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                                                                EXHIBIT 10.aa

                              EMPLOYMENT AGREEMENT

     THIS EMPLOYMENT AGREEMENT, dated as of July 1, 2000, by and between
Keystone Property Trust (the "Company") and Jeffrey E. Kelter ("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 President and Chief Executive Officer 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 by or under common control with the Company, any employee
     benefit plan of the

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     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, and (C) the average of the dollar amounts awarded to Executive in the
form of Incentive Compensation (as hereinafter defined) for the three fiscal
years prior to 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

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following within a 30-mile radius of any Property of the Company: (i)
Acquisition of Office or 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 be for a
period of three years, commencing on the date hereof and continuing until the
third anniversary of the date hereof, unless terminated earlier as provided
herein. After the third anniversary of the date hereof, 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 President and
     Chief Executive Officer 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 President and Chief
     Executive Officer, which substantial alteration is not remedied or cured as
     contemplated by Section B, Paragraph 8(b) hereof;

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

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

          (f) the failure of Executive for any reason other than cause to be a
     member of the Board.

     9. "Independent Trustee" means a member of the Board who is defined as
an "Independent Trustee" in the Declaration of Trust of the Company, as filed
with the Securities and Exchange Commission, as amended.

     10. "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 Independent Trustees receive written notice of such
breach.

     11. "Noncompetition Period" means the period beginning on the later of
the date of the termination of the Employment Term, for whatever reason, and
the date on which Executive ceases to be a member of the Board, and ending
two years from the date of such event.

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     12. "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.

     13. "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 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.

     14. "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.

     15. "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.

     16. "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.

     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 act of the Board for any of the following reasons:

          (a) any material breach of this Agreement, consisting
     of any repeated 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

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     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 a
     reasonable time 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 a reasonable time 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 Board 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 President and Chief Executive Officer
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 senior management authority and responsibility with respect to the
day-to-day operations and long-term management of the Company and its Office
and Industrial Properties, as well as implementation of the growth strategy
of the Company, consistent with directions from the Board. Executive shall
have full authority and responsibility, subject to the general direction,
approval and control of the Board, for formulating policies and administering
the Company and its Properties. He shall have the authority to hire and fire
all Company personnel, to retain consultants when he deems necessary to
implement the Company's policies, to execute contracts on behalf of the
Company in the ordinary course of business and to negotiate for and cause the
Company to acquire new Properties at the direction of the Board. Executive
shall report to the Board.

     3. COMPENSATION. (a) The Company initially shall pay Executive for his
services an annual base salary of $325,000.00, 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)

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at any time and from time to time by action of the Board or any committee
thereof or any 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 paid to executives in comparable positions at
other real estate investment trusts in the Company's peer group.

     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 as constituted by the
     Board.

          (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 $5,000,000.
     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 $1,100.00 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

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presentation of a voucher or documentation reasonably acceptable to the
Company indicating the amount and business purposes of any such expenses.

     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, and Executive shall have a period of 30 days to cure
such cause to the reasonable satisfaction of the Board. 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; provided, however, that Executive, including his
     immediate family, shall be able to continue to participate in the Company's
     medical/health insurance or coverage program with the same level of
     benefits as he was entitled to receive immediately prior to the time of
     termination, for up to 18 months following termination, but Executive
     shall bear all costs of such medical/health insurance or coverage; 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 or Incentive Compensation for all or any part of the Termination
     Year, notwithstanding anything to the contrary set forth in Section B,
     Paragraphs 3(b) and 3(d).

     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);

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     (ii) the Company shall pay Executive (or Executive's estate or
     beneficiaries in the case of death of 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 up to 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);

     (iv) 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 Executive's estate or beneficiaries in the case of death of
     Executive), or require Executive (or Executive's estate or beneficiaries
     in the case of death of Executive) 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);

     (v) the Company shall continue to provide, for the longer of one year or
     the remainder of the Employment Term, Executive (or his family in the case
     of his death) with the level of health/medical insurance or coverage
     provided to Executive at the time of such death or disability;

     (vi) 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

     (vii) 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

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     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
     three times 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, 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 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;
     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 14 days from the date

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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 Executive's employment
with the Company is terminated, by Executive or by the Company, for any
reason, or no reason, within the two-year period following a Change in
Control (including without limitation, a Termination With Cause or on account
of death or disability), 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
     three times the Change-in-Control 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, 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 (e) 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

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     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) If a Change of Control occurs within one year after Executive
suffers an Involuntary Termination or a Termination Without Cause, then the
Company shall pay Executive an amount equal to the average of the dollar
amounts awarded to Executive in the form of Incentive Compensation for each
of the three fiscal years prior to the Termination Year.

     10. INDEMNIFICATION. The Company agrees that 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

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<PAGE>

     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, unless a majority of the Board, which majority must
include a majority of the Independent Trustees, have determined that such
Competitive Activity will not have a material adverse effect on the business
or operations 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.

     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 INDEPENDENT TRUSTEES. 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 and the Independent Trustees. 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 directorship, 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

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<PAGE>

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:

           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:      Jeffrey E. Kelter, 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.

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<PAGE>

     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, and further provided any such modification is approved by a
majority of the Independent Trustees. 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.

     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

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<PAGE>

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 B, Paragraph 9(b) hereof, 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.

     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 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. PARACHUTES. If all, or any portion, of the payments provided under
this Agreement, either alone or together with other payments and benefits
which Executive receives or is entitled to receive from the Company or an
affiliate, would constitute an excess "parachute payment" within the meaning
of Section 280G of the Code (whether or not under an existing plan,
arrangement or other agreement) (each such parachute payment, a "Parachute
Payment"), and would result in the imposition on Executive of an excise tax
under Section 4999 of the Code, then, in addition to any other benefits to
which Executive is entitled under this Agreement, Executive shall be paid by
the Company an amount in cash equal to the sum of the excise taxes payable by
Executive by reason of receiving Parachute Payments plus the amount necessary
to put Executive in the same after-tax position (taking into account any and
all applicable federal, state and local excise, income or other taxes at the
highest possible applicable rates on such Parachute Payments (including
without limitation any payments under this Section D, Paragraph 15) as if no
excise taxes had been imposed with respect to Parachute Payments). Except as
may otherwise be agreed to by the Company and Executive, the amount or
amounts (if any) payable under this Section D, Paragraph 15 shall be as
conclusively determined by the Company's independent auditors (who served in
such capacity immediately prior to a Change in Control (or, if applicable, a
change in control which is not a Change in Control)). If such independent
auditors refuse to make the required determinations, then such determinations
shall be made by a comparable independent accounting firm of national
reputation selected by the Company and reasonably acceptable to Executive.

     16. LEGAL FEES. The Company shall pay, at least monthly, all costs and
expenses, including attorneys' and/or arbitrators' fees and disbursements, of
the Company and Executive in connection with any legal and/or arbitration
proceeding, whether or not instituted by the Company or Executive, relating
to the interpretation or enforcement of any provision of this Agreement;
provided that if Executive institutes the proceeding and the Company prevails

                                       15
<PAGE>

on each and every material issue, Executive shall pay his own costs and
expenses and promptly (and in no event more than 60 days after demand
therefor by the Company) return to the Company any amounts previously paid by
the Company under this Section D, Paragraph 5.

     17. 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

                                       By: /s/ David F. McBride
                                           ------------------------
                                       Name:  David F. McBride
                                       Title: Chairman of the Board


                                       /s/ Jeffrey E. Kelter
                                           ---------------------
                                           Jeffrey E. Kelter

Address and other contact information for
Jeffrey E. Kelter as of the date hereof

Keystone Property Trust
200 Four Falls Corporate Center, Ste. 208
West Conshohocken, PA 19428

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