Exhibit 10.1

Execution Copy

MASTER RECEIVABLES PURCHASE AGREEMENT

among

W.S. BADCOCK CORPORATION Seller

and

B. RILEY RECEIVABLES, LLC

Purchaser

Dated as of December 20, 2021

TABLE OF CONTENTS

MASTER RECEIVABLES PURCHASE AGREEMENT

This Master Receivables Purchase Agreement (as amended, restated, modified or supplemented from time to time, this “Agreement”), dated as of December 20, 2021 is by and between B. RILEY RECEIVABLES, LLC, a Delaware limited liability company, as purchaser (“Purchaser”) and W.S. BADCOCK CORPORATION, a Florida corporation, as seller (“Seller”).

Recitals

WHEREAS, Seller desires to sell to Purchaser, from time to time, and Purchaser desires to purchase from Seller, from time to time, during the term of this Agreement, certain Receivables on various Closing Dates;

WHEREAS, each Receivable to be sold to Purchaser will be identified on the Receivables Schedule provided by Seller.

NOW, THEREFORE, in consideration of the premises and mutual agreements set forth herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, and Purchaser and Seller agree as follows:

Section 1. Definitions. Unless the context shall clearly indicate some other meaning, terms used in this Agreement shall have the meanings assigned thereto in the recitals above or specified in this Section 1 or, if not defined in this Section 1, in the Servicing Agreement.

Account: A revolving credit account identified on the Receivables Schedule delivered on the Initial Closing Date, originated by Seller prior to the Initial Closing Date under the Account Program to fund the purchase by a Buyer of Furniture, any Insurance, and related products and services.

Account Agreement: For each Account, the Badcock Easy Purchase Plan Credit/Security Agreement establishing the creditor-debtor relationship between Seller and the related Buyer substantially in the forms collectively attached as Exhibit 4 to this Agreement, as amended from time to time.

Account Documents: (i) The Account Agreements, (ii) any applicable Insurance election form and (iii) all other agreements or documents evidencing, securing, guarantying, governing or giving rise to such Account, including, without limitation, any third-party guarantees, any other credit enhancement rights, which Seller or Servicer may have received.

Account File: An Electronic Account File or a Physical Account File.

Account Program: The program through which Seller originates Accounts to Buyers that were originated by such for purposes of purchasing Furniture and related products and services, which program may be amended or changed by Seller from time to time.

Adjustment Amount: With respect to any Receivable purchased by Purchaser, an amount equal to all Collections received by Seller for the period after the applicable Cutoff Time through the Applicable Closing Date (whether applied to principal, interest, late charges or other amounts on or in respect of such Receivable).

Affiliate: With respect to any Person, any other Person controlling or controlled by or under common control with such Person. For the purposes of this definition, the term “control” (including, with correlative meanings, “controlling,” “controlled by,” and “under common control with”) means the power to direct or cause the direction of the management and policies of such Person.

AML-BSA Laws: Collectively (i) the Bank Secrecy Act of 1970, as supplemented by the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act, and any rules and regulations promulgated thereunder; and (ii) any other applicable Laws relating to customer identification, anti-money laundering or preventing the financing of terrorism and other forms of illegal activity, each as amended.

Applicable Closing Date: With respect to any Eligible Receivable, the Closing Date on which such Eligible Receivable was or will be purchased by Purchaser.

Back-Order Receivable: Any Receivable as to which the related Furniture is on back-order or otherwise unavailable for delivery to the applicable Buyer as of the Initial Closing Date.

Bankruptcy Code: Title 11 of the United States Code, as amended.

Business Day: Any day other than: (i) a Saturday or Sunday, (ii) a day on which banking and savings and loan institutions in the States of New York or Delaware are authorized or obligated by Law or executive order to be closed, or (iii) any other day on which commercial banking or Federal institutions in New York are authorized or obligated by law or executive order to be closed.

Buyer: Any maker, co-maker, guarantor, or other obligor that is a party to an Account Agreement or otherwise obligated to make payments with respect to an Account.

Claim: Any claim, counterclaim, assessment, action, cause of action, litigation, suit, proof of claim, including a proof of claim filed in a bankruptcy proceeding, demand or complaint.

Closing Date: Each date on which Seller sells, and Purchaser purchases, Receivables under this Agreement during the Purchase Period, as agreed by the parties.

Collections: With respect to all Receivables, all cash collections and other cash proceeds of such Receivable received on or after the related Cutoff Time, regardless of how such collections or cash proceeds are reflected on Seller’s books and records, including (i) Principal Collections, (ii) Interest Collections, (iii) Liquidation Proceeds, including recoveries on Defaulted Receivables (iv) Net Insurance Amounts, and (vi) any other fees, charges or proceeds received in connection with such Receivable.

Confidential Information: The terms and conditions of this Agreement and any proprietary non-public information of a party hereto that is furnished to the other party hereto in connection with this Agreement or the transactions contemplated hereby, including but not limited to, records, documents, proprietary information, technology, software, trade secrets, financial and business information, or data related to such other party’s products (including the discovery, invention, research, improvement, development, manufacture, or sale thereof), processes, or general business operations (including sales, costs, profits, pricing methods, organization, employee or customer lists and process), whether oral, written, or communicated via electronic media or otherwise disclosed or made available to a party or to which a party is given access pursuant to this Agreement by the other party, and any information obtained through access to any information assets or information systems (including computers, networks, voice mail, etc.), that, if not otherwise described above, is of such a nature that a reasonable person would believe to be confidential, as well as any Consumer Information. Information (other than Consumer Information) that is made available to the general public, received from independent sources, already in possession of the receiving party prior to disclosure hereunder or that is independently developed without the use of Confidential Information shall not be considered Confidential Information.

Consumer Information: Any “nonpublic personal information” (as such term is defined in the Gramm-Leach-Bliley Act and/or the regulations implementing the provisions thereof) and other personally identifiable information relating to Buyers or applicants.

Cutoff Time: With respect to the Initial Closing Date, 11:59 p.m., New York time on December 15, 2021, with respect to the Second Closing Date, 11:59 p.m., New York time on December 24, 2021, and with respect to each Closing Date thereafter, the time that is 11:59 p.m., New York time, two Business Days prior to such Closing Date.

Dealer Fees: Fees paid by Seller in the ordinary course of business under dealer agreements in connection with the origination of an Account, provided that Dealer Fees shall not include any portion of the Net Insurance Amounts.

Defaulted Receivable: Any Receivable as to which any of the following is true:

(a) an Insolvency Event has occurred with respect to the related Buyer;

(b) the Servicer has determined, in accordance with the Underwriting Guidelines, that all or any portion of such Receivable has been placed on non-accrual status, is not collectible, or any or all of the principal amount due under such Receivable is reduced or forgiven;

(c) as at the end of any month, such account is 330 days or more past due;

(d), the related Furniture has been repossessed, or detached from the related residence, in whole or in part; or

(e) the Account Documents with respect to such Receivable are amended, restructured, modified or waived so as to avoid a payment default (excluding any (i) waiver of any NSF fees or other administrative fees accrued with respect to such Receivable, (ii) write-off of any other amounts in connection with a payoff of such Receivable that does not exceed $100.00 or (iii) payment arrangements offered to Buyers as outlined in the Underwriting Guidelines).

Deferred Purchase Price: With respect to Receivables purchased on the Second Closing Date, the portion of the Purchase Price for which there is insufficient Collections to be debited pursuant to Section 5(a) hereof provided that such amount shall not exceed 20% of the Purchase Price for such Receivables sold on the Second Closing Date.

Effective Date: The date of this Agreement.

Electronic Account Documents: any Account Documents in electronic form.

Electronic Account File: A file containing Electronic Account Documents.

Eligible Receivable: Any Receivable related to an Account originated by Seller for sale to Purchaser under this Agreement on or prior to the applicable Cutoff Time for which, on the related Applicable Closing Date, the Receivable and Account representations, warranties and covenants set forth in Section 9 are true and correct.

Furniture: The furnishings and other consumer goods sold by Seller or any Affiliate of Seller and purchased by a Buyer funded pursuant to an Account Agreement.

Governmental Authority: Any nation or government, any federal, state, city, town, municipality, county, local or other political subdivision thereof or thereto or any department, commission, board, court, tribunal, bureau, instrumentality, agency or other entity exercising executive, legislative, judicial, taxing, regulatory or administrative powers or functions of or pertaining to government, including the Consumer Financial Protection Bureau, the United States Federal Trade Commission and any local, state or federal governmental or regulatory authority having jurisdiction or exercising regulatory authority or similar oversight with respect to Seller, Purchaser or Servicer.

Holder Rule: The Federal Trade Commission Trade Regulation Rule Concerning the Preservation of Consumers’ Claims and Defenses that appears in 16 C.F.R. Part 433.

Initial Closing Date: December 20, 2021.

Initial Purchase Price: $400 million.

Initial Receivables Pool: All Eligible Receivables in existence at the Cutoff Time immediately preceding the Initial Closing Date.

Insolvent: As to any Person, has the meaning set forth in Section 101(32) of the Bankruptcy Code or Section 271 of the Debtor and Creditor Law of the State of New York.

Insolvency Event: With respect to a specified Person, (a) the filing of a decree or order for relief by a court having jurisdiction in the premises in respect of such Person or any substantial part of its property in an involuntary case under the Bankruptcy Code or any other applicable Insolvency Law now or hereafter in effect, or the appointing of a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or ordering the winding-up or liquidation of such Person’s affairs, and such decree or order shall remain unstayed and in effect for a period of sixty (60) consecutive days; or (b) the commencement by such Person of a voluntary case under any applicable Insolvency Law now or hereafter in effect, or the consent by such Person to the entry of an order for relief in an involuntary case under any such law, or (c) the consent by such Person to the appointment of or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator or similar official for such Person or for any substantial part of its property, or (d) the making by such Person of any general assignment for the benefit of creditors, or (e) the failure by such Person generally to pay its debts as such debts become due, or the taking of action by such Person in furtherance of any of the foregoing.

Insolvency Laws: The Bankruptcy Code and all other applicable liquidation, conservatorship, bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization, suspension of payments, or similar debtor relief laws from time to time in effect affecting the rights of creditors generally.

Insurance: With respect to an applicable Receivable in an Account, a consumer personal property insurance or credit protection insurance policy issued by LOTSolutions Inc., Insurance Company of the South, Lyndon Southern Insurance Company, Life of the South Insurance, 4Warranty Corporation, The Service Doc Inc. or other insurance provider approved by Purchaser covering the Furniture sold by Seller to a Buyer at the time of purchase of the related Furniture.

Insurance Premium: The periodic premium amount related to Insurance, if any, owed by a Buyer that relates to any applicable Receivable sold to Purchaser.

Insurance Retro Commission: Any retroactive commission, residual or similar payment payable to Seller by an insurer in respect of Insurance that relates to any applicable Receivable sold to Purchaser.

Interest Collections: All interest payments and finance charges received from Buyers, including any late fees, returned check fees and any other fees, charges or other obligations of Buyers paid and owed to Purchaser.

Interest Rate: With respect to each Receivable, the fixed annual rate or rates of interest provided for in the related Account Agreement.

Investment Company Act: The Investment Company Act of 1940, as amended.

Laws: All local, state and federal statutes, laws and ordinances applicable to the Accounts and Receivables, Seller, Purchaser, or Servicer and any implementing regulations thereunder (including without limitation the underwriting, origination, servicing, ownership, holding, acquisition, and sale of the Accounts or Receivables); any order, decision, injunction or similar pronouncement of any court, tribunal or arbitration panel issued with respect to the Accounts or Receivables, Seller, Purchaser, Servicer or any and any regulations, policy statements and any similar pronouncement of any Governmental Authority having jurisdiction with respect to the Accounts or Receivables or the acts of Seller, Purchaser, or Servicer.

Liquidation Proceeds: Any cash received with respect to a Defaulted Receivable.

Master Assignment and Conveyance: An assignment and conveyance of the Receivables purchased pursuant to this Agreement in the form annexed hereto as Exhibit 1.

Material Adverse Effect: A material adverse change in (i) the business, assets, operations, or financial condition of Seller or its ability to perform its obligations under this Agreement; or (ii) with respect to the Receivables, the legality, validity binding effect or enforceability of this Agreement or any other Program Agreements or the validity, enforceability, value, binding effect or collectability of any of the Receivables sold to Purchaser pursuant to this Agreement.

Maximum Par Receivable Purchase Amount: $40 million.

Net Insurance Amounts: With respect to any Receivable sold to Purchaser, (i) 23% of the Insurance Premium and (ii) all Insurance Retro Commissions.

Notice of Termination: A written communication from either Seller or Purchaser to the other party indicating its intention to terminate this Agreement pursuant to the provisions of Section 3.

OFAC: The U.S. Department of the Treasury’s Office of Foreign Assets Control. Parent Company of Seller: Franchise Group, Inc.

Par Receivable: Any Receivable originated by Seller after the first Cutoff Time to a Buyer who had an Account with Seller prior to the first Cutoff Time, whether or not such Account had a zero balance as of the first Cutoff Time.

Parent Guaranty: A guaranty in form and substance satisfactory to Purchaser under which the Parent Company of Seller shall unconditionally guarantee the payment of Seller’s monetary obligations hereunder and under the Servicing Agreement, including (without limitation) Seller’s obligations under Sections 10 and 11 of this Agreement.

Person: An individual, corporation, limited liability company, partnership, joint venture, association, joint-stock company, trust, unincorporated organization, government or any agency or political subdivision thereof or any other entity.

Physical Account Documents: any Account Documents in physical, non-electronic form.

Physical Account File: A file containing Physical Account Documents

Principal Collections: All principal payments received from Buyers, including any Principal Prepayments and any other scheduled and unscheduled principal payments, but not including recoveries on Defaulted Receivables.

Principal Prepayment: Any payment or other receipt of principal on a Receivable which is received in advance of its scheduled due date and which is not accompanied by an amount of interest representing scheduled interest due on any date or dates in any month or months subsequent to the month of prepayment.

Proceeding: Any action, suit, petition, administrative or regulatory investigation or other similar proceeding, whether civil or criminal, at law or in equity, before any court, arbitrator or Governmental Authority.

Program Agreements: This Agreement, the Servicing Agreement and any other agreement entered into by Purchaser and Seller related to the sale and purchase of Receivables contemplated herein.

Provider Premium: With respect to any Receivable that includes an Insurance Premium, that portion of the Insurance Premium payable to the provider of the Insurance.

Purchase Period: means the period commencing on the Initial Closing Date and ending on the earliest to occur of (i) the date that is ninety (90) consecutive days after the Effective Date, or such later date as Seller and Purchaser may specify in writing in their sole discretion, and (ii) delivery of a Notice of Termination pursuant to Sections 3(b) or 3(c) hereof.

Purchase Price: With respect to (i) the Initial Receivables Pool and Net Insurance Amounts related thereto, the Initial Purchase Price, (ii) any Eligible Receivable not in the Initial Receivables Pool that is a Par Receivable and Net Insurance Amounts related thereto, the Unpaid Amount of such Par Receivable, and (iii) any other Eligible Receivable not in the Initial Receivables Pool and Net Insurance Amounts related thereto, the product of (A) 75% and (B) the Unpaid Amount of such Receivables, it being understood that (in each instance) the Purchase Price shall reflect the price paid for both the Eligible Receivables and Net Insurance Amounts sold.

Receivable: As of any date of determination, the beneficial interest in any right to payment from or on behalf of any Buyer arising under an Account with such Buyer, and identified on the applicable Receivables Schedule, and any Collections in respect thereof.

Receivables Collateral: As defined in Section 7(b).

Receivables Schedule: Collectively, (i) the schedule, attached to this Agreement, of the Initial Receivables Pool that Seller intends to sell to Purchaser on the Initial Closing Date, and for each other Closing Date (ii) the schedule provided as of Cutoff Time for the Applicable Closing Date, in each case substantially in the form of Exhibit 2, with respect to each such Receivable.

Related Property: With respect to a Receivable, Seller’s interest in any property or other assets of the Buyer thereunder pledged as collateral to secure the repayment of such Receivable, including, without limitation, the Furniture and all proceeds thereof.

Repurchase Price: With respect to any Receivable that has been purchased by Purchaser under this Agreement, on the date of any repurchase, an amount equal to the sum of (i) (A) in the case of any Receivable that was in the Initial Receivables Pool or is a Par Receivable, the Unpaid Amount of such Receivable and (B) in the case of any other Receivable the product of 75% and the Unpaid Amount of such Receivable; provided that in each case, in the event that such Receivable is a Defaulted Receivable, the Unpaid Amount of such Receivable on the date of repurchase shall be the Unpaid Amount of such Receivable prior to it becoming a Defaulted Receivable; (ii) any accrued and unpaid interest and fees associated with such Receivable; and (iii) any accrued and unpaid Net Insurance Amounts.

Sanctions Laws: Any applicable Laws relating to economic or financial sanctions or trade embargoes imposed, administered or enforced by OFAC from time to time, including without limitation Section 1 of Executive Order 13224 of September 23, 2001 Blocking Property and Prohibiting Transactions With Persons Who Commit, Threaten to Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001)) and OFAC’s Specially Designated Nationals and Blocked Persons List.

Scheduled Payment: With respect to any Receivable, the periodic payments payable under the terms of the related Account Documents (which shall include all payments of principal and interest).

Second Closing Date: The next Closing Date occurring after the Initial Closing Date.

Seller’s Knowledge: The knowledge, after reasonable and diligent inquiry, of the Persons with the titles or positions of Chief Legal Officer and Vice President of Retail Operations.

Servicer: W.S. Badcock Corporation, in its capacity as servicer, or any successor thereto under the terms of the Servicing Agreement.

Servicer Termination Event: Servicer Termination Event shall have the meaning given to such term in the Servicing Agreement.

Servicing Agreement: The Servicing Agreement, dated as of the date hereof, by and between Servicer and Purchaser, as amended, restated, supplemented or otherwise modified from time to time.

Servicing Manual: Servicer’s servicing manual as amended, modified and/or supplemented from time to time in accordance with the Servicing Agreement.

Servicing Records: With respect to any Receivable, all of the documents and records related to or required for the servicing of such Receivable kept in the ordinary course of business by Servicer.

State Licenses: Any state licenses, permits, approvals, orders or other authorizations required to be obtained or held by Seller from, or any registrations by Seller required to be made with, applicable state licensing agencies or similar bodies in order for Seller to enter into an Account Agreement, originate an Account, sell a Receivable, and service an Account may be obtained.

UCC: the Uniform Commercial Code as in effect in the State of New York from time to time; provided, that to the extent that the UCC is used to define any term herein or in any Program Agreement and such term is defined differently in different Articles or Divisions of the UCC, the definition of such term contained in Article or Division 9 shall govern; provided further, that, in the event that, by reason of mandatory provisions of laws, any or all of the attachment, perfection or priority of, or remedies with respect to, Purchaser’s lien on any Receivables Collateral is governed by the Uniform Commercial Code as enacted and in effect in a jurisdiction other than the State of New York, the term “UCC” shall mean the Uniform Commercial Code as enacted and in effect in such other jurisdiction solely for purposes of the provisions thereof relating to such attachment, perfection, priority or remedies and for purposes of definitions related to such provisions.

Underwriting Guidelines: The written underwriting criteria, credit and collection policies, program guidelines, program eligibility criteria and other related procedures governing the origination, documentation, collection, modification, charge-off and administration of Accounts by Seller, attached hereto as Exhibit 3.

Unpaid Amount: The original principal amount of a Receivable representing the portion of the purchase price and taxes financed by a Buyer to purchase Furniture and related services less all payments received from the Buyer with respect to such Receivable which are allocated to principal as reported in the servicing system of Servicer.

Volcker Rule: Section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Section 2. Commitments.

(a) Agreement to Purchase Receivables. Subject to and pursuant to the terms of this Agreement, Seller agrees to sell, and Purchaser agrees to purchase, Eligible Receivables and related Net Insurance Amounts from time to time during Purchase Period, on each Closing Date as listed in the applicable Receivables Schedule. Notwithstanding anything to the contrary herein, (i) the Purchase Price of all Par Receivables not in the Initial Receivables Pool and related Net Insurance Amounts shall not exceed the Maximum Par Receivable Purchase Amount, and (ii) the Purchase Price for all Receivables and related Net Insurance Amounts not in the Initial Receivables Pool will be paid solely by debits from Collections owed to Purchaser. Purchaser is not purchasing any Account related to any purchased Receivable and all obligations under each Account remain solely with Seller.

Section 3. Term, Termination.

(a) Term. The obligation to purchase the Receivables pursuant to this Agreement shall commence as of the Effective Date and terminate at the end of the Purchase Period, unless this Agreement is terminated earlier by either party pursuant to the terms of Section 3(b) or Section 3(c).

(b) Termination by Seller. This Agreement may be terminated by Seller prior to the end of the Purchase Period by delivering a Notice of Termination to Purchaser upon the occurrence of any one or more of the following events, and such termination will be effective upon receipt of such Notice of Termination by Purchaser:

(i) If any representation or warranty made by Purchaser as set forth in Section 8(b) proves not to have been true and correct as of the date when made;

(ii) If Purchaser materially breaches any covenant or agreement contained in this Agreement, and if susceptible to cure, Purchaser has not cured such breach within a period of thirty (30) consecutive days after Seller has given written notice of the breach to Purchaser, or if not susceptible to cure, after the passage of a period of thirty (30) consecutive days after Seller has given written notice of the breach to Purchaser; or

(iii) If Purchaser (A) makes a general assignment for the benefit of its creditors, (B) has any Proceeding instituted by or against it seeking to adjudicate it bankrupt or insolvent or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any Laws relating to bankruptcy, insolvency, or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property; or (C) takes any corporate action to authorize any of the actions set forth above in (A) through (B) above.

(c) Termination by Purchaser. This Agreement may be terminated by Purchaser prior to the end of the Purchase Period by delivering a Notice of Termination to Seller upon the occurrence of any one or more of the following events of default (each, an “Event of Default”), and such termination will be effective upon receipt of such Notice of Termination by Seller:

(i) If any representation or warranty made by Seller as set forth in Section 8(a) or Section 9 proves not to have been true and correct in all material respects as of the date when made;

(ii) If Seller breaches any other covenant or agreement contained in this Agreement, and if susceptible to cure, Seller has not cured such breach within a period of thirty (30) consecutive days after Purchaser has given written notice of the breach to Seller or if not susceptible to cure, after the passage of a period of thirty (30) consecutive days after Purchaser has given written notice of the breach to Seller;

(iii) Seller shall fail to make any payment in accordance with the terms of this Agreement and such failure shall continue for more than five (5) Business Days after Seller’s receipt of Purchaser’s written demand that Seller cure such failure;

(iv) If Seller (A) makes a general assignment for the benefit of its creditors or admits in writing it is Insolvent, (B) has any Proceeding instituted by or against it seeking to adjudicate it bankrupt or insolvent or seeking liquidation, winding up, reorganization, arrangement, adjustment, protection, relief, or composition of it or its debts under any Laws relating to bankruptcy, insolvency, or reorganization or relief of debtors, or seeking the entry of an order for relief or the appointment of a receiver, trustee, custodian or other similar official for it or for any substantial part of its property; or (C) takes any corporate action to authorize any of the actions set forth above in (A) through (B) above;

(v) If termination of the Agreement is required or requested by any Governmental Authority, or if Purchaser determines in good faith in its sole discretion, as supported by the legal advice of counsel for Purchaser, that its actions contemplated under this Agreement or the actions or activities of Seller violate any applicable Laws;

(vi) If any regulatory inquiry (other than a routine regulatory examination or a complaint involving a single Buyer ), investigation, enforcement action or litigation is commenced or order or judgment is imposed on or issued against Seller or any agent or other representative of Seller, in each case which could reasonably be expected to have a Material Adverse Effect;

(vii) If Purchaser discovers (A) any non-compliance with Laws applicable to the Accounts originated by Seller, the Receivables sold under this Agreement to Purchaser, or the transactions contemplated by this Agreement by Seller, as supported by the legal advice of counsel for Purchaser, or (B) any breach of any of the representations and warranties set forth in Section 9 with respect to a material portion of the Receivables purchased by Purchaser (any such non-compliance with Laws, breach or event, a “Defect”) and such Defect is not cured to the satisfaction of Purchaser within thirty (30) consecutive days after notice of such Defect is given to Seller by Purchaser (the “Audit Cure Period”) or, as reasonably determined by Purchaser, is not curable.

(viii) Any Servicer Termination Event.

(ix) An event has occurred which has led to a Material Adverse Effect in the good faith determination of Purchaser.

(x) Franchise Group, Inc. shall fail to own and control, in the aggregate, more than 51% of the outstanding equity interest Seller or shall fail to own and control the right to appoint a majority of the Board of Directors of Seller (or comparable governing body).

Upon the occurrence of an Event of Default, Purchaser is not obligated to purchase Receivables until such time as Seller has cured (or Purchaser has waived) such Event of Default.

(d) Remedies cumulative. Purchaser’s and Seller’s respective rights to terminate this Agreement pursuant to this Section 3 shall not affect the availability of any other right or remedy under this Agreement, including those set forth in Section 10 or Section 11, at law or in equity.

Section 4.  Modifications of Account Program. Seller shall not modify or change any forms of Account Documents, the Underwriting Guidelines, the form of Program Agreements, the Account Agreement, or the Account Program in any manner that could reasonably be expected to result in a Material Adverse Effect on any Receivable to be sold to Purchaser hereunder without Purchaser’s prior written consent, not to be unreasonably withheld, conditioned or delayed. Seller shall notify Purchaser of any proposed material changes to the forms of Account Documents, the Underwriting Guidelines, the form of Program Agreements, or the Account Program at least ten (10) Business Days prior to such proposed change. Seller shall notify Purchaser of any immaterial changes to the forms of Account Documents, Underwriting Guidelines, the form of Program Agreements, or the Account Program prior to a purchase of any Receivables originated under or otherwise subject to any such changed document at least ten (10) Business Days prior to such proposed change. Without limiting the foregoing, Seller shall not modify the terms of any Accounts related to Receivables such that more than 3% of the applicable Accounts are “zero interest” or “low interest” Accounts. Further, Seller shall not sell any Account related to a Receivable sold to Purchaser or merge such Account into one not related to a Receivable, unless (in each instance) the Unpaid Amount of such Receivable sold to Purchaser has been paid in full.

Section 5.  Sale and Closing Procedures.

(a) Receivables Schedule. At least one Business Day prior to each Closing Date, Seller shall deliver to Purchaser a Receivables Schedule, which may be as frequently as bi-weekly, or, in the case of the Second Date, less than two weeks following the Initial Closing Date, listing Receivable-level information and Receivables that Seller intends to sell to Purchaser. Purchaser may review the Receivables Schedule to ensure compliance with applicable representations and warranties prior to the Closing Date for such Receivables. On the Initial Closing Date, Purchaser shall wire the Purchase Price for the Initial Receivables Pool and related Net Insurance Amounts to Seller. On each Closing Date thereafter Purchaser’s obligation to pay the applicable Purchase Price shall be effected solely by debiting, and Purchaser hereby authorizes Seller to so debit, such Purchase Price from Collections owed to Purchaser, to the extent of available funds in possession of the Servicer pursuant to the Servicing Agreement. Solely with respect to the Second Closing Date, to the extent available funds in the possession of the Servicer are insufficient to pay the pay the Purchase Price in full on such date, a portion of the Purchase Price may be paid as a Deferred Purchase Price (it being understood that the Purchase Price for the Receivables to be sold on the Second Closing Date, less the Deferred Purchase Price, shall not exceed the amount of Collections then in possession of the Servicer). Seller shall debit any Deferred Purchase Price from Collections within 5 Business Days of receipt thereof until the outstanding balance of the Deferred Purchase Price is reduced to zero. Purchaser shall have no liability for any shortfall of available Collections.

(b) Purchase and Sale of Receivables. The closing for each sale of Receivables and related Net Insurance Amounts hereunder shall take place on each Applicable Closing Date that occurs during the Purchase Period. Subject to the terms and conditions of this Agreement, on each Applicable Closing Date, (i) Seller shall sell, transfer, assign, set over and convey to Purchaser, and Purchaser shall purchase and receive, all beneficial rights, legal title and interest of Seller in and to the Receivables and related Net Insurance Amounts set forth in the Receivables Schedule, (ii) Purchaser shall pay the Purchase Price to Seller as set forth in 5(a) and (iii) immediately upon receipt by Seller of the applicable Purchase Price, Purchaser shall become, for all purposes, the owner of such Receivables and related Net Insurance Amounts. Upon payment of the Purchase Price, Purchaser shall own and be entitled to receive all Collections with respect to each Receivable and related Net Insurance Amounts purchased. For the avoidance of doubt, Purchaser shall own and be entitled to receive all Collections with respect to each Receivable and Net Insurance Amounts sold on the Second Closing Date notwithstanding the inclusion of a Deferred Purchase Price. All Collections, including the Net Insurance Amounts, shall be paid to Purchaser at the times and in the manner specified in the Servicing Agreement.

(c) Delivery of the Account Files. For each Receivable purchased by Purchaser on the Closing Date Seller mark each Receivable on Seller’s books and records as property of Purchaser. Seller shall deliver to Purchaser the Electronic Account File or in the case of Physical Account Files, copies of the Physical Account Files, upon request.

(d) Calculation and Payment of Adjustment Amount. Seller shall provide Purchaser with its calculation of the Adjustment Amount for all purchased Receivables in the Remittance Report for the first full Collection Period following such purchase. Any such Adjustment Amount shall be treated as Collections and applied as set forth in the Servicing Agreement. The parties’ obligations under this Section 5(d) shall survive termination of this Agreement until all payment obligations pursuant to this Section 5(d) have been satisfied.

(e) Modification of Unpaid Amount. Without limiting Purchaser’s rights under Section 10 hereof, if the Servicer adjusts downward the principal balance of any Receivable because of a rebate, refund, unauthorized charge or billing error to a Buyer, or because such Receivable was created in respect of Furniture which was refused or returned by a Buyer, then, in any such case, the amount of Unpaid Amount of the Receivable used to calculate any amount required herein to be calculated by reference to the Unpaid Amount of the Receivable, will be reduced by the principal amount of the adjustment.

Section 6. Conditions to Each Closing. The closing for the purchase and sale of Eligible Receivables to be sold to Purchaser on each Applicable Closing Date shall be subject to each of the following conditions:

(a) Each Receivable to be purchased on such Applicable Closing Date qualifies as an Eligible Receivable;

(b) Seller shall have marked its records evidencing such Receivables to indicate the sale of such Receivables to Purchaser;

(c) Each of the representations and warranties of Seller and Servicer contained in this Agreement, the Servicing Agreement or any other related agreement shall be true and correct as of the Applicable Closing Date (except to the extent such representations and warranties expressly relate to any earlier date, in which case such representations and warranties shall be true and correct in all material respects as of such earlier date as if made on such date);

(d) No Event of Default or Servicer Event of Default shall have occurred and be continuing immediately prior to or immediately after giving effect to such purchase;

(e) To the extent applicable, each secured party (including any party that has a precautionary security interest in such Receivable) has released all of its right, title and interest in, to and under each such Receivable (including any security interest that such secured party or secured party’s agent may have by virtue of its possession, custody or control thereof) and, to the extent applicable, has filed Uniform Commercial Code termination statements in respect of any Uniform Commercial Code filings made in respect of each such Receivable and, to the extent applicable, Purchaser has received a lien release and/or acknowledgement of Purchaser’s lien in form and substance satisfactory to Purchaser in its sole discretion;

(f) Seller shall have performed and complied with each covenant, obligation and agreement required by this Agreement to be performed or complied with by it on or before the Applicable Closing Date;

(g) Seller shall have delivered to Purchaser a Receivables Schedule with respect to the Receivables to be purchased on such Closing Date;

(h) The Servicing Agreement is in effect and no notice of intention to terminate the Servicing Agreement has been delivered to Servicer;

(i) Seller and Purchaser shall have duly executed and delivered to Purchaser a Master Assignment and Conveyance for each Closing Date;

(j) In the case of each Par Receivable purchased by Purchaser on a Closing Date after the Initial Closing Date, such Par Receivable arises under an Account identified on the Receivables Schedule delivered prior to the Initial Closing Date;

(k) The aggregate Purchase Price of Par Receivables purchased by Purchaser on a Closing Date after the Initial Closing Date would not exceed the Maximum Par Receivable Purchase Amount;

(l) The purchase of the Receivables and related Net Insurance Amounts by Purchaser will occur during the Purchase Period;

(m) Purchaser shall have received favorable opinions of counsel to Seller, in form and substance satisfactory to Purchaser with respect to corporate and true sale matters;

(n) Purchaser shall have received the duly executed and delivered Parent Guaranty;

(o) For any Closing Date subsequent to the Second Closing Date, no Deferred Purchase Price shall be unpaid and Seller shall receive the applicable Purchase Price pursuant to Section 5(a) for such Closing Date.

Section 7.  True Sale; Grant of Security Interest; Enforcement

(a) Each of Seller and Purchaser intends and agrees that the transactions contemplated hereby are intended to be and shall constitute true sales of the Receivables and related Net Insurance Amounts transferred pursuant to Section 2 above, and are not intended to be financings or loans by Purchaser to Seller. The parties shall treat such transactions as a purchase and sale of each Receivable and related Net Insurance Amounts for tax, accounting and all other applicable purposes. The sale of each of the Receivables and related Net Insurance Amounts pursuant to Section 2 above transfers to Purchaser all of Seller’s beneficial right, legal title and interest in and to such Receivable and related Net Insurance Amounts and Seller will not retain any residual rights with respect to the Receivables and related Net Insurance Amounts other than as set forth in this Agreement.

(b) Purchaser shall file a Uniform Commercial Code financing statement with respect to the sale of the Eligible Receivables consistent with Section 9-109(a)(3) of the Uniform Commercial Code. Notwithstanding the intent of the parties, in the event that the transactions contemplated hereby are construed to be financings by Purchaser to Seller or the Receivables are determined or held to be property of Seller, then: (i) Seller hereby grants to Purchaser a present and continuing security interest in and to the following, whether now existing or hereafter created, (A) all Receivables and Related Property, (B) all of the related Account Documents for such Receivables, (C) the Net Insurance Amounts and (D) all proceeds and rights to receive proceeds of the Receivables (collectively, the “Receivables Collateral”); (ii) this Agreement shall also be deemed to be a security agreement within the meaning of Article 9 of the Uniform Commercial Code; (iii) the transfers of the Receivables provided for herein shall be deemed to be a grant by Seller to Purchaser of a first priority lien upon and security interest in all of Seller’s right, title and interest in and to the Receivables Collateral; (iv) the possession by Purchaser of the Receivables and related Account Documents and such other items of property that constitute instruments, chattel paper, money, or negotiable documents shall be deemed to be “possession by the secured party” for purposes of perfecting the lien or security interest pursuant to the UCC, including Section 9-313 of the UCC; (v) Purchaser is hereby authorized to take all necessary or appropriate actions to perfect its security interest in the Receivables Collateral and shall file financing statements on form UCC-1 naming Purchaser as secured party/buyer and Seller as debtor/seller, and identifying the Receivables Collateral as collateral therein; and (vi) notifications to Persons holding such property and acknowledgments, receipts or confirmations from Persons holding such property, shall be deemed notifications to, or acknowledgments, receipts or confirmations from, financial intermediaries, bailees or agents (as applicable) of Purchaser for the purpose of perfecting such lien or security interest under the UCC. Any assignment of the interests of Purchaser in the Receivables pursuant to any provision hereof shall also be deemed to be an assignment of any lien or security interest created hereby in the Receivables Collateral.

(c) From and after the Applicable Closing Date, Seller shall not create or permit any security interest in the Receivables Collateral, except in favor of Purchaser or as may be directed by Purchaser and, if necessary, shall modify any previously executed loan or security agreement to eliminate any security interest granted in the Receivables Collateral, including without limitation any security interest in such Receivables Collateral as proceeds or as after- acquired property. Without limiting the foregoing, if the Receivables are subject a previous financing, including on the Applicable Closing Date, Seller shall obtain a written release from with respect to the Receivables Collateral, in form and substance reasonably satisfactory to Purchaser and shall not enter into, amend or modify any agreement related to the Receivables Collateral in any manner that would adversely affect Purchaser’s rights in the Receivables Collateral.

(d) To the extent consistent with this Agreement, Seller and Purchaser shall take such actions as may be deemed reasonably necessary or appropriate such that, if this Agreement were deemed to create a lien upon or security interest in the Receivables Collateral and all such reasonably necessary or appropriate actions had been taken, such lien or security interest would be deemed to be a perfected security interest of first priority under applicable Laws and will be maintained as such throughout the term of this Agreement, including, without limitation, the execution and delivery by Seller to Purchaser of all assignments, security agreements, financing statements and other documents Purchaser reasonably requests, in form and substance reasonably satisfactory to Purchaser.

Section 8.  Representations and Warranties Regarding Seller and Purchaser.

(a) Seller Representations and Warranties. Seller hereby represents, warrants and covenants to Purchaser as of the date hereof and as of the Applicable Closing Date as follows:

(i) Seller is duly organized, validly existing and in good standing under the laws of the state of Florida. Seller is duly qualified and in good standing in each state where the nature of its business or the character of its properties makes such qualification and good standing necessary, except where the failure to be so qualified or in good standing could not reasonably be expected to result in a Material Adverse Effect and Seller is taking all commercially reasonable actions necessary to remedy such failure to be so qualified or in good standing. Seller is licensed and registered in each state where the nature of its business or the character of its properties makes such licensing or registration necessary.

(ii) Seller has the full power and authority to originate, hold and sell each Receivable to be sold to Purchaser hereunder and to execute, deliver and perform, and to enter into and consummate, all transactions contemplated by this Agreement. Seller has duly authorized the execution, delivery and performance of this Agreement, has duly executed and delivered this Agreement. This Agreement constitutes a legal, valid and binding obligation of Seller, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws and general principles of equity (regardless of whether considered in a proceeding in equity or at law).

(iii) The execution and delivery of this Agreement by Seller and the consummation of the transactions contemplated by this Agreement and the performance of and compliance with the terms of this Agreement do not and will not (A) violate Seller’s organizational documents, (B) constitute a default under or result in a breach or acceleration of, any material contract, agreement or other instrument to which Seller is a party or which may be applicable to Seller or its assets where such default, breach or acceleration could reasonably be expected to have a Material Adverse Effect or (C) violate any Laws applicable to Seller or its assets.

(iv) Seller is, and throughout the term of this Agreement will remain, (A) in compliance in all material respects with all Laws applicable to Seller that relate to the Receivables to be sold to Purchaser and the Buyers in respect of such Receivables or Seller’s performance of its obligations under this Agreement and (B) except where such failure to be in compliance could not reasonably be expected to have a Material Adverse Effect, in compliance with all other Laws applicable to Seller or its assets.

(v) There are no Claims or Proceedings pending, or to Seller’s Knowledge, threatened against Seller before any Governmental Authority (A) that might prohibit its entering into this Agreement, (B) seeking to prevent the sale of the Receivables to be sold to Purchaser or the consummation of the transactions contemplated by this Agreement or (C) that might prohibit or materially and adversely affect the performance by Seller of its obligations under, or the validity or enforceability of, this Agreement.

(vi) No consents, licenses, registrations, permits, approvals, authorizations, orders or State Licenses (collectively, “Permits”) of any Governmental Authority or other Person are required for the operation of Seller’s business, the execution, delivery and performance by Seller of, or compliance by Seller with, this Agreement or the consummation of the transactions contemplated by this Agreement, except for such Permits, if any, that have been obtained prior to the date hereof. Throughout the term of this Agreement, Seller shall comply with and maintain in full force and effect all such Permits. All such Permits are in full force and effect, no violations are or have been recorded with respect to any such Permits, and there are no Proceedings pending or, to Seller’s Knowledge, threatened that may terminate, revoke, or limit any such Permits.

(vii) Seller is not Insolvent and will not be rendered Insolvent by the sale of Receivables on the Applicable Closing Date. Seller is not the subject of any Insolvency Event. Seller is not selling any Receivables with any intent to hinder, delay or defraud any of its creditors. The consideration received by Seller upon the sale of the Receivables constitutes reasonably equivalent value (as such term is used in Section 548 of the Bankruptcy Code) and fair consideration (as such term is defined and used in the New York Debtor and Creditor Law Sections

272-279) for such Receivables.

(viii) Seller is not (i) a “covered fund” under the Volcker Rule, or (ii) an “investment company” or a company “controlled” by an investment company with the meaning of the Investment Company Act.

(ix) Seller has not employed any broker or finder or incurred any liability for any brokerage fee, commission or finder’s fee or similar fees, commissions or reimbursement expenses in connection with the sale of Receivables contemplated by this Agreement.

(x) The Initial Receivables Pool, as set forth on the initial Receivables Schedule, contains all of Seller’s Eligible Receivables as of the Cutoff Time immediately preceding the Initial Closing Date and does not contain any Back-Order Receivables.

(xi) The Purchase Price received by Seller on a Closing Date represents the fair market value of the Receivables sold on such Closing Date.

(b) Purchaser Representations and Warranties. Purchaser hereby represents, warrants and covenants to Seller as of the date hereof and each Applicable Closing Date:

(i) Purchaser is duly organized, validly existing and in good standing under the laws of the state of Delaware. Purchaser is duly qualified, in good standing, and, where required, licensed, in each state where the nature of its business or the character of its properties makes such qualification or licensing necessary, except where the failure to be so qualified or licensed would not have a material adverse effect on Purchaser’s ability to enter into or perform its obligations under this Agreement;

(ii) Purchaser has the full power and authority to purchase each Receivable sold by Seller hereunder and to execute, deliver and perform, and to enter into and consummate, all transactions contemplated by this Agreement. Purchaser has duly authorized the execution, delivery and performance of this Agreement, has duly executed and delivered this Agreement. This Agreement constitutes a legal, valid and binding obligation of Purchaser, enforceable against it in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and other similar laws and general principles of equity (regardless of whether considered in a proceeding in equity or at law);

(iii) The execution and delivery of this Agreement by Purchaser and the consummation of the transactions contemplated by this Agreement and the performance of and compliance with the terms of this Agreement will not (A) violate Purchaser’s organizational documents, (B) constitute a default under or result in a breach or acceleration of, any material contract, agreement or other instrument to which Purchaser is a party or which may be applicable to Purchaser or its assets or (C) violate any Laws applicable to Purchaser;

(iv) There are no Claims or Proceedings pending, or to Purchaser’s knowledge, threatened against Purchaser before any Governmental Authority, (A) that might prohibit its entering into this Agreement, (B) seeking to prevent the sale of the Receivables to be sold to Purchaser or the consummation of the transactions contemplated by this Agreement or (C) that might prohibit or materially and adversely affect the performance by Purchaser of its obligations under, or the validity or enforceability of, this Agreement; and

(v) No Permits of any Governmental Authority are required for the execution, delivery and performance by Purchaser of, or compliance by Purchaser with, this Agreement or the consummation of the transactions contemplated by this Agreement, except for such Permits, if any, that have been obtained prior to the date hereof.

(vi) Purchaser shall be sufficiently capitalized to perform its obligations under the Program Agreements.

(vii) The Purchase Price paid by Purchaser on a Closing Date represents the fair market value of the Receivables purchased on such Closing Date.

Section 9.  Representations and Warranties Regarding Individual Accounts and Receivables. Seller hereby represents, warrants and covenants to Purchaser on the Applicable Closing Date, with respect to the Receivables acquired on such date (unless such covenant, representation or warranty is explicitly made as of a different date or dates, in which case Seller represents, warrants and/or covenants to Purchaser on such date or dates), that:

(a) Seller is the sole legal, beneficial and equitable owner of such Receivable and has good and marketable title thereto, and has the right to assign, sell and transfer such Receivable to Purchaser free and clear of any lien, and Seller has not sold, assigned or otherwise transferred any right or interest in or to such Receivable, and has not pledged such Receivable as collateral for any debt or other purpose except for such pledges or grants of liens that are released on or before the Applicable Closing Date.

(b) Such Receivable, and any agreement pursuant to which Related Property is pledged to secure such Receivable and each Account Document is the legal, valid and binding obligation of the related Buyer and is enforceable in accordance with its terms, except as such enforcement may be limited by Insolvency Laws and except as such enforceability may be limited by general principles of equity (whether considered in a suit at law or in equity).

(c) Each of the applicable Account Documents is complete in all material respects as of the Applicable Closing Date and, if applicable, such Account Documents include all amendments, supplements and modifications thereto as of such date. The terms, covenants and conditions of the Account related to the Receivable have not been waived, altered, impaired, modified or amended prior to the Initial Closing Date except (i) as reflected in the Receivables Schedule, and (ii) in any manner inconsistent with the Servicing Manual and/or the Underwriting Guidelines.

(d) Neither Seller nor its Affiliates has granted an interest in the Receivables that would impair the rights of Purchaser or payments with respect thereto, except for those interests that have been released on or before the Applicable Closing Date.

(e) The information set forth on the applicable Receivables Schedule with respect to the following data fields on the related Receivables is true, accurate and correct: (A) Account ID and Plan Type, (B) the Origination Date, (C) Original Account Amount, (D) Unpaid Amount, (E) Interest Rate and Late Fees, (F) Minimum Monthly Payment, (G) Insurance Premium an Original Rate, and all other information set forth on the applicable Receivables Schedule with respect to the related Accounts, is true, accurate and correct in all material respects.

(f) Such Receivable and the related Account was solicited, originated, and serviced in the ordinary course of business and in compliance with the Underwriting Guidelines in effect as of the date the Account was originated, the applicable Program Agreement, Servicing Manual, and the Account and the related Buyer or Buyers satisfied the credit criteria set forth in the Underwriting Guidelines provided, however, that up to 3.00% of the aggregate original principal amount of all Receivables sold to Purchaser may fail to satisfy the Underwriting Guidelines in effect as of the date the Account was originated.

(g) Each of the applicable Account Documents is governed by the laws of a state of the United States and was not originated in, nor is it subject to the laws of, any jurisdiction, the laws of which would make unlawful the sale, transfer, pledge of assignment of the Account Documents related to such Account under any of the Program Agreements.

(h) The Receivable or related Account has not been originated in any jurisdiction in which, and is not subject to, the laws of any jurisdiction under which, the sale, transfer, assignment, setting over, conveyance or pledge of the related Receivable by Seller (without regard to laws applicable to Purchaser) would be unlawful or void.

(i) The Receivables and related Accounts and the rights with respect to the Receivables and related Accounts are freely assignable and a security interest in any such assets may be granted by Purchaser without the consent of any Person, subject to the rights of the Buyer under the Account Documents.

(j) The Receivable and Account, together with its Account Documents, was originated in compliance with all applicable Laws (including all applicable usury laws), and Seller has not done anything to prevent or impair such Account from being valid, binding and enforceable against the applicable Buyer.

(k) The annual percentage rate on such Receivable does not exceed 30% or the maximum annual percentage rate of any applicable jurisdiction.

(l) Each Account is an obligation of a Buyer that is an individual (or the joint and several obligation of more than one individual) that is a citizen, a permanent resident or a legal resident alien, in each case, of the United States or Canada,

(m) Each Account is denominated and payable solely in U.S. dollars, and the billing address provided by the related Buyer and the related bank account used for payments via automated clearing house (“ACH”) transfers on such Receivable, if any, are each located in the United States or a U.S. territory.

(n) Such Receivable is not subject to any right of set-off, or any counterclaim or defense, including the defense of usury that the related Buyer has asserted in writing, nor, to Seller’s knowledge, is any material dispute or litigation threatened with respect to such Account.

(o) Such Receivable has been fully funded and neither Seller nor Purchaser has any obligation under the Account Documents to advance any additional funds to the related Buyer. All costs, fees and expenses incurred in making and closing the related Account were paid.

(p) There are no unpaid fees owed to third parties relating to the origination of such Accounts or Receivables, other than Dealer Fees, and that such Dealer Fees are an obligation of Seller.

(q) Any agreements between the applicable Buyer and Seller are in full force in effect in accordance with its respective terms

(r) To Seller’s Knowledge, such Receivable and related Account was originated without any fraud or material misrepresentation on the part of the Buyer or any other party.

(s) As of the date of Seller’s origination, Seller has no knowledge of any fact which should lead it to expect that any Account and Receivable will not be repaid by the relevant Buyer in full.

(t) The Seller did not use selection procedures that identified the Receivables as being less desirable or valuable than other comparable Receivables originated by Seller. For purposes of clarity, Purchaser understands that Seller may originate Accounts that do not comply with the underwriting criteria described herein with the intent to sell them or an interest therein to other purchasers or capital providers.

(u) Such Receivable is being transferred from Seller to Purchaser under this Agreement with the intention of removing such Receivable from Seller’s estate pursuant to Section 541 of Title 11 of the United States Code, 11 U.S.C. §§ 101 et. seq., as amended from time to time. The sale, transfer and assignment by Seller of such Receivable were not made for or on account of an antecedent debt to Purchaser.

(v) No claim or defense has been raised by the related Buyer against Seller pursuant to the Holder Rule or other applicable Laws.

(w) No broker was used during the origination of such Receivable or related Account, other than in respect of Dealer Fees which are the obligation of Seller. Purchaser shall have no liability for any Dealer Fees, commissions or similar amounts related to the Receivables purchaser hereunder.

(x) All Persons involved in the origination of the Receivable and related Account were duly licensed to the extent required under applicable Law, except to the extent that the lack of any such license would not have a Material Adverse Effect.

(y) Late and insufficient funds fees are no greater than those set by the U.S. Bureau of Consumer Financial Protection pursuant to Regulation Z.

(z) No Receivables transferred on the Applicable Closing Date are or have been Defaulted Receivables.

(aa) For Receivables, the proceeds of the related Account must be used to acquire Furniture, Insurance or related products and services.

(bb) The related Furniture securing or subject to such Receivable was sold by and has been properly delivered or installed (if applicable) and is in good repair, without defects and in satisfactory order. The related Buyer has accepted the related Furniture, and no related Buyer has notified Seller of any existing defects therein which is not in the process of being investigated, addressed or repaired by Seller.

(cc) For Account Agreements (including any amendments or modifications) that have been converted into an electronic form (“Electronic Copy”) and the related original Account Agreement and any amendments or modifications have been destroyed on or before the Applicable Closing Date in compliance with Seller’s document storage policies (which include the exceptions for preservation of originals where the local utility or governmental authority requires such preservation). Such Electronic Copy is a true and complete copy of such original Account Agreement and any amendments or modifications thereto.

(dd) Such Account is secured by a valid purchase money security interest and lien on the Furniture securing or subject to the Buyer’s obligations under such Account and the Buyer and Seller have agreed that such Furniture does not constitute a fixture under the applicable UCC.

(ee) The applicable Buyer is responsible for the payment of all expenses in connection with the maintenance, repair, insurance and taxes for the Furniture and all payments with respect to such Account are payable without condition and notwithstanding any casualty, loss or other damage to such Furniture.

(ff) As of the Applicable Closing Date, the Furniture related to such Account has not been repossessed due to a Buyer delinquency.

(gg) The Account Documents with respect to such Receivable provide for acceleration of payments and repossession of the related Furniture securing or subject to such Receivable upon a default by the related Buyer.

(hh) Each Account is documented on a Account Agreement in substantially the form attached hereto as Exhibit 4 (or such other form as is approved in advance in writing by Purchaser). Such Account Agreement is in full force and effect in accordance with its respective terms, has not been terminated, subordinated or rescinded and no lawsuit is pending or threatened with respect to such Account or Receivable.

(ii) Any related Account Documents executed electronically were executed in compliance with applicable Laws and Seller’s electronic signature policy.

Section 10.  Survival; Repurchase.

(a) Survival. It is understood and agreed that the provisions of this Section 10 shall survive the sale of the Receivables sold to Purchaser and any termination of this Agreement and shall inure to the benefit of Purchaser, notwithstanding the examination or lack of examination of any Account File.

(b) Repurchase. A “Repurchase Event” shall occur:

(i) If Seller or Purchaser receives notice of or becomes aware of, or to Seller’s Knowledge, any material breach of any representation or warranty contained in Section 9 by Seller with respect to any Receivable purchased by Purchaser (provided that if any representation in Section 9 contains a materiality qualification, materiality shall only be read into this Section 10(b) to apply once);

(ii) With respect to any Receivable for which the related Buyer (i) has exercised any applicable right of rescission, or returned or refused Furniture, related to a Receivable purchased by Purchaser, or (ii) has received a rebate, refund, unauthorized charge or billing error that results in the downward adjustment in the Unpaid Amount of a Receivable.

With respect to a Repurchase Event pursuant to clauses (b)(i) and (b)(ii), above, Seller shall promptly notify Purchaser of such Repurchase Event (or, if applicable, Purchaser may notify Seller of such Repurchase Event) and repurchase any Receivables subject to a Repurchase Event on a date mutually agreed to by Seller and Purchaser, which date shall be within a commercially reasonable time period, not to exceed thirty (30) days (except if the parties otherwise agree to extend such time in writing) after Purchaser receives written notice from Seller (or, if applicable, Seller receives written notice from Purchaser) of the event giving rise to the repurchase obligation. If the parties cannot come to an agreement that a Receivable was not an Eligible Receivable on the Applicable Closing Date, Seller must repurchase the Receivable within thirty (30) days after Purchaser provides reasonable evidence that the Receivable was not an Eligible Receivable. On the date of repurchase (the “Repurchase Date”), upon receipt of the Repurchase Price, Purchaser shall transfer all of its right, title and interest in, to, and under such Receivable and all subsequent proceeds thereof to Seller or its designee on an “AS-IS,” “WHERE-IS” basis, without recourse and without representation or warranty other than a warranty of clear and marketable title to such Receivable (unless the failure to be an Eligible Receivable relates to marketability or title, in which case no representation or warranty of clear and marketable title shall be given other than Purchaser’s representation and warranty that Purchaser has not transferred or otherwise assigned or encumbered the Receivable to any Person other than Seller). Each Party shall execute any and all agreements and such other documents, and shall take all other actions, reasonably requested by the other to effect any such required repurchase. Any repurchase by Seller shall be made by the wire transfer or ACH of immediately available funds to the bank account designated by Purchaser sufficiently in advance of such payment as to afford Seller or its designee a reasonable opportunity to arrange for such payment to be made in the ordinary course. The repurchase obligations of Seller to Purchaser under this Section 10 are absolute and unconditional and shall survive termination of this Agreement. Purchaser may, but shall have no obligation to, in its sole discretion, waive Seller’s obligation to repurchase a Receivable. From and after the Repurchase Date, all Collections on each Receivable repurchased by Seller shall be paid to Seller, unless and until such Receivable is subsequently sold to Purchaser on an Applicable Closing Date.

Section 11.  Indemnification.

(a) Seller Indemnification. Seller shall defend, indemnify and hold Purchaser, its Affiliates, and each of their officers, directors, trustees, employees, members, managers, representatives and agents (each, an “Indemnified Purchaser Party”) harmless from and against any and all claims, liabilities, damages, losses, and expenses (including without limitation, reasonable attorneys’ fees and expenses (other than for a third party claim with respect to which Seller has retained counsel and assumed the defense on behalf of Purchaser in accordance with Section 11(e) and, in all cases, regardless of the capacity in which the indemnified party incurs such liabilities, damages, losses, and expenses), reasonable out-of-pocket costs, interest and penalties) (the “Losses”) incurred by Purchaser in connection with this Agreement to the extent that such Losses arise out of, and are imposed on, any such Indemnified Purchaser Party by reason of (i) any breach of a representation, warranty, covenant or obligation by Seller under this Agreement; (ii) the Holder Rule to the extent expressly applicable to and required to be complied with as it relates to the Receivables; or (iii) fraud, gross negligence, bad faith or willful misconduct of Seller or its employees or agents.

(b) Purchaser Indemnification. Purchaser shall defend, indemnify and hold Seller, its Affiliates and each of their officers, directors, trustees, employees, members, managers, representatives and agents (each, an “Indemnified Seller Party”) harmless from and against any Losses incurred by Seller in connection with this Agreement to the extent that such Losses arise out of, and are imposed upon any such Indemnified Seller Party by reason of (i) any breach by Purchaser of its obligations under this Agreement or any breach by Purchaser of a representation or warranty contained in this Agreement or (ii) fraud, gross negligence or willful misconduct of Purchaser or its employees or agents. For the avoidance of doubt, and without otherwise limiting Purchaser’s rights to indemnification hereunder, and except as provided for under this Section 11(b), Purchaser hereby acknowledges that it bears the risk of non-payment by the Buyers and other obligors on the Receivables purchased by Purchaser, and indemnification shall not be available for any such non-payment or any Losses directly attributable to such non-payment under this Agreement.

(c) Damages Waiver. NOTWITHSTANDING ANYTHING TO THE CONTRARY IN THIS AGREEMENT, SELLER AND PURCHASER SHALL NOT BE LIABLE TO THE OTHER UNDER OR IN CONNECTION WITH THIS AGREEMENT FOR ANY INDIRECT OR CONSEQUENTIAL OR OTHER DAMAGES RELATING TO PROSPECTIVE PROFITS, INCOME, ANTICIPATED SALES OR INVESTMENTS, OR GOODWILL, OR FOR ANY PUNITIVE OR EXEMPLARY DAMAGES, EXCEPT TO THE EXTENT SUCH LOSSES OR DAMAGES (I) ARE PAYABLE TO A THIRD PARTY IN CONNECTION WITH A THIRD PARTY CLAIM OR (II) RESULT FROM WILLFUL MISCONDUCT, A WILLFUL BREACH OF THIS AGREEMENT, FRAUD OR GROSS NEGLIGENCE.

(d) Indemnification Procedure. A party entitled to indemnification shall give prompt written notice to the indemnifying party of any claim, assertion, event, condition or proceeding by any third party with respect to which it may request indemnification under this Article. The failure to give such notice will not relieve the indemnifying party from liability hereunder unless, and solely to the extent that, the liabilities, damages, losses or expenses to be indemnified could have been avoided with such prompt notification.

(e) Legal Expenses. An indemnifying party will have the right, upon written notice to the indemnified party within twenty (20) days after receiving notice of a third-party claim, to conduct at its expense the defense against such third-party claim in its own name, or, if necessary, in the name of the indemnified party. When the indemnifying party assumes the defense, the indemnified party will have the right to approve the defense counsel and the indemnified party will have no liability for any compromise or settlement of any third-party claim that is effected without its prior written consent (such consent not to be unreasonably withheld or delayed), unless the sole relief provided is monetary damages that are paid in full by the indemnifying party and such compromise or settlement includes a release of each indemnified party from any liabilities arising out of the third-party claim. If the indemnifying party delivers a notice electing to conduct the defense of the third-party claim, the indemnified party will, at the indemnifying party’s expense, cooperate with and make available to the indemnifying party such assistance, personnel, witnesses and materials as the indemnifying party may reasonably request. If the indemnifying party does not deliver a notice electing to conduct the defense of the third- party claim, the indemnified party will have the sole right to conduct such defense and the indemnified party may pay, compromise or defend such third-party claim or proceeding at the indemnifying party’s expense. Regardless of which party defends the third- party claim, the other party will have the right at its sole expense to participate in the defense assisted by counsel of its own choosing.

(f) Survival. Notwithstanding anything else in this Agreement, this Section 11 shall survive the expiration or termination of this Agreement.

Section 12.  Privacy; Confidentiality.

(a) Protection of Consumer Information.

(i) Seller will only use, maintain and/or disclose Consumer Information in compliance with all applicable privacy and security Laws and with the policies set forth in this Section 12(a), and will ensure that Persons to whom it transfers Consumer Information do the same. In the event that Purchaser or any of its Affiliates request Seller to provide it with any Consumer Information, such Person shall have compliance measures in place with respect to such Consumer Information that comply with all applicable privacy and security Laws.

(ii) Seller will establish and maintain appropriate administrative, technical and physical safeguards to protect the security, confidentiality and integrity of the Consumer Information. These safeguards will be designed to protect the security, confidentiality and integrity of the Consumer Information, ensure against any anticipated threats or hazards to its security and integrity, and protect against unauthorized access to or use of such information or associated records which could result in substantial harm or inconvenience to any Buyer or applicant.

(iii) Seller will ensure that any third party to whom it transfers or discloses Consumer Information (other than a credit agency) signs a written contract in which such third party agrees to (A) restrict its use of Consumer Information to the use specified in the written contract; (B) to comply with all applicable Laws, and (C) implement and maintain appropriate safeguards as stated in clause (ii) above. Seller agrees to transfer or make available to third parties only such Consumer Information as is reasonably necessary to carry out the contemplated task.

(iv) Seller shall notify Purchaser immediately following discovery or notification of any actual or threatened breach of security of the systems maintained by Seller. Seller agrees to take action immediately, at its own expense, to investigate the actual or threatened breach, to identify and mitigate the effects of any such breach and to implement reasonable and appropriate measures in response to such breach. Seller also will provide Purchaser with all available information regarding such breach to assist Purchaser in implementing its information security response program. For the purposes of this clause (iv), the term “breach of security” or “breach” means the unauthorized access to or acquisition of any record containing personally identifiable information relating to a Buyer or applicant, whether in paper, electronic, or other form, in a manner that renders misuse of the information reasonably possible or that otherwise compromises the security, confidentiality, or integrity of the information.

(v) Notwithstanding anything else contained in this Agreement, neither Seller nor Purchaser will, and neither of them will be obligated to, take any action that either of them believes in good faith would violate, or is reasonably likely to cause either of them to violate, any applicable Laws or that would cause either of them to become a “consumer reporting agency” for purposes of the federal Fair Credit Reporting Act, as it may be amended from time to time.

(vi) Seller will use commercially reasonable measures designed to properly dispose of all records containing personally identifiable information relating to Buyers and applicants, whether in paper, electronic, or other form, including adhering to policies and procedures that require the destruction or erasure of electronic media containing such personally identifiable information so that the information cannot practicably be read or reconstructed.

(b) Confidentiality.

(i) Generally. Each party agrees that it will hold all Confidential Information in the strictest confidence and will not disclose or use any Confidential Information for any purpose other than in connection with the performance by such party of its obligations under this Agreement, and shall not disclose any Confidential Information to any third party, except that, subject to Section 13(a), each party may disclose Confidential Information: (A) to its Affiliates, and its and its Affiliates’ officers, directors, employees, auditors, agents, advisors and attorneys, (B) to its third party service providers, capital providers, and asset funders (to the extend such funders are impacted by the sale of assets) (collectively, “Representatives”) that have agreed in writing with such disclosing party to use and maintain the confidentiality of such Confidential Information in accordance with this Agreement, (C) to any Governmental Authority of such party, (D) potential buyers or assignees of all or any portion of the Receivables, or (E) to the extent such disclosure is required or compelled in any judicial or regulatory Proceeding or is otherwise required by applicable Laws. The parties acknowledge and agree that Seller’s origination, purchase, credit risk management and underwriting strategies constitute Confidential Information of Seller that is subject to the terms and conditions of this Section 13(b) that may not be disclosed to any third party. Each party acknowledges and agrees that it shall be responsible for any breach of this Section 12 by itself or its Representatives.

(ii) Account Level Data. The parties acknowledge and agree that all account level data, including the application, credit bureau and ongoing account performance history related to the Receivables sold to Purchaser, shall be the property of Seller. Seller hereby grants to Purchaser, a non-exclusive, worldwide, non-sub licensable, royalty-free, fully paid-up license to use, reproduce, prepare derivative works of such account level data to develop, refine, or enhance Seller’s origination, purchase, credit risk management and underwriting strategies. Seller shall provide to Purchaser the ongoing account performance data for the life of each Receivable sold to Purchaser hereunder. Such data shall be treated as Confidential Information of Seller that is subject to the terms and conditions of this Section 12(b).

(iii) Following the termination of this Agreement, each party agrees that, other than with respect to Confidential Information that has been purged in the ordinary course of such party’s business, it will return or destroy all copies of Confidential Information of the other party, without retaining any copies thereof, and destroy all copies of any analyses, compilations, studies or other documents prepared by it or for its use containing or reflecting any Confidential Information; provided however, that each party may retain such limited copies or materials containing Confidential Information of the other party for customary document retention and audit purposes, as required by applicable Laws, or that has been otherwise archived in the ordinary course of such party’s business and subject to the terms of this Agreement.

(c) Publications. Seller shall not publish or otherwise distribute any written materials (including any website content or correspondence with Buyers) referencing Purchaser or any of its Affiliates, nor shall it orally discuss or reference Purchaser or any of its Affiliates in connection with any Receivable, Account or the Account Program with any Buyers or Account applicants, in each case, without the express prior written consent of Purchaser. Notwithstanding the foregoing, or any other provision of this Agreement, each of Parent Company of Seller and Purchaser may disclose the existence of this Agreement and the transactions contemplated herein on its Form 8-K filing, and Parent Company of Seller, Seller and/or Purchaser may issue a press release announcing the same substantially in the form of Exhibit 5.

Section 13.  Audits; Regulatory Examinations.

(a) Audits. During the term of this Agreement, Purchaser may review and audit (the “Audit”) any aspect of the origination, purchase and servicing of the Receivables sold to Purchaser, with such Audit occurring during regular business hours upon thirty (30) days’ prior written notice and requiring no more than 2 Business Days’ commitment by Seller and its employees; provided that any Audit requested in connection with an Event of Default (a “Specified Audit”) shall occur within five (5) Business Days’ prior written notice and shall require no more than five (5) Business Days’ commitment by Seller or its employees (or such longer period time as may reasonably be required by Purchaser). Seller shall cooperate with all reasonable requests and provide Purchaser, or its designees, with all necessary assistance and information in connection with any such audit and shall make its management personnel available to discuss with Purchaser, or its designees, any matters which may arise during such audit. In connection with any such audit, Seller will permit any representatives designated by Purchaser to review Seller’s information processes and controls and compliance practices and procedures. Purchaser may not request an Audit, other than a Specified Audit, to occur more than two times each year (absent an Event of Default), commencing with the Effective Date. Other than with respect to a Specified Audit and one Audit per year, all costs and expenses of any Audit shall be solely paid by Purchaser.

(b) Regulatory Examinations. Seller agrees to reasonably cooperate with any examination that may be required by any Governmental Authority with audit and examination authority over Purchaser; provided, however, that if such audit is occasioned by the breach of Purchaser’s obligations hereunder, out-of-pocket costs and expenses of such audit (including without limitation reasonable attorneys, accountants and other professional fees) shall be reimbursed and paid by Purchaser.

Section 14.  Merger or Consolidation of Seller.

(a) Assumption of Obligations. Subject to Purchaser’s termination rights under Section 3(c), any Person into which Seller may be merged or consolidated, or any corporation resulting from any merger, conversion or consolidation to which Seller shall be a party, or any Person (including an Affiliate of Seller) succeeding to all or substantially all of the business or assets of Seller, shall automatically be the successor of Seller hereunder, without the execution or filing of any paper or any further act on the part of any of the parties hereto; provided, that, notwithstanding the foregoing, upon the closing of any such merger, conversion or consolidation, the successor or surviving Person shall expressly assume in writing all obligations of Seller under this Agreement.

(b) Notice of Change of Control. Seller shall promptly give written notice to Purchaser in the event that Seller or any direct or indirect holder of equity interests in Seller enters into any agreement or agreements that contemplates (i) the merger or consolidation of Seller with or into any Person, (ii) the sale, transfer or other disposition of any material portion of Seller’s assets or business to any Person (other than the sale of receivables in the normal course of Seller’s business) or (iii) any transfer of equity interests in Seller whereby the Persons beneficially owning, directly or indirectly, the equity interests of Seller as of the date hereof shall cease to beneficially own, directly or indirectly, for any reason, at least 80% of Seller’s outstanding equity interests.

Section 15. Notices. All demands, notices and communications hereunder shall be in writing and shall be deemed to have been duly given when received by the other party when sent by certified mail, return receipt requested, or electronic mail (at such email addresses as a party may designate in accordance herewith), at the respective addresses set forth below:

if to Purchaser:

B. Riley Receivables, LLC

30870 Russell Ranch Road, Suite 250

Westlake Village, CA 91362

Attention: Gina Downs

Phone: (818) 746-9310

E-mail Address: gdowns@brileyfin.com

with a copy, which shall not constitute notice, to:

Choate, Hall & Stewart LLP

Two International Place

Boston, MA 02110

Attention: John Ventola

E-mail Address: jventola@choate.com

if to Seller:

W.S. Badcock Corporation

200 Phosphate Blvd., N.W.

Mulberry, FL 33860

Attention: Mitchell P. Stiles, Senior Vice President- Retail Operations

E-mail Address: Mitchell.Stiles@badcock.com

(863) 425-7506

with a copy, which shall not constitute notice, to:

W.S. Badcock Corporation

200 Phosphate Blvd., N.W.

Mulberry, FL 33860

Attention: Phillip Bayt, Senior Vice President and General Counsel

E-mail Address: phil.bayt@badcock.com

(863) 425-7637

or such other address as may hereafter be furnished to the other party by like notice. Any such demand, notice or communication hereunder shall be deemed to have been received on the date delivered to or received at the premises of the addressee (as evidenced, in the case of registered or certified mail, by the date noted on the return receipt). The parties may provide other communications hereunder via email, but such communications shall only be deemed received upon the sender’s receipt of an acknowledgement from the intended recipient (such as a return e-mail or other written acknowledgement, but not an automated response such as by the “return receipt requested” function).

Section 16.  Miscellaneous.

(a) Amendment. This Agreement, including any exhibits or schedules hereto, may be amended from time to time only by an agreement in writing signed by Purchaser and Seller.

(b) Severability. Any part, provision, representation or warranty of this Agreement which is prohibited or which is held to be void or unenforceable shall be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof. Any part, provision, representation or warranty of this Agreement which is prohibited or unenforceable or is held to be void or unenforceable in any jurisdiction shall be ineffective, as to such jurisdiction, to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction as to any Receivable sold to Purchaser shall not invalidate or render unenforceable such provision in any other jurisdiction. To the extent permitted by applicable Laws, the parties hereto waive any provision of Laws which prohibits or renders void or unenforceable any provision hereof. If the invalidity of any part, provision, representation or warranty of this Agreement shall deprive any party of the economic benefit intended to be conferred by this Agreement, the parties shall negotiate, in good-faith, to develop a structure the economic effect of which is nearly as possible the same as the economic effect of this Agreement without regard to such invalidity.

(c) Duration of Agreement. This Agreement shall continue in existence and effect until terminated as herein provided.

(d) GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO ANY CONFLICTS OF LAW PROVISIONS THAT WOULD RESULT IN THE APPLICATION OF THE LAWS OF ANOTHER JURISDICTION, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, EXCEPT TO THE EXTENT PREEMPTED BY FEDERAL LAW.

(e) WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.

(f) Choice of Forum. Each party irrevocably and unconditionally submits to the exclusive jurisdiction of the U.S. District Court for the Southern District of New York or any court of the State of New York sitting in New York County, and any appellate court from any thereof, in any action, litigation or proceeding of any kind arising out of or relating to this Agreement and agrees to bring any such action, litigation, or proceeding only in such courts. Each party agrees that a final judgment in any such action, litigation, or proceeding is conclusive and may be enforced in other jurisdictions by suit on the judgment or in any other manner provided by law. Each party hereto irrevocably and unconditionally waives, to the fullest extent it may legally and effectively do so, any objection that it may now or hereafter have to the laying of venue of any suit, action or proceeding arising out of or relating to this Agreement in any New York State or federal court. Each party hereto hereby irrevocably waives, to the fullest extent permitted by law, the defense of an inconvenient form to the maintenance of such action or proceeding in any such court.

(g) Assignment. This Agreement shall not be assigned, pledged or hypothecated by Seller to a third party without the prior written consent of Purchaser. Purchaser shall have the full right, at its sole discretion, without need to obtain the consent of Seller or any other party, to (i) assign or participate all or a portion of its rights under this Agreement, and (ii) sell, assign, pledge, hypothecate or otherwise transfer any Receivables purchased hereunder.

(h) General Interpretive Principles. For purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires:

(i) the terms defined in this Agreement have the meanings assigned to them in this Agreement and include the plural as well as the singular, and the use of any gender herein shall be deemed to include the other gender;

(ii) accounting terms not otherwise defined herein have the meanings assigned to them in accordance with generally accepted accounting principles;

(iii) references herein to “Sections,” “Exhibits” and other subdivisions without reference to a document are to designated Sections, Exhibits and other subdivisions of this Agreement;

(iv) the words “herein,” “hereof,” “hereunder” and other words of similar import refer to this Agreement as a whole and not to any particular provision;

(v) the term “include” or “including” shall mean without limitation by reason of enumeration;

(i) Section Headings. Section headings are for convenience only and shall not be part of the terms and conditions of this Agreement.

(j) Execution; Successors and Assigns. This Agreement, any documents to be delivered pursuant to this Agreement and any notices thereunder, may be executed simultaneously in any number of counterparts. Each counterpart shall be deemed to be an original, and all such counterparts shall constitute one and the same instrument. The parties agree that this Agreement, any documents to be delivered pursuant to this Agreement, any notices thereunder, and signature pages to any of the foregoing, may be transmitted between them by facsimile or by electronic mail and that faxed, PDF or DocuSign (or other e-signature) signatures may constitute original signatures and that a faxed, PDF or DocuSign (or other e-signature) signature page containing the signature (faxed, PDF, DocuSign (or other e-signature) or original) is binding upon the parties. The original documents shall be promptly delivered, if requested. Subject to the express terms hereof, this Agreement shall inure to the benefit of and be binding upon Seller and Purchaser and their respective successors and permitted assigns.

(k) Further Agreements. Seller and Purchaser each agrees to execute and deliver to the other such reasonable and appropriate additional documents, instruments or agreement as may be necessary or appropriate to effectuate the purpose of this Agreement.

(l) No Partnership. Nothing herein contained shall be deemed or construed to create a co-partnership or joint venture between the parties hereto and under no circumstances shall Seller or Purchaser be deemed agents of the other.

(m) Waivers. No term or provision of this Agreement may be waived or modified unless such waiver or modification is in writing and signed by the party against whom such waiver or modification is sought to be enforced.

(n) Exhibits. The exhibits to this Agreement are hereby incorporated and made a part hereof and are an integral part of this Agreement.

(o) Force Majeure. No party to this Agreement shall be liable for any failure to perform or delay in its performance of its obligations to the extent such failure or delay is as a result of war, invasion, act of foreign enemies, hostilities (whether war is declared or not), civil war, rebellion, revolution, insurrection, military or usurped power of confiscation, terrorist activities, nationalization, government sanction, blockade or embargo (a “Force Majeure Event”). Notwithstanding the foregoing, a Force Majeure Event shall not excuse a party from any of its obligations hereunder or liability for failure to perform (i) if such failure or delay is due to the non- performing party’s (or any of its personnel’s) gross negligence or willful misconduct, including failing to prevent or causing such failure or delay and (ii) to the extent that the non-performing party commercially reasonably could have prevented the failure or delay by reasonable precautions or could not reasonably have circumvented the underlying issues through the use of alternate sources, workaround plans or other means. In the case of a Force Majeure Event to which the previous sentence is not applicable, the non-performing party shall be excused from further performance or observance of the obligations so affected for as long as such circumstances prevail and such party continues to use commercially reasonable efforts to recommence performance or observance whenever and to whatever extent possible without delay. Any party so delayed in its performance or unable to perform shall immediately notify the party to whom performance is due, describe at a reasonable level of detail the circumstances causing such delay and keep the other party informed on a daily basis of the status of its efforts to recommence performance of its obligations under this Agreement.

(p) Further Assurances. At any time or from time to time upon the reasonable request of Purchaser, Seller shall execute and deliver such further documents and do such other acts and things as Purchaser may reasonably request in order to effect fully the purposes of this Agreement and the other Account Documents, and to provide for payment of the Receivables made hereunder, with interest thereon, in accordance with the terms of this Agreement.

[Signature page follows]

IN WITNESS WHEREOF, Purchaser, and Seller have caused their names to be signed hereto by their respective officers thereunto duly authorized as of the date first above written.

Signature Page to Master Receivables Purchase Agreement

EXHIBIT 1

FORM OF MASTER ASSIGNMENT AND CONVEYANCE

This Master Assignment and Conveyance, dated as of                         , is executed by W.S. Badcock Corporation, as seller (“Seller”) under that certain Master Receivable Purchase Agreement, dated as of December 20, 2021 (as amended, supplemented and otherwise modified from time to time, the “Agreement”). On Closing Date as listed in the attached Receivables Schedule, subject to the terms of the Agreement and in exchange for the Purchase Price, Seller hereby sells, transfers, assigns, sets over and conveys to B. Riley Receivables, LLC, as purchaser (“Purchaser”) under the Agreement, without recourse, except as provided in and subject to the terms of the Agreement, all rights, title and interest of Seller in and to the Receivables and related Net Insurance Amounts listed on the related Receivables Schedule and as provided below, together with the related Account Files and Servicing Records and all rights and obligations arising under the documents contained therein. The ownership of each related Account Document and the contents of the Account File and Servicing Records are vested in Purchaser and the ownership of all records and documents with respect to the related Receivable prepared by or which come into the possession of Seller shall immediately vest in Purchaser and shall be immediately transferred to Purchaser upon payment of the Purchase Price related thereto on the Applicable Closing Date pursuant to the terms of the Agreement.

In connection with the sale of any Receivables, the undersigned officer of Seller, solely in his/her capacity as an officer of Seller, hereby, and by delivery of each Receivables Schedule thereby, certifies as follows:

1. All Receivables set forth in each Receivables Schedule qualify as Eligible Receivables.

2. All of the conditions precedent in the Agreement to the closing of the purchase of the Receivables in each Receivables Schedule have been satisfied.

Capitalized terms used and not otherwise defined herein shall have the meanings assigned to them in the Agreement.

Signature Page to Master Assignment and Conveyance

Signature Page to Master Assignment and Conveyance

EXHIBIT 2

RECEIVABLES SCHEDULE FIELDS

Fields included in Receivables Schedule delivered on the Initial Closing Date:

CustomerID

BorrowerStatusOpenedAccount

InterestBearingIndicator

BranchNumber

BranchName

BranchAddress

ReceivablePlanID

ReceivablePlanDescription

ReceivablePlanType

MonthlyPaymentAmount

EstimatedPrincipalPayout

PaymentFrequency

AmountFinanced

StartingARBalance

FinanceChargeAmount

InsuranceAmount

LateFeesAmount

AdjustmentAmount

ReceiptTotalAmount

NewSalesAmount

ChargeOffAmount

OtherAmount

TransferAmount

GrossAmount

TotalDue

ReceiptAmountCustomer

InsuranceReceiptAmount

LastPurchaseDate

OriginalNoteRate

OriginalRateDescription

LoanDate

LoanAge

PreviousDueDate

NextDueDate

PreviousCycleDate

NextCycleDate

DueDayOfMonth

LastPaymentDate

LastPaymentAmount

LegalStateCode

LegalAccountIndicators

BankruptcyFiled

ContractDaysDelinquent

ContractDelinquencyIndicator

InsuranceCode

InsuranceDescription

CreditLimit

FirstPaymentDueDate

LastPurchaseCreditScore

LastPurchaseCreditScoreDate

LastPurchaseCreditScoreRange

RefreshCreditScore

RefreshCreditScoreDate

RefreshCreditScoreRange

AlertCodeID

AlertCodeDescription

NumberOfMonths30PlusDaysPastDue

NumberOfMonths60PlusDaysPastDue

NumberOfMonths90PlusDaysPastDue

NumberOfMonths120PlusDaysPastDue

PCDIndicator

PCDFlag

ChargeOffDate

Fields containing the following information will be included in the Receivables Schedules delivered on subsequent Closing Dates: Initial Receivables Pool, a Par Receivable and the Purchase Price applicable to such Receivable

EXHIBIT 3

UNDERWRITING GUIDELINES

See attached

Underwriting

Guidelines

Plan Eligibility Guidelines

Rev = Revolving

EPNI = Equal Pay, No Interest

NCR = No Credit Refused

AR-005: Credit Approval

Effective Date: 3/31/2020

Supersedes: 12/12/2018

POLICY:

Account Application Rules:

Only WSBC approved application methods can be used for establishing an account. The W.S. Badcock Corporation allows anyone, who is not a minor (18-years and older except in AL 19-years of age), to complete Badcock Credit Application to apply for a Badcock Account. Our application is intended for individuals, not corporations.

Store Employees must complete the Credit Application process and they must meet the same criteria and requirements as customers to apply for and open an account.

Applicants can apply from home using the link from the Badcock website or in person at the store using either the ELO Credit Application Device, the Credit Application link available on the Surface Pro, their Cell Phone or Mobile Device. Store Personnel cannot enter Credit Application data via phone with an applicant.

Applicants cannot be charged an application fee when they apply for an account. No application fees are to be charged, even if the fee is refunded when a purchase is made by the applicant.

All required fields on the credit application must be entered to process the request, special instructions have been provided for the e-mail address field in the SBM Credit Underwriting Work Instructions included in the SBM Folder. Please note that in the Primary Phone Number field we cannot require an applicant’s cell phone number. However, if the applicant chooses to provide a cell phone number, then they consent to being contacted at that number. Cell phone numbers must be entered into the Cell Phone field in STOREnet.

No additional information is to be obtained or required for an applicant to apply for credit with us, unless the application for credit is Declined or receives a Pending Response.

A Credit Report is only to be requested for a customer when the account is being opened, a co-applicant being added or removed; or the system requires a new credit report. Customer accounts will be reviewed periodically by Credit Underwriting during the AR Review Process. Any adjustments to credit limits will be made and communicated to customers at that time. Customers will not be eligible for a credit limit review at any other time.

Signatures:

It is against Corporate Policy and Federal Law to request a credit report without the customer’s acknowledgement of the terms and conditions when submitting the credit application. For joint accounts, both applicants must acknowledge the terms and conditions. Please review to the Online Credit Application Training and Procedures Work Instructions located

in the SBM Folder.

Accounts with incomplete or improper Credit Applications are not allowed to be charged-off. Any account with an incomplete or incorrect Credit Application that would otherwise charge off, will be direct charged to the store.

It’s against policy to enter false or incorrect information, or to enter applicant information without the applicant’s proper consent into the credit application system. Applications over the phone are not allowed. Entering application information as described previously, will result in disciplinary action up to and including employment termination or in accordance with dealer contract provisions.

Identification Verification and Authentication:

The Federal Trade Commission, as part of the FACT Act, has implemented federal regulations designed to reduce identity theft. Financial institutions, such as Badcock, must have a written identity theft prevention program. The program must identify, detect, prevent and mitigate the potential for identity theft and must include specific procedures for dealing with address discrepancy notifications from the credit bureau.

We must detect Red Flags in connection with opening a covered account and working with existing covered accounts. We must prevent and mitigate identity theft by providing appropriate responses to the Red Flags.

If the application receives a Pending Status the applicant must provide two (2) forms of ID with one of those IDs showing the physical address used during the credit application process. The IDs must be emailed to Credit Underwriting using the MFP device. The ID must be verified to ensure the applicant matches the ID and the credit application information prior to submitting the identification documents to Credit Underwriting.

A complete list of acceptable Identification is located on the FACT Act / Red Flag Verification Form located in the SBM Work Instructions folder located at https://links.badcock.com.

When the required identification documents are obtained, you must confirm:

Credit Cards as Verification:

In accordance with our Red Flag and Payment Card Industry (PCI) guidelines, we will NOT accept credit/debit cards as a second form of identification for Badcock Accounts.

Military IDs as Verification:

We will not accept Military IDs as verification. You cannot make a copy of a Military ID; therefore, military personnel are required to provide an alternative form of photo identification to open an account.

Photocopies:

Power of Attorney:

It is Badcock’s position not to accept Powers of Attorney to establish a new account or as a means of transacting business on account. If the account ever goes into default, a common defense in response to a contract enforcement action is that

the Power of Attorney is invalid or has lapsed.

Military Personnel – We will consider Powers of Attorney of military personnel and what we can do to assist those family members that need to handle everyday affairs for a departed military family member for accounts that have already been established.

Legal departments of the various branches of the military routinely provide Powers of Attorney to those being called into active duty, as well as those being deployed overseas. These are usually General Powers of Attorney, and they are sometimes too broad to cover the specific instance of transacting business on a Badcock account.

If a customer presents you with a power of attorney, forward a copy to the Credit Underwriting department to determine if it will be accepted.

Badcock Multiple Account Policy:

The rule of “one account per household” does not exist. Each applicant must be considered for his or her own credit worthiness. Therefore, a husband and wife may have two separate accounts.

Joint Account (Co-Applicants) Rules:

Any two people may apply for and have a joint Badcock Account. If a Joint Account is being requested, both the Primary and Co-Applicant must complete the credit application process and agree to the terms and conditions before their credit can be pulled.

We do not allow for “Authorized Users” on W.S. Badcock Corporation accounts. Only the Primary and Co-Applicant properly assigned to a joint account may use the account.

It’s important to notify both joint accountholders of their obligation and responsibility concerning the balance and payment for purchases made on the account.

A customer may only be the Primary on one Badcock Easy Purchase Plan Account and a co-applicant on only one other account.

Individuals wanting a joint account must be submitted in STOREnet using the Co-Applicant Option and a credit offer will be based on the overall credit worthiness of both applicants.

Both parties may make purchases and are responsible for making payments for the life of the account.

We will not remove a party from an account unless the balance is paid to zero, and either of the accountholder(s) request to be removed. The store will need to contact credit underwriting so the account can be updated.

If a current individual Accountholder applies with another applicant to open a joint account to help someone build credit, we have a special rule for this situation:

After a Credit Request has been submitted:

Red Flag encompasses of all the alerts that can show up on the credit report together. The FACT Act / Red Flag Warnings are:

If attempting to open an account with an alert appearing on a credit report, we will require the store to fill out the FACT Act / Red Flag form and email the two (2) required forms of identification to credit underwriting for further review and processing of the credit request.

Stores must submit the required FACT Act / Red Flag documentation to Credit Underwriting when these situations arise. Credit Underwriting will decision these applicants based on our underwriting rules. Pending credit requests will have a decision applied within 7 days of credit report date. Please refer to Sales Based Model Work Instructions for additional details.

Approval Decision and Establishing an Account:

After processing the credit application following all the procedures above, a decision will be made to approve or deny the request in STOREnet. Applicants are not considered approved until credit underwriting selects “Approved” within InterConnect, or the credit request was auto approved during the initial credit request process. As soon as an applicant is approved in STOREnet, the account is considered active and eligible for account purchases. Once a transaction completes on the sale, reporting to the credit bureau will begin. With all approved accounts, a signed credit agreement must be obtained. Therefore, follow the below rules for how to handle approved applicants:

Approved Applications:

With the transition to the all Online Credit Application process, there is no credit application or copies of the forms of IDs collected to be retained in the store. There is no need to create a customer account jacket.

Denied Applications:

No files will need to be maintained at the store level for denied credit applications.

Account Application Process:

All Credit Applicants must complete the Credit Application process to request an account.

The Credit Application Terms & Conditions must be acknowledged by the customer. This provides us with the necessary permission to obtain a credit report.

Internet Applications Submitted: Customer can apply for an account online at www.badcock.com.

Approved Internet Applicants: The first order that is created on an account or if the account has a zero balance store personnel must verify the identity of the customer per the zero-balance identity verification policy. One form of acceptable Primary Photo ID from the FACT Act / Red Flag Verification Form in the SBM Folder must be verified and scanned to CanID@badcock.com using the MFP device prior to creating a new financed sales order for the customer.

Internet Application Process:

Approved applicants will receive a message similar to the following: “You have been approved for [Amount] at the [StoreName] store that is located at [StoreAddress]. Offer good for 90 days. Please see store for details and requirements.”

Denied applicants will receive a message similar to the following: “We’re sorry. We were unable to grant you credit at this time. Please contact [StoreAddress] at [StorePhone] for further details. In the meantime, you may visit WWW.BADCOCK.COM.”

For customers in which no result was given online and came into the store: There are times when an Applicant is not approved or denied online. No results/suggestions will be returned if an Applicant fails the electronic identification questions. Therefore, if an applicant did submit information consistent with the credit bureau, but did not correctly answer the questions, they will receive the “Unable to process your request” message. When an applicant, who was neither approved nor denied online comes into a store, the store will need to follow the FACT ACT verification process, filling out a FACT ACT Verification form, collecting two approved forms of ID from the customer and emailing those documents to Credit Underwriting for further processing.

Suspicious Activity and Fraud Protection

If during the credit application or selling process you encounter a situation involving a credit sale that seems suspicious, you have the right to hold up the sale process.

Please contact Credit Underwriting with your concerns and explain the situation.

If necessary, Credit Underwriting will add the Internal Review flag and require additional documentation from the accountholder or applicant.

AR-015: Credit Report

Effective Date: 06/24/2016

POLICY:

The corporation has worked with our Equifax to supply our stores with an Interconnect Decision Power Score. This score translates to a suggested credit limit in our point-of-sale system.

Credit Report Updates and Requirements:

The following items on the credit report must be reviewed prior to opening an account for an applicant:

AR-020: Credit Agreement

Effective Date: 08/10/2021

Supersedes: 07/31/2020

POLICY:

The Badcock Easy Purchase Plan Credit Agreement (“Credit Agreement”) is a contract between an accountholder and the Corporation. An executed W.S. Badcock Credit Agreement supersedes any prior Agreement that has been executed by the accountholder or joint accountholders. The Credit Agreement contains information governing the revolving account for purchases made at a Badcock Home Furniture &more store.

You should never paraphrase any information contained in the Credit Agreement. It is the responsibility of the customer to read and understand this document before signing.

All newly established accounts in which a purchase is financed must execute the Badcock Easy Purchase Plan Credit Agreement.

All Badcock Easy Purchase Plan Agreements must be signed and dated by the accountholder. No one else may sign for the accountholder. This is done electronically through the point of sale system when the customer makes their first financed purchase.

Once a customer signs the Credit Agreement, the provisions of the contract are in affect for the life of the account.

Another Credit Agreement CANNOT be completed or signed again as long as the account has a balance or a zero balance for up to 36 months, and the Signed Credit Agreement box is checked in Advanced Customer Settings.

Inactive Account: An account with a zero balance for over 36 months.

When a new Credit Agreement is required for an inactive account, the system will be updated to remove the checked box for Signed Credit Agreement to prompt for a new signed agreement during the next sales transaction.

If the customer wants to purchase again using the account, a new Credit Report must be pulled; a new Credit Application / Agreement must be signed and executed to reactivate the account. The same account number will be used for the customer.

Credit agreements are state-specific and the appropriate agreement is generated based on the selling store.

Credit Agreement Process:

Approval Decision and Establishing an Account:

After processing the credit application following all of the procedures above, a decision will be made to approve, deny or send the application to pending status. Even with an approval and a suggested credit limit, applicants are not considered approved until the applicant executes (signed) the Credit Agreement.

Once the Credit Agreement is executed the account is considered active. Reporting to the credit bureau will begin after the first order is financed and completed on the account.

To add financing to a sales order the accountholder must have an approved decision, a credit limit, meet the plan criteria and have a signed Credit Agreement on record in the system. The system will not allow for financing without the Credit Agreement box checked in Advanced Customer Settings which is done automatically when the agreement is digitally signed.

A digital version of the signed Credit Agreement document will be uploaded into our document imaging program for our official use. A printed copy will be generated and provided to the accountholder by store personnel.

Account Transfers:

If an account transfers from another state, a newly signed credit agreement must be obtained from the state in which the account transferred when the next purchase is made. CSARM will update the Customer Settings Signed Credit Agreement box so that a new agreement will be required for any additional sales.

Adding a co-applicant to the account:

If an existing accountholder wishes to have a co-accountholder added, then a new credit request must be submitted, and a new credit agreement must be executed. Credit Underwriting will need to be contacted prior to adding a co-applicant to an account.

AR-035: Account Plan Guidelines

Effective Date: 08/10/2021

POLICY:

A customer may have multiple plans within an account, as long as the total revolving balances of the plans are equal to or less than the account credit limit.

All stores are to participate in Special Purchase Plans or similar finance plans that are issued or approved by Badcock. They must also comply with the terms of, and promote, any other financial plans, programs, or procedures specified by Badcock.

Offering cash discounts results in an artificial inflation of the APR charged to finance accounts and is a violation of federal law. It is against policy to extend any cash discounts for purchases.

Below outlines the different plan types for Sales Based Model Stores.

Only plans the customer is eligible for will be available in STOREnet. The plan settings and credit score automatically determines the down payment requirement.

After an MMP is established, customers must make on-time monthly payments. Any amount paid over the established MMP will be applied to the balance (principal), and will not go towards the following month’s MMP.

The pre-payments function in STOREnet is not used.

Revolving Plans:

Revolving plans are those that carry an APR in accordance with your state’s guidelines. The down payment is determined by the credit report suggested amount and/or plan settings. The MMP will be determined by the elected plan chosen in STOREnet in the Financing Worksheet screen. Revolving Plans can have additional purchases added on, up to the customer’s available credit limit.

Special Purchase Plans (Same as Cash or Equal Pay No Interest):

Sale Documentation

New Customers: New customers who participate in any Special Purchase Plan must execute the Credit Application, the Badcock Easy Purchase Plan Credit Agreement, and the Special Purchase Plan Addendum at the time of purchase.

Existing Customers: Existing customers (those who have a current active revolving account with Badcock) who participate in any Special Purchase Plan must execute the Special Purchase Plan Addendum at the time of purchase. This Addendum is in addition to the executed Credit Agreement that should already be in their file.

Credit Bureau Reports

New Customers: New customers who participate in any Special Purchase Plan must complete and sign the Credit Application before a Credit Bureau Report is requested. Once the Credit Bureau Report is acquired, it is only valid for 24 months if the customer does not make a purchase. If a customer does not make a purchase within 24 months, a new Credit Bureau Report must be requested. The Badcock Easy Purchase Plan Credit Agreement must be signed when the first sale transaction is generated.

Existing Customers: Existing customers (those who have a current active revolving account with Badcock) who participate in any Special Purchase Plan must complete and sign all documentation as written above, but a Credit Bureau Report will only need to be acquired if a qualified Credit Bureau Report has not been pulled within 730 days or 24 months since zero balance.

The 36 EPNI 24 EPNI Finance Options are not offered to Dealers, Dealer Employees, Corporate employees, or any accounts that receive discounts (e.g., commercial, charitable discounts). Dealers, Dealer employees, and Corporate employees can still use the 12 or 6 EPNI Finance Options with a qualifying Decision Power Score.

AR-045: MMP Changes

Effective Date: 08/10/2021

Supersedes: 04/05/2018

POLICY:

Stores cannot request an MMP change on an account except in the event of a Workout Agreement, Plan Merge, or an MMP was set in error or if the balance has dropped significantly. All MMP changes will only impact future MMPs; the current MMP cannot be changed.

Workout Agreements:

If a customer cannot afford their payments and wants the MMP lowered, Credit Services must be contacted through a Footprints Work Order or Phone Call. Credit Services will review the account to provide the best possible option for the accountholder based on their Work Instructions for MMP Changes.

Account Plan Merge:

Plan merges should only be requested in the event of any changes to our finance plans or the closing of obsolete finance plans. In the event an accountholder has multiple revolving plans and the accountholder would like to add to their account, merging revolving plans to one may help the customer lower the MMP. Review the balances left on the plans and add them up to see if requesting a plan merge is needed. If so, plan merge requests must be done via a Work Order to the Credit Services department.

Follow the below steps for an account plan merge:

When an accountholder cannot make their MMP on a zero interest (EPNI or SAC Plan), “a direct request from the accountholder will be required to move the balance” from the zero interest plan to a revolving plan to lower the MMP. This must be done by Credit Services following the established guidelines for this action.

AR-050: Credit Limit and Balance

Effective Date: 5/22/2019

Supersedes:03/07/2019

POLICY:

To consistently grant credit limits to applicants, the W.S. Badcock Corporation’s Credit Underwriting Department must extend the suggested credit limit and down payment offer that is returned by Decision Power.

Effective March 1, 2019 applicants with a credit score not meeting our established minimum credit score will receive Declined response and we will not open a Badcock Easy Purchase Plan Account to the applicant. In addition to not meeting the minimum score, an applicant may be denied for one or more of the following reasons.

If an applicant is being declined for one of these reasons, the applicant will be declined in STOREnet. A system-generated Adverse Action Letter will be printed and mailed to the applicant weekly by Credit Underwriting.

Credit Underwriting will periodically review all accounts in good standing with an AR Management Review Credit Check (soft credit pull). The results of the credit response will be reviewed per the Credit Underwriting AR Management Review Guidelines, and the credit report date, credit score, credit limit, suggested credit limit and approved or declined indicator will be updated in the customer’s credit scoring profile in STOREnet.

Credit Underwriting will send out proper notification to customers receiving a credit limit change.

Accounts with credit limits that are higher than the Suggest Decision Power Credit Limit will be identified as credit limit exceptions using an Account Classification Code in STOREnet.

No credit limits will be approved for a limit higher than $7,500 based on the established score in the Decision Power Scoring Model.

Credit Balances:

Stores are responsible for reviewing any credit balances (negative amounts) on accounts. Store personnel must research the account history to determine if the reason for the credit balance. If the credit balance is an error, store personnel must take the necessary action in STOREnet to correct the credit balance.

If the credit balance is owed to the customer, store personnel must attempt to contact these accountholders to notify them of the credit balance. Store personnel should let the accountholder know the credit must be used for a new purchase or a refund will be issued.

If the accountholder comes into the store, a refund should be issued. If not, the store should submit a Work Order to Credit Services to request the balance amount be refunded and a check will be mailed to the customer.

Stores are not permitted to keep the funds from any credit balance that is owed to a customer. No refunds should be made on credit balances to anyone but the accountholder.

Monthly, Credit Services will run the Credit Balances report to notify Retail Ops of any credit balances over 45 days old. When credit balances reach over 60 days Credit Services will research the reason for the credit balance. Based on the research, Credit Services will either request a refund be mailed to the customer or clear the account balance.

If a refund check is received as returned mail, Credit Services will be turned over to Cash Management to comply with Escheat Law requirements.

AR-055: Account Transfers

Effective Date: 08/10/2021

Supersedes:05/22/219

POLICY:

Credit Services must approve all account transfers. Request to transfer an account must be submitting using the Account Transfer Template in Footprints.

Since all stores can access all accounts, transfers will be limited to accounts transferring from state to state.

For approved account transfers Credit Services will cancel the insurance from the account (if applicable). The receiving store will need to get a new insurance election form signed to add the new state’s insurance to the account (if applicable).

For accounts with a balance transferring in or out of Florida and Alabama, Credit Services will transfer the account balances to the appropriate plan for the receiving state.

Documentation:

All original documentation will remain at the originating store. Stores are not to mail the original account jacket & documents to Mulberry or the receiving store.

Accounts which transfer to a different state will require a newly executed credit agreement for the new state. Transferring an account from state to state is considered a change in Terms & Conditions; and a newly executed Credit Agreement should be obtained by the receiving store.

The new receiving store will create an account jacket for the documentation generated by the receiving store for the account going forward.

Baber Economy Stores:

The transferring of accounts between WSBC and Badcock Economy Stores is not allowed. You cannot make deliveries or do any collection activity for Badcock Economy Stores.

PROCEDURE:

AR-060: Lay-a-way & COD Purchases

Effective Date: 08/10/2021

Supersedes:05/22/2019

WSBC store personnel are not allowed to create Lay-a-way or COD transactions. The total amount of the sale must have the appropriate tend type for the method of payment used. There are to be no unpaid balances on Open Orders.

AR-065: Post Dated Checks & Future Dated Payments

Effective Date: 05/22/2021

POLICY:

A post-dated check or future dated promise is a form of a payment promise. Only Credit Services and Retail Account Manager Specialists (RAMS) personnel may established post-dated checks.

Accepting a post-dated or future dated payment will stop an account from receiving collection calls and letters.

When the Credit Services and Retail Account Manager Specialists (RAMS) personnel establish post-dated or future dated payments, the Future Date Payment letter (available through WinDebt) will be sent by CSARM to the customer no more than ten and no fewer than three days prior to posting of the future dated payment.

AR-075: Non-Accrual

Effective Date: 05/22/2019

Supersedes: 08/06/2018

POLICY:

Potential Charge-Off (Non-Accrual):

Potential charge-off accounts are those that could be charged off at cycle end each month. Accounts that are scheduled to charge-off will have the NA Alert Code (Non-Accrual) added to the account by CSARM monthly.

Non-Accrual:

At the beginning of the month, accounts that become uncollectable or meet specific criteria will be classified as Non- Accrual. The CSARM Reviewer will provide Credit Services with a report of Potential Charge-off accounts requiring the NA Alert Code. The NA Alert Code will remain on the account until charge-off unless a payment equal to or greater than the MMP is made prior to the end of cycle. The NA Alert Code will be removed from these accounts and collection activities will continue until the account is brought to a current status or eventually charged off.

When the store cycles each month, accounts with the NA Alert code will be charged off and the NA Alert Code will be replaced with the CO Alert Code. The appropriate post charge-off collection activity will be determined by CSARM.

Non-Accrual Criteria:

Special Non-Interest Bearing Accounts:

The below criteria is used to classify Non-Interest Bearing (NIB) accounts. As long as an account retains its NIB status, it will not be automatically charged off at the end of cycle monthly with all of the other accounts that have Non-Accrual/E status. The NI and TX Alert Codes are used to create the NIB status for accounts.

The criteria for NIB accounts are:

Either part of the balance or the entire balance may eventually Charge Off when the account is removed from the NIB Status at the conclusion of the legal proceedings or bankruptcy.

AR-080: Charge Off

Reviewed: 5-22-2019

Effective Date: 5-22-2019

Supersedes: 9-16-2016

POLICY:

Each month, accounts that are in Non-Accrual (NA Alert Code) will be charged-off at cycle based on the assigned store for the account.

Accounts will be moved to Non-Accrual based on criteria outlined in CSARM Work Instructions, or any account to be deemed uncollectable at the discretion of Senior Management of CSARM.

Credits and Recovery:

Credit on previous charge off accounts is referred to as Recovery. Examples of recovery are payments or settlements. Under no circumstances should anyone write a receipt to an account that is charged off if the payment has not been made by the customer.

This is a violation of corporate policy and may be considered as a false entry to an account. This includes charge-off as well as active accounts. This is account manipulation and will result in serious consequences and at the minimum the potential charging of the account or accounts to the Dealer or potential disciplinary action for corporate employees.

AR-090: Bankruptcy

Effective Date: 05/22/2019

POLICY:

Bankruptcy is considered a critical event in collections by Badcock.

Badcock has identified the following as Critical Collection Events that require immediate action on the part of store personnel and Credit Services personnel:

Bankruptcy

Represented by Attorney

Cease Communications

STOP Phone Calls

STOP Home Visits

The occurrence of any Critical Collection Event requires immediate ACTION on the part of the person receiving notice of the critical event. To ensure understanding of each of these Critical Collection Events and the appropriate action required for each one, please review the full Critical Collection Events policy located at AR-126. This policy AR-090 specifically relates to Bankruptcy notification and how bankruptcies are managed by Badcock.

Notification of Bankruptcy:

If a customer advises, verbally or in writing, that they are in the process of filing bankruptcy or have filed bankruptcy, all collection activity must immediately cease and the Credit Services Department must be notified immediately either by phone or work order, although a phone call to Credit Services is recommended.

The account will be flagged with the “Represented by Attorney” flag immediately by Credit Services.

Additional Information Concerning Bankruptcy:

The instant a bankruptcy case is filed, the automatic stay takes effect freezing all actions against the consumer and the property, including repossession or sale of property recovered prepetition.

In the event of a joint account, the automatic stay applies to both parties on the account. Meaning, if one party on the account files bankruptcy, collections activity must stop immediately and neither of the accountholders can be contacted. When a customer or customer’s attorney advises that they have filed for bankruptcy, the following should be done immediately:

Chapter 13 Bankruptcy - Reorganization of Debt

When a customer files Chapter 13 bankruptcy, all collections activity must cease.

Generally, a Chapter 13 bankruptcy involves the reorganization of the consumer’s debts and permits the customer to development a new payment plan arrangement with Badcock. Once the plan is in place payments are generally sent by the bankruptcy trustee to W.S. Badcock Corporation to apply to the account. Once the plan has paid out, the balance is uncollectable, the lien is extinguished and the customer receives a discharge.

We may not contact a discharged Chapter 13 bankruptcy account for collections purposes. If the customer pays their account in accordance with the Chapter 13 plan, they have satisfied their obligation to the bankruptcy court and any debt that existed prior to the plan being put in place owed to Badcock is discharged in bankruptcy.

If a case is dismissed, the situation is such that the customer never filed for bankruptcy. Normal collection efforts can be followed once the CSARM department receives the dismissal notice and removes the Bankruptcy flag from the account.

Chapter 7 – Total Liquidation of Assets

We must stop all collection activity until the bankruptcy dismisses, discharges or the customer reaffirms their debt with us. If the customer signs a reaffirmation agreement, no flag will be on the account and the account will be handled like all

other active accounts.

The discharge of a Chapter 7 case where no reaffirmation or redemption has occurred will be reviewed by our CSARM department to determine if suit will be filed for possession of the merchandise

We cannot attempt to collect on the debt or ask for payment at all. We can only accept payment if the customer offers to pay in lieu of merchandise.

If a case is dismissed, the situation is such that the customer never filed for bankruptcy. Normal collection efforts can be followed once the CSARM department receives the dismissal notice and notifies the store in writing that it is safe to proceed.

Service Issues and Bankruptcy:

If a customer in bankruptcy notifies you of a service problem with an item that has an active warranty or extended warranty, you should notify CSARM. If CSARM determines that the warranty is active, we are required to honor the extended warranty. From there, we must provide the customer with contact information, any warranty information, and help with the exchange of the product under warranty. We are also responsible for providing service to any previously purchased merchandise that has been paid for and is under warranty.

Adding and Removing Bankrupt Accountholders:

It is a violation of the Bankruptcy Code to unilaterally remove either the debtor or the joint accountholder from an account to avoid the reach of bankruptcy protection. Therefore, do not remove any accountholders from an account without written permission and guidance from the Credit Services group.

AR-095: Litigation/Legal Action

Effective Date: 05/22/2019

Supersedes: 07/09/2018

POLICY:

Monthly the Credit Services BALI team will review and evaluate charged off accounts that meet the established criteria for litigation.

Approval process:

If an account meets the established criteria, the account will be placed with one of our outside Attorneys based on the customer’s state of residence. The appropriate Attorney flag will be placed on the account as notification that it has been placed with an Attorney.

Customer Attempts to Pay:

If a customer with an Attorney flag attempts to pay or inquire about their account, please do not provide them with any information or accept payment.

Please have them contact the Attorney directly.

TN Law Firm:

John B. Ingleson 615.895.3332 (Murfreesboro & Columbia, TN stores)

Lindsay Cameron Gross 931.526.3366 (Cookeville, TN store)

Rambo & Kingree 931.684.6213 (Shelbyville, TN store)

Jerre Hood 931.967.0838 (Winchester, TN store)

Judy Troutman 423.566-6001 (Lafollette, TN store)

Brian P. Mickles 423.266.1237 (Chattanooga & Cleveland, TN stores)

McCoy Law Firm:

Law Office of Jennifer McCoy 615.500.8577 (numerous Tennessee stores)

Finkelstein Law Firm:

Finkelstein Kern Steinberg & Cunningham 865-525-0238 or 888-200-6501 (numerous Tennessee stores)

GA Goodman Law Firm:

Law Offices of Emmett Goodman 877.354.3476

Smith Debnam Narron Law Firm (SC, NC, and VA stores):

Law Offices of Smith Debnam Narron Drake Saintsing & Myers, LLP 919-250-2142 or 888¬704-0884

American Alliance (all states):

AACANet 833-222-3270

Criminal Prosecutions or Misuse of any Legal Action:

Attempting to circumvent the spirit and intent of account administration is against Badcock policy. Furthermore, any practice which leads a customer to believe that they are about to be sued, when in fact they actually are not, has been construed to be a violation of the law.

Initiating criminal proceedings against a customer or sending correspondence threatening criminal prosecution is prohibited. Failure to adhere to this policy may result in the account in question being charged to you, or may further result in the Corporation seeking indemnification from you should a future claim be made against the Corporation for abuse of process, malicious prosecution, or any similar activity.

AR-105: Criminal Prosecutions

Effective Date: 01/26/2017

POLICY:

The W.S. Badcock Corporation does not approve or authorize the swearing out an affidavit, warrant, or initiating criminal prosecution against any Badcock customer related to the default of their Badcock Account. This is true regardless of any suggestion or authority from any local sheriff, judge, or similar official.

Initiating criminal proceedings against a customer or sending correspondence threatening criminal prosecution is prohibited. Never attempt to prosecute a customer or sign an affidavit or warrant without having first received written authorization from the W.S. Badcock Legal department which has made a determination that there has been a clear intent to defraud Badcock.

Failure to adhere to this policy may result in the account in question being charged to you, or may further result in the Corporation seeking indemnification from you should a future claim be made against the Corporation for abuse of process, malicious prosecution, or any similar activity.

AR-110: Repossession

Effective Date: 09/16/2016

Supersedes: 07/21/16

POLICY:

The Badcock Easy Purchase Plan Credit Agreement is a binding promise to pay on an account and a purchase money security agreement, the breach of which entitles Badcock to the repossession of the collateral securing the amount owed. In taking possession of the collateral, you may proceed without judicial process if this can be done without breach of the peace.

As a customer makes payments on an account and reduces the balance, items of merchandise clear Badcock’s lien according to a repossession formula. This is known as the first in, first out (FIFO) formula. Therefore, prior to commencing the repossession of an account, you must secure a list of those items in which Badcock still maintains a security interest.

This list of merchandise is on the Legally Entitled To (LET) document and is available in our point-of-sale system.

Prior to attempting to repossess merchandise, use the following checklist to ensure the account is eligible for repossession:

If you have completed all of the above actions and the account is still not up to date, you may proceed with repossession.

LET:

Take only the items listed on the LET provided by STOREnet. If you take the items on the LET, attempt to have the customer sign the Repossession Notice Statement page. If they refuse, write “Customer Refused” in the customer signature

space provided.

During the repossession, you must follow the below customer contact policies:

Account Credit:

All items on the LET that were surrendered by the customer (including non-merchandise product associated with said items) must be entered into our point-of-sale system as a Repossession, not a Return.

The account will be credited for up to the original retail amount of the items repossessed. If all of the merchandise we are entitled to repossess is returned, the account will be closed and the balance reduced by an amount equal to the repossessed merchandise credit. If any items are missing from the entitled list, or there is significant finance and insurance accumulation on the account due to a poor payment history, then the account may still have a balance and the customer will be liable for the remaining balance.

Any unpaid balances remaining after repossession will charge off when it meets the established criteria.

Customer Dispute during Repossession:

During an attempt to repossess merchandise from a customer, if the customer refuses to return an item or asks you to stop and leave, unless you are processing a repossession with the assistance of law enforcement and a court order, stop the repossession and leave the customer’s property immediately. Depending on the account balance and merchandise involved, a decision by the Credit Services department will be made to either litigate the account or charge off the remaining balance.

Items Subject to Repossession:

Badcock does not consider under the counter dishwashers or gas ranges as permanent fixtures. If they are on the LET list and a customer voluntarily surrenders these items or a court order allows for their repossession, you may repossess these items.

However, you should be aware that during the repossession, you will be responsible for any damages resulting from the repossession or possible claims made afterwards. Therefore, any disconnections should be performed by a qualified servicer. It is in your best interest to weigh the potential risk of damage against the financial gain of repossession before removing these items.

Repossession of Computers, Laptops, and Tablets:

Computers, Laptops, and Tablets must be kept in the store for 10 days to allow the customer to retrieve their personal information. This is explained in the Computer Disclosure Agreement that must be signed with every sale of a Computer, Laptop, or Tablet.

Pawn Shops, Landlords, Storage:

When you learn that a customer has pawned merchandise, you should contact the pawn shop immediately and inform them of Badcock’s lien. If the pawn shop owner does not recognize Badcock’s lien, you should contact the Credit Services department and a letter will be sent to the pawn shop placing them on official notice of our lien.

Landlords often attempt to keep merchandise to offset unpaid rent. The law in all states is clear that Badcock has a prior lien on the merchandise. However, we may be responsible for reasonable storage fees. If a landlord remains difficult, please contact the Credit Services department and a letter can be sent to the landlord notifying them of Badcock’s lien. You should contact the Credit Services department if you encounter any problem with a customer who has left the merchandise in a storage unit. Although there is an issue as to priority of liens, these owners will often let you pay past due rent if reasonable.

You must contact Credit Services to obtain approval prior to paying any fees or unpaid rent to Pawn Shops, Landlords or Storage facilities if you want to be reimbursed for some or all of the fees. Credit Services will review the value of the merchandise and if approval is given the Corporation will normally reimburse 100% of the approved amount. Approvals for fees or rent exceeding $250.00 will require approval from the Senior Management of Credit Services.

Credit Services will add a comment in the Customer Activity Log when approval is given to pay fees for pawn shops, landlords or storage facilities to document the approved amount and for review purposes when the reimbursement request is received.

The Dealer must submit a receipt to the Credit Services department with the Customer Account # and the Merchandise Return # for review and payment.

Failure to obtain approval from Credit Services prior to paying any fees or unpaid rent will result in the request for reimbursement to be denied.

Penalties for Non-compliance:

If you violate the provisions of the Credit Agreement and repossess and sell collateral when no right to repossess exists, you would be liable to the customer for damages under various laws, including conversion, civil theft statutes, Fair Debt Collection Practices Act, and UCC Article 9. Punitive damages are available to the customer as well. Intent is irrelevant.

You will be required to return the property to the customer. No condition as to the return of the unsecured property may be place on the return. Said activity is also a violation of your Dealership Agreement.

Customer Request for Voluntary Repossession

If a customer contacts the store or Credit Services to request Voluntary Repossession (voluntary surrender) merchandise on their Badcock Account, the person in contact with the customer will explain The Badcock Easy Purchase Plan Agreement is a binding promise to pay on the account until the entire balance is paid. The customer will be notified their request for voluntary repossession and surrender of certain unpaid merchandise purchased on their Badcock Account in order to satisfy the account balance will be presented to the Manager of Regional Collections for review. The reviewing and repossessing process can take 5-7 business days for completion.

Any decision to accept or not accept the return of merchandise outside our stated return policy is at the sole discretion of Badcock and its authorized representatives in the Field Services department. A formula based on the age, type, value and condition of the merchandise will be used to determine if the request for Voluntary Repossession is approved or denied. If a request for Voluntary Repossession meets our established criteria, the customer will be informed of the following conditions that must be met:

The customer’s voluntarily surrendered merchandise will be processed as repossession and reported to the credit reporting agencies as such. Any remaining balance after the repossession is processed will be the accountholder’s responsibility to pay.

Any request from store personnel for a Voluntary Repossession must be submitted through the Footprints Work Order process using the template provided in Collections.

If a Voluntary Repossession is tentatively approved by the Manager of Regional Collections, the person making the request will see the decision when the Footprints Work Order is completed. The appropriate Regional Account Manager Specialist will be notified or appropriate store and arrangements will be made with the customer to schedule the Voluntary Repossession of merchandise.

If merchandise is in re-sellable condition at the time of the visit, then the RAM and/or appropriate store will proceed to take the merchandise.

The returned merchandised will be processed as a repossession in STOREnet using the LET option; and it will be reported to the credit reporting agencies as such.

Any remaining balance after the repossession will be the accountholder’s responsibility to pay. Any remaining balance not paid by the customer will become part of the store’s annual charge-off amount.

When possible, the Credit Services department will request the customer contact us to see what payment arrangements can be made to get the account out of past due status and back to a good standing status.

Attempts to bypass the Voluntary Repossession process and return merchandise outside our stated return policy will be considered Account Manipulation and subject to the consequences associated with the Account Manipulation Policy. It’s important to note that store personnel must follow the established warranty and customer service policies. Store personnel must properly handle customer complaints and warranty issues to prevent these problems from getting out of control. Service or Warranty issues that are not properly addressed or handled by store personnel that result in non-payment or a demand by the customer to return the merchandise will not be processed as repossession. Merchandise accepted by the store for the above reasons will be done as a Merchandise Return.

Voluntary Repossession Request Review Procedure:

Store personnel or Credit Services personnel receives request for Voluntary Repossession of Merchandise from the customer.

A Footprints Work Order is submitted to Credit Services using the Voluntary Repossession Template or an e-mail is submitted to reporequests@badcock.com for review or request. All Voluntary Repossessions will be done as a full repossession of all LET items.

The Manager of Regional Collections will review the request using the Voluntary Repossession Formula to determine the proper response to the request (approved or denied).

For approved Voluntary Repossessions, the Manager of Regional Collections will notify the Regional Account Manager Specialist or store to schedule the Voluntary Repossession.

The Regional Account Manager Specialist or store employee will take the LET for the merchandise to be repossessed with them when conducting the repossession. The repossessed merchandise will be brought back to the store. The customer will sign a copy of the LET for the store’s files and receive a copy for their records.

The merchandise will be processed as repossession in STOREnet when the Manager of Regional Collections completes the repossession. A transfer of the merchandise will also be created and completed. Any additional price cuts desired by the store for RPO merchandise must be done in accordance with Corporate Store Policy.

After being properly detailed by the store personnel, the store personnel will be responsible for printing and tagging the correct merchandise with the new price and the RPO As Is Disclaimer. The merchandise will be placed in the Backroom Bargain Area for sale to customers.

No merchandise should be accepted during a Voluntary Repossession that cannot be sold for an amount at least equal to the amount owed.

The customer is still responsible for any remaining balance left on an account after the repossession has been completed. The Repossession Flag in STOREnet is automatically set when the repossession is completed. The Repossession Flag will remain on the account. The customer will not be eligible to make future purchases for at 25 months. and a new credit report and updated score will be required. The Credit Granting Policy will be followed at that time if approved; a Footprints Work Order would be required to remove the Repossession and Charge-Off Flag from the account.

For Partial Voluntary Repossessions (less than all of LET merchandise was repossessed) the Repossession Flag will be placed on the account and remain on the account until the remaining balance is paid in full. The customer cannot make any further purchases until the account has a zero balance. The customer will still receive monthly statements and can continue to make payments at the store.

The MMP will be lowered to the MMP for the remaining balance in accordance with our MMP Chart.

Balances on accounts after a Partial Voluntary Repossession that hit the Potential Non-Accrual Report will be charged-off. The customer is still responsible for any remaining balance left on a Partial Voluntary Repossession, even if the account charges off.

A Partial Voluntary Repossession account holder who pays the balance to zero can have their credit re-evaluated with a new Credit Report pull. Normal Credit Granting Policies will be followed at the time of the request. If approved, a Footprints Work Order would be required to remove the Repossession Flag from the account before purchases can be made.

A Customer denied for Voluntary Repossession will remain responsible for paying the full account balance.

Voluntary Repossession Merchandise Valuation Criteria

If the merchandise on the LET (Legally Entitled To) has the following items, a Voluntary Surrender request can be subject to a denial for these items:

AR-115: Non-payment Due to Customer Death

Effective Date: 05/22/2019

POLICY:

In the event a customer dies and you receive notification, the account should immediately be reviewed to verify whether the customer had life insurance on the account. Often the family will not be aware of this coverage.

If the customer had insurance, contact the Customer Insurance department for details on the process for handling this claim. It’s important to also notify Credit Services so the Deceased flag can be added to the account once the proper documentation or confirmation has been obtained.

If the customer does not have insurance coverage, the CSARM BALI team will determine whether a probate action will be filed and assume responsibility for taking the appropriate action.

If a probate proceeding is filed, CSARM BALI team will review the account and determine eligibility for filing a statement of claim in the probate proceeding in an effort to recover the legally entitled to merchandise or the balance of the account.

If the probate process does not yield results, the balance may be moved to non-accrual to be included in the monthly charge-off.

AR-120: Collection Letters

Effective Date: 05/22/219

POLICY:

Only correspondence approved by the W.S. Badcock Corporation may be sent to W.S. Badcock Corporation accountholders. Only the Accounts Receivables Management Team may send collection or account related communications to our accountholders. No other collection or account correspondence can be generated other than approved past due text messaging.

No free-form letters or hand-written comments are to be used when communicating with a customer about their W.S. Badcock Corporation account.

If the Regional Account Management Specialist is going to leave a letter for the customer, only W.S. Badcock Corporation generated letters may be used. The letter must be sealed in a Yellow Personal & Confidential envelope and mark the envelope with the customer’s name on the outside.

Windebt will generate the collection letters to past due accountholders based on the timing of due dates. All Windebt Collection Letters must be reviewed and approved by Senior Management of CSARM, the Legal Department, and the Compliance Department.

AR-125: Customer Contact

Effective Date: 05/22/2019

POLICY: General Contact:

The Accounts Receivables Management Team will only provide customer support on accounts during the hours of 9:00 a.m. through 9:00 p.m., Monday through Friday, Saturday from 11:00 a.m. to 8:00 p.m. and Sundays 11:00 a.m. to 7:00 p.m.

Authorized corporate personnel are allowed to engage in collection activity with our accountholders unless written authorization has been provided by the CSARM Team.

The acceptance of payments, asking for the past due balance on an account or providing service to a financed account is not considered collection activity. You cannot ask for the current month payment until after the due date, but you may remind them of their upcoming minimum monthly payment.

It is against corporate policy as well as federal law to use any language that may be considered as abusive or threatening when collecting. This is to be avoided and will not be tolerated.

These acts are violations of the State and Federal collection laws:

If an accountholder or co accountholder asks to stop collection activities or advises that they are represented by an attorney (either by phone, in writing, or in person), immediate action must be taken. The CSARM department must be contacted immediately via a Footprints work order and advised that the customer requests to stop collections activities. CSARM will flag the account accordingly to cease communications.

Phone Contact:

Text messaging cannot be used to contact our accountholders. This could result in a message charge for an accountholder, which is in violation of FDCPA.

Contacting a customer at work (Place of Employment POE) should only be done as a last resort. If a customer asks you to stop contacting them at work, stop at once.

When contacting a customer by phone, the we should only call the customer up to three (3) times a day without reaching the customer. Once a message is left with an answering machine or a third party, we will wait twenty-four (24) hours to try again.

You cannot disclose the purpose of your call with anyone except the accountholder. You must identify yourself and identify the company name, but not your title or position with the company until you are speaking to the accountholder. Guidelines for leaving a message with someone other than the accountholder:

Guidelines for leaving a message on an answering machine:

Personal Visit:

When visiting a customer’s home, you may only visit the home two (2) times in one (1) day without reaching customer. Once you leave a message with a third party (as described above) or a letter in a confidential sealed envelope, you cannot visit the home again for twenty-four (24) hours.

When visiting the customer’s home, only discuss the account status with the customer. Do not talk to anyone else about the account, and do not discuss the delinquency in a manner so that others can hear the discussion.

If a customer is not at home, do not discuss the account status with anyone else at the home.

Never enter a customer’s home if only a minor is present.

Never contact a customer at work in person.

Email:

Email cannot be used as a collection correspondence with a customer.

Breach of Peace:

Stores must not violate any consumer protection laws. The following are a non-exhaustive list of actions that consumers are protected against and are considered a breach of the peace by courts:

Third Parties

From time to time, the Company will engage a third-party vendor to contact customers and service accounts. Only vendors selected and approved by a Senior Vice President and approved by the legal department may service accounts or contact customers.

AR-126 Critical Collection Events

Effective Date: 07/18/2018

Supersedes: N/A

POLICY

We have identified the following as Critical Collection Events that require immediate action to be done by store personnel and Credit Services personnel:

Bankruptcy

Represented by Attorney

Cease Communications

STOP Phone Calls

STOP Home Visits

The occurrence of any Critical Collection Event requires immediate ACTION on your part:

To ensure you understand each of these Critical Collection Events and the appropriate action required for each one, we have provided the following detailed information:

Notification of Bankruptcy: If a customer tells you, verbally or in writing, they are in the process of filing bankruptcy or have filed bankruptcy, you must cease collection activity immediately and notify the Credit Services Department. The account will be flagged with the “Represented by Attorney” flag immediately by Credit Services.

Represented by Attorney: When notification is received verbally or in writing, you must cease collection activity immediately and notify the Credit Services Department. The account will be flagged with the “Represented by Attorney” flag immediately by Credit Services.

Ceasing Communication: When a customer has requested in writing that all collections communications are to cease and desist, honor the request and cease all collection communication and activity with the customer and notify Credit Services.

STOP Phone Calls: When notification is received verbally or in writing, we will immediately flag the account & cease collection calls.

STOP Home Visits: This account flag is primarily used by the Regional Account Manager Specialists. Upon a customer’s request, whether verbal or written, that Badcock stop collection home visits, you must stop making collection home visits to the customer immediately, and submit a request to add STOP Home Visits flag to the account using the Footprints Work Order process or sending an email to your supervisor.

AR-130: Use of Call Boxes and Call Services

Effective Date: 05/22/2019

POLICY:

The use of call boxes or outside call services by store personnel or store locations (corporate or dealer) to contact W.S. Badcock Corporation (“Badcock”) customers is NOT permitted under any circumstances.

Stores previously using systems or services such as “Call-Em-All” or “CallFire” or any other device or software that automatically dials a phone number without human intervention should have discontinued the use of these systems and services no later than January 31, 2019. No employee or store personnel shall use these systems, software, or services for any purpose including, but not limited to, contacting any Badcock customer for collections, solicitation, or notification (even a current accountholder) of any current or upcoming sale or promotion.

Only approved collection personnel may contact Badcock customers using call systems or services in accordance with their approved Work Instructions and in compliance with all relevant laws and regulations.

AR-135: Skipped Accounts

Effective Date: 05/22/2019

POLICY:

A skipped account is one that has not paid, has moved, and has taken their merchandise with them without providing forwarding address information. Only authorized CSARM and Loss Prevention personnel may skip trace an account. When searching for skipped accounts all laws and WSBC policies must be followed.

Acceptable Actions:

The following is a list of acceptable actions CSARM & Loss Prevention may take when trying to locate a “Skipped Account”:

Unacceptable Actions:

The following is a list of unacceptable actions CSARM and Loss Prevention personnel may not take when trying to locate a “Skipped Account”:

AR-140: Partial Payments

Effective Date: 05/22/2019

POLICY:

A partial payment is any payment amount that is posted to an account that is less than the minimum monthly payment (MMP). If less than the MMP is accepted, the customer must be notified the remaining portion of the MMP must be made on or before the due date to avoid the account being past due and subject to collection activity and late fees.

A token payment is a payment that is an amount that does not reasonably reduce the customer’s balance or is equal to or less than the amount of the total finance and or insurance premiums.

Any manipulation of accounts with payments that change the status of an account or other misconduct will be deemed as account fraud, and the entire account balance will be charged to the Dealer or Corporate Store. This includes, but is not limited to, payments not made by the customer, partial payments made and later refunded, repossessions later resold to the same customer or any other unauthorized refunds. Manipulation of accounts may result in the loss of employment and/or dealership.

AR-145: Account Past Due Adjustment

Effective Date: 04/30/2020

Supersedes: 03/27/2020

POLICY:

The purpose of the Past Due Adjustment policy is to encourage customers to re-establish the practice of making consistent and full payments to bring their account back to a Current status.

Additional benefits of this policy could be reduced fees and interest for customers, account will be reported as current, and the customer may be able to use their line of credit for future account purchases.

The following is the report criteria Credit Services will be using to adjust the past due payments of eligible accounts:

Accounts can only receive a past due adjustment once every six months (twice a year).

Additional Requirements:

MONTHLY PAST DUE ADJUSTMENT PROCEDURE:

The morning of Cycle Cut-Off, Credit Services will generate a report of accounts with past due payments that meet the policy requirements. The past due status for these accounts will be adjusted to zero and the payments past due will be added to the long-term balance of the associated plan. Any Master Plan balance will be transferred to the revolving plan with highest balance.

No action needs to be taken by the store for Past Due Adjustments.

AR-150: Third Party Financing

Effective Date: 04/30/2020

Supersedes: 03/27/2020

POLICY:

From time to time at the company’s discretion, we may offer financing from a Third-Party Provider. It’s the responsible of the Dealer or Store Manager to ensure complete Adherence & Compliance to the specific policies and procedures established with any provider. Failure to follow Third Party Finance Policy & Procedure as outlined by W.S. Badcock Corporation can result in the following:

Third Party Financing Information Security

No confidential information is to be disclosed to any third party. All non-public information (NPI) is to be kept secure in the Customer Privacy Protection (CPP) file and access should be limited to appropriate personnel only. Any disposal of this information, per retention guidelines, must be done with the use of a Certified Document Disposal Company or crosscut shredder.

AR-155: Account Flags

Effective Date: 06/02/2020

Supersedes:07/20/2019

POLICY:

Account flags are placed on accounts by Credit Services to alert store personnel about information needed or restrictions placed on an account for legal or compliance reasons. Setting a flag will impact various actions on accounts, including accepting payments, making new transactions (including cash sales), blocking collection activities for letters, phone calls, home visits, repossessions, and statements. A matrix of the flags and flag settings is available by clicking the Account Flag Matrix Link. This matrix highlights important actions that are allowed or prohibited when the associated Flag is on the account.

The placing or removing of account flags will be handled by Credit Services.

Credit Services personnel will only override the settings for corporate stores following department policy for each flag situation. Credit Services will not remove a flag to allow a payment to be posted to an account.

PROCEDURE:

Flags can be accessed by navigating to View Advanced Customer Settings Menu > Receivables Tab > Actions > Legal Settings. Flags will also appear any time a customer is accessed in either View All Revolving Plan Activity for a Customer, Enter a Sales Order or Enter a Customer Payment/Refund/Gift Certificate.

To request that an account be reviewed for a flag removal or flag addition, a Work Order must be submitted to Credit Services.

A brief description for the use of each flag is provided to assist you in understanding the reason for the account flag and any special instructions regarding the flag.

Chapter 13 Active: This is a Critical Event. When notification is received in writing or verbal notification is confirmed by Credit Services, we will immediately flag the account and cease collection activities.

The account is an active Chapter 13 bankruptcy. The automatic stay rules are in place at all times for accounts with this flag.

The NI Alert Code will be added to the account and the optional Credit Insurance will be cancelled (if applicable) by Credit Services when the flag is added to the account.

No collection activity will occur while this flag is applied to the account. Only Credit Services BALI Team can add or remove this flag.

Chapter 7 Active: This is a Critical Event. When notification is received in writing or verbal notification is confirmed by Credit Service, we will immediately flag the account and cease collection activities.

The account is an active Chapter 7 bankruptcy. The automatic stay rules are in place at all times for accounts with this flag.

The NI Alert Code will be added to the account and the optional Credit Insurance will be cancelled (if applicable) by Credit Services when the flag is added to the account.

No collection activity will occur while this flag is applied to the account. Only Credit Services BALI Team can add or remove this flag.

Cease Communications: This is a Critical Event. When notification is received in writing or verbal notification is confirmed by Credit Services, we will immediately flag the account and cease collection activities.

This flag is applied to an account when a customer has requested that all collections communications are to cease and desist. If an account holder makes the request verbally, we will instruct the customer to submit the request in writing. If the verbal request is related to one of the other flags created for Critical Events (Represented by an Attorney for bankruptcy, litigation or other purpose, STOP Phone Calls, Customer Lawsuit or STOP Home Visits), the appropriate account flag for the Critical Event is to be used.

No collection efforts will be made on accounts with the Cease Communications flag. Credit Services will send the customer a letter acknowledging the Cease Communications request, as well as our legal options to obtain payment. Credit Services will evaluate the account to determine if litigation is the appropriate action concerning the account if the flag remains on the account once it is charged off.

To remove the Cease Communications flag, Credit Services must receive a written authorization from the customer. We will not accept a verbal request to rescind the previous Cease Communications request. The written authorization can be in the form of a letter or a new credit application; however, the authorization must be signed and dated by the customer with phone number(s) and address that the customer agrees to be used for collection activities. When the flag is removed, the customer may be eligible for future on-account purchases.

Customer Lawsuit: This is a Critical Event. When notification is received in writing, we will immediately flag the account and cease collection activities.

The Corporation has received a lawsuit from an attorney representing the customer. The flag will remain on the account until the lawsuit has been settled or completed.

The NI Alert Code will be added to the account by Credit Services when the flag is added to the account.

The account will not charge-off unless approval is given from the Legal Department, and no collection activity will be done when the Customer Lawsuit flag is applied. Credit Services will monitor the account monthly to determine the status of the account. Accounts with this flag are not eligible for a Past Due Adjustment in accordance with AR-145.

Represented by Attorney: This is a Critical Event. When notification is received verbally or in writing, we will immediately flag the account and cease collection activities.

Badcock received verbal or written notification from the customer or store personnel that the customer hired an attorney to represent them for a potential bankruptcy filing, or other legal action, but we have (i) not received the attorney information from the account holder or a letter of representation from the attorney (ii) received the attorney information but have not been able to confirm the attorney’s representation of the customer; or (iii) not received a bankruptcy notification.

The Account Flag report will be run monthly to update the status of accounts with the Represented by Attorney flag. If we do not receive payment within 120 days of flagging the account, the account will be set to charge off and we will evaluate the account to determine if litigation will be filed once it charges off.

There will be no collection activity when the Represented by Attorney flag is applied.

To remove the Represented by Attorney flag, Credit Services must receive a written authorization from the customer. We will not accept a verbal request to rescind the Represented by Attorney flag. The written authorization can be in the form of a letter, which must be signed and dated by the customer. When the flag is removed, the customer may be eligible for future on-account purchases.

STOP Phone Calls: This is a Critical Event. When notification is received verbally or in writing, we will immediately flag the account and cease collection activities.

Upon a customer’s request, whether verbally or written, that Badcock stop all collection phone calls, you must stop calling the customer immediately; and must submit a request to add STOP Phone Calls flag to the account using the Footprints

Work Order process.

The flag will be added by Credit Services and all collection calls to the customer must stop immediately. While the flag is on the account, the customer will receive statements and payments can be made, but no new account sales can be made.

By requesting collection calls to stop, the customer has limited our ability to collect and raised their credit risk to us. This increased credit risk is grounds for us to freeze the account to prevent future on-account purchases. To remove the Stop Phone Calls flag, Credit Services must receive a written authorization from the customer. The written authorization can be in the form of a letter or a new credit application; however, the authorization must be signed and dated by the customer with phone number(s) that the customer agrees to be used for collection calls.

Credit Services will only accept a verbal request to rescind the previous STOP Phone Call request if the call is received on our recorded line, and the Verbal Authorization Statement is read to the customer with an affirmative response. When the flag is removed, the customer will be eligible for future on-account purchases.

Chapter 13 Complete Discharged: The account holder completed the Chapter 13 bankruptcy plan approved by the court. Any remaining balance on the account will be cleared by CSARM BALI team.

A new credit report will be required to extend credit to the account after the bankruptcy has discharged. Re-activating a bankruptcy flagged account can only be done with a zero balance (Receivables or Charge-off). To remove the flag a work order must be submitted.

Only Credit Services BALI Team and authorized Credit Services personnel can remove this flag following the established Policies and Procedures.

Chapter 7 Discharged: The account holder received a discharge of the debt in the Chapter 7 bankruptcy case. We will have one attempt to contact the customer to repossess the merchandise we are Legally Entitled To. We cannot ask the customer for money.

A new credit report will be required to extend credit to the account after the bankruptcy has discharged. Re-activating a bankruptcy flagged account can only be done with a zero balance (Receivables or Charge-off). To remove the flag a work order must be submitted.

Only Credit Services BALI Team and authorized Credit Services personnel can remove this flag following the established Policies and Procedures.

Reaffirmation Pending: The BALI Team will add this flag when an attorney representing a Chapter 7 Active Bankruptcy customer requests a Reaffirmation Agreement. After the Chapter 7 Bankruptcy discharges, the signed Reaffirmation Agreement is received and scanned into the customer’s account file and payments are made per the agreement, the Reaffirmation Pending flag will be removed.

Once the Chapter 7 Active Bankruptcy and Reaffirmation Pending flags have been removed the account is no longer under bankruptcy protection and the account is restored to an active status. Only Credit Services BALI Team can add or remove this flag. Accounts with this flag are not eligible for a Past Due Adjustment in accordance with AR-145.

Charge-Off: The account has met the established criteria for non-payment to be charged-off. The account cannot be re- activated and the account holder or co-applicant cannot make future credit purchases if a balance remains on the account. To remove the flag a work order must be submitted.

Charge-Off Flag can be removed by any Credit Services Assistants as long as the established Policies & Procedures are followed. If a litigation related flag is also on the account, verification of any court costs or interest that may be owed is required prior to removing the Charge-Off flag in addition to the account having a zero balance (Receivables or Charge-off).

Court Payment Plan: The Court Payment Plan flag will be applied to an account upon the happening of either of the two following events:

The court did not enter a final judgment against the account holder (stays an entry of a final judgment) because the account holder entered into a pre-judgment stipulation with Badcock agreeing to make monthly payments. The pre-judgment stipulation is filed with the court.

Litigation resulted in a money judgment being entered against the account holder; however the court stayed execution of the judgment because the account holder agreed to enter in a stipulation to make payments on the judgment until it is satisfied. The stipulation is made part of the final judgment (sometimes also called a Consent Judgment). The balance must be paid to zero and court costs paid before the Court Payment Plan flag can be removed. To remove the flag, a work order must be submitted. A new credit report will be required to re-activate the account for future finance purchases.

Failure to pay as agreed will result in the court either (i) entering a default judgment (in the case of a pre-judgment stipulation), or (ii) issuing execution of the judgment (in the case of a pre-judgment with stay of execution), upon a motion and/or affidavit being filed by Badcock. Depending on the result, the appropriate flag will be applied by Credit

Services. Only Credit Services BALI Team can add or remove this flag.

Deceased: The Corporation has received appropriate documentation (death certificate) proving the account holder is deceased. The BALI Team will determine if filing a claim against the estate in Probate Court is an option. The NI Alert Code will be added to the account by Credit Services when the flag is added to the account,

Dispute: The Corporation has received appropriate documentation from the account holder to notify us of a dispute with the balance or the account. Credit Services will review the dispute and the supporting account documents to determine if the dispute is valid or not. Credit Services will complete the review and either resolve the dispute with the appropriate action or notify the account holder the balance is valid within 30 days of receiving the dispute. The NI Alert Code will be added by Credit Services when the flag is added to the account.

Fraud: Credit Services has received documentation proving the account was fraudulently created. Credit Services will consult with the Loss Prevention department to determine if additional action is to be taken, such as filing a police report or obtaining other documentation to verify the fraud.

The NI Alert Code will be added to the account by Credit Services when the flag is added to the account. Once the fraud has been proven and the account balance captured and charged to the store, Credit Services will clear the account balance and make the necessary reporting to the Credit Reporting Agencies to ensure the account does not report. Accounts with this flag are not eligible for a Past Due Adjustment in accordance with AR-145.

Insurance Claim Filed: The customer has filed and received approval for an insurance claim using the optional credit insurance. The Customer Insurance Department adds this flag when the customer submits an Unemployment or Disability Claim Form and approval and payment have been received. After the insurance claim is paid in full or no activity in excess of 45 days, the claim is closed and the Insurance Claim Filed flag is removed. An Insurance Claim Filed flag will NOT be placed on accounts with Property or Life submitted claims, regardless of the approval status.

No collection activity will occur while this flag is on the account. It’s recommended that stores review accounts with Insurance Claim Filed flags to determine if the claim is still active. If it’s determined the claim is not active, a request to remove the flag should be submitted to allow collection activities to continue if the account is past due.

Pending Litigation Approval: Accounts with this flag will be litigated. The Pending Litigation Approval flag will be added to the account while the BALI team gathers the necessary documents to place the account with the Attorney.

Litigation Active: Account is actively going through the Litigation process.

Flag Removed: In order for the Litigation Active flag to be removed (i) a final judgment for money (without a pay plan) must be received, or (ii) the customer must enter into a pre-judgment stipulation or stipulation on a judgment with stay of execution (sometimes called a Consent Judgment) under payment terms set forth in Court Payment Plan section above. The outcome of litigation will determine what flag will be added to the account when the Litigation Active flag is removed; Money Judgment (no payment plan), Court Payment Plan, Wage Garnishment, or Repossession. The account must be paid to a zero balance along with court costs for the Litigation Active flag to be removed. To remove the flag, a work order must be submitted. A new credit report will be required to re-activate the account for future finance

purchases.

Only the Credit Services BALI Team can add or remove this flag.

Litigation Incomplete: This flag means the account was either filed previously or was returned by the Attorney due to multiple reasons.

The entire balance on the account must be paid along with court costs if applicable before the Litigation Incomplete flag can be removed.

To remove the flag, a work order must be submitted. A new credit report will be required to re-activate the account for future finance purchases. Only Credit Services BALI Team can add or remove this flag.

Money Judgment (No Pay Plan): Litigation resulted in a money judgment against the account holder with no payment arrangements recorded with the court. This flag replaces the Litigation Active flag.

Any payments made to accounts flagged Money Judgment must be taken by Credit Services BALI Team to ensure we comply with the legal requirements to record a Satisfaction of Judgment within the required time frame when the balance is paid in full.

Do not quote a pay-off balance for accounts with the Money Judgment flag until you have confirmed what was awarded in the judgment. Credit Services must provide you with the total pay-off amount for these accounts. If interest was awarded in the Final Judgment the accrued interest must be paid before the Money Judgment flag can be removed.

For a Money Judgment flag to be removed; the balance must be paid to zero, court costs must be paid, and the Satisfaction of Judgment must be filed with the courts before the request to remove the flag will be processed.

To remove the flag, a work order must be submitted. A new credit report will be required to re-activate the account for future finance purchases. Only Credit Services BALI Team can add or remove this flag.

Wage Garnishment: Litigation resulted in a money judgment against the account holder and a wage garnishment was subsequently filed by Badcock and issued by the courts requiring the garnishment of the account holder’s wages to the amount of the judgment.

The balance must be paid to zero (Receivables or Charge-off) before the Wage Garnishment flag can be removed. Failure to pay as agreed will result in the filing of a Default Judgment against the customer. To remove the flag, a work order must be submitted. A new credit report will be required to re-activate the account for future finance purchases. Only Credit Services BALI Team can add or remove this flag.

Repossession: The account had merchandise on the LET repossessed and processed through STOREnet using the repossession process. The Repossession flag is automatically set when this process is used for a voluntary repossession (must be approved by CSARM).

A new credit report will be required to extend credit to the account after the repossession flag has been removed. Removing a Repossession flag can only be done with a zero balance (Receivables or Charge-off). To remove the flag a work order must be submitted. This Repossession date must be at least 25 months or longer for the flag to be removed.

Skipped: Field Services may submit a request to add the Skip flag to accounts they have verified the customer is no longer at the address provided.

Credit Services will require proof of correct address to remove a Skipped flag from accounts with a past due status.

Return Mail Flag: Due to the customer’s address we have in our system not matching the Post Office records (National Change of Address – NCOA) the mail being sent to the customer is being returned to us. This flag will serve as a notification to the store to verify the address is correctly entered into the system using the appropriate abbreviations and Address Line 1 in STOREnet. The Address Line 2 field should not contain any information.

The customer must be notified to either go online to the Official USPS Change of Address website update their address or go to the Post Office that serves them to update their address. Failure to notify the Post Office of their change of address will result in the mail continuing to be returned and the Return Mail flag being added to the account.

The Return Mail flag will prevent future purchases and the mailing of statements. The flag will block the sending of collection letters, but home visits and collection phone call activity will continue.

Credit Services will require proof of correct address to remove a Return Mail flag from accounts with a past due status.

Account Closed Customer Request: When customer contacts Credit Services requesting their account be closed, the Account Closed Customer Request will be added to the account. This flag is not to be used in conjunction with any of the Litigation, Bankruptcy, Repossession or Charge-Off flags.

Customer Documentation Needed: This is for accounts missing signed Credit Agreements. When it is discovered that a signed Credit Agreement is not on file or expired, a request to add the flag can be done using the Footprints Work Order process.

The flag will be added by Credit Services. To remove the flag, Credit Services must receive a copy of the signed and dated Credit Agreement. The signed Credit Agreement will cover transactions going forward from the date of the Credit Agreement.

180DLP: Credit Services will add this flag and the TX Alert Code to accounts monthly when the account reaches over 180 days since date of last payment. This flag will stop the addition of late fees and finance charges and prevent any sales transactions. Monthly, CSARM will run a report for accounts with this flag and remove the 180DLP flag and TX Alert Code if a payment has been made on the account or the past due has reached zero. This will enable finance charges and late fees to be assessed to these accounts after a payment is received.

60DLP: Credit Services will add this flag and the TX Alert Code to accounts monthly when the account reaches over 60 days since date of last payment for MS and FL stores only. This flag will stop the addition of late fees and finance charges and prevent any sales transactions. Monthly, CSARM will run a report for accounts with this flag and remove the 60DLP flag and TX Alert Code if a payment has been made on the account or the past due has reached zero. This will enable finance charges and late fees to be assessed to these accounts after a payment is received.

PDA Not Eligible: Accounts may receive a past due adjustment only once every six-months. When an account receives a past due adjustment, the PDA Not Eligible (No Past Due Adjustments) flag will be added to the account. While this flag is on the account, no past due adjustments can be made. When the flag add date reaches five months CSARM will remove the flag or if the account reaches a zero balance. The PDA Not Eligible flag removal process will be done monthly. Accounts with this flag are not eligible for a Past Due Adjustment in accordance with AR-145.

Bad Phone Number: When CSARM is notified a phone number associated with an account is a disconnected or no longer associated with the accountholder, the Bad Phone Number flag will be added. This is an information only flag. This flag will not stop purchases. When store or company personnel access an account with this flag, a new primary phone number should be obtained and entered into the Customer Settings. If a phone number is changed with the Bad Phone flag a work order should be submitted to remove the flag. CSARM will remove the flag and contact the number to verify the newly entered number is associated with the accountholder.

SMRA Plan: When CSARM adds the SMRA Plan to an eligible active duty military accountholder, the SMRA Plan flag will be added. While the flag is on the account, the customer will receive statements and payments can be made, but no new account sales can be made. An account with the SMRA Plan flag cannot have litigation filed on the account, however, all other collection activity is allowed.

Primary Multiple Accts: When Credit Underwriting discovers an accountholder is listed as the primary on more than one account, the Primary Multiple Accts flag will be added to both accounts. The flag will remain on the accounts until one of the accounts reaches a zero balance. This flag will prevent additional sales to either account while the flag is in place. When the flag is removed the SSN will be removed from one account and the credit limit on the account to remain active will have the credit limit verified to ensure it does not exceed the authorized credit limit.

Internal Review: Credit Underwriting will add this flag to accounts on a case by case basis for various reasons. The most common reason is related discrepancies during the credit application and approval process or if fraudulent activity is suspected. Accounts with this flag are not eligible for a Past Due Adjustment in accordance with AR-145.

Only the Director of Credit Underwriting can remove Internal Review flags from accounts.

Account Closed by Creditor: Credit Underwriting will add this flag to accounts on a case by case basis for various reasons. The most common reason is related discrepancies which have been confirmed through the credit application and approval process, or if fraudulent activity has been determined to have occurred during the application process. Only the Director of Credit Underwriting can remove Account Closed by Creditor flags from accounts.

McCoy Law Firm TN: The account has been sent to our attorney for Tennessee accounts. This Law Firm will work the accounts similar to a third party collection agency. Accounts that do not pay will have litigation filed on them. The law firm must be contacted directly to make payments.

Law Office of Jennifer McCoy 615.500.8577 (numerous Tennessee stores)

No payments can be accepted by the store or Credit Services.

Balance must be paid to zero (Receivables or Charge-off) and a new credit report is for the flag to be removed.

Finkelstein Law Firm: The account has been sent to our attorney for Tennessee accounts. This Law Firm will work the accounts similar to a third party collection agency. Accounts that do not pay will have litigation filed on them. The law firm must be contacted directly to make payments.

Finkelstein Kern Steinberg & Cunningham 865-525-0238 (numerous Tennessee stores)

No payments can be accepted by the store or Credit Services.

Balance must be paid to zero (Receivables or Charge-off) and a new credit report is required for the flag to be removed.

TN Law Firms: The account has been sent to an attorney for Tennessee accounts. These Law Firms will work the accounts similar to a third party collection agency. Accounts that do not pay will have litigation filed on them. The law firm must be contacted directly to make payments. The law firm information is listed below and the stores they cover:

No payments can be accepted by the store or Credit Services. Balance must be paid to zero (Receivables or Charge-off) and a new credit report is required for the flag to be removed.

American Alliance: The account has been sent to this Agency for possible litigation. This agency will work the accounts similar to a third party collection agency. Accounts that do not pay will have litigation filed on them. The Agency must be contacted directly to make payments.

American Alliance of Creditor Attorneys 833-222-3270

No payments can be accepted by the store or Credit Services.

Balance must be paid to zero (Receivables or Charge-off) and a new credit report is required for the flag to be removed.

Settlement: This is for accounts the CSARM Team has agreed to accept less than the total balance owed due to specific circumstances. The customer will receive a settlement letter outlining the settlement plan if the entire amount of the settlement is not paid at time of the offer. Settlement offers have a limited offer time period. If the settlement amount is not paid within the specific time period, the Settlement flag will not be applied and the entire remaining account balance will be due. Flag will only be added once customer pays the agreed upon settlement amount in full. At the company’s direction settlements will be offered on charge-off accounts not placed with third party agencies.

When the settlement amount is paid, Credit Services will remove the remaining balance and report the account to the credit bureau as paid less than full amount. The customer will not be eligible to have an active account for at least 5 years from the Settlement flag date.

Pulling credit and establishing credit limits for accounts flagged settlement will be done by Credit Services following the Flag Removal Credit Limit Procedure.

Employee Corporation - Corporate Stores Only: Corporate employees who sign the Employee Account Addendum will have this flag on their account. This flag will prompt a payroll deduction of ½ of MMP at each pay period. Accounts with this flag will not receive collection activity.

Credit Services will receive a list of employees from Human Resources for adding and removing Employee Corporation flags. This flag will be for corporate stores only.

AVANTEUSA – AVANTEUSA is a Third Party Collection Agency: The account has been sent to a third party collection agency to be worked. Customer must be referred to the Collection Agency (AVANTEUSA @ 1-866-618-9041) with any questions.

Payments can be accepted by the store or Credit Services.

Charge-off Balance must be paid to zero and a new credit report is required for the flag to be removed.

Phoenix – Phoenix is a Third Party Collection Agency: The account has been sent to a third party collection agency to be worked. Customer must be referred to the Collection Agency (Phoenix @ 1-855-342-6567) with any questions.

Payments can be accepted by the store or Credit Services.

Charge-off Balance must be paid to zero and a new credit report is required for the flag to be removed.

Sunrise – Sunrise is a Third Party Collection Agency: The account has been sent to a third party collection agency to be worked. Customer must be referred to the Collection Agency (Sunrise @ 1-844-727-2638) with any questions.

Payments can be accepted by the store or Credit Services.

Charge-off Balance must be paid to zero and a new credit report is required for the flag to be removed.

GA Goodman Law Firm: The account has been sent to our attorney for Georgia accounts. This Law Firm will work the accounts similar to a third party collection agency. Accounts that do not pay will have litigation filed on them. The law firm must be contacted directly to make payments.

Law Offices of Emmett Goodman 877.354.3476

No payments can be accepted by the store or Credit Services.

Balance must be paid to zero (Receivables or Charge-off) and a new credit report is required for the flag to be removed.

AL Law Firm: The account has been sent to our attorney for Alabama accounts. This Law Firm will work the accounts similar to a third party collection agency. Accounts that do not pay will have litigation filed on them. The law firm must be contacted directly to make payments.

Law Offices of Key, Greer, Harrison & Casey 205.403.3484

No payments can be accepted by the store or Credit Services.

Balance must be paid to zero (Receivables or Charge-off) and a new credit report is required for the flag to be removed.

Smith Debnam Narron Law Firm: The account has been sent to our attorney for South Carolina, North Carolina and Virginia accounts. This Law Firm will work the accounts similar to a third party collection agency. Accounts that do not pay will have litigation filed on them. The law firm must be contacted directly to make payments.

Law Offices of Smith Debnam Narron Drake Saintsing & Myers, LLP 919-250-2142 or 888-704-0884

No payments can be accepted by the store or Credit Services.

Balance must be paid to zero (Receivables or Charge-off) and a new credit report is required for the flag to be removed.

Balance Uncollectable: Due to various reasons, Credit Services has determined collection activities will not continue for the remaining balance on the account. Any remaining balance on the account will be moved to Non-Accrual and the account will be charged-off during the monthly charge-off process.

The NI Alert Code will be applied when the Balance Uncollectable flag is added to the account. The NI Alert Code will be removed if the Balance Uncollectable flag is removed.

The account number cannot be used again by the customer to make finance purchases as long as the account has the Balance Uncollectable flag and any balance (Receivables or Charge-Off). Customers must have a zero balance (Receivable or Charge-off), and a new credit report pulled for customers with a Balance Uncollectable flag on a previous account to be eligible to make finance purchases.

This flag is used primarily for accounts assigned to locations 9046, 9047, 9048.

STOP Home Visits: Upon a customer’s request, whether verbal or written, that Badcock stop collection home visits, you must stop making collection home visits to the customer immediately, and submit a request to add STOP Home Visits flag to the account using the Footprints Work Order process or sending an email to your supervisor. The flag will be added by Credit Services and all collection home visits to the customer must stop immediately. While the flag is on the account, the customer will receive statements and payments can be made, but no new account sales can be made.

By requesting collection home visits to stop, the customer has limited our ability to collect and thereby raised their credit risk to us. This increased credit risk is grounds for us to freeze the account to prevent future on-account purchases. To remove the STOP Home Visits flag, Credit Services must receive written authorization from the customer signed and dated with a physical address that will be used for collection home visits if needed. We will only accept written authorization to rescind the previous STOP Home Visits request. Credit Services will only accept a verbal request to rescind the previous STOP Phone Call request if the call is received on our recorded line, and the Verbal Authorization Statement is read to the customer with an affirmative response. When the flag is removed, the customer’s will be eligible for future on-account purchases.

HPP: Credit Services will add this flag to accounts with a confirmed payment hardship in accordance with the CSARM Work Instructions. The customer has agreed to their account being closed to new activity until a zero balance is reached or the account has met the established criteria to remove flag. The account balance is transferred to a special Hardship Payment Plan in STOREnet. Payment default on this special hardship payment plan will result in the account charging off in accordance with the CSARM work instruction guidelines. The HPP flag cannot be removed from an account until the account balance reaches a zero balance or the account has met the established criteria to remove flag.

FL Opt Out: Accounts with this flag means that the customer opted out of our new contractual rate for the state of Florida. The flag was added by Credit Services. To remove the flag, Credit Services must receive a copy of the signed and dated Credit Agreement. The signed Credit Agreement will cover transactions going forward from the date of the Credit Agreement.

SCVA Opt Out: Accounts with this flag means that the customer opted out of our new contractual rate for the state of South Carolina or Virginia. The flag was added by Credit Services. To remove the flag, Credit Services must receive a copy of the signed and dated Credit Agreement. The signed Credit Agreement will cover transactions going forward from the date of the Credit Agreement.

TLO: This is an informational flag for the BALI team. Any accounts with this flag means that it is under review for possible litigation due to the delinquency of the account. This flag can be removed if the account has reached a zero balance or the account is no longer past due.

Dealer Employee: This is an informational flag for the CSARM team. Dealer and Dealer Employee accounts will have this information flag to alert the CSARM team and Retail Ops. The flag will be added when a Dealer or Dealer Employee is entered into STOREnet with a User ID, and it will be removed when the person is no longer employed by a Dealer store.

Legal Demand Letter: This flag is for accounts meeting our past due status criteria to receive a Legal Demand Letter from our approved Attorney(s). These accounts will receive correspondence from our Attorney notifying them of their options to avoid charge-off and possible litigation. When the flag add date reaches six months CSARM will remove the flag or if the past due has reached zero.

Pre Charge Off: This flag is for accounts meeting our past due status criteria that have been placed with a 3rd Party Collection Agency prior to charge-off. These accounts will receive correspondence and phone calls from our 3rd Party Collection Agency notifying them of their options to avoid charge-off and possible litigation. This flag will be removed if payment arrangements are met, a Settlement is successfully completed, or the account meets the criteria to be moved to Charge Off status. If payment arrangements are not made prior to the charge-off date of last payment criteria, the account will charge-off during the monthly charge-off process.

Payment Deferred: Accounts may receive a one-time payment deferral for the current payment due when there is a state of emergency or natural disaster. This one-time exception is only allowed during the period specified and only once every six-months. When an account receives a payment deferral for the extraordinary circumstance clause in accordance with AR-145, the Payment Deferred flag will be added to the account. When the flag add date reaches five months CSARM will remove the flag or if the account reaches a zero balance. The Payment Deferred flag removal process will be done monthly. Accounts with this flag are not eligible for a Past Due Adjustment in accordance with AR-145.

Do Not Text: This flag is for accounts that have received a text message that have replied STOP or have notified CSARM or any third-party collectors (verbally or in writing) that they would no longer like to receive text messages. This flag can only be removed with written consent that they would like to begin receiving text messages again.

ADI-Returned Mail: This flag is placed on an account when the new account welcome letter was either not deliverable by the post office or came back as returned. To remove the flag, Credit Underwriting must receive confirmation of customer address. Only credit underwriting can remove this flag after following approved policy & procedures.

AR-165: Safeguarding Customer Information

Effective Date: N/A

Supersedes: N/A

POLICY:

The Safeguards Rule requires Badcock to consider all areas of its operation, including areas that are particularly important to information security - its stores.

It is the policy of the W.S. Badcock Corporation (“Badcock”) to utilize Personal Data relating to its employees, customers, and suppliers only for legitimate business purposes. Such information will be collected, processed, stored, and transferred among Badcock retail locations wherever located, only in a manner consistent with Badcock business practices and policies, and in compliance with applicable laws.

Compliance. Failure to comply with this policy may result in disciplinary action or possible consumer-initiated legal action.

Ensuring Compliance of Safeguard Policy:

Protecting Computer Systems:

Effective security management includes the prevention, detection, and response to attacks, intrusions, or other system failures. In an effort to assist in the protection of customer information, WSBC implements industry-standard security counter-measures, which include, but are not limited to:

Protecting Customer Confidentiality:

Prohibited Activities:

The disclosure of non-public customer information to unauthorized individuals is prohibited. Examples of unauthorized disclosure include, but are not limited to:

Employee Training:

Employees with access to non-public information shall be trained by the Dealer or Store Manager to take basic steps to maintain the security, confidentiality and integrity of customer information, including but not limited to:

General Information:

An Authorization to Release Information form must be completed by customers if they wish to have their account information shared with other individuals.

This authorization form will need to be completed for each person to whom the customer wishes their account information shared or discussed by the store. The names of these authorized people must be entered into the customer notes, and the identification of the accountholder and any authorized person must be verified prior to releasing any non-public information.

When in doubt regarding this policy – ASK.

AR-170: Accuracy and Integrity [Data furnisher duties – Credit reporting]

Effective Date: 05/22/2019

1. Purpose

The purpose of this policy is to ensure W.S. Badcock Corporation (“Badcock”) establishes, implements and maintains reasonable policies and procedures regarding the accuracy and integrity of the consumer information our company furnishes and reports to a consumer reporting agency (CRA) in compliance with 16 C.F.R. Part 660.3. Badcock is a data furnisher. As such, the Fair Credit Reporting Act (FCRA) along with governmental agencies such as the Consumer Financial Protection Bureau and the Federal Trade Commission impose many responsibilities on our organization. This policy addresses the steps we take to ensure the data we furnish to a credit reporting agency is accurate and complete. It also supplements the policies regarding our response to consumer disputes about the information we furnish to a credit reporting agency (CRA).

2. Scope

These policies and procedures apply to all Badcock employees, contractors, consultants, temporary workers, service providers, and any third parties who participate in furnishing information about consumer accounts to consumer reporting agencies.

3. General

Badcock will exercise reasonable efforts:

4. Procedure

Duty to Review and Update - Policies and procedures related to the accuracy and integrity of reported credit information will be periodically reviewed semi-annually or more frequently if necessary, by the Compliance Department in conjunction with the Credit Services and Accounts Receivable Management Department (“CSARM”) and Legal Department based upon consideration of:

Data Furnisher Batch Process – Badcock furnishes information relating to consumers to one or more CRAs for inclusion in a consumer report through the electronic reporting system known as E-Oscar and under the standard data reporting format known as Metro-2. Badcock provides updates of consumer reports to the CRAs monthly using a batch process, wherein the Metro-2 file containing consumer account data is generated from StoreNet. The Information Technology Department (“IT”) is responsible for the creation of the Metro-2 file and the transmission of the file to the CRAs using a secure data encryption method. Such process is outlined in the IT Metro 2 process procedures and work instructions. Content of Data Furnished on an Account - The information relating to a consumer or a consumer account by Badcock will:

In addition, any information furnished by Badcock to a CRA will be furnished in a standardized and understandable form, manner and with a date identifying the time period to which the information pertains.

Training - Staff training shall be conducted for all employees, officials, contractors, and service providers for whom it is reasonably foreseeable that they may be involved in the furnishing of information relating to consumers to consumer reporting agencies by Badcock.

Training regarding these policies and procedures shall take place at least annually, and additional training shall be provided to staff by the CSARM Department or as directed by the Compliance Department.

Practices of Contractors and Service Providers – The Compliance Department shall ensure the activities of all service providers and contractors whose activities may affect the accuracy or integrity of information about consumers furnished to CRAs by Badcock are conducted in accordance with these policies and procedures.

Internal Controls Regarding Accuracy and Integrity of Furnished Information – The management and staff of the CSARM, Compliance, and Legal Departments shall periodically, but no less than semi-annually, review the current standard procedures used to furnish information about consumers to CRAs to ensure information is reported accurately and with integrity as outlined in these policies and procedures.

The Internal Audit Department staff shall also perform a periodic review of a randomly selected sample of information provided to CRAs to ensure Badcock is adhering to these policies and procedures.

5. References and Related Documents

6. Disciplinary and Remedial Action

In collaboration with HR, any violation of this policy will subject the employee to progressive remedial action, including immediate termination.

7. Record Retention

The human resources department shall note any confirmed violation of this policy by any employee in the employee’s personnel record. Records pertaining to this policy will be retained in the appropriate form and for the duration required under state and/or federal law, by the Human Resources department.

8. Review History

9. Governance

AR-175: Credit Reporting Accuracy and Integrity [Direct Consumer Disputes]

Effective Date: 05/22/2019

1. Purpose

The purpose of this policy is to detail the process by which W.S. Badcock Corporation (“Badcock”) timely recognizes and responds to consumer disputes submitted in writing, directly to Badcock by consumers at the address provided for in the Badcock Easy Purchase Plan Credit Agreement and Security Agreement (“Credit Agreement”).

As a furnisher of consumer information to a CRA, the Fair Credit Reporting Act (FCRA) imposes many responsibilities on our organization regarding consumer disputes including the duty to investigate and respond. Once a consumer submits a dispute directly to Badcock regarding any of the information we have furnished, we are required to investigate the dispute, determine the accuracy and integrity of the information we furnished and respond to the consumer. The Credit Services and Accounts Receivable Management Department (“CSARM”) is responsible for receiving and administering all direct consumer disputes.

2. Scope

This policy applies to all direct disputes related to a consumer account received directly from a consumer in writing. A direct dispute is a dispute submitted in writing directly to Badcock by a consumer concerning the accuracy of any information contained in a consumer report and pertaining to an account or other relationship that the furnisher has or had with the consumer.

3. General

Badcock will accept written disputes from consumers related to accounts in Badcock’s possession on which Badcock credit reports. On all written disputes that are not deemed frivolous or irrelevant, Badcock will perform a reasonable investigation of the dispute and respond to the consumer with the results of the dispute within 30 days. If the reasonable investigation reveals that information reported to credit reporting agencies (CRAs) is inaccurate, misleading, or incomplete, Badcock will notify all CRAs to which the information was reported to modify, block, or delete the information.

Frivolous or irrelevant disputes will include, but will not be limited to, disputes that have already been investigated and responded to or disputes that do not contain sufficient information to identify the account, or to identify the specific information disputed by the consumer. These disputes will be responded to within 5 days of receipt by Badcock with information explaining why the dispute was deemed frivolous or irrelevant and any missing information that may be necessary to initiate an investigation of the dispute.

For accounts that have not been credit reported by Badcock, these disputes will be deemed frivolous or irrelevant and will be responded to within 5 days of receipt with information to direct the consumer to other channels to resolve their dispute.

4. Procedure

Duty to Investigate - As a furnisher of consumer information to a CRA, Badcock is required to conduct a reasonable investigation of a direct dispute if the consumer submits a proper, written notice of dispute [See Contents of Dispute below] and it relates to:

Contents of Written Dispute - The consumer must include the following information in the written notice of dispute before Badcock is required to investigate and respond and the notice must be delivered to the address posted by Badcock for this purpose.

If a CSARM employee of Badcock is in doubt as to whether the consumer’s dispute meets the required threshold to trigger our duty to investigate, the dispute shall be forwarded within 24 hours of receipt to the Compliance and Legal Departments for a final determination.

The consumer’s notice of dispute must include:

Exceptions - Badcock is not required to investigate a direct dispute if the CSARM Department determines the dispute is related to:

Frivolous Disputes - Badcock is not required to investigate a direct dispute if it is determined the dispute is frivolous or irrelevant.

A dispute may be deemed frivolous or irrelevant if:

Upon a determination by the CSARM Department a dispute is frivolous or irrelevant, Badcock will notify the consumer of the determination within five business days of making the determination by mail or other means if authorized by the consumer. The notice must contain Badcock’s reasons for making the determination and identify what information is necessary to investigate the disputed information.

Reasonable Investigation Requirements - Upon receipt of a valid direct dispute, Badcock will review all relevant information provided by the consumer with the dispute notice, complete a reasonable investigation within 30 days of receipt, with the option for an additional 15 days if the consumer submits additional information during the 30-day period to investigate the consumer’s dispute and if the investigation finds the information reported was inaccurate, and promptly notify each consumer reporting agency to which Badcock provided inaccurate information of that determination and provide to the consumer reporting agency any correction to that information that is necessary to make the information provided by the furnisher accurate.

The CSARM Department will ensure our review of all relevant information provided by the consumer with the dispute notice includes the documents the consumer included with the dispute or transmits to us during the investigation period and Badcock’s own information with respect to the dispute.

Under no circumstances will Badcock simply remove the item from the consumer’s credit report without first conducting the reasonable investigation described above and responding to the consumer unless one of the exceptions listed above applies to the situation.

Valid and Invalid Direct Disputes - In the event a dispute is received from a consumer, be it written or oral, the debt should be marked as disputed on the consumer’s credit report. This will be true in all instances when a consumer disputes

a debt, so long as the debt is being reported to a CRA.

Written Dispute Following a Cease and Desist - If a consumer submits a valid dispute directly to Badcock at the address posted for this purpose after sending a written cease communication request, Badcock will respond to the consumer solely to inform the consumer of the result of our investigation or to inform the consumer his or her dispute is frivolous or irrelevant.

Review by Compliance Department - The Chief Compliance Officer will monitor the dispute response process and compile a summary report of the ACDV disputes each month. This report will be analyzed by the Chief Compliance Officer and the Compliance Management Committee at its next scheduled meeting to identify any need for changes in our policies, procedures or investigative response plan, our Equal Credit Opportunity Act (ECOA) policies or procedures or our Unfair, Deceptive, Abusive Acts and Practices (UDAAP) policies and procedures.

5. Disciplinary and Remedial Action

In collaboration with HR, any violation of this policy will subject the employee to progressive remedial action, including immediate termination.

6. Record Retention

The human resources department shall note any confirmed violation of this policy by any employee in the employee’s personnel record.

Records pertaining to this policy will be retained in the appropriate form and for the duration required under state and/or federal law, by the CSARM department.

7. Review History

8. Governance

AR-180: Accuracy and Integrity [Indirect Dispute ACDV/e-OSCAR]

Effective Date: 05/22/2019

1. Purpose

The purpose of this policy is to detail the process by which W.S. Badcock Corporation (“Badcock”) timely recognizes and responds to consumer disputes submitted to our organization indirectly by way of a credit reporting agency (CRA).

As a furnisher of consumer information to a CRA, the Fair Credit Reporting Act (FCRA) imposes many responsibilities on our organization regarding consumer disputes including the duty to investigate and respond. Once a consumer submits a dispute to a CRA regarding any of the information we have furnished, the CRA is required to investigate the dispute and collect information from us about the accuracy and integrity of the information we furnished. As the data furnisher, we have a legal duty to investigate the dispute and respond.

2. Scope

This policy applies to any indirect dispute received by Badcock from a credit reporting agency.

An indirect dispute is a dispute submitted by the consumer to a CRA concerning the accuracy of any information contained in a consumer report and pertaining to an account or other relationship that Badcock has or had with the consumer.

3. General

Badcock will accept indirect disputes from consumers routed through CRAs via the e-OSCAR system. Any indirect dispute received by company name will trigger a reasonable investigation of the dispute and a response to the CRA with the results of the investigation within 15 days. This reasonable investigation will include all information at the disposal of Badcock as well as any information transmitted to Badcock by the CRA. If the investigation reveals that any information reported by Badcock to CRAs was inaccurate, misleading, or incomplete, Badcock will inform all CRAs to which the information was reported and request that this information be modified, blocked, or deleted.

4. Procedure

CRAs use an automated process called the Automated Credit Dispute Verification (ACDV) to route consumer disputes to Badcock. Upon receipt of an ACDV, Badcock, through its Credit Services and Accounts Receivable Management (“CSARM”) department will:

Badcock must complete its investigation within the time frame dictated by the CRA in the ACDV notice of dispute. Administration by CSARM and Review by Compliance Department-The CSARM department will administer, oversee and monitor the dispute response process and compile a summary report of the ACDV disputes no less than quarterly. This report will be analyzed by the Compliance Department to identify any need for changes in our policies, procedures or investigative response plan, our Equal Credit Opportunity Act (ECOA) policies or procedures or our Unfair, Deceptive, Abusive Acts and Practices (UDAAP) policies and procedures.

5. References and Related Documents

 

Document Number(if applicable)		Title
		CSARM Procedures/Work Instructions

6. Disciplinary and Remedial Action

In collaboration with HR, any violation of this policy will subject the employee to progressive remedial action, including immediate termination.

7. Record Retention

The human resources department shall note any confirmed violation of this policy by any employee in the employee’s personnel record.

Records pertaining to this policy will be retained in the appropriate form and for the duration required under state and/or federal law, by the CSARM department.

8. Review History

 

Date		Reviewed by		Description of Update
4/5/2019		CSARM; Legal; Compliance		Policy created.

9. Governance

AR-185: Credit Reporting

Effective Date: 05/22/2019

1. Purpose

The purpose of this policy is to ensure W.S. Badcock Corporation’s (“Badcock”) compliance with its duties as a data furnisher to credit reporting agencies (CRAs) under the Fair Credit Reporting Act (FCRA).

2. Scope

This policy applies to all credit reporting operations of Badcock including the documentation and updating of account level information prior to credit reporting to a CRA.

3. General

Badcock is a data furnisher as defined by the FCRA and must provide credit reporting agencies with accurate and complete information about the consumer.

Badcock is committed to updating the consumer’s credit report with timely, accurate and complete information. Further, Badcock prohibits any employee from discussing the impact a payment or nonpayment may have on the consumer’s credit score, credit rating, credit worthiness or making any other statement to the consumer or any third party about his or her credit report.

4. Procedure

No employee of Badcock may remove an item from a consumer’s credit report for any reason. Removing an item from a consumer’s credit report may only be performed by authorized CSARM personnel following established procedures and work instructions. Consumer’s seeking removal of information from the consumer’s credit report shall be immediately transferred to the Credit Services department (“CSARM”). Upon receipt of the communication from the consumer (whether by phone, physical or electronic mail, or any other communication method), the CSARM department shall make an independent decision as to whether the account information or any other information reported by Badcock to the credit reporting agency was in error or the result of identity fraud.

Should it be determined any information was reported in error, the CSARM department shall submit a request to the credit reporting agency to update the previously reported information with accurate and complete information or flag the report as identity fraud. Any accounts removed from the consumer’s credit report by the CRA because they do not belong to the consumer or accounts that are flagged as identity fraud shall be closed.

During communications with the consumer or an authorized third party known to have accurate and complete information about the consumer, and information pertaining to personally identifiable information or account information Badcock has in its data base with regard to the consumer, the CSARM employee shall update and correct the information on the account and any tied accounts to reflect the updated information. The system shall automatically update the new information to the credit reporting agency.

All disputed accounts flagged as Fraud shall be escalated to the Loss Prevention Department. The Loss Prevention Department will investigate the potential fraud activity and report the incident to law enforcement if warranted. The Loss Prevention team will report back to CSARM the results of their investigation and CSARM will take the necessary steps to properly resolve the disputed fraudulent account based on their findings.

In the event an account is placed with a Law Firm for the purposes of Litigation, the CSARM team will flag the account with the appropriate law firm flag in STOREnet to prevent any additional sales or collection activity on the account. Badcock will not update or report any information to any CRA during the time an account is placed with a Law Firm. Any updates provided to any CRA will be handled by Badcock after the account is returned.

In the event an account is placed with a Collection Agency for the purposes of recovery collections, the Credit Services team will flag the account with the appropriate Collection Agency flag in STOREnet to prevent any additional sales or collection activity on the account by Badcock personnel. Any updates provided to any CRA will be handled by Badcock only after the account has been returned to Badcock from the Collection Agency.

If the Collection Agency elects to update the customer’s credit report during the time the account is placed with the agency, the agency must comply with all necessary FCRA requirements. Badcock will not update or report any information to any CRA during the time an account is placed with a Collection Agency.

In order to comply with this policy, Badcock shall report updates to consumer credit reports monthly to the credit reporting agency.

5. Disciplinary and Remedial Action

In collaboration with HR, any violation of this policy will subject the employee to progressive remedial action, including immediate termination.

6. Record Retention

The human resources department shall note any confirmed violation of this policy by any employee in the employee’s personnel record.

7. Review History

8. Governance

AR-200: Payment Deferrals

Effective Date: 04/30/2020

POLICY:

To comply with any special regulations or acts in affect due to a declared state of emergency by the state or federal government or to protect accountholders good standing during a natural disaster or extraordinary circumstances, at our discretion, we may defer the current payment due only for our accountholders giving them additional time to make that payment and to avoid a late fee.

PAYMENT DEFERRAL PROCESS:

At our discretion, we will allow for one-off payment deferral requests or at cycle payment deferrals for accounts rolling from Current to 1-30 past due status during extraordinary circumstances.

For either option, only the Current Payment Due will be deferred to avoid a late fee being added to the account. If a one- off request is granted, the past due status of the account will not change due to the Current payment adjustment. The accountholder will remain past due until past due payments are made.

The Payment Deferred flag will be added to the account and remain on the account for five months to avoid another payment deferral being granted. When processing a deferral, the Credit Services agent will need to set a future payment on the collection system (Windebt) before it gets approved and completed by management.

Accounts with a Payment Deferred flag will not be eligible for a Past Due Adjustment under our normal guidelines.

Monthly, CSARM will review Payment Deferred flagged accounts and the flag will be removed when the flag add date reaches five months.

RS-015: SafeGuard Rule

Policy RS-015 – SafeGuard Rule

Effective Date: 01/29/2020

Safeguards Rule History and Guidelines

As Badcock and it’s stores collect personal information from customers, such as their names, addresses and phone numbers, bank and credit card account numbers, income and credit histories, account information, and Social Security numbers, we are required to follow the Gramm-Leach Bliley Act (GLB). Under this act, Badcock is required to provide an annual privacy policy notice to our customers. The Federal Trade Commission (FTC) has issued the Safeguards Rule under the GLB.

Under the Safeguards Rule, Badcock must:

Badcock’s Requirements under the Safeguards Rule:

The Safeguards Rule requires Badcock to maintain a written information security plan that describes its program to protect customer information. As part of our plan, Badcock must:

In addition to developing our own safeguards, Badcock is responsible for taking steps to ensure that Dealers, Corporate stores, and service providers safeguard customer information in their care. Because of this federal requirement, Badcock has adopted a Safeguarding Customer Information policy.

RS-020: Disposal Rule

Policy RS-020 – Disposal Rule

It is very important to remember that much of the consumer information that we handle on a day-to-day basis is non-public information. With this in mind, all non-public information must be held in the strictest confidence, and when it is no longer required to be retained it should be destroyed pursuant to the Corporation’s policy of shredding and the Federal Trade Commission’s (FTC) Disposal Rule.

FTC Disposal Rule

The FTC Disposal Rule essentially provides enhanced protection to prevent identity theft by responsibly disposing consumer information.

The FTC Disposal Rule requires all entities to take “responsible measures” to keep “consumer information derived from a credit report” out of the hands of those who are not authorized to see or use it. Essentially, it is intended to provide enhanced protection against identity theft.

The law covers all consumer information from or derived from a consumer report in paper, electronic, or other forms.

Compliance

In order to assure compliance with the rule and protection of our customers, the following is required of all Corporate and Dealer Stores and Corporate Personnel handling consumer credit information:

RS-030: Fair Credit Billing Act – FCBA

Policy RS-030 – Fair Credit Billing Act - FCBA

Fair Credit Billing Act – FCBA

The Fair Credit Billing Act (FCBA) is an amendment to the Truth in Lending Act intended to protect consumers from unfair billing practices and to provide a mechanism for addressing billing errors in “open end” credit accounts, such as Badcock In- Store Credit Accounts.

Prior to engaging in any collection efforts, creditors must first be sure all consumer disputes and requests for information are responded to and explained.

Creditors who fail to comply with FCBA, amongst other penalties, lose the right to collect the amount in error, including any finance charges. A customer may also choose to sue the creditor in violation and in the case they win, may be awarded damages, plus twice the amount of any finance charge.

Applicable disputes about billing inquiries/errors:

Billing inquiry from consumer:

FCBA is triggered when the consumer contacts the Billing Inquiries address listed on the statement.

Creditor’s responsibilities:

Store compliance:

RS-035: Fair Credit Reporting Act – FCRA

Policy RS-035 – Fair Credit Reporting Act - FCRA

The Fair Credit Reporting Act (FCRA) enables consumers to obtain information from credit reporting agencies and holds reporting agencies accountable for compliance to procedures and regulations.

Relating to Badcock, stores and the main office are responsible for the following:

RS-040: Fair and Accurate Credit Transaction Act - FACT Act

Policy RS-040 – Fair and Accurate Credit Transaction Act – FACT Act

The Fair and Accurate Credit Transaction Act or FACT Act, as it is commonly called, amends the Fair Credit Reporting Act (FCRA) and is intended to protect consumer private information. Credit bureaus will provide certain alert information as part of the credit bureau reports to indicate potential risk, fraud and/or identity theft.

Upon receipt of an alert, stores are required to complete a FACT ACT / Red Flag Verification Form. Stores may also be required to take specific actions to verify the applicant’s identity before granting credit or increasing the credit limit on an existing account.

Initial Fraud Alert:

This will be an alert that is placed on the credit bureau file for anyone who asserts in good faith a suspicion that they have been or are about to become the victim of fraud. This alert will be on file for at least ninety (90) days.

Active Duty Alert:

This will be an alert that is placed on the credit bureau file at the request of active duty military personnel. This alert will remain on the file for a period of not less than twelve (12) months.

Extended Fraud Alert:

This will be an alert that is placed on the credit bureau file for anyone that submits an identity theft report to one of the national consumer reporting agencies. This alert will remain on the file for a period of up to seven (7) years.

Address Discrepancy Alert:

This alert will be returned when the address used on the Credit Application and input as part of the inquiry, does not match any of the addresses in the credit bureau file.

RS-045: Fair Debt Collection Practices Acts – FDCPA

Policy RS-045 – Fair Debt Collection Practices Acts - FDCPA

The Fair Debt Collection Practices Acts (FDCPA) is the most important legislation affecting the credit and collection industry. The findings and purpose of these acts are to eliminate abusive, deceptive and unfair collection practices.

In addition to Federal FDCPA, many states have adopted collection legislation.

NOTE: Even if no state statute on collection practices exists, most states prohibit “abusive or unconscionable” collection practices. Creditors and their agents are subject to these state laws. In its analysis of whether a collection practice is abusive or unconscionable, a state court will examine FDCPA to determine whether the practice is identified as a violation. If the activity does qualify as a violation, the court will most likely decide that an abusive or unconscionable collection practice took place under state law. The procedure of the court is to use FDCPA as the standard to measure the abusive collection activity and then apply the general terms of the state law to the activity.

Badcock policy requires that you comply with FDCPA and all state laws with respect to collection practices. It is your obligation to be well versed and remain in compliance with collection practices laws and Badcock policy related to collections.

Acquisition of Location Information

When communicating with a person other than the customer to locate a customer:

Ex. Whether the customer owes Badcock money or merchandise.

Time and Place of Contact

Attorney Representation

Cease Communication

Answering Machines

Prohibited Collection Activity

Harassment & Abuse

In your collection efforts, you may not engage in any conduct which harasses, oppresses, or abuses the customer. Without limiting the general application of the foregoing, the following are considered violations and are prohibited:

Threats of Violence

The use of or threat to use violence or other criminal means to harm the physical person, reputation, or property of any customer is prohibited.

Such statements such as: “Now were going to get tough here,” or “We’re going to get you one way or another,” are clear examples of threats.

Obscene Language

The use of obscene or profane language, the natural consequence of which is to abuse the customer, is prohibited. Religious slurs, profanity, obscenity, calling the customer a deadbeat or a liar, and the use of sexual or racial epithets are clear examples.

Publication of a List

Advertising the debt for sale, or shaming the customer to coerce payment by publishing a customer debt so that others can see it is prohibited.

Repeated Telephone Calls

Multiple contacts with the customer may constitute a violation. Certainly, causing the telephone to ring or engaging any person in telephone conversation repeatedly with the intent to annoy or abuse is prohibited.

Failing to identify yourself

Failing to disclose your identity to the customer in connection with a telephone call is considered harassment.

False or Misleading Representation

Any false, deceptive, or misleading representation to collect a debt is prohibited. Without limiting the general application of the foregoing, the following are considered violations and are prohibited:

Affiliation with Government

The false representation that you are affiliated with, vouched for, or bonded by the United States or any state, including the use of any badge, uniform, or facsimile, is a violation.

Misrepresentation of Amount of Debt

The false representation of the character, amount, or legal status of any debt is prohibited.

Misrepresenting use of Attorney

The representation or implication that you are an attorney or that any communication is from an attorney is prohibited. The use of the words “Plaintiff v. Defendant” without an actual suit being filed is prohibited.

Threat of Arrest

A statement that nonpayment of the debt may result in the arrest or imprisonment of the customer is prohibited. To threaten the consumer with seizure of property or wages, without disclosing that court orders may be required for any such action is also prohibited.

Threatening Action That Is Not Intended

The threat to take any action that cannot legally be taken or is not intended is prohibited.

Falsely Implying a Criminal Act

The false representation that the customer has committed any crime or other conduct in order to disgrace the customer is prohibited.

Simulated Legal Process or Governmental Communication

The use of or distribution of any written communication which simulates or is falsely represented to be a document authorized, issued, or approved by any court, official, or agency of the United States is prohibited. The false representation or implication that a document is legal process is prohibited. The use of return addresses and the form or shape of envelopes indicating that the letter is being mailed from a governmental office is prohibited.

Use of Any other Business Name

You may not use any name that would falsely imply that another party is involved in the collection of the debt. You must use your name when dealing with the customer. The use of any business, company, or organization name other than your true name or business name is prohibited.

Deceptive Forms

Designing or furnishing forms knowing they are deceptive or will be used to deceive the customer into believing that someone other than you is collecting the debt is prohibited.

UNFAIR PRACTICES

Any unfair or unconscionable means to collect or attempt to collect a debt is a collection practice violation. Without limiting the general application of the foregoing, the following are considered violations and are prohibited:

Collection Charges

The collection of any incidental charges, such as a service fee, to the collection of the debt is prohibited.

Post Dated Checks

Depositing or threatening to deposit any postdated check prior to the date on such check is prohibited. The solicitation of a postdated check for the purposes of threatening or initiating criminal prosecution is prohibited. Our policy prohibits accepting post-dated checks for account payments.

Communicating By Post Card

Communicating with a customer by post card regarding the debt is prohibited.

Language or Symbol

Using any language or symbol other than your address on any envelope when communicating with the customer is prohibited.

LEAST SOPHISTICATED CONSUMER:

In cases where courts try to determine whether a violation of collection practices has occurred, the courts use the test of the “least sophisticated consumer,” which means if anyone on the low side of reasoning capacity would believe that certain conduct constituted a collection practices violation, then a violation will have occurred.

RS-050: Red Flags - Identity Theft and Address Discrepancies

Policy RS-050 – Red Flags – Identity Theft and Address Discrepancies

1. Purpose. The purpose of this policy is to establish the process by which W.S. Badcock Corporation (hereinafter “Badcock”) implements and manages its compliance with the Fair Credit Reporting Act as amended by the Fair and Accurate Credit Transactions Act (FACT Act) and the Red Flag, Identity theft and Address Discrepancy rules (hereinafter the “Red Flag rules”), which require Badcock to develop and provide for the continued administration of a written program to detect, prevent, and mitigate identity theft in connection with the opening of a covered account or servicing any existing covered account.

2. Scope. This policy applies to all employees of Badcock and service providers (including dealers) who interact with consumers concerning a Badcock account.

3. General

Badcock’s Identity Theft and Address Discrepancy Program (the “Program”) is designed to comply with Sections 114 and 315 of the FACT Act. Section 114 of the FACT Act and its implementing regulations require financial institutions to develop and implement a written identity theft prevention program that is designed to detect, prevent, and mitigate identity theft in connection with the opening of a covered account or any existing covered account. Section 315 of the FACT Act and its implementing regulations require users of consumer reports to develop and implement reasonable policies and procedures designed to enable the user to form a reasonable belief that a consumer report relates to the consumer about whom it has requested the report, when the user receives a notice of an address discrepancy.

Badcock treats the potential for identity theft very seriously and understands that the best way to prevent identity theft is to have strong policies, procedures and internal controls in place for the opening of accounts and the continued servicing of existing accounts. Under the Program, Badcock has developed and implemented policies and procedures, training and testing to prevent, detect and mitigate the impact of identity theft. We have also implemented controls to help identify and eliminate reasonably foreseeable identity theft related risks to consumers associated with Badcock accounts.

4. Definitions

Active Duty Alert: An alert that is placed on the credit bureau file at the request of active duty military personnel. This alert will remain on the file for a period of not less than twelve (12) months.

Address Discrepancy Alert: An alert returned when the address used on the Credit Application and input as part of the inquiry, does not match any of the addresses in the credit bureau file.

Covered account: Any account, whether revolving or otherwise, that Badcock offers or maintains, primarily for personal, family, or household purposes that involves or is designed to permit multiple payments or transactions.

It includes any other type of account that Badcock offers or maintains for which there is a reasonably foreseeable risk for identity theft.

Extended Fraud Alert: An alert that is placed on the credit bureau file for anyone that submits an identity theft report to one of the national consumer reporting agencies. This alert will remain on the file for a period of up to seven (7) years. Identity Theft: A fraud committed or attempted using the identifying information of another person without authority. Initial Fraud Alert: An alert that is placed on the credit bureau file for anyone who asserts in good faith a suspicion that they have been or are about to become the victim of fraud. This alert will be on file for at least ninety (90) days.

Office of Foreign Assets Control (OFAC) Alert: An alert that is placed on the credit bureau file for anyone who may be potentially be listed on OFAC’s Specially Designated Nationals (SDN) list or one of OFAC’s other sanction lists. Red Flag: A pattern, practice, or specific activity that indicates the possible risk of identity theft.

Safescan Alert: An alert that is created when Safescan, a fraud prevention tool, finds that the consumer-provided information is questionable or potentially suspicious.

5. Identification of Red Flags

A. Risk Factors – Badcock has considered the following factors in identifying relevant Red Flags for covered accounts:

B. Sources of Red Flags – Badcock has incorporated relevant Red Flags from sources such as:

C. Categories of Red Flags – Badcock considers information from the following sources and categories to help prevent, detect, and mitigate identity theft involving any covered account.

Examples of Red Flags from each of the above sources/categories are outlined below.

Alerts, Notifications or Warnings from a Consumer Reporting Agency

Suspicious Documents

Suspicious Personal Identifying Information

The Unusual Use of, or Suspicious Activity Related to the Covered Account

Notice from consumers, service providers and third parties, victims of identity theft, law enforcement authorities, or other persons regarding possible identity theft in connection with a covered account

6. Detecting Red Flags

Having identified the potential Red Flags as outlined above, Badcock seeks to detect Red Flags in connection with opening and servicing Badcock accounts by:

A. Obtaining identifying information about, and verifying the identity of, a person making an application to open a new account or access an existing account, for example, using the policies and procedures regarding identification and verification of customers; and

B. Authenticating consumers, monitoring transactions, and verifying the validity of change of address requests, in the case of existing covered account.

7. Preventing and Mitigating Identity Theft

Once a Red Flag has been detected by a Badcock employee or store personnel or a customer, law enforcement, or any other person notifies Badcock of possible identity theft in connection with a covered account or an existing covered account, CSARM or the Legal Department must be notified. The Senior Vice President of Credit Services and Account Receivables Management (CSARM) or his/her designee will determine Badcock’s response(s) to any Red Flags detected or identified. Such response(s) will be commensurate with the degree of risk posed and consideration of all the facts and circumstances. Appropriate responses may include, but are not limited to, the following

8. Updating the Program

This program will be reviewed periodically to reflect changes in risks to customers or to the safety of Badcock due to experiences with identity theft, changes in methods to detect, prevent or mitigate identity theft or changes in the business such as mergers, acquisitions, joint ventures or service provider arrangements.

9. Oversight and Administration; Reporting

The Board of Directors is ultimately responsible for the implementation and oversight of the Red Flag Program. The Board has designated the Vice President of Compliance to be the Compliance Officer. The Board has commissioned a Compliance Oversight Committee and the Compliance Officer shall report to the Compliance Oversight Committee and/or the Board not less than annually on the Red Flag Program.

The Vice President of Compliance in collaboration with the Senior Vice President of CSARM will prepare the Red Flag Program report and address material matters related to identity theft and red flags and evaluate issues such as:

10. Other Legal Requirements

Badcock will monitor other related legal requirements that may be applicable, such as:

11. Responsibilities

12. References and Related Documents

13. Disciplinary and Remedial Action

Any violation of this policy will subject the employee or vendor/service provider to progressive remedial action, including but not limited to, immediate termination as applicable.

14. Record Retention

The human resources department shall note any confirmed violation of this policy by any employee in the employee’s personnel record. Records pertaining to this policy will be retained in the appropriate form and for the duration required under state and/or federal law, by the human resources department.

15. Review History

16. Governance

Approving Body: Board of Directors Date:

Approval: Approved at meeting. 1/14/2019

RS-055: Truth In Lending Act – TILA

Policy RS-055 – Red Flags – Truth In Lending Act - TILA

The Truth In Lending Act (TILA) was introduced with the intention for the consumer to shop for the best price for credit in the same way one shops for the best price for an automobile. TILA measures are in place to guarantee the accurate and meaningful disclosure of the costs of consumer credit and thereby to enable consumers to make informed choices in the credit marketplace.

TILA requires creditors and lenders to furnish a clear description of all the important terms and requirements relating to any credit transaction. Creditors and lenders must furnish the detailed information to consumers before extending credit, such as:

Periodic Disclosures

Consumer Action for TILA Violations

TILA allows the consumer to bring a lawsuit if a creditor fails to make the required disclosures, or if the creditor treats the account relationship differently.

Generally, the consumer is entitled to any actual damages (any monetary loss) suffered as a result of a violation of the TILA disclosure rules. Customers may also ask for “statutory” damages (TILA has set limits), and if the customer wins the lawsuit, they may also be entitled to court costs and attorneys’ fees.

Under some circumstances, customers may also be able to include “consequential” damages, such as emotional distress or harm resulting from the violation of TILA.

If violations are considered a widespread practice, a class action lawsuit can be brought against the offending party as well.

Warning: Offering cash discounts results in an artificial inflation of the APR charged to finance accounts and is a violation of federal law. It is against policy to extend any cash discounts for purchases.

RS-065: Uniform Commercial Code – UCC

Policy RS-065 – Uniform Commercial Code - UCC

While the general law of repossession is covered under Article 9 of the Uniform Commercial Code (UCC), repossession of property is primarily controlled by a contract entered into by the customer – in our case, the Badcock Easy Purchase Plan Credit Agreement and special purchase option addendums.

Default as a Precondition to Repossession:

Under the UCC, the customer’s default is necessary before you may repossess the collateral.

Waive to Declare Default:

Consistent, compliant application and enforcement of the Credit Agreement and/or purchase option addendum is very important. Leniency in allowing delinquent payment may compromise the creditor’s ability to declare default on a delinquent account.

By accepting late payments and by other conduct, you have specifically modified the credit agreement and waived the contractual right to seek strict compliance absent written notice of expected compliance in the future. The customer has a reasonable impression that the late payments will be accepted and the extensions will be granted.

For example: A customer often falls behind in their payments on an account and consistently misses due dates over a period of months.

You may be permissive in the beginning allowing delinquent payments, but may suddenly, and without warning, seek to declare the debt in default and accelerate the note. This is highly disfavored in the law, and you may not “by your acts or omissions” permit the customer to assume that the contract will not be strictly enforced, then crack down on the customer by rigidly insisting on performance. In this example, you are prohibited from proceeding without giving specific notice of required compliance.

Notice of Strict Compliance:

Many courts have held that where a secured creditor routinely accepts a customer’s delinquent payments, the creditor may be waiving strict compliance with the contractual agreement. Therefore, not insisting on timely payment in the past may cause some difficulties in the future if the customer raises the issue.

Anyone who has not insisted upon strict compliance with due dates in the past, but who has instead accepted late payment, must give reasonable notice to the customer in writing that you will insist on strict compliance in the future.

Legally Entitled To:

Badcock maintains a purchase money security interest in merchandise purchased until it is paid for. Once an item of merchandise is paid for through regular monthly payments, our lien is released. In other words, various federal and state consumer protection laws, as well as Badcock policy, prohibit the repossession from a customer of any merchandise we are not legally entitled to.

As a customer makes payments on an account and reduces the balance, items of merchandise clear Badcock’s lien according to a repossession formula. This formula is known as the Legally Entitled To formula or FIFO formula. Prior to the repossession of an account, you must secure a list of those items in which Badcock still maintains a security interest. Seizing merchandise you are not entitled to without a waiver of rights gives the customer cause of action against you.

Peaceful Repossession:

Badcock’s security agreement or credit agreement provides that you may acquire peaceful possession of the collateral. This means that the customer is to voluntarily surrender the property.

The most important restriction on your right to use self-help repossession is that the repossession must not constitute a breach of the peace.

Breach of Peace:

The general rule is that you cannot utilize force or threat, cannot enter the customer’s residence without consent, and cannot seize any property over the objections of the debtor’s or a third party who may be present. Any activity indicating the objection to the repossession, whether engaged by the customer or members of the customer’s family, is evidence that the repossession is not peaceful.

Deceptive practices, threats and certainly physical force constitute a breach of the peace and are prohibited.

Other actions that are to be considered a beach of the peace include, but are not limited to:

Redeeming Collateral:

At any time before the property is sold or disposed of, a customer has an unqualified right to redeem the collateral. This can be done by fulfilling all the obligations of the agreement, and by paying the balance due.

Waiver of Rights:

There are times when a customer may not have items subject to Badcock’s lien. In this situation, a customer may voluntarily wish to reduce their outstanding indebtedness by surrendering other items purchased we do not have a security interest in to reduce the amount of their balance.

Alternative items being surrendered should be listed on the Waiver of Rights and every effort should be made to get the customer to sign the Mutual Waiver of Rights.

You cannot force the customer to agree to surrender items not on the LET.

COMP-006: Compliance Training

Policy COMP-006 – Compliance Training

Effective Date: 06/14/2018

PURPOSE

The purpose of this policy is to establish the process by which W.S. Badcock Corporation (hereinafter “Badcock”) implements and manages its compliance training program at all levels of the organization. Badcock’s compliance training program is designed to reinforce our policies and procedures, help us identify individual and systemic areas of weakness and drive improvements to the compliance training program.

SCOPE

This policy applies to all employees of Badcock. Training will also be verified or required for certain vendors and service providers (hereinafter “service provider) who interact with consumers or with consumer data.

GENERAL

Compliance training will be provided to members of the Board of Directors, employees, certain vendors and service providers (including Badcock dealers), commensurate with their roles and responsibilities and access to consumer data or their interaction with consumers.

Badcock’s compliance training program will include, but not be limited to, the following subject areas:

CFPB Compliance; Complaint Management; applicable state Collection Practices Act; Fair Credit Reporting Act; Telephone

Consumer Protection Act; Gramm Leach Bliley Act; Unfair, Deceptive, Abusive Acts and Practices, Equal Credit

Opportunity Act; Vendor Management and Oversight; and related policies and procedures.

PROCEDURE

Badcock is committed to the ongoing training and personal development of each of its employees throughout the term of their employment. Additionally, it is important to Badcock that certain vendors and service providers that have interaction with consumers or access to consumer data (including Badcock dealers) receive compliance training, as well.

Training on the topics enumerated above will be managed and administered by the Compliance Department in collaboration with our Training Department. The training program shall be delivered to employees by the Training Department, its designee, a third party trainer, or the Compliance Department. Testing and successful passage of testing related to consumer financial protection and communication laws may be required for any employee or service provider that may interact with a consumer.

New hire training will be provided to all new hires who interact with consumers and/or have access to consumer data. Such training will be tailored to the role and responsibilities of the individual but include, at a minimum, training on CFPB Compliance, Complaint Management, Unfair, Deceptive, Abusive Acts and Practices, Equal Credit Opportunity Act and any related financial consumer product or service policies and procedures.

Ongoing training will include all employees who interact with consumers and/or have access to consumer data. Such training will be tailored to the role and responsibilities of the individual and scheduled at regular intervals.

Annual training will be provided to all employees who interact with consumers and/or have access to consumer data regardless of position and all members of senior management and of the Board of Directors. Such annual training will cover at a minimum CFPB Compliance, Unfair, Deceptive, Abusive Acts and Practices, Equal Credit Opportunity Act and the related policies and procedures.

In the event non-compliance by an employee, remedial action will include follow up training and coaching and will be based on the nature, scope, and severity of each employee’s non-compliance. Remedial action training will be documented and supervised by management.

Where testing is required following training, a minimum passing score on all tests is 80%. Employees who do not achieve a passing score will retake the test. The Training Department will identify those employees who do not achieve a minimum passing score of 80% by the third attempt and notify human resources and the employee’s manager. Together with the employee’s manager with the Human Resources Department will determine the appropriate, progressive remedial action which may include termination.

All test results will be consolidated and analyzed by the Compliance Department in collaboration with the Training Department to determine if weaknesses in the training program, Badcock’s policies and procedures or other systemic reasons are the root cause of poor test scores. The Vice President of Compliance will present consolidated results of the test scores and any root cause analysis results and findings to the Operational Compliance Committee for their review and determination of any necessary corrective action. The results and findings of the Operational Compliance Committee will be escalated to the Compliance Oversight Committee for appropriate remedial action.

The Training Department will maintain the training schedule, records of completion and the materials used for each training course for employees and vendors and service providers. The Compliance Department will maintain the training schedule, records of completion and materials used for each training course for members of the Board of Directors and senior management.

The Vice President of Compliance will oversee the selection, review and delivery of the training content.

RESPONSIBILITIES

DISCIPLINARY and REMEDIAL ACTION

In collaboration with HR, any violation of this policy will subject the employee to progressive remedial action, including, which includes but is not limited to, immediate termination as applicable.

RECORD RETENTION

The human resources department shall note any confirmed violation of this policy by any employee in the employee’s personnel record.

Records pertaining to this policy will be retained in the appropriate form and for the duration required under state and/or federal law, by the human resources department.

GOVERNANCE

COMP-007: Servicemembers Civil Relief Act

Policy COMP-007 – Servicemembers Civil Relief Act

Effective Date: 03/05/2020

Supersedes: 06/14/2018

PURPOSE

The purpose of this policy is to ensure W.S. Badcock Corporation complies with the Servicemembers Civil Relief Act in connection with the servicing of its consumer credit accounts and collection of a debt.

SCOPE

This policy applies to W.S. Badcock Corporation’s practices when communicating with, and collecting debt from, consumers who are protected by the Servicemembers Civil Relief Act (SCRA).

The SCRA provides a number of protections to those who are protected by the SCRA with regard to obligations, debts and liabilities incurred prior to military service. A few examples of these protections include but are not limited to the interest rate charged on the debt, commencement of legal action, and foreclosure of property or replevin proceedings. The protections take effect on the date of entering active duty and generally terminates within 30-90 days after the date of discharge from active duty.

GENERAL

Upon receipt of notification and confirmation that an individual is eligible for SCRA protection, W.S. Badcock Corporation will not initiate or pursue the following actions during the person’s eligibility period:

PROCEDURE

If any employee, service provider or dealer receives a request from a consumer requesting SCRA protection, such employee, dealer or service provider shall immediately submit a work order or send an email to the Credit Services and Accounts Receivable Management (CSARM) Department along with a copy of the consumer’s military orders for review and processing.

W.S. Badcock Corporation takes the position that once an individual who is entitled to the protections afforded them under the SCRA notifies our company of their SCRA eligibility the following shall occur:

eligibility on the account and all the accounts owed by such person(s) will be flagged with the “SCRA” flag.

RESPONSIBILITIES

REFERENCES and RELATED DOCUMENTS