<PAGE>

                                                                  EXHIBIT 10.5


                             EMPLOYMENT AGREEMENT

     THIS AGREEMENT, made as of this 30th day of January, 1998, by and between
Edward B. Romanov, Jr. ("Employee") and ElderTrust, a Maryland real estate
investment trust ("Employer").

                                  BACKGROUND


     The Board of Trustees of the Employer (the "Board of Trustees")
recognizes that the Employee's contribution to the growth and success of the
Employer will be substantial. The Board desires to provide for the employment
of the Employee. The Employee is willing to commit himself to serve the
Employer, on the terms and conditions herein provided.

     In order to effect the foregoing, the Employer and the Employee wish to
enter into an employment agreement on the terms and conditions set forth
below. Accordingly, in consideration of the premises and the respective
covenants and agreements of the parties herein contained, and intending to be
legally bound hereby, the parties hereto agree as follows:

     1. Employment and Duties. Employer shall employ Employee as Employer's
President and Chief Executive Officer during the term of employment set forth
in Section 2 hereof. Employee shall perform the duties of the President and
Chief Executive Officer of Employer and shall provide to Employer such other
services befitting Employee's position as are reasonably requested of him from
time to time by the Board of Trustees of Employer, including responsibility
for the following: (i) implementation of the Company's investment and growth
strategies including establishment of investment policies; (ii) review,
analysis and execution of investment decisions; (iii) maximization of return
on portfolio; (iv) procurement of capital; (v) oversight of investor
relations; (vi) assurance of proper financial reporting and securities law
compliance; and (vii) establishment of corporate governance and employee
policies. Employee shall have supervision and control over, and responsibility
for, the business and affairs of Employer as provided in the Bylaws of
Employer, subject to the direction of Employer's Board of Trustees. Employee
shall report only to the Board of Trustees of Employer and his powers and
authority shall be superior to those of any officer or employee of Employer.
Employee shall devote his full time, energy, skill and best efforts to the
business and affairs of Employer provided, however, that nothing herein shall
preclude Employee from serving as a director, trustee, officer of, or partner
in, any other firm, trust, corporation or partnership or from pursuing
personal investments, as long as such activities do not interfere with
Employee's performance of his duties hereunder. Employee agrees to serve,
without additional compensation, as a

<PAGE>

trustee of the Employer and a trustee or director of any of its subsidiaries
and in one or more executive offices of any of the Employer's subsidiaries.

     2. Term. The term of Employee's employment under this Agreement shall be
a three year period commencing on the closing date (the "Effective Date") of
the Company's initial public offering of its common shares of beneficial
interest, par value $.01 per share ("Common Shares") and ending on the third
anniversary of the Effective Date, unless further extended or sooner
terminated in accordance with the other provisions hereof (the "Term"). On the
third anniversary of the Effective Date and on the last day of every second
contract year thereafter, the Term shall be automatically extended for two
years. The last day of the Term, as from time to time extended, is hereinafter
referred to as the "Expiration Date." Employer or Employee may elect to
terminate the automatic extension of the Term set forth in this section by
giving written notice of such election not less than one ( 1 ) year prior to
the end of the then current term. The Effective Date shall be confirmed by the
parties in writing.

     3. Compensation.

     3.1 Base Salary. Employer shall pay to Employee as his base compensation
for all services rendered hereunder an annual base salary of $250,000 per year
("Base Salary"), for the first contract year, increasing to such higher rate
as may from time to time be determined by the Board of Trustees, payable in
accordance with Employer's normal payroll practices for employees. Employer
shall deduct or cause to be deducted from the Base Salary all taxes and
amounts required by law to be withheld. Employee's Base Salary shall be
reviewed by the Board of Trustees no less frequently than annually, with the
first such review to be made one year after the Effective Date.

     3.2 Benefits. During the Term, subject to the other provisions of this
Agreement, Employee shall be entitled to participate and shall be included in
any savings, 401(k), pension, profit-sharing, group medical, group life, group
disability or similar plan adopted by Employer now existing, or established
hereafter, to the extent he is eligible under the general provisions thereof.

     3.3 Discretionary Bonuses. During the term of this Agreement, Employee
shall be entitled to such bonuses as may be authorized, declared, and paid by
the Board of Trustees in its sole discretion. The Board of Trustees shall
review Employee's entitlement to a bonus no less frequently than annually,
with the first such review to be made one year after the Effective Date.

     3.4 Distribution Equivalent Rights. Employee will participate in
Employer's 1998 Share Option and Incentive Plan (the "Plan") and will receive
a grant of 37,500 Distribution Equivalent Rights ("Rights"). Employee will be
assigned an account under the Plan (the "Distribution Equivalent Account")



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which will be credited with distribution equivalents as and when distributions
on the Common Shares are declared and paid by the Board of Trustees, which
distribution equivalents will be in an amount equal to the distribution amount
per Common Share declared and paid by the Board of Trustees at any time,
multiplied by the number of Rights credited to Employee as of such time. Any
such distribution equivalents credited to Employee's Distribution Equivalent
Account will be deemed to be reinvested in Common Shares upon receipt at a
rate equal to the distribution yield rate on the Common Shares as of the first
day of each fiscal year, compounded quarterly. Employee's interest in the
Distribution Equivalent Account will vest at a rate of 20% per year over five
years; provided, however, that Employee's interest in the Distribution
Equivalent Account will become fully vested on a Change in Control (as defined
below). Notwithstanding the foregoing, during the first year following the
Effective Date, the distribution yield rate shall be deemed to equal the Prime
Rate as determined from time to time by Mellon Bank, N.A.

     3.5 Share Options. On the Effective Date, Employee will be granted
options to purchase 300,000 Common Shares pursuant to the Plan (the "Initial
Options"). The option exercise price for the Initial Options will be the
offering price per Common Share in Employer's initial public offering. Of the
Initial Options, Options for 150,000 Common Shares will vest immediately and
Options for 150,000 Common Shares will vest at a rate of 50,000 per year
beginning on the first anniversary of the Effective Date; provided, however,
that these latter Initial Options will become fully vested on a Change in
Control. Employee may be granted additional options to purchase Common Shares
pursuant to the Plan at any time and from time to time as the Board of
Trustees determines in its sole discretion. Any such additional options
granted to Employee will be subject to the terms of the Plan.

     3.6 Fringe Benefits.

         3.6.1 Vacation. Employee shall be entitled to five weeks of vacation
during each year.

         3.6.2 Reimbursement of Expenses. Employee is authorized to incur
ordinary, necessary and reasonable expenses in the course of Employer's
business. Employer shall reimburse Employee for such expenses upon
presentation by Employee of an itemized account of such expenditures in
accordance with Employer's established policy, unless such expenses have been
paid directly by Employer.

     3.7 Entire Compensation. The compensation provided for in this Section 3
shall be the full consideration for the services to be rendered by Employee to
Employer hereunder.



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     4. Termination.

     4.1 Notice of Termination. Any termination by Employer or by Employee
shall be communicated by written Notice of Termination to the other party
hereto. As used in this Agreement, "Notice of Termination" means a notice
specifying the termination provision in this Agreement relied upon and setting
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Employee's employment under the provision specified.
As used in this Agreement, "Date of Termination" shall mean the date specified
in the Notice of Termination.

     4.2 Grounds for Termination.

         4.2.1 Termination upon Death. Employee's employment with Employer and
all of Employee's rights to compensation and benefits hereunder shall
automatically terminate upon his death, except that Employee's heirs, personal
representatives or estate shall be entitled to any unpaid portion of his
Salary and accrued benefits up to the Date of Termination and shall also be
entitled to reimbursement for any expenses incurred by Employee hereunder. In
addition, Employee's heirs, personal representatives or estate shall be
entitled to receive the bonus, if any, earned by Employee prior to death (in
accordance with Section 3.3 hereof); all of Employee's Initial Options shall
vest; and if the termination event occurs (a) prior to the third anniversary
of the Effective Date, they will receive 60% or (b) after the third
anniversary, they will receive 100% of Employee's Distribution Equivalent
Account.

         4.2.2 Termination Upon Disability. If Employee becomes disabled,
Employee shall continue to receive all of his compensation and benefits in
accordance with Section 3 for a period of six (6) months following the Onset
of Disability (as defined in this Section 4.2.2). Any amounts due to Employee
as compensation under this Section 4.2.2 shall be reduced, dollar-for-dollar,
by any amounts received by Employee under any disability insurance policy or
plan provided to Employee by Employer. "Onset of Disability" means the first
day on which Employee shall be unable to attend to the regular affairs of
Employer on a full time basis by reason of physical or mental incapacity,
sickness or infirmity. If Employee's disability continues for more than six
(6) months after the Onset of Disability or for periods aggregating more than
nine (9) months during any twenty-four (24) month period, then Employer shall
have the right to terminate Employee's employment immediately upon notice, and
all of his rights to compensation and benefits hereunder shall simultaneously
terminate, except that Employee shall be entitled to any unpaid portion of his
Salary, bonus and accrued benefits up to the Date of Termination and to any
benefits which are to be continued or paid after the Date of Termination in
accordance with the terms of the corresponding benefit plans.



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         4.2.3 Termination for Cause. At any time during the Term, Employer
may terminate Employee's employment hereunder for Cause (as defined herein),
effective immediately upon notice to Employee, if at a duly convened meeting
of the Board of Trustees of which Employee was given reasonable advance notice
and at which Employee and his counsel had the opportunity to be heard, a
resolution was duly adopted by the affirmative vote of not less than
two-thirds of the entire membership of the Board of Trustees finding that, in
the good faith judgment of the Board of Trustees, (1) an event (which is
described in the resolution in reasonable detail) constituting Cause has
occurred, and (2) either Employee had a reasonable opportunity to take
remedial action but failed or refused to do so, or an opportunity to take
remedial action would not have been meaningful or appropriate under the
circumstances. For purposes of this Agreement, Cause shall mean: (1) Employee
willfully breaches or fails to diligently perform any or all of his duties
under this Agreement (other than such failure resulting from Employee's
incapacity due to physical or mental illness) and Employee continues to do so
after demand for substantial performance is delivered by the Employer that
specifically identifies the manner in which the Employer believes the Employee
has not diligently performed his duties under this Agreement, (2) Employee
commits an act of dishonesty or breach of trust, (3) Employee willfully
violates or breaches any of the material provisions of this Agreement, (4)
Employee's act or omission to act results in or is intended to result directly
in unjust gain to or personal enrichment of Employee at Employer's expense, or
(5) Employee is indicted for or convicted of a felony, including, without
limitation, involving larceny, embezzlement or moral turpitude.

         Notwithstanding anything to the contrary contained herein, except for
an act set forth in subsection (5) above, the term "Cause" shall not include
any act or omission to act of the Employee:

         (1) if such act or omission has been approved by the Board of
Trustees of Employer; or

         (2) which is the result of bad judgment or negligence on the part of
the Employee.

         On termination of this Agreement pursuant to this Section 4.2.3, all
rights to compensation and benefits of Employee shall cease as of the Date of
Termination, except Employee shall be entitled to any unpaid portion of his
Salary and benefits earned to the Date of Termination. The Employee shall have
the option to have assigned to him at no cost and with no apportionment of
prepaid premiums any assignable insurance policy owned by the Employer and
relating specifically to the Employee.

         4.2.4 Termination without Cause. This Agreement may be terminated by
the corporation upon thirty (30) days' prior written notice without Cause
being assigned therefor upon affirmative vote of a majority of the members of



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the Board of Trustees entitled to vote on the matter. On termination of this
Agreement without Cause, Employee shall be entitled to the payments he would
have received had the Agreement been terminated under the provisions of
Section 4.2.3, all of his Initial Options shall vest, and shall, in addition,
be entitled to severance compensation equal to two times his then current Base
Salary and most recent annual bonus, if any. In addition, if the Agreement is
terminated without cause (a) prior to the third anniversary of the Effective
Date, Employee will receive 60% or (b) after the third anniversary Employee
will receive 100%, of his Distribution Equivalent Account.

         4.2.5 Termination for "Good Reason". Employee may, upon thirty (30)
days' prior written notice, terminate this Agreement for Good Reason if (1)
Employer elects to terminate the automatic extension of the Term, (2) if
Employer significantly changes Employee's duties or reduces Employee's
responsibility or authority or (3) other than at the request of Employee,
Employer transfers Employee to a location that results in a commuting distance
for Employee that is more than ten (10) miles greater than Employee's commute
as of the Effective Date. If Employee terminates this Agreement for Good
Reason, he shall be entitled to the payments he would have received under
Section 4.2.3, all of his Initial Options shall vest and shall, in addition,
be entitled to receive severance compensation equal to two (2) times his then
current Base Salary and most recent annual bonus, if any. In addition, if the
Agreement is terminated for Good Reason (a) prior to the third anniversary of
the Effective Date, Employee will receive 60% or (b) after the third
anniversary, Employee will receive 100% of his Distribution Equivalent
Account.

     4.3 Mitigation. Employee shall not be required to mitigate the amount of
any payment provided-for in Section 4 by seeking employment or otherwise.
Employer shall not be entitled to set off against the amounts payable to
Employee hereunder any amounts earned by Employee in other employment after
termination of his employment with Employer hereunder or any amounts which
might have been earned by Employee in other employment had he sought such
other employment. The amounts payable to Employee hereunder shall not be
treated as damages but as severance compensation to which Employee is entitled
by reason of termination of his employment in the circumstances contemplated
by this Agreement.

     4.4 Procedure Upon Termination. On termination of employment regardless
of the reason, Employee shall promptly return to Employer all documents
(including copies) and other property of Employer, including without
limitation, customer lists, manuals, letters, materials, reports, and records
in his possession or control no matter from whom or in what manner acquired.



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     5. Employee's Covenants.

     5.1 Discoveries. Employee shall communicate to Employer and preserve as
confidential information of Employer each discovery, idea, design, invention
and improvement relating in any manner to Employer's business, whether or not
patentable and whether or not reduced to practice, which is conceived,
developed or made by Employee, whether alone, or jointly with others, at any
time during the Term hereof (such discoveries, ideas, designs, inventions and
improvements are referred to as "Employee's Discoveries"). All of Employee's
Discoveries shall be Employer's exclusive property, and all of Employee's
right, title and interest therein are hereby irrevocably assigned to Employer,
Employee shall not, except with Employer's express prior written consent, or
except in the proper course of his employment with Employer, use any of
Employee's Discoveries for his own benefit or the benefit of any Person (as
defined herein), or disclose any of Employee's Discoveries to any outside
Person through publication or in any other manner.

     For purposes of this Agreement, the term "Person" means a natural person,
corporation, partnership, trust, estate, joint venture, sole proprietorship,
government (and any branch or subdivision thereof), governmental agency,
association, cooperative or other entity.

     5.2 Nondisclosure. At all times during and after the Term, Employee shall
keep confidential and shall not, except with Employer's express prior written
consent, or except in the proper course of his employment with Employer,
directly or indirectly, communicate, disclose, divulge, publish or otherwise
express, to any Person, or use for his own benefit or the benefit of any
Person, any trade secrets, confidential or proprietary knowledge or
information, no matter when or how acquired, concerning the conduct and
details of Employer's business, including without limitation names of
customers and suppliers, marketing methods, unique financing methods, trade
secrets, policies, prospects and financial condition. For purposes of this
Section 5.2, confidential information shall not include any information which
is now known by or readily available to the general public or which becomes
known by or readily available to the general public other than as a result of
any improper act or omission of Employee.

     5.3 Non-competition. During the Term hereof and for a period of two (2)
years thereafter, Employee shall not, except with Employer's express prior
written consent, directly or indirectly, in any capacity, for the benefit of
any Person:

         (1) communicate with or solicit any Person who is or during such period
becomes a customer, supplier, employee, salesman, agent or representative of
Employer, in any manner which interferes or might interfere with



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such Person's relationship with Employer, or in an effort to obtain such
Person as customer, supplier, employee, salesman, agent, or representative of
any business in competition with Employer within 100 miles of any office or
facility owned, leased or operated by Employer.

         (2) Establish, engage, own, manage, operate, join or control, or
participate in the establishment, ownership (other than as the owner of less
than 1% of the stock of a corporation whose shares are publicly traded),
management, operation or control of, or be a director, trustee, officer,
employee, salesman, agent or representative of, or be a consultant to, any
Person in any business in competition with Employer, at any location within
100 miles of any office or facility owned, leased or operated by Employer, or
act or conduct himself in any manner which he would have reason to believe
inimical or contrary to the best interests of Employer.

     5.4 Enforcement. Employee acknowledges that any breach by him of any of
the covenants and agreements of this Section 5 ("Covenants") will result in
irreparable injury to Employer for which money damages could not adequately
compensate Employer, and therefore, in the event of any such breach, Employer
shall be entitled, in addition to all other rights and remedies which Employer
may have at law or in equity, to have an injunction issued by any competent
court enjoining and restraining Employee and/or all other Persons involved
therein from continuing such breach. The existence of any claim or cause of
action which Employee or any such other Person may have against Employer shall
not constitute a defense or bar to the enforcement of any of the Covenants. If
Employer is obliged to resort to litigation to enforce any of the Covenants
which has a fixed term, then such term shall be extended for a period of time
equal to the period during which a material breach of such Covenant was
occurring, beginning on the date of a final court order (without further right
of appeal) holding that such a material breach occurred or, if later, the last
day of the original fixed term of such Covenant.

     5.5 Consideration. Employee expressly acknowledges that the Covenants are
a material part of the consideration bargained for by Employer and, without
the agreement of Employee to be bound by the Covenants, Employer would not
have agreed to enter into this Agreement.

     5.6 Scope. If any portion of any Covenant or its application is construed
to be invalid, illegal, or unenforceable, then the other portions and their
application shall not be affected thereby and shall be enforceable without
regard thereto. If any of the Covenants is determined to be unenforceable
because of its scope, duration, geographical area or similar factor, then the
court making such determination shall have the power to reduce or limit such
scope, duration, area or other factor, and such Covenant shall then be
enforceable in its reduced or limited form.



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<PAGE>


     6. Miscellaneous.

     6.1 Notices. All notices, requests, demands, consents or other
communications required or permitted to be given under this Agreement shall be
in writing and shall be deemed to have been duly given if and when (1)
delivered personally, (2) mailed by first class certified mail, return receipt
requested, postage prepaid, or (3) sent by a nationally recognized express
courier service postage or delivery charges prepaid, to the parties at their
respective addresses stated below or to such other addresses of which the
parties may give notice in accordance with this Section.

                       If to Employer, to:

                            ElderTrust
                            415 McFarlan Road, Suite 202
                            Kennett Square, PA 19348

                            Attention: Chairman of the Board

                       If to Employee, to:

                            Edward B. Romanov, Jr.
                            c/o ElderTrust
                            415 McFarlan Road, Suite 202
                            Kennett Square, PA 19348

     6.2 Entire Understanding. This Agreement, sets forth the entire
understanding between the parties with respect to the subject matter hereof
and supersedes all prior and contemporaneous, written, oral, expressed or
implied, communications, agreements and understandings with respect to the
subject matter hereof.

     6.3 Modification. This Agreement shall not be amended, modified,
supplemented or terminated except in writing signed by both parties. No action
taken by Employer hereunder, including without limitation any waiver, consent
or approval, shall be effective unless approved by a majority of the Board of
Trustees.

     6.4 Prior Agreements. Employee represents to Employer (1) that there are
no restrictions, agreements understandings whatsoever to which Employee is a
party which would prevent or make unlawful his execution of this Agreement or
his employment hereunder, (2) that his execution of this Agreement and his
employment hereunder shall not constitute a breach of any contract, agreement
or understanding, oral or written to which he is a party or by which he is
bound and (3) that he is free and able to execute this Agreement and to enter
into employment by Employer.



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     6.5 Parties in Interest. This Agreement and all rights of Employee
hereunder shall inure to the benefit of, bind and be enforceable by Employee
and his heirs, personal representatives, estate and beneficiaries, and
Employer and its successors and assigns. This Agreement is a personal
employment contract of Employer, being for the personal services of Employee,
and shall not be assignable by Employee.

     6.6 Severability. If any provision of this Agreement is construed to be
invalid, illegal or unenforceable, then the remaining provisions hereof shall
not be affected thereby and shall be enforceable without regard thereto.

     6.7 Counterparts. This Agreement may be executed in any number of
counterparts, each of which when so executed and delivered shall be an
original hereof and it shall not be necessary in making proof of this
Agreement to produce or account for more than one counterpart hereof.

     6.8 Section Headings. Section and subsection headings in this Agreement
are inserted for convenience of reference only, and shall neither constitute a
part of this Agreement nor affect its construction, interpretation, meaning or
effect.

     6.9 References. All words used in this Agreement shall be construed to be
of such number and gender as the context requires or permits.

     6.10 Controlling Law. This Agreement is made under, and shall be governed
by, construed and enforced in accordance with, the substantive laws of
Pennsylvania applicable to agreements made and to be performed entirely
therein.

     6.11 Settlement of Disputes. Any claims, controversies, demands, disputes
or differences between or among the parties hereto or any persons bound hereby
arising out of, or by virtue of, or in connection with, or relating to this
Agreement shall be submitted to and settled by arbitration in Philadelphia
Pennsylvania, before and in accordance with the rule, then obtaining of the
American Arbitration Association ("AAA"). In the event AAA does not exist for
settlement of disputes at the time either or both of the parties desire to
submit a claim, controversy, demand, dispute or difference to arbitration,
then such claim, controversy, demand, dispute or difference shall be submitted
to and settled by arbitration in Philadelphia, Pennsylvania before a single
arbitrator who shall be knowledgeable in the field of business law and
employment relations and such arbitration shall be in accordance with the
rules then obtaining of the American Arbitration Association. The parties
agree to bear joint and equal responsibility for all fees of the arbitrator,
abide by any decision rendered as final and binding, and



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waive the right to submit the dispute to a public tribunal for a jury or
non-jury trial.

     6.12 Approval and Authorizations. The execution and the implementation of
the terms and conditions of this Agreement have been fully authorized by the
Board of Trustees.

     6.13 Indulgences, Etc. Neither the failure nor delay on the part of
either party to exercise any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof, nor shall the single or partial
exercise of any right, remedy, power or privilege preclude any other or
further exercise of the same or any other right, remedy, power or privilege,
nor shall any waiver of any right, remedy, power or privilege with respect to
any occurrence be construed as a waiver of such right, remedy, power or
privilege with respect to any other occurrence. No waiver shall be effective
unless it is in writing and is signed by the party asserted to have granted
such waiver.

     6.14 Legal Expenses. In the event that the Employee institutes any legal
action to enforce his rights under, or to recover damages for breach of this
Agreement, the Employee, if he is the prevailing party, shall be entitled to
recover from the Employer any actual expenses for attorney's fees and
disbursements incurred by him.

     6.15 Definition of "Change in Control". A "Change in Control" shall be
deemed to have occurred if (i) any "person" (as such term is used in Sections
13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act")), becomes, after the date hereof, the "beneficial owner" (as
defined in Rule 13d-3 under the Exchange Act), directly or indirectly, of
securities of the Employer representing fifty percent (50%) or more of the
combined voting power of the Employer's then outstanding securities; (ii)
during any two (2) year period, individuals who at the beginning of such
period constitute the Board of Trustees, including for this purpose any new
trustee whose election resulted from a vacancy on the Board of Trustees caused
by the mandatory retirement, death, or disability of a trustee and was
approved by a vote of at least two-thirds (2/3rds) of the trustees then still
in office who were trustees at the beginning of the period, cease for any
reason to constitute a majority thereof, (iii) notwithstanding clauses (i) or
(v) of this Section 6.15, the Employer consummates a merger or consolidation
of the Employer with or into another corporation or trust, the result of which
is that the shareholders of the Employer at the time of the execution of the
agreement to merge or consolidate own less than eighty percent (80%) of the
total equity of the entity surviving or resulting from the merger or
consolidation or of a entity owning, directly or indirectly, one hundred
percent (100%) of the total equity of such surviving or resulting entity; (iv)
the sale in one or a series of transactions of all or substantially all of the
assets of the Employer; (v) any person, has commenced a tender or exchange
offer, or entered into an agreement or received an option to



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acquire beneficial ownership of fifty percent (50%) or more of the total
number of voting shares of the Employer unless the Board of Trustees has made
a determination that such action does not constitute and will not constitute a
change in the persons in control of the Employer; or (vi) there is a change of
control in the Employer of a nature that would be required to be reported in
response to Item 6(e) of Schedule 14A of Regulation 14A promulgated under the
Exchange Act other than in circumstances specifically covered by clauses (i) -
(v) above.

     6.16 Notwithstanding anything else in this Agreement, solely in the event
of a Change of Control, the amount of severance compensation paid to Employee
under this Agreement, shall not include any amount that the Corporation is
prohibited from deducting for federal income tax purposes by virtue of Section
280 G of the Internal Revenue Code or any successor provision.

     IN WITNESS WHEREOF, the parties hereto have executed this Agreement the
day and year first above mentioned.

                                         EMPLOYER:

                                         ELDERTRUST


                                         By: /s/ D. Lee McCreary, Jr.
                                            -----------------------------
                                            D. Lee McCreary, Jr.
                                            Vice President &
                                            Chief Financial Officer

                                         Date of execution: 3/4/98
                                                            ------


                                         EMPLOYEE:

                                              /s/ Edward B. Romanov, Jr.
                                              ---------------------------
                                              Edward B. Romanov, Jr.

                                         Date of execution: 3/4/98
                                                            ------




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<PAGE>


     As contemplated by the last sentence of Section 2, the parties hereto
hereby confirm in writing that the "Effective Date" for purposes of this
Agreement means January 30, 1998.


                                         EMPLOYER:

                                         ELDERTRUST


                                         By: /s/ D. Lee McCreary, Jr.
                                             -------------------------
                                             D. Lee McCreary, Jr.
                                             Vice President &
                                             Chief Financial Officer

                                         Date of execution: 3/4/98
                                                            ------


                                         EMPLOYEE:

                                         /s/ Edward B. Romanov, Jr.
                                         ---------------------------
                                         Edward B. Romanov, Jr.

                                         Date of execution:  3/4/98
                                                             ------


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