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                                                                 EXHIBIT 10.t


                              EMPLOYMENT AGREEMENT

                  THIS EMPLOYMENT AGREEMENT, dated as of October 1, 2001, by and
between Keystone Property Trust (the "Company") and Timothy A. Peterson
("Executive"), recites and provides as follows:

                              W I T N E S S E T H:

                  WHEREAS, the Company is a self-administered Maryland real
estate investment trust which owns, acquires, develops and leases office and
industrial properties;

                  WHEREAS, the Company desires to employ Executive to devote
substantially all of his working time to the business of the Company, including,
without limitation, the operation and management of the Company and the
properties, and to serve as Executive Vice President of the Company; and

                  WHEREAS, Executive desires to be so employed on the terms and
subject to the conditions hereinafter stated.

                  NOW, THEREFORE, IN CONSIDERATION of the mutual covenants,
promises and obligations of the parties provided for in this Agreement, and for
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:

                  A. DEFINITIONS.

                  For purposes of this Agreement, the following terms shall have
the following meanings (applicable to both the singular and plural forms of the
terms defined):

                  1. "Acquisition of Office or Industrial Property" means
engaging in the activity of soliciting, seeking to acquire, obtaining an option
or first right of refusal to acquire, or acquiring, any interest in an Office or
Industrial Property or in real property planned for development as an Office or
Industrial Property.

                  2. "Affiliate" means (i) any person directly or indirectly
controlling, controlled by, or under common control with such other person, (ii)
any executive officer, director, trustee or general partner of such other
person, and (iii) any legal entity for which such person acts as an executive
officer, director, trustee or general partner. The term "person" means and
includes any natural person, corporation, partnership, association, limited
liability company or any other legal entity.

                  3. "Board" means the Board of Trustees of the Company.

                  4. "Change in Control" means the happening of any of the
following:

                  (i) any "person," including a "group" (as such terms are used
                  in Sections 13(d) and 14(d) of the Securities Exchange Act of
                  1934, as amended (the "Exchange Act")), but excluding the
                  Company, any entity controlling, controlled


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                  by or under common control with the Company, any employee
                  benefit plan of the Company or any such entity, and, with
                  respect to Executive, Executive and any "group" (as such term
                  is used in Section 13(d)(3) of the Exchange Act) of which
                  Executive is a member, is or becomes the "beneficial owner"
                  (as defined in Rule 13d-3 under the Exchange Act), directly or
                  indirectly, of securities of the Company representing 50% or
                  more of either (A) the combined voting power of the Company's
                  then outstanding securities or (B) the then outstanding shares
                  (in either such case other than as a result of an acquisition
                  of securities directly from the Company); or

                  (ii) any consolidation or merger of the Company or any
                  subsidiary where (A) the shareholders of the Company,
                  immediately prior to the consolidation or merger, would not,
                  immediately after the consolidation or merger, beneficially
                  own (as such term is defined in Rule 13d-3 under the Exchange
                  Act), directly or indirectly, shares representing in the
                  aggregate 60% or more of the voting securities of the
                  corporation issuing cash or securities in the consolidation or
                  merger (or of its ultimate parent corporation, if any), and
                  (B) the members of the Board immediately prior to such event
                  fail to constitute a majority of the board of directors or
                  trustees of the successor business organization; or

                  (iii) there shall occur (A) any sale, lease, exchange or other
                  transfer (in one transaction or a series of transactions
                  contemplated or arranged by any party as a single plan) of all
                  or substantially all of the assets of the Company, other than
                  a sale or disposition by the Company of all or substantially
                  all of the Company's assets to an entity, at least 50% of the
                  combined voting power of the voting securities of which is
                  owned by persons in substantially the same proportion as their
                  ownership of the combined voting power of the voting
                  securities of the Company immediately prior to such transfer,
                  or (B) the approval by shareholders of the Company of any plan
                  or proposal for the liquidation or dissolution of the Company;
                  or

                  (iv) the members of the Board at the beginning of any
                  consecutive 24-calendar-month period (the "Incumbent
                  Trustees") cease for any reason other than due to death to
                  constitute at least a majority of the members of the Board;
                  provided that any trustee whose election, or nomination for
                  election by the Company's shareholders, was approved by a vote
                  of at least a majority of the members of the Board then still
                  in office who were members of the Board at the beginning of
                  such 24-calendar-month period shall be deemed to be an
                  Incumbent Trustee.

                  5. "Change-in-Control Severance Amount" means an amount equal
to the sum of (A) Executive's annual base salary as of the Termination Date (as
hereinafter defined) and (B) the greater of (1) the average Annual Bonus (as
hereinafter defined) for the three fiscal years prior to the Termination Year
(as hereinafter defined) or (2) the target Annual Bonus for the Termination
Year.

                   6. "Competitive Activity" means engaging in directly, through
an Affiliate, or being employed by any entity undertaking, or otherwise
undertaking to do any of the following within a 30-mile radius of any Property
of the Company: (i) Acquisition of Office or


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Industrial Property, (ii) Office or Industrial Property Ownership or Leasing,
(iii) Office or Industrial Property Construction, (iv) Office or Industrial
Property Entitlements, (v) Speculation, or (vi) Office or Industrial Property
Management and Operation.

                  7. "Employment Term" means the Initial Term, as herein
defined, and the successive annual renewals of this Agreement until terminated.
The initial term of Executive's employment hereunder (the "Initial Term") shall
commence on October 1, 2001 and expire on December 31, 2002, unless terminated
earlier as provided herein. After December 31, 2002, the term shall be
automatically renewed for successive one-year periods (subject to termination as
otherwise provided herein) unless either party notifies the other party in
writing prior to sixty (60) days before the expiration of the Initial Term and
each annual renewal thereof, as applicable.

                  8. "Good Reason" means the occurrence, without Executive's
express written consent, of any one or more of the following events:

                           (a) a reduction in the annual base salary of
         Executive;

                           (b) the removal or suspension from office without
         cause of Executive or failure without cause to elect or appoint
         Executive as Executive Vice President of the Company throughout the
         Employment Term;

                           (c) any substantial alteration, including any
         material diminution, in the nature or status of Executive's
         responsibilities as Executive Vice President, which substantial
         alteration is not remedied or cured as contemplated by Section B,
         Paragraphs 8(b) or 9(b) hereof;

                           (d) the assignment of any duties which are in any
         significant respect inconsistent with Executive's status as Executive
         Vice President of the Company, which inconsistent assignment is not
         remedied or cured as contemplated by Section B, Paragraphs 8(b) or 9(b)
         hereof; and

                           (e)      the relocation of Executive's office to more
         than 50 miles from West Conshohocken, Pennsylvania.

                  9. "Involuntary Termination" means the breach by the Company
of any material provision of this Agreement and such breach continues for a
period of 30 days after the Company receives written notice of such breach.

                  10. "Noncompetition Period" means the period beginning on the
date of the termination of the Employment Term, for whatever reason, and ending
one year from the date of such termination.

                  11. "Notice of Termination" means a notice given by the
Company or Executive, as applicable, which shall indicate the specific
termination provision in this Agreement relied upon and shall set forth in
reasonable detail the facts and circumstances claimed to provide a basis for
termination of Executive's employment under the provisions so indicated.

                  12. "Office or Industrial Property" means any Property that is
used in whole or in part for office or industrial space or office or
industrial-related purposes, whether in fee or


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leasehold, together with all improvements and fixtures now or hereafter located
thereon, all rights, privileges and easements appurtenant thereto, and all
tangible and intangible personal property used in connection therewith.

                  13. "Office or Industrial Property Construction" means the
construction, renovation or repair of improvements on an Office or Industrial
Property by Executive or an Affiliate of Executive.

                  14. "Office or Industrial Property Entitlements" means
engaging in the process by which a person with an interest in an Office or
Industrial Property obtains necessary or desirable governmental approvals,
licenses, permits, entitlements or agreements for the commencement of Office or
Industrial Property Construction.

                  15. "Office or Industrial Property Management and Operation"
means engaging in directly or through an Affiliate, or being employed by any
entity undertaking, or otherwise undertaking the day-to-day management and
operation of an Office or Industrial Property, whether pursuant to a master
lease, management agreement or any other arrangement.

                  16. "Office or Industrial Property Ownership or Leasing" means
(i) owning, directly or through an Affiliate, any interest in an Office or
Industrial Property; (ii) engaging, directly or through an Affiliate, in any
leasing activities related to an Office or Industrial Property (other than on
behalf of the Company or its subsidiaries); (iii) rendering any services to any
person, corporation, partnership or other entity (other than the Company or its
subsidiaries) engaged in the activities set forth in clause (i) or (ii), or (iv)
becoming interested in any such person, corporation, partnership or other entity
(other than the Company or its subsidiaries) as a partner, shareholder,
principal, agent, employee, consultant or in any other relationship or capacity;
provided, however, that, notwithstanding the foregoing, the Executive may own,
directly or indirectly, a beneficial interest in any company traded on a
nationally recognized public securities exchange (including The Nasdaq National
Market), provided such interest does not exceed 5% of the outstanding capital
stock of such company.

                  17. "Property" means any real property or any interest
therein.

                  18. "Severance Amount" means an amount equal to the sum of (A)
Executive's annual base salary as of the Termination Date and (B) Executive's
Annual Bonus for the fiscal year preceding the Termination Year.

                  19. "Speculation" means engaging in the activity of
soliciting, seeking to acquire, obtaining an option or a first right of refusal
to acquire, or acquiring, any interest in an Office or Industrial Property with
the intention at any time of acquiring (or obtaining an option or a first right
of refusal to acquire) or holding an Office or Industrial Property for
subsequent sale or other transfer to any person for purposes of Competitive
Activity.

                  20. "Termination Date" means the date of termination of
Executive's employment by the Company during the Employment Term.

                  21. "Termination With Cause" means the termination of
Executive's employment by the Company for any of the following reasons:



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                           (a) any material breach of this Agreement, consisting
         of any gross or willful refusal, failure or neglect by Executive in
         connection with the performance of his duties and fulfillment of his
         obligations under this Agreement;

                           (b) (i) conduct by Executive that would result in
         material injury to the reputation of the Company if he were retained in
         his position with the Company, including (A) conviction of (or pleading
         nolo contendere to) a felony under the laws of the United States or any
         State thereof or of an equivalent crime under the laws of any other
         jurisdiction, (B) commission of a crime of (1) moral turpitude, (2)
         dishonesty, (3) breach of trust or (4) unethical business conduct, or
         (C) bankruptcy, insolvency or general assignment for the benefit of his
         creditors, or (ii) commission of any crime involving the Company;

                           (c) any failure to comply substantially with any
         written rules, regulations, policies or procedures of the Company, if
         such non-compliance could be expected to have a material and adverse
         effect on the Company's business, which has not been cured within 14
         days after notice thereof; or

                           (d) any failure to comply with the Company's internal
         policies regarding insider trading or insider dealing which has not
         been cured within 14 days after notice thereof.

                  22. "Termination Without Cause" means the termination of
Executive's employment (i) by the Company for any reason other than Termination
With Cause, or (ii) by Executive for Good Reason.

                  23. "Termination Year" means the fiscal year in which the
Termination Date occurs.

                  24. "Voluntary Termination" means Executive's voluntary
termination of his employment hereunder (which does not include termination for
Good Reason), which may be effected by Executive's giving the Company 60 days'
written notice of Executive's desire to terminate his employment.

                  B. THE EMPLOYMENT RELATIONSHIP.

                  1. EMPLOYMENT. The Company shall employ Executive, and
Executive agrees to be so employed, in the capacity of Executive Vice President
of the Company to serve for the Employment Term, subject to earlier termination
as herein provided.

                  2. SERVICES. Executive shall devote substantially all of his
working time, attention and effort to the Company's affairs. Specifically,
Executive shall have such duties and responsibilities as assigned by his
supervising officer. Executive shall report to the President, Chief Operating
Officer or Chief Financial Officer of the Company, as directed by the Company.

                  3. COMPENSATION. (a) The Company initially shall pay Executive
for his services an annual base salary of $240,000.00, in equal installments not
less frequently than bi-weekly, subject to any increases in base compensation as
approved by the Compensation Committee of the Board (the "Compensation
Committee"). Executive's annual salary shall be reviewed at least once each year
after the date hereof, and may be increased (but not decreased) at any time and
from time to time by action of the Board or any committee thereof or any


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individual having authority to take such action in accordance with the Company's
regular practices.

                  (b) During the Employment Term, in addition to the annual base
salary, Executive shall be eligible to receive, in the discretion of the
Company, an annual bonus ("Annual Bonus"). Each Annual Bonus payable under this
Section B, Paragraph 3(b) shall be payable to Executive during the first quarter
of each calendar year to follow the year for which the Annual Bonus is paid and
in accordance with the Company's customary procedures for payment of executive
bonuses.

                  (c) In addition, the Company may from time to time pay
Executive such compensation or benefits as the Compensation Committee may, in
its discretion, award to Executive under any compensation, bonus, stock
purchase, stock option, profit sharing or other employee benefit plan that may
hereafter be adopted (any such compensation is referred to as "Incentive
Compensation"). Executive's Incentive Compensation will be consistent with the
Incentive Compensation available to other similarly situated senior executives
of the Company.

                  4. BENEFITS. The Company agrees to provide Executive with the
following benefits during the Employment Term:

                           (a) VACATION. Executive shall be entitled each year
         to a paid vacation in accordance with the practices of the Company.

                           (b) EMPLOYEE BENEFITS. Executive shall be entitled to
         all rights, benefits and privileges to which other management level
         employees of the Company are entitled, including, but not limited to,
         any retirement, pension, profit sharing, insurance, hospital or other
         plans which may now be in effect or which may hereafter be adopted by
         the Company.

                           (c) LIFE INSURANCE. During the Employment Term, the
         Company shall provide Executive with and shall pay the premiums on a
         life insurance policy that, when payable, will provide for a death
         benefit of $1,000,000. The beneficiary of the policy shall be the
         estate of Executive or such other beneficiary as may be selected by
         Executive.

                           (d) DISABILITY. During the Employment Term, the
         Company shall provide Executive with (or shall pay the premiums on) a
         supplemental disability program that, when payable, will provide for a
         maximum benefit of 50% of Executive's then annual salary plus Annual
         Bonus for the most recently completed year, with payments to cease in
         accordance with the terms of the program.

                           (e) AUTO ALLOWANCE. During the Employment Term, the
         Company shall provide Executive with an automobile allowance of $500.00
         per month.

                  5. EXPENSES. The Company recognizes that Executive will have
to incur certain out-of-pocket expenses, including, but not limited to, travel
expenses, related to his services and the Company's business, and the Company
agrees to reimburse Executive for all reasonable expenses necessarily incurred
by him in the performance of his duties upon presentation of a voucher or
documentation reasonably acceptable to the Company indicating the amount and
business purposes of any such expenses.



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                  6. TERMINATION WITH CAUSE; VOLUNTARY TERMINATION. The Company
may terminate this Agreement upon a determination that an event has occurred
within the definition of Termination With Cause; provided, however, in the case
of a Termination With Cause based upon clauses (a) or (b) of such definition,
the Company shall provide Executive written notice of such grounds for
termination. If Executive shall suffer Termination With Cause or shall cease
being an employee of the Company on account of a Voluntary Termination, then:

                  (i) the Company shall pay Executive a lump sum equal to any
                  annual salary and other benefits earned and accrued under this
                  Agreement prior to the Termination Date (and reimbursement
                  under this Agreement for expenses incurred prior to the
                  Termination Date);

                  (ii) any continued rights and benefits that Executive may have
                  under employee benefit plans and programs of the Company upon
                  such a termination shall be determined in accordance with the
                  terms and provisions of such plans and programs; and

                  (iii) Executive shall have no further rights to any other
                  compensation or benefits hereunder or granted hereunder on or
                  after the termination of employment, or any other rights
                  hereunder, and, in particular but without limitation of the
                  foregoing, Executive shall not be entitled to any Annual Bonus
                  for all or any part of the Termination Year.

                  7. TERMINATION UPON DEATH OR DISABILITY. This Agreement shall
terminate automatically upon Executive's death. This Agreement may be terminated
by the Company during the Employment Term in case of Executive's permanent
disability (defined as physical or mental inability, confirmed by a licensed
physician, to perform substantially all of the services described herein that
continues for a period of 180 consecutive or non-consecutive days in any 365-day
period). Upon death or termination of employment by virtue of disability during
the Employment Term:

                  (i) the Company shall pay Executive (or Executive's estate or
                  beneficiaries in the case of death of Executive) a lump sum
                  equal to any annual salary and other benefits earned and
                  accrued under this Agreement prior to the Termination Date
                  (and reimbursement under this Agreement for expenses incurred
                  prior to the Termination Date);

                  (ii) the Company shall pay Executive an amount equal to the
                  target Annual Bonus for the Termination Year multiplied by a
                  fraction, the numerator of which is the number of days elapsed
                  in the Termination Year through the Termination Date and the
                  denominator of which is the number of days in the Termination
                  Year;

                  (iii) all outstanding unvested stock options, restricted stock
                  and other unvested equity-type interests shall vest and shall
                  otherwise be exercisable for the greater of (1) one year after
                  the effective date of such termination or (2) in accordance
                  with their terms (provided, however, that the Board, in its
                  sole discretion, may extend such exercise period, forgive any
                  authorized loan previously made to Executive to purchase any
                  such stock, and/or modify any of the other terms and


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                  conditions of any such stock option, stock award or other
                  equity-type award programs, on terms no less favorable to
                  Executive than those provided for herein);

                  (iv) any continued rights and benefits that Executive, or
                  Executive's estate or other legal representatives, may have
                  under employee benefit plans and programs of the Company upon
                  such death or disability shall be determined in accordance
                  with the terms and provisions of such plans and programs; and

                  (v) Executive shall have no further rights to any other
                  compensation or benefits hereunder or granted hereunder on or
                  after the termination of employment, or any other rights
                  hereunder.

                  8. INVOLUNTARY TERMINATION OR TERMINATION WITHOUT CAUSE. (a)
If Executive shall suffer an Involuntary Termination or a Termination Without
Cause, then:

                  (i) the Company shall pay Executive a lump sum equal to any
                  annual salary and other benefits earned and accrued under this
                  Agreement prior to the Termination Date (and reimbursement
                  under this Agreement for expenses incurred prior to the
                  Termination Date);

                  (ii) the Company shall pay Executive an amount equal to the
                  target Annual Bonus for the Termination Year multiplied by a
                  fraction, the numerator of which is the number of days elapsed
                  in the Termination Year through the Termination Date and the
                  denominator of which is the number of days in the Termination
                  Year;

                  (iii) the Company shall pay Executive an amount equal to the
                  Severance Amount;

                  (iv) all outstanding unvested stock options, restricted stock
                  and other unvested equity-type interests shall vest and shall
                  otherwise be exercisable for the greater of (1) one year after
                  the effective date of such termination or (2) in accordance
                  with their terms (provided, however, that the Board, in its
                  sole discretion, may extend such exercise period, forgive any
                  authorized loan previously made to Executive to purchase any
                  such stock, and/or modify any of the other terms and
                  conditions of any such stock option, stock award or other
                  equity-type award programs, on terms no less favorable to
                  Executive than those provided for herein);

                  (v) the Company shall forgive the outstanding balance of the
                  loan made by the Company to Executive under Section B,
                  Paragraph 3(c) of that certain Employment Agreement dated as
                  of August 15, 1998, as amended (as so amended, the "Prior
                  Agreement"), by and between Executive and American Real Estate
                  Investment Corporation, predecessor-in-interest to the Company
                  (provided, however, that as a condition precedent to the
                  Company's obligation to forgive such loan, the Company may
                  withhold from other amounts payable to Executive, or require
                  Executive to pay to the Company, the amount the Company in
                  good faith deems necessary to satisfy the Company's obligation
                  to withhold federal, state or local income or other taxes
                  incurred by reason of such forgiveness of such loan);



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                  (vi) the Company shall continue to provide Executive, for the
                  longer of one year or the remainder of the Employment Term,
                  with the level of health/medical insurance or coverage
                  provided to Executive at the time of such termination; it
                  being expressly understood and agreed that nothing in this
                  clause (v) shall restrict the ability of the Company to amend
                  or terminate such plans and programs from time to time in its
                  sole discretion; provided, however, that the Company shall in
                  no event be required to provide any coverage after such time
                  as Executive becomes entitled to receive benefits of the same
                  type from another employer or recipient of Executive's
                  services (and provided, further, that such entitlement shall
                  be determined without regard to any individual waivers or
                  other similar arrangements);

                  (vii) any continued rights and benefits that Executive may
                  have under employee benefit plans and programs of the Company
                  upon such termination shall be determined in accordance with
                  the terms and provisions of such plans and programs; and

                  (viii) Executive shall have no further rights to any other
                  compensation or benefits hereunder or granted hereunder on or
                  after the termination of employment, or any other rights
                  hereunder.

                  (b) Notwithstanding the foregoing, (i) neither Good Reason nor
grounds for Involuntary Termination shall be deemed to exist unless a Notice of
Termination on account thereof (specifying a termination date no less than 14
days and no more than 21 days from the date of such notice) is given no later
than 90 days after the time at which the event or condition purportedly giving
rise to Good Reason or the Involuntary Termination first occurs or arises; and
(ii) if there exists (without regard to this clause (ii)) an event or condition
that constitutes Good Reason or grounds for Involuntary Termination, the Company
shall have 30 days from the date such Notice of Termination is given to remedy
or cure such event or condition and, if the Company does so, such event or
condition shall not constitute Good Reason or grounds for Involuntary
Termination, respectively, hereunder.

                  9. TERMINATION UPON A CHANGE IN CONTROL. (a) If, within the
two-year period following a Change in Control, Executive shall suffer an
Involuntary Termination or a Termination Without Cause, then:

                  (i) the Company shall pay Executive a lump sum equal to any
                  annual salary and other benefits earned and accrued under this
                  Agreement prior to the Termination Date (and reimbursement
                  under this Agreement for expenses incurred prior to the
                  Termination Date);

                  (ii) the Company shall pay Executive an amount equal to the
                  target Annual Bonus for the Termination Year multiplied by a
                  fraction, the numerator of which is the number of days elapsed
                  in the Termination Year through the Termination Date and the
                  denominator of which is the number of days in the Termination
                  Year;

                  (iii) the Company shall pay Executive an amount equal to two
                  times the Change-in-Control Severance Amount;



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                  (iv) all outstanding unvested stock options, restricted stock
                  and other unvested equity-type interests shall vest and shall
                  otherwise be exercisable for the greater of (1) one year after
                  the effective date of such termination or (2) in accordance
                  with their terms (provided, however, that the Board, in its
                  sole discretion, may extend such exercise period, and/or
                  modify any of the other terms and conditions of any such stock
                  option, stock award or other equity-type award programs, on
                  terms no less favorable to Executive than those provided for
                  herein);

                  (v) the Company shall forgive any and all outstanding balances
                  on loans made by the Company to Executive to purchase the
                  Company's stock (provided, however, that as a condition
                  precedent to the Company's obligation to forgive such loans,
                  the Company may withhold from other amounts payable to
                  Executive, or require Executive to pay to the Company, the
                  amount the Company in good faith deems necessary to satisfy
                  the Company's obligation to withhold federal, state or local
                  income or other taxes incurred by reason of such forgiveness
                  of loans);

                  (vi) the Company shall continue to provide Executive, for
                  three years from the date of termination, with the level of
                  health/medical insurance or coverage provided to Executive at
                  the time of such termination; it being expressly understood
                  and agreed that nothing in this clause (vi) shall restrict the
                  ability of the Company to amend or terminate such plans and
                  programs from time to time in its sole discretion; provided,
                  however, that the Company shall in no event be required to
                  provide any coverage after such time as Executive becomes
                  entitled to receive benefits of the same type from another
                  employer or recipient of Executive's services (and provided,
                  further, that such entitlement shall be determined without
                  regard to any individual waivers or other similar
                  arrangements);

                  (vii) any continued rights and benefits that Executive may
                  have under employee benefit plans and programs of the Company
                  upon such termination shall be determined in accordance with
                  the terms and provisions of such plans and programs; and

                  (viii) Executive shall have no further rights to any other
                  compensation or benefits hereunder or granted hereunder on or
                  after the termination of employment, or any other rights
                  hereunder.

                  (b) Notwithstanding the foregoing, (i) neither Good Reason nor
grounds for Involuntary Termination shall be deemed to exist unless a Notice of
Termination on account thereof (specifying a termination date no less than 14
days and no more than 21 days from the date of such notice) is given no later
than 90 days after the time at which the event or condition purportedly giving
rise to Good Reason or the Involuntary Termination first occurs or arises; and
(ii) if there exists (without regard to this clause (ii)) an event or condition
that constitutes Good Reason or grounds for Involuntary Termination, the Company
shall have 30 days from the date such Notice of Termination is given to remedy
or cure such event or condition and, if the Company does so, such event or
condition shall not constitute Good Reason or grounds for Involuntary
Termination, respectively, hereunder.



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                  (c) If a Change in Control occurs during the Employment Term,
then the provisions of this Section B, Paragraph 9 shall survive the termination
of the Employment Term and continue in effect until the expiration of the
two-year period following such Change in Control.

                  10. INDEMNIFICATION. The Company agrees that during the
Employment Term, provisions of the Company's bylaws regarding indemnification
and advancement of expenses of officers and trustees shall not be amended to
adversely affect Executive nor shall the Company's articles of incorporation be
amended to adversely affect Executive's rights with respect to limitation of
liability, indemnification or advancement of expenses.

                  11. CONFIDENTIAL INFORMATION. During the Employment Term, and
all periods thereafter, Executive shall keep secret and retain in strictest
confidence, and shall not use for his benefit or the benefit of others, except
in connection with the business and affairs of the Company and its Affiliates,
all confidential matters relating to the Company's business and the business of
any of its Affiliates, learned by Executive heretofore or hereafter directly or
indirectly from the Company or any of its Affiliates (the "Confidential Company
Information"), including, without limitation, information with respect to (i)
sales figures (whether per property or otherwise), (ii) profit or loss figures
(whether per property or otherwise), and (iii) customers, clients, tenants, and
customer lists; and shall not disclose such Confidential Company Information to
anyone outside of the Company except with the Company's express written consent
and except for Confidential Company Information which is at the time of receipt
or thereafter becomes publicly known through no wrongful act of Executive's or
is received from a third party not under an obligation to keep such information
confidential and without breach of this Agreement.

                  12. RETURN OF PROPERTY. All memoranda, notes, lists, records,
property and any other tangible product and documents (and all copies thereof),
whether visually perceptible, machine-readable or otherwise, made, produced or
compiled by Executive or made available to Executive concerning the business of
the Company or its Affiliates, (i) shall at all times be the property of the
Company (and, as applicable, any Affiliates) and shall be delivered to the
Company at any time upon its request, and (ii) upon Executive's termination of
employment, shall be immediately returned to the Company; provided, however,
that Executive may retain a copy of his "rolodex" (or other similar record of
names and addresses) maintained from time to time in the ordinary course.

                  C. AGREEMENT NOT TO COMPETE

                  Except as explicitly provided herein, Executive agrees, for
the entire Employment Term and Noncompetition Period, to the following
covenants, effective within the United States:

                  1. COMPETITIVE ACTIVITY RESTRICTION. Executive, personally or
through any Affiliate of Executive, shall not conduct any Competitive Activity
other than through the Company, without the prior written consent of the
Company. Notwithstanding any other provision of this Agreement, and without
limiting any obligations to the Company that Executive may have without regard
hereto, Executive agrees that, during the time he is employed by the Company,
Executive shall present to the Company all opportunities that arise to engage in
Competitive Activities unless Executive reasonably determines that such
opportunities are not appropriate for the Company.



                                       11
<Page>

                  2. NO BENEFICIAL OWNERSHIP. Executive shall not beneficially
own directly or indirectly any beneficial interest in any entity engaged in any
Competitive Activity other than the Company, except for any interest in a
company traded on a nationally recognized public securities exchange (including
The Nasdaq National Market), provided such interest does not exceed 5% of the
outstanding capital stock of such company.

                  3. LOANS. Executive shall not directly or indirectly make any
loan to, or hold any note evidencing a loan from, any entity engaged in any
Competitive Activity.

                  4. COMPETITIVE ENTITY. Executive shall not be a director or
trustee, partner, officer, principal, agent or employee of, or consultant to
(whether for compensation or not), or work in any other capacity for, any entity
engaged in any Competitive Activity.

                  5. NOTIFICATION TO COMPANY. If Executive or any Affiliate of
Executive desires to engage in any Competitive Activity, Executive shall
describe fully the proposed activity in a written notice (the "Disclosure
Notice") to the Company. A Disclosure Notice shall only pertain to a specific
proposed project and the referenced proposed project shall be described therein
with specificity as to timing, location, scope and the extent of Executive's
involvement, financially and in terms of his time commitment. A Disclosure
Notice may not request approval for any conceptual or non-project specific
activity or for any activity that is prohibited by this Agreement.

                  6. NO INTERFERENCE OR SOLICITATION. Notwithstanding any other
provision of this Agreement, during the Noncompetition Period, Executive shall
not directly or indirectly (i) solicit or endeavor to entice away any existing
client of the Company or any potential client of the Company whom the Company
was actively soliciting during the time of Executive's employment, or any person
who during the Employment Term or the one-year period which follows the
expiration of the Employment Term was or is a client of the Company, or (ii)
hire, solicit or otherwise encourage any employee or independent contractor of
the Company to leave the employment of, or terminate any contractual
relationship with, the Company, or (iii) hire any employee or independent
contractor who has left the employment or other service of the Company or any of
its Affiliates within the six-month period which follows the termination of such
employee's or independent contractor's employment or other service with the
Company and its Affiliates, or (iv) otherwise knowingly interfere with, disrupt
or attempt to disrupt the relationships, contractual or otherwise, between the
Company and its employees or independent contractors or solicit or encourage any
employee or independent contractor of the Company to engage in any Competitive
Activity.

                  D. MISCELLANEOUS PROVISIONS.

                  1. NOTICES. All notices or deliveries authorized or required
pursuant to this Agreement shall be deemed to have been given when in writing
and when (i) deposited in the U.S. mail, certified, return receipt requested,
postage prepaid, or (ii) otherwise delivered by hand or by overnight delivery,
against written receipt, by a common carrier or commercial courier or delivery
service addressed to the parties at the following addresses or to such other
addresses as either may designate in writing to the other party:



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<Page>


                  To the Company:  Keystone Property Trust
                                   200 Four Falls Corporate Center, Suite 208
                                   West Conshohocken, PA  19428
                                   Attention: General Counsel
                                   Telephone: (484) 530-1825
                                   Facsimile: (484) 530-0131

                  To Executive:    Timothy A. Peterson, addressed to the
                                   address set forth on the signature page
                                   of this Agreement.

                  2. ENTIRE AGREEMENT. This Agreement contains the entire
understanding between the parties hereto with respect to the subject matter
hereof and shall not be modified in any manner except by written instrument
signed by or on behalf of the parties hereto. This Agreement shall be binding
upon and inure to the benefit of the heirs, successors and assigns of the
parties hereto.

                  3. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE COMMONWEALTH OF PENNSYLVANIA.

                  4. ASSIGNMENT. Executive acknowledges that his services are
unique and personal. Executive may not assign his rights or delegate his duties
or obligations under this Agreement except (a) his rights to compensation and
benefits hereunder may be transferred by will or operation of law and (b) his
rights under employee benefit plans or programs described in Section B,
Paragraphs 4(b, c and d) may be assigned or transferred in accordance with the
terms of such plans or programs, or regular practices thereunder. Executive's
rights and obligations under this Agreement shall inure to the benefit of and
shall be binding upon Executive's heirs and personal representatives.

                  5. WITHHOLDING. The Company shall be entitled to withhold from
any payments or deemed payments any amount of tax withholding required by law.

                  6. TITLES AND HEADINGS. Titles and headings to sections and
paragraphs in this Agreement are inserted for the convenience of reference only
and are not intended to be a part of or to affect the meaning or interpretation
of this Agreement.

                  7. COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original, but all of which
together shall constitute one and the same instrument.

                  8. AMENDMENTS. No amendment, modification, waiver or
supplement to this Agreement shall be binding on any of the parties hereto
unless it is in writing and signed by the parties in interest at the time of the
modification. No delay on the part of any party in exercising any right, power
or privilege hereunder shall operate as a waiver thereof, nor shall any waiver
on the part of any party of any such right, power or privilege nor any single or
partial exercise of any such right, power or privilege, preclude any other or
further exercise thereof or the exercise of any other such right, power or
privilege.



                                       13
<Page>

                  9. NO THIRD-PARTY BENEFICIARIES. This Agreement is solely for
the benefit of the parties to this Agreement and should not be deemed to confer
upon third parties any remedy, claim, liability, reimbursement, claims or action
or other right in excess of those existing without reference to this Agreement.

                  10. MAXIMUM LEGAL ENFORCEABILITY; TIME OF ESSENCE. Any
provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall, as to such jurisdiction, be ineffective to the extent of
such prohibition or unenforceability without invalidating the remaining
provisions hereof. Any such prohibition or unenforceability in any jurisdiction
shall not invalidate or render unenforceable such provision in any other
jurisdiction. Without prejudice to any rights or remedies otherwise available to
any party to this Agreement, each party hereto acknowledges that damages would
not be an adequate remedy for any breach of the provisions of this Agreement and
agrees that the obligations of the parties hereunder shall be specifically
enforceable. Time shall be of the essence as to each and every provision of this
Agreement.

                  11. SPECIFIC PERFORMANCE. (a) Executive acknowledges that the
obligations undertaken by him pursuant to this Agreement are unique and that the
Company will not have an adequate remedy at law if he shall fail to perform any
of his obligations hereunder, and Executive therefore confirms that the
Company's right to specific performance of the terms of Section C of this
Agreement is essential to protect the rights, interest and goodwill of the
Company. Accordingly, in addition to any other remedies that the Company may
have at law or in equity, the Company shall have the right to have all
obligations, covenants, agreements and other provisions of Section C of this
Agreement specifically performed by Executive, and the Company shall have the
right to obtain preliminary and permanent injunctive relief to secure specific
performance and to prevent a breach or contemplated breach of Section C of this
Agreement by Executive. Executive acknowledges that the Company will have the
right to have the provisions of Section C of this Agreement enforced in any
court of competent jurisdiction, it being agreed that any breach or threatened
breach of Section C of this Agreement would cause irreparable injury to the
Company and its business and that money damages would not provide an adequate
remedy to the Company.

                  (b) Any controversy or claim arising out of or relating to
this Agreement or the breach of this Agreement that is not resolved by Executive
and the Company (or its Affiliates, where applicable), other than controversies
or claims arising under Section C, to the extent necessary for the Company (or
its Affiliates, where applicable) to avail itself of the rights and remedies
provided under Section D, Paragraph 11(a) hereof, shall be submitted to
arbitration in Philadelphia, Pennsylvania in accordance with Pennsylvania law
and the procedures of the American Arbitration Association. The determination of
the arbitrator(s) shall be conclusive and binding on the Company (or its
Affiliates, where applicable) and Executive and judgment may be entered on the
arbitrator(s)' award in any court having jurisdiction.

                  12. SURVIVAL. Anything contained in this Agreement to the
contrary notwithstanding, the provisions of Section C hereof, Section D,
Paragraphs 5 and 11 hereof, and the other provisions of this Section D (to the
extent necessary to effectuate the survival of Section C and Section D,
Paragraphs 5 and 11), shall survive termination of this Agreement and any
termination of Executive's employment hereunder.



                                       14
<Page>

                  13. OPERATIONS OF AFFILIATED PARTIES. Executive agrees that he
will refrain from authorizing any Affiliate to perform any activities that would
be prohibited by the terms of this Agreement if they were performed by him.
Notwithstanding anything to the contrary contained in this Agreement, Executive
shall not be required by the terms of this Agreement to violate any fiduciary
duty existing on the date hereof that he owes to a third party.

                  14. EXISTING AGREEMENTS. Executive and the Company acknowledge
and agree that the Prior Agreement is hereby terminated and rendered null and
void and of no force or effect as of September 30, 2001. In addition, Executive
represents to the Company that he is not subject or a party to any employment or
consulting agreement, non-competition covenant or other agreement, covenant or
understanding which might prohibit him from executing this Agreement or limit
his ability to fulfill his responsibilities hereunder.

                  15. FURTHER ASSURANCES. The parties to this Agreement will
execute and deliver or cause the execution and delivery of such further
instruments and documents and will take such other actions as any other party to
the Agreement may reasonably request in order to effectuate the purpose of this
Agreement and to carry out the terms hereof.

                  IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first written above.

                             KEYSTONE PROPERTY TRUST

                             /s/ Jeffrey E. Kelter
                             ---------------------------------------------------
                             Name:Jeffrey E. Kelter
                             Title: President and Chief Executive Officer

                             /s/ Timothy A. Peterson
                             ---------------------------------------------------
                             Timothy A. Peterson


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