Great Ajax : Audit Committee Charter

GREAT AJAX CORP.

Charter of the Audit Committee

1. Authority and Purpose

The audit committee (the "Committee") of the Board of Directors (the "Board") of Great Ajax Corp., a Maryland corporation (the "Company"), is appointed by the Board for the purpose of assisting the Board in fulfilling its legal and fiduciary obligations with respect to matters in volving the accounting, auditing, financial reporting, internal control and legal compliance functions of the Company, including without limitation, assisting (i) the Board oversight of (a) the integrity of the Company's financial statements, (b) the Company's compliance with legal and regulatory requirements, (c) the Company's independent registered public accounting firm's qualifications and independence, and (d) the performance of the Company's internal audit function, if any, and independent registered public accounting firm and (ii) preparing the report required to be prepared by the Committee pursuant to the rules of the Securities and Exchange Commission (the "SEC") for inclusion in the Company's annual proxy statement.

The Company is listed on the New York Stock Exchange ("NYSE") and this charter is in compliance with the requirements applicable to audit committees promulgated by the NYSE, as well as the SEC and other applicable rules and regulations.

2. Committee Membership

The members of the Committee (the "Members" or, individually, each a "Member") shall be appointed by the Board and shall serve at the discretion of the Board. The Committee shall consist of three Members, each of which shall be a member of the Board. No director may serve as a Member if such director serves on the audit committee of more than two public companies, unless the Board determines that such simultaneous service would not impair the ability of such director to effectively serve on the Committee. Any such determination must be disclosed in the Company's annual proxy statement. Director's fees (including any additional amounts paid to chairs of committees and to members of committees of the Board) are the only compensation a member of the Committee may receive from the Company.

The following membership requirements shall also apply:

1. Each Member must meet the criteria for independence set forth in Rule 10A- 3(b)(1) promulgated under the Securities Exchange Act of 1934 ("Act");
2. Each Member must be "independent" as defined in Section 303A.02 of the listing rules of the NYSE;
3. Each Member must be financially literate, as such qualification is interpreted by

the Board in its business judgment, or must become financially literate within a reasonable

period

of

time

after

his

or

her

appointment

to

the

Committee;

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1. At least one Member must have "accounting or related financial management expertise," as the Board determines in its business judgment;
2. At least one Member must, through appropriate education and/or experience, satisfy the definition of "audit committee financial expert" as defined by rules and regulations under the Act; and
3. Any vacancy on the Committee shall be filled by majority vote of the Board at the next meeting of the Board following the occurrence of the vacancy. No member of the Committee shall be removed except by majority vote of the Board.
   3. Structure and Meetings

The Committee shall conduct its business and meetings in accordance with this Charter, the Company's bylaws and any direction set forth by the Board. The chairperson of the Committee shall be designated by the Board or, in the absence of such a designation, by a majority of the Members. The designated chairperson shall preside at each meeting of the Committee and, in consultation with the other Members, shall set the frequency and length of each meeting and the agenda of items to be addressed at each meeting. In the absence of the designated chairperson at any meeting of the Committee, the Members present at such meeting shall designate a chairperson pro tem to serve in that capacity for the purposes of such meeting (not to include any adjournment thereof) by majority vote. The chairperson (other than a chairperson pro tem) shall ensure that the agenda for each meeting is distributed to each Member in advance of the applicable meeting.

The Committee shall meet as often as it determines to be necessary and appropriate, but not less than quarterly each year. The Committee may establish its own schedule, provided that it shall provide such schedule to the Board in advance. The chairperson of the Committee or a majority of the Members may call special meetings of the Committee upon notice as is required for special meetings of the Board in accordance with the Company's bylaws. A majority of the appointed Members, but not less than two Members, shall constitute a quorum for the transaction of business. Members may participate in a meeting of the Committee by means of a conference telephone or similar communications equipment if all persons participating in the meeting can hear each other at the same time. Participation in a meeting by these means shall constitute presence in person at the meeting.

The Committee may meet with any person or entity in executive session as desired by the Committee. The Committee shall meet with the Company's independent registered public accounting firm, at such times as the Committee deems appropriate, to review the independent registered public accounting firm's examination and management report.

Unless the Committee by resolution determines otherwise, any action required or permitted to be taken by the Committee may be taken without a meeting if all Members consent thereto in writing and the same are filed with the minutes of the proceedings of the Committee. The Committee may form and delegate authority to subcommittees when appropriate; provided, however, that no subcommittee shall consist of fewer than two members; and provided further that the Committee shall not delegate to a subcommittee any power or authority required by any law, regulation or listing standard to be exercised by the Committee as a whole. The Committee

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shall maintain written minutes of its meetings, which minutes shall be filed with the minutes of the meetings of the Board.

4. Duties and Responsibilities

The Committee shall have the authority and responsibility for:

1. Financial Statement & Disclosure Matters.
2. 1. Review the policies and procedures adopted by the Company to fulfill its responsibilities regarding the fair and accurate presentation of financial statements in accordance with generally accepted accounting principles ("GAAP") and applicable rules and regulations of the SEC and the NYSE;
   2. Review any analyses prepared by management and/or the Company's independent registered public accounting firm setting forth significant financial reporting issues and judgments made in connection with the preparation of the Company's financial statements, including analyses of the effects of alternative GAAP methods on the financial statements;
   3. Review major issues regarding accounting principles and financial statement presentations, including any significant changes in the Company's selection or application of accounting principles, and with management, review major issues as to the adequacy of the Company's internal controls and any special audit steps adopted in light of material control deficiencies;
   4. Discuss policies with respect to risk assessment and risk management, and discuss the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures;
   5. Review with the Company's independent registered public accounting firm, management and internal auditors any information regarding "second" opinions sought by management from any other accounting firm with respect to the accounting treatment of a particular event or transaction;
   6. Review and discuss with management and the Company's independent registered public accounting firm the effect of regulatory and accounting initiatives, as well as off-balance sheet arrangements and aggregate contractual obligations, on the Company's financial statements;
   7. Review and discuss reports from the Company's independent registered public accounting firm regarding: (A) all critical accounting policies and practices to be used by the Company; (B) all alternative treatments of financial information within GAAP that have been discussed with management, including ramifications of the use of such alternative disclosures and treatments and the treatment preferred by the independent registered public accounting firm; and (C) other material written communications between the independent registered public accounting firm and management, such as any management letter or schedule of unadjusted differences;
   8. Review all certifications required to be made by the Company's principal executive officer and principal financial officer in connection with the Company's periodic

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reports under the Act, if any;

1. 1. Meet to review and discuss the Company's annual audited financial statements, including any comments or recommendations of the Company's independent auditors, and quarterly financial statements with management and the Company's independent registered public accounting firm, including reviewing the Company's specific disclosures under
      "Management's Discussion and Analysis of Financial Condition and Results of Operations" or any similar section in any document distributed to stockholders;
   2. Discuss the Company's earnings press releases (including type and presentation of information, paying particular attention to any use of "pro forma," "adjusted" or non-GAAP information), as well as financial information and earnings guidance provided to analysts and ratings agencies;
   3. If deemed appropriate, recommend to the Board that the Company's audited financial statements be included in its annual report on Form 10-K for the last fiscal year;
   4. Prepare and approve the report required by the rules of the SEC to be included in the Company's annual proxy statement in accordance with the requirements of Item 7(d)(3)(i) of Schedule 14A and Item 407 of Regulation S-K;
   5. Prepare an audit committee report as required by the SEC to be included in the Company's annual proxy statement, if applicable, and in so doing, endeavor to maintain free and open communication between the Company's directors, independent registered public accounting firm and financial management;
   6. Discuss with management all significant deficiencies in the design or operation of internal controls which could adversely affect the Company's ability to record, process, summarize, and report financial data, including any material weaknesses in internal controls identified by the Company's independent auditors; and
   7. Meet separately, periodically, with management, with the Company's internal auditors (or other personnel responsible for the internal audit function) and with the
      Company's independent registered public accounting firm.
2. Matters Regarding Oversight of the Company's Independent Registered Public Accounting Firm.
3. 1. Be directly responsible, in its capacity as a committee of the Board, for the appointment, compensation, retention, oversight, and approval of the work of any independent registered public accounting firm engaged (including resolution of disagreements between management and such firm regarding financial reporting) for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; provided also that each such registered public accounting firm shall report directly to the Committee;
   2. Instruct the Company's independent auditors that they are ultimately accountable to the Committee and the Board, and that the Committee is responsible for the selection (subject, if applicable, to stockholder ratification), evaluation and termination of the Company's independent auditors;

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1. Receive and review a formal written statement and letter from the Company's independent registered public accounting firm delineating all relationships between the independent registered public accounting firm and the Company, consistent with Independence Standards Board Standard 1, as may be modified or supplemented;
2. Actively engage in a dialogue with the Company's independent registered public accounting firm with respect to any disclosed relationship or services that may impact the objectivity and independence of the independent registered public accounting firm;
3. Establish clear policies regarding the hiring of employees and former employees of the Company's independent registered public accounting firm;
4. Establish policies and procedures for review and pre-approval by the Committee of all audit services and permissible non-audit services (including the fees and terms thereof) to be performed by the Company's independent registered public accounting firm, with exceptions provided for de minimis amounts under certain circumstances as permitted by law; provided, however, that: (A) the Committee may delegate to one or more Members the authority to grant such pre-approvals if the pre-approval decisions of any such delegate Member(s) are presented to the Committee at its next-scheduled meeting; and (B) all approvals of non-audit services to be performed by the independent registered public accounting firm must be disclosed in the Company's applicable periodic reports;
5. Obtain and review, at least annually, a report by the Company's independent registered public accounting firm describing: (A) the independent registered public accounting firm's internal quality-control procedures; (B) any material issues raised by the most recent internal quality-control review, or peer review, of the independent registered public accounting firm, or by any inquiry or investigation by governmental or professional authorities, within the preceding five years, respecting one or more audits carried out by the independent registered public accounting firm, and any steps taken to deal with any such issues; and (C) all relationships between the independent registered public accounting firm and the Company (to assess such firm's independence);
6. Meet with the Company's independent registered public accounting firm prior to its audit to review and accept, if appropriate, the planning and staffing of the audit, including the scope of audit activities and all critical accounting policies and practices to be used and monitor such plan's progress and results during the year;
7. Discuss with the Company's independent registered public accounting firm the matters required to be discussed by Statement on Auditing Standards No. 61 or No. 114 as applicable, and as may be modified or supplemented;
8. Review with the Company's independent registered public accounting firm any audit problems or difficulties and management's response, including any restrictions on the scope of such firm's activities or access to requested information, any significant

disagreements with management, any accounting adjustments that were noted or proposed by such firm but were "passed" (as immaterial or otherwise), any communications between the audit team and the audit firm's national office respecting auditing or accounting issues

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presented by the engagement, any "management" or "internal control" letter issued, or proposed to be issued, by the firm to the Company, and a discussion of the responsibilities, budget and staffing of the Company's internal audit function;

1. 1. Confirm that the Company's interim financial statements included in Quarterly Reports on Form 10-Q have been reviewed by the Company's independent auditors;
   2. Review and evaluate the qualifications, performance and independence of the Company's independent registered public accounting firm and its lead partner, and present the Committee's conclusions to the Board and, in its sole discretion (subject, if required to stockholder ratification), make decisions regarding the replacement or termination of such independent registered public accounting firm when circumstances warrant; and
   3. Oversee the rotation of the lead (or coordinating) audit partner of the Company's independent registered public accounting firm having primary responsibility for the audit and the audit partner responsible for reviewing the audit at least every five fiscal years.
2. Matters Regarding Oversight of the Company's Internal Audit Function.
3. 1. Obtain and review ongoing assessments of the Company's risk management processes and system of internal control from the Company's internal audit function;
   2. Review the Company's annual audited financial statements with management, including any major issues regarding accounting and auditing principles and practices, and review management's yearly report of the adequacy and effectiveness of internal controls that could significantly affect the Company's financial statements, as well as the adequacy and effectiveness of the Company's disclosure controls and procedures and management's reports thereon;
   3. Review major changes to the Company's auditing and accounting principles and practices as suggested by the Company's independent registered public accounting firm, internal auditors or management;
   4. Review the appointment of, and any replacement of, the Company's senior internal auditing executive, if any;
   5. Review the significant reports to management prepared by the Company's internal auditing department and management's responses;
   6. Review with management the Company's administrative operational and accounting internal controls, including any special audit steps adopted in light of the discovery of material control deficiencies, and evaluate whether the Company is operating in accordance with its prescribed policies, procedures and codes of conduct.
4. Matters Regarding Oversight of Compliance Responsibilities.
5. 1. Advise the Board with respect to the Company's policies and procedures regarding compliance with applicable laws and regulations;

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1. Obtain reports from the Company's management, senior internal auditing executive and independent registered public accounting firm that the Company's subsidiaries and any foreign affiliated entities are in compliance with applicable legal requirements, including the Foreign Corrupt Practices Act and Anti-Money Laundering regulations;
2. Review the Company's policies relating to the avoidance of conflicts of interest and review past or proposed transactions between the Company and members of management as well as policies and procedures with respect to officers' expense accounts and perquisites, including the use of corporate assets. The Committee shall consider the results of any review of these policies and procedures by the Company's independent auditors;
3. Ensure that the chief executive officer, controller, chief financial officer, chief accounting officer or other person serving in an equivalent position of the Company, was not, within one year prior to the initiation of the audit, an employee of the independent auditor who participated in any capacity in the Company's audit;
4. Establish procedures for: (A) the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls, or auditing matters; and (B) the confidential, anonymous submission by employees of the Company of concerns regarding questionable accounting or auditing matters;

Review and address any concerns regarding potentially illegal actions raised by the Company's independent registered public accounting firm pursuant to Section 10A(b) of the Act; and cause the Company to inform the SEC of any report issued by the Company's independent registered public accounting firm to the Board regarding such conduct pursuant to Rule 10A-1 under the Act;

1. 1. Review the Company's program to monitor compliance with the Company's Code of Conduct, and meet periodically with the Company's legal department or other appropriate person to discuss compliance with the Code of Conduct. Obtain from the Company's independent registered public accounting firm assurance that such firm has complied with Section 10A of the Act.
2. Additional Duties & Responsibilities.
3. 1. Review and reassess the adequacy of this Charter annually;
   2. Review and assess the performance and effectiveness of the Committee at

least annually;

1. Review and approve all Related Party Transactions, as defined and described in the Company's Related Party Transaction Policies and Procedures;
2. Report regularly to the Board, and review with the Board any issues that arise with respect to the quality or integrity of the Company's financial statements, the Company's compliance with legal or regulatory requirements, the performance and independence of the Company's independent registered public accounting firm, or the performance of the Company's internal audit function;

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1. Review with the Company's outside counsel and internal legal counsel any legal matters that may have a material impact on the financial statements, the Company's compliance policies and any material reports or inquiries received from regulators or governmental agencies;
2. Provide oversight and review of the Company's asset management policies, including an annual review of the Company's investment policies and performance for cash and short-term investments;
3. Establish and maintain free and open means of communication between and among the Company's independent auditors and accountants, the Company's internal auditing department and management, the Company's corporate compliance department, the
   Board, and the Committee, including providing such parties with appropriate opportunities to meet separately and privately with the Committee on a periodic basis;
4. Review with management and the Company's independent registered public accounting firm any fraud, whether or not material, that involves management or other employees who have a significant role in the Company's internal control over financial reporting; and
5. Take any other actions that the Committee deems necessary or proper to fulfill the purposes and intent of this Charter.

Although the Committee has the responsibilities, duties and powers set forth in this Charter, it is not the duty of the Committee to plan or conduct audits or to determine that the Company's financial statements are complete, accurate and in accordance with GAAP. Rather, those duties are the responsibility of management and the independent registered public accounting firm.

Nothing contained in this Charter is intended to alter or impair the operation of the "business judgment rule" as interpreted by the courts under the Maryland General Corporation Law. Further, nothing contained in this Charter is intended to alter or impair the right of the Members to rely, in discharging their duties and responsibilities, on the records of the Company and on other information presented to the Committee, Board or Company by its officers or employees or by outside experts and advisers such as the Company's independent registered public accounting firm.

5. Committee Resources

The Committee shall have the authority to retain such independent legal, accounting or other advisers as it determines necessary to carry out its duties and, if necessary, to institute special investigations. The Committee may request any officer or employee of the Company, or the Company's outside counsel or independent registered public accounting firm, to attend a meeting of the Committee or to meet with any Members or with any consultants to the Committee. Further, the Committee may request any such officer, employee, outside counsel or independent registered public accounting firm to provide any pertinent information to the Committee or to any other person or entity designated by the Committee.

The Company shall provide the Committee with appropriate funding, as determined by the Committee in its capacity as a committee of the Board, for the payments of: (a) compensation

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to any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services for the Company; (b) compensation to any independent advisers retained by the Committee in carrying out its duties; and (c) ordinary administrative expenses of the Committee that are necessary or appropriate in carrying out its duties.

6. Self Evaluation of the Committee

The Committee shall, on an annual basis, evaluate its performance. The evaluation shall address all matters that the Committee considers relevant to its performance, including a review and assessment of the adequacy of this Charter, and shall be conducted in such manner as the Committee deems appropriate. The Committee shall deliver to the Board a report, which may be oral, setting forth the results of its evaluation, including any recommended amendments to this Charter.

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