<PAGE>
                                                                  Exhibit D(iii)

<PAGE>
                      SECOND AMENDMENT TO LEASE AGREEMENT
                                   (Sanatoga)

    This SECOND AMENDMENT TO LEASE AGREEMENT (this "Agreement") is dated as of
September ____, 2003, by and among ET SUB-SANATOGA LIMITED PARTNERSHIP, a
Delaware limited partnership ("Landlord"), and ASSISTED LIVING ASSOCIATES OF
SANATOGA, INC., a Pennsylvania corporation ("Tenant").

                                   BACKGROUND

    WHEREAS, Landlord and Tenant are parties to that certain Lease Agreement
dated as of January 31, 2001, as amended by that certain First Amendment to
Lease Agreement dated August 5, 2002 (the "Lease"); and

    WHEREAS, pursuant to the terms of the Lease, Tenant leases the land
located in Lower Pottsgrove Township, Montgomery County, Pennsylvania, and the
improvements located thereon consisting of a skilled nursing facility operated
by Tenant and commonly known as Sanatoga Commons a/k/a Park Lane Commons at
Sanatoga (the "Facility"); and

    WHEREAS, Genesis Health Ventures, Inc. and ElderTrust Operating Limited
Partnership have entered into that certain Master Agreement dated September
11, 2003 (the "Master Agreement"), pursuant to which, among other things,
Landlord and Tenant have agreed to modify and amend the Lease; and

    WHEREAS, Landlord and Tenant desire to amend the Lease on the terms and
conditions set forth herein.

    NOW, THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and intending to be legally bound hereby, Landlord and Tenant
agree as follows:

    1.   Definitions. All terms not otherwise defined herein
shall have the meaning ascribed to them in the Lease. The
following are added to Article 1, Interpretations and
Definitions:

               "EBITDARM" means, for any Test Period, gross
               revenues from the Facility without any deduction
               from such gross revenues for interest, taxes,
               depreciation, amortization, Rent and any fees
               payable to any manager of the Facility.

               "Adjusted EBITDARM" means, for any Test Period,
               EBITDARM for the Facility for such Test Period
               less (i) a five percent (5%) management


                                      -1-

<PAGE>
               fee, and (ii) an annualized $400 per bed capital
               expenditure allowance."

               "Effective Date" means _________, 2003.

               "Fair Market Rent" means the fair market rental
               value of the Leased Property as determined in
               accordance with Exhibit C to the Lease.

               "Lease Coverage Ratio" means, for any Test
               Period, the ratio of (i) Adjusted EBITDARM for
               such Test Period to (ii) the Minimum Rent
               payable under the Lease during such Test Period.

               "Test Period" means each period of twelve
               calendar months that ends on June 30, September
               30, December 31 and March 31.

    2.   The following definitions are deleted in their entirety and are
replaced with the following:

               "Adjusted Minimum Rent: Means for the Lease Year
               commencing February 1, 2009 and ending on
               January 31, 2010, the greater of (i) the Minimum
               Rent for the immediately preceding Lease Year
               plus the Incremental Minimum Rent, if any,
               determined with respect to the immediately
               preceding Lease Year or (ii) the Fair Market
               Rent of the Leased Property as of the Lease Year
               commencing February 1, 2009.

               Incremental Minimum Rent: Means for the Lease
               Year that commences February 1, 2004 and ends on
               the next succeeding January 31, 2005 and for
               each succeeding Lease Year thereafter, an amount
               equal to the greater of :

                       (x) the product of (A) the Minimum
                       Rent for such Lease Year and (B) fifty
                       percent (50%) of the percentage
                       increase, if any, in the CPI during
                       such Lease Year, or

                       (y) the Minimum Rent for the
                       immediately preceding Lease Year
                       multiplied by one and five-tenths
                       percent (1.5%).

               Minimum Rent: The Minimum Rent payable from the
               Effective Date through the end of the then-
               current Lease Year shall be shall be equal to an
               annual rent of $227,329.88, pro-rated for the
               remaining months of the then-current Lease Year.
               The Minimum Rent for each subsequent Lease Year
               that commences on February 1 and ends on the
               next succeeding January 31, shall be an amount
               equal to the Minimum Rent for the immediately
               preceding Lease Year plus the Incremental
               Minimum Rent,


                                      -2-

<PAGE>
               provided that the Minimum Rent for the period
               commencing February 1, 2009 and ending January
               31, 2010, the Minimum Rent shall be the Adjusted
               Minimum Rent. For the Lease Year Commencing
               February 1, 2010 and ending January 31, 2011,
               and for each 12 month period thereafter, the
               Minimum Rent shall be the Minimum Rent for the
               immediately preceding Lease Year increased by
               the Incremental Minimum Rent.

    3.   Extension of Lease Term. The Initial Lease Term is hereby extended
until 11:59 p.m. on September 30, 2012.

    4.   Modification of Extension Option. Section 2.3 of the Lease is deleted
in its entirety and is replaced with the following:

                  "2.3 Extended Term. Provided that no Event of
               Default shall have occurred and be continuing,
               and that the Lease shall be in full force and
               effect, Tenant shall have the right to extend
               the Term for one extended term of ten (10) years
               (the "Extended Term"); provided, however, that
               Tenant shall exercise such right no later than
               ten (10) months prior to the end of the then
               current term (i.e. Tenant must give notice of
               exercise on or before November 30, 2011).

                  The Extended Term shall commence on the day
               succeeding the expiration of the Initial Term
               (the "Extended Term Commencement Date"), and
               shall expire on the day prior to the tenth
               (10th) anniversary of such Extended Term
               Commencement Date. During the Extended Term the
               Minimum Rent shall continue to increase as
               provided in Section 3.1 herein. All of the other
               terms, conditions, covenants and provisions of
               this Lease Document shall apply for such
               Extended Term. If Tenant shall fail to give any
               such notice, this Lease shall automatically
               terminate at the end of the then current Term,
               and Tenant shall have no further right to extend
               the Term of this Lease. If Tenant shall give
               such notice, the extension of the Lease shall be
               automatically effected without the execution of
               any additional documents; it being understood
               and agreed, however, that Tenant and Landlord
               shall execute such documents and agreements as
               either party shall reasonably require to
               evidence the same"

    5.   Lease Coverage Ratio. The Lease hereby is further amended by the
addition of the following as Section 3.8 of the Lease:

               "3.8 Lease Coverage Ratio.


                                      -3-

<PAGE>
                  Commencing with the Test Period that ends on
               September 30, 2004, if the Facility fails to
               maintain a Lease Coverage Ratio of 1.25 to 1.00
               ("Minimum Lease Coverage Ratio") for any Test
               Period, the Tenant shall deliver to Landlord a
               letter of credit ("LC") from a financial
               institution reasonably acceptable to Landlord
               and in form reasonably acceptable to Landlord in
               an amount representing the difference between
               (x) Adjusted EBITDARM for such Test Period and
               (y) the product of (i) the Minimum Rent payable
               during such Test Period and (ii) 1.25 (the
               "Shortfall"). Tenant's obligation to deliver a
               LC to Landlord for failure to meet the Minimum
               Lease Coverage Ratio is subject to the following
               conditions:

                  (a)   At any time when Landlord does not hold
               an LC pursuant to this Section 3.8, if the
               Shortfall for any Test Period is less than
               $50,000.00, then Tenant shall not be required to
               deliver an LC;

                  (b)   In the event Landlord holds an LC
               pursuant to this Section 3.8 and a Shortfall
               occurs for a subsequent Test Period, Tenant
               shall be required to increase the amount of the
               LC (or deliver to Landlord an additional LC) in
               the amount, if any, by which the Shortfall for
               such Test Period exceeds the amount of the LC or
               LCs then held by Landlord.

                  (c)   Landlord shall be obligated to release
               any LCs held by Landlord in the event Tenant
               meets or exceeds the Minimum Lease Coverage
               Ratio as of the end of any subsequent Test
               Period.

                  (d)   In the event Tenant is obligated to
               deliver an LC to Landlord (or increase the
               amount of the LC then held by Landlord), Tenant
               shall deliver the LC (or increase the LC) not
               later than forty-five (45) days following the
               end of the applicable Test Period.

                  (e)   Any LC or LCs delivered by Tenant
               pursuant to this Section 3.8 shall (x) be for a
               term not less than the balance of the Initial
               Term of the Lease and shall be automatically
               extended in the event this Lease is extended for
               the Extended Term and (y) provide that, upon
               advance notice to Tenant, Landlord may draw upon
               the LC upon notice from Landlord to the issuer
               that an Event of Default involving the payment
               of Rent or the other sums due


                                      -4-

<PAGE>
               under this Lease has occurred under the Lease
               provided that the amount drawn upon the LC by
               Landlord shall not exceed the amount of the
               payment default by Tenant."

    6.   Management Agreements. Section 7.5 of the Lease is deleted in its
entirety and is replaced with the following:

               "7.5    Management Agreements.

               Throughout the Term, Tenant shall not enter into
               any Management Agreement except with a Manager
               that satisfies the definition of "Manager"
               herein, or such other party approved by Landlord
               in Landlord's reasonable discretion, and, if
               required, the prior written approval of a
               Facility Mortgagee, in each instance, which
               approval of Landlord and a Facility Mortgagee
               shall not be unreasonably withheld, conditioned
               or delayed; provided, however, that Tenant shall
               provide Landlord with a copy of any such
               proposed Management Agreement and any other
               documents relating thereto which Landlord may
               reasonably request. Tenant shall not, without
               the prior written consent of Landlord or such
               Facility Mortgagee, which consent may not be
               unreasonably withheld or delayed, agree to: (i)
               any change in the Manager under any Management
               Agreement; (ii) any material change in any
               Management Agreement or any material change in
               the ownership or control of any Manager; (iii)
               the termination of any Management Agreement; or
               (iv) the assignment of any Management Agreement
               by any Manager. Each Management Agreement shall
               provide that Landlord shall receive notice of
               any defaults thereunder and, at Landlord's
               option, an opportunity to cure any such
               defaults. If Landlord shall cure any of Tenant's
               defaults under any Management Agreement, the
               cost of any such cure shall be payable upon
               demand by Landlord to Tenant as Additional Rent.
               All management fees, payments in connection with
               any extension of credit and fees for services
               provided in connection with the operation of the
               Facility, and all other payments and fees,
               payable by Tenant to any Affiliate of Tenant,
               shall be subordinated to the obligations of
               Tenant under this Lease. Tenant shall deliver to
               Landlord any instrument requested by Landlord to
               implement the intent of the foregoing
               provision."

    7.   Flood Insurance. Section 14.1.3 is deleted in its entirety and is
replaced with the following:


                                      -5-

<PAGE>
               "Flood (when the Leased Property is located in
               whole or in material part in a designated flood
               plain area) and such other hazards and in such
               amounts as may be customary for comparable
               properties in the area; provided however, that
               Tenant shall not be required to participate in
               the National Flood Insurance Program. Any flood
               insurance obtained by Tenant may be obtained as
               part of Tenant's property insurance policy or,
               it Tenant so elects, through the National Flood
               Insurance Program."

    8.   Insurance Company Satisfactory. Section 14.4 is deleted in its
entirety and is replaced with the following:

               "All of the policies of insurance referred to in
               Section 14.1 shall comply with applicable legal
               requirements of the State in which the Leased
               Property is located. Any insurance, other than
               self-insurance or insurance maintained by an
               off-shore insurance company wholly-owned by an
               Affiliate of Tenant, shall be maintained with a
               company rated not less than A:X by A.M. Best Co.
               All insurance carried by Tenant hereunder shall
               have deductible amounts which are reasonably
               acceptable to Landlord. Tenant shall pay all
               premiums for the policies of insurance referred
               to in Section 14.1 and shall deliver
               certificates thereof to Landlord prior to their
               effective date (and with respect to any renewal
               policy, at least five (5) days prior to the
               expiration of the existing policy). In the event
               Tenant fails to satisfy its obligations under
               this Section 14.4, Landlord shall be entitled,
               but shall have no obligation, to effect such
               insurance and pay the premiums therefor, which
               premiums shall be repayable to Landlord upon
               written demand as Additional Rent. Tenant shall
               use its best efforts to cause each insurer
               mentioned in Section 14.1 to agree, by
               endorsement on the policy or policies issued by
               it, or by independent instrument furnished to
               Landlord, that it will give to Landlord thirty
               (30) days' written notice before the policy or
               policies in question shall be altered, allowed
               to expire or canceled. Each such policy shall
               also provide that any loss otherwise payable
               thereunder shall be payable notwithstanding (i)
               any act or omission of Landlord or Tenant which
               might, absent such provision, result in a
               forfeiture of all or a part of such insurance
               payment, (ii) the occupation or use of the
               Leased Property for purposes more hazardous than
               those permitted by the provisions of such
               policy, (iii) any foreclosure or other action or
               proceeding taken by the Facility Mortgagee
               pursuant to any provision of a mortgage, note,
               assignment or other document evidencing or
               securing a loan upon the happening of an event
               of


                                      -6-

<PAGE>
               default therein or (iv) any change in title to
               or ownership of the Leased Property."

    9.   Failure to Deliver LC. Section 17.1 of the Lease hereby is amended by
the addition of the following subparagraph (n):

               "(n)  if Tenant shall fail to deliver to Landlord
               an LC (or an increase to an LC held by Landlord)
               when required to do so pursuant to Section 3.8."

    10.  LC Draw. The following new Section 17.10 hereby is added to the Lease.

               "17.10 Letter of Credit. Following the
               occurrence of an Event of Default, Landlord may
               draw upon any LC held by Landlord pursuant to
               Section 3.8 to recover any damages incurred by
               Landlord and Tenant shall promptly thereafter
               restore the LC to its amount immediately prior
               to such draw."

    11.   Default. Section 17.1(a) of the Lease is deleted in its entirety and
is replaced with the following:

               "(a)  (x) if Tenant shall fail to make payment of
               the Minimum Rent payable by Tenant under this
               Lease when the same becomes due and payable and
               such failure is not cured by Tenant within a
               period of five (5) business days after the due
               date, or, (y) if Tenant shall fail to make
               payment of any Impositions on or before the due
               date thereof, or (z) if Tenant shall fail to
               make payment of any other Rent payable by Tenant
               under this Lease and if the failure shall
               continue uncured beyond the period, if any,
               allowed for such payment by the terms of this
               Lease or if no period or any lesser period is
               specified, then for more than ten (10) days
               after receipt of written notice from Landlord;
               provided, however, that with respect to the
               first time within any calendar year that Tenant
               shall fail to make payment of Minimum Rent by
               the due date, Tenant shall not be deemed to be
               in default until Landlord has furnished written
               notice of such default to Tenant, and unless
               Tenant has failed to make the payment in
               question within three (3) business days after
               Tenant receives such notice."

    12.   Subletting and Assignment. Section 23.1 is deleted in its entirety
and is replaced with the following:

               "23.1  Prohibition Against Subletting and Assignment.


                                      -7-

<PAGE>
               Except as provided in Section 23.3 or Section
               23.4 and where required pursuant to Section
               23.2, Tenant shall not, without the prior
               written consent of Landlord (which consent may
               not be unreasonably withheld, conditioned or
               delayed except that Landlord may grant or
               withhold its consent in its sole discretion for
               a proposed mortgage, pledge, hypothecation or
               encumbrance), assign, mortgage, pledge,
               hypothecate, encumber or otherwise transfer
               (except to an Affiliate of Tenant) this Lease or
               any interest in this Lease, all or any part of
               the Leased Property or suffer or permit this
               Lease or the leasehold estate created hereby or
               any other rights arising under this Lease to be
               assigned, transferred, mortgaged, pledged,
               hypothecated or encumbered, in whole or in part,
               whether voluntarily, involuntarily or by
               operation of law. For purposes of this Section
               23.1, an assignment of this Lease shall be
               deemed to include any Change of Control of
               Tenant, as if such Change of Control were an
               assignment of this Lease."

    The first paragraph of Section 23.4 is deleted in its entirety and is
replaced with the following:

               "23.4   Assignment.

               Except as expressly provided in this Section
               23.4 and Section 23.2, Tenant may not assign
               this Lease (including, without limitation, upon
               a Change of Control of Tenant as provided in
               Section 23.2) without the written consent of
               Landlord, which consent may not be unreasonably
               withheld or delayed. Landlord may base its
               consent, among other criteria, on the
               experience, creditworthiness and reputation of
               the assignee or its Affiliates. If Tenant
               desires at any time to assign this Lease, it
               shall first notify Landlord of its desire to do
               so and shall submit in writing to Landlord: (i)
               the name of the proposed assignee; (ii) the
               terms and provisions of the proposed assignment;
               and (iii) such financial information as Landlord
               reasonably may request concerning the proposed
               assignee. Except as provided in Section 23.4.3
               below, any assignment by Tenant of this Lease
               shall be solely of Tenant's entire interest in
               and under this Lease. The consent by Landlord to
               any assignment shall not constitute a consent to
               any subsequent or successive assignment by the
               assignee. Any purported assignment or other
               transfer of all or any portion of Tenant's
               interest in this Lease in contravention of this
               Section 23.4 shall be void and, at


                                      -8-

<PAGE>
               the option of Landlord, shall terminate this
               Lease."

    The following shall be added to the end of Section 23.4.7:

               "Notwithstanding the foregoing, Tenant and any
               guarantor of Tenant's obligations shall be fully
               released from their obligations under and with
               respect to this Lease in the event of an
               assignment of this Lease that satisfies the
               following conditions (i) the assignee or its
               affiliates owns, operates or manages hospitals,
               assisted living facilities or nursing homes (ii)
               the assignee or any proposed substitute
               guarantor of this Lease has sufficient
               creditworthiness in the reasonable judgment of
               Landlord, and (iii) Landlord has consented to
               the assignment in accordance with the consent
               standards of this Lease."

    13.   Financial Statements. Section 24.2 is deleted in its entirety and is
replaced with the following:

               "Tenant will furnish to Landlord, within one
               hundred twenty (120) days after the end of
               Tenant's fiscal year, a copy of its financial
               statements, which shall, if requested or
               required by a Facility Mortgagee, be audited by
               a certified public accountant. Within thirty
               (30) days after the end of each quarter, Tenant
               shall provide to Landlord internally generated
               financial statements, which statements shall
               include a calculation of the Lease Coverage
               Ratio. All financial statements shall be
               accompanied by a certificate of an officer and
               the chief accounting officer of Tenant delivered
               with such report, stating (i) that the officers
               know of no Event of Default, or event which,
               upon notice or the passage of time or both,
               would become an Event of Default, which has
               occurred and is continuing under this Lease or,
               if any such event has occurred or is continuing,
               specifying the nature and period of existence
               thereof and what action Tenant has taken or
               proposes to take with respect thereto, and (ii)
               except as otherwise specified in such
               certificate, that to the best of such officers'
               knowledge, Tenant has fulfilled all of its,
               obligations under this Lease which are required
               to be fulfilled on a prior date to such
               certificate."

    14.   Security Deposit. With reference to Section 8.1 of the Lease, the
parties confirm that the Security Deposit held by Landlord in the amount of
$106,725.00, plus accrued interest, has been returned to Tenant upon execution
of this Agreement and Tenant shall have no further obligation to Landlord with
respect to the Security Deposit.


                                      -9-

<PAGE>
    15.   Guaranty. Landlord acknowledges and agrees that, pursuant to a
corporate Reorganization (as that term is defined in the Master Agreement)
contemplated by Genesis Health Ventures, Inc. ("GHV"), parent corporation of
Tenant, Genesis HealthCare Corporation ("GHC") shall become the parent entity
of Tenant, and, contemporaneously therewith, GHC shall replace GHV as
guarantor of the Lease. Upon the execution and delivery by the parties of the
this Amendment, GHC shall execute and deliver to Landlord a Guaranty (the "GHC
Guaranty") in the form attached hereto as Exhibit A which shall be effective
only upon the date of the Reorganization, and Landlord hereby (i) consents to
the Reorganization as described in the Master Agreement, and (ii) agrees that
upon the effective date of the Reorganization, the GHV Guaranty shall be
automatically terminated and the GHC Guaranty shall be automatically
effective.

    16.   Inspection Fee. Tenant shall pay to Landlord, as an item of
Additional Rent, an annual fee for Landlord's cost of inspecting the Facility
(the "Inspection Fee"). The Inspection Fee shall be payable on November 1 of
each Lease Year, including the Extended Term. The amount of the Inspection Fee
shall be $2,000.00 for the payment due on November 1, 2004 for the first Lease
Year, which amount shall increase each Lease Year by multiplying the
Inspection Fee for the immediately preceding year by the increase in the CPI.

    17.   Effectiveness of this Agreement. Except as expressly modified by
this Agreement, all other terms and provisions of the Lease are hereby
ratified and confirmed and shall remain in full force and effect. Each of
Landlord and Tenant confirms to the other that there are not presently
outstanding any defaults or Events of Default of the other under the Lease and
hereby waives and releases the other from any prior defaults or Events of
Default.

    18.   Counterparts; Facsimile Execution. The parties hereto agree that:
(a) this Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which counterparts together shall constitute one
and the same instruments, and that executed counterpart originals shall be
satisfactory for purposes of enforcing this Agreement; and (b) original
signatures transmitted via facsimile shall be acceptable for purposes of
executing this Agreement. If counterpart originals are executed and/or
original signatures are transmitted by facsimile, the parties hereto shall
endeavor in good faith to deliver to each other executed counterpart originals
within ten (10) days from the date hereof.

    19.   Rent Reduction Payment. On the Effective Date, Tenant shall pay to
Landlord the amount of $530,000.00 by wire transfer in immediately available
funds in consideration for the reduction of Minimum Rent to an amount of
$18,944.00 per month for the balance of the term of the Lease.




                    [SIGNATURES CONTINUED ON FOLLOWING PAGE]


                                      -10-

<PAGE>



                                      -11-

<PAGE>
    EXECUTED as a sealed instrument the day and year first above written.

                                 TENANT:

                                 ASSISTED LIVING ASSOCIATES OF
                                 SANATOGA, INC., a Pennsylvania corporation


                                 By:___________________________________________

                                       Name:
                                       Title:

                                 LANDLORD:

                                 ET SUB-SANATOGA LIMITED PARTNERSHIP,
                                 a Delaware limited partnership


                                 By:___________________________________________

                                       Name:
                                       Title:


                                      -12-

<PAGE>
                                   Exhibit A

                                 Lease Guaranty


                                      -13-

<PAGE>
                    LEASE GUARANTY AND SURETYSHIP AGREEMENT
                                   (Sanatoga)


    THIS LEASE GUARANTY AND SURETYSHIP AGREEMENT (sometimes herein referred to
as the "Guaranty"), dated as of the ______ day of _________, 200___, by
GENESIS HEALTHCARE CORPORATION, a Pennsylvania corporation, having an address
at 101 East State Street, Kennett Square, Pennsylvania 19348 (the "Guarantor")
in favor of ET SUB-SANATOGA LIMITED PARTNERSHIP, a Delaware limited
partnership, having an address at 2711 Centerville Road, Suite 108,
Wilmington, Delaware 19808 (the "Landlord").



                                  WITNESSETH:

    WHEREAS, Assisted Living Associates of Sanatoga, Inc., a Pennsylvania
corpration ("Tenant") and Landlord are parties to that certain Lease Agreement
dated as of January 31, 2001, as amended by that certain First Amendment to
Lease dated August 5, 2002, and that certain Second Amendment to Lease of even
date herewith (the "Second Amendment"), pursuant to which Tenant leases from
Landlord the real property and buildings and improvements known as Sanatoga
Commons, a/k/a Park Lane Commons at Sanatoga, Lower Pottsgrove Township,
Montgomery County, Pennsylvania (the "Lease");

    WHEREAS, the Tenant is a wholly owned subsidiary of Guarantor; and

    WHEREAS, Landlord has required that the Guarantor guaranty and act as
surety for Tenant's performance under the Lease in the manner hereinafter set
forth; and

    WHEREAS, the Guarantor shall receive direct and indirect benefits from the
entry by the Landlord into the Lease with Tenant.

    NOW, THEREFORE, Guarantor hereby agrees as follows:

    1.  The Guarantor unconditionally guarantees to the Landlord and agrees to
be surety for the full and punctual payment, performance and observance by the
Tenant, of all the terms, covenants and conditions in the Lease contained on
Tenant's part to be kept, performed or observed. This Guaranty shall include
any liability of Tenant that shall accrue under the Lease for any period
preceding as well as any period following the term in the Lease specified.
Without limitation of the foregoing, if at any time Tenant shall default in
the payment, performance or observance of any of the terms, covenants or
conditions in the Lease contained on the Tenant's part to be kept, performed
or observed, the Guarantor will keep, perform and observe the same, as the
case may be, in place and stead of the Tenant.

    2.  The Guarantor hereby waives: (a) notice of acceptance of this Guaranty;
(b) presentment and demand for any payments due Landlord; (c) protest and
notice of dishonor or


                                      -14-

<PAGE>
default to the Guarantor or to any other person or party with respect to the
terms of the Lease or any portion thereof; (d) notice of Tenant's nonpayment,
nonperformance or nonobservance, other than as expressly required under the
Lease.

    3.  This is a guaranty of performance and payment and not of collection,
and the Guarantor waives any right to require that any action be brought
against the Tenant or to require that resort be had to any credit on the books
of the Landlord in favor of the Guarantor or any other person or party.

    4.  Any act of the Landlord, or the successors or assigns of the Landlord,
consisting of a waiver of any of the terms or conditions of the Lease, or the
giving of any consent to any manner or thing relating to the Lease, or the
granting of any indulgences or extensions of time to the Tenant, may be done
without notice to the Guarantor and without releasing the obligations of the
Guarantor hereunder.

    5.  The obligations of the Guarantor hereunder shall not be released by
Landlord's receipt, application or release of security given for the
performance and observance of covenants and conditions in the Lease contained
on Tenant's part to be performed or observed; nor by any modification of the
Lease, but in case of any such modification, the liability of the Guarantor
shall be deemed modified in accordance with the terms of any such modification
of the Lease.

    6.  The obligations, covenants and agreements of Guarantor under this
Guaranty shall in no way be affected or impaired by reason of the happening
from time to time of any of the following, although without notice to or the
further consent of Guarantor:

        (a)  the waiver by Landlord of the performance or observance by
        Guarantor, Tenant or any other party of any of the agreements,
        covenants or conditions contained in the Lease or this Guaranty;

        (b)  the extension, in whole or in part, of the time for payment by
        Guarantor or Tenant of any sums owing or payable under the Lease or
        this Guaranty, or of any other sums or obligations under or arising out
        of or on account of the Lease or this Guaranty, or the renewal of the
        Lease or this Guaranty;

        (c)  any assignment of the Lease or subletting of the Premises or any
        part thereof;

        (d)  the modification or amendment (whether material or otherwise) of
        any of the obligations of Guarantor or Tenant under the Lease or this
        Guaranty;

        (e)  the doing or the omission of any of the acts referred to in the
        Lease or this Guaranty (including, without limitation, the giving of
        any consent referred to therein);


                                      -15-

<PAGE>
        (f)  any failure, omission or delay on the part of Landlord to
        enforce, assert or exercise any right, power or remedy conferred on or
        available to Landlord in or by the Lease or this Guaranty, or any
        action on the part of Landlord granting indulgence or extension in any
        form whatsoever;

        (g)  the voluntary or involuntary liquidation, dissolution, sale of
        all or substantially all of the assets, marshaling of assets and
        liabilities, receivership, conservatorship, insolvency, bankruptcy,
        assignment for the benefit of creditors, reorganization, arrangement,
        composition or readjustment of, or other similar proceeding affecting
        Tenant or Guarantor or any of its assets; or

        (h)  the release of Guarantor or Tenant from the performance or
        observance of any of the agreements, covenants, terms or conditions
        contained in the Lease or this Guaranty by operation of law; or

        (i)  the release of any other guarantor of the Lease.

    7.  Until all the covenants and conditions in the Lease to be performed and
observed on the Tenant's part are fully and indefeasibly performed and
observed, the Guarantor: (a) shall have no right of subrogation against the
Tenant by reason of any payments or acts of performance by the Guarantor, in
compliance with the obligations of the Guarantor hereunder; (b) subordinates
to the rights of Landlord any right to enforce any remedy which the Guarantor
now or hereafter shall have against the Tenant by reason of any one or more
payment or acts of performance in compliance with the obligations of the
Guarantor hereunder; and (c) subordinates any liability or indebtedness of the
Tenant now or hereafter held by the Guarantor to the obligations of the Tenant
to the Landlord under the Lease.

    8.  This Guaranty shall apply to the Lease, any extension or renewal
thereof and to any holdover term following the term thereby granted.

    9.  The Guarantor represents and warrants to Landlord that, as of the date
hereof:

    (a)  It is a Pennsylvania corporation, duly constituted and validly
existing under the laws of such state, and has the power and authority to own
its assets and to conduct its business.

    (b)  It has full corporate power and authority to execute and deliver this
Guaranty and to perform its obligations hereunder.

    (c)  This Guaranty has been duly authorized, executed and delivered by the
Guarantor and constitutes the legal, valid and binding obligation of the
Guarantor enforceable against the Guarantor in accordance with its terms.

    (d)  The Tenant is a wholly owned subsidiary of Guarantor.


                                      -16-

<PAGE>
    (e)  All recent financial statements and other information concerning the
Guarantor delivered to the Landlord by or on behalf of the Tenant or the
Guarantor are true, correct and complete in all material respects, fairly
represent Guarantor's financial condition as of the date hereof and thereof,
and no information has been omitted which would make the information
previously furnished misleading or incorrect in any material respect.

    (f)  All consents, approvals, filings and registrations with or of any
court, governmental authority or regulatory body or any political subdivision
thereof required in connection with the execution, delivery and performance by
the Guarantor of the Guaranty have been obtained or made; and the execution,
delivery and performance by the Guarantor of this Guaranty will not conflict
with or result in a violation of any of the terms or provisions of, or
constitute a default under, any law or the regulations thereunder,
organizational documents of the Guarantor, or any material agreement or
material instrument to which the Guarantor is a party or by which it is bound.

    (g)  The execution, delivery and performance of this Guaranty constitutes
private and commercial acts rather than public or governmental acts.

    10.  Each notice and other communication under this Guaranty shall be in
writing. Each notice, communication or document to be delivered to any party
under this Guaranty shall be sent by hand delivery or facsimile transmission
(promptly confirmed by courier) to it at the address herein contained, and
marked for the attention of the person (if any), from time to time designated
by such party for the purpose of this Guaranty. The initial address and person
(if any) so designated by each party are set out opposite such party's
signature to this Guaranty. Any communication or document shall be deemed to
be received, if sent by facsimile transmission, when the recipient confirms
legible transmission thereof or, if sent by hand delivery or by courier, when
delivered at the address specified by the addressee for purposes of this
Guaranty.

    11.  Solely with respect to any suit, action or proceeding arising out of
or relating to this Guaranty (each, a "Proceeding"), the Guarantor hereby
irrevocably submits to the jurisdiction of any United States federal or state
court sitting in the Commonwealth of Pennsylvania. The Guarantor hereby
irrevocably waives, to the fullest extent permitted by law, any objection
which it may now or hereafter have to the laying of the venue of any such
Proceeding brought in such court and any claim that any such Proceeding
brought in such court has been brought in an inconvenient forum. The Guarantor
hereby agrees that a final, non-appealable judgment in any such Proceeding
brought in such court shall be conclusive and binding upon it.

    12.  Each reference herein to the Landlord shall be deemed to include its
successors and assigns, in whose favor the provisions of this Guaranty shall
also inure. Each reference herein to the Guarantor shall be deemed to include
any permitted successors and assigns of the Guarantor (including any successor
entity resulting from a merger or consolidation), in whose favor the
provisions of this Guaranty shall also inure and all of whom shall be bound by
the


                                      -17-

<PAGE>
provisions of this Guaranty. In connection therewith, the Guarantor shall
execute such reaffirmations of this Guaranty as may be reasonably requested
from time to time by the Landlord. Notwithstanding the foregoing, it is hereby
agreed that Guarantor shall have no rights to transfer or assign this Guaranty
by operation of law or otherwise, without the express written consent of the
Landlord, which consent may be withheld by the Landlord in the Landlord's sole
discretion, and any such transfer or assignment made without the Landlord's
consent shall be null and void and shall be deemed a default hereunder.

    13.  No delay on the part of the Landlord in exercising any rights
hereunder or failure to exercise the same shall operate as a waiver of such
rights; no notice to or demand on the Guarantor shall be deemed to be a waiver
of the obligation of the Guarantor or of the right of the Landlord to take
further action without notice or demand as provided herein; nor in any event
shall any modification or waiver of the provisions of this Guaranty be
effective unless in writing nor shall any such waiver be applicable except in
the specific instance for which given.

    14.  In the event of a default under any of the terms of the Lease,
Landlord shall have the right to proceed directly and immediately against the
Guarantor and such proceeding is not to be deemed an irrevocable election of
remedies.

    15.  This Guaranty is, and shall be deemed to be entered into, under and
pursuant to the laws of the Commonwealth of Pennsylvania and shall be in all
respects governed, construed, applied and enforced in accordance with the laws
of said Commonwealth; and no defense given or allowed by the laws of any other
state or country shall be interposed in any action or proceeding hereon unless
such defense is also given or allowed by the laws of the Commonwealth of
Pennsylvania.

    16.  Guarantor shall furnish to Landlord, within one hundred twenty (120)
days of the end of each fiscal year of Tenant during the Term of the Lease, an
audited consolidated balance sheet of Guarantor as of the end of such fiscal
year and an audited consolidated statement of income and consolidated cash
flow of Guarantor for such fiscal year, setting forth in each case, in
comparative form, the corresponding figures for the preceding fiscal year,
prepared in accordance with GAAP, and a copy of its financial statements for
such year certified by an appropriate officer of Guarantor and audited by an
independent certified public accountant. Landlord may provide such financial
statements to its consultants, lenders and investors, but otherwise shall not
provide the financial statements to third parties without the prior consent of
Guarantor.

    17.  This instrument may not be changed, modified, discharged or terminated
orally or in any manner other than by an agreement in writing signed by the
Guarantor and the Landlord.

    18.  If any term or provision of this Guaranty or the application thereof
to any person or circumstances shall, to any extent, be invalid or
unenforceable, the remainder of this Guaranty, or the application of such term
or provision to persons or circumstances other than those to which it is held
invalid or unenforceable, shall not be affected thereby and all other terms
and provisions of this Guaranty shall be valid and enforced to the fullest
extent permitted by law.


                                      -18-

<PAGE>
    19.  THE GUARANTOR AND THE LANDLORD AGREE THAT ANY SUIT, ACTION OR
PROCEEDING, WHETHER CLAIM OR COUNTERCLAIM, BROUGHT BY THE LANDLORD OR THE
GUARANTOR ON OR WITH RESPECT TO THIS GUARANTY OR THE LEASE, SHALL BE TRIED
ONLY BY A COURT AND NOT BY A JURY. THE LANDLORD AND THE GUARANTOR EACH HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN
ANY SUCH SUIT, ACTION OR PROCEEDING.

    20.  Landlord has previously received a Guaranty of the Lease from GHV (the
"GHV Guaranty"). Pursuant to the terms of the Second Amendment, GHV shall be
released as a guarantor and the GHV Guaranty shall terminate upon the
occurrence of certain events and transactions. Landlord, for itself and its
parents, subsidiaries and affiliates (collectively, the "ET Entities") hereby
agree that so long as the GHV Guaranty remains in effect, the ET Entities
shall not file any claim, action or suit against Guarantor under this Guaranty
nor seek any recovery under this Guaranty but the foregoing shall not
otherwise impair the enforeceability of this Guaranty. Upon the release of GHV
under the GHV Guaranty, Landlord and the ET Entities, without the necessity
for any further action or the execution of any further documents by Guarantor
or any other party, shall have full recourse against Guarantor under this
Guaranty and the right to file any claim, action or suit against Guarantor
hereunder and Guarantor shall be fully liable hereunder, whether such claim,
action or suit arose prior to or subsequent to the release of GHV under the
GHV Guaranty.

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                                      -19-

<PAGE>
    IN WITNESS WHEREOF, the Guarantor has hereunto executed and delivered this
Guaranty as of the day and year first above written.


Witness:                                    GENESIS HEALTHCARE
                                            CORPORATION

_______________________________             By:_______________________________

                                                Name:
                                                Title:


                                      -20-