreement or otherwise out of
the Executive's employment by the Company.

          NOW THEREFORE, intending to be legally bound and for good and valid
consideration the sufficiency of which is hereby acknowledged, the Executive
agrees as follows:

          1. RELEASE. In consideration for the payments to be made pursuant to
the Agreement:

          (a) Executive knowingly and voluntarily releases, acquits and forever
discharges the Company, and its respective owners, parents, stockholders,
predecessors, successors, assigns, agents, directors, officers, employees,
representatives, divisions and subsidiaries (collectively, the "Releasees") from
any and all charges, complaints, claims, liabilities, obligations, promises,
agreements, damages, causes of action, suits, rights, costs, losses, debts and
expenses of any nature whatsoever, known or unknown, suspected or unsuspected,
foreseen or unforeseen, matured or unmatured, against them which the Executive
or any of her heirs, executors, administrators, successors and assigns
("Executive Persons") ever had, now has or at any time hereafter may have, own
or hold by reason of any matter, fact, or cause whatsoever from the beginning of
time up to and including the date of this Termination Release, including without
limitation all claims for salary, bonuses, severance pay, vacation pay or any
benefits arising under the Employee Retirement Income Security Act of 1974, as
amended; any claims of sexual harassment, or discrimination based upon race,
color, national origin, ancestry, religion, marital status, sexual orientation,
citizenship status, medical condition or disability under Title VII of the Civil
Rights Act of 1964, the Civil Rights Act of 1991, the American with Disabilities
Act, Section 1981 of the Civil Rights Acts of 1866 and 1871, the Equal Pay Act,
The Rehabilitation Act, The Consolidated Omnibus Budget Reconciliation Act, as
amended, The Fair Labor Standards Act, as amended, and any other federal, state
or local law prohibiting discrimination in

                                       17

<PAGE>

employment; any claims of age discrimination under the Age Discrimination in
Employment Act, as amended by the Older Workers Benefit Protection Act, or under
any other federal, state or local law prohibiting age discrimination; claims of
breach of implied or express contract, breach of promise, misrepresentation,
negligence, fraud, estoppel, defamation, infliction of emotional distress,
violation of public policy, wrongful or constructive discharge, or any other
employment-related tort; any claim for costs, fees, or other expenses, including
attorneys fees; and all claims under any other federal, state or local laws
relating to employment, except in any case to the extent such release is
prohibited by applicable federal, state and/or local law.

          (b) Executive represents that she has not filed or permitted to be
filed against the Releasees, any complaints, charges or lawsuits and covenants
and agrees that she will not seek or be entitled to any personal recovery in any
court or before any governmental agency, arbitrator or self-regulatory body
against any of the Releasees arising out of any matters set forth in Section
1(a) hereof. If Executive has filed a complaint, charge, grievance, lawsuit or
similar action, she agrees to remove, dismiss or take similar action to
eliminate such complaint, charge, grievance, lawsuit or similar action within
five (5) days of signing this Termination Release.

          (c) Notwithstanding the foregoing, this Termination Release is not
intended to interfere with Executive's right to file a charge with the Equal
Employment Opportunity Commission (hereinafter referred to as the "EEOC") in
connection with any claim she believes she may have against the Company.
However, Executive hereby agrees to waive the right to recover money damages in
any proceeding she may bring before the EEOC or any other similar body or in any
proceeding brought by the EEOC or any other similar body on her behalf. This
Termination Release does not release, waive or give up any claim for workers'
compensation benefits, vested retirement or welfare benefits she is entitled to
under the terms of the Company's retirement and welfare benefit plans, as in
effect from time to time, any right to unemployment compensation that Executive
may have, or her right to enforce her rights under the Agreement.

          2. CONFIRMATION OF OBLIGATIONS. Executive hereby confirms and agrees
to her continuing obligation under the Agreement after termination of employment
not to directly or indirectly disclose to third parties or use any Confidential
Information (as defined in the Agreement) that she may have acquired, learned,
developed, or created by reason of her employment with the Company.

          3. NO COMPETITION; NONSOLICITATION. Executive hereby confirms and
agrees to her nonsolicitation and non-competition obligations under the
Agreement, which include an obligation not to engage in a business or activity
that is substantially similar to the business of the Company or, generally,
without the prior consent of the Company, employ or solicit any individual
employed by the Company during the time she was employed by the Company for a
period of 24 months after her termination of employment date, as provided for in
the Agreement.

          4. NO DISPARAGEMENT. Each of the Executive and the Company agree not
to disparage the other, including making any statement or comments or engaging
in any conduct that is disparaging or derogatory toward the Executive or the
Company, as the case may be, whether directly or indirectly, by name or
innuendo; provided, however, that nothing in this Termination Release shall
restrict communications protected as privileged under federal or state

                                       18

<PAGE>

law to testimony or communications ordered and required by a court or an
administrative agency of competent jurisdiction.

          5. CONFIDENTIALITY. Each of the Executive and the Company agree to
keep the terms of this Termination Release confidential and shall not disclose
the fact or terms to third parties, except as required by applicable law or
regulation or by court order; provided, however, that Executive may disclose the
terms of this Termination Release to members of her immediate family, her
attorney or counselor, and persons assisting her in financial planning or tax
preparation, provided these people agree to keep such information confidential;
provided, further, however, that the Company may disclose the terms of this
Termination Release to its certified public accounts, outside counsel or others
on a need to know basis, provided these people agree to keep such information
confidential.

          6. ACKNOWLEDGMENT. The Company has advised the Executive to consult
with an attorney of her choosing prior to signing this Termination Release and
the Executive hereby represents to the Company that she has been offered an
opportunity to consult with an attorney prior to signing this Termination
Release. The Executive shall have twenty-one (21) days to consider the waiver of
her rights in this Termination Release, although she may sign this Termination
Release sooner if she chooses. Once she has signed this Termination Release, the
Executive shall have seven (7) additional days from the date of execution to
revoke her consent to the waiver of her rights. If no such revocation occurs,
the Executive's waiver of rights in this Termination Release shall become
effective seven (7) days from the date of execution by the Executive. In the
event that the Executive revokes her waiver of rights in this Termination
Release, this Termination Release will have no force and effect and no Severance
Payments (as defined in the Agreement) shall be due or payable.

          7. GOVERNING LAW. This Termination Release shall be governed and
construed in accordance with the laws of Commonwealth of Pennsylvania, without
giving effect to principles of conflicts law.

          IN WITNESS WHEREOF, the Executive has executed this Termination
Release as of the day and year first above written.



                                         __________________________________

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