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

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