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                       RIGHT OF FIRST REFUSAL AGREEMENT


         This Right of First Refusal Agreement ("Agreement") is entered into
and is effective as of the 30th day of January 1998, by and among Genesis
Health Ventures, Inc. ("Genesis"), ElderTrust, a Maryland real estate
investment trust (which expects to qualify as a real investment trust for
federal income tax purposes) ("ElderTrust") and ElderTrust Operating Limited
Partnership, a Delaware limited partnership ("ETOLP") (ElderTrust and ETOLP
are sometimes collectively referred to in this Agreement as the "REIT").

                                  BACKGROUND:

         A. The REIT has undertaken, or concurrently with the offering of
shares in ElderTrust (the "Offering"), will undertake, a series of
transactions involving the REIT, Genesis and certain properties, including
certain assisted living facilities, one independent living facility and
certain skilled nursing facilities owned or managed by Genesis or certain of
its subsidiaries.

         B. The REIT and Genesis have determined that is in their mutual best
interest to grant to each other certain rights of first refusal with respect
to the sale, financing, leasing or management of assisted living facilities,
independent living facilities and skilled nursing facilities now owned or to
be acquired by Genesis or the REIT.

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

         1. Definitions. As used in this Agreement, the following terms shall
have the following meanings (applicable to both the singular and plural terms
of the words defined):

            1.1. "Affiliate" means: (i) any other Person (as defined below)
directly or indirectly controlling, controlled by, or under common control
with the Person to which such term applies; or (ii) as to any natural Person,
such Person's spouse, child, grandchild, sibling, parent, aunt, uncle or
cousin, as well as the spouse of any of the foregoing. In addition, (1) as to
any corporation, real estate investment trust or business trust, any Person
with any of the foregoing relationships to any Person in control of such
corporation, real estate investment trust or business trust shall be deemed to
be an Affiliate of such corporation, real estate investment trust or business
trust, and (2) as to any partnership or limited liability company, any Person
with any of the foregoing relationships to any Person in control of such
partnership or limited liability company as a general partner or managing
member or otherwise shall be deemed to be an Affiliate of such partnership or
limited liability company. For purposes of this Agreement, "control" as
applied to any Person means the possession either directly or indirectly, of
the power to direct or cause the direction of the management, policies and
decision-making of such Person whether through the ownership of voting
interest, by contract or otherwise. "Control" also shall include, without
limitation, the possession of direct or indirect equity or beneficial interest
in more than fifty percent (50%) of the profits or voting control of any
entity.

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            1.2. "Basic Business Terms" shall mean, at a minimum, the
following terms: (i) the sales price and/or rent; (ii) the amount and terms of
any assumable third party financing; (iii) the state of title to be
transferred; (iv) the date of closing; (v) the proration of closing costs and
the allocation between buyer and seller of any brokerage commissions; (vi) the
lease term (if applicable); (vii) the form of consideration; (viii) the
security deposit required, if any; (ix) the interest rates, if applicable; and
(x) all other material business terms and conditions, including, without
limitation, any rights of first refusal, options or renewal rights.

            1.3. "Covered Facility" means an assisted living, an independent
living (i.e., (in each case) a residential facility providing limited medical
and daily living assistance to its elderly residents) or a skilled nursing
facility.

            1.4. "Developer" means any Person who or which is, at any time
during the Term of this Agreement, developing an assisted living facility or
an independent living facility.

            1.5. "Finance" shall mean to provide or the providing of funds to
finance the construction, acquisition or refinancing of one or more Covered
Facilities (whether individually or together with one or more other Covered
Facilities), including, without limitation, any off-balance sheet financing of
a skilled nursing facility as described in Section 3.3 hereof, and "Financing"
and "Financed" shall have meanings correlative to the foregoing.

            1.6. "Financing Notice" shall mean a written notice delivered to
the REIT by Genesis stating that Genesis, a Genesis Affiliate or a Developer
desires to obtain Financing for one or more assisted living facilities or
independent living facilities, which notice sets forth (i) the location and,
if applicable, the name of each facility, (ii) the proposed use of the
Financing (e.g., construction, acquisition or refinancing) and (iii) the
estimated amount of such Financing.

            1.7. "Genesis Market" shall mean the counties in which Genesis or
one of its Affiliates, or The Multicare Companies, Inc. or one of its
Affiliates, now or during the term of this Agreement owns or operates assisted
living, independent living or skilled nursing facilities and any counties
contiguous to such counties, but shall not include counties in the states of
Illinois or Wisconsin unless Genesis acquires additional Covered Facilities in
such states after the date hereof.

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            1.8. "Lease Offer" shall mean a bona fide offer made to, or
acceptance of an offer made by, the REIT by a Person who or which is not an
Affiliate of Genesis to lease one or more Covered Facilities owned or to be
acquired by the REIT (whether individually or together with one or more other
Covered Facilities or any other properties or assets) which the REIT intends
to accept.

            1.9. "Lease Notice" means a written notice delivered to Genesis by
the REIT stating that it has received or made a Lease Offer, which notice sets
forth (i) the name of the proposed lessee and (ii) the Basic Business Terms of
the proposed lease, and which is accompanied by a copy of the Lease Offer (if
in writing) and a copy of the proposed lease, if available.

            1.10. "Management Notice" shall mean a written notice delivered to
Genesis by the REIT stating that an Owner of one or more Covered Facilities in
the Genesis Market Financed by the REIT intends to enter into one or more
management agreements with respect to such Covered Facilities and/or has
received a Management Offer with respect to such Covered Facilities, which
notice sets forth (i) the name of any proposed manager (if applicable) and
(ii) the material terms of any proposed management agreement, and which is
accompanied by a copy of any Management Offer (if in writing) and a copy of
any proposed management agreement, if available.

            1.11. "Management Offer" shall mean a bona fide offer made to, or
by, an Owner by, or to, a Person who or which is not an Affiliate of such
Owner proposing to manage one or more existing or proposed Covered Facilities
in the Genesis Market which are Financed by the REIT (whether individually or
together with one or more other Covered Facilities or any other properties or
assets).

            1.12. "Off-Balance Sheet Financing Notice" shall mean a written
notice delivered to the REIT by Genesis stating that Genesis or a Genesis
Affiliate desires to undertake a transaction involving off-balance sheet
Financing of one or more skilled nursing facilities presently owned by Genesis
or a Genesis Affiliate, which notice sets forth (i) the location and, if
applicable, the name of each skilled nursing facility with respect to which
Genesis or such Genesis Affiliate desires to obtain off-balance sheet
Financing and (ii) the proposed financing structure to be used for such
off-balance sheet Financing.

            1.13. "Owner" shall mean the owner of one or more Covered
Facilities in the Genesis Market Financed by the REIT.

            1.14. "Person" shall mean a natural person or a corporation, real
estate investment trust, business trust, partnership, trust, limited liability
company or other entity.

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            1.15. "Purchase Offer" shall mean a bona fide offer made to, or
acceptance of an offer made by, Genesis or a Genesis Affiliate by a Person who
or which is not an Affiliate of Genesis proposing to purchase from Genesis or
a Genesis Affiliate and lease back to Genesis or a Genesis Affiliate one or
more Covered Facilities, which Genesis or a Genesis Affiliate intends to
accept.

            1.16. "Transfer" means the sale, ground lease for a term of not
less than 29 years, transfer of control or conveyance by deed, assignment,
quitclaim or otherwise, whereby a Person or its Affiliate transfers its
interest in a Covered Facility, but shall not include (i) a transfer by a
Person to an Affiliate of such Person or (ii) any change in control of
Genesis, and "Transferring" and "Transferred" shall have meanings correlative
to the foregoing.

            1.17. "Transfer Notice" means a written notice delivered to the
REIT by Genesis stating that Genesis or a Genesis Affiliate intends to
Transfer one or more Covered Facilities and/or has received a Purchase Offer
with respect to one or more Covered Facilities, which notice sets forth (i)
the name and identity of the proposed Transferee and (ii) the Basic Business
Terms of the Purchase Offer, together with a copy of the Purchase Offer (if in
writing) and any written notice of the Purchase Offer.

            1.18. "Transferee" means any Person who or which has made a
Purchase Offer to Genesis or a Genesis Affiliate.

         2. Term. The term of this Agreement ("Term") shall commence as of the
date first above written and shall continue for three years. Thereafter, this
Agreement shall automatically renew for successive one-year renewal Terms
unless Genesis or the REIT shall have given notice to the other, not less than
six months prior to the end of the initial Term or any such renewal Term, that
it has elected to terminate this Agreement as of the end of the then current
Term.

         3. First Refusal and Other Rights of the REIT. Genesis hereby grants
to the REIT the following rights:


            3.1. If, during the Term, Genesis or a Genesis Affiliate desires
to Transfer one or more Covered Facilities owned by Genesis or a Genesis
Affiliate in a transaction or transactions where Genesis or a Genesis
Affiliate will lease back the Transferred Covered Facilities from the
Transferee, Genesis shall first offer to the REIT (or at the election of the
REIT, to an Affiliate of the REIT) the opportunity to purchase and lease back
to Genesis or a Genesis Affiliate designated by Genesis the subject Covered
Facilities on the same terms and conditions as contained in any Purchase Offer
by giving a Transfer Notice to the REIT. Upon the written request of the REIT,
Genesis shall deliver to the REIT copies of all material contracts affecting
the subject Covered Facility which will survive any Transfer. The REIT shall
have twenty (20) days after the receipt of the Transfer Notice to deliver to
Genesis a written acceptance of the Purchase Offer on the terms and conditions
set forth in the Transfer Notice. The parties shall enter into a definitive
acquisition agreement within fifteen (15) business days after the acceptance
of a Purchase Offer by the REIT. Notwithstanding anything set forth in this
Section 3.1, the right of first refusal set forth herein shall not apply to
any proposed Transfer and lease of a Covered Facility by Genesis or a Genesis
Affiliate involving a commercial bank or an Affiliate of a commercial bank or
any similar financial institution.


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            3.2. If, during the Term, a Developer desires to enter into a real
estate secured-Financing to Finance one or more assisted living facilities or
independent living facilities to be operated by Genesis or a Genesis
Affiliate, Genesis or its Affiliates shall use its reasonable business efforts
to cause the Developer to provide a Financing Notice to the REIT and to grant
to the REIT (or at the election of the REIT, to an Affiliate of the REIT) the
opportunity to make a proposal to the Developer to Finance one or more of the
subject assisted living facilities or independent living facilities. The
Developer shall not be obligated to accept any such Financing proposal of the
REIT, even if the terms and conditions of such Financing proposal are more
favorable than the terms and conditions of other Financing proposals received
by the Developer with respect to the Financing of the subject assisted living
facilities or independent living facilities.

            3.3. If, during the Term, Genesis or a Genesis Affiliate
determines to Finance one or more skilled nursing facilities presently owned
by Genesis or a Genesis Affiliate in a transaction where the liability
resulting from such Financing would not be reflected on the balance sheet of
Genesis, (i.e., an off-balance sheet Financing), Genesis or the Genesis
Affiliate, as the case may be, shall provide an Off-Balance Sheet Financing
Notice to the REIT and grant to the REIT (or at the election of the REIT, to
an Affiliate of the REIT) the opportunity to make a proposal to Genesis or to
such Genesis Affiliate to provide off-balance sheet Financing with respect to
such skilled nursing facilities. Neither Genesis nor any Genesis Affiliate
shall be obligated to accept any such off-balance sheet Financing proposal of
the REIT, even if the terms and conditions of such off-balance sheet Financing
proposal are more favorable than the terms and conditions of other off-balance
sheet Financing proposals received by Genesis or any Genesis Affiliate.

         4. First Refusal and Other Rights of Genesis. The REIT hereby grants
to Genesis the following rights of first refusal:


            4.1. If, during the Term, the REIT (or an Affiliate of the REIT)
acquires a Covered Facility located in the Genesis Market from a third party,
and desires to lease such Covered Facility (or if, due to the termination of
any lease with respect to a Covered Facility between the REIT and any Person
who or which is not an Affiliate of Genesis by reason of expiration,
termination, default or otherwise, the REIT intends to enter into a new lease
with respect to such Covered Facility) (whether, in any such case, such
Covered Facility is to be leased individually or together with one or more
other properties or assets, provided that at least thirty-three percent (33%)

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of such properties are located in the Genesis Market), the REIT shall first
offer to Genesis (or at Genesis' election an Affiliate of Genesis) the
opportunity to lease the Covered Facilities from the REIT on the same terms
and conditions as contained in any Lease Offer by giving a Lease Notice to
Genesis. Genesis shall have twenty (20) days after the receipt of the Lease
Notice to deliver to the REIT a written acceptance of the Lease Offer, which
written acceptance shall set forth the agreement of Genesis to all of the
terms and conditions set forth in the Lease Notice. The parties shall enter
into a definitive lease agreement within fifteen (15) business days after the
acceptance of the Lease Offer by Genesis. The foregoing right of first refusal
shall not apply if the proposed lessee of the Covered Facilities is the Person
who or which developed the Covered Facility or Transferred the Covered
Facility to the REIT or an Affiliate of such Person.

            4.2. If, during the Term, the REIT Finances one or more Covered
Facilities located in the Genesis Market and a manager is to be engaged by the
Owner (or if there is a default under an existing management agreement
relating to one or more Covered Facilities and a new manager is to be engaged
by the Owner) (whether, in any such case, any such Covered Facility is to be
managed individually or together with one or more other Covered Facilities or
any other properties or assets), the REIT shall deliver a Management Notice to
Genesis. The REIT shall use reasonable business efforts to cause the Owner to
enter into a management agreement with Genesis or a Genesis Affiliate, or, if
applicable, to permit Genesis to manage the Covered Facility upon the same
terms and conditions as set forth in any Management Offer. Genesis shall have
twenty (20) days after receipt of a Management Notice to deliver to the REIT
and the Owner a written management proposal, or, if applicable, an acceptance
of the Management Offer, which acceptance shall set forth the agreement of
Genesis to all of the terms of the Management Notice. The foregoing obligation
shall not apply if the proposed manager of the Covered Facility is an
Affiliate of the Owner or an Affiliate of the developer of the Covered
Facility.

         5. Failure to Exercise Right of First Refusal. If a party hereto does
not elect to exercise a right of first refusal granted under this Agreement on
the terms and conditions set forth herein, then, during the six-month period
("Six-Month Unrestricted Period") following the expiration of the right of
first refusal, Genesis or the REIT, as applicable, may Transfer, Finance or
lease the subject Covered Facility, free and clear of the terms and conditions
contained in the most recently delivered Transfer Notice, Lease Notice or
Management Notice, as the case may be. If, upon the expiration of the
Six-Month Unrestricted Period, Genesis or the REIT, as applicable, has not
consummated a Transfer or leasing of, or a management agreement with respect
to, the subject Covered Facility, then such other party may not Transfer or
lease, or enter into a management agreement with respect to a subject Covered
Facility without giving a new Transfer Notice, Lease Notice or Management
Notice, as the case may be, in accordance with the terms and conditions of
this Agreement.


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         6. Miscellaneous.

            6.1. Complete Agreement; Construction. This Agreement, and the
other agreements and documents referred to herein, shall constitute the entire
agreement between the parties with respect to the subject matter thereof and
shall supersede all previous negotiations, commitments and writings with
respect to such subject matter.

            6.2. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the jurisdiction of the Commonwealth
of Pennsylvania without regard to the principles of conflicts of laws thereof.

            6.3. Notices. All notices and other communications required or
permitted hereunder shall be in writing, shall be deemed to be duly given upon
actual receipt, and shall be delivered (i) in person, (ii) by registered or
certified mail, postage prepaid, (iii) by nationally recognized overnight
delivery service or (iv) by facsimile or other generally accepted means of
electronic transmission, provided that a copy of any notice delivered pursuant
to this clause (iv) shall also be sent contemporaneously pursuant to clause
(ii), addressed as follows (or to such other address(es) as may be specified
by like notice to the other parties):

         To Genesis and any of its Affiliates:    Genesis Health Ventures, Inc.
                                                  148 W. State Street
                                                  Kennett Square, PA 19348
                                                  Attn.: Chief Executive Officer
                                                  Attn.:  Law Department

         To the REIT:                             ElderTrust
                                                  415 McFarlan Road
                                                  Suite 202
                                                  Kennett Square, PA 19348
                                                  Attn.:  President

            6.4. Amendments. No amendment, modification or supplement to this
Agreement shall be binding on any party hereto unless it is in writing and
signed by the parties in interest.

            6.5. Successors and Assigns. Neither this Agreement nor any rights
or obligations hereunder shall be assignable by a party to this Agreement
without the prior, express written consent of the other parties. This
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties to this Agreement and their respective successors
and permitted assigns.

            6.6. No Third-Party Beneficiaries. This Agreement is solely for
the benefit of the parties to this Agreement and shall 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.

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            6.7. Titles and Headings. Titles and headings to paragraphs and
sections 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 of this
Agreement.

            6.8. Maximum Legal Enforceability; Time of Essence. The provisions
hereof shall be considered severable such that if any provision or part hereof
is ever held to be invalid, void or illegal under any law or ruling, all
remaining provisions hereof shall remain in full force and effect to the
maximum extent permitted by law. Any non-material 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 or rendering unenforceable any of the
remaining provisions hereof, and 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.

            6.9. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall constitute an original and all of which
shall be one and the same agreement.

            6.10. 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.


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

GENESIS HEALTH VENTURES, INC.               ELDERTRUST



By: /s/ Ira C. Gubernick                    By: /s/ Edward B. Romanov, Jr.
    --------------------------------           ---------------------------------

ELDERTRUST OPERATING LIMITED PARTNERSHIP

By its General Partner, ElderTrust


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

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