Document:

Exhibit 4.1

 

WARRANT AGREEMENT

 

THIS WARRANT AGREEMENT (this
 “Agreement”), dated as of December 9, 2021, is by and between Financial Strategies Acquisition Corp., a Delaware
corporation (the “Company”), and Continental Stock Transfer & Trust Company, a New York corporation, as
warrant agent (the “Warrant Agent,” also referred to herein as the “Transfer
Agent”).

 

WHEREAS, the Company is engaged
in an initial public offering (the “Offering”) of units of the Company’s equity securities (the “Units”),
each such Unit comprised of one share of Class A common stock of the Company, par value $0.0001 per share (“Common Stock”),
one redeemable Public Warrant (as defined below) and one right to receive one-tenth (1/10) of one share of Common Stock (the “Rights”),
and, in connection therewith, has determined to issue and deliver up to 8,700,000 warrants (or up to 10,005,000 warrants if the Over-allotment
Option is exercised in full) to public investors in the Offering (the “Public Warrants”); and

 

WHEREAS, on December 9, 2021,
the Company entered into that certain Private Placement Unit Purchase Agreement with FSC Sponsor LLC, a Delaware limited liability company,
Celtic Sponsor VII LLC, a Delaware limited liability company, I-Bankers Securities, Inc., a Texas corporation (the “Representative”),
Sixth Borough Capital Fund LP, a Delaware limited partnership (and certain members of its general partner), Eagle Point Credit Management
LLC, a Delaware limited liability company, Greentree Financial Group Inc., a Florida corporation and Sea Otter Securities Group LLC, a
Delaware limited liability company (collectively, the “Private Investors”), pursuant to which the Private Investors
agreed to purchase an aggregate of 459,275 units, or 504,950 units if the over-allotment option is exercised in full (the “Private
Placement Units”), which Private Placement Units include 459,275 underlying warrants, or 504,950 warrants if the over-allotment
option is exercised in full (the “Private Placement Warrants”), simultaneously with the closing of the Offering
at a purchase price of $10.00 per Private Placement Unit, and in connection therewith, will issue and deliver up to an aggregate of 459,275
Private Placement Warrants (or 504,950 Private Placement Warrants if the over-allotment option is exercised in full) underlying
the Private Placement Units bearing the legend set forth in Exhibit B hereto; and

 

WHEREAS, in connection
with the Offering, the Company has agreed to issue and deliver to the Representative 696,000 warrants, or 800,400 warrants if the
Representative’s over-allotment option is exercised in full (the “Representative Warrants”), bearing
the legend set forth in Exhibit C hereto; and

 

WHEREAS, in order to finance
the Company’s transaction costs in connection with an intended initial Business Combination (as defined below), the Private Investors
or affiliates of the Private Investors or certain of the Company’s executive officers and directors may, but are not obligated to,
loan to the Company funds as the Company may require, of which up to $1,500,000 of such loans may be convertible into up to an additional
150,000 units (the “Working Capital Units”) at a price of $10.00 per unit, which Working Capital Units would
each include one underlying warrant, for an aggregate of up to an additional 150,000 warrants (the “Working Capital Warrants”);
and

 

WHEREAS, following consummation
of the Offering, the Company may issue additional warrants (“Post-IPO Warrants”; together with the Private Placement
Warrants, the Representative Warrants, the Working Capital Warrants and the Public Warrants, the “Warrants”)
in connection with, or following the consummation by the Company of, a Business Combination (defined below); and

 

WHEREAS, the Company has filed
with the Securities and Exchange Commission (the “Commission”) registration statement on Form S-1, File No.
333-260434 (the “Registration Statement”) and prospectus (the “Prospectus”), for the
registration, under the Securities Act of 1933, as amended (the “Securities Act”), of the Units, the Public
Warrants, the Rights, the Common Stock included in the Units, the Representative Warrants and the Common Stock to be issued to the Representative;
and

 

WHEREAS, the Company desires
the Warrant Agent to act on behalf of the Company, and the Warrant Agent is willing to so act, in connection with the issuance, registration,
transfer, exchange, redemption and exercise of the Warrants; and

 

     

     

    

 

WHEREAS, the Company desires
to provide for the form and provisions of the Warrants, the terms upon which they shall be issued and exercised, and the respective rights,
limitation of rights, and immunities of the Company, the Warrant Agent, and the holders of the Warrants; and

 

WHEREAS, all acts and things
have been done and performed which are necessary to make the Warrants, when executed on behalf of the Company and countersigned by or
on behalf of the Warrant Agent, as provided herein, the valid, binding and legal obligations of the Company, and to authorize the execution
and delivery of this Agreement.

 

NOW, THEREFORE, in consideration
of the mutual agreements herein contained, the parties hereto agree as follows:

 

1. Appointment of
Warrant Agent. The Company hereby appoints the Warrant Agent to act as agent for the Company for the Warrants, and the Warrant Agent
hereby accepts such appointment and agrees to perform the same in accordance with the terms and conditions set forth in this Agreement.

 

2. Warrants.

 

2.1 Form of Warrant. Each
Warrant shall be issued in registered form only, and, if a physical certificate is issued, shall be in substantially the form of Exhibit
A hereto, the provisions of which are incorporated herein and shall be signed by, or bear the facsimile signature of, the Chairman
of the Board, President, Chief Executive Officer, Chief Financial Officer, Secretary or other principal officer of the Company. In the
event the person whose facsimile signature has been placed upon any Warrant shall have ceased to serve in the capacity in which such person
signed the Warrant before such Warrant is issued, it may be issued with the same effect as if he or she had not ceased to be such at the
date of issuance.

 

2.2 Effect of Countersignature.
If a physical certificate is issued, unless and until countersigned by the Warrant Agent pursuant to this Agreement, a Warrant certificate
shall be invalid and of no effect and may not be exercised by the holder thereof.

 

2.3 Registration.

 

2.3.1 Warrant Register. The
Warrant Agent shall maintain books (the “Warrant Register”) for the registration of original issuance and the
registration of transfer of the Warrants. Upon the initial issuance of the Warrants, the Warrant Agent shall issue and register the Warrants
in the names of the respective holders thereof in such denominations and otherwise in accordance with instructions delivered to the Warrant
Agent by the Company. All of the Public Warrants shall initially be represented by one or more book-entry certificates (each, a “Book-Entry
Warrant Certificate”) deposited with The Depository Trust Company (the “Depositary”) and registered
in the name of Cede & Co., a nominee of the Depositary. Ownership of beneficial interests in the Public Warrants shall be shown on,
and the transfer of such ownership shall be effected through, records maintained by (i) the Depositary or its nominee for each Book-Entry
Warrant Certificate, or (ii) institutions that have accounts with the Depositary (each such institution, with respect to a Warrant in
its account, a “Participant”).

 

If the Depositary subsequently
ceases to make its book-entry settlement system available for the Public Warrants, the Company may instruct the Warrant Agent regarding
making other arrangements for book-entry settlement. In the event that the Public Warrants are not eligible for, or it is no longer necessary
to have the Public Warrants available in, book-entry form, the Warrant Agent shall provide written instructions to the Depositary to deliver
to the Warrant Agent for cancellation each Book-Entry Warrant Certificate, and the Company shall instruct the Warrant Agent to deliver
to the Depositary definitive certificates in physical form evidencing such Warrants (“Definitive Warrant Certificate”).
Such Definitive Warrant Certificate shall be in substantially the form annexed hereto as Exhibit A, with appropriate insertions,
modifications and omissions, as provided above.

 

2.3.2 Registered
Holder. Prior to due presentment for registration of transfer of any Warrant, the Company and the Warrant Agent may deem and
treat the person in whose name such Warrant is registered in the Warrant Register (the “Registered
Holder”) as the absolute owner of such Warrant and of each Warrant represented thereby (notwithstanding any notation
of ownership or other writing on a Definitive Warrant Certificate made by anyone other than the Company or the Warrant Agent), for
the purpose of any exercise thereof, and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by
any notice to the contrary.

 

     

     

    

 

2.4 Detachability
of Warrants. The Common Stock, Rights and Public Warrants comprising the Units shall begin separate trading on the 52nd day following
the date of the Prospectus or, if such 52nd day is not on a day, other than a Saturday, Sunday or federal holiday, on which banks in New
York City are generally open for normal business (a “Business Day”), then on the immediately succeeding Business
Day following such date, or earlier (the “Detachment Date”) with the consent of the Representative, as representative
of the several underwriters, but in no event shall the Common Stock, the Public Warrants and the Rights comprising the Units be separately
traded until the Company has filed a current report on Form 8-K with the Commission containing an audited balance sheet reflecting the
receipt by the Company of the gross proceeds of the Offering and the Company issues a press release announcing when such separate trading
shall begin.

  

2.5 No Fractional
Warrants Other Than as Part of Units. The Company shall not issue fractional Warrants. If, upon the detachment of Public Warrants
from Units, upon the detachment of Private Placement Warrants from Private Placement Units or otherwise, a holder of Warrants would be
entitled to receive a fractional Warrant, the Company shall round down to the nearest whole number the number of Warrants to be issued
to such holder.

 

2.6 Private Placement
Warrants and Working Capital Warrants. The Private Placement Warrants and the Working Capital Warrants shall be identical to the Public
Warrants, except that so long as they are held by one of the Private Investors or its Permitted Transferees (as defined below), as applicable,
the Private Placement Warrants and the Working Capital Warrants: (i) may be exercised for cash or on a cashless basis, pursuant to subsection
3.3.1(c) hereof, (ii) may not be transferred, assigned or sold until thirty (30) days after the completion by the Company of
an initial Business Combination (as defined below), and (iii) shall not be redeemable by the Company; provided, however,
that in the case of (ii) the Private Placement Warrants and the Working Capital Warrants and any shares of Common Stock held by one of
the Private Investors or its Permitted Transferees, as applicable, and issued upon exercise of the Private Placement Warrants and the
Working Capital Warrants may be transferred by the holders thereof:

 

(a) to the Company’s
officers or directors, any affiliate or family member of any of the Company’s officers or directors, any affiliate of a Private
Investor or to any member(s) of a Private Investor;

 

(b) in the case of an individual,
by gift to a member of such individual’s immediate family or to a trust, the beneficiary of which is a member of such individual’s
immediate family, an affiliate of such individual or to a charitable organization;

 

(c) in the case of an individual,
by virtue of the laws of descent and distribution upon death of such person;

 

(d) in the case of an individual,
pursuant to a qualified domestic relations order;

 

(e) by private sales or
transfers made in connection with the consummation of an initial Business Combination at prices no greater than the price at which the
Warrants were originally purchased;

 

(f) in the event of the
Company’s liquidation prior to consummation of the Company’s Business Combination; or

 

(g) by virtue of the laws
of the State of Delaware or a Private Investor’s limited liability company agreement upon dissolution of such Private Investor;

 

provided, however,
that, in the case of clauses (a) through (e) or (g), these transferees (the “Permitted Transferees”)
enter into a written agreement with the Company agreeing to be bound by the transfer restrictions in this Agreement.

  

2.7 Representative Warrants. The Representative
Warrants shall have the same terms, and be in the same form, as the Public Warrants except as may be agreed upon by the Company and the
Representative.

 

     

     

    

 

2.8 Working Capital
Warrants. The Working Capital Warrants shall be identical to the Private Placement Warrants.

 

2.9 Post-IPO Warrants.
The Post-IPO Warrants, when and if issued, shall have the same terms and be in the same form as the Public Warrants except as may be agreed
upon by the Company.

  

3. Terms and Exercise
of Warrants.

 

3.1 Warrant Price.
Each Warrant shall entitle the Registered Holder thereof, subject to the provisions of such Warrant and of this Agreement, to purchase
from the Company the number of shares of Common Stock stated therein, at the price of $11.50 per share, subject to the adjustments provided
in Section 4 hereof and in the last sentence of this Section 3.1; provided, however, that the
Representative Warrants shall entitle the Registered Holder thereof to purchase the number of shares of Common Stock stated therein at
the price of $12.00 per share, subject to the adjustments provided in Section 4 hereof. The term “Warrant Price” as
used in this Agreement shall mean the price per share at which shares of Common Stock may be purchased at the time a Warrant is exercised.
The Company in its sole discretion may lower the Warrant Price of all Warrants other than the Representative Warrants at any time prior
to the Expiration Date (as defined below) for a period of not less than twenty (20) Business Days; provided, however, that
the Company shall provide at least twenty (20) days prior written notice of such reduction to Registered Holders of the Warrants and,
provided, further, that any such reduction shall be identical among all of the Warrants.

 

3.2 Duration of
Warrants. A Warrant may be exercised only during the period (the “Exercise Period”) commencing on the later
of: (i) the date that is thirty (30) days after the first date on which the Company completes a merger, capital stock exchange, asset
acquisition, stock purchase, reorganization or similar business combination, involving the Company and one or more businesses (a “Business
Combination”), or (ii) the date that is twelve (12) months from the date of the closing of the Offering, and terminating
at 5:00 p.m., New York City time on the earlier to occur of: (x) the date that is five (5) years after the date on which the Company completes
its initial Business Combination, (y) the liquidation of the Company, or (z) other than with respect to the Private Placement Warrants
and the Working Capital Warrants to the extent then held by the original purchasers thereof or their Permitted Transferees or with respect
to the Representative Warrants, the Redemption Date (as defined below) as provided in Section 6.2 hereof (the Expiration
Date”); provided, however, that the exercise of any Warrant shall be subject to the satisfaction
of any applicable conditions, as set forth in subsection 3.3.2 below with respect to an effective registration statement.
Notwithstanding the foregoing, the Representative Warrants may not be exercised following the fifth anniversary of the commencement date
of sales in the Offering. Except with respect to the right to receive the Redemption Price (as defined below) (other than with respect
to a Representative Warrant or a Private Placement Warrant or a Working Capital Warrant) to the extent then held by the original purchasers
thereof or their Permitted Transferees in the event of a redemption (as set forth in Section 6 hereof), each outstanding
Warrant (other than a Representative Warrant or a Private Placement Warrant or a Working Capital Warrant to the extent then held by the
original purchasers thereof or their Permitted Transferees in the event of a redemption) not exercised on or before the Expiration Date
shall become void, and all rights thereunder and all rights in respect thereof under this Agreement shall cease at 5:00 p.m. New York
City time on the Expiration Date. The Company in its sole discretion may extend the duration of the Warrants by delaying the Expiration
Date; provided, however, that the Company shall provide at least twenty (20) days prior written notice of any such
extension to Registered Holders of the Warrants and, provided, further, that any such extension shall be identical in duration
among all the Warrants.

 

3.3 Exercise of
Warrants.

 

3.3.1 Payment.
Subject to the provisions of the Warrant and this Agreement, a Warrant may be exercised by the Registered Holder thereof by
delivering to the Warrant Agent at its corporate trust department (i) the Definitive Warrant Certificate evidencing the Warrants to
be exercised, or, in the case of a Book-Entry Warrant Certificate, the Warrants to be exercised (the “Book-Entry
Warrants”) on the records of the Depositary to an account of the Warrant Agent at the Depositary designated for such
purposes in writing by the Warrant Agent to the Depositary from time to time, (ii) an election to purchase (“Election to
Purchase”) shares of Common Stock pursuant to the exercise of a Warrant, properly completed and executed by the
Registered Holder on the reverse of the Definitive Warrant Certificate or, in the case of a Book-Entry Warrant Certificate, properly
delivered by the Participant in accordance with the Depositary’s procedures, and (iii) payment in full of the Warrant Price
with lawful money of the United States for each full share of Common Stock as to which the Warrant is exercised and any and all
applicable taxes due in connection with the exercise of the Warrant, the exchange of the Warrant for the shares of Common Stock and
the issuance of such shares of Common Stock, as follows:

 

(a) by certified check payable
to the order of the Warrant Agent or by wire transfer;

 

     

     

    

 

(b) in the event of a redemption
pursuant to Section 6 hereof in which the Company’s board of directors (the “Board”)
has elected to require all holders of the Warrants to exercise such Warrants on a “cashless basis,” by surrendering the Warrants
for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common
Stock underlying the Warrants, multiplied by the difference between the Warrant Price and the “Fair Market Value”, as defined
in this subsection 3.3.1(b) by (y) the Fair Market Value. Solely for purposes of this subsection 3.3.1(b) and Section
6.3, the “Fair Market Value” shall mean the average last sale price of the Common Stock for the ten (10) trading days
ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of the Warrants, pursuant to Section
6 hereof;

  

(c) with respect to any
Representative Warrant or Private Placement Warrant or Working Capital Warrant, so long as such Representative Warrant or Private Placement
Warrant or Working Capital Warrant is held by, with respect to the Private Placement Warrant or Working Capital Warrant, one of the Private
Investors or its Permitted Transferees, as applicable, or with respect to the Representative Warrant, the Representative (or its designees),
by surrendering the Warrants for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the
number of shares of Common Stock underlying the Warrants, multiplied by the difference between the Warrant Price and the “Fair Market
Value”, as defined in this subsection 3.3.1(c), by (y) the Fair Market Value. Solely for purposes of this subsection
3.3.1(c), the “Fair Market Value” shall mean the average reported last sale price of the Common Stock for the ten (10)
trading days ending on the third trading day prior to the date on which notice of exercise of the Warrant is sent to the Warrant Agent;
or

 

(d) as provided in Section
7.4 hereof.

 

3.3.2 Issuance of
Shares of Common Stock on Exercise. As soon as practicable after the exercise of any Warrant and the clearance of the funds in payment
of the Warrant Price (if payment is pursuant to subsection 3.3.1(a)), the Company shall issue to the Registered Holder of
such Warrant a book-entry position or certificate, as applicable, for the number of full shares of Common Stock to which he, she or it
is entitled, registered in such name or names as may be directed by him, her or it, and if such Warrant shall not have been exercised
in full, a new book-entry position or countersigned Warrant, as applicable, for the number of shares of Common Stock as to which such
Warrant shall not have been exercised. If fewer than all the Warrants evidenced by a Book-Entry Warrant Certificate are exercised, a notation
shall be made to the records maintained by the Depositary, its nominee for each Book-Entry Warrant Certificate, or a Participant, as appropriate,
evidencing the balance of the Warrants remaining after such exercise. Notwithstanding the foregoing, the Company shall not be obligated
to deliver any shares of Common Stock pursuant to the exercise of a Warrant and shall have no obligation to settle such Warrant exercise
unless a registration statement under the Securities Act with respect to the shares of Common Stock underlying the Public Warrants is
then effective and a prospectus relating thereto is current, subject to the Company’s satisfying its obligations under Section
7.4. No Warrant shall be exercisable and the Company shall not be obligated to issue shares of Common Stock upon exercise of a Warrant
unless the Common Stock issuable upon such Warrant exercise has been registered, qualified or deemed to be exempt from registration or
qualification under the securities laws of the state of residence of the Registered Holder of the Warrants, except pursuant to Section
7.4. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to a Warrant, the
holder of such Warrant shall not be entitled to exercise such Warrant and such Warrant may have no value and expire worthless, in which
case the purchaser of a Unit containing such Public Warrants shall have paid the full purchase price for the Unit solely for the shares
of Common Stock underlying such Unit. In no event will the Company be required to net cash settle the Warrant exercise. The Company may
require holders of Public Warrants to settle the Warrant on a “cashless basis” pursuant to subsection 3.3.1(b) and Section
7.4. If, by reason of any exercise of Warrants on a “cashless basis”, the holder of any Warrant would be entitled, upon
the exercise of such Warrant, to receive a fractional interest in a share of Common Stock, the Company shall round down to the nearest
whole number, the number of shares of Common Stock to be issued to such holder.

 

     

     

    

 

3.3.3 Valid Issuance.
All shares of Common Stock issued upon the proper exercise of a Warrant in conformity with this Agreement shall be validly issued, fully
paid and non-assessable.

 

3.3.4 Date of Issuance.
Each person in whose name any book-entry position or certificate, as applicable, for shares of Common Stock is issued shall for all purposes
be deemed to have become the holder of record of such shares of Common Stock on the date on which the Warrant, or book-entry position
representing such Warrant, was surrendered and payment of the Warrant Price was made, irrespective of the date of delivery of such certificate
in the case of a certificated Warrant, except that, if the date of such surrender and payment is a date when the share transfer books
of the Company or book-entry system of the Warrant Agent are closed, such person shall be deemed to have become the holder of such shares
of Common Stock at the close of business on the next succeeding date on which the share transfer books or book-entry system are open.

 

3.3.5 Maximum Percentage.
A holder of a Warrant may notify the Company in writing in the event it elects to be subject to the provisions contained in this subsection
3.3.5; however, no holder of a Warrant shall be subject to this subsection 3.3.5 unless he, she or it
makes such election. If the election is made by a holder, the Warrant Agent shall not effect the exercise of the holder’s Warrant,
and such holder shall not have the right to exercise such Warrant, to the extent that after giving effect to such exercise, such person
(together with such person’s affiliates), to the Warrant Agent’s actual knowledge, would beneficially own in excess of 4.9%
or 9.8% (or such other amount as a holder may specify) (the “Maximum Percentage”) of the shares of Common Stock
outstanding immediately after giving effect to such exercise. For purposes of the foregoing sentence, the aggregate number of shares of
Common Stock beneficially owned by such person and its affiliates shall include the number of shares of Common Stock issuable upon exercise
of the Warrant with respect to which the determination of such sentence is being made, but shall exclude shares of Common Stock that would
be issuable upon (x) exercise of the remaining, unexercised portion of the Warrant beneficially owned by such person and its affiliates
and (y) exercise or conversion of the unexercised or unconverted portion of any other securities of the Company beneficially owned by
such person and its affiliates (including, without limitation, any convertible notes or convertible preferred stock or warrants) subject
to a limitation on conversion or exercise analogous to the limitation contained herein. Except as set forth in the preceding sentence,
for purposes of this paragraph, beneficial ownership shall be calculated in accordance with Section 13(d) of the Securities Exchange Act
of 1934, as amended (the “Exchange Act”). For purposes of the Warrant, in determining the
number of outstanding shares of Common Stock, the holder may rely on the number of outstanding shares of Common Stock as reflected in
(1) the Company’s most recent annual report on Form 10-K, quarterly report on Form 10-Q, current report on Form 8-K or other public
filing with the Commission as the case may be, (2) a more recent public announcement by the Company or (3) any other notice by the Company
or the Transfer Agent setting forth the number of shares of Common Stock outstanding. For any reason at any time, upon the written request
of the holder of the Warrant, the Company shall, within two (2) Business Days, confirm orally and in writing to such holder the number
of shares of Common Stock then outstanding. In any case, the number of outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of equity securities of the Company by the holder and its affiliates since the date as of which such
number of outstanding shares of Common Stock was reported. By written notice to the Company, the holder of a Warrant may from time to
time increase or decrease the Maximum Percentage applicable to such holder to any other percentage specified in such notice; provided, however,
that any such increase shall not be effective until the sixty-first (61st) day after such notice is delivered to the Company.

  

4. Adjustments.

 

4.1 Stock Dividends.

 

4.1.1 Split-Ups.
If after the date hereof, and subject to the provisions of Section 4.6 below, the number of outstanding shares of
Common Stock is increased by a stock dividend payable in shares of Common Stock, or by a split-up of shares of Common Stock or other
similar event, then, on the effective date of such stock dividend, split-up or similar event, the number of shares of Common Stock
issuable on exercise of each Warrant shall be increased in proportion to such increase in the outstanding shares of Common Stock. A
rights offering to holders of the Common Stock entitling holders to purchase shares of Common Stock at a price less than the
 “Fair Market Value” (as defined below) shall be deemed a stock dividend of a number of shares of Common Stock equal to
the product of (i) the number of shares of Common Stock actually sold in such rights offering (or issuable under any other equity
securities sold in such rights offering that are convertible into or exercisable for the Common Stock) and (ii) one (1) minus the
quotient of (x) the price per share of Common Stock paid in such rights offering divided by (y) the Fair Market Value. For purposes
of this subsection 4.1.1, (i) if the rights offering is for securities convertible into or exercisable for Common Stock,
in determining the price payable for Common Stock, there shall be taken into account any consideration received for such rights, as
well as any additional amount payable upon exercise or conversion and (ii) “Fair Market Value” means the volume weighted
average price of the Common Stock as reported during the ten (10) trading day period ending on the trading day prior to the first
date on which the shares of Common Stock trade on the applicable exchange or in the applicable market, regular way, without the
right to receive such rights.

 

     

     

    

 

4.1.2 Extraordinary
Dividends. If the Company, at any time while the Warrants are outstanding and unexpired, shall pay a dividend or make a distribution
in cash, securities or other assets to the holders of the Common Stock on account of such shares of Common Stock (or other shares of the
Company’s capital stock into which the Warrants are convertible), other than (a) as described in subsection 4.1.1 above,
(b) Ordinary Cash Dividends (as defined below), (c) to satisfy the redemption rights of the holders of the Common Stock in connection
with a proposed initial Business Combination, (d) as a result of the repurchase of shares of Common Stock by the Company if a proposed
Business Combination is presented to the stockholders of the Company for approval, (e) to satisfy the redemption rights of the holders
of Common Stock in connection with a stockholder vote to amend the Company’s amended and restated certificate of incorporation to
modify the substance or timing of the Company’s obligation to redeem 100% of the public shares of Common Stock if the Company does
not complete the Business Combination within the period set forth in the Company’s amended and restated certificate of incorporation
or (f) in connection with the redemption of public shares of Common Stock upon the failure of the Company to complete its initial Business
Combination and any subsequent distribution of its assets upon its liquidation (any such non-excluded event being referred to herein as
an “Extraordinary Dividend”), then the Warrant Price shall be decreased, effective immediately after the effective
date of such Extraordinary Dividend, by the amount of cash and/or the fair market value (as determined by the Board, in good faith) of
any securities or other assets paid on each share of Common Stock in respect of such Extraordinary Dividend. For purposes of this subsection
4.1.2, “Ordinary Cash Dividends” means any cash dividend or cash distribution which, when combined on a
per share basis, with the per share amounts of all other cash dividends and cash distributions paid on the Common Stock during the 365-day
period ending on the date of declaration of such dividend or distribution (as adjusted to appropriately reflect any of the events referred
to in other subsections of this Section 4 and excluding cash dividends or cash distributions that resulted in an adjustment
to the Warrant Price or to the number of shares of Common Stock issuable on exercise of each Warrant) does not exceed $0.50 (being 5%
of the offering price of the Units in the Offering).

 

4.2 Aggregation
of Shares. If after the date hereof, and subject to the provisions of Section 4.6 hereof, the number of outstanding
shares of Common Stock is decreased by a consolidation, combination, reverse stock split or reclassification of shares of Common Stock
or other similar event, then, on the effective date of such consolidation, combination, reverse stock split, reclassification or similar
event, the number of shares of Common Stock issuable on exercise of each Warrant shall be decreased in proportion to such decrease in
outstanding shares of Common Stock.

 

4.3 Adjustments
in Exercise Price.

 

4.3.1 Whenever the number
of shares of Common Stock purchasable upon the exercise of the Warrants is adjusted, as provided in subsection 4.1.1 or Section
4.2 above, the Warrant Price shall be adjusted (to the nearest cent) by multiplying such Warrant Price immediately prior to such
adjustment by a fraction (x) the numerator of which shall be the number of shares of Common Stock purchasable upon the exercise of the
Warrants immediately prior to such adjustment, and (y) the denominator of which shall be the number of shares of Common Stock so purchasable
immediately thereafter.

 

4.3.2 If (i) the Company
issues additional shares of Common Stock or securities convertible into or exercisable or exchangeable for shares of Common Stock
for capital raising purposes in connection with the closing of its initial Business Combination at an issue price or effective issue
price of less than $9.20 per share of Common Stock, with such issue price or effective issue price to be determined in good faith by
the Board (and in the case of any such issuance to a Private Investor or its affiliates, without taking into account any founder
shares held by such holder or affiliates, as applicable, prior to such issuance) (the “New Issuance
Price”), (ii) the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds,
and interest thereon, available for the funding of the initial Business Combination on the date of the consummation thereof (net of
redemptions) and (iii) the volume weighted average trading price of the Common Stock during the 20 trading day period starting on
the trading day prior to the day on which the Company consummates the initial Business Combination (such price, the “Market
Value”) is below $9.20 per share, the Warrant Price shall be adjusted (to the nearest cent) to be equal to 115% of the greater
of the Market Value and the New Issuance Price and the Redemption Trigger Price (as defined below) shall be adjusted to equal to
180% of the greater of the Market Value and the Newly Issued Price; provided, however, that no adjustments shall be
made pursuant to this Section 4.3.2 with respect to any Representative Warrants.

 

     

     

    

 

4.4 Replacement
of Securities upon Reorganization, etc. In case of any reclassification or reorganization of the outstanding shares of Common
Stock (other than a change under subsections 4.1.1 or 4.1.2 or Section 4.2 hereof
or that solely affects the par value of such shares of Common Stock), or in the case of any merger or consolidation of the Company
with or into another entity or conversion of the Company as another entity (other than a consolidation or merger in which the
Company is the continuing corporation and that does not result in any reclassification or reorganization of the outstanding shares
of Common Stock), or in the case of any sale or conveyance to another entity of the assets or other property of the Company as an
entirety or substantially as an entirety in connection with which the Company is dissolved, the holders of the Warrants shall
thereafter have the right to purchase and receive, upon the basis and upon the terms and conditions specified in the Warrants and in
lieu of the shares of Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights
represented thereby, the kind and amount of shares of stock or other securities or property (including cash) receivable upon such
reclassification, reorganization, merger or consolidation, or upon a dissolution following any such sale or transfer, that the
holder of the Warrants would have received if such holder had exercised his, her or its Warrant(s) immediately prior to such event
(the “Alternative Issuance” ); provided, however, that in connection with the closing
of any such consolidation, merger, sale or conveyance, the successor or purchasing entity shall execute an amendment hereto with the
Warrant Agent providing for delivery of such Alternative Issuance; provided, further, that (i) if the
holders of the Common Stock were entitled to exercise a right of election as to the kind or amount of securities, cash or other
assets receivable upon such consolidation or merger, then the kind and amount of securities, cash or other assets constituting the
Alternative Issuance for which each Warrant shall become exercisable shall be deemed to be the weighted average of the kind and
amount received per share by the holders of the Common Stock in such consolidation or merger that affirmatively make such election,
and (ii) if a tender, exchange or redemption offer shall have been made to and accepted by the holders of the Common Stock (other
than a tender, exchange or redemption offer made by the Company in connection with redemption rights held by stockholders of the
Company as provided for in the Company’s amended and restated certificate of incorporation or as a result of the repurchase of
shares of Common Stock by the Company if a proposed initial Business Combination is presented to the stockholders of the Company for
approval) under circumstances in which, upon completion of such tender or exchange offer, the maker thereof, together with members
of any group (within the meaning of Rule 13d-5(b)(1) under the Exchange Act (or any successor rule)) of which such maker is a part,
and together with any affiliate or associate of such maker (within the meaning of Rule 12b-2 under the Exchange Act (or any
successor rule)) and any members of any such group of which any such affiliate or associate is a part, own beneficially (within the
meaning of Rule 13d-3 under the Exchange Act (or any successor rule)) more than 50% of the outstanding shares of Common Stock, the
holder of a Warrant shall be entitled to receive as the Alternative Issuance, the highest amount of cash, securities or other
property to which such holder would actually have been entitled as a stockholder if such Warrant holder had exercised the Warrant
prior to the expiration of such tender or exchange offer, accepted such offer and all of the Common Stock held by such holder had
been purchased pursuant to such tender or exchange offer, subject to adjustments (from and after the consummation of such tender or
exchange offer) as nearly equivalent as possible to the adjustments provided for in this Section
4; provided, further, that if less than 70% of the consideration receivable by the holders of the Common
Stock in the applicable event is payable in the form of common stock in the successor entity that is listed for trading on a
national securities exchange or is quoted in an established over-the-counter market, or is to be so listed for trading or quoted
immediately following such event, and if the Registered Holder properly exercises the Warrant within thirty (30) days following the
public disclosure of the consummation of such applicable event by the Company pursuant to a Current Report on Form 8-K filed with
the Commission, the Warrant Price shall be reduced by an amount (in dollars) (but in no event less than zero) equal to the
difference of (i) the Warrant Price in effect prior to such reduction minus (ii) (A) the Per Share Consideration (as defined below)
minus (B) the Black-Scholes Warrant Value (as defined below). The “Black-Scholes Warrant Value” means the
value of a Warrant immediately prior to the consummation of the applicable event based on the Black-Scholes Warrant Model for a
Capped American Call on Bloomberg Financial Markets (“Bloomberg”). For purposes of calculating such
amount, (1) Section 6 of this Agreement shall be taken into account, (2) the price of each share of Common Stock
shall be the volume weighted average price of the Common Stock as reported during the ten (10) trading day period ending on the
trading day prior to the effective date of the applicable event, (3) the assumed volatility shall be the 90 day volatility obtained
from the HVT function on Bloomberg determined as of the trading day immediately prior to the day of the announcement of the
applicable event, and (4) the assumed risk-free interest rate shall correspond to the U.S. Treasury rate for a period equal to the
remaining term of the Warrant. “Per Share Consideration” means (i)
if the consideration paid to holders of the Common Stock consists exclusively of cash, the amount of such cash per share of Common
Stock, and (ii) in all other cases, the amount of cash per share of Common Stock, if any, plus the volume weighted average price of
the Common Stock as reported during the ten (10) trading day period ending on the trading day prior to the effective date of the
applicable event. If any reclassification or reorganization also results in a change in shares of Common Stock covered
by subsection 4.1.1, then such adjustment shall be made pursuant to subsection
4.1.1 or Sections 4.2, 4.3 and this Section 4.4. The provisions of
this Section 4.4 shall similarly apply to successive reclassifications, reorganizations, mergers or consolidations,
sales or other transfers. In no event will the Warrant Price be reduced to less than the par value per share issuable upon exercise
of the Warrant.

 

     

     

    

 

4.5 Notices of Changes
in Warrant. Upon every adjustment of the Warrant Price or the number of shares of Common Stock issuable upon exercise of a Warrant,
the Company shall give written notice thereof to the Warrant Agent, which notice shall state the Warrant Price resulting from such adjustment
and the increase or decrease, if any, in the number of shares of Common Stock purchasable at such price upon the exercise of a Warrant,
setting forth in reasonable detail the method of calculation and the facts upon which such calculation is based. Upon the occurrence of
any event specified in Sections 4.1, 4.2, 4.3 or 4.4, the Company shall give written
notice of the occurrence of such event to each holder of a Warrant, at the last address set forth for such holder in the Warrant Register,
of the record date or the effective date of the event. Failure to give such notice, or any defect therein, shall not affect the legality
or validity of such event.

  

4.6 No Fractional
Shares. Notwithstanding any provision contained in this Agreement to the contrary, the Company shall not issue fractional shares of
Common Stock upon the exercise of Warrants. If, by reason of any adjustment made pursuant to this Section 4, the holder of
any Warrant would be entitled, upon the exercise of such Warrant, to receive a fractional interest in a share, the Company shall, upon
such exercise, round down to the nearest whole number the number of shares of Common Stock to be issued to such holder.

 

4.7 Form of Warrant.
The form of Warrant need not be changed because of any adjustment pursuant to this Section 4, and Warrants issued after such
adjustment may state the same Warrant Price and the same number of shares of Common Stock as is stated in the Warrants initially issued
pursuant to this Agreement; provided, however, that the Company may at any time in its sole discretion make any
change in the form of Warrant that the Company may deem appropriate and that does not affect the substance thereof, and any Warrant thereafter
issued or countersigned, whether in exchange or substitution for an outstanding Warrant or otherwise, may be in the form as so changed.

 

4.8 Other Events.
In case any event shall occur affecting the Company as to which none of the provisions of preceding subsections of this Section
4 are strictly applicable, but which would require an adjustment to the terms of the Warrants in order to (i) avoid an adverse
impact on the Warrants and (ii) effectuate the intent and purpose of this Section 4, then, in each such case, the Company
shall appoint a firm of independent public accountants, investment banking or other appraisal firm of recognized national standing, which
shall give its opinion as to whether or not any adjustment to the rights represented by the Warrants is necessary to effectuate the intent
and purpose of this Section 4 and, if they determine that an adjustment is necessary, the terms of such adjustment; provided,
however, that under no circumstances shall the Warrants be adjusted pursuant to this Section 4.8 as a result of any issuance
of securities in connection with the Business Combination. The Company shall adjust the terms of the Warrants in a manner that is consistent
with any adjustment recommended in such opinion.

 

4.9 No Adjustment.
For the avoidance of doubt, no adjustment shall be made to the terms of the Warrants solely as a result of an adjustment to the conversion
ratio of the Company’s Class B common stock (the “Class B Common Stock”) into shares of Common Stock or
the conversion of the shares of Class B Common Stock into shares of Common Stock, in each case, pursuant to the Company’s Charter,
as amended from time to time.

 

5. Transfer and Exchange
of Warrants.

 

5.1 Registration
of Transfer. The Warrant Agent shall register the transfer, from time to time, of any outstanding Warrant upon the Warrant
Register, upon surrender of such Warrant for transfer, in the case of certificated Warrants, properly endorsed with signatures
properly guaranteed and accompanied by appropriate instructions for transfer. Upon any such transfer, a new Warrant representing an
equal aggregate number of Warrants shall be issued and the old Warrant shall be cancelled by the Warrant Agent. In the case of
certificated Warrants, the Warrants so cancelled shall be delivered by the Warrant Agent to the Company from time to time upon
request.

 

     

     

    

 

5.2 Procedure for
Surrender of Warrants. Warrants may be surrendered to the Warrant Agent, together with a written request for exchange or transfer,
and thereupon the Warrant Agent shall issue in exchange therefor one or more new Warrants as requested by the Registered Holder of the
Warrants so surrendered, representing an equal aggregate number of Warrants; provided, however, that except as
otherwise provided herein or in any Book-Entry Warrant Certificate or Definitive Warrant Certificate, each Book-Entry Warrant Certificate
and Definitive Warrant Certificate may be transferred only in whole and only to the Depositary, to another nominee of the Depositary,
to a successor depositary, or to a nominee of a successor depositary; provided further, however, that in the event
that a Warrant surrendered for transfer bears a restrictive legend (as in the case of the Private Placement Warrants and the Working Capital
Warrants), the Warrant Agent shall not cancel such Warrant and issue new Warrants in exchange thereof until the Warrant Agent has received
an opinion of counsel for the Company stating that such transfer may be made and indicating whether the new Warrants must also bear a
restrictive legend.

 

5.3 Fractional Warrants.
The Warrant Agent shall not be required to effect any registration of transfer or exchange which shall result in the issuance of a warrant
certificate or book-entry position for a fraction of a warrant.

 

5.4 Service Charges.
No service charge shall be made for any exchange or registration of transfer of Warrants.

 

5.5 Warrant Execution
and Countersignature. The Warrant Agent is hereby authorized to countersign and to deliver, in accordance with the terms of this Agreement,
the Warrants required to be issued pursuant to the provisions of this Section 5, and the Company, whenever required by the
Warrant Agent, shall supply the Warrant Agent with Warrants duly executed on behalf of the Company for such purpose.

 

5.6 Transfer of
Warrants. Prior to the Detachment Date, the Public Warrants may be transferred or exchanged only together with the Unit in which such
Warrant is included, and only for the purpose of effecting, or in conjunction with, a transfer or exchange of such Unit. Furthermore,
each transfer of a Unit on the register relating to such Units shall operate also to transfer the Warrants included in such Unit. Notwithstanding
the foregoing, the provisions of this Section 5.6 shall have no effect on any transfer of Warrants on and after the Detachment
Date.

 

5.7 Transfer of Representative
Warrants. Pursuant to FINRA Rule 5110(e)(1), the Representative Warrants may not be sold, transferred, assigned, pledged, or hypothecated,
or be the subject of any hedging, short sale, derivative, put, or call transaction that would result in the effective economic disposition
of the Representative Warrants (or the Common Stock underlying the Representative Warrants) for a period of 180 days beginning on the
date of the commencement of sales in the Offering, subject to certain exceptions pursuant to FINRA Rule 5110(e)(2).

  

6. Redemption.

 

6.1 Redemption.
Subject to Section 6.4 hereof, not less than all of the outstanding Warrants may be redeemed, at the option of the Company,
at any time while they are exercisable and prior to their expiration, at the office of the Warrant Agent, upon notice to the Registered
Holders of the Warrants, as described in Section 6.2 below, at the price of $0.01 per Warrant (the “Redemption
Price”), provided, that the last reported sales price of the Common Stock has been at least $18.00 per share (subject
to adjustment in compliance with Section 4 hereof) (the “Redemption Trigger Price”), on
each of twenty (20) trading days within the thirty (30) trading-day period ending on the third Business Day prior to the date on which
notice of the redemption is given and provided, that there is an effective registration statement covering the shares of Common
Stock issuable upon exercise of the Warrants, and a current prospectus relating thereto, available throughout the 30-day Redemption Period
(as defined in Section 6.2 below) or the Company has elected to require the exercise of the Warrants on a “cashless
basis” pursuant to subsection 3.3.1; provided, however, that if and when the Public Warrants become redeemable
by the Company, the Company may not exercise such redemption right if the issuance of shares of Common Stock upon exercise of the Public
Warrants is not exempt from registration or qualification under applicable state blue sky laws or the Company is unable to effect such
registration or qualification.

 

     

     

    

 

6.2 Date Fixed for,
and Notice of, Redemption. In the event that the Company elects to redeem all of the Warrants, the Company shall fix a date for the
redemption (the “Redemption Date”). Notice of redemption shall be mailed by first class mail, postage prepaid,
by the Company not less than thirty (30) days prior to the Redemption Date (the “30-day Redemption Period”)
to the Registered Holders of the Warrants to be redeemed at their last addresses as they shall appear on the registration books. Any notice
mailed in the manner herein provided shall be conclusively presumed to have been duly given whether or not the Registered Holder received
such notice.

 

6.3 Exercise After
Notice of Redemption. The Warrants may be exercised, for cash (or on a “cashless basis” in accordance with subsection
3.3.1(b) of this Agreement) at any time after notice of redemption shall have been given by the Company pursuant to Section
6.2 hereof and prior to the Redemption Date. In the event that the Company determines to require all holders of Warrants to exercise
their Warrants on a “cashless basis” pursuant to subsection 3.3.1, the notice of redemption shall contain the
information necessary to calculate the number of shares of Common Stock to be received upon exercise of the Warrants, including the “Fair
Market Value” (as such term is defined in subsection 3.3.1(b) hereof) in such case. On and after the Redemption
Date, the record holder of the Warrants shall have no further rights except to receive, upon surrender of the Warrants, the Redemption
Price.

 

6.4 Exclusion of
Representative Warrants and Private Placement Warrants and Working Capital Warrants. The Company agrees that the redemption rights
provided in this Section 6 shall not apply to the Representative Warrants or the Private Placement Warrants or the Working
Capital Warrants if, with respect to the Private Placement Warrants or the Working Capital Warrants, at the time of the redemption such
Private Placement Warrants or the Working Capital Warrants continue to be held by one of the Private Investors or its Permitted Transferees,
as applicable. However, with respect to the Private Placement Warrants or the Working Capital Warrants, once such Private Placement Warrants
or Working Capital Warrants are transferred (other than to Permitted Transferees under Section 2.6), the Company may redeem
the Private Placement Warrants and the Working Capital Warrants, provided, that the criteria for redemption are met, including
the opportunity of the holder of such Private Placement Warrants or the Working Capital Warrants to exercise the Private Placement Warrants
and the Working Capital Warrants prior to redemption pursuant to Section 6.3. Private Placement Warrants and Working Capital
Warrants that are transferred to persons other than Permitted Transferees shall upon such transfer cease to be Private Placement Warrants
or Working Capital Warrants and shall become Public Warrants under this Agreement. The provisions of this Section 6.4 may
not be modified, amended or deleted without the prior written consent of the Representative.

   

7. Other Provisions
Relating to Rights of Holders of Warrants.

 

7.1 No Rights as
Stockholder. A Warrant does not entitle the Registered Holder thereof to any of the rights of a stockholder of the Company, including,
without limitation, the right to receive dividends, or other distributions, exercise any preemptive rights to vote or to consent or to
receive notice as stockholders in respect of the meetings of stockholders or the election of directors of the Company or any other matter.

 

7.2 Lost, Stolen,
Mutilated, or Destroyed Warrants. If any Warrant is lost, stolen, mutilated, or destroyed, the Company and the Warrant Agent may on
such terms as to indemnity or otherwise as they may in their discretion impose (which shall, in the case of a mutilated Warrant, include
the surrender thereof), issue a new Warrant of like denomination, tenor, and date as the Warrant so lost, stolen, mutilated, or destroyed.
Any such new Warrant shall constitute a substitute contractual obligation of the Company, whether or not the allegedly lost, stolen, mutilated,
or destroyed Warrant shall be at any time enforceable by anyone.

 

7.3 Reservation
of Common Stock. The Company shall at all times reserve and keep available a number of its authorized but unissued shares of Common
Stock that shall be sufficient to permit the exercise in full of all outstanding Warrants issued pursuant to this Agreement.

 

     

     

    

 

7.4 Registration
of Common Stock; Cashless Exercise at Company’s Option.

 

7.4.1 Registration
of the Common Stock. The Company agrees that as soon as practicable, but in no event later than fifteen (15) Business Days after
the closing of its initial Business Combination, it shall use its best efforts to file with the Commission a registration statement
for the registration, under the Securities Act, of the shares of Common Stock issuable upon exercise of the Warrants. The Company
shall use its best efforts to cause the same to become effective and to maintain the effectiveness of such registration statement,
and a current prospectus relating thereto, until the expiration of the Warrants in accordance with the provisions of this Agreement.
If any such registration statement has not been declared effective by the 60th day following the closing of the Business
Combination, holders of the Warrants shall have the right, during the period beginning on the 61st day after the closing of the
Business Combination and ending upon such registration statement being declared effective by the Commission, and during any other
period when the Company shall fail to have maintained an effective registration statement covering the shares of Common Stock
issuable upon exercise of the Warrants, to exercise such Warrants on a “cashless basis,” by exchanging the Warrants (in
accordance with Section 3(a)(9) of the Securities Act (or any successor rule) or another exemption) for that number of shares of
Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the
Warrants, multiplied by the difference between the Warrant Price and the “Fair Market Value” (as defined below) by (y)
the Fair Market Value. Solely for purposes of this subsection 7.4.1, “Fair Market Value” shall mean the
volume weighted average price of the Common Stock as reported during the ten (10) trading day period ending on the third trading day
prior to the date that notice of exercise is received by the Warrant Agent from the holder of such Warrants or its securities broker
or intermediary. The date that notice of cashless exercise is received by the Warrant Agent shall be conclusively determined by the
Warrant Agent. In connection with the “cashless exercise” of a Public Warrant, the Company shall, upon request, provide
the Warrant Agent with an opinion of counsel for the Company (which shall be an outside law firm with securities law experience)
stating that (i) the exercise of the Warrants on a cashless basis in accordance with this subsection 7.4.1 is not
required to be registered under the Securities Act and (ii) the shares of Common Stock issued upon such exercise shall be freely
tradable under United States federal securities laws by anyone who is not an affiliate (as such term is defined in Rule 144 under
the Securities Act (or any successor statute)) of the Company and, accordingly, shall not be required to bear a restrictive legend.
Except as provided in subsection 7.4.2, for the avoidance of any doubt, unless and until all of the Warrants have been
exercised or have expired, the Company shall continue to be obligated to comply with its registration obligations under the first
three sentences of this subsection 7.4.1.

  

7.4.2 Cashless Exercise
at Company’s Option. If the Common Stock is at the time of any exercise of a Warrant not listed on a national securities exchange
such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act (or any successor
statute), the Company may, at its option, (i) require holders of Public Warrants who exercise Public Warrants to exercise such Public
Warrants on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act (or any successor statute) as described
in subsection 7.4.1 and (ii) in the event the Company so elects, the Company shall not be required to file or maintain
in effect a registration statement for the registration, under the Securities Act, of the Common Stock issuable upon exercise of the Warrants,
notwithstanding anything in this Agreement to the contrary. If the Company does not elect at the time of exercise to require a holder
of Public Warrants who exercises Public Warrants to exercise such Public Warrants on a “cashless basis,” it agrees to use
its best efforts to register or qualify for sale the Common Stock issuable upon exercise of the Public Warrant under the blue sky laws
of the state of residence of the exercising Public Warrant holder to the extent an exemption is not available.

 

8. Concerning the
Warrant Agent and Other Matters.

 

8.1 Payment of Taxes.
The Company shall from time to time promptly pay all taxes and charges that may be imposed upon the Company or the Warrant Agent in respect
of the issuance or delivery of shares of Common Stock upon the exercise of the Warrants, but the Company shall not be obligated to pay
any transfer taxes in respect of the Warrants or such shares of Common Stock.

 

     

     

    

 

8.2 Resignation,
Consolidation, or Merger of Warrant Agent.

 

8.2.1 Appointment
of Successor Warrant Agent. The Warrant Agent, or any successor to it hereafter appointed, may resign its duties and be
discharged from all further duties and liabilities hereunder after giving sixty (60) days’ notice in writing to the Company.
If the office of the Warrant Agent becomes vacant by resignation or incapacity to act or otherwise, the Company shall appoint in
writing a successor Warrant Agent in place of the Warrant Agent. If the Company shall fail to make such appointment within a period
of thirty (30) days after it has been notified in writing of such resignation or incapacity by the Warrant Agent or by the holder of
a Warrant (who shall, with such notice, submit his Warrant for inspection by the Company), then the holder of any Warrant may apply
to the Supreme Court of the State of New York for the County of New York for the appointment of a successor Warrant Agent at the
Company’s cost. Any successor Warrant Agent, whether appointed by the Company or by such court, shall be a corporation
organized and existing under the laws of the State of New York, in good standing and having its principal office in the Borough of
Manhattan, City and State of New York, and authorized under such laws to exercise corporate trust powers and subject to supervision
or examination by federal or state authority. After appointment, any successor Warrant Agent shall be vested with all the authority,
powers, rights, immunities, duties, and obligations of its predecessor Warrant Agent with like effect as if originally named as
Warrant Agent hereunder, without any further act or deed; but if for any reason it becomes necessary or appropriate, the predecessor
Warrant Agent shall execute and deliver, at the expense of the Company, an instrument transferring to such successor Warrant Agent
all the authority, powers, and rights of such predecessor Warrant Agent hereunder; and upon request of any successor Warrant Agent
the Company shall make, execute, acknowledge, and deliver any and all instruments in writing for more fully and effectually vesting
in and confirming to such successor Warrant Agent all such authority, powers, rights, immunities, duties, and obligations.

 

8.2.2 Notice of
Successor Warrant Agent. In the event a successor Warrant Agent shall be appointed, the Company shall give notice thereof to the predecessor
Warrant Agent and the Transfer Agent for the Common Stock not later than the effective date of any such appointment.

 

8.2.3 Merger or
Consolidation of Warrant Agent. Any corporation into which the Warrant Agent may be merged or with which it may be consolidated or
any corporation resulting from any merger or consolidation to which the Warrant Agent shall be a party shall be the successor Warrant
Agent under this Agreement without any further act.

 

8.3 Fees and Expenses
of Warrant Agent.

 

8.3.1 Remuneration.
The Company agrees to pay the Warrant Agent reasonable remuneration for its services as such Warrant Agent hereunder and shall, pursuant
to its obligations under this Agreement, reimburse the Warrant Agent upon demand for all expenditures that the Warrant Agent may reasonably
incur in the execution of its duties hereunder.

  

8.3.2 Further Assurances.
The Company agrees to perform, execute, acknowledge, and deliver or cause to be performed, executed, acknowledged, and delivered all such
further and other acts, instruments, and assurances as may reasonably be required by the Warrant Agent for the carrying out or performing
of the provisions of this Agreement.

 

8.4 Liability of
Warrant Agent.

 

8.4.1 Reliance on
Company Statement. Whenever in the performance of its duties under this Agreement, the Warrant Agent shall deem it necessary or desirable
that any fact or matter be proved or established by the Company prior to taking or suffering any action hereunder, such fact or matter
(unless other evidence in respect thereof be herein specifically prescribed) may be deemed to be conclusively proved and established by
a statement signed by the Chief Executive Officer, Chief Financial Officer, President, Executive Vice President, Vice President, Secretary
or Chairman of the Board of the Company and delivered to the Warrant Agent. The Warrant Agent may rely upon such statement for any action
taken or suffered in good faith by it pursuant to the provisions of this Agreement.

 

8.4.2 Indemnity.
The Warrant Agent shall be liable hereunder only for its own gross negligence, willful misconduct or bad faith. The Company agrees to
indemnify the Warrant Agent and save it harmless against any and all liabilities, including judgments, costs and reasonable counsel fees,
for anything done or omitted by the Warrant Agent in the execution of this Agreement, except as a result of the Warrant Agent’s
gross negligence, willful misconduct or bad faith.

 

8.4.3 Exclusions.
The Warrant Agent shall have no responsibility with respect to the validity of this Agreement or with respect to the validity or
execution of any Warrant (except its countersignature thereof). The Warrant Agent shall not be responsible for any breach by the
Company of any covenant or condition contained in this Agreement or in any Warrant. The Warrant Agent shall not be responsible to
make any adjustments required under the provisions of Section 4 hereof or responsible for the manner, method, or
amount of any such adjustment or the ascertaining of the existence of facts that would require any such adjustment; nor shall it by
any act hereunder be deemed to make any representation or warranty as to the authorization or reservation of any shares of Common
Stock to be issued pursuant to this Agreement or any Warrant or as to whether any shares of Common Stock shall, when issued, be
valid and fully paid and non-assessable.

 

     

     

    

 

8.5 Acceptance of
Agency. The Warrant Agent hereby accepts the agency established by this Agreement and agrees to perform the same upon the terms and
conditions herein set forth and among other things, shall account promptly to the Company with respect to Warrants exercised and concurrently
account for, and pay to the Company, all monies received by the Warrant Agent for the purchase of shares of Common Stock through the exercise
of the Warrants.

 

8.6 Waiver.
The Warrant Agent has no right of set-off or any other right, title, interest or claim of any kind (“Claim”)
in, or to any distribution of, the Trust Account (as defined in that certain Investment Management Trust Agreement, dated as of the date
hereof, by and between the Company and the Warrant Agent as trustee thereunder) and hereby agrees not to seek recourse, reimbursement,
payment or satisfaction for any Claim against the Trust Account for any reason whatsoever. The Warrant Agent hereby waives any and all
Claims against the Trust Account and any and all rights to seek access to the Trust Account.

 

9. Miscellaneous Provisions.

 

9.1 Successors.
All the covenants and provisions of this Agreement by or for the benefit of the Company or the Warrant Agent shall bind and inure to the
benefit of their respective successors and assigns.

  

9.2 Notices.
Any notice, statement or demand authorized by this Agreement to be given or made by the Warrant Agent or by the holder of any Warrant
to or on the Company shall be sufficiently given when so delivered if by hand or overnight delivery or if sent by certified mail or private
courier service within five (5) days after deposit of such notice, postage prepaid, addressed (until another address is filed in writing
by the Company with the Warrant Agent), as follows:

 

Financial Strategies Acquisition Corp.

2626 Cole Avenue, Suite 300

Dallas, Texas 75204

Attention: Jamie Khurshid

 

Any notice, statement or demand authorized by
this Agreement to be given or made by the holder of any Warrant or by the Company to or on the Warrant Agent shall be sufficiently given
when so delivered if by hand or overnight delivery or if sent by certified mail or private courier service within five (5) days after
deposit of such notice, postage prepaid, addressed (until another address is filed in writing by the Warrant Agent with the Company),
as follows:

 

Continental Stock Transfer & Trust Company

1 State Street, 30th Floor

New York, NY 10004

Attention: Compliance Department

 

9.3 Applicable Law.
The validity, interpretation, and performance of this Agreement and of the Warrants shall be governed in all respects by the laws of the
State of New York, without giving effect to conflicts of law principles that would result in the application of the substantive laws of
another jurisdiction. The Company hereby agrees that any action, proceeding or claim against it arising out of or relating in any way
to this Agreement shall be brought and enforced in the courts of the State of New York or the United States District Court for the Southern
District of New York, and irrevocably submits to such jurisdiction. The Company hereby waives any objection to such jurisdiction and that
such courts represent an inconvenient forum.

 

9.4 Persons
Having Rights under this Agreement. Nothing in this Agreement shall be construed to confer upon, or give to, any person or
corporation other than the parties hereto and the Registered Holders of the Warrants and, for purposes of Sections 7.4, 9.4
and 9.8, the Representative, any right, remedy, or claim under or by reason of this Agreement or of any covenant, condition,
stipulation, promise, or agreement hereof. All covenants, conditions, stipulations, promises, and agreements contained in this
Agreement shall be for the sole and exclusive benefit of the parties hereto and, for purposes of Sections 7.4, 9.4 and 9.8,
the Representative, and its successors and assigns and of the Registered Holders of the Warrants.

 

     

     

    

 

9.5 Examination
of the Warrant Agreement. A copy of this Agreement shall be available at all reasonable times at the office of the Warrant Agent in
the Borough of Manhattan, City and State of New York, for inspection by the Registered Holder of any Warrant. The Warrant Agent may require
any such holder to submit such holder’s Warrant for inspection by the Warrant Agent.

 

9.6 Counterparts.
This Agreement may be executed in any number of original or facsimile counterparts and each of such counterparts shall for all purposes
be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument.

 

9.7 Effect of Headings.
The section headings herein are for convenience only and are not part of this Agreement and shall not affect the interpretation thereof.

 

9.8 Amendments.
This Agreement may be amended by the parties hereto without the consent of any Registered Holder (i) for the purpose of curing any ambiguity,
or curing, correcting or supplementing any mistake, including to confirm the provisions of this Agreement to the description of the terms
of the Warrants and this Agreement set forth in the Prospectus, or any defective provision contained herein or adding or changing any
other provisions with respect to matters or questions arising under this Agreement as the parties may deem necessary or desirable and
that the parties deem shall not adversely affect the interest of the Registered Holders, and (ii) to provide for the delivery of Alternative
Issuance pursuant to Section 4.4. All other modifications or amendments, including any amendment to increase the Warrant Price
or shorten the Exercise Period, shall require the vote or written consent of the Registered Holders of at least 65% of the then outstanding
Public Warrants. Any amendment solely to the Private Placement Warrants, the Representative Warrants or the Working Capital Warrants shall
require the vote or written consent of a majority of the holders of the then outstanding Private Placement Warrants, the Representative
Warrants or the Working Capital Warrants, as applicable. Notwithstanding the foregoing, the Company may lower the Warrant Price or extend
the duration of the Exercise Period pursuant to Sections 3.1 and 3.2, respectively, without the consent of
the Registered Holders.

  

9.9 Severability.
This Agreement shall be deemed severable, and the invalidity or unenforceability of any term or provision hereof shall not affect the
validity or enforceability of this Agreement or of any other term or provision hereof. Furthermore, in lieu of any such invalid or unenforceable
term or provision, the parties hereto intend that there shall be added as a part of this Agreement a provision as similar in terms to
such invalid or unenforceable provision as may be possible and be valid and enforceable.

 

[Signature Page Follows]

 

     

     

    

 

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

 

	 	FINANCIAL STRATEGIES ACQUISITION CORP.
	 	 
	 	By:	/s/ Jamie Khurshid 
	 	Name:	Jamie Khurshid
	 	Title:	Chief Executive Officer
	 	 
	 	CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Warrant Agent
	 	 
	 	By:	/s/ Douglas Reed 
	 	Name:	Douglas Reed 
	 	Title:	Vice President

 

[Signature Page to Warrant Agreement]

 

     

     

    

 

EXHIBIT A

  

[Form of Warrant Certificate]

 

[FACE]

 

Number

 

Warrants

 

THIS WARRANT SHALL BE VOID IF NOT EXERCISED
PRIOR TO

THE EXPIRATION OF THE EXERCISE PERIOD PROVIDED
FOR

IN THE WARRANT AGREEMENT DESCRIBED BELOW

 

FINANCIAL STRATEGIES ACQUISITION CORP.

Incorporated Under the Laws
of the State of Delaware

 

CUSIP 31772T 115

 

Warrant Certificate

 

This Warrant Certificate
certifies that               , or its registered assigns,
is the registered holder of warrant(s) evidenced hereby (the “Warrants” and each, a “Warrant”) to
purchase shares of Class A common stock, $0.0001 par value per share (“Common Stock”), of Financial Strategies
Acquisition Corp., a Delaware corporation (the “Company”). Each Warrant entitles the holder, upon exercise during
the period set forth in the Warrant Agreement referred to below, to receive from the Company that number of fully paid and non-assessable
shares of Common Stock as set forth below, at the exercise price (the “Exercise Price”) as determined pursuant
to the Warrant Agreement, payable in lawful money (or through “cashless exercise” as provided for in the Warrant
Agreement) of the United States of America upon surrender of this Warrant Certificate and payment of the Exercise Price at the office
or agency of the Warrant Agent referred to below, subject to the conditions set forth herein and in the Warrant Agreement. Defined terms
used in this Warrant Certificate but not defined herein shall have the meanings given to them in the Warrant Agreement.

 

Each Warrant is initially
exercisable for one fully paid and non-assessable share of Common Stock. No fractional shares will be issued upon exercise of any Warrant.
If, upon the exercise of Warrants, a holder would be entitled to receive a fractional interest in a share of Common Stock, the Company
will, upon exercise, round down to the nearest whole number the number of shares of Common Stock to be issued to the Warrant holder. The
number of shares of Common Stock issuable upon exercise of the Warrants is subject to adjustment upon the occurrence of certain events
set forth in the Warrant Agreement.

 

The initial Exercise Price
per share of Common Stock for any Warrant is equal to $11.50 per share. The Exercise Price is subject to adjustment upon the occurrence
of certain events set forth in the Warrant Agreement.

 

Subject to the conditions
set forth in the Warrant Agreement, the Warrants may be exercised only during the Exercise Period and to the extent not exercised by the
end of such Exercise Period, such Warrants shall become void.

 

Reference is hereby made
to the further provisions of this Warrant Certificate set forth on the reverse hereof and such further provisions shall for all purposes
have the same effect as though fully set forth at this place.

 

This Warrant Certificate
shall not be valid unless countersigned by the Warrant Agent, as such term is used in the Warrant Agreement.

 

This Warrant Certificate
shall be governed by and construed in accordance with the internal laws of the State of New York, without regard to conflicts of laws
principles thereof.

 

     

     

    

 

	 	FINANCIAL STRATEGIES ACQUISITION CORP.
	 	 	 
	 	By:	 
	 	Name:	 
	 	Title:	 
	 	 	 
	 	CONTINENTAL STOCK TRANSFER & TRUST COMPANY, as Warrant Agent
	 	 	 
	 	By:	                   
	 	Name:	 
	 	Title:	 

 

     

     

    

 

[Form of Warrant Certificate]

 

[Reverse]

 

The Warrants evidenced by
this Warrant Certificate are part of a duly authorized issue of Warrants entitling the holder on exercise to receive shares of Common
Stock and are issued or to be issued pursuant to a Warrant Agreement dated as of                ,
2021 (the “Warrant Agreement”), duly executed and delivered by the Company to Continental Stock Transfer &
Trust Company, a New York corporation, as warrant agent (the “Warrant Agent”), which Warrant Agreement is hereby
incorporated by reference in and made a part of this instrument and is hereby referred to for a description of the rights, limitation
of rights, obligations, duties and immunities thereunder of the Warrant Agent, the Company and the holders (the words “holders”
or “holder” meaning the Registered Holders or Registered Holder, respectively) of the Warrants. A copy of the
Warrant Agreement may be obtained by the holder hereof upon written request to the Company. Defined terms used in this Warrant Certificate
but not defined herein shall have the meanings given to them in the Warrant Agreement.

 

Warrants may be exercised
at any time during the Exercise Period set forth in the Warrant Agreement. The holder of Warrants evidenced by this Warrant Certificate
may exercise them by surrendering this Warrant Certificate, with the form of election to purchase set forth hereon properly completed
and executed, together with payment of the Exercise Price as specified in the Warrant Agreement (or through “cashless exercise”
as provided for in the Warrant Agreement) at the principal corporate trust office of the Warrant Agent. In the event that upon any exercise
of Warrants evidenced hereby the number of Warrants exercised shall be less than the total number of Warrants evidenced hereby, there
shall be issued to the holder hereof or his, her or its assignee, a new Warrant Certificate evidencing the number of Warrants not exercised.

 

Notwithstanding anything
else in this Warrant Certificate or the Warrant Agreement, no Warrant may be exercised unless at the time of exercise (i) a registration
statement covering the shares of Common Stock to be issued upon exercise is effective under the Securities Act and (ii) a prospectus thereunder
relating to the shares of Common Stock is current, except through “cashless exercise” as provided for in the Warrant Agreement.

 

The Warrant Agreement provides
that upon the occurrence of certain events the number of shares of Common Stock issuable upon exercise of the Warrants set forth on the
face hereof may, subject to certain conditions, be adjusted. If, upon exercise of a Warrant, the holder thereof would be entitled to receive
a fractional interest in a share of Common Stock, the Company shall, upon exercise, round down to the nearest whole number of shares of
Common Stock to be issued to the holder of the Warrant.

 

Warrant Certificates, when
surrendered at the principal corporate trust office of the Warrant Agent by the Registered Holder thereof in person or by legal representative
or attorney duly authorized in writing, may be exchanged, in the manner and subject to the limitations provided in the Warrant Agreement,
but without payment of any service charge, for another Warrant Certificate or Warrant Certificates of like tenor evidencing in the aggregate
a like number of Warrants.

 

Upon due presentation for
registration of transfer of this Warrant Certificate at the office of the Warrant Agent a new Warrant Certificate or Warrant Certificates
of like tenor and evidencing in the aggregate a like number of Warrants shall be issued to the transferee(s) in exchange for this Warrant
Certificate, subject to the limitations provided in the Warrant Agreement, without charge except for any tax or other governmental charge
imposed in connection therewith.

 

The Company and the Warrant
Agent may deem and treat the Registered Holder(s) hereof as the absolute owner(s) of this Warrant Certificate (notwithstanding any notation
of ownership or other writing hereon made by anyone), for the purpose of any exercise hereof, of any distribution to the holder(s) hereof,
and for all other purposes, and neither the Company nor the Warrant Agent shall be affected by any notice to the contrary. Neither the
Warrants nor this Warrant Certificate entitles any holder hereof to any rights of a stockholder of the Company.

 

     

     

    

 

Election to Purchase

 

(To Be Executed Upon Exercise of Warrant)

 

The undersigned hereby irrevocably
elects to exercise the right, represented by this Warrant Certificate, to receive             shares
of Common Stock and herewith tenders payment for such shares of Common Stock to the order of Financial Strategies Acquisition Corp. (the “Company”)
in the amount of $        in accordance with the terms hereof. The undersigned requests that a certificate
for such shares of Common Stock be registered in the name of             ,
whose address is                  and that such shares
of Common Stock be delivered to                 whose
address is                  . If said number of shares
of Common Stock is less than all of the shares of Common Stock purchasable hereunder, the undersigned requests that a new Warrant Certificate
representing the remaining balance of such shares of Common Stock be registered in the name of              ,
whose address is               and that such Warrant Certificate
be delivered to                 , whose address is                  .

 

In the event that the Warrant
has been called for redemption by the Company pursuant to Section 6 of the Warrant Agreement and the Company has required
cashless exercise pursuant to Section 6.3 of the Warrant Agreement, the number of shares of Common Stock that this Warrant
is exercisable for shall be determined in accordance with subsection 3.3.1(b) and Section 6.3 of the
Warrant Agreement.

 

In the event that the Warrant
is a Representative Warrant, Private Placement Warrant, Working Capital Warrant or Post-IPO Warrant that is to be exercised on a “cashless”
basis pursuant to subsection 3.3.1(c) of the Warrant Agreement, the number of shares of Common Stock that this Warrant
is exercisable for shall be determined in accordance with subsection 3.3.1(c) of the Warrant Agreement.

 

In the event that the Warrant
is to be exercised on a “cashless” basis pursuant to Section 7.4 of the Warrant Agreement, the number of
shares of Common Stock that this Warrant is exercisable for shall be determined in accordance with Section 7.4 of the
Warrant Agreement.

 

In the event that the Warrant
may be exercised, to the extent allowed by the Warrant Agreement, through cashless exercise (i) the number of shares of Common Stock that
this Warrant is exercisable for would be determined in accordance with the relevant section of the Warrant Agreement which allows for
such cashless exercise and (ii) the holder hereof shall complete the following: The undersigned hereby irrevocably elects to exercise
the right, represented by this Warrant Certificate, through the cashless exercise provisions of the Warrant Agreement, to receive shares
of Common Stock. If said number of shares of Common Stock is less than all of the shares of Common Stock purchasable hereunder (after
giving effect to the cashless exercise), the undersigned requests that a new Warrant Certificate representing the remaining balance of
such shares of Common Stock be registered in the name of               ,
whose address is                and that such Warrant Certificate
be delivered to              , whose address is                    .

 

[Signature Page Follows]

 

	Date:                      , 20	 
	 	(Signature)
	 	 
	 	 
	 	 
	 	 
	 	(Address)
	 	 
	 	 
	 	(Tax Identification Number)
	 	 
	Signature Guaranteed:	 
	 	 
	 	 

 

     

     

    

 

THE SIGNATURE(S) SHOULD BE GUARANTEED BY AN ELIGIBLE GUARANTOR INSTITUTION
(BANKS, STOCKBROKERS, SAVINGS AND LOAN ASSOCIATIONS AND CREDIT UNIONS WITH MEMBERSHIP IN AN APPROVED SIGNATURE GUARANTEE MEDALLION PROGRAM,
PURSUANT TO S.E.C. RULE 17Ad-15 (OR ANY SUCCESSOR RULE)).

 

     

     

    

 

EXHIBIT B

 

LEGEND

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE
HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED, SOLD, TRANSFERRED
OR OTHERWISE DISPOSED OF UNLESS REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, AND ANY APPLICABLE STATE SECURITIES LAWS OR AN
EXEMPTION FROM REGISTRATION IS AVAILABLE. IN ADDITION, SUBJECT TO ANY ADDITIONAL LIMITATIONS ON TRANSFER DESCRIBED IN THE LETTER AGREEMENT
BY AND AMONG FINANCIAL STRATEGIES ACQUISITION CORP. (THE “COMPANY”), FSC SPONSOR LLC AND THE OTHER PARTIES THERETO, THE SECURITIES
REPRESENTED BY THIS CERTIFICATE MAY NOT BE SOLD OR TRANSFERRED PRIOR TO THE DATE THAT IS THIRTY (30) DAYS AFTER THE DATE UPON WHICH THE
COMPANY COMPLETES ITS INITIAL BUSINESS COMBINATION (AS DEFINED IN SECTION 3 OF THE WARRANT AGREEMENT REFERRED TO HEREIN) EXCEPT TO A PERMITTED
TRANSFEREE (AS DEFINED IN SECTION 2 OF THE WARRANT AGREEMENT) WHO AGREES IN WRITING WITH THE COMPANY TO BE SUBJECT TO SUCH TRANSFER PROVISIONS.

 

SECURITIES EVIDENCED BY THIS CERTIFICATE AND SHARES
OF CLASS A COMMON STOCK OF THE COMPANY ISSUED UPON EXERCISE OF SUCH SECURITIES SHALL BE ENTITLED TO REGISTRATION RIGHTS UNDER A REGISTRATION
RIGHTS AGREEMENT TO BE EXECUTED BY THE COMPANY.”

 

     

     

    

 

EXHIBIT C

 

REPRESENTATIVE WARRANTS LEGEND

 

“THE SECURITIES REPRESENTED BY THIS CERTIFICATE
ARE SUBJECT TO LIMITATIONS ON TRANSFER PURSUANT TO FINRA RULE 5110(E)(1).

 

SECURITIES EVIDENCED BY THIS CERTIFICATE AND CLASS A
COMMON STOCK OF THE COMPANY ISSUED UPON EXERCISE OF SUCH SECURITIES SHALL BE ENTITLED TO REGISTRATION RIGHTS UNDER A REGISTRATION RIGHTS
AGREEMENT TO BE EXECUTED BY THE COMPANY.”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

 

	 	 	Page
	Section 1.	Definitions	1
	Section 2.	Commitments	7
	Section 3.	Term, Termination	8
	Section 4.	Modifications of Account Program	9
	Section 5.	Sale and Closing Procedures	9
	Section 6.	Conditions to Each Closing	10
	 	 	 
	Section 7.	True Sale; Grant of Security Interest; Enforcement	11
	Section 8.	Representations and Warranties Regarding Seller and
    Purchaser	12
	Section 9.	Representations and Warranties Regarding Individual
    Accounts and Receivables	14
	Section 10.	Survival; Repurchase	17
	Section 11.	Indemnification	17
	Section 12.	Privacy; Confidentiality	18
	Section 13.	Audits; Regulatory Examinations	20
	Section 14.	Merger or Consolidation of Seller	20
	Section 15.	Notices	21
	Section 16.	Miscellaneous	22
	 	 	 
	 	EXHIBITS	 
	 	 	 
	EXHIBIT 1	FORM OF MASTER ASSIGNMENT AND CONVEYANCE	Ex 1-1
	EXHIBIT 2	RECEIVABLES SCHEDULE FIELDS	Ex 2-1
	EXHIBIT 3	UNDERWRITING GUIDELINES	Ex 3-1
	EXHIBIT 4	ACCOUNT AGREEMENT FORM	Ex 4-1
	EXHIBIT 5	FORM OF PRESS RELEASE	Ex 5-1

 

    i

     

    

 

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.

 

    1

     

    

 

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.

 

    2

     

    

 

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.

 

    3

     

    

 

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.

 

    4

     

    

 

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.

 

    5

     

    

 

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.

 

    6

     

    

 

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.

 

    7

     

    

 

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;

 

    8

     

    

 

(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.

 

    9

     

    

 

(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;

 

    10

     

    

 

(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.

 

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(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.

 

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(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

 

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(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.

 

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(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.

 

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(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.

 

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(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.

 

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(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.

 

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(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).

 

    19

     

    

 

(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.

 

    20

     

    

 

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).

 

    21

     

    

 

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;

 

    22

     

    

 

(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]

 

    23

     

    

 

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.

 

	 	W.S. BADCOCK CORPORATION

 (Seller)
	 	 	 
	 	By:	/s/ Robert Burnette
	 	Name: 	Robert Burnette
	 	Title:	Chief Executive Officer

 

	 	B. RILEY RECEIVABLES, LLC (Purchaser) 
	 	 
	 	By:	/s/ Martin Bernstein
	 	Name: 	Martin Bernstein
	 	Title: 	Senior Vice President

 

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.

 

	 	W.S. BADCOCK CORPORATION

 (Seller)
	 	 	 
	 	By:	                         
	 	Name:  	 
	 	Title: 	 

 

Signature Page to Master Assignment and Conveyance

 

    Ex 1-1 

     

    

 

	Accepted and agreed:	 
	 	 
	B. RILEY RECEIVABLES, LLC 

(Purchaser)	 
	 	 
	By:	                	                 
	Name: 	 	 
	Title:	 	 

 

Signature Page to Master Assignment and Conveyance

 

    Ex 1-2 

     

    

 

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

 

    Ex 2-1 

     

    

 

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

 

    Ex 2-2 

     

    

 

EXHIBIT 3

 

UNDERWRITING GUIDELINES

 

See attached

 

    Ex 3-1 

     

    

 

 

 

 

 

 

 

 

 

 

Underwriting

Guidelines

 

 

 

 

 

 

 

 

 

 

     

     

    

 

	Contents	 
	Plan Eligibility Guidelines 	3
	AR-005: Credit Approval 	4
	AR-015: Credit Report 	8
	AR-020: Credit Agreement 	9
	AR-035: Account Plan Guidelines	10
	AR-045: MMP Changes 	11
	AR-050: Credit Limit and Balance 	12
	AR-055: Account Transfers 	13
	AR-060: Lay-a-way & COD Purchases 	14
	AR-065: Post Dated Checks & Future Dated Payments	15
	AR-075: Non-Accrual 	16
	AR-080: Charge Off 	17
	AR-090: Bankruptcy 	18
	AR-095: Litigation/Legal Action 	20
	AR-105: Criminal Prosecutions 	21
	AR-110: Repossession	22
	AR-115: Non-payment Due to Customer Death	26
	AR-120: Collection Letters 	27
	AR-125: Customer Contact 	28
	AR-126 Critical Collection Events 	30
	AR-130: Use of Call Boxes and Call Services	32
	AR-135: Skipped Accounts 	33
	AR-140: Partial Payments 	34
	AR-145: Account Past Due Adjustment 	35
	AR-150: Third Party Financing	36
	AR-155: Account Flags	37
	AR-165: Safeguarding Customer Information	46
	AR-170: Accuracy and Integrity [Data furnisher duties – Credit reporting]	48
	AR-175: Credit Reporting Accuracy and Integrity [Direct Consumer Disputes]	50
	AR-180: Accuracy and Integrity [Indirect Dispute ACDV/e-OSCAR]	53
	AR-185: Credit Reporting	55
	AR-200: Payment Deferrals	57
	RS-015: SafeGuard Rule	58
	RS-020: Disposal Rule	59
	RS-030: Fair Credit Billing Act – FCBA	60
	RS-035: Fair Credit Reporting Act – FCRA	62
	RS-040: Fair and Accurate Credit Transaction Act - FACT Act	63
	RS-045: Fair Debt Collection Practices Acts – FDCPA	64
	RS-050: Red Flags - Identity Theft and Address Discrepancies	67
	RS-055: Truth In Lending Act – TILA	74
	RS-065: Uniform Commercial Code – UCC	75
	COMP-006: Compliance Training	78
	COMP-007: Servicemembers Civil Relief Act	80
	COMP-008: Equal Credit Opportunity Act	82
	COMP-009: Unfair, Deceptive, or Abusive Acts or Practices (UDAAP)	85
	PS-050: Accepting Checks	88
	PS-055: Returned NSF Checks	91
	SO-010: Refund and Return Policy	92
	SO-012: Bedding Warranty and Exchanges	95
	SO-014: Cash Control	98
	SO-015: EOD Balancing	101
	SO-096: Document Retention	102
	Work Instructions - Charge off: Non-Accrual	104
	Work Instructions - Credit Limit Reduction (90DLP)	105
	Work Instructions - Credit Statement for Recurring Payments	106
	Work Instructions - Credit Statement for Recurring Payments	107
	Work Instructions - Lockbox	111
	Work Instructions - Monthly Cycle Past Due Adjustment	112
	Exhibit A	Ex A-1

 

    2

     

    

 

Plan Eligibility Guidelines

 

	Plan	 	Down Payment	 	 	 	MMP	 	Min Fin

 Amount	 	 	# Days Past

Due Stop

Add on	 	 	Lowest MMP Allowed	 	 	Min Credit Score**	 	 	Max Credit score**
	Rev	 	 	Score Driven	 	 	 	Balance Driven	 	$	10	 	 	 	11	 	 	 	15	 	 	 	230	 	 	 
	06 EPNI	 	 	10	%	 	 	6 Equal	 	 	600	 	 	 	11	 	 	 	30	 	 	 	700	 	 	 
	12 EPNI	 	 	10	%	 	 	12 Equal	 	 	1200	 	 	 	11	 	 	 	30	 	 	 	800	 	 	 
	24 EPNI	 	 	10	%	 	 	24 Equal	 	 	2400	 	 	 	11	 	 	 	10	 	 	 	900	 	 	 
	36 EPNI	 	 	0-10	%	 	 	36 Equal	 	 	3600	 	 	 	11	 	 	 	 	 	 	 	900	 	 	 
	NCR	 	 	50	%	 	 	6 Equal	 	 	100	 	 	 	11	 	 	 	15	 	 	 	0	 	 	229

 

Rev = Revolving

EPNI = Equal Pay, No Interest

NCR = No Credit Refused

 

	**	Credit score based on Badcock’s proprietary model.

 

    3

     

    

 

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.

 

    4

     

    

 

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:

 

		●	That the documents presented for identification do not appear
to have been altered or forged

 

		●	 The photograph
or physical description on the identification is consistent with the appearance of the applicant or customer presenting the identification

 

		●	That the ID is not expired at the point of account creation
(subsequent purchases do not require the ID to be unexpired)

 

		●	If you discover suspicious documents, you should contact
Credit Underwriting before processing the request for credit. For a complete list of acceptable Identification please refer
to the FACT Act / Red Flag Verification Form located in the SBM Work Instructions folder located at https://links.badcock.com.

 

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:

 

		●	After you have obtained the forms of identification the documents
from the applicant, these be emailed to Credit Underwriting using the MFP device. Stores are not allowed to retain any photocopies of
these forms of identification. After the initial copies of the IDs are made, scanned and confirmation of decision has been received from
Credit Underwriting; the IDs and documentation obtained must be shredded.

 

		●	DO NOT email any credit cards or write down any credit card
numbers. They are not acceptable forms of ID.

 

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.

 

    5

     

    

 

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:

 

		●	The 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.

 

		●	This Accountholder is responsible for their account and the
joint account.

 

		●	This Accountholder must be listed as the Co-Applicant on
the new account.

 

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:

 

		●	SafeScan

 

		●	OFAC (Office of Foreign Assets Control)

 

		●	Initial Fraud Alert

 

		●	Extended Fraud Alert

 

		●	Active-Duty Alert

 

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 applicants will be required to sign an electronic
Credit Agreement during the sales process when the first financed sale is created for the customer. The customer must electronically
sign the Credit Agreement to accept the terms and conditions of the Credit Agreement to make the account eligible for financed purchases.

 

    6

     

    

 

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.

 

    7

     

    

 

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:

 

		●	A credit bureau report is required when opening any new revolving
account

 

		●	A credit bureau report is required when an established account
has not had an updated report pulled within the previous 24 months

 

		●	A credit bureau report will be required at any time a revolving
account does not have a credit score in place in the system

 

		●	A credit bureau report will be required under the “Red
Flag Policy” for any account with a zero balance for more than 24 months.

 

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

 

		●	Consumer statement

 

		■	Appropriate
                                            Identifications must be collected and reviewed by the Credit Underwriting Department if present
                                            (see Red Flag and Reading and Responding to Credit Alerts).

 

		●	Red Flag / FACT Act alerts

 

		■	Appropriate
Identifications must be collected and reviewed by the Credit Underwriting Department if present (see Red Flag and Reading
and Responding to Credit Alerts).

 

		●	Synthetic ID or other Fraud Identification Alerts

 

		■	Appropriate
Identifications must be collected and reviewed by the Credit Underwriting Department if present (see Red Flag and Reading
and Responding to Credit Alerts).

 

    8

     

    

 

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.

 

    9

     

    

 

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.

 

	Plan Name	 	Down
 Payment	 	 	Estimated MMP	 	 	Min Fin 
 Amount	 	 	Past Due Stop Add on	 
	Rev Plan	 	 	Follow CLG	 	 	 	Table Based Plan	 	 	$	10	 	 	 	11 days	 
	06EPNI	 	 	10	%	 	 	6 Equal MMP	 	 	$	600	 	 	 	11 days	 
	12EPNI	 	 	10	%	 	 	12 Equal MMP	 	 	$	1200	 	 	 	11 days	 
	24EPNI	 	 	10	%	 	 	24 Equal MMP	 	 	$	2400	 	 	 	11 days	 
	36 EPNI	 	 	10	%	 	 	36 Equal MMP	 	 	$	3600	 	 	 	11 days	 
	NCR	 	 	50	%	 	 	6 Equal MMP	 	 	$	100	 	 	 	11 days	 

 

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.

 

    10

     

    

 

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:

 

		1.	The new sale should be written and completed under the new
plan.
	 	 	 
		2.	Following the sale completion, the store should request the
plan merge via a CSARM Work Order including the customer name, account number, balance of old plan, and the new plan that the balance
needs to be merged to.

 

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.

 

    11

     

    

 

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.

 

		●	The applicant fails WSBC Identification Verification
Policy. This includes failure to provide required documentation for Red Flag, ADI, or Safe Scan warnings, along with other potential
electronic verification software services.
	 	 	 
		●	Customer has an active bankruptcy
	 	 	 
		●	Previous unpaid Charge Off account with Badcock

 

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.

 

    12

     

    

 

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:

 

		●	The receiving (new) store must make a transfer request by
creating a Footprints Work Order using the COLLECTIONS – Account Transfer Request template.
	 	 	 
		●	Credit Services will check the account for State to State
transfer, Flags, Previous Charge- Off Balance, Open Orders, Quotes, Past Due Status.
	 	 	 
		●	Credit Services will make the decision and complete/decline
the transfer request.
	 	 	 
		●	If the account meets the established criteria to be transferred,
Credit Services will complete the transfer of the account to the receiving store.

 

    13

     

    

 

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.

 

    14

     

    

 

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.

 

    15

     

    

 

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.

 

		●	Accounts with NI or TX Alert Codes will not charge-off, but
the interest and late fees will still be stopped to prevent the account balance from increasing.

 

Non-Accrual Criteria:

 

		●	Accounts with a Date of Last Payment (DLP) greater than 11
months (330 days)

 

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:

 

		●	180DLP flag is applied to accounts that have a date of last
payment that is 180 days or more, this flag and the TX Alert Code remains on the account until charged off, a repossession is processed,
or a payment is made on the account
	 	 	 

		●	Litigation Active flag is applied to accounts after litigation
has been filed and required documentation is provided to Credit Services.
	 	 	 

		●	Deceased flagged accounts when the appropriate proof of death
has been received or verified by Credit Services.
	 	 	 

		●	Customer Lawsuit flagged accounts when Legal has received
a notification of a pending lawsuit.
	 	 	 

		●	Chapter 13 Active, Chapter 13 Complete Discharge, Chapter
7 Active, or Chapter 7 Discharge flag is applied to accounts as soon as we receive the bankruptcy notification.

 

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.

 

    16

     

    

 

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.

 

    17

     

    

 

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.

 

		●	When the customer tells us they are filing or have filed
bankruptcy, you may ask them for the name of the attorney and the attorney’s phone number. If they provide that information, enter it
into the STOREnet Customer Activity Log immediately.
	 	 	 
		●	If they do not provide us with the attorney’s name and phone
number, we will still immediately flag the account and cease collection activities.
	 	 	 
		●	Once Badcock receives confirmation of the bankruptcy, we
will add the appropriate bankruptcy flag (Chapter 13 Active or Chapter 7 Active), add the NI Alert Code and remove the “Represented
by Attorney” flag.

 

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:

 

		●	Notify the CSARM department: Ask for the name, address and
telephone number of the attorney and provide this information to the CSARM department so they can verify if a case has been filed (they
will flag the account in our point-of-sale system). If they cannot provide this information, contact the CSARM department and they will
search in the Bankruptcy filing database.
	 	 	 
		●	Do not discuss the account with the customer or their attorney.
Only authorized CSARM personnel are permitted to contact the customer’s attorney or the customer in limited situations.
	 	 	 
		●	Any documentation received from the bankruptcy court, trustee,
attorney for customer, or the customer during the bankruptcy case should be forwarded to the Credit Services department.

 

    18

     

    

 

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.

 

    19

     

    

 

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.

 

    20

     

    

 

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.

 

    21

     

    

 

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:

 

		●	Verify Credit Agreement is signed by accountholder
	 	 	 
		●	Obtain an LET from STOREnet
	 	 	 
		●	Verify Model and Serial Number for Appliances and Electronics
	 	 	 
		●	Verify account is in default (check for recent payments)
	 	 	 
		●	Review status of pending insurance claims
	 	 	 
		●	Make sure you are able to locate the customer
	 	 	 
		●	Make sure we are legally allowed to repossess the account;
verify account is not in bankruptcy, litigation, or covered under the Service member Civil Relief Act

 

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:

 

		●	Never enter a home without the consent of the customer.

 

		●	Never enter a home without the customer being present.

 

		●	Under no circumstances should you attempt repossession when
a minor is the only one home.

 

		●	Please make sure any personal property contained in any repossessed
property is left behind with the customer.

 

		●	Never trespass to repossess property.

 

		●	Do not accept or attempt to take any items not listed on
the LET

 

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.

 

    22

     

    

 

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.

 

    23

     

    

 

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:

 

		1.	The voluntarily surrendered merchandise must be in sellable
condition. Our company representative will make this determination upon inspection of the merchandise.
	 	 	 
		2.	Customer agrees to sign the “Legally Entitled To”
document listing the merchandise to be Voluntarily Repossessed.
	 	 	 
		3.	Customer agrees to a re-stocking fee of 20% of the purchase
price of each item which will be deducted from the credit you receive for the merchandise. As such, the credit received will only be
for 80% of the purchase price.
	 	 	 
		4.	Customer agrees to a $99.00 transportation pick up fee, which
will be charged to the customer to offset the transportation expense of picking up the merchandise. This fee can be paid by the customer
at the time the merchandise is picked up by us or deducted from the credit being issued for the approved merchandise that is repossessed.
This fee can be avoided if the customer makes acceptable arrangements to return it to the store where your purchase was made.

 

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.

 

    24

     

    

 

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:

 

		●	Accessories
	 	 	 
		●	Bedding
	 	 	 
		●	Flooring
	 	 	 
		●	Upholstery & Electronics (sale date over 12 months)

 

    25

     

    

 

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.

 

    26

     

    

 

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.

 

    27

     

    

 

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:

 

		●	never threaten a customer or threaten to take any action
that cannot legally be taken

 

		●	never berate or harass the customer

 

		●	never lie to or knowingly mislead a customer

 

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:

 

		●	Identify the person the message is for.

 

		●	Identify yourself and the company....do not identify your
position or title.

 

		●	Leave a message for the accountholder to call you that day
and provide the phone number.

 

		●	Never reveal the purpose of the call, simply state that the
matter is personal or that you prefer to talk to the accountholder about it.

 

Guidelines for leaving a message on an answering machine:

 

		●	Say only your name and your company’s name.

 

		●	Ask the accountholder to please call you today.

 

		●	Say your phone number.

 

    28

     

    

 

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:

 

		●	Pushing open the door

 

		●	Grabbing keys or hiding keys

 

		●	Any touching of a customer

 

		●	Wedging a foot in the door

 

		●	Damage of the debtor’s property before, during, or after
repossession

 

		●	Using any abusive language

 

		●	Threats of any nature

 

		●	Feeling by the customer that immediate danger is near

 

		●	An objecting customer

 

		●	The objection of a third party

 

		●	Any entry into a closed area (trespass)

 

		●	Raising closed but unlocked window

 

		●	Use of a police officer without a court order or writ

 

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.

 

    29

     

    

 

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:

 

		●	If you

 

		●	for no further collection visits to their residence

 

		●	You must notify Credit Services immediately using either
the Footprints Work Order system or email. Following up with a phone call to receive notification from a customer or store personnel
of:

 

		●	Bankruptcy (actual filing or an intent to file)

 

		●	Representation by an attorney

 

		●	Their demand for no further contact or communications with
regard to their debt

 

		●	Their demand for no further collection phone calls

 

		●	Their demand Credit Services is also recommended.

 

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.

 

		●	When the customer tells us they are filing or have filed
bankruptcy, you may ask them for the name of the attorney and the attorney’s phone number. If they provide that information, enter it
into the STOREnet Customer Activity Log immediately.
	 	 	 
		●	If they do not provide us with the attorney’s name and phone
number, we will still immediately flag the account and cease collection activities.
	 	 	 
		●	Once Badcock receives confirmation of the bankruptcy, we
will add the appropriate bankruptcy flag (Chapter 13 Active or Chapter 7 Active), add the NI Alert Code and remove the “Represented
by Attorney” flag.

 

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.

 

		●	Credit Services has received verbal or written notification
from the customer or store notifying us an attorney has been obtained to represent them for a potential Bankruptcy filing, or other legal
action; but we have not received confirmation from the attorney or a bankruptcy notification. The Flag will remain on the account until
we receive written validation of legal representation, bankruptcy filing, or written authorization from the customer signed and dated
that they are not represented by an attorney.

 

    30

     

    

 

		●	The 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.
	 	 	 
		●	No collection activity will be done when the Represented
by Attorney flag is applied, but the account is subject to the date of last payment charge-off rules.

 

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.

 

		●	If the verbal request is related to one of the other flags
created for Critical Events (Represented by an Attorney for the purpose of filing bankruptcy, STOP Phone Calls, Customer Lawsuit or STOP
Home Visits), the appropriate account flag for the Critical Event will 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, and notify the customer
of their obligation to pay, as well as our legal options to obtain payment.
	 	 	 
		●	For these Critical Events, we should receive the appropriate
written documentation from the customer or a response from the letter that we send.

 

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

 

		●	If a customer provides notification in any manner (verbally
or written) requesting collection phone calls stop, you must submit a request to Credit Services to add the STOP Phone Calls flag to
the account.
	 	 	 
		●	The flag will be added by Credit Services and all collection
calls to the customer will stop immediately. The customer will receive statements, collection letters and possible home visits. 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. This increased credit risk is grounds for us to freeze the account to prevent future on-account purchases.
	 	 	 
		●	To remove the flag, we will ask for written authorization
from the customer signed and dated with phone number(s) that can be used for collection calls. Credit Services only accepts 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.

 

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.

 

		●	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.

 

		●	To remove the 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. Credit
Services only accepts 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.

 

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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.

 

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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”:

 

		●	Check with the references provided on the Credit Application.
The only questions you may ask anyone you contact about the skipped account are:

 

		o	Do
you know where they live? Do you know where they work? Do you know their contact information?

 

		●	Check approved search services (Accurint/TLO) reports to
see if there is an updated address.
	 	 	 
		●	Check their previous address, especially if it was with a
relative.

 

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”:

 

		●	Do not repeatedly call relatives, places of employment or
creditors. If someone you have contacted tells you they have no information, do not call them again. This is considered harassment and
it is strictly prohibited.
	 	 	 
		●	Do not discuss the purpose of your call; simply state you
have something important to discuss.
	 	 	 
		●	Never misrepresent yourself or mislead anyone to believe
you are someone else.
	 	 	 
		●	Never reveal the identity of your employer unless asked,
and then simply tell them you work for Badcock Home Furniture &more. Do not make any references to the fact that you work in collections
or loss prevention.
	 	 	 
		●	Do not attempt to communicate or contact a customer if notified
they are represented by an attorney. If you are notified an attorney represents the customer, follow the Critical Events procedure.
	 	 	 
		●	Never lie to anyone you contact.
	 	 	 
		●	Never get angry or upset with anyone you contact. Do not
lose your temper and do not do anything that will cause the person you are contacting to get angry.
	 	 	 
		●	Do not threaten or intimidate anyone you contact and never
use violence.
	 	 	 
		●	Do not call anyone before 8:00 a.m. or after 9:00 p.m. If
the person you are calling is out of your area, know what time zone you are calling and what time it is there when you are calling.
	 	 	 
		●	Do not post any “Dead Beat” list or make any reference
verbally or in writing about the debt owed to you by a customer.
	 	 	 
		●	Engaging in any action which may harass, annoy, embarrass,
or mislead a customer or anyone else contacted concerning a skipped account.

 

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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.

 

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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:

 

		●	We will adjust the past due balance for customers who make
2 out 3 payments during a three-month billing cycle period.

 

		●	There must be a full MMP or more within the billing cycle
for two of the three billing cycles.

 

		●	These do not need to be consecutive payments.

 

		●	Accounts with the following flags will not be eligible
for a past due adjustment: PDA Not Eligible, Payment Deferred, Internal Review, Fraud, Reaffirmation Pending, and
Customer Lawsuit.

 

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

 

Additional Requirements:

 

		●	There cannot be any open items on the account.

 

		●	Only revolving plans, Equal Pay No Interest, and NCR Plans
can be adjusted. SAC Plans cannot be adjusted under this policy.

 

		●	It’s possible the MMP may increase after the past due
balance is adjusted if the long-term balance increases above the current MMP threshold.

 

		●	Accounts may not receive more than two (2) past due adjustment
in twelve (12) 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. The PDA Not Eligible flag removal process will be done monthly.

 

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.

 

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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:

 

		●	Dealer Commission charge-back.

 

		●	Third Party Account value charge-back.

 

		●	Discontinuation of third-party financing in your store(s).

 

		●	Disciplinary Action for Corporate Employees

 

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.

 

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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.

 

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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.

 

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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.

 

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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.

 

    40

     

    

 

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.

 

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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.

 

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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:

 

	Jerre Hood	931.967.0838	(Winchester, TN store)
	John B. Ingleson	615.895.3332	(Murfreesboro & Columb ia, TN stores)
	Brian P. Mickles	423.266.1237	(Chattanooga & Cleveland, TN 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.

 

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 1⁄2
of MMP at each pay period. Accounts with this flag will not receive collection activity.

 

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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.

 

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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.

 

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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:

 

		●	Anti-virus software, firewalls, and intrusion detection and
protection systems.

 

		●	Routine notifications of new viruses, security risks, and
hoaxes shall be communicated on an “as-is” basis.

 

		●	Offsite Internet access for employees to connect to the Badcock
network from home or other off-site locations shall be protected by industry-standard accepted anti-virus software and kept up to date.
Personal computers must also be kept current with all critical patches and updates by their operating system provider.

 

Protecting Customer Confidentiality:

 

		●	Jackets, sales Orders, and other personal data must be out
of sight of any third party.

 

		●	Check references prior to hiring employees who will have
access to customer information and train on GLB and Safeguard Rule.

 

		●	Instruct and regularly remind all employees of the Safeguards
Policy, and our legal requirement, to keep customer information secure and confidential.

 

		●	Limit access to customer information to employees who have
a business reason for seeing it.

 

		●	Impose disciplinary measures for any breaches of the Safeguard
Rule.

 

		●	Store records in a secure area. Never leave records unattended
and unlocked.

 

		●	Ensure that storage areas are protected against destruction
or potential damage from physical hazards, like fire or floods.

 

		●	Dispose of customer information in a secure manner pursuant
to W.S. Badcock Corporation’s document retention and shredding policy as well as the FTC Disposal Rule.

 

		●	Report any fraudulent attempt by anyone to obtain customer
information.

 

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Prohibited Activities:

 

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

 

		●	Providing customer names and addresses to any outside party
(including non-profit) for marketing or fundraising.

 

		●	Sharing customer account information or history outside of
the office or with co-workers if there is not a legitimate business reason to do so.

 

		●	Using or sharing customer information for any non-Badcock
work-related purposes.

 

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:

 

		●	Locking rooms and file cabinets where customer information
is kept, where appropriate.

 

		●	The need to change passwords as required and not post passwords
near employees’ computers.

 

		●	Disposal/destruction of non-public personal information.

 

		●	Referring calls or other requests for customer information
to designated individuals who have had safeguards training.

 

		●	Recognizing any fraudulent attempt to obtain customer information
and reporting it to the legal department or corporate security department.

 

		●	Instruct and regularly remind all employees of the Safeguards
Policy, and our legal requirement, to keep customer information secure and confidential.

 

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.

 

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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:

 

		●	To furnish information about consumer accounts to consumer
reporting agencies that is accurate; and

 

		●	To furnish information about consumer accounts to consumer
reporting agencies that has integrity.

 

		●	Badcock will not knowingly furnish information related to
a consumer account that is false, misleading, inaccurate, or incomplete.

 

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:

 

		●	The business activities in which Badcock engages;

 

		●	The nature and frequency of the information Badcock provides
to CRAs;

 

		●	The technology used by Badcock to furnish information to
CRAs;

 

		●	The nature, frequency and severity of any complaints or disputes
Badcock receives in connection with its credit reporting activities; and

 

		●	The impact of any mergers, portfolio acquisitions or sales,
or other acquisitions or transfers of accounts on Badcock’s credit reporting process or the accuracy or integrity of the information
furnished in order to prevent re-aging of the information, duplicative reporting, or other problems that may arise relating to the accuracy
and integrity of the furnished information.

 

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:

 

		●	Identify the appropriate consumer;

 

		●	Reflect the terms of and liability for the relevant account
reported;

 

		●	Reflect the consumer’s performance and other conduct
with respect to the account;

 

		●	Be substantiated by records in the possession of Badcock
at the time the information is furnished;

 

		●	Be furnished in a form and manner that is designed to minimize
the likelihood the information may be incorrectly reflected in a consumer report;

 

		●	Be deleted, updated, or corrected accordingly based upon:

 

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		●	An investigation of a dispute submitted either directly by
a consumer to Badcock or received by Badcock from a CRA if the information reported is inaccurate;

 

		●	The transfer of an account to a third party;

 

		●	An investigation by Badcock concluding the consumer may be
a victim of identity theft pursuant to our company’s identity theft prevention program; or

 

		●	Payment of the account by the consumer.

 

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

 

	Document Number(if applicable)	 	Title
	N/A	 	Metro 2 (Information Technology Department Procedure/Work Instruction)

 

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

 

	Date	 	Reviewed
by	 	Description of Update
	3/19/2019	 	CSARM; Legal; Compliance	 	Policy created.

 

9.
Governance

 

	Approving Body: Operational
Compliance Committee 	 	Date
	Approval: Approved at meeting	 	4/19/2019

 

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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:

 

		●	The consumer’s liability for a credit account;
	 	 	 

		●	The terms of a credit account;
	 	 	 

		●	The consumer’s performance or conduct related to an account;
or
	 	 	 

		●	Any other information related to the consumer’s credit standing,
character, or reputation.

 

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.

 

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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:

 

		●	Sufficient information to identify the account or other relationship
that is in dispute, such as an account number and the name, address, and telephone number of the consumer, if applicable;
	 	 	 
		●	Specific information the consumer is disputing and an explanation
of the basis for the dispute; and
	 	 	 
		●	All supporting documentation or other information reasonably
required by the furnisher to substantiate the basis of the dispute. This documentation may include, for example a copy of the relevant
portion of the consumer report that contains the allegedly inaccurate information; a police report; a fraud or identity theft affidavit;
a court order; or account statements.
	 	 	 
		●	Posted Address for Written Disputes – Badcock shall
include the address for submitting direct disputes to Badcock’s attention (1) on the consumer report, (2) within the Credit Agreement,

 

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

 

		●	The consumer’s identifying information such as the consumer’s
name, date of birth, Social Security number, telephone number(s), or address(es);
	 	 	 
		●	The identity of past or present employers;
	 	 	 
		●	Inquiries or requests for a consumer report;
	 	 	 
		●	Information derived from public records, such as judgments,
bankruptcies, liens, and other legal matters;
	 	 	 
		●	Information related to fraud alerts or active duty alerts;
	 	 	 
		●	Information provided to a consumer reporting agency by another
furnisher; or
	 	 	 
		●	A dispute submitted by a credit repair organization. If Badcock
has a reasonable belief the direct dispute was submitted by, prepared on
                                               behalf of, or submitted on a form supplied to the consumer by a credit repair organization or an entity that would be defined as a
                                               credit repair organization, if not for their non-profit status, a reinvestigation is not required. A credit repair organization
                                               cannot trigger a reinvestigation by contacting us directly on behalf of a consumer. Additionally, this exclusion applies to forms
                                               prepared by such organizations; thus, a consumer cannot trigger a reinvestigation by submitting a dispute directly to a data
                                               furnisher on a form supplied to the consumer by a credit repair organization.

 

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:

 

		●	The consumer did not provide sufficient information to investigate
the disputed information as outlined above; or
	 	 	 
		●	The dispute is substantially the same as a dispute previously
submitted by or on behalf of the consumer, regardless of whether the dispute had been previously submitted directly or through a CRA,
so long as the consumer has not provided additional supporting information regarding the dispute.

 

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.

 

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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

 

	Date	 	Reviewed by	 	Description of Update
	3/28/2019	 	CSARM; Legal; Compliance	 	Policy created.

 

8.
Governance

 

	Approving Body: Operational Compliance Committee 	 	Date
	Approval: Approved at Meeting	 	4/19/2019

 

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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:

 

		●	Log the dispute/ACDV in the company’s complaint and
dispute management system;
	 	 	 
		●	Enter the date upon which Badcock must complete its investigation
and file its response to the ACDV into the company’s complaint and dispute management system;
	 	 	 
		●	Assign the dispute for an investigation and forward the ACDV
to the person responsible for conducting ACDV investigations;
	 	 	 
		●	Conduct a complete investigation regarding the disputed item
to determine the accuracy and completeness of the information Badcock furnished to the CRA and which is the subject matter of the consumer’s
dispute;
	 	 	 
		●	Include in our investigation a review of all relevant information
relating to the dispute, including documents the CRA included with the ACDV or transmits to us during the investigation period and Badcock’s
own information with respect to the dispute;
	 	 	 
		●	Under no circumstances simply remove the item from the consumer’s
credit report without first conducting the reasonable investigation described above and responding to the ACDV;
	 	 	 
		●	Timely report the outcome of the investigation to the CRA
[not the consumer];
	 	 	 
		●	If the investigation reveals information that is inaccurate
or incomplete, inform all CRAs which compile and maintain consumer information on a nationwide basis of the result of the investigation;
and
	 	 	 
		●	If an item is determined to be inaccurate, incomplete, or
unverifiable, modify or delete the item in the consumer report or permanently block the reporting of that item.

 

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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

 

	Approving Body: Operational Compliance Committee 	 	Date:
	Approval: Approved at meeting	 	4/19/2019

 

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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.

 

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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

 

	Date	 	Reviewed by	 	Description of Update
	3/19/2019	 	CSARM; Legal; Compliance	 	Policy created.

 

8.
Governance

 

	Approving Body: Operational Compliance Committee 	 	Date:
	Approval: Approved at meeting	 	4/19/19

 

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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.

 

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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:

 

		●	Maintain physical, electronic, and procedural safeguards
that comply with applicable laws and regulations to protect the confidentiality and security of nonpublic personal information pertaining
to our customers.

 

		●	Protect against any anticipated threats or hazards to the
security and integrity of such records.

 

		●	Protect against unauthorized access to or use of such records
or information which could result in substantial harm or inconvenience to any customer.

 

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:

 

		●	Designate one or more employees to coordinate the safeguards;

 

		●	Identify and assess the risks to customer information in
each relevant area of the Company’s operation, and evaluate the effectiveness of the safeguards for controlling these risks;
	 	 	 

		●	Design and implement a safeguards program, and regularly
monitor and test it;

 

		●	Select appropriate service providers and contract with them
to implement safeguards; and

 

		●	Evaluate and adjust the program in light of relevant circumstances,
including changes in the Corporation’s business arrangements or operations, or the results of testing and monitoring of safeguards.

 

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.

 

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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:

 

		●	After the necessary retention period, shred all paper records
with respect to customer information from or derived from a credit bureau report.
	 	 	 

		●	With respect to electronic information, after the necessary
retention period, erase or otherwise destroy computer disks or erase information from computer hard drives or storage files when it is
no longer needed.

 

		●	Create policies and procedures for the disposal of paper
records and electronic information.

 

		●	Audit the disposal practices to confirm compliance and to
make sure nothing is overlooked.

 

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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:

 

		●	Unauthorized charges

 

		●	Charges that list the wrong date or amount

 

		●	Charges for goods/services that weren’t accepted or delivered
as agreed

 

		●	Math errors

 

		●	Failure to post payments and other credits, such as returns

 

		●	Failure to send bills to the current address provided the
customer has supplied a change of address at least twenty (20) days before the billing period ends

 

		●	Disputes about the quality of goods and service are not “billing
errors,” so FCBA does not apply.

 

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Billing inquiry from consumer:

 

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

 

		●	Written notice of dispute sent to Billing Inquiries address
on customer statement no later than sixty (60) days after the creditor’s first transmitted billing statement.

 

		●	Oral notification is not sufficient.

 

Creditor’s responsibilities:

 

		●	Customer Statement – open ended creditors must send
a customer statement stating the due date and possible late charges

 

		●	Post Customer Payments - credit all payments to a customer’s
account on the date they’re received

 

		●	Timely Credits and Refunds - promptly credit or refund overpayments
and other amounts owed to a customer’s account
	 	 	 

		●	Acknowledgement of Receipt - the creditor must acknowledge
receipt of the notice in writing within thirty (30) days after receiving it, unless the problem has been investigated and resolved.
	 	 	 

		●	Error Investigation - The creditor must investigate and resolve
the billing error dispute within two (2) complete billing cycles, unless the creditor decides to correct the account as requested or
the notice is withdrawn by.
	 	 	 

		●	Correction of Error - If an error has occurred, it must be
corrected, notice must be mailed to the consumer, and the correction must be reported to each credit reporting agency notified of a delinquency.
	 	 	 

		●	Response of No Error - If it is determined that there was
no billing error, the creditor must mail or deliver an explanation of its reasons, plus documentation evidencing the conclusion.

 

Store compliance:

 

		●	Forward billing dispute notice to the Collections Department
promptly for proper processing.

 

		●	Remind customers that oral notification of billing disputes
is not sufficient.

 

		●	Cease any and all collection activity until the Corporation
has had an opportunity to comply with the provisions of FCBA.

 

		●	Do not close the account or restrict it in any way.

 

		●	If a customer requests a complete audit of their account,
please contact the Collections department in Mulberry.

 

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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:

 

		●	A consumer report may only be used for permissible business
use – establishing a Badcock credit account.

 

		●	A consumer report must remain confidential and may not be
disclosed or delivered to third parties.

 

		●	Written notice must be supplied to applicants being declined
credit and must include the reason for decline and address of the agency that furnished the credit report.

 

		●	Any applicant that disputes any information contained in
their report must be reported to the Collections department.

 

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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.

 

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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:

 

		●	Clearly identify yourself

 

		●	Only confirm/correct location information

 

		●	DO NOT stat any information about the account

 

Ex. Whether the customer owes Badcock money or merchandise.

 

		●	Communication with the Customer and Third Parties

 

		●	Various laws limit communication concerning the debt to the
customer:

 

		●	DO NOT discuss any account information with any relatives,
third party or service provider.

 

		●	Communicating with any third party about the debt is prohibited.

 

Time and Place of Contact

 

		●	Contact cannot be made at any unusual time or place known
to be inconvenient to the customer.

 

		●	Usual convenient time for contact - between 8:00 a.m. and
9:00 p.m.

 

		●	Sunday calls are not suggested

 

		●	Unless efforts have been made during the week to contact
the customer without success

 

		●	Do not contact the customer at their place of employment.

 

		●	The call may be overheard by fellow employees. The customer
may be prohibited from taking personal calls at work, and such call may interfere with their job.

 

Attorney Representation

 

		●	If a customer is represented by an attorney concerning the
debt, contact must be made through the Legal Department.

 

Cease Communication

 

		●	If the customer advises you in writing that he or she does
not wish to be contacted in connection with the debt, cease collection efforts immediately and contact the Legal Department for further
instructions.

 

Answering Machines

 

		●	The answering machine may be accessible to more than just
one party and any message left may be over heard by another party. Therefore, when leaving a message it must be addressed to the individual
only, and a request for a return call and the number to contact you.

 

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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.

 

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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.

 

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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:

 

		1.	The types of covered accounts it offers and maintains;

 

		2.	The methods it provides to open its covered accounts;

 

		3.	The methods it provides to access a covered account; and

 

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		4.	Its previous experiences with identity theft.

 

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

 

		1.	Incidents of identity theft that Badcock has experienced;

 

		2.	Methods of identity theft that Badcock has identified that
reflect changes in identity theft risks; and

 

		3.	Applicable supervisory guidance.

 

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.

 

		1.	Alerts, notifications, or other warnings received from consumer
reporting agencies or service providers, such as fraud detection services;

 

		2.	The presentation of suspicious documents;

 

		3.	The presentation of suspicious personal identifying information,
such as a suspicious address change;

 

		4.	The unusual use of, or other suspicious activity related
to, a covered account; and

 

		5.	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.

 

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

 

Alerts, Notifications or Warnings from a Consumer Reporting
Agency

 

		●	A Safescan or similar warning is included with a consumer
report that may indicate the potential for identity theft.

 

		●	An Office of Foreign Assets Control (hereinafter “OFAC”)
alert is included with a consumer report or reported to Badcock.

 

		●	A fraud (initial or extended) or active duty alert is included
with a consumer report.

 

		●	A consumer reporting agency provides notice of credit freeze
in response to a request for a consumer report.

 

		●	A notice of address discrepancy is provided by a consumer
reporting agency.

 

Suspicious Documents

 

		●	Documents presented for identification appear to have been
altered or forged.

 

		●	The photograph or physical description on the identification
is not consistent with the appearance of the applicant or customer presenting the identification.
	 	 	 

		●	Other information on the identification is not consistent
with information provided by the person opening the account or customer presenting the identification.

 

		●	Other information on the identification is not consistent
with readily accessible information that is on file with Badcock.

 

		●	An application appears to have been altered or forged, or
gives the appearance of having been destroyed or reassembled.

 

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Suspicious Personal Identifying Information

 

		●	Personal identifying information provided is inconsistent
when compared against external information sources used by Badcock. For example:

 

		■	Identification
address does not match address provided by a consumer reporting agency.

 

		■	The
Social Security number is listed on the Social Security Administration’s death master file.

 

		●	Personal identifying information provided by the customer
is not consistent with other personal identifying information provided by the customer. For example, there is a lack of correlation between
the Social Security range and date of birth.

 

		●	Social Security number has been issued by the Social Security
Administration within the last five years.

 

		●	Personal identifying information provided is associated with
known fraudulent activity as indicated by internal or third party sources used by Badcock. For example, the address or phone number on
an application is the same as the address and phone number provided on a fraudulent application.
	 	 	 

		●	Personal identifying information provided is a type commonly
associated with fraudulent activity as indicated by internal or third party sources used by Badcock. For example:

 

		■	The
address provided is identified as fictitious, a mail drop, or a prison.

 

		■	The
phone number is invalid.

 

		●	The Social Security number provided is the same as that submitted
by other persons opening an account or other customers.

 

		●	The address or telephone number provided is the same or similar
to the address or telephone number submitted by an unusually large number of other persons opening accounts or by other customers.
	 	 	 

		●	The person opening the covered account or the customer fails
to provide all required personal identifying information on an application or in response to notification that the application is incomplete.
	 	 	 

		●	The person opening the account or the customer cannot provide
authenticating information beyond that which would be available from a wallet or consumer report.

 

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

 

		●	Shortly following the notice of a change of address for an
account, Badcock receives a request for the addition of authorized users on the account.

 

		●	A new Badcock account is used in a manner commonly associated
with known patterns of fraud, such as the majority of available credit is used for merchandise that is easily convertible to cash and
first payment defaults.

 

		●	An account is used in a manner than is not consistent with
established patters of activity on the account. For example:

 

		■	Non-payment
when there is no history of late or missed payments;

 

		■	A
material increase in the use of available credit, including a request for a substantial increase;

 

		■	A
material change in purchasing or spending patterns.

 

		●	A covered account that has been inactive for a reasonably
lengthy period of time is used.

 

		●	Mail or statements sent to the customer is returned repeatedly
as undeliverable although transactions continue to be conducted in connection with the customer’s covered account.

 

		●	Badcock is notified of unauthorized charges in connection
with the customer’s account.

 

		●	Badcock is notified that the customer is not receiving account
statements.

 

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

 

		●	Badcock is notified by a customer, a victim of identity theft,
law enforcement authority, or any other person that it has opened a fraudulent account for a person engaged in identity theft.

 

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.

 

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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

 

		●	Denying an applicant’s request to open an account;

 

		●	Denying access or use of an existing account;

 

		●	Monitoring a covered account for evidence of identity theft;

 

		●	Contacting the customer;

 

		●	Changing any passwords, security codes, or other security
devices that permit access to the covered account;

 

		●	Reopening a covered account with a new account number;

 

		●	Notifying any credit reporting agencies to which Badcock
has furnished information in connection with a covered account or any consumer associated with a consumer account;

 

		●	Closing an existing covered account;

 

		●	Not attempting to collect on a covered account;

 

		●	Notifying law enforcement; or

 

		●	Determining that no response is warranted under the particular
circumstances.

 

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.

 

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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:

 

		●	The effectiveness of the policies and procedures of Badcock
in addressing the risk of identity theft in connection with the opening of covered accounts and with respect to existing covered accounts;

 

		●	Service provider arrangements;

 

		●	Significant incidents involving identity theft and management’s
response;

 

		●	Recommendations for material changes to policies, procedures,
training, testing, or controls.

 

10. Other Legal Requirements

 

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

 

		●	Implementing any requirements under 15 U.S.C. 1681c-1(h)
regarding the circumstances under which credit may be extended when the financial institution or creditor detects a fraud or active duty
alert;
	 	 	 

		●	Implementing any requirements for furnishers of information
to consumer reporting agencies under 15 U.S.C. 1681s-2, for example, to correct or update inaccurate or incomplete information, and to
not report information that the furnisher has reasonable cause to believe is inaccurate;

 

		●	Complying with the prohibitions in 15 U.S.C. 1681m on the
sale, transfer, and placement for collection of certain debts resulting from identity theft; and

 

		●	Complying with applicable state data breach, data security
laws, data security controls, identity theft and red flag laws and requirements.

 

11.
Responsibilities

 

	Roles / Process Area	Responsibilities
	 	 
	Legal, CSARM, Management	Administer monitoring in collaboration with Compliance Department
	 	 
	Compliance Department

 

	Oversee Compliance Training Program: work with CSARM to ensure monitoring in place. Report to the Board of Directors annually on the Red Flag Program.

 

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12.
References and Related Documents

 

	Document Number 	Title
	 	 
	AR-005 	Credit Approval
	 	 
	AR-015 	Credit Report

 

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

 

	Date	 	Reviewed by	 	Description of Update
	 	 	 	 	 
	7/11/2018	 	Operational Compliance Committee	 	Policy reviewed and approved.
	 	 	 	 	 
	8/14/2018	 	Board of Directors	 	Policy reviewed and approved.

 

16. Governance

 

Approving Body: Board of Directors  Date:

 

Approval:
Approved at meeting.   1/14/2019

 

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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:

 

		●	the conditions under which a finance charge (including interest
and late fees) may be imposed on the consumer’s account, including the extent of any “grace period” before finance charges
accrue;

 

		●	the method by which the creditor will determine the balance
on which a finance charge is imposed;

 

		●	the method of determining the amount of any finance charge,
including interest, late fees and any minimum or fixed charge;

 

		●	the periodic rate of interest (such as 11⁄2% per month);

 

		●	the so-called nominal Annual Percentage Rate (APR), which
is computed by multiplying the periodic interest rate by the number of periods in a year to arrive at an annual rate;
	 	 	 

		●	disclosure of whether the agreement gives the creditor a
security interest in any merchandise purchased with the credit card (or any other property); and

 

		●	a statement of the consumer’s right to dispute charges (this
statement must also be provided every six (6) months).

 

Periodic Disclosures

 

		●	Open-end issuers must provide consumers with statements at
the end of each billing period, which includes the following additional disclosures (these should be familiar to you from your monthly
credit card bills):

 

		●	the date of the bill and the beginning date of the billing
cycle;

 

		●	the outstanding balance owed at the beginning of the billing
cycle;

 

		●	the date and amount of each extension of credit during the
billing cycle, with a description of the transaction sufficient to identify it;

 

		●	any credits to the account (such as payments received);

 

		●	all finance charges for the billing cycle, itemized as interest,
late fees, minimum fees, annual fees, etc.;

 

		●	the balance on which the finance charge was computed and
a statement as to how the balance was arrived at;

 

		●	the APR;

 

		●	the final balance;

 

		●	the date by which payments must be made to avoid any finance
charge statement; and

 

		●	the address of the creditor for purposes of disputing charges
or other inquiries.

 

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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.

 

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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.

 

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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:

 

		●	Damaging a person’s property (that which is not being repossessed)
during repossession

 

		●	Pushing open the door

 

		●	Grabbing keys or hiding keys

 

		●	Wedging a foot in the door

 

		●	Using any abusive language

 

		●	Threats of any nature

 

		●	An objecting customer or third party

 

		●	Any entry into a closed area (Trespass)

 

		●	Raising a closed but unlocked window

 

		●	Use of a police officer without a court order or written
notice

 

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.

 

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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.

 

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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

 

	Roles
/ Process Area
	 	Responsibilities
	Training Department	 	Administer Training Program in collaboration with Compliance Department
	Compliance Department	 	Oversee Compliance Training Program; collaborate with the Training Department in the administration and delivery of the Training Program

 

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

 

	Approving Body: Compliance Oversight Committee of the Board of Directors
	Approval: Approved at meeting 	Date: 01/19/2018

 

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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).

 

		●	This policy extends to debts and obligations incurred prior
to the individual’s entry into active military service.

 

		●	This policy extends to service personnel in the Army, Navy,
Air Force, Marine Corps and Coast Guard engaged in active duty, commissioned officers of the Public Health Service, members of the National
Oceanic and Atmospheric Administration in active service and members of the National Guard who are called to active service for more
than thirty days in order to respond to a national emergency. National Guard Reservists who are ordered to report to active duty and
any person ordered to report for induction are entitled to the rights and protections of Titles I, II, and III of the SCRA.

 

		●	This policy extends to non-servicemembers who are primarily
or secondarily liable on a service member’s obligation or liability.

 

		●	This policy extends to non-servicemembers who are dependents
of military personnel who are subject to the protections afforded by the SCRA such as the service member’s spouse, children and
any individual for whom the service member provided more than one-half of the person’s support for 180 days immediately preceding
an application for relief under the 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:

 

		●	Reporting adverse credit information to credit reporting
agencies

 

		●	Charging in excess of 6% for interest, fees, or other charges
on any account

 

		●	Litigating, foreclosing, repossessing, or otherwise pursuing
or exercising a security interest in personal property belonging to the person

 

		●	Terminating or accelerating any contract or agreement that
is the basis for the debt

 

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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:

 

		●	The customer account shall be notated with all information
received about the person or persons entitled to SCRA

eligibility on the account and
all the accounts owed by such person(s) will be flagged with the “SCRA” flag.

 

		●	Interest, fees and charges in excess of 6% applied to the
account by W.S. Badcock Corporation shall be forgiven and shall not resume until such time W.S. Badcock Corporation receives reliable
information confirming the protections of the SCRA no longer apply to the account.

 

 

		●	Legal action, garnishment, repossessions and such other legal
proceedings, shall not be pursued on any accounts associated with the individuals protected by the SCRA.

 

RESPONSIBILITIES

 

	Roles
                                            / Process Area

	 	 Responsibilities
	Credit
    Services and Accounts Receivable Management	 	Review
    and process SCRA requests

 

REFERENCES and RELATED DOCUMENTS

 

	Document
                                            Number (if applicable)

	 	 Title
	Servicemembers Civil Relief Act
	 	50 U.S.C. §§ 3901-4043

 

DISCIPLINARY and REMEDIAL ACTION

 

Any violation of this policy will subject the employee,
dealer, or service provider to progressive remedial action, including but 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. Any confirmed violation of this policy by a dealer
will be noted by Retail Operations.

 

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.

 

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COMP-008: Equal Credit Opportunity Act

 

Policy COMP-008 – Equal Credit Opportunity Act

Effective Date: 06/14/2018

 

PURPOSE

 

The purpose of this policy is to ensure that W.S.
Badcock Corporation (hereinafter “Badcock”) complies with the Equal Credit Opportunity Act (hereinafter
“ECOA”) and its implementing regulation B when granting consumer credit and collecting consumer debt and effectively
integrates this policy into Badcock’s Compliance Management System (hereinafter “CMS”).

 

Under the ECOA, credit transactions include every aspect
of a consumer’s dealings with a creditor regarding an application for credit or an existing extension of credit. Badcock must comply
with the ECOA to ensure its practices do not discriminate against persons who fall within one of the protected class categories listed
below.

 

SCOPE

 

This policy extends to consumer credit granting and debt collection
activities and to all Badcock employees and dealers.

 

Protected Class - Under the ECOA and its implementing
Regulation B, creditors may not discriminate against an applicant in any aspect of a credit transaction (i) on the basis of race, color,
religion, national origin, sex, marital status, age (provided the applicant has the capacity to contract), (ii) because all or part of
an applicant’s income comes from a public assistance program, or (iii) because an applicant has exercised in good faith any right
under the Consumer Credit Protection Act. (12 CFR 1002.2(z), 1002.4(a)).

 

GENERAL

 

It is the policy of Badcock to conduct its business
such that statements, acts and practices of Badcock do not discriminate against any individual on the basis of race, color,
religion, national origin, sex, marital status, age, receipt of public assistance, or the exercise in good faith of any right under
the Consumer Credit Protection Act. It is also the policy of Badcock to conduct its business such that statements, acts and
practices of Badcock do not discourage consumers in the previously mentioned classes from engaging in credit transactions, including
the application for or extension of credit from Badcock, the settlement of debts, making payment arrangements, or exercising rights
enumerated in Federal consumer financial laws.

 

To this end, Badcock shall develop and approve policies
and procedures that prohibit discrimination or discouragement of consumers on a prohibited basis and monitor the controls in these policies
and procedures for effectiveness. All employees and dealers interacting with consumers will receive training on these policies and procedures
and acknowledge in writing that discrimination and discouragement is prohibited at Badcock.

 

PROCEDURE

 

Vice President of Compliance – The Vice
President of Compliance will oversee Badcock’s compliance with all laws and regulations, including but not limited to the ECOA,
governing Badcock’s offering of financial products and services as part of its CMS.

 

All Employees and Dealers – Badcock shall
hold all employees and dealers responsible through its training and testing, monitoring, corrective action and whistleblower programs
to ensure each employee and dealer is responsible for maintaining compliance with Badcock’s ECOA policies and procedures.

 

Scoring
Criteria – Badcock collects data about consumers and their willingness to pay their debts using scoring criteria. The
scoring criteria, models and methodologies are developed in house or purchased from third parties. Such scoring criteria must not
directly or indirectly result in discriminatory credit granting, debt collection or credit reporting practices. The Senior Vice
President of Credit Service and Accounts Receivable Management shall develop input criteria that does not consider or use criteria
or attributes based on race, color, religion, national origin, sex, marital status, age (provided the applicant has the capacity to
contract), receipt of public assistance income or exercise in good faith of any right under the Consumer Credit Protection Act,
including but not limited to, zip code demographics, birth date, litigation or complaint  history, fluency in the English
language, etc. The Compliance Department in collaboration with the Credit Services and Accounts Receivable Management Department
shall:

 

		●	Periodically but not less than annually, test all scoring
methods to ensure compliance with the input criteria;

 

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		●	Periodically but not less than annually, test the impact
of Badcock’s use of all scoring methods to detect and correct the existence of intentional or unintentional disparate impact on
members of protected classes resulting from credit granting, workflow processes, settlement offers, interest, charges, fees, collection
litigation; credit reporting and other discretionary processes and decision points in the credit granting and collection process;
	 	 	 

		●	Conduct Board of Directors, Management and employee and dealer
training on the requirements of the ECOA, this policy, the complaint escalation process and Badcock’s whistle blower policy;
	 	 	 

		●	Include questions in the call audit/monitoring process to
detect noncompliance with this policy and the law;
	 	 	 

		●	Review call audit/monitoring results periodically regarding
ECOA noncompliance, report findings to the Operational Compliance Committee and /or the Compliance Oversight Committee and recommend
corrective action; and
	 	 	 

		●	Ensure all third party service providers adhere to Badcock’s
ECOA policy through training, testing and relevant contract provisions.

 

Discretionary Practices Generally – In order
to foster excellent communication with consumers in connection with the granting of credit or collection of debt, certain employees and
dealers have the authority to make exceptions to Badcock’s credit granting, collection and credit reporting policies from time to
time. In order to ensure no employee or dealer makes an exception or exercises his or her discretionary authority in a manner that results
in the disparate treatment of persons in protected class categories, written criteria shall be established by the Credit Services and
Accounts Receivable Management Department and made conspicuously available to all employees and dealers pertaining to:

 

		●	Decision Power credit scoring model criteria and credit granting
guidelines;

 

		●	Settlement offers;

 

		●	Amount of or reduction or waiver of interest, charges, fees;

 

		●	Collection litigation practices;

 

		●	Credit reporting practices including the removal of an item
from a credit report Employees or dealers who seek to deviate from the written criteria must obtain the approval of Senior Vice President
of Credit Services and Accounts Receivable Management before doing so. Such approval shall be documented in the screen notes on the account.
Any approved credit granting overrides will be listed in AR-050.

 

Receipt Based Model Dealer Credit Granting Overrides-

 

Receipt Based Model Dealers are permitted to deviate from
Badcock’s Decision Power credit decision only if the dealer maintains and adheres to the approved and authorized Credit Granting
Override Guidelines submitted to Credit Services and Accounts Receivable Management Department in compliance with AR-050.

 

Badcock will test and monitor exceptions and overrides
to credit limits and will report any overrides or exceptions not following the Dealer’s approved Credit Granting Override Guidelines
to Retail Operations for remediation up to and including termination. Additionally, any account determined by Badcock not to comply with
the dealer’s Credit Granting Override Guidelines will be charged to the dealer pursuant to policies AR-050 and SO-075.

 

ECOA
Complaint Escalation – Any complaint submitted to Badcock regarding ECOA noncompliance shall be immediately escalated to the
Vice President of Compliance, General Counsel, and Senior Vice President of Credit Services and Accounts Receivable Management for review,
response and corrective action as deemed necessary. A full report of any such complaint and Badcock’s response to the complaint
shall be reported to the Compliance Oversight Committee of the Board of Directors at the next regularly scheduled meeting. 

 

RESPONSIBILITIES

 

	Roles
                                            / Process Area

	 	 Responsibilities
	Compliance	 	Administer the ECOA compliance program.
	Credit Services and Accounts Receivable Management	 	Develop policies and procedures. Work with compliance to administer the ECOA
    compliance program.

  

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REFERENCES and RELATED DOCUMENTS

 

	Document
                                            Number 

(if applicable)

	 	Title
	AR-050	 	Credit Limit and Balance
	SO-075	 	Transfer or Termination of Dealership

 

DISCIPLINARY and REMEDIAL ACTION

 

In collaboration with HR, any violation of this policy
will subject the employee or dealer to progressive remedial action, including, but not limited to, immediate termination.

 

RECORD RETENTION

 

The Human Resources department shall note any confirmed
violation of this policy by any employee in the employee’s personnel record. Any confirmed violation of this policy by a dealer
will be noted by Retail Operations.

 

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.

 

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COMP-009: Unfair, Deceptive, or Abusive Acts or Practices
(UDAAP)

 

Policy COMP-009 – Unfair, Deceptive, or Abusive Acts
or Practices (UDAAP)

 

PURPOSE

 

The purpose of this policy is to prevent W.S.
Badcock Corporation (hereinafter “Badcock”), its employees and its service providers (including dealers) from engaging
in acts or practices related to the offering of consumer credit products and collection of consumer debt that could, depending on
the facts and circumstances, constitute an unfair, deceptive or abusive act or practice as prohibited by the Dodd-Frank Act
(UDAAP(s)).

 

SCOPE

 

This policy applies to all employees and service providers
(including dealers) of Badcock who interact with consumers, their data, or payments.

 

UDAAPs can cause significant financial injury to consumers,
erode consumer confidence, and undermine fair competition in the financial marketplace. As a retailer offering consumer financial products
and services to consumers, Badcock and our service providers are subject to the prohibition against UDAAPs in the Dodd-Frank Act. UDAAPs
can result from three different categories of acts or omissions:

 

Unfair Acts or Practices – An act or practice is unfair
when:

 

		1.	It causes or is likely to cause substantial injury to consumers;

 

		2.	The injury is not reasonably avoidable by consumers; and

 

		3.	The injury is not outweighed by countervailing benefits to
consumers or to competition.

 

Deceptive Acts or Practices - An act or practice is deceptive
when:

 

		1.	The act or practice misleads or is likely to mislead the
consumer;

 

		2.	The consumer’s interpretation is reasonable under the
circumstances; and

 

		3.	The misleading act or practice is material.

 

Abusive Acts or Practices - An act or practice is abusive when
it:

 

		1.	Materially interferes with the ability of a consumer to understand
a term or condition of a consumer financial product or service; or

 

		2.	Takes unreasonable advantage of –

 

A. a consumer’s lack of understanding of the material
risks, costs, or conditions of the product or service;

 

B. a consumer’s inability to protect his or her interests
in selecting or using a consumer financial product or service; or

 

C. a consumer’s reasonable reliance on a covered person
to act in his or her interests.

 

GENERAL

 

Badcock will refrain from any conduct that is unfair,
deceptive, or abusive to consumers. All new business processes that will affect consumers or consumer data should be reviewed for UDAAP
risk by the Operational Compliance Committee prior to implementation. Existing business processes will be reviewed by the Vice President
of Compliance periodically to determine whether they pose risk of consumer harm. The Vice President of Compliance will provide recommendations
to remediate any business process that poses risk of consumer harm to management, the Operational Compliance Committee and/or the Compliance
Oversight Committee of the Board of Directors.

 

All Badcock employees and dealers who interact with consumers
will receive training no less than annually on the Company’s policies against UDAAP.

 

PROCEDURE

 

Vice President of Compliance /Compliance Oversight
Committee – The Vice President of Compliance will develop and implement Badcock’s UDAAP Compliance Program. In collaboration
with the Director of Training, the Vice President of Compliance will ensure proper, role based, UDAAP training is conducted annually for
executive management, Board of Directors, and all employees and dealers who interact with consumers.

 

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Unless otherwise required by this policy, the Compliance
Oversight Committee of the Board of Directors and the Vice President of Compliance will meet at least annually to review all complaints,
litigation, and administrative actions filed against Badcock in light of UDAAP considerations and to ensure Badcock has monitoring systems
in place to prevent unfair, deceptive or abusive acts or practices.

 

Identifying UDAAP at Badcock - Depending on the
facts and circumstances, the following non-exhaustive list of examples of conduct related to the sale of consumer products and services
and collection of consumer debt could constitute UDAAPs. The Vice President of Compliance and the Compliance Oversight Committee shall
be responsible for instituting a training, monitoring, audit and control program to prevent any of these possible UDAAP violations from
occurring at. Badcock.

 

		●	Making misleading cost or price claims or inadequate disclosure
of material terms of a product or service in advertising or the sales presentation (i.e. effect of credit insurance on payment terms).
	 	 	 

		●	Omitting material limitations or conditions about a product
or service from an offer for sale.
	 	 	 

		●	Failing to provide promised products or services.
	 	 	 

		●	Offering to provide a product or service that is not in fact
available.
	 	 	 

		●	Using oppressive sales or bait-and-switch techniques in the
advertising or sales process.
	 	 	 

		●	Selling used items as new, or failure to disclose to a customer
than an item for sale is not new.
	 	 	 

		●	Unlicensed sale of credit insurance products.
	 	 	 

		●	Coercion in selling credit insurance, participating in forced
placement of credit insurance on an account, failure to disclose and adhere to the voluntary nature of credit insurance program, or any
deceptive practices in the sale of credit insurance.
	 	 	 

		●	Cancelling or transferring out of credit balances or failing
to post payments timely or properly to a consumer’s account.
	 	 	 

		●	Collecting or assessing a debt and/or any additional amounts
in connection with a debt (including interest, fees, and charges) not expressly authorized by the agreement creating the debt or permitted
by law.
	 	 	 

		●	Unauthorized repossession or taking possession of property
without the legal right to do so.
	 	 	 

		●	Disclosing the existence of a consumer’s debt to a
third party, employer and/or coworker without the consumer’s consent.
	 	 	 

		●	Representing to consumers they may pay less than the minimum
amount due without clearly and prominently disclosing any fees associated with paying a reduced amount.
	 	 	 

		●	Falsely representing the character, amount, or legal status
of the debt.
	 	 	 

		●	Misrepresenting whether information about a payment or nonpayment
would be furnished to a credit reporting agency.

 

		●	Misrepresenting to consumers their debts would be waived
or forgiven if they accepted a settlement offer, when this statement is in fact not true.
	 	 	 

		●	Threatening any action that is not intended or we do not
have the authorization to pursue, including false threats of lawsuits, arrest, prosecution, or imprisonment for non-payment of a debt.
	 	 	 

		●	Asserting that a debt collection communication is from an
attorney or from a government source or that the source of the communication is affiliated with the government.
	 	 	 

		●	Making repeated telephone calls and/or home visits to consumers
with the intent to annoy, abuse, or harass any person at the number called and/or address visited.
	 	 	 

		●	Brandishing or displaying a weapon in the course of collection
of a debt.
	 	 	 

		●	Threatening to use violence or other means to harm the physical
person, reputation, or property of any consumer.
	 	 	 

		●	Using obscene, profane, or derogatory language in communication
with a consumer.

 

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RESPONSIBILITIES

 

	Roles
                                            / Process Area

	 	Responsibilities
	Training	 	Collaborate with Compliance to ensure that UDAAP training is provided to employees, management, BOD, and service providers.
	Compliance	 	Administer W.S. Badcock Corporation’s UDAAP Compliance Program.

 

REFERENCES and RELATED DOCUMENTS 

 

	Document Number 

(if applicable) 	 	Title
	COMP-030 	 	Compliance Training Policy

 

DISCIPLINARY and REMEDIAL ACTION

 

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

 

RECORD RETENTION

 

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

 

GOVERNANCE

 

	Approving Body: Compliance Oversight Committee of the Board of Directors
	Approval: Approved at meeting 	Date: 02/15/2018

 

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PS-050: Accepting Checks

 

Policy PS-050 – Accepting Checks

 

POLICY:

 

All checks must be entered into STOREnet immediately upon
receipt and applied to the appropriate Sales Order or Account.

 

Personal Checks:

 

When accepting a personal check, make sure of the following:

 

		●	The name must be pre-printed on the check by the bank.

 

		●	No temporary checks.

 

		●	The complete physical address and phone number including
area code must appear on the check (No PO Box).

 

		●	If the address on the check differs from address on the ID,
both must appear on the check.

 

		●	Personal checks require an ID. The identification type and
number must appear on the check (Identification must be valid).

 

		●	Acceptable forms of ID include: Valid U.S or Canadian driver’s
license, Active Military ID, Valid U.S or Canadian Passport.

 

		●	Physical address and phone numbers may be handwritten on
the check.

 

		●	All checks must have the Account Number written on
the front of the check.

 

		●	Upon receipt of the check, the check must be stamped “For
Deposit Only”.

 

		●	When processing in STOREnet, use “MAIL” in the
state field.

 

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Post-Dated Checks:

 

Do not accept any post-dated checks as a form of payment for
a customer’s account.

 

Third-Party Checks:

 

Do not accept any third-party checks. Due to the high risk
of check fraud, especially with Government Checks and Payroll

Checks, we only accept checks from the check writer in the
amount equal to the payment or purchase amount being made.

 

Some examples of third-party checks:

 

		●	United States Government Checks

 

		●	Payroll Checks

 

		●	Business Checks (must be approved by District Manager)

 

		●	Any other third-party endorsed checks Stores can accept checks
from Banks or Mortgage Companies made out to Badcock for account payments & payoff. Stores cannot accept checks from Debt Consolidation
Services for payments made to an account. These checks must be returned to sender.

 

ECA Checks:

 

 

 

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Electronic Check Authorization (ECA) is a check guarantee
service that minimizes the risk of returned checks. All checks for Cash Sales and Original Down Payments (New Account Sales) must be processed
using the ECA option in STOREnet, entering all required information, regardless of the amount of the check. Checks for on-account payments
are not guaranteed and should not be processed using ECA. When accepting a check to be processed as ECA, make sure of the following:

 

		●	All personal checks: check writer, signer, and presenter
must all be the same.
	 	 	 
		●	Checks must be written on a U.S or Canadian bank account.
	 	 	 
		●	All checks: the check date, purchase date and call in date
must be the same.

 

		●	The merchant number is noted on the check (For Deposit Stamp).

 

		●	Checks must be approved by one of NCT’s authorization methods.

 

		●	If the ECA response declines the check, the customer must
pay by either cash, debit or bank card. We will not accept the declined ECA checks.

 

WSBC absorbs all fees associate with using ECA for SBM stores

 

Manual Authorizations:

 

Use the following procedure if you have a check transaction
that requires a manual authorization:

 

		●	Verify the customer’s Photo ID against the name on the Check.

 

		●	Management should call the appropriate 800 number provided
for each check, and provide them with our merchant number.

 

		●	Management should obtain the manual authorization number
and enter that number into the authorization field for the check in STOREnet.

 

The Corporate-provided contact numbers for Check Manual
Authorizations must be posted in your front counter area. These numbers should be out of the sight of customers, but easily accessible
for you. These are the only numbers to be called should you need to obtain a manual authorization for a check transaction.

 

Since the need for manual authorizations for check transactions
are rare in STOREnet, we should take all necessary and reasonable precautions to prevent against any potential fraudulent activity.

 

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PS-055: Returned NSF Checks

 

Policy PS-055 – Returned NSF Checks

 

POLICY:

 

All non-sufficient funds (NSF) check notifications are
sent to CSARM. Upon reciept, CSARM will notify the store when a check has been returned as NSF. If you happen to receive one at your store,
please notify Cash Management.

 

ECA Payment Deemed NSF

 

We do not charge an NSF fee on account for checks run
through ECA. NCT (our check guarantee service) will collect the NSF fee.

 

If a check comes back to CSARM or the store as NSF after
it has been run through ECA, CSARM will submit the claim to NCT to be reimbursed for the check. Once reimbursement is received at the
store, it must be deposited on a separate deposit slip.

 

If the claim is denied and is not reimbursed, CSARM will
contact the store to explore next steps, which may include contacting the customer.

 

NSF for any check run as CHK

 

CSARM will remove the payment from the account and apply
the NSF fee. They will also send a Return Check Notice letter to the customer asking them to come in to reconcile the check. Stores should
not attempt to contact the customer to obtain payment for the check. Once received, this does not to be processed a separate bank deposit
slip.

 

If check repayment is not made within 30 days, contact CSARM
to explore possible actions.

 

Charge-back to stores:

 

Not collecting funds to make up for bad check within 30
days on cash sales or down payments may result in the full amount of the check to be charged back to the store.

 

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SO-010: Refund and Return Policy

 

Policy SO-010 – Refund and Return Policy

Effective Date: 04/13/2021

Supersedes: 11/03/2020

 

POLICY:

 

All merchandise sold by Badcock Home Furniture &more
is covered under our “10-Day Return and Refund Policy”. Merchandise returned in “like-new” condition under the
policy guidelines is eligible for a full refund, merchandise exchange, or in-store credit at the customer’s choosing.

 

Refund Exceptions

 

Merchandise not in “like-new” condition, as
well as defaced, abused, neglected, or similar merchandise, may not be accepted for return during the return and refund period. Some
conditions that will prevent an item from being returned include, but are not limited to:

 

		●	smoke

 

		●	pet hair

 

		●	stains due to food, drink, pets, bodily fluids, or any other
substance

 

Returns After Delivery

 

After delivery, the following are acceptable returns for the
specified timeframes:

 

1-10 days from delivery date: If a customer returns
an item for any reason within 10-days of delivery, they will receive full credit for merchandise via a refund or exchange. The item(s)
must be in “like-new” condition.

 

11-30 days from delivery date: If a customer returns
an item for any reason other than “Defective”, they will receive full credit for merchandise reselection or will be required
to pay a 20% restocking fee if they request a refund. The item(s) must be in “like-new” condition. If the merchandise is “Defective”,
then the customer is eligible for full credit for merchandise reselection or a full refund.

 

31-365 days from delivery date:
After 31-days, only “Defective” merchandise can be returned, and full credit will be given for merchandise reselection. Please
follow Badcock Policy and Procedure for determining return and refund amount for any non-merchandise offerings included in the Order.

 

Exchanges written for defective
merchandise should be of equal or greater value. The customer will be responsible for any greater price difference on the exchange. No
refund will be given to the customer if the exchange difference is less, in this case the sale is to be written as an evenly priced exchange.

 

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Merchandise returns should not be accepted on any item
31 days or more after the date of delivery, except for defective merchandise. Dealers must work with corporate personnel to determine
if merchandise is defective. No restocking fee should be charged on any defective merchandise.

 

If merchandise that is not defective is returned after
31 days and a restocking fee was not applied, then the entire amount of the restocking fee up to the entire amount of the item(s) may
be charged-back to the store, less potential commission percentage.

 

Refund Requests

 

For refund requests with cash purchases over $200.00
and all check purchases, a check will be mailed to the customer from the Corporate Office within 14 days of the return of the merchandise.
Refunds for purchases made using a credit card, Badcock financing program, or Third Party Financing will be credited immediately upon
return of the merchandise. The original receipt is required for all return and refund requests.

 	Tender Type	 	10-Day Return and Refund Policy
	Cash ($200 or less)	 	Store provides cash refund upon return of merchandise
	Cash (more than $200)	 	
    Check mailed from Corporate Office within 14 days of merchandise return

    

	Check	 	Check mailed from Corporate Office within 14 days of merchandise return 
	Credit or Debit Card	 	Store credits back to same card upon return of merchandise
	In-House Financing	 	Credited back to account upon return of merchandise 
	Third Party Financing	 	Credited back to account upon return of merchandise 

 

If a check is required from the home office, the request
must be made by the store. This is performed in our point-of-sale system and does not require a Work Order to RSS.

 

Manufacturers’ Warranties

 

Badcock stands behind all manufacturers’ warranties with
free parts and labor for up to one year after the date of delivery for defects due to material or workmanship related problems covered
by a manufacturer’s written warranty, excluding Appliances, Electronics, Bedding, Area Rugs and Lawn & Garden Equipment. If
a repair cannot be made, the decision on any refunds, credits, or exchanges during the one-year period will be at WSBC’s sole discretion.

 

Electronics & Appliances

 

Electronics
must be returned in original packaging and all instruction manuals, remotes, and other accessories must be returned with the item
(if applicable).

 

All major appliances and electronics will be covered by the manufacturers’ written warranties, if any. Some
items may require authorization from the manufacturer prior to replacement or refund approval.

 

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Lawn & Garden Equipment

 

All Lawn and Garden merchandise (including grills) will
be covered by the manufacturers’ written warranties, if any. Warranty decisions are made by the local authorized servicer, not the retailer.
The customer is responsible for repair charges for all non-warranty repair work within the warranty period. Lawn and Garden equipment
pick-up and delivery charges are the responsibility of the customer.

 

Bedding

 

See IM-065: Bedding Warranty and Exchanges

 

Area Rugs

 

Area rugs only covered by the manufacturer’s written warranty,
if any. Area rugs can only be replaced during the warranty period, pursuant to the manufacturer’s written warranty.

 

Reduced Price Merchandise

 

Merchandise sold at a reduced price is sold “As-Is”.
This includes, but is not limited to, clearance and floor sample merchandise. “As-Is” merchandise is excluded from this return
and refund policy and no exchanges shall be allowed.

 

Items and Fees Not Subject to Refund

 

Delivery Service Fees will not be refunded after the sale and
delivery has been completed.

 

Non-Refund Charges Responsibility

 

For situations where Delivery Service Fees are not refunded,
the customer will be responsible for the remaining balance. Failure of the customer not paying for remaining delivery fee resulting in
a charge off balance will become the responsibility of the Dealer.

 

For situations when a return is done for a Badcock account
sale and the 20% restocking fee is charged, but the down payment was less than 20%, the customer will be responsible for the remaining
balance on the account to include any non- refunded charges.

 

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SO-012: Bedding Warranty and Exchanges

 

Policy SO-012 – Bedding Warranty and Exchanges

Reviewed:

Effective Date: 04/13/2021

Supersedes: 02/12/21

 

POLICY:

 

Comfort: Our bedding comfort policy provides
customers with 45 nights to make sure their mattress set meets their comfort expectations. We do require that the customer has the
bedding in their home for a period of 30 nights prior to any reselection to allow for body/sleeping adjustments. After the 30-night
adjustment period but prior to the 45th day, they may receive full credit towards a reselection mattress set one time to find the
proper comfort level. If the bedding set they select is greater in value than what was originally purchased, they will be
responsible for the difference in price. If a suitable alternative set cannot be found from our selections between the 30th and 45th
day, a return and refund may be provided less a 20% handling fee and return delivery charges may apply. All returned items must be
clean and free of any stains or odors.

 

Manufacture Defects:

 

All bedding is covered by the manufacturer’s
warranty and can be returned during the warranty period pursuant to the manufacturer’s written warranty. Bedding must be free of
soiling and stains and have proper center support if either a queen or king size, otherwise the manufacturer’s warranty is voided.
It is strongly suggested our customers purchase one of our mattress protectors (sold separately) to protect their investment and
warranty. The warranty period on replacement bedding reverts back to the original purchase date. A customer can exchange due
to manufacturer defect as many times as needed up to the warranty period from the original purchase date following the defect
guidelines.

 

All Mattress Inspections must be completed with a Bedding
Inspection Form. Upon notification at the store level that there is a concern with the mattress set, the customer will be
provided at no cost a pre-inspection kit that will include a string with clips and an instruction form. The form will guide the
customer through the inspection process and the guidelines and requirements for determining whether the mattress or foundation may
be approved for exchange. Upon completion of the pre-inspection form and submission of valid pictures clearly showing the condition
of the mattress set as well as the support system beneath, the store dealer or manager will confirm whether an exchange can be
scheduled. If upon exchange delivery the conditions of the existing mattress set are found to not be as represented by the
pre-inspection form or photos as are required in the inspection form, the exchange may be denied.

 

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All bedding sets have the following coverage under warranty:

 

Mattress Issues Covered:

 

		●	Wires that are loose, broken or protruding through fabric.
	 	 	 
		●	Sagging, only if the mattress has been continuously supported
by a matching foundation (or equivalent) and used with an appropriate frame and center support, or a minimum of five cross supports.
	 	 	 
		●	Measurements less than the required sag are considered normal
body impressions, and are not indicative of a defect:

 

		o	Legends >1.5 inches

 

		o	Legends Signature >1.5 inches

 

		o	Stanhope >1.5 inches

 

		o	Sealy >1.5 inches

 

Foundation Issues Covered:

 

		●	Broken or loose support elements
	 	 	 
		●	Compression or unstapling of support elements
	 	 	 
		●	Broken or loose grip top
	 	 	 
		●	Splitting of the wood frame
	 	 	 
		●	Loose, bent or defective wood beams
	 	 	 
		●	Sagging, but only when continuously supported with an appropriate
frame with a rigid center support

 

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Items Not Covered:

 

		●	Bedding sold As-Is

 

		●	Bedding Height

 

		●	Bent perimeter border rods due to moving or bending the bedding
set

 

		●	Handles on mattresses

 

		●	Fabric stains, soiling or burns

 

		●	Replacement of another piece in a sleep set, unless it is
also defective

 

		●	Transportation costs

 

		●	Damage of the mattress or foundation due to abuse

 

		●	Sheet fit

 

		●	Mattress damage due to an inappropriate foundation

 

		●	Comfort preference

 

		●	Corner guards

 

		●	Cover

 

Choosing the Replacement Mattress (for defective exchanges)

 

Comparable Mattress: Bedding of comparable comfort
level/price must be selected for replacement. If you are unsure of the comparable comfort level, contact the Merchandising Help
Desk. If the price of the replacement is lower, then adjust the return value of the bedding in STOREnet when generating the
exchange; the customer is not to receive a refund for warranty exchanges. If the price of the replacement is higher, then
discounting may be necessary to adjust the price to match that of the defective piece. The customer will be responsible for any tax
increases that may have occurred from original purchase date.

 

Changing brands/Upselling: If a customer decides to take
the opportunity to select a higher quality and priced bedding set or change brands, they may do so by paying the difference. In this case,
the full retail price of both pieces would be credited, and the new bedding set sold. After the exchange is completed, the warranty for
the new set reverts to the balance of the warranty on the original bedding set.

 

After a mattress has been exchanged for defect: For
Sealy bedding, a Sealy return tag will be placed on the bedding. This serves as approval for the Retail Business Consultant or Inventory
Analyst to return the bedding to the DC. If any bedding exchange is not done as set forth in this policy and/or the WS Badcock Return
and Refund published policy the store will be charged the regular retail amount of the bedding less the appropriate discount. For defective
Legends or Stanhope bedding that cannot be resold, the mattress will be destroyed and junked at the store by your Retail Business Consultant.

 

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SO-014: Cash Control

 

Policy SO-014 – Cash Control

 

Cash Control / Petty Cash:

 

		●	Each Cash Drawer will contain $100.

 

		●	Balance all Cash Drawers Daily.

 

		●	Store Petty Cash Log must be completed daily
and emailed to DM on the 1st of each month.

 

		●	Sales Associates must log cash counts on Daily Activity
Report each day and have Store Manager or Sales Lead sign for all monies at closing.

 

		●	Shortages of $10 or more must be reported to the District
Manager immediately.

 

		●	Document Cash shortages with the employee.

 

		●	Managers cannot require employees to replace cash that is
short.

 

		●	Cash Count Sheets must be completed at the start of each
day and again at the EOD.

 

		●	Managers must also maintain a cash count sheet if they maintain
a cash drawer.

 

		●	Keep completed cash count sheets in your store they are subject
to management review at any time. These are kept on a rolling 12-month cycle.
	 	 	 

		●	When getting change from petty cash, never take the entire
petty cash amount from the store.
	 	 	 

		●	Document the amount and date of any cash out for change,
and keep it in the cash bag until you return from the bank.

 

Replace it immediately.

 

		●	Excessive cash shortages will not be tolerated. Excessive
cash shortages are defined as more than three (3) cash shortages of less than $10.00, but over $1.00 in a six month period or more than
two cash shortages of over $10.00 in a six month period of time.
	 	 	 

		●	Cash overages must be held for 24 hrs, after 24hrs the overage
must be deposited on a separate deposit slip. You are to notify cash management and your DM with all overage deposits. Any employee that
does not follow the Cash Overage Procedure and withholds cash overages or other store funds
will be terminated.

 

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Sales Associate and Cash Drawer Settlement

 

		●	Anyone assigned a cash drawer that received any monies or
made any transactions must do a Settlement Report prior to the End-of-Day.
	 	 	 

		●	Process the Report Cash Drawer Balancing Totals
to assist in the balancing of the Cash Drawer Settlement.

 

Balance all Cash Drawers

 

		●	Starting cash must be surrendered to the Store Manager or
designated person after balancing. The remaining funds must match the individual settlement for that Sales Associate.
	 	 	 

		●	Any cashier cash discrepancy must be brought to the attention
of the Store Manager or designated person immediately.
	 	 	 

		●	Any shortage of $10.00 or more must be reported the District
Manager immediately for follow-up and necessary action, to include documenting with an Employee Counseling Form and/or involvement of
the Security Department. Documentation must include:

 

		o	The shortage amount
	 	 	 

		o	Signature of the Sales Associate with the shortage
	 	 	 

		o	Date & time of the shortage
	 	 	 

		o	Store Name (location) and Store Code
	 	 	 

		o	Any additional pertinent information
	 	 	 

		●	Any shortage of less than $10.00 must be handled by the Store
Manager and documented using an Employee Counseling Form. The documentation must be filed in the employee’s personnel file and it must
be brought to the attention of the District Manager during the next Store Meeting.

 

Store Petty Cash Count Sheet

 

The purpose of the Store Petty Cash Count Sheet is to
make certain that all store funds are being verified and accounted for each day. The Store Manager and Store Lead is required to maintain
a Store Petty Cash Count sheet on a daily basis. The form should be completed at opening and at the close of business each day. Click
here for a printable version of the form. It is for a calendar month and you should use a new form for each month.

 

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Setting up the form

 

		●	At the top of the form you will write in the month and the
year.

 

		●	Your store code goes on the second line.

 

		●	On the third line titled “Drawer assignment” you
will put the amount petty cash assigned to you.

 

		●	The fourth line would be your name.

 

Using the form

 

		●	The first column is the date.

 

		●	The second column is the amount of cash that you started
the day with. It should be the same as what is listed in the Petty Cash Allotment.

 

		●	The third column is the amount of cash that you end the day
with. It should be the same as what is listed in the Petty Cash Allotment.

 

		●	The fourth column is for the amount of the total deposit
for the day.

 

		●	The fifth column is the signature of the manager or designated
person to compile the store deposit after verification.

 

If not you are not balanced, you need to notify the District
Manager. If you are unable to balance, please refer to the policy above.

 

If the manager uses a drawer, they also need to maintain a
separate cash count sheet for their drawer.

 

The completed Store Petty Cash Count Sheets should
be filed in the Petty Cash Log book under the corresponding month. The Cash Count sheets are subject to review at any time by the
Manger or District Manager. Failure to maintain the sheet as specified could result in disciplinary action.

 

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SO-015: EOD Balancing

 

Policy SO-015 – EOD Balancing

Effective Date: 07/23/2021

Supersedes: 07/22/2021

 

POLICY:

 

Each store must perform the Cash Balancing process at
the end-of-day via STOREnet. Additionally, each store will have a transfer/depository account set up by W.S. Badcock Corporation for the
transfer of daily funds received during daily business transactions.

 

All checks made out to W.S. Badcock Corporation, Badcock
Home Furnishings Centers, or Badcock &more must be deposited daily in the depository/transfer account and all deposits must before
business day cut off times established per assigned depository bank.

 

No personal or business checks from the Dealer or Store
Manager are to be included when making daily bank deposits unless it is for payment on account or payment on a Sales Order. There are
to be no checks written to Badcock Home Furniture &more, Badcock Home Furnishing Centers, or the W.S. Badcock Corporation for items
sold that are not Badcock inventory items.

 

In
accordance with federal laws, a store that receives cash in excess of $10,000 in a single or multiple transactions from the same
customer within a 24-hour day, MUST file an IRS Form 8300. Form 8300 must be filed within 15 days of receiving more than $10,000. If
payments are received in installments, Form 8300 is due after the total payments are more than $10,000. Contact Cash Management in
Mulberry or www.irs.gov for current copies of Form 8300.

 

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SO-096: Document Retention

 

Policy SO-096 – Document Retention

Effective Date: 05/20/2019

 

POLICY:

 

Federal laws and Company policies require the retention
of specific documents that contain non-public information for a predetermined period of time. These documents should always be filed in
your stores Secured File area.

 

After any legal or policy-driven requirements have lapsed,
the retention copies should be disposed of in a legal and proper manner.

 

There are legal requirements, as well as Company Policies,
that determine the retention period for specific documents are shown in the table below.

 

Document Disposal: After the retention period has passed,
document destruction must be executed using certified document destruction company or in-store cross cut shredder

 

	Document Name	 	Retention Period	 	Where Filed
	Denied Credit Applications w/ID’s	 	25 months	 	Denied Application File
	Approved Credit Applications w/ID’s	 	7 years from date account closed	 	Customer File Jacket
	Red Flag Documentation (If applicable)	 	7 years from date account closed	 	Customer File Jacket
	Original Signed Financed Credit Agreements	 	7 years from date account closed	 	Customer File Jacket
	Original Signed Same As Cash Addendum	 	7 years from date account closed	 	Customer File Jacket
	Original Signed Insurance Election Form	 	7 years from date account closed	 	Customer File Jacket
	Original Signed Insurance Election Cancellation 
Form	 	7 years from date account closed	 	Customer File Jacket
	Third Party Finance Applications	 	7 years from date account closed	 	*See Current Third Party Finance Policy & Procedure
	Original Signed Financed Sales Orders	 	7 years	 	Customer File Jacket
	Original Signed Manual Sales Order	 	7 years	 	Attach to STOREnet generated Sales Order and place in Customer File Jacket
	Original Signed Financed Delivery/Pick-Up 
Tickets	 	7 years	 	Customer File Jacket
	 Manual Receipts	 	7 years	 	Attach to STOREnet generated receipt and place in Customer File Jacket

 

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	Third Party Finance Sales Orders Delivery/Pick- Up Tickets	 	 
7 years
	 	EOD File, by calendar month
	Original Signed Financed Exchanges/Returns	 	7 years	 	Customer File Jacket
	Completed Signed Financed Service Orders	 	7 years	 	Customer File Jacket
	Insurance Claim Form (copy)	 	7 years	 	Customer File Jacket
	Daily Detailed Sales Receipts Report with verified bank deposit slip attached	 	 
7 years
	 	EOD File, by calendar month
	Original Signed Cash Sales Orders	 	5 years	 	EOD File, by calendar month
	Original Signed Cash Delivery/Pick-Up Tickets	 	5 years	 	EOD File, by calendar month
	Original Signed Cash Sale 
Refunds/Exchanges/Returns	 	 
5 years
	 	EOD File, by calendar month
	Completed Signed Cash Sale Service Orders	 	5 years	 	EOD File, by calendar month
	Original Signed Third Party 
Refunds/Exchanges/Returns	 	 
5 years
	 	EOD File, by calendar month
	Inventory Manifests From DC	 	18 months	 	Transfer File
	Inbound/Outbound Transfers	 	18 months	 	Inbound/Outbound Transfer File

 

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Work Instructions - Charge off: Non-Accrual

 

1. Potential Charge Off Report

 

a. Selection Criteria:

 

i. Corp & Dealer

 

ii.By Cycle

 

iii. All Regions/Divisions

 

iv.All
Districts

 

v. All Stores

 

vi.12 Month Payment History

 

 

 

2. Export the Report to CSV

 

3. Delete Columns O through X –
this data is not used, removing the columns will make file saves more manageable

 

4. Delete StoreID
and DistrictCode Columns – this data is not used, removing the columns will make file saves more manageable

 

5. Sort by Last Payment Date –
Newest to Oldest

 

6. Remove any accounts that have a
last payment less than 11 months old (for example report processed for cycle 19 on 10-20-20 – remove any account with a last
payment date of 11-20-19 or more recent)

 

7. Sort by Alert Code ID – A to
Z

  

8. Remove any account that is already
set to NA

 

a. If an account is transferred to a
new store with a different cycle date after the NA Alert Code is added the account will not charge off until it has been in the new
cycle for one month – example account in 9046 has NA Alert Code added on 10-20-20, on 11-9-20 account is transferred to a
cycle 11 store, the account will not charge off on the 12th with other accounts in that store,
it will charge off during the December cycle for the new store

 

9. Scroll
to bottom of report – create a sum formula for the account balance column – this indicates the charge off for the cycle for
the following month (this total will change throughout the month based on customer payments, or any accounts that did not charge off previous
cycle based on account transfer as described above)

 

10. Save Report as an Excel file –
File Name Should be – MonthYear-Cycle-MovetoNA (Nov2020-11-MovetoNA.xlsx)

 

11. Email file to Credit Services leadership
team for processing into STOREnet

 

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Work Instructions - Credit Limit
Reduction (90DLP)

 

Monthly, Credit Underwriting will review accounts in stores
that have gone over 90 days since date of last payment and the account has a past due amount in the 91-120 or greater past due bucket.

 

All accounts meeting the 90DLP criteria will have the credit
limit reduced to zero and the Credit Limit Reduction Letter will be sent to them.

 

Credit Underwriting will use the Adverse Action Mailer
Report in Reporting Services to identify the accounts requiring a credit reduction.

 

Accounts with flags that block the mailing of letters will
have the letters generated, but not mailed to the customer.

 

To determine the accounts eligible for Credit Reductions use
Adverse Action Mailer Report in Report Manager. Use the following Settings:

 

The process will be performed four times
per month, and will be completed on a per cycle basis. For Cycle 11 accounts the process will be performed on the 12th,
cycle 15 on the 16th, cycle 17 on the 18th
and cycles 19 + 21 will be processed on the 22nd of each month.

 

	Store Type: Corp,Dealer 	Cycle: Varies based on day of month
	Region(s)/Division(s): All 	District: All
	Store ID: All 	Not Paid Since Days: All except 0, 1 – 30, 31 – 60, & 61 – 90
	Min. Credit Limit: 1 	Max. Credit Limit: 99999
	Min. Credit Score: 0 	Max. Credit Score: 999
	Customer Due Date: Null 	Credit Limit Changed Date: Null
	Block Letter Accounts: Include	 

 

NOTE: Using a Credit Limit of 1 will
exclude the accounts that have already had the credit limit reduced to Zero. Export the report to CSV and delete columns S, O, J, H, G,
F, E, D, and A.

 

Sort the report by DLQ and delete any accounts that are not
greater than 90 days past due. Sort the report by Flags.

 

The report will have two sheets. One for the accounts
having the credit limit reduced to zero that will receive a letter and one for accounts having the credit limit reduced to zero that
will not receive a letter.

 

Accounts with the following flags do not receive the credit
limit reduction letters Chapter 13 Bankruptcy flags, Chapter 7 Bankruptcy flags, Deceased Flag, Represented by Attorney, or Returned
Mail Flag. The letters will be generated and Credit Limit Reduced to Zero, but Credit Reduction Letter will not be mailed.

 

Two upload files (Excel) must be created
with the account number for all accounts that will have the credit limit reduced to Zero, one file will be for accounts that will receive
the Credit Limit Reduction Letter and one file for accounts that will not receive the Credit Limit Reduction Letter.

 

In STOREnet access the Print Credit Status Letters function
and print any letters that have already been queued up for mailing. These letters will need to be mailed to the customer.

 

In STOREnet access the Import Data function
and process the upload for the customers who will not receive the Credit Limit Reduction Letter.

 

In STOREnet access the print Credit Status Letters function
and print the letters that were generated when the file was uploaded into STOREnet. These letters should be placed in the shred bin as
the accounts should not receive the letter In STOREnet access the Import Data function and process the upload for customers who will receive
the Credit Limit Reduction Letter.

 

In STOREnet access the Print Credit Status Letters
function and print the letters that were generated when the file was uploaded in STOREnet. These letters should be taken to the
mailroom for folding and mailing purposes.

 

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Work Instructions - Credit Statement for Recurring Payments

 

As an incentive to sign up for recurring payments, Badcock
offers a $15 account credit for those that meet the following criteria.

 

Every month before cycles a
“New Online Accounts” report will need to be ran to determine which accounts setup at least 3 recurring payments on our
website and have the first one already processed.

 

Once we have the list of accounts a spreadsheet will need
be prepared to be upload it into Storenet as a payment upload using the code “Promotion”. Each customer will receive a $15
payment into their account once the upload is completed.

 

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Work Instructions - Credit Statement for Recurring Payments

 

Every month our IT Department will send
us a file for accounts with over 90 days since the date of last payment that have insurance coverage. The email should read something
like this: Customer Insurance 90 Day Report was executed at <date> <time> and have an attachment that we need to work
with.

 

Credit Services will use the same steps
below to process daily insurance cancellations requests as well. Create a spreadsheet using the Data Import Insurance spreadsheet that
is located at on our share folder: \\PFS08\Department_Shares\Collections\Insurance Uploads\Data Import Insurance Template.

 

 

 

Copy and paste the accounts from the
spreadsheet sent by IT to Customer ID column of the Data Import Insurance Template.

 

Enter the <&> symbol on the Insurance Code
column for every single account. (This symbol is used to remove information on most Storenet uploads).

 

Save the document as a .txt (text delimited)
and save it under the our shared folder at: \\PFS08\Department_Shares\Collections\Insurance Uploads\

 

On Storenet open the Update Revolving Insurance Plans and
click on the icon by the Filename area and browse for the file that you saved for this.

 

Once you can see your file name on the Filename area click
on Run to initialize the upload.

 

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Once the upload has been completed a new screen will come up.
Both boxes on this screen should be marked. Click Save.

 

 

 

A PDF containing any errors on the upload will come up. Please
review this error report to confirm that no account number was rejected by the process.

 

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Please save the error report on the same folder with the name:
“Results_ddmmyy”.

 

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Work Instructions - Lockbox

 

All customer payments should be going to the lockbox PO Box
724688 in Atlanta, GA. However, we still receive a fair amount of checks at Corporate. If the payments are received here then we’ll
manually post them into the account and process the electronic deposit for it.

 

For those that will go to the
Lockbox, we’ll only need to work on recommendations once a day to determine which R/T and account numbers can get approved or
ignored on the BofA system for future payment.

 

We’ll also need to work on exceptions in a daily basis
to complete any payment that BofA system wasn’t able to.

 

At BofA EOD (around 8pm) IT will be receiving a file with
all the payments received on that day. IT will possibly divide into two files depending if the account number matches one on our system.
If that’s the case it will be on an exceptions file.

 

Any account on that exception file will be manually posted
the next day.

 

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Work Instructions - Monthly Cycle Past Due Adjustment

 

Run the Past Due Adjustment
Report from Report Manager for each cycle the morning of cycle cut-off. Past Due Adjustments should be done after ARMS is
updated, but before stores open at 9:00 am.

 

To reduce confusion, run the report for All Stores (Corporate
and Dealer). Please do not delete any columns for the original file so we can do research and analysis from that file.

 

Make sure to only select the Cycle you are adjusting...
Make sure you select Three as the Number of Months. This will give you accounts that have made 2 out of the last 3 Payments. (For cycle
19, select 2 as the number of months)

 

 

 

Save the CSV file to Excel and save it
to the DepartmentShares on FS4 > Collections > (Current Month) > Monthly Past Due Adjustments Folder.

 

Use: Month, Year, Past Due Adjustment to name the Report (C17
PDA Full File April 2018)

 

 

 

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After creating the Full File, you will need to remove any accounts
with SAC Plans or ineligible flags. Accounts with the following flags will not be eligible for a past due adjustment:

 

PDA Not Eligible, Internal Review, Fraud, Reaffirmation
Pending, Payment Deferred, and Customer Lawsuit

 

We will do an upload to Remove 180PDL flags and the TX Alert
Code after the Past Due Adjustments have been processed at the end of the last cycle of the month. Other flags that can be removed after
the account has zero past due balance will be done at the end of the month.

 

When there are multiple flags on an account, the flags that
cannot be adjusted override flags that can be adjusted, so you would remove those accounts from the Past Due Adjustment file.

 

Sort and Remove any accounts with SAC Plans. EPNI & NCR
Plans can be adjusted.

 

Save the CSV file to Excel and save it
to the DepartmentShares on FS4 > Collections > (Current Month) > Monthly Past Due Adjustments Folder.

 

Use: Month, Year, Past Due Adjustment to name the Report (C17
PDA Clean File April 2018)

 

You will only need the Account Number – Plan Name fields
for the Import into STOREnet, but don’t delete the other columns from the other reports. This is our record and reference report
and it must have all the original data.

 

Save Account Number – Plan Name fields into the ImportRevolvingPlanDeferment-95
– Template file.

 

 

 

Copy and Paste the Account Number
& Plan from Past Due Adjustment Report to Account Number field and Master Plan to fields respectively on Import
file. Make sure this information matches the original file. Put a Y in the All Plans field so that all Plans will be adjusted.

 

 

 

Save the Excel file for the Import using:
Month, Year, Past Due Adjustment to name the Report (C17 PDA Upload April 2018)

 

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Then save the file as Text (Tab
Delimited). Save it to the Monthly Past Due Adjustment Reports Folder on Department_Shares on FS4 > Collections folder. You will
then need to save it to the Shared Files for STOREnet in your Report or
Export Folder. There is a limit to the number of characters for the import file, so you may need to abbreviate the file
name.

 

 

 

To
import the Text (Tab Delimited file) you will need to use the Import Revolving Plan Deferments menu option in STOREnet.

 

 

 

When you open this option, you will need
to click on the Browse button to locate the file you saved for Past Due Adjustment imports.

 

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Click
on the file you want to Import and Click Open.

 

 

 

After you select the file you want to
import, you will Click SAVE and the file will begin to process. If the MMP will be changed for a past due adjustment plan,
the pop-up box will appear notifying you of the MMP change. You will need to Click OK to continue each time this box appears.

 

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When the file is completely populated, you must Click on the
Include Errors and Include Warnings boxes to generate an exception report after the import is complete. You must Click on
SAVE to finalize the import process.

  

 

Here
is what a sample of the Text (tab delimited) import file will contain.

 

 

 

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If there were no exceptions, the
report will be blank.

 

 

If there were exceptions the report will contain details of
the exceptions.

 

 

 

After completing Past Due Adjustments for the cycle, save
a list of the Account Numbers in Excel to be submitted to Credit Services so the PDA Not Eligible account flag can be added to
the account. Accounts with the PDA Not Eligible flag are not eligible for a Past Due Adjustment for six months after the flag is added.

 

Error Report....

 

If you get any of these error messages below you must use
the various STOREnet menus to be able to adjust these manually if needed:

 

Record ID Error

 

3219621170 The Master Plan to REVC1 must be an active plan
for the customer

 

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For the Error Report Past Due Adjustments, you will need to
use the Adjust Revolving Plans menu and manually adjust these accounts if applicable. You will need to use the Plan Deferment option for
the plans including the Master Plan to adjust the Past Due Payments.

 

 

    119

     

    

 

 

    120

     

    

 

 

 

684408278 Adjustment
amount is required

 

Most likely the account has an NSF in the history, so we
will need to clear that fee from the account.

 

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After adjusting the account manually
thru the Adjust Revolving Plans menu, we will need to clear the NSF fee remaining.

 

 

 

On the Manual Adjustments Tab, click on Reference, then select
Manual Credit Memo from the dropdown under the Type field.

 

Enter the amount that needs to be cleared (the NSF fee) as
a credit in the Adjustment Amount Field. (Ex -25.00)

 

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Select the green plus sign and Save.

 

Enter account number again in Maintain Customer Balances.

 

Go
to the Keyoffs tab.

 

 

    125

     

    

 

Double click on the Manual Credit menu and a check will appear
in the Keyoff box. Select the green plus sign.

 

 

    126

     

    

 

Then double click the revolving payment due and a check will
appear in the Pay box.

 

 

    127

     

    

 

Select the green plus sign and Save. This will clear the NSF
fee.

 

 

    128

     

    

 

6119122007 There are no revolving plans to defer

 

There is nothing to do when this error message is present.
These accounts will need to be deleted from the clean file.

 

 

 

For some accounts, you may need to make the customer active
in Advanced Customer Settings by removing the Inactive Date. Check for flags before removing this date. Make sure the Ok
to Solicit box is checked and make sure the Hold Statement is set to NO on the Receivables tab.

 

    129

     

    

 

After the Past Due has been adjusted, we will not make the
customer Inactive, we will keep the customer active.

 

 

 

Prior to adjusting the Past Due
for accounts when the Plan is closed, you will need to go to the Enter a Customer’s Terms and Conditions to make the Plan
Active, including the Master Plan.

 

We will not close the plans after the Past Due Adjustment
is done, we will keep the plans active.

 

 

    130

     

    

 

Exhibit A

 

W.S. Badcock Corporation Custom Risk
Model

 

    Ex A-1 

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

	Statistician:      
    Amy Fomo / Wes Bailey	Custom/Generic:	Custom
	Phone Number:	770-740-5078	Installation Environment:	On-line/Off-Line
	PSPS Number:	PSPS5378	Implementation Platform:	OMS/DP/Fusion

 	Score Name: Badcock
    Custom Model 	Score Range: 1-999
	SAS Name: 	Exclusion Score: 
	Performance Definition: 90+ dpd in 24 months 	 
	Number of Scorecards Included: 5	 

 

SECTION 1. REVISION HISTORY

 

	DATE	RVISION	SUBMITTED BY
	
    11/14/2016
	
    Original Version
	
    Amy Fomo

    Wes Bailey

	
    11/28/2016
	Updated scoring formula from score to MODEL SCORE and segmentation logic from .Z to missing	Meenal
	12/12/16	Add number of open trade to segmentation condition	Amy Fomo
	12/15/2016	Update parenthesis for appropriate condition(minimum criteria) in segment	Amy Fomo
	12/19/2016	Update scorecard4 and scorecard5	Amy Fomo
	12/20/2016	Update default values  scorecard2 and scorecard3	Amy Fomo
	12/22/2016	Update CLUAMT range on scorecard1	Amy Fomo
	12/28/2016	Update Reason codes	Amy Fomo
	
    5/24/2017
	
    Corrected RC in Section 8.1 Adverse
Action Statement from ’004’ and ’005’ to ‘O04’ and ‘O05’
	Meenal

 

    Page 1

     

    

 

SCORECARD SPECS TEMPLATE 

PROJECT NUMBER 05378 

MODEL SPECIFICATIONS

 

SECTION 2. REJECT CODES

 

Please output reject codes using the following hierarchy and
code:

 

Standard V5/V6 Reject Code:

 

	REJECT CODE	DESCRIPTION
	L0	Model Delivery is Not Available: Subject Deceased
	A1	Model Delivery is Not Available: File under Review
	R0	Model Delivery is Not Available: Insufficient Information to Score
	X1, X3, X5, X7	ACRO System Reject - Model Delivery is Temporarily Unavailable

 

	REJECT CODE	 	
    V5
	 	
    V6

	
     

    L0
	 	
    File contains any of the following:

     

    ■     Segment
    06 – Record Code DT (Death) – and – Valid Subject Death Date

     

    ■     Trade
    - and – Rate/Status Code = E (Consumer Deceased) or any Narrative Code = 256 (JD - Consumer Deceased)

     

    ■    Segment
    14 - Record Code CO and – Rate/Status Code = E (Consumer Deceased) or any Narrative Code = 256 (JD - Consumer
    Deceased)

     

    ■    
Segment 13 – Record Code BP - and – any Narrative Code =
256 (JD - Consumer Deceased)

     

    ■    
Segment 16 – Record Code LI - and – any Narrative Code =
256 (JD - Consumer Deceased)

     

    ■    
Segment 20 – Record Code TL - and – any Narrative Code =
256 (JD - Consumer Deceased)
	 	
    File contains any of the following:

     

    ■     Segment
06 – Record Code DT (Death) – and – Valid Subject Death Date

     

    ■     Trade
    - and – Rate/Status Code = E (Consumer Deceased) or any Narrative Code = 256 (JD - Consumer Deceased) or Account
    Designator = X (Deceased)

     

    ■     Segment
    14 - Record Code CO and – Rate/Status Code = E (Consumer Deceased) or any Narrative Code = 256 (JD - Consumer
    Deceased)

     

    ■     Segment
    13 – Record Code BP - and – any Narrative Code = 256 (JD - Consumer Deceased)

     

    ■     Segment
16 – Record Code LI - and – any Narrative Code = 256 (JD - Consumer Deceased)

     

    ■     Segment
20 – Record Code TL - and – any Narrative Code = 256 (JD - Consumer Deceased)

     

	
    

    A1
	 	
    Model Delivery is Not Available: File under Review

    (File Indicator)
	 	
    Model Delivery is Not Available: File under Review (File
    Indicator)

	
    R0
	 	
    File contains none of the following segments:

     

    · Trade
    Segment

    · Inquiry
    Segment

    · Collection
    Segment

    · Bankruptcy
    Segment

    · Legal
    Segment

    · Tax
    Lien Segment
	 	
    File contains none of the following segments:

     

    · Trade
    Segment

    · File
    Inquiry Segment

    · Collection
    Segment

    · Bankruptcy
    Segment

    · Legal
    Segment

    · Tax
    Lien Segment

	
    

    X1, X3, X5, X7
	 	
    These are ACRO System Rejects and are not coded into
    the model. Possible values are:

     

    X1: Model Delivery is Temporarily Unavailable - program
    not defined or in the system

     

    X3: Model Delivery is Temporarily Unavailable - too

    many inquiries on file

     

    X5: Model Delivery is Temporarily Unavailable -
    model needs input fields and none were provided

     

    X7: Model Delivery is Temporarily Unavailable – file cannot be scored
	 	
    These are ACRO System Rejects and are not coded into the
    model. Possible values are:

     

    X1: Model Delivery is Temporarily Unavailable - program
    not defined or in the system

     

    X3: Model Delivery is Temporarily Unavailable - too

    many inquiries on file

     

    X5: Model Delivery is Temporarily Unavailable - model needs
    input fields and none were provided

     

    X7: Model Delivery is Temporarily Unavailable – file

    cannot be scored

 

    Page 2

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378 

MODEL SPECIFICATIONS

 

Additional Rejects:

 

	REJECT

 CODE	 	
     

    DESCRIPTION
	 	
     

    CONDITION TO REJECT

	 	 	 	 	 
	 	 	 	 	 

	 	 	 	 	 

 

    Page 3

     

    

 

SCORECARD SPECS TEMPLATE

 PROJECT
NUMBER 05378

MODEL SPECIFICATIONS

 

 

SECTION3.

 

PROCESS FLOW
CHART

 

 

 

    Page 4

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

SECTION 4. SEGMENTATION

 

An elaborate analysis was conducted to identify best suited
segmentation for Badcock. Bankcard data was loaded into SAS eMiner and a series of decision trees were built. Approach of heuristic and
data driven segmentations were explored. After analyzing lift in KS and capture rates in the bottom 30% of the population the decision
was made to proceed with 5 segments: segment1, segment2, segment3, segment4 and segment5. Attributes that determine segmentation are listed
in the following sections.

 

4.1 List of Attributes in Segmentation

 

The table contains the attributes and scores that are needed
to determine the segmentation.

 

	
     

    SOURCE
	
     

    REF. #
	
     

    SAS NAME
	
     

    ATTRIBUTE DESCRIPTION
	
    DEFINE MISSING

    VALUES

	ADA	3376	V1	Number Revolving Trades Always Satisfactory	93-99
	ADA	3002	IQ24	Number Inquiries w/in 24 Months	93-99
	ADA	3215	PD	Number Trades w/ Past Due Amount > $0	93-99
	ADA	3001	IQ12	Number Inquiries w/in 12 Months	93-99
	ADA	3100	TD	Number Trades	93-97
	ADA	3795	CLU24	Number Unpaid 3rd Party Collections w/in 24 Months	93-99
	ADA	3902	BP24FLAG	Bankruptcy w/in 24 Months Flag	3-9
	XMA	1006	XMA1006	Number of Trades	93-99
	XMA	1011	XMA1011	Number of Number of Open Trades	93-99

  

4.2 Segmentation Criteria

 

There are five segments in this model. The segmentation is
defined in the following table.

 

	
    SEGMENT

    INDICATOR
	
     

    SEGMENT
	
     

    CONDITION

	Seg1	
    Number Revolving Trades
    always Satisfactory <3 or missing & Number of inquiries w/in 24 months <12 or missing and (at least one of collection,
    bankruptcy, trade or inquiry) or (at least one NC+ open trade)
	
    {ADA3376 <3 and
    ADA3002 <12 and ((ADA3100 is not missing) or (ADA3002 is not missing) or (ADA3795 is not missing) or (ADA3902 is not missing) or
    (XMA1006 is not missing and XMA1011>0))}

	Seg2	
    Number Revolving Trades
always Satisfactory <3 or missing & Number of inquiries w/in 24 months

    >=12
	ADA3376 <3 and ADA3002 >=12
	Seg3	
    Number Revolving Trades
always Satisfactory >=3 & Number Trades w/ Past Due Amount > $0

    >=1
	ADA3376 >= 3 and  ADA3215 >=1
	Seg4	
    Number Revolving Trades
    always Satisfactory >=3 & Number Trades w/ Past Due Amount > $0 <1 or missing & Number Inquiries w/in 12 months
    <5 or missing
	
    ADA3376 >= 3 and ADA3215
<1 and ADA3001 <5

	Seg5	
    Number Revolving Trades
    always Satisfactory >=3 & Number Trades w/ Past Due Amount > $0 <1 or missing & Number Inquiries w/in 12 months
    >=5
	
    ADA3376 >= 3 and ADA3215
<1 and ADA3001 >=5

 

    Page 5

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

SECTION 5. ATTRIBUTES IN MODEL

 

In the model development process multiple sets of attributes
were considered: ADA, Dimensions, RegZ and NC+ attributes. While reviewing the models it became apparent that overwhelming contribution
to the model is coming from ADA, RegZ and NC+ attributes. Only ADA, RegZ and NC+ attributes entered final model.

 

5.1 Attributes for Segment 1

 

5.1.1 List of Generic Attributes for Segment 1

 

The following attributes from existing sources are used in
the model.

 

	
     

    SOURCE
	
     

    REF. #
	
     

    SAS NAME
	
     

    ATTRIBUTE DESCRIPTION
	
    DEFINE MISSING

    VALUES

	ADA

 PSP5127	
     

    3743
	
     

    AMS3743
	
     

    MONTHS ON FILE
	
     

    9993-9999

	
    ADA

    PSP5127
	
     

    3101
	
     

    ATD
	
     

    Number of Auto Trades
	
     

    93-99

	
    ADA

    PSP5127
	
     

    3799
	
     

    CLUAMT
	
     

    Total Collection Amount Unpaid 3rd Party Collections
	
     

    9999993-9999999

	
    ADA

    PSP5127
	
     

    3104
	
     

    DTD
	
     

    Number Department Store Trades
	
     

    93-99

	
    ADA

    PSP5127
	
     

    3111
	
     

    OLDEST
	
     

    AGE OLDEST TRADE
	
     

    9993-9999

	ADA

 PSP5127	
     

    3761
	
     

    IMINDLAXPA
	
    AGE NEWEST DATE LAST
ACTIVITY INSTALLMENT TRADES OTHER THAN PAID AS AGREED
	
     

    9993-9999

	ADA

 PSP5127	
     

    3027
	
     

    IQ1
	
     

    NUMBER INQUIRIES W/IN 1 MONTH
	
     

    93-99

	ADA

 PSP5127	
     

    3011
	
     

    IQNU24
	
     

    NUMBER NON-UTILITY INQUIRIES W/IN 24 MONTHS
	
     

    93-99

	ADA

 PSP5127	
     

    3031
	
     

    IQUI24
	
     

    NUMBER UTILITY INQUIRIES W/IN 24 MONTHS
	
     

    93-99

	ADA

 PSP5127	
     

    3959
	
     

    IWST3PLUS
	
    NUMBER INSTALLMENT TRADES
WORST RATING EVER 60 DAYS PAST DUE OR WORSE
	
     

    93-99

	ADA

 PSP5127	
     

    3608
	
     

    IWST6
	
     

    Number Installment Trades Major Derogatory
	
     

    93-99

	ADA

 PSP5127	
     

    3755
	
     

    MINDLAPA
	
     

    Age Newest DLA Trds Paid As Agreed
	
     

    9993-9999

	
    ADA

    PSP5127
	
     

    3195
	
     

    MNEWEST
	
     

    Age Newest Mortgage Trade
	
     

    9993-9999

	
    ADA

    PSP5127
	
     

    3192
	
     

    OP3M
	
     

    Number Trades Opened w/in 3 Months
	
     

    93-99

	ADA

                                                                                PSP5127
	
     

    3972
	
     

    PCT2AWST7
	
     

    Percent Trades Unpaid Major Derogatory to Trades
	
     

    9.9993-9.9999

	
    ADA

    PSP5127
	
     

    3224
	
     

    VPD
	
     

    Number Revolving Trades w/ Past Due Amount >
    $0
	
     

    93-99

	
    ADA

    PSP5127
	
     

    3386
	
     

    VWST23
	
    Number Revolving Trades
Worst Rating 30 Days Past Due w/in 3 Months
	
     

    93-99

	ADA

 PSP5127	
     

    3307
	
     

    X424
	
     

    Number 90 Days Past Due Occurrences w/in 24 Months
	
     

    93-99

 

    Page 6

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

	
    RegZ

    PSPS2429
	
     

    6019
	
     

    REGZ_6019
	
     

    Other Revolving
Open to Buy
	
    N/A

	RegZ

 PSPS2429	
    6022
	
    REGZ_6022
	
    BANKCARD OPEN
TO BUY
	
    N/A

	
    XMA

    PSPS5098
	
    1162
	
     

    XMA1162
	
    Number of Months Since
the Most Recent Involuntary Disconnection
	
     

    993-999

	
    XMA

    PSPS5098
	
     

    1231
	
     

    XMA1231
	
    Number of Worst Ever
Satisfactory Trades Reported In Last 12 Months
	
     

    93-99

	
    XMA

    PSPS5098
	
     

    1251
	
     

    XMA1251
	
    Number of Worst Ever
60+ DPD Trades Reported In Last 3 Months
	
     

    93-99

	XMA

 PSPS5098	
     

    1414
	
     

    XMA1414
	
    Number of Months Since
the Most Recent Connection for Satisfactory Trades in the Last 6 Months
	
     

    993-999

 

    Page 7

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

5.2 Attributes for Segment 2

 

5.2.1 List of Generic Attributes for
Segment 2

 

The following attributes from existing sources are used in the model.

 

	
     

    SOURCE
	
     

    REF. #
	
     

    SAS NAME
	
     

    ATTRIBUTE DESCRIPTION
	DEFINE MISSING

 VALUES
	
    ADA

    PSP5127
	
     

    3743
	
     

    AMS3743
	
     

    MONTHS ON FILE
	
     

    9993-9999

	
    ADA

    PSP5127
	
     

    3760
	
     

    BMINDLAXPA
	
    AGE NEWEST DATE LAST
ACTIVITY BANKCARD TRADES OTHER THAN PAID AS AGREED
	
     

    9993-9999

	
    ADA

    PSP5127
	
     

    3848
	
     

    CBAL3T
	
    TOTAL BALANCE CREDIT
UNION TRADES W/UPDATE W/IN 3 MONTHS
	
     

    9999993-9999999

	ADA

                                                                                PSP5127
	
     

    3799
	
     

    CLUAMT
	
     

    Total Collection Amount Unpaid 3rd Party Collections
	
     

    9999993-9999999

	
    ADA

    PSP5127
	
     

    3026
	
     

    IQNU6
	
     

    NUMBER NON-UTILITY INQUIRIES W/IN 6 MONTHS
	
     

    93-99

	
    ADA

    PSP5127
	
     

    3031
	
     

    IQUI24
	
     

    NUMBER UTILITY INQUIRIES W/IN 24 MONTHS
	
     

    93-99

	
    ADA

    PSP5127
	
     

    3755
	
     

    MINDLAPA
	
     

    Age Newest DLA Trds Paid As Agreed
	
     

    9993-9999

	
     

    ADA

    PSP5127
	
     

     

    3759
	
     

     

    MINDLAXPA
	
     

    AGE NEWEST DATE LAST ACTIVITY
    TRADES OTHER THAN PAID AS AGREED
	
     

    9993-9999

	ADA

                                                                                PSP5127
	
     

    3864
	
     

    PCT2ASAT
	
     

    PERCENT TRADES ALWAYS SATISFACTORY TO TRADES
	
     

    9.9993-9.9999

	
    ADA

    PSP5127
	
     

    3215
	
     

    PD
	
     

    Number Trades w/ Past Due Amount > $0
	
     

    93-99

	
    ADA

    PSP5127
	
     

    3723
	
     

    TBG50HC3
	
    NUMBER OPEN RETAIL TRADES
W/ UPDATE W/IN 3 MONTHS W/ BALANCE >= 50% HIGH CREDIT
	
     

    93-99

	
    ADA

    PSP5127
	
     

     

    3845
	
     

    VOP6M2VTD
	
     

    PERCENT REVOLVING TRADES
    OPENED W/IN 6 MONTHS TO REVOLVING TRADES
	
     

    9.9993-9.9999

	
    RegZ

    PSPS2429
	
     

    6022
	
     

    REGZ_6022
	
     

    BANKCARD OPEN TO BUY
	
     

    N/A

	
    XMA

    PSPS5098
	
     

    1186
	
     

    XMA1186
	
    NUMBER OF SATISFACTORY
OCCURRENCES REPORTED IN LAST 12 MONTHS
	
     

    93-99

	
    XMA

    PSPS5098
	
     

    1206
	
     

    XMA1206
	
    NUMBER OF 60 DPD OCCURRENCES
REPORTED IN LAST 3 MONTHS
	
     

    93-99

 

    Page 8

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

5.3 Attributes for Segment 3

 

5.3.1 List of Generic Attributes for Segment 3

 

The following attributes from existing sources are used in
the model.

 

	
     

    SOURCE
	
     

    REF. #
	
     

    SAS NAME
	
     

    ATTRIBUTE DESCRIPTION
	DEFINE MISSING

 VALUES
	
    ADA

    PSP5127
	
     

    3743
	
     

    AMS3743
	
     

    MONTHS ON FILE
	
     

    9993-9999

	
    ADA

    PSP5127
	
     

    3912
	
     

    CLAMT24
	
    TOTAL COLLECTION AMOUNT
3RD PARTY COLLECTIONS W/IN 24 MONTHS
	
     

    9999993-9999999

	
    ADA

    PSP5127
	
     

    3152
	
     

    DBG03
	
    NUMBER DEPARTMENT STORE
TRADES W/UPDATE W/IN 3 MONTHS W/ BALANCE > $0
	
     

    93-99

	ADA

                                                                                PSP5127
	
     

    3002
	
     

    IQ24
	
     

    Number Inquiries Within 24 Months
	
     

    93-99

	
    ADA

    PSP5127
	
     

    3383
	
     

    IWST23
	
    NUMBER INSTALLMENT TRADES
WORST RATING 30 DAYS PAST DUE W/IN 3 MONTHS
	
     

    93-99

	
    ADA

    PSP5127
	
     

    3759
	
     

    MINDLAXPA
	
    AGE NEWEST DATE LAST
ACTIVITY TRADES OTHER THAN PAID AS AGREED
	
     

    9993-9999

	
    ADA

    PSP5127
	
     

    3177
	
     

    MTD
	
     

    NUMBER MORTGAGE TRADES
	
     

    93-99

	
    ADA

    PSP5127
	
     

    3111
	
     

    OLDEST
	
     

    AGE OLDEST TRADE
	
     

    9993-9999

	
    ADA

    PSP5127
	
     

    3844
	
     

    OP12M2TD
	
    PERCENT TRADES OPENED
W/IN 12 MONTHS TO TRADES
	
     

    9.9993-9.9999

	
    ADA

    PSP5127
	
     

    3865
	
     

    PCT2ASAT3M
	
    PERCENT TRADES SATISFACTORY
W/IN 3 MONTHS TO TRADES REPORTED W/IN 3 MONTHS
	
     

    9.9993-9.9999

	ADA

 PSP5127	
     

    3215
	
     

    PD
	
     

    Number Trades w/ Past Due Amount > $0
	
     

    93-99

	
    ADA

    PSP5127
	
     

    3858
	
     

    PRNIOP3
	
    PERCENT BALANCE TO TOTAL
LOAN AMOUNT OPEN INSTALLMENT TRADES W/UPDATE W/IN 3 MONTHS
	
     

    9.9993-9.9999

	
    ADA

    PSP5127
	
     

    3257
	
     

    V26
	
    NUMBER 30 DAYS PAST
DUE OCCURRENCES W/IN 6 MONTHS REVOLVING TRADES
	
     

    93-99

	
    ADA

    PSP5127
	
     

    3194
	
     

    VOP12M
	
    NUMBER REVOLVING TRADES
OPENED W/IN 12 MONTHS
	
     

    93-99

	ADA

 PSP5127	
     

    3845
	
     

    VOP6M2VTD
	
    PERCENT REVOLVING TRADES
OPENED W/IN 6 MONTHS TO REVOLVING TRADES
	
     

    9.9993-9.9999

	
    RegZ

    PSPS2429
	
     

    6019
	
     

    REGZ_6019
	
     

    Other Revolving Open to Buy
	
     

    N/A

	
    RegZ

    PSPS2429
	
     

    6022
	
     

    REGZ_6022
	
     

    BANKCARD OPEN TO BUY
	
     

    N/A

	
     

    XMA

 PSPS5098
	
     

     

    1061
	
     

     

    XMA1061
	
    AVERAGE OF TRADE LEVEL
AVERAGE OPEN BALANCES IN LAST 6 MONTHS ON NON- DEROGATORY TRADES
	
     

     

    999993-999999

	XMA

 PSPS5098	
     

    1091
	
     

    XMA1091
	
    SUM OF CURRENT BALANCES
REPORTED IN LAST 6 MONTHS ON DEROGATORY ACCOUNTS
	
     

    999993-999999

	
    XMA

    PSPS5098
	
     

    1394
	
     

    XMA1394
	
    NUMBER OF MONTHS SINCE
THE OLDEST CONNECTION SATISFACTORY TRADES
	
     

    993-999

 

    Page 9

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

5.4 Attributes for Segment 4

 

5.4.1 List of Generic Attributes for Segment 4

 

The following attributes from existing sources are used in
the model.

 

	
     

    SOURCE
	
     

    REF. #
	
     

    SAS NAME
	
     

    ATTRIBUTE DESCRIPTION
	DEFINE MISSING

 VALUES
	
    ADA

    PSPS5127
	3270	B224	
    Number 30 Days Past
Due Occurrences w/in 24 Months Bankcard Trades
	93-99
	
    ADA

    PSPS5127
	3909	CL	Number 3rd Party Collections	93-99
	
    ADA

    PSPS5127
	3024	IQ6	Number of Inquiries w/in 6 Months	93-99
	ADA

 PSPS5127	3864	PCT2ASAT	Percent Trades Always Satisfactory to Trades	9.9993-9.9999
	ADA

 PSPS5127	3177	MTD	Number of Mortgage Trades	93-99
	
    ADA

    PSPS5127
	3008	IQNU1	Number Non-Utility Inquiries w/in 1 Month	93-99
	ADA

 PSPS5127	
     

    3257
	
     

    V26
	
    Number 30 Days Past
Due Occurrences w/in 6 Months Revolving Trades
	
     

    93-99

	ADA

 PSPS5127	
     

    3724
	
     

    VBG50HC3
	
    Number Open Revolving
Trades w/ Update w/in 3 Months w/ Balance >= 50% High Credit
	
     

    93-99

	
    ADA

    PSPS5127
	3113	BOLDEST	Age Oldest Bankcard Trade	9993 - 9999
	
    ADA

    PSPS5127
	3844	OP12M2TD	Percent Trades Opened w/in 12 Months to Trades	9.9993 – 9.9999
	ADA

 PSPS5127	
     

    3856
	
     

    UTLVOP3
	
    Percent Balance to High
Credit Open Revolving Trades w/Update w/in 3 Months
	
     

    9.9993 – 9.9999

	ADA

 PSPS5127	
     

    3208
	
     

    VHCOP3M
	
    Total High Credit Open
Revolving Trades w/Update w/in 3 Months
	
     

    9999993 - 9999999

	
    XMA

    PSPS5098
	1394	XMA1394	
    Number of Months Since
the Oldest Connection Satisfactory Trades
	993-999

 

 

    Page 10

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

5.5 Attributes for Segment 5

 

5.5.1 List of Generic Attributes for Segment 5

 

The following attributes from existing sources are used in
the model.

 

	
     

    SOURCE
	
     

    REF. #
	
     

    SAS NAME
	
     

    ATTRIBUTE DESCRIPTION
	
    DEFINE MISSING

    VALUES

	
    ADA

    PSPS5127
	
     

    3002
	IQ24	Number Inquiries w/in 24 Months	
     

    93-99

	
    ADA

    PSPS5127
	
     

    3266
	V212	
    Number 30 Days Past
Due Occurrences w/in 12 Months Revolving Trades
	
     

    93-99

	
    ADA

    PSPS5127
	
     

    3120
	VOLDEST	Age Oldest Revolving Trade	
     

    9993 - 9999

	
    ADA

    PSPS5127
	
     

    3101
	ATD	Number of Auto Trades	
     

    93-99

	
    ADA

    PSPS5127
	
     

    3907
	CL12	Number 3rd Party Collections w/in 12 Months	
     

    93-99

	ADA

 PSPS5127	
     

    3866
	PCT2ABSAT3M	
    Percent Bankcard Trades
Satisfactory w/in 3 Months to Bankcard Trades Reported w/in 3 Months
	
     

    9.9993 – 9.9999

	ADA

 PSPS5127	
     

    3856
	UTLVOP3	Percent
    Balance to High Credit Open Revolving Trades w/Update w/in 3 Months	
     

    9.9993 – 9.9999

	ADA

 PSPS5127	
     

    3208
	VHCOP3M	Total
    High Credit Open Revolving Trades w/Update w/in 3 Months	
     

    9999993 - 9999999

	
    ADA

    PSPS5127
	
     

    3743
	AMS3743	Months on File	
     

    9993 - 9999

	
    ADA

    PSPS5127
	
     

    3845
	VOP6M2VTD	
    Percent Revolving Trades
Opened w/in 6 Months to Revolving Trades
	
     

    9.9993 – 9.9999

	
     

     

    ADA

 PSPS5127
	
     

     

    3943
	
     

    PCT2AWST5PLUS6M
	
    Percent Trades Worst
Rating 120-180 or More Days Past Due or Worse w/in 6 Months or Major Derogatory Event w/in 24 Months to Trades Reported w/in 6

    Months
	
     

     

    9.9993 – 9.9999

	
    ADA

    PSPS5127
	
     

    3166
	PBAL3	
    Total Balance Open Personal
Finance and Student Loan Trades w/Update w/in 3 Months
	
     

    9999993 - 9999999

	XMA

 PSPS5098	
     

    1091
	
     

    XMA1091
	
    Sum of Current Balances
Reported in Last 6 Months on Derogatory Accounts
	
     

    999993-999999

	
    XMA

    PSPS5098
	
     

    1392
	XMA1392	Number of Involuntary Disconnection in Last 3 Months	
     

    93 – 99

	
    RegZ

    PSPS2429
	
     

    6019
	
     

    REGZ_6019
	
     

    Other Revolving Open to Buy
	
     

    N/A

	
    RegZ

    PSPS2429
	
     

    6056
	
     

    REGZ_6056
	
     

    Bankcard High Credit
	
     

    N/A

 

    Page 11

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

SECTION 6. SCORECARD CALCULATION

 

Logistic regression methodology was used to build models.
Variables were treated to be continuous and binned type. Below are the coefficients and reason codes produced by each variable.

 

6.1 SCORECARD 1:

 

	
     

    ATTRIBUTE
	
     

    SOURCE
	
    REF.

    #
	
     

    SASNAME
	
     

    INTERVAL
	
     

    POINTS
	
    MAXIMUM

    POINTS
	
    REASON

    CODE

	Constant	 	 	 	 	0.4603	 	 
	
    Months on File
	
    ADA PSPS5127
	
    3743
	
    AMS3743
	
    0

    1-315

    316-376

    377-9992

    9993-9999
	
    0

    0

    0.2473

    0.4292

    0
	
    0.4292
	
    327

    327

    327

    Block

    287

	
    Number of Auto Trades
	
    ADA PSPS5127
	
    3101
	
    ATD
	
    0

    1-3

    4-92

    93-99
	
    0

    0

    0.2725

    0
	
    0.2725
	
    305

    305

    Block

    305

	
    Total Collection
Amount Unpaid

    3rd Party Collections
	
    ADA PSPS5127
	
    3799
	
    CLUAMT
	
    0

    1-2667

    2668-7378

    7379-9999992

    9999993-9999999
	
    0

    0

    -0.314

    -0.4374

    0
	
    0
	
    Block

    Block

    352

    352

    Block

	
    Number Department Store
Trades
	
    ADA PSPS5127
	
    3104
	
    DTD
	
    0

    1-2

    3-92

    93-99
	
    0

    0.2008*( DTD)

    0.6024

    0
	
    0.6024
	
    110

    110

    Block

    110

	
    AGE OLDEST TRADE
	
    ADA PSPS5127
	
     3111
	
    OLDEST
	
    0

    1-151

    152-229

    230-9992

    9993-9999
	
    0

    0

    0.1032

    0.1470

    0
	
    0.1470
	
    80

    80

    80

    Block

    299

	AGE NEWEST DATE LAST ACTIVITY INSTALLMENT TRADES OTHER THAN PAID AS AGREED	
    ADA PSPS5127
	
    3761
	
    IMINDLAXPA
	
    0

    1-32

    33-9992

    9993-9999
	
    -0.3671

    -0.3671

    0

    0
	
    0
	
    70

    70

    Block

    Block

	
    NUMBER INQUIRIES
W/IN 1

    MONTH
	
    ADA PSPS5127
	
    3027
	
    IQ1
	
    0

    1-4

    5-92

    93-99
	
    0

    -0.1234*(IQ1)

    -0.6170

    0
	
    0
	
    Block

    154

    154

    Block

	
     

    NUMBER NON-UTILITY INQUIRIES W/IN 24 MONTHS
	
    ADA PSPS5127
	
    3011
	
    IQNU24
	
    0-1

    2-9

    10-92

    93-99
	
    0.1463

    0

    -0.2525

    0.1463
	
    0.1463
	
    Block

    304

    304

    Block

	
    NUMBER UTILITY INQUIRIES
W/IN

    24 MONTHS
	
    ADA PSPS5127
	
    3031
	
    IQUI24
	
    0

    1-5

    6-92

    93-99
	
    0

    -0.3833*( IQUI24)**1/2

    -0.9389

    0
	
    0
	
    Block

    302

    302

    Block

	
    NUMBER INSTALLMENT TRADES

    WORST RATING EVER 60 DAYS PAST DUE OR WORSE
	ADA PSPS5127	
    3959
	
    IWST3PLUS
	
    0

    1-92

    93-99
	
    0.1417

    0

    0
	
    0.1417
	
    Block

    129

    129

	
    Number Installment Trades Major

    Derogatory
	
    ADA PSPS5127
	
    3608
	
    IWST6
	
     

    0

    1-7

    8-92

    93-99
	
    0

    -0.0633*(IWST6)

    -0.5064

    0
	
    0
	
    Block

    136

    136

    Block

	
    Age Newest DLA Trds Paid As

    Agreed
	ADA PSPS5127	3755	MINDLAPA	
    0

    1-111
	
    0

    -0.00312*( MINDLAPA)
	0	
    Block

    79

 

    Page 12

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378 

MODEL SPECIFICATIONS

 

	 	 	 	 	
    112-9992

    9993-9999
	
    -0.3494

    0
	 	
    79

    Block

	
     

    Age Newest Mortgage Trade
	ADA

 PSPS5127	
     

    3195
	
     

    MNEWEST
	
    0

    1-9992

    9993-9999
	
    0

    0

    -0.2717
	
     

    0
	
    Block

    Block

    294

	
     

    Number Trades Opened w/in 3

    Months
	
     

    ADA

 PSPS5127
	
     

    3192
	
     

    OP3M
	
    0

    1-2

    3-92

    93-99
	
    0

    -0.1925*( OP3M)

    -0.5775

    0
	
     

    0
	
    Block

    199

    199

    Block

	
     

    Percent Trades Unpaid Major

    Derogatory to Trades
	
     

    ADA

 PSPS5127
	
     

    3972
	
     

    PCT2AWST7
	
    0

    0.0001-0.3947

    0.3948--9.9992

    9.9993-9.9999
	
    0

    -0.2321

    -0.2669

    0
	
     

    0
	
    Block

    41

    41

    Block

	
    Number Revolving Trades w/ Past

    Due Amount > $0
	ADA

 PSPS5127	
     

    3224
	
     

    VPD
	
    0

    1-92

    93-99
	
    0.2137

    0

    0.2137
	
     

    0.2137
	
    Block

    176

    Block

	
    Number Revolving Trades Worst

    Rating 30 Days Past Due w/in 3

    Months
	ADA

 PSPS5127	
     

    3386
	
     

    VWST23
	
    0

    1-92

    93-99
	
    0

    -0.5452

    0
	
     

    0
	
    Block

    169

    Block

	
     

    Number 90 Days Past Due

    Occurrences w/in 24 Months
	
     

    ADA

 PSPS5127
	
     

    3307
	
     

    X424
	
    0

    1-12

    13-92

    93-99
	
    0

    -0.0245*( X424)

    -0.3185

    0
	
     

    0
	
    Block

    60

    60

    Block

	
     

    Other Revolving Open to Buy
	
     

    RegZ

 PSPS2429
	
     

    6019
	
     

    REGZ_6019
	
    Missing

    <=0

    1-2599

    2600+
	
    0

    0

    0.0103 *( REGZ_6019)**1/2

    0.5252
	
     

    0.5252
	
    G02

    O04

    O04

    Block

	
     

     

    BANKCARD OPEN TO BUY
	
     

     

    RegZ

 PSPS2429
	
     

     

    6022
	
     

     

    REGZ_6022
	
    Missing

    <=0

    1-39

    40-100

    101-1000

    1001+
	
    0

    0

    0

    0.3753

    0.6991

    1.2506
	
     

     

    1.2506
	
    G01

    O05

    O05

    O05

    O05

    Block

	Number of Months Since the Most Recent Involuntary Disconnection	
     

    XMA

 PSPS5098
	
     

    1162
	
     

    XMA1162
	
    0

    1-10

    11-992

    993-999
	
    -0.1903

    -0.1903

    0

    0
	
     

    0
	
    A14

    A14

    Block

    Block

	Number of Worst Ever Satisfactory Trades Reported In Last 12 Months	
     

    XMA

 PSPS5098
	
     

    1231
	
     

    XMA1231
	
    0

    1-2

    3-92

    93-99
	
    0

    0.398*( XMA1231)

    1.1940

    0
	
     

    1.1940
	
    A21

    A21

    Block

    A21

	Number of Worst Ever 60+ DPD Trades Reported In Last 3 Months	XMA

 PSPS5098	
     

    1251
	
     

    XMA1251
	
    0

    1-92

    93-99
	
    0

    -0.2942

    0
	
     

    0
	
    Block

    Y21

    Block

	
    Number of Months Since the Most Recent Connection
    for Satisfactory Trades in the Last 6

    Months
	
     

    XMA

 PSPS5098
	
     

    1414
	
     

    XMA1414
	
    0

    1-282

    283-992

    993-999
	
    0

    0.0044*( XMA1414)

    1.2452

    0
	
     

    1.2452
	
    Y27

    Y27

    Block

    Y51

 

	MODEL SCORE =	1000 *	e
    Points	 
	 	 	1 + e Points	 

 

Rounding and Capping Instruction:

 

Round MODEL SCORE to nearest whole number.

 

	EQUALIZATION SCORE =	0.0000001581* MODEL SCORE * MODEL SCORE * MODEL SCORE + 0.0006049921* MODEL SCORE * MODEL SCORE - 0.0286058749* MODEL SCORE + 100.5434620780

 

Round EQUALIZATION SCORE to nearest whole number.

 

If EQUALIZATION SCORE <100 then EQUALIZATION SCORE=100;
If EQUALIZATION SCORE >832 then EQUALIZATION SCORE=832;

 

    Page 13

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

6.2 SCORECARD 2:

 

	
     

    ATTRIBUTE
	
     

    SOURCE
	
    REF.

    #
	
     

    SASNAME
	
     

    INTERVAL
	 	
    MAXIMUM

    POINTS
	
    REASON

    CODE

	POINTS
	Constant	 	 	 	 	-0.0728	 	 
	
     

     

    Months on File
	
     

    ADA PSPS5127
	
     

     

    3743
	
     

     

    AMS3743
	
    0

    1-253

    254-393

    394-9992

    9993-9999
	
    -0.2023

    -0.2023

    0

    0.3801

    0
	
     

     

    0.3801
	
    327

    327

    327

    Block

    287

	AGE NEWEST DATE LAST ACTIVITY BANKCARD TRADES OTHER THAN PAID AS AGREED	
     

    ADA PSPS5127
	
     

    3760
	
     

    BMINDLAXPA
	
    0

    1-2

    3-9992

    9993-9999
	
    -0.4638

    -0.4638

    0

    0
	
     

    0
	
    67

    67

    Block

    Block

	
    TOTAL BALANCE CREDIT UNION TRADES W/UPDATE W/IN
    3

    MONTHS
	
     

    ADA PSPS5127
	
     

    3848
	
     

    CBAL3T
	
    0

    1-8743

    8744-9999992

    9999993-9999999
	
    0

    0

    0.4193

    0
	
     

    0.4193
	
    215

    215

    Block

    291

	
     

    Total Collection Amount Unpaid

    3rd Party Collections
	
     

    ADA PSPS5127
	
     

    3799
	
     

    CLUAMT
	
    0

    1-11366

    11367-9999992

    9999993-9999999
	
    0

    0

    -0.2944

    0
	
     

    0
	
    Block

    Block

    352

    Block

	
     

    NUMBER NON-UTILITY INQUIRIES W/IN 6 MONTHS
	
     

    ADA PSPS5127
	
     

    3026
	
     

    IQNU6
	
    0

    1-14

    15-92

    93-99
	
    0

    0

    -0.5285

    0
	
     

    0
	
    Block

    Block

    303

    Block

	
     

    NUMBER UTILITY INQUIRIES W/IN

    24 MONTHS
	
     

    ADA PSPS5127
	
     

    3031
	
     

    IQUI24
	
    0

    1-11

    12-92

    93-99
	
    0

    -0.3009*LN( IQUI24+1)

    -0.7718

    0
	
     

    0
	
    Block

    302

    302

    Block

	
     

    Age Newest DLA Trds Paid As

    Agreed
	
     

    ADA PSPS5127
	
     

    3755
	
     

    MINDLAPA
	
    0

    1-17

    18-9992

    9993-9999
	
    0

    0

    -0.3158

    0
	
     

    0
	
    Block

    Block

    79

    Block

	AGE NEWEST DATE LAST ACTIVITY TRADES OTHER THAN PAID AS AGREED	
     

    ADA PSPS5127
	
     

    3759
	
     

    MINDLAXPA
	
    0

    1-50

    51-9992

    9993-9999
	
    0

    0

    0.4018

    0
	
     

    0.4018
	
    79

    79

    Block

    299

	
     

    PERCENT TRADES ALWAYS SATISFACTORY TO TRADES
	
     

    ADA PSPS5127
	
     

    3864
	
     

    PCT2ASAT
	
    0

    0.0001-0.9399

    0.94-9.9992

    9.9993-9.9999
	
    0

    0

    0.2569

    0
	
     

    0.2569
	
    40

    40

    Block

    299

	
     

    Number Trades w/ Past Due

    Amount > $0
	
     

    ADA PSPS5127
	
     

    3215
	
     

    PD
	
    0

    1-2

    3-92

    93-99
	
    0.2897

    0

    -0.1955

    0
	
     

    0.2897
	
    Block

    200

    200

    200

	
     

    NUMBER OPEN RETAIL TRADES W/ UPDATE W/IN 3

    MONTHS W/ BALANCE >= 50% HIGH CREDIT
	
     

     

    ADA PSPS5127
	
     

     

    3723
	
     

     

    TBG50HC3
	
     

     

    0

    1-92

    93-99
	
     

     

    0.5502

    0

    0
	
     

     

    0.5502
	
     

     

    Block

    164

    164

 

    Page 14

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378 

MODEL SPECIFICATIONS

 

	
    PERCENT REVOLVING TRADES

    OPENED W/IN 6 MONTHS TO

    REVOLVING TRADES
	
     

    ADA PSPS5127
	
     

    3845
	
     

    VOP6M2VTD
	
    0

    0.0001-9.9992

    9.9993-9.9999
	
    0.4549

    0

    0.4549
	
     

    0.4549
	
    Block

    26

    Block

	
     

     

    BANKCARD OPEN TO BUY
	
     

    RegZ PSPS2429
	
     

     

    6022
	
     

     

    REGZ_6022
	
    Missing

    <=0

    1-23

    24-295

    296+
	
    0

    0

    0

    0.4446

    0.7698
	
     

     

    0.7698
	
    G01

    O05

    O05

    O05

    Block

	NUMBER OF SATISFACTORY OCCURRENCES REPORTED IN LAST 12 MONTHS	
     

    XMA PSPS5098
	
     

    1186
	
     

    XMA1186
	
    0

    1-9

    10-92

    93-99
	
    0

    0

    0.6759

    0
	
     

    0.6759
	
    A16

    A16

    Block

    Y92

	
    NUMBER OF 60 DPD

    OCCURRENCES REPORTED IN LAST 3 MONTHS
	
     

    XMA PSPS5098
	
     

    1206
	
     

    XMA1206
	
    0

    1-92

    93-99
	
    0

    -0.3412

    0
	
     

    0
	
    Block

    A19

    Block

 

	MODEL SCORE =	1000 *	e
    Points	 
	 	 	1 + e Points	 

 

Round MODEL SCORE to nearest whole number.

 

	EQUALIZATION SCORE =	0.0000000391* MODEL SCORE* MODEL SCORE * MODEL SCORE + 0.0005274592* MODEL SCORE * MODEL SCORE - 0.1087483747* MODEL SCORE + 65.4440128765

 

Round EQUALIZATION SCORE to nearest whole number.

 

If EQUALIZATION SCORE <62 then EQUALIZATION SCORE=62;

 

If EQUALIZATION SCORE >506 then EQUALIZATION SCORE=506;

 

    Page 15

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378 

MODEL SPECIFICATIONS

 

6.3 SCORECARD 3:

 

	
     

    ATTRIBUTE
	
     

    SOURCE
	
    REF.

    #
	
     

    SASNAME
	
     

    INTERVAL
	
     

    POINTS
	MAXIMUM POINTS	REASON CODE
	Constant	 	 	 	 	0.9154	 	 
	
     

    Number Inquiries Within 24

    Months
	
     

    ADA PSPS5127
	
     

    3002
	
     

    IQ24
	
    0

    1-39

    40-92

    93-99
	
    0

    -0.4117*LN(IQ24+1)

    -1.5289

    0
	
     

    0
	
    Block

    123

    123

    Block

	
     

     

    Months on File
	
     

     

    ADA PSPS5127
	
     

     

    3743
	
     

     

    AMS3743
	
    0

    1-323

    324-406

    407-419

    420-9992

    9993-9999
	
    0

    0

    0.4303

    0.515

    0.5462

    0
	 

     

    0.5462
	327

    327

    327

    327

    Block

    287

	
    TOTAL COLLECTION AMOUNT 3RD PARTY COLLECTIONS
    W/IN 24

    MONTHS
	
     

    ADA PSPS5127
	
     

    3912
	
     

    CLAMT24
	
    0

    1-30

    31-9999992

    9999993-9999999
	
    0.3251

    0.3251

    0

    0.32510
	
     

    0.3251
	
    Block

    Block

    224

    Block

	
    NUMBER DEPARTMENT STORE TRADES W/UPDATE W/IN 3

    MONTHS W/ BALANCE > $0
	
     

    ADA PSPS5127
	
     

    3152
	
     

    DBG03
	
    0

    1

    2-92

    93-99
	
    0

    0

    0.4016

    0
	
     

    0.4016
	
    120

    120

    Block

    120

	
    NUMBER INSTALLMENT TRADES

    WORST RATING 30 DAYS PAST DUE W/IN 3 MONTHS
	ADA PSPS5127	
     

    3383
	
     

    IWST23
	
    0

    1-92

    93-99
	
    0

    -0.3333

    0
	
     

    0
	
    Block

    127

    Block

	
    AGE NEWEST DATE
LAST ACTIVITY TRADES OTHER THAN PAID AS AGREED
	
     

    ADA PSPS5127
	
     

     

    3759
	
     

     

    MINDLAXPA
	
    0

    1-42

    43-66

    67-9992

    9993-9999
	
    0

    0

    0.3609

    0.4944

    0
	
     

     

    0.4944
	
    79

    79

    79

    Block

    299

	
     

     

    NUMBER MORTGAGE TRADES
	
     

    ADA PSPS5127
	
     

     

    3177
	
     

     

    MTD
	
    0

    1-2

    3-4

    5-92

    93-99
	
    0

    0

    0.2892

    0.4555

    0
	
     

     

    0.4555
	
    308

    308

    308

    Block

    308

	
     

    AGE OLDEST TRADE
	
     

    ADA PSPS5127
	
     

    3111
	
     

    OLDEST
	
    0

    1-87

    88-9992

    9993-9999
	
    -0.3894

    -0.3894

    0

    -0.3894
	
     

     

    0
	
    80

    80

    Block

    299

	
     

    PERCENT TRADES OPENED W/IN

    12 MONTHS TO TRADES
	
     

    ADA PSPS5127
	
     

    3844
	
     

    OP12M2TD
	
    0

    0.0001-0.0491

    0.0492-9.9992

    9.9993-9.9999
	
    0.2243

    0.2243

    0

    0.2243
	
     

    0.2243
	
    Block

    Block

    37

    Block

	
     

     

    PERCENT TRADES SATISFACTORY W/IN 3 MONTHS TO TRADES
    REPORTED W/IN 3 MONTHS
	
     

     

    ADA PSPS5127
	
     

     

    3865
	
     

     

    PCT2ASAT3M
	
    0

    0.0001-0.2

    0.2001-0.25

    0.2501-0.4736

    0.4737-0.619

    0.6191-9.9992

    9.9993-9.9999
	
    -0.7294

    -0.7294

    -0.5177

    -0.3529

    -0.2664

    0

    -0.7294
	
     

     

    0
	
    40

    40

    40

    40

    40

    Block

    299

	
     

    Number Trades w/ Past Due

    Amount > $0
	
     

    ADA PSPS5127
	
     

    3215
	
     

    PD
	
    0

    1

    2-92

    93-99
	
    0.2643

    0.2643

    0

    0.2643
	
     

    0.2643
	
    Block

    Block

    200

    Block

    Page 16

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378 

MODEL SPECIFICATIONS

	PERCENT BALANCE TO TOTAL LOAN AMOUNT OPEN INSTALLMENT TRADES W/UPDATE W/IN 3 MONTHS	
     

    ADA PSPS5127
	
     

     

    3858
	
     

     

    PRNIOP3
	
    0

    0.0001-0.9356

    0.9357-1.0808

    1.0809-9.9992

    9.9993-9.9999
	
    0

    0

    -0.3331

    -0.4275

    0
	
     

     

    0
	
    Block

    Block

    12

    12

    Block

	
     

    NUMBER 30 DAYS PAST DUE OCCURRENCES W/IN 6 MONTHS
    REVOLVING TRADES
	
     

    ADA PSPS5127
	
     

     

    3257
	
     

     

    V26
	
    0

    1-2

    3-6

    7-92

    93-99
	
    0

    -0.3824

    -0.4690

    -0.9232

    0
	
     

     

    0
	
    Block

    53

    53

    53

    Block

	
     

    NUMBER REVOLVING TRADES OPENED W/IN 12 MONTHS
	
     

    ADA PSPS5127
	
     

     

    3194
	
     

     

    VOP12M
	
    0

    1-3

    4-5

    6-92

    93-99
	
    0

    0

    -0.4027

    -0.5167

    0
	
     

     

    0
	
    Block

    Block

    175

    175

    Block

	
     

    PERCENT REVOLVING TRADES OPENED W/IN 6 MONTHS
    TO REVOLVING TRADES
	
     

     

    ADA PSPS5127
	
     

     

    3845
	
     

     

    VOP6M2VTD
	
    0

    0.0001-0.0968

    0.0969-0.4167

    0.4168-0.6667

    0.6668-9.9992

    9.9993-9.9999
	
    0.3767

    0.3767

    0

    -0.6384

    -1.1489

    0.3767
	
     

     

    0.3767
	
    Block

    Block

    26

    26

    26

    Block

	
     

     

    Other Revolving Open to Buy
	
     

    RegZ PSPS2429
	
     

     

    6019
	
     

     

    REGZ_6019
	
    Missing

    <=0

    1-167

    168-6640

    6641+
	
    -0.3004

    -0.3004

    -0.3004

    0

    0.4346
	
     

     

    0.4346
	
    G02

    O04

    O04

    O04

    Block

	
     

    BANKCARD OPEN TO BUY
	
     

    RegZ PSPS2429
	
     

    6022
	
     

    REGZ_6022
	
    Missing

    <=0

    1-19

    20+
	
    -0.5205

    -0.5205

    -0.5205

    0
	
     

    0
	
    G01

    O05

    O05

    Block

	
    AVERAGE OF TRADE LEVEL

    AVERAGE OPEN BALANCES IN LAST 6 MONTHS ON NON-
    DEROGATORY TRADES
	
     

    XMA PSPS5098
	
     

     

    1061
	
     

     

    XMA1061
	
    0

    1-556.59

    556.6-999992

    999993-999999
	
    0

    0

    -0.8432

    0
	
     

     

    0
	
    Block

    Block

    Y35

    Block

	SUM OF CURRENT BALANCES REPORTED IN LAST 6 MONTHS ON DEROGATORY ACCOUNTS	
     

    XMA PSPS5098
	
     

    1091
	
     

    XMA1091
	
    0

    1-992.16

    992.17-999992

    999993-999999
	
    0

    0

    -0.5183

    0
	
     

    0
	
    Block Block Y63

    Block

	
     

    NUMBER OF MONTHS SINCE THE OLDEST CONNECTION SATISFACTORY
    TRADES
	
     

    XMA PSPS5098
	
     

     

    1394
	
     

     

    XMA1394
	
    0

    1-53

    54-183

    184-992

    993-999
	
    0

    0

    0.3379

    0.642

    0
	
     

     

    0.642
	
    Y74

    Y74

    Y74

    Block

    Y56

 

	MODEL SCORE =	1000 *	e
    Points	 
	 	 	1 + e Points	 

 

Round MODEL SCORE to nearest whole number.

 

	EQUALIZATION SCORE =	0.0000018063* MODEL SCORE * MODEL SCORE * MODEL SCORE - 0.0018395141* MODEL SCORE * MODEL SCORE + 1.1058060414* MODEL SCORE - 5.9763836497

 

Round EQUALIZATION SCORE to nearest whole number.

 

If EQUALIZATION SCORE <1 then EQUALIZATION SCORE=1;

 

If EQUALIZATION SCORE >953 then EQUALIZATION SCORE=953;

 

    Page 17

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378 

MODEL SPECIFICATIONS

 

6.4 SCORECARD 4:

 

	
     

    ATTRIBUTE
	
     

    SOURCE
	
    REF.

    #
	
     

    SASNAME
	
     

    INTERVAL
	
     

    POINTS
	
    MAXIMUM

    POINTS
	
    REASON

    CODE

	Constant	 	 	 	 	-1.9614	 	 
	
    Number 30 Days Past Due

    Occurrences w/in 24 Months

    Bankcard Trades
	ADA

 PSPS5127	
     

    3270
	
     

    B224
	
    0

    1-92

    93-99
	
    0.3709

    0

    0.3709
	
     

    0.3709
	
    Block

    49

    Block

	
     

    Number 3rd Party Collections
	
     

    ADA

 PSPS5127
	
     

    3909
	
     

    CL
	
    0

    1-10

    11-92

    93-99
	
    1.0343

    1.0343*(1/(CL+1))

    0.08619

    1.0343
	
     

    1.0343
	
    Block

    109

    109

    Block

	
     

    Number of Inquiries w/in 6

    Months
	
     

    ADA

 PSPS5127
	
     

    3024
	
     

    IQ6
	
    0

    1-2

    3-92

    93-99
	
    0

    -0.1298*(IQ6)

    -0.3894

    0
	
     

    0
	
    Block

    154

    154

    Block

	
     

    Percent Trades Always

    Satisfactory to Trades
	
     

    ADA

 PSPS5127
	
     

    3864
	
     

    PCT2ASAT
	
    0

    0.0001 – 0.9999

    1.0000 – 9.9992

    9.9993-9.9999
	
    0

    1.6152*(PCT2ASAT)

    1.6152

    0
	
     

    1.6152
	
    40

    40

    Block

    299

	
     

    Number of Mortgage Trades
	
     

    ADA

 PSPS5127
	
     

    3177
	
     

    MTD
	
    0

    1-5

    6-92

    93-99
	
    0

    0.1288*(MTD)

    0.7728

    0
	
     

    0.7728
	
    308

    308

    Block

    308

	Number Non-Utility Inquiries w/in 1 Month	
     

    ADA

 PSPS5127
	
     

    3008
	
     

    IQNU1
	
    0

    1

    2-92

    93-99
	
    0

    -0.1919*(IQNU1)

    -0.3838

    0
	
     

    0
	
    Block

    303

    303

    Block

	
    Number 30 Days Past Due

    Occurrences w/in 6 Months

    Revolving Trades
	ADA

 PSPS5127	
     

    3257
	
     

    V26
	
    0

    1-92

    93-99
	
    0

    -0.6039

    0
	
     

    0
	
    Block

    53

    Block

	
    Number Open Revolving

    Trades w/ Update w/in 3

    Months w/ Balance >= 50%

    High Credit
	
     

    ADA

 PSPS5127
	
     

    3724
	
     

    VBG50HC3
	
    0

    1-7

    8-92

    93-99
	
    0

    -0.2559*(VBG50HC3)

    -2.0472

    0
	
     

    0
	
    Block

    178

    178

    Block

	
     

     

    Age Oldest Bankcard Trade
	
     

     

    ADA

 PSPS5127
	
     

     

    3113
	
     

     

    BOLDEST
	
    0

    1-32

    33-236

    237-9992

    9993-9999
	
    -0.5114

    -0.5114

    0

    0.2671

    -0.5114
	
     

     

    0.2671
	
    68

    68

    68

    Block

    290

	
     

    Percent Trades Opened w/in

    12 Months to Trades
	
     

     

    ADA

 PSPS5127
	
     

     

    3844
	
     

     

    OP12M2TD
	
    0

    0.0001 – 0.1219

    0.1220 – 0.3750

    0.3751 – 0.5714

    0.5715 – 9.9992

    9.9993 – 9.9999
	
    0.4956

    0.4956

    0

    -0.23

    -0.4647

    0.4956
	
     

     

    0.4956
	
    Block

    Block

    37

    37

    37

    Block

	Percent Balance to High Credit Open Revolving Trades w/Update w/in 3 Months	
     

    ADA

 PSPS5127
	
     

     

    3856
	
     

     

    UTLVOP3
	
    0

    0.0001 – 0.0627

    0.0628 – 0.5187

    0.5188 – 9.9992

    9.9993 – 9.9999
	
    0.2562

    0.2562

    0

    -0.3842

    0.2562
	
     

     

    0.2562
	
    Block

    Block

    206

    206

    Block

	
     

     

    Total High Credit Open Revolving Trades w/Update
    w/in 3 Months
	
     

     

    ADA

 PSPS5127
	
     

     

    3208
	
     

     

    VHCOP3M
	
    0

    1 – 850

    851 – 1800

    1801 – 3400

    3401 – 6900

    6901 – 44901

    44902 – 9999992

    9999993 - 9999999
	
    -1.5779

    -1.5779

    -0.8047

    -0.5687

    -0.4847

    0

    0.4396

    -1.5779
	
     

     

    0.4396
	
    205

    205

    205

    205

    205

    205

    Block

    297

	Number of Months Since the Oldest Connection Satisfactory Trades	
     

    XMA

 PSPS5098
	
     

    1394
	
     

    XMA1394
	
    0

    1 – 120

    121 - 992

    993-999
	
    0

    0

    0.4246

    0
	
     

    0.4246
	
    Y74

    Y74

    Block

    Y56

 

    Page 18

     

    

 

SCORECARD SPECS TEMPLATE

 PROJECT NUMBER 05378

 MODEL SPECIFICATIONS

 

 

	MODEL SCORE =	1000 *	e
    Points	 
	 	 	1 + e Points	 

 

Round MODEL SCORE to nearest whole number.

 

If MODEL SCORE <=689 then do;

 

	EQUALIZATION SCORE =	0.000000926178 *MODEL SCORE* MODEL SCORE * MODEL SCORE - 0.000643976963 * MODEL SCORE * MODEL SCORE + 0.947314540314 * MODEL SCORE + 342.826490579581;

 

Round EQUALIZATION SCORE to nearest whole number.

 

If EQUALIZATION SCORE >978 then EQUALIZATION
SCORE=978;

 

End;

 

Else if 689< score <=711 then do; 

EQUALIZATION SCORE
=979;

End;

Else if 711< score <=726 then do;

EQUALIZATION SCORE
=980;

End;

Else if 726< score <=741 then do;

EQUALIZATION SCORE
=981;

End;

Else if 741< score <=760 then do;

EQUALIZATION SCORE
=982;

End;

Else if 760< score <=770 then do;

EQUALIZATION SCORE =983;

End;

Else if 770< score <=785 then do;

EQUALIZATION SCORE
=984;

End;

Else if 785< score <=806 then do;

EQUALIZATION SCORE
=985;

End;

Else if 806< score <=825 then do;

EQUALIZATION SCORE
=986;

End;

Else if 825< score <=839 then do;

EQUALIZATION SCORE
=987;

End;

Else if 839< score <=852 then do;

EQUALIZATION SCORE
=988;

End;

Else if 852< score <=863 then do;

EQUALIZATION SCORE
=989;

End;

Else if 863< score <=876 then do;

 

    Page 19

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

EQUALIZATION SCORE =990;

End;

Else if 876< score <=888 then do;

EQUALIZATION SCORE
=991;

End;

Else if 888< score <=900 then do;

EQUALIZATION SCORE
=992;

End;

Else if 900< score <=911 then do;

EQUALIZATION SCORE
=993;

End;

Else if 911< score <=915 then do;

EQUALIZATION SCORE
=994;

End;

Else if 915< score <=923 then do;

EQUALIZATION SCORE
=995;

End;

Else if 923< score <=930 then do;

EQUALIZATION SCORE
=996;

End;

Else if 930< score <=937 then do;

EQUALIZATION SCORE
=997;

End;

Else if 937< score <=946 then do;

EQUALIZATION SCORE
=998;

End;

Else if 946< score then do;

EQUALIZATION SCORE =999;

End;

 

If EQUALIZATION SCORE <1 then EQUALIZATION SCORE=1;

 

If EQUALIZATION SCORE >999 then EQUALIZATION SCORE=999;

 

    Page 20

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

6.5 SCORECARD 5:

 

	
     

    ATTRIBUTE
	
     

    SOURCE
	
    REF.

    #
	
     

    SASNAME
	
     

    INTERVAL
	
     

    POINTS
	
    MAXIMUM

    POINTS
	
    REASON

    CODE

	Constant	 	 	 	 	-0.5004	 	 
	
     

     

    Number Inquiries w/in 24

    Months
	
     

     

    ADA PSPS5127
	
     

     

    3002
	
     

     

    IQ24
	
    0

    1-6

    7-8

    9-10

    11-16

    17-92

    93-99
	
    1.0209

    1.0209

    0.816

    0.612

    0.5826

    0

    1.0209
	
     

     

    1.0209
	
    Block

    Block

    123

    123

    123

    123

    123

	Number 30 Days Past Due Occurrences w/in 12 Months Revolving Trades	
     

    ADA PSPS5127
	
     

    3266
	
     

    V212
	
    0

    1-2

    3-92

    93-99
	
    0

    -0.3944*(V212)

    -1.1832

    0
	
     

    0
	
    Block

    53

    53

    Block

	
     

     

    Age Oldest Revolving Trade
	
     

    ADA PSPS5127
	
     

     

    3120
	
     

     

    VOLDEST
	
    0

    1-32

    33-121

    122-168

    169-9992

    9993-9999
	
    -0.6708

    -0.6708

    -0.5718

    -0.3572

    0

    0
	
     

     

    0
	
    76

    76

    76

    76

    Block

    Block

	
     

    Number of Auto Trades
	
     

    ADA PSPS5127
	
     

    3101
	
     

    ATD
	
    0

    1-11

    12-92

    93-99
	
    0

    0.0723*(ATD)

    0.8676

    0
	
     

    0.8676
	
    305

    305

    Block

    305

	
     

    Number 3rd Party Collections w/in 12 Months
	
     

    ADA PSPS5127
	
     

    3907
	
     

    CL12
	
    0

    1-2

    3-92

    93-99
	
    0

    -0.2124*(CL12)

    -0.6372

    0
	
     

    0
	
    Block

    109

    109

    Block

	
    Percent Bankcard Trades

    Satisfactory w/in 3 Months to Bankcard Trades Reported
    w/in 3 Months
	
     

    ADA PSPS5127
	
     

    3866
	
     

    PCT2ABSAT3M
	
    0

    0.0001 - 1

    1.001 – 9.9992

    9.9993 – 9.9999
	
    0

    0

    0

    -0.3925
	
     

    0
	
    Block

    Block

    Block

    290

	
     

     

    Percent Balance to High

    Credit Open Revolving Trades w/Update w/in 3 Months
	
     

     

    ADA PSPS5127
	
     

     

    3856
	
     

     

    UTLVOP3
	
    0

    0.0001 – 0.0632

    0.0633 – 0.1779

    0.1780 – 0.5716

    0.5717 – 0.7626

    0.7627 – 0.8902

    0.8903 – 9.9992

    9.9993 – 9.9999
	
    0.8265

    0.8265

    0.433

    0

    -0.3996

    -0.5911

    -0.8824

    0
	
     

     

    0.8265
	
    Block

    Block

    206

    206

    206

    206

    206

    297

	
    Total High Credit Open Revolving Trades
w/Update w/in 3 Months
	
     

    ADA PSPS5127
	
     

     

    3208
	
     

     

    VHCOP3M
	
    0

    1-1900

    1901 – 38500

    38501 – 9999992

    9999993 - 9999999
	
    -0.2359

    -0.2359

    0

    0.5325

    0
	
     

     

    0.5325
	
    205

    205

    205

    Block

    297

	
     

    Months on File
	
     

    ADA PSPS5127
	
     

    3743
	
     

    AMS3743
	
    0

    1-486

    487 – 9992

    9993 – 9999
	
    0

    0

    2.2847

    0
	
     

    2.2847
	
    327

    327

    Block

    287

	Percent Revolving Trades Opened w/in 6 Months to Revolving Trades	
     

    ADA PSPS5127
	
     

    3845
	
     

    VOP6M2VTD
	
    0

    0.0001 – 0.9999

    1 – 9.9992

    9.9993 – 9.9999
	
    0

    -1.4094*(VOP6M2VTD)

    -1.4094

    0
	
     

    0
	
    Block

    26

    26

    Block

    Page 21

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

	
    Percent Trades Worst Rating

    120-180 or More Days Past

    Due or Worse w/in 6 Months

    or Major Derogatory Event w/in 24 Months to Trades
    Reported w/in 6 Months
	
     

     

    ADA PSPS5127
	
     

     

    3943
	
     

     

    PCT2AWST5PLUS6M
	
    0

    0.0001 – 9.9992

    9.9993 – 9.9999
	
    0.4355

    0

    0
	
     

     

    0.4355
	
    Block

    30

    30

	
    Total Balance Open Personal Finance and
    Student Loan

    Trades w/Update w/in 3

    Months
	
     

    ADA PSPS5127
	
     

    3166
	
     

    PBAL3
	
    0

    1 - 9999992

    9999993 – 9999999
	
    0

    0

    0.1393
	
     

    0.1393
	
    219

    219

    Block

	Sum of Current Balances Reported in Last 6 Months on Derogatory Accounts	
     

    XMA PSPS5098
	
     

    1091
	
     

    XMA1091
	
    0

    1 – 225.02

    225.03 – 999992

    999993 - 999999
	
    0

    0

    -0.4404

    0
	
     

    0
	
    Block Block Y63

    Block

	
    Number of Involuntary

    Disconnection in Last 3

    Months
	XMA PSPS5098	
     

    1392
	
     

    XMA1392
	
    0

    1 – 92

    93 – 99
	
    0

    0

    0.5460
	
     

    0.5460
	
    Y25

    Y25

    Block

	
     

     

    Other Revolving Open to Buy
	 	
     

     

    6019
	
     

     

    REGZ_6019
	
    Missing

    <=0

    1-7425

    7426-17736

    17737+
	
    0

    0

    0

    0.2938

    0.9887
	
     

     

    0.9887
	
    G02

    O04

    O04

    O04

    Block

	
     

    Bankcard High Credit
	 	
     

    6056
	
     

    REGZ_6056
	
    Missing

    <= 0

    1-1723

    1724+
	
    -0.2424

    -0.2424

    -0.2424

    0
	
     

    0
	
    G03

    E01

    E01

    Block

 

	MODEL SCORE =	1000 *	e
    Points	 
	 	 	1 + e Points	 

 

Round MODEL SCORE to nearest whole number.

 

EQUALIZATION SCORE
= MODEL SCORE

 

Round EQUALIZATION SCORE to nearest whole number.

 

If EQUALIZATION SCORE <1 then EQUALIZATION SCORE=1;

 

If EQUALIZATION SCORE >999 then EQUALIZATION SCORE=999;

 

SECTION 7. FINAL SCORE CALCULATION

 

7.1 Final Score

 

FINAL SCORE = EQUALIZATION SCORE

 

Rounding and Capping Instruction:

 

Round FINAL SCORE to nearest whole number.

If FINAL SCORE > 999 then FINAL SCORE = 999

If FINAL SCORE < 1 then FINAL SCORE = 1

    Page 22

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

SECTION 8. REASON CODE INSTRUCTION

 

Reason code logic should mimic the logic PMML uses to assign
reason codes. An example can be found in the Scorecard_Specs_Example document.

 

Section 8.1 Adverse Action Statement

 

	ADA REASON CODE	
     

    ADVERSE ACTION STATEMENT

	7	Percent of Bankcard Accounts Satisfactory
	26	Percent of Revolving Accounts Opened Recently
	30	Percent of Accounts 120+ Days Delinquent
	37	Percent of Accounts Opened Recently
	40	Percent of Accounts Satisfactory
	49	30 Days Delinquency Occurrences On Bankcard Accounts
	53	30 Days Delinquency Occurrences On Revolving Accounts
	68	Age of Bankcard Accounts
	76	Age of Revolving Accounts
	109	Number of Collections
	123	Number of Inquiries
	154	Number of Recent Inquiries
	178	Number of Revolving Accounts With High Utilization
	205	Revolving High Credit
	206	Revolving Utilization
	219	Total Balance On Personal Finance or Student Loan Accounts
	287	Insufficient Information On Credit History
	290	Insufficient Information On or Lack of Bankcard Accounts
	297	Insufficient Information On or Lack of Revolving Accounts
	299	Insufficient Information On or Lack of Accounts
	303	Number of Recent Non-Utility Inquiries
	305	Number of Auto Accounts
	308	Number of Mortgage Accounts
	327	Length of Credit History
	12	Percent of Installment Balance Outstanding
	26	Percent of Revolving Accounts Opened Recently
	37	Percent of Accounts Opened Recently
	40	Percent of Accounts Satisfactory
	41	Percent of Accounts With Major Derogatory Event
	53	30 Days Delinquency Occurrences On Revolving Accounts

 

    Page 23

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

	60	90 Days Delinquency Occurrences
	67	Age of Bankcard Account Activity
	70	Age of Installment Account Activity
	79	Age of Account Activity
	80	Age of Accounts
	110	Number of Department Store Accounts
	120	Number of Department Store Accounts With Balance
	123	Number of Inquiries
	127	Number of Installment Accounts 30 Days Delinquent
	129	Number of Installment Accounts 60+ Days Delinquent
	136	Number of Installment Accounts With Major Derogatory Event
	154	Number of Recent Inquiries
	164	Number of Retail Accounts With High Utilization
	169	Number of Revolving Accounts 30 Days Delinquent
	175	Number of Revolving Accounts Opened Recently
	176	Number of Revolving Accounts Past Due
	199	Number of Accounts Opened Recently
	200	Number of Accounts Past Due
	215	Total Balance On Credit Union Accounts
	224	Total Collection Amount
	287	Insufficient Information On Credit History
	291	Insufficient Information On or Lack of Credit Union Accounts
	294	Insufficient Information On or Lack of Mortgage Accounts
	297	Insufficient Information On or Lack of Revolving Accounts
	299	Insufficient Information On or Lack of Accounts
	302	Number of Utility Inquiries
	303	Number of Recent Non-Utility Inquiries
	304	Number of Non-Utility Inquiries
	305	Number of Auto Accounts
	305	Number of Auto Accounts
	308	Number of Mortgage Accounts
	327	Length of Credit History
	352	Total Unpaid Collection Amount

 

    Page 24

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

	XMA Reason Code	
     

    ADVERSE ACTION STATEMENT

	Y25	Number of NCTUE accounts involuntary disconnected in the last 3 months
	Y63	Total balance of derogatory NCTUE accounts reported in the last 6 months
	Y74	Months since connection of oldest paid-as-agreed NCTUE account
	A14	Number of Months since the latest NCTUE involuntary disconnection
	A16	Number of NCTUE satisfactory occurrences reported in the last 12 months
	A19	Number of times 60 days past due was reported in the last 3 months on NCTUE
	A21	# of NCTUE worst ever satisfactory accounts reported in the last 12 months
	Y21	# of NCTUE non-derogatory worst 60+ days past due accounts in last 3 months
	Y27	Age of youngest NCTUE connection for paid-as-agreed accounts
	Y35	Average balance on open NCTUE accounts in the last 6 months
	Y51	Not enough information on paid-as-agreed NCTUE accounts
	Y56	Not enough information on paid-as-agreed NCTUE accounts
	Y63	Total balance of derogatory NCTUE accounts reported in the last 6 months
	Y74	Months since connection of oldest paid-as-agreed NCTUE account
	Y92	Not enough information on NCTUE accounts reported in the last 12 months

 

	RegZ Reason Code	
     

    ADVERSE ACTION STATEMENT

	O04	Bankcard Credit Capacity
	O05	Other Revolving Credit Capacity
	E01	Bankcard High Credit Limit
	G03	Insufficient information on Bankcard Credit Limit
	G01	Insufficient information on Bankcard Account
	G02	Insufficient information on Revolving Account

 

    Page 25

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

Section 8.5 5th Reason Code
/ Inquiry Flag Instructions for Segment 1

 

(In order to be FCRA compliant on models using credit data
a 5th reason code / Inquiry Flag needs to be assigned if inquiries were the reason for the consumer not receiving a higher score.)

 

5th Reason Code
Logic:

 

If (1<= IQ1<=92) or (2<= IQNU24<= 92) or (1<=IQUI24<=92)
then 5th Reason Code Flag= Y

 

Section
8.6 5th Reason Code / Inquiry Flag Instructions for Segment 2

 

(In order to be FCRA compliant on models using credit data
a 5th reason code / Inquiry Flag needs to be assigned if inquiries were the reason for the consumer not receiving a higher score.)

 

5th Reason Code
Logic:

 

If (15<= IQNU6<=92) or (1<= IQUI24<=92) then 5th
Reason Code Flag= Y

 

Section 8.7 5th Reason Code / Inquiry Flag
Instructions for Segment 3

 

(In order to be FCRA compliant on models using credit data
a 5th reason code / Inquiry Flag needs to be assigned if inquiries were the reason for the consumer not receiving a higher score.)

 

5th Reason Code
Logic:

 

If (1<= IQ24<=92) then 5th Reason Code Flag= Y

 

Section
8.8 5th Reason Code / Inquiry Flag Instructions for Segment 4

 

(In order to be FCRA compliant on models using credit data
a 5th reason code / Inquiry Flag needs to be assigned if inquiries were the reason for the consumer not receiving a higher score.)

 

5th Reason Code
Logic:

 

If (1<= IQ6<=92) or (1<= IQNU1<=92) then 5th Reason
Code Flag= Y

 

Section 8.9 5th Reason Code / Inquiry Flag
Instructions for Segment 5

 

(In order to be FCRA compliant on models using credit data
a 5th reason code / Inquiry Flag needs to be assigned if inquiries were the reason for the consumer not receiving a higher score.)

 

5th Reason Code
Logic:

 

If (7<= IQ24<=92) then 5th Reason Code Flag= Y

 

    Page 26

     

    

 

SCORECARD SPECS TEMPLATE

PROJECT NUMBER 05378

MODEL SPECIFICATIONS

 

SECTION 9. AUDIT INSTRUCTION

 

Dataset used to create audit
data for QA:

 

500k Sample on latest frozen MDB data

 

Audit materials

 

Please include the following information in the audit data
set if applicable:

 

All records with applicable reject codes, points assignments,
segment, model scores, equalization score, calibration score, rescale score and final score.

 

    Page 27

     

    

 

EXHIBIT4

 

ACCOUNTAGREEMENTFORM

 

See attached

 

    Ex 4-1 

     

    

 

BADCOCK EASY PURCHASE PLAN CREDIT/SECURITY AGREEMENT AND
DISCLOSURE STATEMENT - STATE

 

	Interest Rates
    and Interest Charges
	 
	
    Annual Percentage Rate

    (APR) for Purchases
	
    XX.XX%

    (to the portion of the average daily balance of your Account
    which is $5000 or less)

     

    

    XX.XX%

    (to the portion of the average daily balance of your Account which
is more than $5000) 

	 	 
	
    How to Avoid Paying

    Interest
	We will not charge you interest in any month in which there  is no prior balance shown  on your statement. Also we will not charge you any additional  interest if you pay your entire account balance within XX days  after the closing  (billing) date  on your statement.
	 	 
	Fees	 
	 	 
	Penalty Fees	 
	 	 
	● Late Payment	$XX.00, if you fail to pay the minimum monthly payment within 10 days
after the payment due date.
	 	 
	● Returned Payment	$XX.00

 

How We Will Calculate Your Balance: We use
a method called “average daily balance (including new purchases).” See your Badcock Easy Purchase Plan Credit/Security
Agreement for more details.

 

Billing Rights:
Information on your rights to dispute transactions and how to exercise those rights is provided in your Badcock Easy Purchase Plan
Credit/Security Agreement.

 

This is your Agreement with W.S. Badcock Corporation. Please
read this Agreement and keep it for your records.

 

This Agreement
governs your W.S. Badcock Corporation account (“Account”) for consumer credit purchases made at any Badcock Home Furnishings
Center or Badcock Home Furniture & more store location. Your Account may include two or more Credit Plans, including but not limited
to, a regular revolving credit plan and special purchase plans. The words “you,” “your” and “Accountholder”
in this Agreement refer to each person who signs this Agreement. The words “we,” “our” and “us” refer
to W.S. Badcock Corporation, its successors and assigns. Our principal place of business is 200 N. Phosphate Boulevard, Mulberry, Florida
33860.

 

NOTICE TO BUYER: (a) Do not sign this
before you read it or if it contains any blank spaces. (b) You are entitled to an exact copy of the paper you sign.

 

You have the right to pay in advance
the full amount due. ANY HOLDER OF THIS CONSUMER CREDIT CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST
THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED
AMOUNTS PAID BY THE DEBTOR HEREUNDER. YOU HEREBY ACKNOWLEDGE RECEIPT OF A FULLY EXECUTED AND COMPLETE COPY OF THIS CONTRACT.

 

In consideration for opening this Account in your name,
you agree to the following:

 

1. PROMISE TO
PAY AND ACCEPTANCE OF ACCOUNT. You will pay us as provided in this Agreement for all amounts owed under each Credit Plan on the Account
for each purchase made by you, by any other Accountholder, or by any person who has your permission to use this Account, whether the purchase
is made in person, or by telephone, Internet or mail. If there are two Accountholders, the Account is a joint Account and each Accountholder
is jointly and individually liable for all amounts owed under this Agreement and is bound by the terms of this Agreement. This also means:
(a) each joint Accountholder is an agent for and has the right and authority to bind the other in connection with this Agreement; (b)
we can rely on and follow the instructions, information and requests we receive from either joint Accountholder even if they conflict
with the instructions, information or requests we receive from the other joint Accountholder; and (c) we may collect all amounts owed
on the Account from either joint Accountholder. W hen you use your Account or authorize others to use your Account, you represent that
you have the ability and intention to pay us all amounts owed under this Agreement. Payments shall be made in U.S. Dollars. This Agreement
supersedes any prior agreements you may have with us.

 

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2. DOWN
PAYMENTS; BILLING STATEMENT; MINIMUM PAYMENT DUE; LATE FEES. At the time of each purchase, you will make a down payment in an
amount that is at least 25% of the cash price, plus sales tax. From time to time, at our option, we may allow you to make purchases
with a reduced or no down payment. You will receive a statement from us each month showing your new balance and the minimum payment
due. You will pay us each month the minimum payment due with respect to your Account; you may pay us a higher amount, including the
entire balance of your Account, at any time. The minimum payment due shall be the total of: (1) the minimum monthly payment (which
is a total of the minimum monthly payments required for each Credit Plan as described below), plus (2) any late payment fee or
returned payment fee, plus (3) any amount past due. Except as otherwise expressly provided in this Agreement: (a) we will allocate
payments and credits to your Account consistent with applicable law; and (b) we may, consistent with applicable law, change at any
time, and from time to time, the manner in which we allocate such payments and credits to your Account. At our sole discretion, we
may stop sending you statements if we deem your Account uncollectible, if delinquency or collection proceedings have been instituted
or if otherwise permitted by applicable law. We reserve the right to obtain payment electronically for any check or other instrument
that you send to us by initiating an ACH (electronic) debit to your banking account in the amount of your check or instrument. Your
check or instrument may not be returned to you by us or your bank. You must continue to pay the minimum payment due even if you
notify us of a dispute on your Account unless the whole balance is in dispute. If you make a payment on your Account, whether by
check, other instrument, debit or other payment order (including an electronic payment or process), that is dishonored or returned
unpaid for any reason, you authorize us to add to your Account an amount equal to the highest charge authorized by law for returned
payment fees. If you fail to pay the minimum monthly payment within 10 days after the due date, you authorize us to add to your
Account an amount not in excess of the highest charge authorized by law for late payment fees. We can, without losing any of our
rights under this Agreement or otherwise, accept any check or other payment instrument marked with or accompanied by a document with
words of condition, limitation, waiver, compromise or the like such as but not limited to “payment in full” or
“without recourse.” You agree that we can also return any such check or other payment instrument to you. We can, without
losing any of our rights under this Agreement or otherwise, also accept a late payment and a partial payment.

 

3. CREDIT PLANS
.. As used in this Agreement, “Credit Plan” includes your regular revolving credit plan and any special purchase plan established
under this Agreement from time-to-time, the terms of which will be set forth and provided to you at the time of your purchase. Except
as expressly provided with respect to a special purchase plan, all terms of this Agreement apply to the special purchase plans. If the
sales slip or other documentation honoring your Account does not specify that the purchase is subject to the terms of a special purchase
plan, then the purchase is subject to the terms of your regular revolving credit plan. We may cancel the availability of any of the Credit
Plans at any time at our sole discretion.

 

4. FINANCE CHARGES . You will pay us
a FINANCE CHARGE each month based on the average daily balance (including new purchases) computation method. Except to the extent,
if any, another daily periodic rate is then expressly applicable under the terms of this Agreement, a periodic rate of X.XX% (ANNUAL
PERCENTAGE RATE of XX.XX%) will be applied to the portion of the average daily balance of your Account which is $5000 or
less and a periodic rate of X.X% (ANNUAL PERCENTAGE RATE of XX%) will be applied to the portion of the average daily
balance of your Account which is more than$5000. To get the “average daily balance” we take the beginning balance of your
Account each day, add any new purchases and other transactions and subtract any payments or credits. This gives us the daily balance.
Then, we add up all the daily balances for the billing cycle and divide the total by the number of days in the billing cycle. This gives
us the ‘‘average daily balance.’’ FINANCE CHARGES will be charged from the date of purchase (even if you pay your next bill in full).
Notwithstanding the above, no FINANCE CHARGE will be imposed in any month in which there is no previous balance shown on your statement,
and no additional FINANCE CHARGES will be imposed on your next monthly statement if you pay your account balance in full within 26 days
after the closing (billing) date on your statement. The closing (billing) date is the last day of each monthly cycle that payments and
transactions will post to your Account for that cycle.

 

5. OTHER CHARGES
.. You will pay us all other charges under your Account. These other charges include fees for delivery and setup, and charges for insurance,
warranties, or service contracts that you voluntarily elect to purchase.

 

6. NOTICES; BILLING
ERRORS. The delivery of your monthly statement or other notice to any Accountholder at the billing address then shown on our records
will constitute delivery and notice to all Accountholders. You agree to provide us at least 10 days prior written notice of any change
in your name, home address, billing address, or place of employment and if you have not already done so, you will note any such changes
on the payment stub of your current monthly statement and return it to us. You agree that you have read the notice at the end of this
Agreement regarding your rights and responsibilities with respect to billing errors. The monthly statement of your Account, indicating
any purchases or payments, will be considered correct unless you tell us in writing of any possible mistake within 60 days after the first
monthly statement which shows the possible mistake was mailed to your billing address. If you violate any terms of this Agreement, a negative
report may be submitted to credit reporting agencies and entered on your credit record. If you believe we have reported inaccurate information
regarding the account, you should follow the procedures described in the Billing Rights section at the end of this Agreement. All billing
inquiries or notices should be sent to P.O. Box 724, Mulberry, Florida 33860.

 

7. ACCOUNT PURCHASES
.. You will sign a sales slip or other document that evidences each purchase; and in case a purchase is made by telephone, Internet
or by mail, you will accept our sales slip or other document showing such sale and our record of delivery of goods purchased as conclusive
evidence (complete proof) of such sale and delivery. The fact there is no signature on a sales slip or other document for the purchase
of goods will not relieve you of your obligations under this Agreement. You consent to the use of secure electronic signature capture
for storing and documenting any purchase you make on the Account. You may order items for delivery at a later date, but the amount of
the order will be added to your Account at the time of purchase. Title to the merchandise you purchase will pass when you accept possession
at our store location or when the merchandise is loaded onto a common carrier or our delivery truck if you choose our delivery service.

 

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8. SECURITY INTEREST.
You hereby grant us a purchase money security interest in each item of property purchased on the Account (unless a security interest
is not permitted by law), except for any property that, when installed, will become a fixture. You and we intend that floor coverings
and unit air conditioners will not be fixtures no matter how they are installed. Each item will be described and identified on one or
more separate sales slips or documents which are incorporated by reference herein, that is, this document and all sales slips and other
documentation regarding the Account are one integrated agreement. Granting us a security interest means we keep an interest in the property
until you pay us for it in full as explained in this Agreement. Such security interest will secure the total amount due from time to time
on each item and will remain in such item until the total cash price has been paid in full. For the purpose of determining the extent
of our purchase money security interest in the items purchased with your Account, and subject to applicable law, we will apply payments
on your Account (including any special purchase plan) in the following order: first to the payment of finance charges in the order of
their entry to the Account and then to the payment of any other debts (including without limitation, taxes, insurance charges, late fees,
court costs, returned payment fees, delivery charges, set-up or installation fees and the unpaid purchase price of items) in the order
of their entry to the Account. If you purchase more than one item on the same date, payments will be applied first to the payment of the
smallest debt. You agree that the security interest will give both us and you all the rights and remedies granted by the Uniform Commercial
Code as it applies from time to time in the State of Florida.

 

9. DEFAULTS; APPLICABLE
LAW . Unless otherwise provided by law, you will be in default of this Agreement and your Account upon the occurrence of any of the
following: 1) if you do not pay all of any required minimum payment due when it is due; 2) if you die, are declared legally incompetent
or file a petition for bankruptcy protection or other insolvency action; 3) if we determine that you have provided incomplete, incorrect,
false or misleading information or signatures relating to this Account; 4) if you default on any other account or agreement you have with
us; 5) if you in any other way fail to meet your obligations under this Agreement; or 6) if we receive information that you are unable
or unwilling to perform the terms or conditions of this Agreement. If you are in default, we may: (a) terminate your credit privileges
under this Agreement; (b) declare the entire balance of your Account immediately due and payable without notice and require you to pay
immediately your entire Account balance, including all special purchase plan balances; (c) cancel any credit insurance applicable to your
Account pursuant to the insurance policy; and/or (d) bring an action or proceeding to recover property or to collect all amounts owed.
We may also repossess, and you will immediately surrender to our possession, any and all property for which you have not fully paid and
in which we still have a security interest. If we repossess any goods purchased with your Account, we may charge you our repossession
costs including necessary repairs, storage fees, and costs of sale, when and as permitted by applicable law. Upon your default under this
Agreement, you agree to pay all costs, including court costs, incurred by us for collection of your Account, including replevin or other
legal action, in each case to the fullest extent permitted by law, and such costs will be added to your Account. In addition to the foregoing
costs, if your failure to meet your obligations under this Agreement results in our placing your Account with an attorney who is not a
salaried employee of ours, for collection, including replevin or other legal action, you agree to pay us reasonable attorneys’ fees
which will be added to your Account. In any proceeding to collect on your Account, we may use a photographic copy or electronic image
of any sales slip or other document to establish the validity of any sale. You hereby consent to attachment, garnishment and/or other
legal process of your wages and other earnings to the extent permitted by applicable state and federal laws. Unless otherwise provided
by this Agreement, this Agreement is governed by the internal laws of the State of Florida.

 

10. A. TERMINATION.
We or you may terminate this Agreement at any time upon written notice to the other; provided, the termination of this Agreement by either
party will in no way change your responsibility to pay the entire balance due on your Account under the terms of this Agreement, including
purchases made and other amounts incurred but not yet billed, and to do everything else required by this Agreement until payment has been
made in full. Once notice of termination has been given, no further purchases may be made under the Agreement. We may also suspend your
Account privileges at any time. Your Account will be classified as inactive, and terminated, if there is no current balance and there
has been no activity for a period of 36 months.

 

B. CHANGES
TO AGREEMENT. To the fullest extent permitted by applicable law, we may change this Agreement in any respect by mailing written notice
of the change to the billing address as then shown on our records. When we change this Agreement, we will comply with the applicable notice
requirements of federal and state laws that are in effect at that time. Without limiting the foregoing, such changes may change terms
by the addition of new terms or by the deletion or modification of then-existing terms, whether relating to benefits or features of your
Account or this Agreement, fees, credit limit, the periodic rate or rates, the manner of calculating the FINANCE CHARGE or outstanding
unpaid indebtedness, the manner for amending the terms of this Agreement, arbitration or other alternative dispute resolution mechanisms,
and/or other matters of any kind whatsoever. Except as otherwise prohibited by law or as otherwise provided in the notice, all changes
will apply to all outstanding indebtedness as well as new transactions; provided, that you may reject the changes by providing us written
notice, prior to the effective date of the change, of your rejection. Any such notice of rejection shall be mailed to us at the address
in the Billing Rights section at the end of this Agreement. If you timely provide such written notice to us and make no further purchases
on your Account, then the changes will not apply to your Account or to this Agreement; however, in such event, we may restrict or prohibit
any additional purchases on your Account and/or terminate this Agreement. The failure to provide such notice on a timely basis or any
further use of your Account (even if a notice rejecting the changes has been sent) will be considered an acceptance of all changes in
terms.

 

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11. ARBITRATION
.. Except as expressly set forth in the following paragraph, you and we agree that any controversy or dispute between us and you (all of
which are called “Claims”) exceeding $7,500 as described below, shall be submitted to mandatory, binding arbitration. This
arbitration provision is made pursuant to a transaction involving interstate commerce, and shall be governed by, and enforceable under,
the Federal Arbitration Act (the “FAA”), 9 U.S.C. §1 et seq. and, not by any state arbitration statutes or rules.

 

Where arbitration is not required
.. This arbitration provision does not affect the rights of either party to exercise any right to self-help repossession or judicial (including
appeal) recovery regarding collateral to secure the Account. We and you further understand and agree that arbitration will be required
only in the event that the aggregate amount(s) at issue arising from all of the Claims between us exceeds $7,500 (including but not limited
to the value of any property at issue, money, attorneys’ fees, punitive damages, injunctive relief, declaratory relief, and any
and all other Claims that we or you attempt to assert on behalf of ourselves or any others). Other than in small claims or similar proceeding,
if any party fails to specify the amount being sought for any relief, or any form or component of relief, the amount being sought shall
be deemed to exceed $7,500.

 

CLAIMS COVERED: Claims subject to arbitration
include, but are not limited to, any and all claims or controversies arising out of or related to any aspect of the relationship between
us and you, including any claims by either party’s agents, assigns, attorneys, employees, officers, insurers, or any other representatives.
This arbitration clause applies to all transactions occurring before or after the execution of this Agreement. This includes (but is not
limited to) any Claims relating to services that we or our affiliates offer in connection with your Account or this Agreement; Claims
for any violation of any federal, state or local statute, rule, regulation or ordinance; Claims made under common law, whether in tort
(whether or not intentional), contract or otherwise; Claims made under any other sources of law; or any Claims involving or against any
of our affiliates, successors or assigns and our and their officers, employees or agents. The Claims subject to this arbitration provision
include but are not limited to any Claims that arose or arise in the past, present or future, including Claims that arose before you opened
your Account. Any questions about whether a Claim is subject to arbitration shall be resolved by interpreting this arbitration provision
in the broadest way the law will allow it to be enforced.

 

INITIATION OF
ARBITRATION : The party filing arbitration must choose one of the following arbitration administrators: American Arbitration
Association or JAMS. All parties must follow their rules and procedures for initiating and pursuing arbitration. If you initiate the
arbitration, you must also notify us in writing to the Arbitration Officer at P.O. Box 232 Mulberry, FL 33860. If we initiate the
arbitration, we will notify you in writing at your then current billing address or (if your Account is closed) the last address at
which we contacted you. Any arbitration hearing that you attend will be held at a place chosen by the arbitrator or arbitration
administrator in the same city as the U.S. District Court closest to your then current billing address, or at some other place to
which we and you agree in writing. You may obtain copies of the current rules of each of the arbitration administrators named above,
and other related materials, including forms and instructions for initiating an arbitration, by contacting the arbitration
administrators as follows: American Arbitration Association, 335 Madison Avenue, Floor 10, New York, NY 10017-4605, Web site:
www.adr.org or JAMS, 1920 Main Street, Suite 300, Irvine, CA 92610, Web site: www.jamsadr.com .

 

PROCEDURES AND LAW APPLICABLE IN ARBITRATION
: A single, neutral arbitrator will resolve the Claims. The arbitrator will be selected in accordance with the rules of the arbitration
administrator. The arbitration will be conducted under the applicable procedures and rules of the arbitration administrator that are in
effect on the date the arbitration is filed unless this arbitration provision is inconsistent with those procedures and rules, in which
case this Agreement will prevail. You may choose to have a hearing and be represented by counsel. The arbitrator will take reasonable
steps to protect your customer account information and other confidential information, including the use of protective orders to prohibit
disclosure outside the arbitration, if requested to do so by us. The arbitrator will have the power to award to a party any damages or
other relief provided for under applicable law, and will not have the power to award relief to, against, or for the benefit of, any person
who is not a party to the proceeding. The arbitrator will make any award in writing but need not provide a statement of reasons unless
requested by a party. Upon a request by us or you, the arbitrator will provide a brief statement of the reasons for the award.

 

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COSTS: Unless the arbitration rules
require allocation more beneficial to you: (a) the party making demand for arbitration shall pay the filing fee required by the arbitration
rules when the demand is made, except that if you are the party making such demand, we will pay the amount of the filing fee in excess
of the lesser of $125 or the amount of the fee that would be required for you to file a lawsuit in the county or parish of your residence;
(b) we will pay the fees of the arbitrator; and (c) each party shall pay that party’s own attorneys’, experts’ and witnesses’
fees and expenses unless otherwise required by law or by other terms of this Agreement. Despite our agreement to pay filing fees and the
arbitrator’s fees as described above, you have the option to pay your share of the filing fees and the arbitrator’s fees consistent
with the arbitration rules. If the arbitrator determines that a Claim was made in bad faith or lacks any justification, the arbitrator
may, in accordance with the arbitration rules: (a) award the party against whom such Claim was made the amount of the filing fees such
party paid; and (b) require the party making such Claim to pay the amount of the arbitrator’s fees or award the amount of the arbitrator’s
fees to the party against whom such Claim was made if the party against whom such Claim was made pays the arbitrator’s fees.

 

NO CONSOLIDATION OR JOINDER OF PARTIES
: Arbitration is not available and shall not be conducted on a class-wide basis. All parties to the arbitration must be individually named.
Claims by persons other than individually named parties shall not be raised or determined. Unless consented to by all parties to the arbitration,
Claims of two or more persons may not be joined, consolidated or otherwise brought together in the same arbitration (unless those persons
are applicants, co-applicants or authorized users on a single Account and/or related accounts or parties to single transaction or related
transactions); this is so whether or not the Claims (or any interest in the Claims) may have been assigned.

 

ENFORCEMENT; FINALITY;
APPEALS : We or you may bring an action, including a summary or expedited motion, to compel arbitration of Claims subject to
arbitration, or to stay the litigation of any Claims pending arbitration, in any court having jurisdiction. Failure or forbearance
to enforce this arbitration provision at any particular time, or in connection with any particular Claims, will not constitute a
waiver of any rights to require arbitration at a later time or in connection with any other Claims. Any additional or different
agreement between us and you regarding arbitration must be in writing. An award by the arbitrator after 15 days have passed shall be
final and binding on the parties, subject to judicial review that may be permitted under the FAA. An award in arbitration will be
enforceable as provided by the FAA or other applicable law by any court having jurisdiction. An award in arbitration shall determine
the rights and obligations between the named parties only, and only in respect of the Claims in arbitration, and shall not have any
bearing on the rights and obligations of any other person, nor on the resolution of any other dispute or controversy.

 

SEVERABILITY; SURVIVAL: This arbitration
provision shall survive: (i) termination or changes in this Agreement, your Account and the relationship between us and you concerning
your Account; (ii) any suspension of your Account privileges; (iii) the bankruptcy of any party; and (iv) any transfer or assignment of
your Account, or any amounts owed on your Account, to any other person. If any portion of this arbitration provision is deemed invalid
or unenforceable, the remaining portions shall nevertheless remain in force.

 

12. RIGHTS CUMULATIVE;
NO WAIVER . We may delay or choose not to enforce any right in this Agreement without losing or waiving that right, including, but
not limited to, accepting late or partial payments. Any waiver of rights by us must be in writing and signed by our authorized representative.
All of our rights and remedies under this Agreement or otherwise are cumulative.

 

13. CREDIT LIMIT.
We will set a limit on the amount of credit we will give to you and we may increase, decrease, suspend or terminate this limit at any
time without prior notice. You will be notified of your credit limit when the Account is opened and on each monthly statement. You agree
not to let your Account balance, including FINANCE CHARGES and all other amounts, exceed the credit limit established for you by us from
time to time and shown on your monthly statement or other documents we send you. We do not have to honor a transaction that would cause
you to exceed your credit limit. If we do and you go over your established credit limit at any time, you will still be charged for all
purchases made and the amount exceeding your credit limit will be immediately due and payable.

 

14. AUTHORIZED
USERS. You understand you may grant permission in writing for certain persons to use your Account (“authorized users”)
under the terms of this Agreement, and you will be responsible for all charges made by any authorized user.

 

15. UPDATED FINANCIAL INFORMATION. Upon request,
you will promptly give us accurate updated financial information about yourself.

 

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16. CREDIT INVESTIGATIONS
AND REPORTING. You agree that we may investigate your credit, employment and income records and verify your credit references, and
that we also may report the status and payment history of your Account to credit reporting agencies, our affiliates, and dealers. You
authorize us to provide information on you from your application and other sources to our affiliates, including but not limited to our
dealers. We may inform our affiliates, including but not limited to our dealers, of the credit limit on your account. You authorize us
to obtain a consumer report from consumer reporting agencies in considering your application, and for the purpose of an update, renewal,
extension or increase of credit, review or collection of your Account. If you ask whether or not a consumer report was requested, we will
tell you and if we received a report, we will give you the name and address of the agency that furnished it. If you believe any information
provided to a credit reporting agency is incorrect, you should notify us in writing at P.O. Box 724, Mulberry, FL 33860, including the
specific reason you believe there is a discrepancy.

 

17. MONITORING
PRACTICES . You agree that our supervisory personnel may listen to and record telephone calls between our representatives and you
in order to evaluate the quality of our service to you and other accountholders.

 

18. ASSIGNMENT
OF ACCOUNT. We may sell, assign, or transfer your Account or any portion thereof without notice to you. You may not sell, assign,
or transfer your Account.

 

19. SEVERABILITY
.. If any provision of this Agreement is determined to be void or unenforceable under any law, rule, or regulation, all other provisions
of the Agreement will remain valid and enforceable.

 

20. MISCELLANEOUS.
If we have provided this Agreement or a translation of this Agreement in a language other than English, we may still provide all monthly
statements, amendments to this Agreement and any other documents, correspondence, notices, communications and the like regarding this
Agreement (including your Account) in English without translation. If there is a conflict between the English version of this Agreement
and any translation of this Agreement we have provided, the English version shall control. References in this Agreement to our sole discretion
mean our sole and absolute discretion, and references in this Agreement to “including” mean including but not limited to the
matter referred to. Time is of the essence of this Agreement. Copies of your application, sales slips and other documents you sign in
connection with your Account shall be admissible in evidence in any legal or arbitration proceeding without regard to any requirement
that the original be produced.

 

21. CONSENT TO
CONTACT AND REVOCATION OF CONSENT. You understand that if you have provided us with your cellular number and/or email address, by
signing this Agreement, you understand and agree that you are providing Badcock and its agents and service providers with your express
consent to use written, electronic, or verbal means to contact you. This consent includes, but is not limited to, contact by manual calling
methods, prerecorded or artificial voice messages, text messages, emails, and/or automatic telephone dialing systems. Your consent to
our ability to contact you by using any or all of these methods at the cellular numbers and/or email addresses provided by you is an essential
part of the consideration for our decision to open this Account in your name. You may revoke consent for us to contact you by any of these
methods or otherwise restrict your permissions as provided in this form at any time by simply submitting a written request via mail to
P.O. 724 Box Mulberry, Florida 33860 stating in clear and concise terms that you are revoking consent or restricting your permissions
and identifying the cellular numbers and/or email addresses for which you are revoking consent or restricting your permissions. By providing
your cellular number and/or email address and signing this Agreement, you understand and agree that you may not orally revoke consent
for us to contact you at that cellular number and/or email address by any of these methods or otherwise orally restrict your permissions
as provided in this form, and that you may revoke consent or otherwise restrict your permissions only in writing by using the particular
revocation procedures described in this paragraph later converted to a cell number, you agree that we or our service providers can contact
you at that number by auto dialer, recorded or artificial voice, or a text. This includes contacting you for informational and account
service purposes. Your phone charges may apply.

 

By
signing below, I acknowledge that I have agreed to conduct this transaction by electronic means. I further acknowledge that I am electronically
signing the Agreement. I agree that my electronic signature is the legal equivalent of my manual/handwritten signature.

 

	Signature	 	Signature
	 	 	 
	AccountHolder Printed Name	 	Joint Accountholder Printer Name
	
    XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

    XXXXXXXXXXXXXXXXXXXXXXXX
	 	
    XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

    XXXXXXXXXXXXXXXXXXXXXXXX

	Address	 	Address
	XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX	 	XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
	XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX	 	XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
	Date	 	Date
	9999999999	 	9999999999

 

		Account # 	XXXXXXXXXXXX

 

    6/8

     

    

 

YOUR BILLING RIGHTS

KEEP THIS NOTICE FOR FUTURE USE

 

This notice tells you about your rights
and our responsibilities under the Fair Credit Billing Act.

 

What To Do If You
Find A Mistake On Your Statement. If you think there is an error on your statement, write to us on a separate sheet of paper (not on the
monthly statement or payment receipt) at W.S. Badcock Corporation, P.O. Box 1034, Mulberry, Florida 33860. In your letter, give us the
following information:

 

		●	Account Information: Your name and Account number.

 

		●	Dollar Amount: The dollar amount of the suspected error.

 

		●	Description of problem: If you think there is an error on your bill, describe what you believe is wrong and why you believe it is
a mistake.

 

You must contact us:

 

		●	Within 60 days after the error appeared on your statement.

 

		●	At least 3 business days before an automated payment is scheduled, if any, if you want to stop payment on the amount you think is
wrong.

 

You must notify us of any potential
errors in writing. You may call us, but if you do we are not required to investigate any potential errors and you may have to pay the
amount in question.

 

What Will Happen After We Receive
Your Letter. When we receive your letter, we must do two things:

 

		1.	Within 30 days of receiving your letter, we must tell you
that we received your letter. We will also tell you if we have already corrected the error.

 

		2.	Within 90 days of receiving your letter, we must either correct
the error or explain to you why we believe the bill is correct.

 

While we investigate whether or not
there has been an error:

 

		●	We cannot try to collect the amount in question, or report
you as delinquent on that amount.

 

		●	The charge in question may remain on your statement, and we
may continue to charge you interest on that amount.

 

		●	While you do not have to pay the amount in question, you are
responsible for the remainder of your balance.

 

		●	We can apply any unpaid amount against your credit limit.

 

After we finish our investigation,
one of two things will happen:

 

		●	If we have made a mistake, you will not have to pay the amount
in question or any interest or other fees related to that amount.

 

		●	If we do not believe there was a mistake, you will have to pay the amount in question, along with applicab sle interest and fees.
We will send you a statement of the amount you owe and the date payment is due. We may then report you as delinquent if you do not pay
the amount we think you owe.

 

If you receive our explanation but
still believe your bill is wrong, you must write to us within 10 days telling us that you still refuse to pay. If you do so, we cannot
report you as delinquent without also reporting that you are questioning your bill. We must tell you the name of anyone to whom we reported
you as delinquent, and we must let those organizations know when the matters has been settled between us. If we do not follow all of the
rules above, you do not have to pay the first $50 of the amount you question even if your bill is correct.

 

    7/8

     

    

 

 

W. S. BADCOCK CORPORATION PRIVACY POLICY

 

Keeping customer information secure
is a top priority for all of us at Badcock. In order to help you understand what information we collect and how we use it, we have implemented
this Privacy Policy. Unless we indicate otherwise, the term “information” in this Privacy Policy means information that specifically
identifies you. This Privacy Policy applies to all current and former customers of Badcock.

 

What Information Is Collected

 

In the process of
serving you, we become aware of certain “nonpublic personal information” - information about you that is not available
publicly. This information comes to us from a variety of sources including:

 

		●	Information you provide directly to us on applications or
otherwise (such as Social Security number, assets and income);

 

		●	Information related to your transactions with us, or others (such as your account balance, payment history, parties to transactions
and account usage);

 

		●	Information we receive about your transactions with nonaffiliated
third parties; and

 

		●	Information that we receive from a consumer reporting agency.

 

We protect personal information we
collect about you by maintaining physical, electronic, and procedural safeguards that comply with applicable law and assist us in preventing
unauthorized access to that information. We train people who work for us how to handle personal information and we restrict access to
it.

 

We Do Not Sell Any
Information

 

We do not permit list brokers, mail-order businesses, telemarketers, or other marketing companies to contact you to
promote their products or services, and we do not sell, lend, or give out your information for this purpose. If you are a former
customer, we maintain the confidentiality of your personal information as if you were still a customer.

 

We Strive To Maintain the
Accuracy Of Your Information

 

We work to ensure that the information concerning you is accurate in all aspects. If we become aware of
inaccuracies in our records, we will take prompt steps to make appropriate corrections.

 

What Information We
Disclose

 

Federal law allows us to share information in certain circumstances:

 

		●	We may disclose information we collect, as described above, to companies that perform marketing services on our behalf or to other
financial institutions with which we have joint marketing agreements.

 

		●	We may share your information with companies that we hire
to perform necessary account-servicing functions at our direction, to manage, service and maintain your account.

 

We also are permitted under law to
disclose nonpublic personal information about you to “nonaffiliated third parties” in certain other circumstances. For example,
we may disclose nonpublic personal information about you to third parties to assist us in processing your application with us, to government
entities in response to subpoenas, and to credit reporting agencies.

 

    8/8

     

    

 

	 	 	SALES ORDER
	 	 	 
	XXXXX	 	XXXXXXXXX
	XXXXX	 	 

 

	Account Number	XXXXXXXXX	 	BADCOCK EASY PURCHASE PLAN 
	Plan Type EQUAL PAY
    	 		EQUAL PAY PLAN ADDENDUM

 

You are being offered special promotional
terms (and Equal Pay Plan) which subject to specified conditions may reduce the cost of credit under your Badcock Easy Purchase Plan Credit
Agreement (“Credit Agreement”) or otherwise modify the terms of the Credit Agreement with respect to purchases on your account.
You understand that the standard provisions of the Credit Agreement shall apply to the Equal Pay Plan as described herein, except to the
extent otherwise provided under this addendum.

 

For this 36-month Equal Pay Plan, a ten
percent (10%) down payment may be required and your minimum monthly payment will be 1/36 of the remaining amount. This Equal Pay Plan
is a zero interest plan. Thus, Interest will not accrue and will not be payable on purchases made on this Plan; however, provisions relating
to fees that may be charged for late payments will continue to apply pursuant to the terms of the Credit Agreement.

 

If you make any additional purchases under
this Equal Pay Plan, the amount of the additional purchases will be added to the existing Equal Pay Plan balance and will result in a
new Equal Pay Plan balance. Your minimum monthly payment will be increased by the monthly payment required with respect to the new purchase.
For purposes of determining if the minimum monthly payment requirements have been satisfied, payments allocated to this Equal Pay Plan
will be applied pro-rata (based on the remaining amount owned for each purchase under the Plan). Once any prior Equal Pay Plan purchases
have been “paid in full”, the required minimum monthly payment will be reduced to reflect that payment in full.

 

If you have made purchases under one or
more Plans under the Credit Agreement (including purchases under a Special Purchase Plan, an Equal Pay Plan and/or the regular revolving
plan), you understand that you will receive only one monthly account statement and that statement will show, among other things, only
one combined account balance and one combined minimum monthly payment. If, for any reason, your payment is less than the combined minimum
monthly payment, the payment received by us will first be applied to the minimums then due under any Special Purchase Plans (in order
of purchase) and then will be applied to amounts owed under the regular revolving plan and any Equal Pay Plan (in order of purchase).
You understand that such application of your payments may be different than the application of payments as set forth in the Credit Agreement
and under applicable law for purposes of determining the extent of a purchase money security interest in items purchased on your Account.

 

In the event of a conflict between the
terms and conditions of the Credit Agreement and this Equal Pay Plan, you agree that the terms and conditions of this Equal Pay Plan shall
prevail.

 

	NOTICE TO BUYER	(a) Do not sign this before
you read it or if it contains any blank spaces.
	 	(b) You are entitled to an exact copy of the paper you sign. 
	 	(c) You have the right to
pay in advance the full amount due.

 

ANY HOLDER OF THIS CONSUMER CREDIT
CONTRACT IS SUBJECT TO ALL CLAIMS AND DEFENSES WHICH THE DEBTOR COULD ASSERT AGAINST THE SELLER OF GOODS OR SERVICES OBTAINED PURSUANT
HERETO OR WITH THE PROCEEDS HEREOF. RECOVERY HEREUNDER BY THE DEBTOR SHALL NOT EXCEED AMOUNTS PAID BY THE DEBTOR HEREUNDER. YOU HEREBY
ACKNOWLEDGE RECEIPT OF A FULLY EXECUTED AND COMPLETE COPY OF THIS CONTRACT.

 

	 	 	 	 	 
	Print Primary Account Holder Name	 	Primary Account Holder Signature	 	Date
	 	 	 	 	 
	Print Joint Account Holder Name	 	Joint Account
Holder Signature	 	Date

 

	Rev. 04-19
	Badcock offers a 10 day return and refund policy for qualified items.	1/1
	 	Please refer to www.badcock.com for complete details	 

     

     

    

 

 

 

Date                                

 

Sales Order                                 

 

BADCOCK EASY
PURCHASE PLAN 

EMPLOYEE PURCHASE PLAN ADDENDUM

 

Because you are a W.S. Badcock Corporation
(“Badcock”) employee, you are being offered special promotional terms which (subject to specified conditions) may reduce the
cost of credit under your Badcock Easy Purchase Plan Credit Agreement (“Credit Agreement”) or otherwise modify the terms of
the Credit Agreement with respect to purchases on your account. The special rate available to you is set forth below; but, except as provided
below, all the regular provisions of the Credit Agreement shall apply to purchases made by you during the time you are a Badcock employee.

 

Any
purchase made by you under your Credit Agreement with Badcock during the time you are a Badcock employee shall be subject to the following
reduced rate:  Annual Percentage Rate (APR) of 14.88%.

 

If at
any time you are no longer employed by Badcock, you will no longer be eligible to make purchases under the terms of this Addendum. 
Any existing balance related to employee purchases will be paid out under the terms of this Addendum; however, any future purchases will
be subject to all of the terms of your Credit Agreement, including the regular  Annual Percentage
Rate (APR) of [XX%] (to the portion of the average daily balance of your Account which is $750 or less) and [XX%] (to the portion of the
average daily balance of your Account which is more than $750).

 

If you make purchases under your Credit
Agreement both as a Badcock employee and otherwise than as a Badcock employee, you will receive an account statement showing one combined
minimum monthly payment. If, for any reason, you make a payment that is less than the total minimum payment due, you direct that any payment
received by us from you will first be applied to the minimum then due for purchases as an employee, with any excess to be applied to amounts
owed for non-employee purchases.

 

In the event of a conflict between the
terms and conditions of the Credit Agreement and this Addendum, you agree that the terms and conditions of this Addendum shall prevail.

 

	 	 	 	 	 
	Print Primary Account Holder Name	 	Primary Account Holder Signature	 	Date
	 	 	 	 	 
	Print Joint Account Holder Name	 	Joint Account
Holder Signature	 	Date

 

	

Form: EPPA 06/2011-AL 

	Badcock offers a 10 day return and refund policy for qualified items.	1/1
	 	 	 
	 	Please refer to www.badcock.com for complete details	 

     

     

    

 

	 	 	CUSTOMER CREDIT INSURANCE ELECTION
	 

INSURANCE IS NOT REQUIRED FOR ANY PURCHASE ON YOUR W.S.
BADCOCK CORPORATION EASY PURCHASE PLAN

	 	999999999999999
	 	 	9999999999

 

	Insured	 
 	 

	
     

    XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
    XXXXXXXXXXXXXXXXXXXXX

    XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX XXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXXX
    XXXXXX, XX XXXXXXXXXX
	 

	Underwriter	License	Representative	Rate*	Insurance Code
	XXXXXXXXXXXXXXXX	XXXXXXXXXXXXXXXXX	XXXXXXXXXXXXXXXXX	99999	XXXXXXXXXX

	Insurance Description
	XXXXXXXXXXXXXXXXXXXXXXXXXXXXXX

 

NOTICE OF PROPOSED CREDIT INSURANCE

MONTHLY OUTSTANDING BALANCE COVERAGE

 

You are being offered voluntary credit
insurance in connection with your Badcock Easy Purchase Plan Credit Agreement. By electing to enroll in this program, credit
insurance premiums will be based upon the outstanding balance on any regular revolving plans, any special purchase plans, or any
other sub-feature or sub-account under your Agreement (collectively referred to as Account). Subject to coverage certificate terms
and conditions, the credit insurance you elect will cover either the outstanding balance in the event of death, or the minimum
monthly payment on your Badcock Account in the event of a covered claim for disability or involuntary unemployment, or the property
purchased on your Badcock Account for repair or replacement up to the maximum outlined in the certificate of insurance.

 

You will choose the type of credit insurance
program you want to cover your Account. If you elect the Safegard Program, your credit insurance coverage includes single life, disability,
involuntary unemployment and property insurance. If you elect Life/Property, your credit insurance coverage includes single life and property
insurance. If you elect Property, your credit insurance coverage includes property insurance. The credit insurance coverage you choose
will continue in effect on your Account anytime your Account has an open balance and as long as you make your Account payments on time
and your Account is not otherwise in default. Coverage will stop and you will not be charged a premium when your Account balance is paid
in full, but coverage and premiums will automatically resume when you have another open balance on your Account. Your credit insurance
election will terminate if your Account balance has no activity for a continuous period of more than 120 days. Your enrollment begins
on the date this credit insurance election form is signed.

 

Your
initial monthly premium for your elected coverage is 99999 per $100.00 of the average daily balance of your Account for the prior
month. Monthly Premium Rate is subject to change if provided within thirty (30) days’ notice. Life and disability insurance
coverage are provided and underwritten by Life of the South Insurance Company, Administrative Office; 10151 Deerwood Park Blvd,
Building 100, Suite 500, Jacksonville, Florida 32256. Unemployment and property insurance coverage are provided and underwritten by
Lyndon Southern Insurance Company, Administrative Office: 10151 Deerwood Park Blvd., Building 100, Suite 500, Jacksonville, Florida
32556. A certificate describing the coverage in detail will be sent to you within thirty (30) days of your enrollment. It is
important that you read your certificate(s) for complete details of the coverage, benefits, exclusions and conditions that apply to
the insurance plan you selected. You may cancel this coverage at any time by sending written notice of such cancellation to W.S.
Badcock Corporation, Insurance Department, PO Box

497, Mulberry, FL 33860 (fax: 863-869-7964), or the Administrative
Office address above.

 

If your elected insurance coverage includes
life, disability, and/or involuntary unemployment, this coverage will stop when you reach age 71. However, if your insurance coverage
includes property insurance, it will remain in effect on your Account for a maximum period of 36 months from the effective date of coverage,
or until your Account no longer has an open balance. Your premium rate will be lowered to reflect the change in coverage. To qualify for
disability and unemployment benefits, you must be gainfully employed, working at least 30 hours per week on the effective date of your
certificate of insurance, in a non- seasonal occupation (excluding North Carolina).

 

BY SIGNING BELOW, I VOLUNTARILY ELECT
TO ENROLL IN AND PURCHASE THE INSURANCE COVERAGES DETAILED ABOVE FOR PURCHASES ON MY W. S. BADCOCK CORPORATION ACCOUNT. I UNDERSTAND
THAT INSURANCE IS NOT REQUIRED TO OBTAIN CREDIT. IF DESIRED, IT MAY BE OBTAINED BY ME THROUGH ANY INSURER OF MY CHOICE. THIS
ELECTION CANCELS ANY PRIOR INSURANCE ELECTION THAT I MAY HAVE HAD WITH YOU.

 

	 	 	9999999999
	Insured Customer Signature	 	Date 

 

rev. 11/16

 

     

     

    

 

EXHIBIT 5

 

FORM OF PRESS RELEASE 

 

    Ex 5-1 

     

    

 

FRANCHISE GROUP, INC. REPAYS $400
MILLION OF DEBT WITH PROCEEDS FROM THE SALE OF THE W.S. BADCOCK CONSUMER CREDIT ACCOUNTS RECEIVABLE PORTFOLIO

 

Delaware, Ohio, December 20, 2021 (GLOBE
NEWSWIRE) -- Franchise Group, Inc. (NASDAQ: FRG) (“Franchise Group,” “FRG” or the “Company”) today
announced the repayment of $400 million of debt with the proceeds from the sale of the consumer credit accounts receivable portfolio by
its recently acquired subsidiary W.S. Badcock Corporation (“Badcock”) to a subsidiary of B. Riley Financial, Inc. (NASDAQ:
RILY) (the “Transaction”). FRG received $400 million in cash proceeds from the Transaction, which the Company immediately
used to repay debt.

 

Brian Kahn, CEO of Franchise Group said,
“We acquired Badcock to add scale and synergy to our home furnishings franchise businesses. I am pleased that we were able to rapidly
sell the Badcock consumer credit receivables. Badcock will continue to service the receivables portfolio sold to B. Riley while also continuing
to offer flexible payment solutions and credit options to our customers.” Mr. Kahn continued, “The repayment of debt demonstrates
our commitment to a conservative financial policy and identifying the highest and best uses of the Company’s capital. Additionally,
we are continuing to evaluate options for the Badcock real estate portfolio and anticipate completing that sale by the end of the second
quarter of fiscal 2022 which will further reduce our debt.”

 

About Franchise Group

 

Franchise Group is an owner and operator
of franchised and franchisable businesses that continually looks to grow its portfolio of brands while utilizing its operating and capital
allocation philosophy to generate strong cash flow for its shareholders. Franchise Group’s business lines include Pet Supplies Plus,
American Freight, The Vitamin Shoppe, Badcock Home Furniture & more, Buddy’s Home Furnishings and Sylvan Learning. On a combined
basis, Franchise Group currently operates over 3,000 locations predominantly located in the U.S. that are either Company-run or operated
pursuant to franchising and dealer agreements.

 

    - 2 -

     

    

 

Forward-Looking Statements

 

This press release
contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended,
including, without limitation, those that contain, or are identified by, words such as “outlook”,
“guidance”, “believes”, “expects”, “potential”, “continues”,
“may”, “will”, “should”, “predicts”, “intends”, “plans”,
“estimates”, “anticipates”, “could” or the negative version of these words or other comparable
words. Forward-looking statements include, without limitation, projections, predictions, expectations, or beliefs about future
events or results and are not statements of historical fact, including the Company’s expectations regarding its financial
condition, statements relating to the Transaction, anticipated benefits resulting from the Transaction, the use of cash proceeds
received as a result of the Transaction, the potential sale of Badcock’s real estate portfolio, and the resulting anticipated
benefits of such potential sale, which are subject to various significant risks and uncertainties, many of which are outside of the
control of the Company and the effects of the coronavirus (COVID-19) pandemic and/or supply chain disruptions on economic conditions
and the industry in general, and the financial position and operating results of the Company. Such forward-looking statements are
based on various assumptions as of the time they are made, and are inherently subject to known and unknown risks, uncertainties and
other factors that may cause actual results, performance or achievements to be materially different from any future results,
performance or achievements expressed or implied by such forward-looking statements. Forward-looking statements are often
accompanied by words that convey projected future events or outcomes such as “expect,” “believe,”
“estimate,” “plan,” “project,” “anticipate,” “intend,”
“will,” “may,” “view,” “opportunity,” “potential,” or words of similar
meaning or other statements concerning opinions or judgment of the Company or its management about future events. Although the
Company believes that its expectations with respect to forward-looking statements are based upon reasonable assumptions within the
bounds of its existing knowledge of its business and operations, there can be no assurance that actual results, performance, or
achievements of the Company will not differ materially from any projected future results, performance or achievements expressed or
implied by such forward-looking statements. Actual future results, performance or achievements may differ materially from historical
results or those anticipated depending on a variety of factors, many of which are beyond the control of the Company. Additional
factors that could cause actual results to differ materially from forward-looking statements include, among others, the effect of
the announcement of the Transaction on the Company’s ability to retain and hire key personnel and maintain relationships with
their franchisees, dealers, customers, suppliers, partners and others with whom they do business, or on their respective operating
results and business generally; risks associated with the diversion of management’s attention from ongoing business operations
due to the Transaction; legal proceedings related to the Transaction; costs, charge or expenses resulting from the Transaction;
growth of the Company’s franchise and dealer base; the strength of the economy; changes in the overall level of consumer
spending; the performance of the products and services of the Company in the prevailing retail or other business environments;
implementation of the strategy of the Company; maintaining appropriate levels of inventory; or changes in tax policy. We refer you
to the “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of
Operations” sections of the Company’s Annual Report on Form 10-K for the fiscal year ended December 26, 2020, and
comparable sections of the Company’s Quarterly Reports on Form 10-Q and other filings (including the Company’s Current
Reports on Form 8-K), which have been filed with the SEC and are available on the SEC’s website at www.sec.gov. All of the
forward-looking statements made in this press release are expressly qualified by the cautionary statements contained or referred to
herein. The actual results or developments anticipated may not be realized or, even if substantially realized, they may not have the
expected consequences to or effects on the Company or its business or operations. Readers are cautioned not to rely on the
forward-looking statements contained in this press release. Forward-looking statements speak only as of the date they are made and
the Company does not undertake any obligation to update, revise or clarify these forward-looking statements, whether as a result of
new information, future events or otherwise.

 

Franchise Group Investor Relations Contact:

Andrew F. Kaminsky

EVP & Chief Administrative Officer

Franchise Group, Inc.

akaminsky@franchisegrp.com

(914) 939-5161

 

 

- 3 -

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