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                               HRSI FUNDING, INC.,

                            HOUSEHOLD BANK (SB), N.A.

                                       and

                    HOUSEHOLD RECEIVABLES ACQUISITION COMPANY

                         RECEIVABLES PURCHASE AGREEMENT

                            Dated as of June 12, 2001

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                                TABLE OF CONTENTS

<Table>
<Caption>
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ARTICLE I DEFINITIONS...........................................................................................1

         Section 1.01. Definitions..............................................................................1
         Section 1.02. Other Definitional Provisions............................................................4

ARTICLE II PURCHASE AND CONVEYANCE OF RECEIVABLES...............................................................4

         Section 2.01. Purchase.................................................................................4

ARTICLE III CONSIDERATION AND PAYMENT...........................................................................6

         Section 3.01. Purchase Price...........................................................................6

ARTICLE IV REPRESENTATIONS AND WARRANTIES.......................................................................6

         Section 4.01. Representations and Warranties of the Bank Relating to the Bank..........................6
         Section 4.02. Representations and Warranties of the Bank Relating to the Agreement and the
                       Receivables..............................................................................7
         Section 4.03. Representations and Warranties of HRAC...................................................8
         Section 4.04. Representations and Warranties of HRSIFI.................................................9
         Section 4.05. Representations and Warranties of HRSIFI Relating to the Agreement and the Receivables..10

ARTICLE V COVENANTS............................................................................................11

         Section 5.01. Covenants of HRSIFI.....................................................................11

ARTICLE VI REPURCHASE OBLIGATION...............................................................................11

         Section 6.01. Reassignment of Ineligible Receivables..................................................11
         Section 6.02. Reassignment of Trust Portfolio.........................................................12

ARTICLE VII CONDITIONS PRECEDENT...............................................................................13

         Section 7.01. Conditions to HRAC's Obligations Regarding Initial Receivables..........................13
         Section 7.02. Conditions Precedent to the HRSIFI's Obligations........................................13

ARTICLE VIII TERM AND PURCHASE TERMINATION.....................................................................14

         Section 8.01. Term....................................................................................14

ARTICLE IX MISCELLANEOUS PROVISIONS............................................................................14

         Section 9.01. Amendment...............................................................................14
         Section 9.02. Governing Law...........................................................................15
         Section 9.03. Notices.................................................................................15
         Section 9.04. Severability of Provisions..............................................................15
         Section 9.05. Assignment..............................................................................15
</Table>

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<Table>
<S>                                                                                                            <C>
         Section 9.06. Acknowledgement and Agreement of the Bank and HRSIFI....................................15
         Section 9.07. Further Assurances......................................................................16
         Section 9.08. No Waiver; Cumulative Remedies..........................................................16
         Section 9.09. Counterparts............................................................................16
         Section 9.10. Binding; Third-Party Beneficiaries......................................................16
         Section 9.11. Merger and Integration..................................................................17
         Section 9.12. Headings................................................................................17
         Section 9.13. Schedules and Exhibits..................................................................17
         Section 9.14. Survival of Representations and Warranties..............................................17
         Section 9.15. Nonpetition Covenant....................................................................17

Schedule I LIST OF ACCOUNTS....................................................................................I-1
</Table>

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         RECEIVABLES PURCHASE AGREEMENT, dated as of June 12, 2001 by and among
HRSI FUNDING, INC., a Nevada Corporation ("HRSIFI"), HOUSEHOLD RECEIVABLES
ACQUISITION COMPANY, a Delaware corporation ("HRAC"), and HOUSEHOLD BANK (SB),
N.A., a national banking association (the "BANK").

                                   WITNESSETH:

         WHEREAS, HRAC desires to purchase, certain Receivables (hereinafter
defined) owned by HRSIFI which arose under certain revolving credit accounts
owned by the Bank;

         WHEREAS, HRSIFI desires to sell and assign such Receivables to HRAC
upon the terms and conditions hereinafter set forth;

         WHEREAS, it is contemplated that the Receivables purchased hereunder
will be transferred by HRAC to HRSI Funding, Inc. II then to the Trust
(hereinafter defined) in connection with the issuance of certain Securities
(hereinafter defined);

         WHEREAS, the Bank agrees that all representations, warranties, and
agreements made by the Bank herein with respect to the Accounts (hereinafter
defined) and Receivables shall also be for the benefit of HRSI Funding, Inc. II,
the Owner Trustee (hereinafter defined), the Indenture Trustee (hereinafter
defined) and all beneficiaries of the Trust, including the holders of the
Securities; and

         WHEREAS, HRSIFI agrees that all representations, warranties, covenants,
and agreements made by HRSIFI herein with respect to Receivables shall also be
for the benefit of HRSI Funding, Inc. II, the Owner Trustee (hereinafter
defined), the Indenture Trustee (hereinafter defined) and all beneficiaries of
the Trust, including the holders of the Securities.

         NOW, THEREFORE, it is hereby agreed by and among HRSIFI, HRAC and the
Bank as follows:

                                   ARTICLE I

                                  DEFINITIONS

         Section 1.01. Definitions. All capitalized terms used herein or in any
certificate, document, or Conveyance Paper made or delivered pursuant hereto,
and not defined herein or therein, shall have the meaning ascribed thereto in
the Transfer and Servicing Agreement; in addition, the following words and
phrases shall have the following meanings:

         "Account" shall mean (a) each Initial Account, and (b) each account
into which an Account shall be transferred (a "TRANSFERRED ACCOUNT") provided
that (i) such transfer was made in accordance with the Credit Guidelines and
(ii) such account can be traced or identified as an account into which an
Account has been transferred, but shall exclude (x) any Account that after the
Removal Date, the Receivables in which shall not be assigned to HRAC hereunder,
(y) the right, title and interest of HRAC in the Receivables in which are
assigned to the Bank pursuant to Section 6.01 or (z) the right, title and
interest of the Trust in the Receivables in which are assigned and transferred
to the Servicer pursuant to Section 3.03 of the Transfer and Servicing
Agreement.

<PAGE>   5

         "Account Owner" shall mean HRSIFI, the Bank, or any entity which is the
issuer of the revolving credit relating to an Account pursuant to a Credit
Agreement and/or a seller of Receivables to HRAC.

         "Agreement" shall mean this Receivables Purchase Agreement and all
amendments hereof and supplements hereto.

         "Bank" shall mean Household Bank (SB), N.A., a nationally chartered
bank, and its successors and permitted assigns.

         "Closing Date" shall mean June 12, 2001.

         "Company" shall mean HRSI Funding, Inc. II, a Delaware corporation, and
its permitted successors and assigns.

         "Conveyance" shall have the meaning specified in subsection 2.01(a).

         "Debtor Relief Laws" shall mean (a) the Bankruptcy Code of the United
States of America and (b) all other applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, receivership, insolvency, reorganization,
suspension of payments, readjustment of debt, marshalling of assets or similar
debtor relief laws of the United States, any state or any foreign country from
time to time in effect affecting the rights of creditors generally.

         "Eligible Receivable" shall have the meaning set forth in the Transfer
and Servicing Agreement, except that HRSIFI shall be substituted for each
occurrence of "the Transferor," "HRAC" shall be substituted for each occurrence
of "the Owner Trustee," and all references to the Notes shall be ignored.

         "Finance Charge and Administrative Receivables" shall mean all
Receivables in the Accounts which would be treated as "Finance Charge and
Administrative Receivables" in accordance with the definition for such term in
the Transfer and Servicing Agreement.

         "HRAC" shall mean Household Receivables Acquisition Company, a Delaware
corporation, and its successors and permitted assigns.

         "HRSIFI" shall mean HRSI Funding, Inc., a Nevada corporation, and its
successors and permitted assigns.

         "Indenture" shall mean the Master Indenture between the Trust and U.S.
Bank National Association, as Indenture Trustee, dated as of June 12, 2001 as
supplemented by Indenture Supplements applicable to any Series that may be
issued from time to time.

         "Indenture Supplement" shall mean the indenture supplement pursuant to
which a Series is issued.

         "Indenture Trustee" shall mean U.S. Bank National Association in its
capacity as indenture trustee, or any successor indenture trustee.

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<PAGE>   6

         "Initial Account" shall mean each Account included in the computer file
delivered pursuant to Section 2.01(c)(ii) of this Agreement to HRAC or its
designee in respect of the Closing Date.

         "Insolvency Event" shall have the meaning specified in Section 8.02.

         "Obligor" shall mean, with respect to each Account, each person that
would be treated as an "Obligor" in accordance with the definition for such term
in the Transfer and Servicing Agreement.

         "Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation the institution executing the Trust Agreement as and acting in the
capacity of Owner Trustee thereunder, or its successor in interest, or any
successor trustee appointed as provided in the Trust Agreement.

         "Principal Receivables" shall mean all Receivables other than Finance
Charge and Administrative Receivables.

         "Purchase Price" shall have the meaning set forth in Section 3.01.

         "Purchased Assets" shall have the meaning set forth in Section 2.01.

         "Receivables" shall mean all amounts shown on HRSIFI's records as
amounts payable by Obligors on any Account from time to time, including amounts
payable for Principal Receivables and Finance Charge and Administrative
Receivables.

         "Securities" shall mean any one of the Notes (as such term is defined
in the Indenture) or the Transferor Certificates.

         "Transfer and Servicing Agreement" shall mean the Transfer and
Servicing Agreement, dated as of June 12, 2001 among Household Finance
Corporation, as Servicer, the Company, as Transferor, and the Owner Trustee on
behalf of the Trust, and all amendments and supplements thereto.

         "Trust" shall mean the Household Private Label Credit Card Master Note
Trust I, acting by and through Wilmington Trust Company, not in its individual
capacity but solely as Owner Trustee.

         "Trust Agreement" shall mean the Household Private Label Credit Card
Master Note Trust I Trust Agreement, dated as of June 12, 2001 between the
Company, as Transferor, and the Owner Trustee on behalf of the Trust.

         "Trust Collateral" shall have the meaning set forth in Section 2.01.

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<PAGE>   7

         Section 1.02. Other Definitional Provisions.

         All terms defined in this Agreement shall have the defined meanings
when used in any certificate, other document, or Conveyance Paper made or
delivered pursuant hereto unless otherwise defined therein.

         The words "HEREOF," "HEREIN" and "HEREUNDER" and words of similar
import when used in this Agreement or any Conveyance Paper shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
Section, Subsection, Schedule and Exhibit references contained in this Agreement
are references to Sections, Subsections, Schedules and Exhibits in or to this
Agreement unless otherwise specified.

         All determinations of the principal or finance charge balance of
Receivables, and of any collections thereof, shall be made in accordance with
the Transfer and Servicing Agreement and the Indenture.

         All capitalized terms used herein and not otherwise defined herein have
the meanings ascribed to them in the Indenture or the Transfer and Servicing
Agreement.

                                   ARTICLE II

                     PURCHASE AND CONVEYANCE OF RECEIVABLES

         Section 2.01. Purchase.

         (a) By execution of this Agreement, HRSIFI does hereby sell, transfer,
assign, set over and otherwise convey to HRAC (collectively, the "CONVEYANCE"),
without recourse except as provided herein, all its right, title and interest
in, to and under the Receivables existing at the close of business on the
Closing Date in the Initial Accounts, all Recoveries with respect to such
Accounts, all monies due or to become due and all amounts received or receivable
with respect thereto, and all proceeds (including, without limitation,
"proceeds" as defined in the UCC) thereof (the "PURCHASED Assets").

         (b) In connection with such Conveyance, HRSIFI agrees (i) to record and
file, at its own expense, any financing statements (and continuation statements
with respect to such financing statements when applicable) with respect to the
Receivables existing at the close of business on the Closing Date in the Initial
Accounts, meeting the requirements of applicable state law in such manner and in
such jurisdictions as are necessary to perfect, and maintain perfection of, the
Conveyance of such Receivables from HRSIFI to HRAC, (ii) that such financing
statements shall name HRSIFI, as seller, and HRAC, as purchaser, of the
Receivables and (iii) to deliver a file-stamped copy of such financing
statements or other evidence of such filings (excluding such continuation
statements, which shall be delivered as filed) to HRAC as soon as is practicable
after filing.

         (c) In connection with each such Conveyance, HRSIFI further agrees that
it will, at its own expense, (i) on or prior to the Closing Date, indicate in
its computer files that,

                                       4
<PAGE>   8

Receivables created in connection with the Initial Accounts have been conveyed
to HRAC in accordance with this Agreement and, as applicable, have been conveyed
by HRAC to the Company in accordance with the Receivables Purchase Agreement by
and between HRAC and the Company and, as applicable, have been conveyed by the
Company to the Trust pursuant to the Transfer and Servicing Agreement and, as
applicable, have been pledged by the Trust to the Indenture Trustee pursuant to
the Indenture for the benefit of the Noteholders by including in such computer
files the code that identifies each such Account and (ii) on or prior to the
date that is five Business Days after the Closing Date, to deliver to HRAC, or
its designee, a computer file or microfiche list containing a true and complete
list of all such Accounts specifying for each such Account, as of the Closing
Date, (1) its account number, (2) the aggregate amount outstanding in such
Account and (3) the aggregate amount of Principal Receivables in such Account.
Each such computer file or microfiche list, as supplemented from time to time to
reflect Removed Accounts, shall be marked as SCHEDULE I to this Agreement, shall
be delivered to HRAC, or its designee, and is hereby incorporated into and made
a part of this Agreement. HRSIFI further agrees not to alter the code referenced
in clause (i) of this paragraph with respect to any Account during the term of
this Agreement unless and until such Account becomes a Removed Account.

         (d) The parties hereto intend that the conveyance of HRSIFI's right,
title and interest in and to the Purchased Assets shall constitute an absolute
sale, conveying good title free and clear of any liens, claims, encumbrances or
rights of others from HRSIFI to HRAC and that the Purchased Assets shall not be
part of HRSIFI's estate in the event of the bankruptcy of HRSIFI. It is the
intention of the parties hereto that the arrangements with respect to the
Purchased Assets shall constitute a purchase and sale of such Purchased Assets
and not a loan or a borrowing secured by such Purchased Assets. In the event,
however, that it were to be determined that the transactions evidenced hereby
constitute a loan and not a purchase and sale, it is the intention of the
parties hereto that this Agreement shall constitute a security agreement under
applicable law, and that HRSIFI shall be deemed to have granted and does hereby
grant to HRAC a first priority perfected security interest in all of HRSIFI's
right, title and interest, whether now owned or hereafter acquired, in, to and
under the Receivables and other Purchased Assets to secure the obligations of
HRSIFI hereunder.

         (e) To the extent that HRSIFI retains any interest in the Purchased
Assets, HRSIFI hereby grants to the Indenture Trustee for the benefit of the
Noteholders a security interest in all of HRSIFI's right, title, and interest,
whether now owned or hereafter acquired, in, to, and under the Receivables and
other Purchased Assets that are intended to be pledged to the Indenture Trustee
pursuant to the Indenture (collectively, the "TRUST COLLATERAL"), to secure the
performance of all of the obligations of HRSIFI under this Agreement and any
other agreement or document related to the Transfer and Servicing Agreement or
the Indenture. With respect to the Trust Collateral, the Indenture Trustee shall
have all of the rights that it has under the Transfer and Servicing Agreement
and the Indenture and all of the rights of a secured creditor under the UCC.

                                       5
<PAGE>   9

                                  ARTICLE III

                            CONSIDERATION AND PAYMENT

         Section 3.01. Purchase Price.

         (a) The "PURCHASE PRICE" for the Receivables in the Initial Accounts
and the related Purchased Assets conveyed to HRAC under this Agreement shall be
payable on the Closing Date and shall be an amount equal to 100% of the
aggregate balance of Principal Receivables in those Accounts as of the Closing
Date, plus the present value of anticipated excess spread, computed by taking
into account factors such as historical losses, servicing fees, delinquencies
and paydown rates, yield and such other factors as HRSIFI and HRAC mutually
agree (and discounted to take into account any uncertainty as to future
performance matching historical performances) will result in a Purchase Price
determined to be the fair market value of such Purchased Assets. This
computation of initial purchase price shall assume no reinvestment in new
Receivables.

         (b) The Purchase Price to be paid by HRAC on the Closing Date shall be
paid in cash (including netting against other payments).

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

         Section 4.01. Representations and Warranties of the Bank Relating to
the Bank. The Bank hereby represents and warrants to, and agrees with, HRAC as
of the Closing Date that:

         (a) (Organization and Good Standing) the Bank is a national bank duly
organized and validly existing in good standing under the laws of the United
States and has, in all material respects, full power and authority to own its
properties and conduct its business as such properties are presently owned and
such business is presently conducted, and to execute, deliver and perform its
obligations under this Agreement;

         (b) (Due Qualification) the Bank is duly qualified to do business and
is in good standing as a foreign corporation (or is exempt from such
requirements) and has obtained all necessary licenses and approvals, in each
jurisdiction in which failure to so qualify or to obtain such licenses and
approvals would (i) render any Credit Agreement relating to an Account or any
Receivable unenforceable by the Bank, HRAC, the Company or the Owner Trustee on
behalf of the Trust and (ii) have a material adverse effect on the Noteholders;

         (c) (Due Authorization) the execution, delivery and performance of this
Agreement and any other document or instrument delivered pursuant hereto, and
the consummation of the transactions provided for in this Agreement have been
duly authorized by the Bank by all necessary corporate action on the part of the
Bank;

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<PAGE>   10

         (d) (No Conflict) the execution and delivery of this Agreement by the
Bank, the performance of the transactions contemplated by this Agreement, and
the fulfillment of the terms of this Agreement will not conflict with, violate
or result in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a material default
under, any indenture, contract, agreement, mortgage, deed of trust, or other
instrument to which the Bank is a party or by which it or any of its properties
are bound;

         (e) (No Violation) the execution, delivery and performance of this
Agreement by the Bank and the fulfillment of the terms contemplated herein and
therein applicable to the Bank will not conflict with or violate any
Requirements of Law applicable to the Bank;

         (f) (No Proceedings) there are no proceedings or investigations pending
or, to the best knowledge of the Bank, threatened against the Bank, before any
Governmental Authority (i) asserting the invalidity of this Agreement, (ii)
seeking to prevent the consummation of any of the transactions contemplated by
this Agreement, (iii) seeking any determination or ruling that, in the
reasonable judgment of the Bank, would materially and adversely affect the
performance by the Bank of its obligations under this Agreement, (iv) seeking
any determination or ruling that would materially and adversely affect the
validity or enforceability of this Agreement or (v) seeking to affect adversely
the income tax attributes of the Trust under the United States Federal or
Delaware income tax systems; and

         (g) (All Consents) all authorizations, consents, orders or approvals of
or registrations or declarations with any Governmental Authority required to be
obtained, effected or given by the Bank in connection with the execution and
delivery by the Bank of this Agreement and the performance of the transactions
contemplated by this Agreement by the Bank have been duly obtained, effected or
given and are in full force and effect.

         The representations and warranties set forth in this Section 4.01 shall
survive the transfer and assignment of the Receivables to HRAC. Upon discovery
by the Bank or HRAC of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give written notice to the
other party, the Company, the Owner Trustee and the Indenture Trustee within
three Business Days following such discovery.

         Section 4.02. Representations and Warranties of the Bank Relating to
the Agreement and the Receivables.

         (a) Representations and Warranties. The Bank hereby represents and
warrants to HRAC as of the date of this Agreement and as of the Closing Date
that:

               (i) this Agreement constitutes a legal, valid and binding
     obligation of the Bank enforceable against the Bank in accordance with its
     terms, except as such enforceability may be limited by applicable
     bankruptcy, insolvency, reorganization, moratorium or other similar laws
     affecting creditors' rights generally from time to time in effect or
     general principles of equity;

               (ii) as of the Closing Date with respect to Initial Accounts,
     SCHEDULE I to this Agreement, is an accurate and complete listing in all
     material respects of all the Initial Accounts as of the Closing Date, and
     the information contained therein with respect to the

                                       7
<PAGE>   11

     identity of such Initial Accounts and the Receivables existing thereunder
     is true and correct in all material respects as of the Closing Date;

               (iii) each Receivable has been conveyed to HRAC free and clear of
     any Lien;

               (iv) all authorizations, consents, orders or approvals of or
     registrations or declarations with any Governmental Authority required to
     be obtained, effected or given by the Bank in connection with the
     conveyance of Receivables to HRAC have been duly obtained, effected or
     given and are in full force and effect;

               (v) on the Closing Date, each related Initial Account is an
     Eligible Account;

               (vi) on the Closing Date, each Receivable generated under an
     Initial Account is an Eligible Receivable; and

               (vii) no selection procedures believed by the Bank to be
     materially adverse to the interests of HRAC or the Noteholders have been
     used in selecting such Accounts.

         (b) Notice of Breach. The representations and warranties set forth in
this Section 4.02 shall survive the transfer and assignment of the Receivables
to HRAC. Upon discovery by any of the Bank, HRSIFI or HRAC of a breach of any of
the representations and warranties set forth in this Section 4.02, the party
discovering such breach shall give written notice to the other parties, the
Company, the Owner Trustee and the Indenture Trustee within three Business Days
following such discovery; provided that the failure to give notice within three
Business Days does not preclude subsequent notice. The Bank hereby acknowledges
that HRAC intends to rely on the representations hereunder in connection with
representations made by HRAC to secured parties, assignees or subsequent
transferees including but not limited to transfers made by HRAC to the Company
pursuant to the Receivables Purchase Agreement, dated June 12, 2001, by and
between HRAC and the Company, and by the Company to the Trust pursuant to the
Transfer and Servicing Agreement and by the Trust to the Indenture Trustee
pursuant to the Indenture and that the Company, the Owner Trustee and the
Indenture Trustee may enforce such representations directly against the Bank.

         Section 4.03. Representations and Warranties of HRAC. As of the Closing
Date, HRAC hereby represents and warrants to, and agrees with, the Bank and
HRSIFI that:

         (a) (Organization and Good Standing) HRAC is a corporation duly
organized and validly existing under the laws of the State of Delaware and has,
in all material respects, full power and authority to own its properties and
conduct its business as such properties are presently owned and such business is
presently conducted and to execute, deliver and perform its obligations under
this Agreement;

         (b) (Due Authorization) the execution and delivery of this Agreement
and the consummation of the transactions provided for in this Agreement have
been duly authorized by HRAC by all necessary corporate action on the part of
HRAC;

                                       8
<PAGE>   12

         (c) (No Conflict) the execution and delivery of this Agreement by HRAC,
the performance of the transactions contemplated by this Agreement, and the
fulfillment of the terms of this Agreement applicable to HRAC, will not conflict
with, result in any breach of any of the material terms and provisions of, or
constitute (with or without notice or lapse of time or both) a material default
under, any indenture, contract, agreement, mortgage, deed of trust or other
instrument to which HRAC is a party or by which it or any of its properties are
bound;

         (d) (No Violation) the execution, delivery and performance of this
Agreement by HRAC and the fulfillment of the terms contemplated herein and
therein applicable to HRAC will not conflict with or violate any Requirements of
Law applicable to HRAC;

         (e) (No Proceedings) there are no proceedings or investigations pending
or, to the best knowledge of HRAC, threatened against HRAC, before any
Governmental Authority (i) asserting the invalidity of this Agreement, (ii)
seeking to prevent the consummation of any of the transactions contemplated by
this Agreement, (iii) seeking any determination or ruling that, in the
reasonable judgment of HRAC, would materially and adversely affect the
performance by HRAC of its obligations under this Agreement or (iv) seeking any
determination or ruling that would materially and adversely affect the validity
or enforceability of this Agreement; and

         (f) (All Consents) all authorizations, consents, orders or approvals of
or registrations or declarations with any Governmental Authority required to be
obtained, effected or given by HRAC in connection with the execution and
delivery by HRAC of this Agreement and the performance of the transactions
contemplated by this Agreement have been duly obtained, effected or given and
are in full force and effect.

         The representations and warranties set forth in this Section 4.03 shall
survive the Conveyance of the Receivables to HRAC. Upon discovery by HRSIFI,
HRAC or the Bank of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
to the other parties, the Owner Trustee and the Indenture Trustee.

         Section 4.04. Representations and Warranties of HRSIFI. As of the
Closing Date HRSIFI hereby represents and warrants to, and agrees with, HRAC
that:

         (a) (Organization and Good Standing) HRSIFI is a corporation duly
organized and validly existing under the laws of the State of Nevada and has, in
all material respects, full power and authority to own its properties and
conduct its business as such properties are presently owned and such business is
presently conducted and to execute, deliver and perform its obligations under
this Agreement;

         (b) (Due Authorization) the execution and delivery of this Agreement
and the consummation of the transactions provided for in this Agreement have
been duly authorized by HRSIFI by all necessary corporate action on the part of
HRSIFI;

         (c) (No Conflict) the execution and delivery of this Agreement by
HRSIFI, the performance of the transactions contemplated by this Agreement, and
the fulfillment of the terms of this Agreement applicable to HRSIFI, will not
conflict with, result in any breach of any of the material terms and provisions
of, or constitute (with or without notice or lapse of time or both) a

                                       9
<PAGE>   13

material default under, any indenture, contract, agreement, mortgage, deed of
trust or other instrument to which HRSIFI is a party or by which it or any of
its properties are bound;

         (d) (No Violation) the execution, delivery and performance of this
Agreement by HRSIFI and the fulfillment of the terms contemplated herein and
therein applicable to HRSIFI will not conflict with or violate any Requirements
of Law applicable to HRSIFI;

         (e) (No Proceedings) there are no proceedings or investigations pending
or, to the best knowledge of HRSIFI, threatened against HRSIFI, before any
Governmental Authority (i) asserting the invalidity of this Agreement, (ii)
seeking to prevent the consummation of any of the transactions contemplated by
this Agreement, (iii) seeking any determination or ruling that, in the
reasonable judgment of HRSIFI, would materially and adversely affect the
performance by HRSIFI of its obligations under this Agreement or (iv) seeking
any determination or ruling that would materially and adversely affect the
validity or enforceability of this Agreement; and

         (f) (All Consents) all authorizations, consents, orders or approvals of
or registrations or declarations with any Governmental Authority required to be
obtained, effected or given by HRSIFI in connection with the execution and
delivery by HRSIFI of this Agreement and the performance of the transactions
contemplated by this Agreement have been duly obtained, effected or given and
are in full force and effect.

         The representations and warranties set forth in this Section 4.04 shall
survive the Conveyance of the Receivables to HRAC. Upon discovery by HRSIFI,
HRAC or the Bank of a breach of any of the foregoing representations and
warranties, the party discovering such breach shall give prompt written notice
to the other parties, the Owner Trustee and the Indenture Trustee.

         Section 4.05. Representations and Warranties of HRSIFI Relating to the
Agreement and the Receivables. HRSIFI hereby represents and warrants to HRAC as
of the date of this Agreement, as of the Closing Date that:

         (a) this Agreement constitutes a valid sale, transfer and assignment to
HRAC of all right, title and interest of HRSIFI in the Receivables and the
proceeds thereof and the Recoveries payable pursuant to this Agreement;

         (b) this Agreement constitutes a legal, valid and binding obligation of
HRSIFI enforceable against HRSIFI, in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting creditors' rights
generally from time to time in effect or general principles of equity;

         (c) as of the Closing Date with respect to Initial Accounts, SCHEDULE I
to this Agreement is an accurate and complete listing in all material respects
of all the Accounts as of the Closing Date, and the information contained
therein with respect to the identity of such Accounts and the Receivables
existing thereunder is true and correct in all material respects as of the
Closing Date;

         (d) each Receivable has been conveyed to HRAC free and clear of any
Lien;

                                       10
<PAGE>   14

         (e) all authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required to be
obtained, effected or given by HRSIFI in connection with the conveyance of
Receivables to HRAC have been duly obtained, effected or given and are in full
force and effect;

         (f) on the Closing Date, each related Initial Account is an Eligible
Account;

         (g) on the Closing Date, each Receivable generated under an Initial
Account is an Eligible Receivable; and

         (h) no selection procedures believed by HRSIFI to be materially adverse
to the interests of HRAC or the Noteholders have been used in selecting such
Accounts.

                                    ARTICLE V

                                    COVENANTS

         Section 5.01. Covenants of HRSIFI. HRSIFI hereby covenants and agrees
with HRAC as follows:

         (a) Security Interests. Except for the conveyances hereunder, HRSIFI
will not sell, pledge, assign or transfer to any other Person, or take any other
action inconsistent with HRAC's ownership of the Receivables or grant, create,
incur, assume or suffer to exist any Lien (arising through or under HRSIFI) on,
any Receivable, whether now existing or hereafter created, or any interest
therein, and HRSIFI shall not claim any ownership interest in the Receivables
and shall defend the right, title and interest of HRAC in, to and under the
Receivables, whether now existing or hereafter created, against all claims of
third parties claiming through or under HRSIFI.

         (b) Delivery of Collections or Recoveries. In the event that HRSIFI
receives Collections or Recoveries, HRSIFI agrees to pay to HRAC (or to the
Servicer if HRAC so directs) all such Collections and Recoveries as soon as
practicable after receipt thereof.

         (c) Documentation of Transfer. HRSIFI shall undertake to file the
documents which would be necessary to perfect and maintain the transfer of the
Purchased Assets to HRAC.

                                   ARTICLE VI

                              REPURCHASE OBLIGATION

         Section 6.01. Reassignment of Ineligible Receivables.

         (a) In the event any representation or warranty under Section
4.02(a)(ii), (iii), (iv), (v), (vi) or (vii) is not true and correct in any
material respect as of the date specified therein with respect to any Receivable
or the related Account and as a result of such breach HRAC is

                                       11
<PAGE>   15

required to accept reassignment of Ineligible Receivables previously sold by
HRSIFI to HRAC pursuant to Section 6.01(b) of the Receivables Purchase Agreement
between HRAC and the Company, the Bank shall accept reassignment of HRAC's
interest in such Ineligible Receivables on the terms and conditions set forth in
Section 6.01(b) of this Agreement.

         (b) The Bank shall accept reassignment from HRAC of any Ineligible
Receivables previously sold by HRSIFI to HRAC on the date on which such
reassignment obligation arises, and shall pay for such reassigned Ineligible
Receivables by paying to HRAC, not later than 3:00 p.m., New York City time on
such date, an amount equal to the unpaid principal balance of such Ineligible
Receivables plus accrued and unpaid finance charges at the annual percentage
rate applicable to such Receivables from the last date billed through the end of
the Due Period in which such reassignment obligation arises. Upon reassignment
of such Ineligible Receivables, HRAC shall automatically and without further
action be deemed to sell, transfer, assign, set-over and otherwise convey to the
Bank, without recourse, representation or warranty, all the right, title and
interest of HRAC in and to such Ineligible Receivables, all Recoveries related
thereto, all monies and amounts due or to become due with respect thereto and
all proceeds thereof; and such reassigned Ineligible Receivables shall be
treated by HRAC as collected in full as of the date on which they were
transferred. HRAC shall execute such documents and instruments of transfer or
assignment and take such other actions as shall reasonably be requested by the
Bank to effect the conveyance of such Ineligible Receivables and other property
pursuant to this subsection.

         Section 6.02. Reassignment of Trust Portfolio. In the event any
representation or warranty set forth in Section 4.01(a), (c), (d), (f) or (g) or
Section 4.02(a)(i) is not true and correct in any material respect and as a
result of such breach HRAC is required to accept a reassignment of the
Receivables previously sold by HRSIFI to HRAC pursuant to Section 6.02 of the
Receivables Purchase Agreement between HRAC and the Company, the Bank shall be
obligated to accept a reassignment of HRAC's interest in such Receivables on the
terms set forth below.

         The Bank shall pay to HRAC by depositing in the Collection Account in
immediately available funds, not later than 1:00 P.M. New York City time, on the
first Transfer Date following the Due Period in which such reassignment
obligation arises, in payment for such reassignment, an amount equal to the
amount specified in Section 2.06 of the Transfer and Servicing Agreement. Upon
such reassignment of Receivables, HRAC shall automatically and without further
action be deemed to sell, transfer, assign, set-over and otherwise convey to the
Bank, without recourse, representation or warranty, all the right, title and
interest of HRAC in and to such Receivables, all Recoveries related thereto, all
monies and amounts due or to become due with respect thereto and all proceeds
thereof; and such reassigned Receivables shall be treated by HRAC as collected
in full as of the date on which they were transferred. HRAC shall execute such
documents and instruments of transfer or assignment and take such other actions
as shall reasonably be requested by the Bank to effect the conveyance of such
Receivables and other property pursuant to this subsection.

                                       12
<PAGE>   16

                                  ARTICLE VII

                              CONDITIONS PRECEDENT

         Section 7.01. Conditions to HRAC's Obligations Regarding Initial
Receivables. The obligations of HRAC to purchase the Receivables in the Initial
Accounts on the Closing Date shall be subject to the satisfaction of the
following conditions:

         (a) All representations and warranties of the Bank and HRSIFI contained
in this Agreement shall be true and correct on the Closing Date with the same
effect as though such representations and warranties had been made on such date;

         (b) All information concerning the Initial Accounts provided to HRAC,
or its designee, shall be true and correct as of the Closing Date in all
material respects;

         (c) HRSIFI shall have delivered to HRAC, or its designee, a computer
file or microfiche list containing a true and complete list of all Initial
Accounts identified by account number and by the Receivables balance as of the
Closing Date and (ii) HRSIFI and the Bank substantially performed all other
obligations required to be performed by the provisions of this Agreement;

         (d) HRSIFI shall have recorded and filed, at its expense, any financing
statement with respect to the Receivables now existing for the transfer of
accounts and general intangibles (each as defined in Section 9-106 of the UCC)
meeting the requirements of applicable state law in such manner and in such
jurisdictions as would be necessary to perfect the sale of and security interest
in the Receivables from HRSIFI to HRAC, and shall deliver a file-stamped copy of
such financing statements or other evidence of such filings to HRAC, or its
designee;

         (e) On or before the Closing Date, (i) the Bank and HRAC shall have
entered into a Receivables Purchase Agreement, (ii) HRAC and the Company shall
have entered into a Receivables Purchase Agreement (iii) the Company and the
Owner Trustee shall have entered into the Trust Agreement (iv) the Company,
Household Finance Corporation and the Owner Trustee shall have entered into the
Transfer and Servicing Agreement, (iv) the Trust and the Indenture Trustee shall
have entered into the Indenture and (vi) the closing under the Transfer and
Servicing Agreement and the Indenture shall take place simultaneously with the
initial closing hereunder; and

         (f) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to HRAC, and HRAC shall have received from
HRSIFI and copies of all documents (including, without limitation, records of
corporate proceedings) relevant to the transactions herein contemplated as HRAC
may reasonably have requested.

         Section 7.02. Conditions Precedent to the HRSIFI's Obligations. The
obligations of HRSIFI to sell Receivables in the Initial Accounts on the Closing
Date shall be subject to the satisfaction of the following conditions:

                                       13
<PAGE>   17

         (a) All representations and warranties of HRAC contained in this
Agreement shall be true and correct with the same effect as though such
representations and warranties had been made on such date;

         (b) Payment or provision for payment of the Purchase Price in
accordance with the provision of Section 3.01 hereof shall have been made; and

         (c) All corporate and legal proceedings and all instruments in
connection with the transactions contemplated by this Agreement shall be
satisfactory in form and substance to HRSIFI, and HRSIFI shall have received
from HRAC copies of all documents (including, without limitation, records of
corporate proceedings) relevant to the transactions herein contemplated as
HRSIFI may reasonably have requested.

                                  ARTICLE VIII

                          TERM AND PURCHASE TERMINATION

         Section 8.01. Term. This Agreement shall commence as of the date of
execution and delivery hereof and shall continue until the earlier of (i) the
termination of the Trust as provided in Article VIII of the Trust Agreement or
(ii) such time when all amounts payable under all Receivables purchased under
this agreement have been paid out by the Trust.

                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

         Section 9.01. Amendment. This Agreement and any Conveyance Papers and
the rights and obligations of the parties hereunder and thereunder may not be
changed orally, but only by an instrument in writing signed by HRAC, HRSIFI and
the Bank in accordance with this Section 9.01. This Agreement may be amended
from time to time by HRAC, HRSIFI and the Bank (i) to cure any ambiguity, (ii)
to correct or supplement any provisions herein which may be inconsistent with
any other provisions herein, (iii) to add any other provisions with respect to
matters or questions arising under this Agreement which shall not be
inconsistent with the provisions of this Agreement, (iv) to change or modify the
Purchase Price and (v) to change, modify, delete or add any other obligation of
the Bank, HRSIFI or HRAC; provided, however that no amendment pursuant to clause
(v) of this Section 9.01 shall be effective unless the Bank, HRSIFI and HRAC
have been notified in writing that the Rating Agency Condition has been
satisfied; provided, further, the Bank, HRSIFI and HRAC shall have delivered to
the Company, the Owner Trustee and the Indenture Trustee an Officer's
Certificate, dated the date of any such action, stating that each of the Bank
and HRAC, respectively, reasonably believes that such action will not have an
Adverse Effect, unless the Company, the Owner Trustee and the Indenture Trustee
shall consent thereto. Any reconveyance executed in accordance with the
provisions hereof shall not be considered to be an amendment to this Agreement.
A copy of any amendment to this Agreement shall be sent to the Rating Agency.

                                       14
<PAGE>   18

         Section 9.02. Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

         Section 9.03. Notices. All demands, notices and communications
hereunder shall be in writing and shall be deemed to have been duly given if
personally delivered at or mailed by registered mail, return receipt requested,
to (a) in the case of the Bank, 1111 Town Center Drive, Las Vegas, Nevada 89134,
Attention: General Counsel, (b) in the case of HRAC, 2700 Sanders Road, Prospect
Heights, IL 60070, Attention: General Counsel, (c) HRSIFI , 2700 Sanders Road,
Prospect Heights, IL 60070, Attention: Legal Department, (d) in the case of the
Owner Trustee, Rodney Square North, 1100 North Market Street, Wilmington, DE
19890-0001, (e) in the case of the Indenture Trustee, 111 East Wacker Drive,
Chicago, Illinois, 60601, Attention: Corporate Trust Department, (f) in the case
of the Servicer, Household Finance Corporation, 2700 Sanders Road, Prospect
Heights, Illinois 60070, Attention: S.H. Smith, Assistant Treasurer, (g) in the
case of Fitch, Fitch, Inc., One State Street Plaza, New York, NY 10004,
Attention: ABS Surveillance, (h) in the case of Moody's, Moody's Investors
Service Inc., 99 Church Street, New York, NY 10007, Attention: ABS Monitoring
Group, or (i) in the case of Standard & Poor's, Standard & Poor's Ratings Group,
55 Water Street, New York, NY 10041, Attention: Credit Card ABS; or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party.

         Section 9.04. Severability of Provisions. If any one or more of the
covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such covenants, agreements, provisions,
or terms shall be deemed severable from the remaining covenants, agreements,
provisions, and terms of this Agreement and shall in no way affect the validity
or enforceability of the other provisions of this Agreement.

         Section 9.05. Assignment. Notwithstanding anything to the contrary
contained herein, other than HRAC's assignment of its rights, title, and
interests in, to, and under this Agreement to the Company and the Company's
assignment of its rights, title and interest in, to and under this Agreement to
the Trust and the Trust's assignment of its rights, title and interests in, to
and under this Agreement to the Indenture Trustee for the benefit of the
beneficiaries of the Trust, including the Noteholders as contemplated by the
Transfer and Servicing Agreement, the Indenture and Section 9.06 hereof, this
Agreement and may not be assigned by the parties hereto unless the Bank shall
assign its rights, title and interests in, to and under this Agreement to (a)
any successor by merger assuming this Agreement (b) to any affiliate owned
directly or indirectly by Household International, Inc. which assumes the
obligations of this Agreement or (c) to any entity provided that the Rating
Agency has advised HRAC and the Bank that the Rating Agency Condition has been
satisfied.

         Section 9.06. Acknowledgement and Agreement of the Bank and HRSIFI. By
execution below, each of HRSIFI and the Bank expressly acknowledges and agrees
that all of HRAC's right, title, and interest in, to, and under this Agreement,
including, without limitation, all of HRAC's right, title, and interest in and
to the Receivables purchased pursuant to this Agreement, shall be assigned by
HRAC to the Company, and shall be assigned by the Company to

                                       15
<PAGE>   19

the Owner Trustee, and shall be assigned by the Owner Trustee to the Indenture
Trustee for the benefit of the beneficiaries of the Trust, including the
Noteholders, and each of HRSIFI and the Bank consents to such assignments. Each
of HRSIFI and the Bank further agrees that notwithstanding any claim,
counterclaim, right of setoff or defense which it may have against HRAC, due to
a breach by HRAC of this Agreement or for any other reason, and notwithstanding
the bankruptcy of HRAC or any other event whatsoever, each of HRSIFI and the
Bank's sole remedy shall be a claim against HRAC for money damages, and then
only to the extent of funds received by HRAC pursuant to the Receivables
Purchase Agreement between HRAC and the Company, and in no event shall the Bank
or HRSIFI assert any claim on or any interest in the Receivables or any proceeds
thereof or take any action which would reduce or delay receipt by the Company or
the Owner Trustee of collections with respect to the Receivables. Additionally,
the Bank agrees for the benefit of the Noteholders that any amounts payable by
the Bank to HRAC hereunder which are to be paid by HRAC to the Company then paid
by the Company to the Owner Trustee and pledged to the Indenture Trustee for the
benefit of the Noteholders shall be paid by the Bank, on behalf of HRAC,
directly to the Company. Additionally, the Bank agrees for the benefit of the
Noteholders that any amounts payable by the Bank to HRAC hereunder which are to
be paid by HRAC to the Company then paid by the Company to the Owner Trustee and
pledged to the Indenture Trustee for the benefit of the Noteholders shall be
paid by the Bank, on behalf of HRAC, directly to the Company. Additionally,
HRSIFI agrees for the benefit of the Noteholders that any amounts payable by
HRSIFI to HRAC hereunder which are to be paid by HRAC to the Company then paid
by the Company to the Owner Trustee and pledged to the Indenture Trustee for the
benefit of the Noteholders shall be paid by HRSIFI, on behalf of HRAC, directly
to the Company.

         Section 9.07. Further Assurances. HRAC and the Bank agree to do and
perform, from time to time, any and all acts and to execute any and all further
instruments required or reasonably requested by the other party, the Company,
the Owner Trustee or the Indenture Trustee more fully to effect the purposes of
this Agreement, and the Transfer and Servicing Agreement, including, without
limitation, the execution of any financing statements or continuation statements
or equivalent documents relating to the Receivables for filing under the
provisions of the UCC or other law of any applicable jurisdiction.

         Section 9.08. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of HRAC , HRSIFI or the Bank, any right,
remedy, power or privilege hereunder, shall operate as a waiver thereof; nor
shall any single or partial exercise of any right, remedy, power or privilege
hereunder preclude any other or further exercise thereof or the exercise of any
other right, remedy, power or privilege. Subject to Section 9.06, the rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.

         Section 9.09. Counterparts. This Agreement may be executed in two or
more counterparts (and by different parties on separate counterparts), each of
which shall be an original, but all of which together shall constitute one and
the same instrument.

         Section 9.10. Binding; Third-Party Beneficiaries. This Agreement will
inure to the benefit of and be binding upon the parties hereto and their
respective successors and permitted assigns. The Company, the Owner Trustee and
the Indenture Trustee shall be considered third-party beneficiaries of this
Agreement.

                                       16
<PAGE>   20

         Section 9.11. Merger and Integration. Except as specifically stated
otherwise herein, this Agreement set forth the entire understanding of the
parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.

         Section 9.12. Headings. The headings are for purposes of reference only
and shall not otherwise affect the meaning or interpretation of any provision
hereof.

         Section 9.13. Schedules and Exhibits. The schedules and exhibits
attached hereto and referred to herein shall constitute a part of this Agreement
and are incorporated into this Agreement for all purposes.

         Section 9.14. Survival of Representations and Warranties. All
representations, warranties and agreements contained in this Agreement, shall
remain operative and in full force and effect and shall survive conveyance of
the Receivables by HRSIFI to HRAC and thereafter to the Company pursuant to the
Receivables Purchase Agreement between HRAC and the Company, and thereafter by
the Company to the Trust pursuant to the Transfer and Servicing Agreement and by
the Trust and the Indenture Trustee pursuant to the Indenture.

         Section 9.15. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, each of the HRSIFI and the Bank shall not, prior
to the date which is one year and one day after the termination of this
Agreement, acquiesce, petition or otherwise invoke or cause HRAC to invoke the
process of any Governmental Authority for the purpose of commencing or
sustaining a case against HRAC under any Federal or state bankruptcy, insolvency
or similar law or appointing a receiver, conservator, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of HRAC or any
substantial part of its property or ordering the winding-up or liquidation or
the affairs of HRAC.

                                       17
<PAGE>   21

         IN WITNESS WHEREOF, HRSIFI, HRAC and the Bank have caused this
Agreement to be duly executed by their respective officers as of the day and
year first above written.

                                       HRSI FUNDING, INC.

                                       By: /s/ S. H. SMITH
                                           -------------------------------------
                                           Name:  S. H. Smith
                                           Title: Vice President and Treasurer


                                       HOUSEHOLD BANK (SB), N.A.

                                       By: /s/ J. W. HOFF
                                           -------------------------------------
                                           Name:  J. W. Hoff
                                           Title: Vice President


                                       HOUSEHOLD RECEIVABLES ACQUISITION COMPANY

                                       By: /s/ J. W. HOFF
                                           -------------------------------------
                                           Name:  J. W. Hoff
                                           Title: Vice President


                                       18
<PAGE>   22

                                                                      Schedule I

                                LIST OF ACCOUNTS

         COMPUTER FILES CONTAINING ACCOUNT INFORMATION DELIVERED TO HRAC
                         ARE INCORPORATED BY REFERENCE


                                      I-1