Amended and Restated



There shall be a committee of the board of directors (the “Board”) of Genesis HealthCare Corporation (the “Company”) to be known as the audit committee of the Company. The audit committee’s purpose is to oversee the accounting and financial reporting processes of the Company and the audit of the financial statements of the Company.


The audit committee shall have at least three (3) members, comprised solely of directors who satisfy the audit committee composition and independence requirements of applicable law and national security exchange rules. Audit committee members shall be elected annually by the Board.

Each member of the audit committee shall be able to read and understand fundamental financial statements, including the Company’s balance sheet, income statement, statement of shareholders equity, cash flow statement and related notes. In addition, at least one member of the audit committee shall be a financial expert, as defined by applicable law and regulations.

  Meetings and Procedures






The audit committee shall fix its own rules of procedure, which shall be consistent with the Bylaws of the Company and this Charter.





The audit committee shall meet at least quarterly and more frequently as circumstances require.





The chairperson of the audit committee or a majority of the members of the audit committee may call special meetings of the audit committee.





If a chairperson is not elected by the Board, the members of the audit committee may designate a chairperson by majority vote of the full committee.





The audit committee may request that any directors, officers or employees of the Company, or other persons whose advice and counsel are sought by the audit committee, attend any meeting of the audit committee and/or provide such pertinent information as the audit committee requests.





The audit committee shall apprise the Board of Directors on a regular basis regarding audit committee meetings and include a description of all actions taken by the audit committee.





The audit committee shall keep written minutes of its meetings, which minutes shall be maintained with the books and records of the Company.



Responsibilities and Authority

The responsibilities and authority of the audit committee are as follows:


Sole power to appoint (and terminate), compensate, oversee the work of the outside auditors, including audit scope and procedures and resolution of disagreements between management and the outside auditor regarding financial reporting, for the purpose of preparing or issuing an audit report or related work.





Pre-approve all auditing services and permissible non-audit services provided by the outside auditors to the Company.





Review and discuss the formal written statement from the outside auditors delineating all relationships between the outside auditors and the Company or any other relationships that may adversely affect the independence of the auditor and, based on such review, assess the independence of the outside auditor consistent with the Independence Standards Board Standard No. 1.





Review and approve the audit committee report required to be filed with the SEC.





Review and approve the Company’s Internal Audit Plan prior to its inception for each fiscal year.





Review and discuss with management and the outside auditors for the Company the following: (i) critical accounting policies and practices to be utilized in connection with the preparation of the Company’s financial statements; (ii) material alternative treatments of financial information within United States generally accepted accounting principles that have been discussed with the management of the Company, ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the outside auditors; and (iii) other material written communications between the outside auditors and the management of the Company, such as any management letter or schedule of unadjusted differences.





Establish procedures for (i) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters as set forth in section 10A(m)(4) of the Exchange Act and (ii) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters.





Review reports submitted to the audit committee pursuant to the reporting provisions of the Code of Ethics of the Company alleging actual or suspected violations of federal, state or local laws or regulations, including anonymous reports of questionable accounting or auditing matters.





Review and discuss with management and the outside auditors: (i) all related party transactions which are relevant to an understanding of the Company’s financial statements, and (ii) any material financial or non-financial arrangements of the Company which do not appear on the financial statements of the Company.





Approve all related party transactions.





Review and discuss with the outside auditors, the Company’s internal auditor, and financial and accounting personnel, the adequacy and effectiveness of the accounting and financial controls of the Company, and elicit any recommendations for the improvement of such internal control procedures or particular areas where new or more detailed controls or procedures are desirable.





Review and discuss the financial statements contained in the annual report to shareholders with management and the outside auditors, including an analysis of the auditors’ judgment as to the quality of the Company’s accounting principles.





Review the Company’s quarterly financial statements.





Review the Company’s Form 10-Q.





Review and approve the Company’s Form 10-K.





Meet with the internal auditor, outside auditor or the management privately as necessary to discuss any matters that the audit committee, the internal auditor, the outside auditor or the management believes should be discussed privately with the audit committee.





Engage independent counsel and other advisors as it deems necessary to carry out its duties, and determine their compensation.





Review and reassess the adequacy of the audit committee’s charter annually.





Conduct or authorize investigations into any matters within the scope of its responsibilities.



Any responsibility or authority of the audit committee, including but not limited to, the authority to preapprove all audit and permitted non-audit services, may be delegated to one or more members of the committee. The decisions of any member of the audit committee to whom authority to grant pre-approval has been delegated shall be presented to the full audit committee at the next scheduled meeting.


The audit committee is responsible for the duties set forth in this Charter but is not responsible for either the preparation of the financial statements or the auditing of the financial statements. Management has the responsibility for preparing the financial statements and implementing internal controls and the independent auditors have the responsibility for auditing the financial statements and obtaining a sufficient understanding of internal control to plan the audit and to determine the nature, timing and extent of tests to be performed. The review of the financial statements by the audit committee is not of the same quality as the audit performed by the independent auditors. In carrying out its responsibilities, the audit committee believes its policies and procedures should remain flexible in order to best react to a changing environment.