<PAGE>

                                                                    EXHIBIT 10.1

                                                                  EXECUTION COPY


--------------------------------------------------------------------------------


                   HOUSEHOLD RECEIVABLES FUNDING, INC. III,
                                  TRANSFEROR,

                        HOUSEHOLD FINANCE CORPORATION,
                                   SERVICER,

                                      and


                  WILMINGTON TRUST COMPANY, AS TRUSTEE OF THE

                  HOUSEHOLD CREDIT CARD MASTER NOTE TRUST I,
                                    ISSUER


                             AMENDED AND RESTATED
                       TRANSFER AND SERVICING AGREEMENT

       Dated as of November 16, 2000 amending and restating in full the
        Transfer and Servicing Agreement dated as of September 25, 2000

--------------------------------------------------------------------------------

<PAGE>

                               TABLE OF CONTENTS

<TABLE>
<S>                                                                                                                <C>
ARTICLE I      DEFINITIONS......................................................................................    1

     Section 1.01.     Definitions..............................................................................    1

     Section 1.02.     Other Definitional Provisions............................................................   13

ARTICLE II     CONVEYANCE OF RECEIVABLES........................................................................   15

     Section 2.01.     Conveyance of Receivables................................................................   15

     Section 2.02.     Acceptance by Owner Trustee..............................................................   16

     Section 2.03.     Representations and Warranties of Each Transferor Relating to Such Transferor............   17

     Section 2.04.     Representations and Warranties of each Transferor Relating to the  Agreement and Any
                       Participation Interest Supplement and the Receivables....................................   18

     Section 2.05.     Reassignment of Ineligible Receivables...................................................   19

     Section 2.06.     Reassignment of Trust Portfolio..........................................................   20

     Section 2.07.     Covenants of each Transferor.............................................................   21

     Section 2.08.     Covenants of each Transferor with Respect to Receivables Purchase Agreement..............   22

     Section 2.09.     Addition of Accounts.....................................................................   23

     Section 2.10.     Removal of Accounts and Participation Interests..........................................   26

     Section 2.11.     Account Allocations......................................................................   28

     Section 2.12.     Discount Option..........................................................................   28

ARTICLE III    ADMINISTRATION AND SERVICING OF RECEIVABLES......................................................   30

     Section 3.01.     Acceptance of Appointment and Other Matters Relating to the Servicer.....................   30

     Section 3.02.     Servicing Compensation...................................................................   31

     Section 3.03.     Representations, Warranties and Covenants of the Servicer................................   31

     Section 3.04.     Reports and Records for the Owner Trustee and the Indenture Trustee......................   34

     Section 3.05.     Annual Certificate of Servicer...........................................................   34

     Section 3.06.     Annual Servicing Report of Independent Public Accountants; Copies of Reports Available...   34

     Section 3.07.     Tax Treatment............................................................................   35

     Section 3.08.     Notices to Household Finance Corporation.................................................   35

     Section 3.09.     Adjustments..............................................................................   35

     Section 3.10.     Reports to the Commission................................................................   36

ARTICLE IV     OTHER MATTERS RELATING TO EACH TRANSFEROR........................................................   37

     Section 4.01.     Liability of each Transferor.............................................................   37

     Section 4.02.     Merger or Consolidation of, or Assumption of the Obligations of, a Transferor............   37
</TABLE>

                                       i
<PAGE>

<TABLE>
<S>                                                                                                                <C>
     Section 4.03.     Limitations on Liability of Each Transferor..............................................   38

     Section 4.04.     Assumption of the Transferor Obligations.................................................   38

ARTICLE V      OTHER MATTERS RELATING TO THE SERVICER...........................................................   40

     Section 5.01.     Liability of the Servicer................................................................   40

     Section 5.02.     Merger or Consolidation of, or Assumption of the Obligations of, the Servicer............   40

     Section 5.03.     Limitation on Liability of the Servicer and Others.......................................   40

     Section 5.04.     Servicer Indemnification of the Owner Trustee and the Indenture Truste....................  41

     Section 5.05.     Resignation of the Servicer...............................................................  41

     Section 5.06.     Access to Certain Documentation and Information Regarding the Receivables.................  41

     Section 5.07.     Delegation of Duties......................................................................  42

     Section 5.08.     Examination of Records....................................................................  42

ARTICLE VI     INSOLVENCY EVENTS.................................................................................  43

     Section 6.01.     Rights upon the Occurrence of an Insolvency Event.........................................  43

ARTICLE VII    SERVICER DEFAULTS.................................................................................  44

     Section 7.01.     Servicer Defaults.........................................................................  44

     Section 7.02.     Indenture Trustee To Act; Appointment of Successor........................................  46

     Section 7.03.     Notification to Noteholders...............................................................  47

ARTICLE VIII   TERMINATION.......................................................................................  48

     Section 8.01.     Termination of Agreement..................................................................  48

ARTICLE IX     MISCELLANEOUS PROVISIONS..........................................................................  49

     Section 9.01.     Amendment; Waiver of Past Defaults........................................................  49

     Section 9.02.     Protection of Right, Title and Interest to Trust..........................................  50

     Section 9.03.     Governing Law.............................................................................  51

     Section 9.04.     Notices; Payments.........................................................................  51

     Section 9.05.     Severability of Provisions................................................................  52

     Section 9.06.     Further Assurances........................................................................  52

     Section 9.07.     No Waiver; Cumulative Remedies............................................................  52

     Section 9.08.     Counterparts..............................................................................  52

     Section 9.09.     Third-Party Beneficiaries.................................................................  53

     Section 9.10.     Actions by Noteholders....................................................................  53

     Section 9.11.     Rule 144A Information.....................................................................  53

     Section 9.12.     Merger and Integration....................................................................  53

     Section 9.13.     Headings..................................................................................  53
</TABLE>

                                      ii
<PAGE>

                          TABLE OF CONTENTS (cont'd)


                                    EXHIBITS

<TABLE>
<S>                                                                                                   <C>
EXHIBIT A      Form of  Assignment of Receivables in Additional Accounts...........................     A-1

EXHIBIT B      Form of  Reassignment of Receivables in Removed Accounts............................     B-1

EXHIBIT C      Form of Annual Servicer's Certificate...............................................     C-1

EXHIBIT D-1    Form of Opinion of Counsel with Respect to Amendments...............................   D-1-1

EXHIBIT D-2    Form of Opinion of Counsel with Respect to Accounts.................................   D-2-1

EXHIBIT D-3    Provisions to be Included in Annual Opinion of Counsel..............................   D-3-1

                                    SCHEDULES

SCHEDULE 1     List of Accounts....................................................................     I-1
</TABLE>

                                      iii
<PAGE>

          This AMENDED AND RESTATED TRANSFER AND SERVICING AGREEMENT, dated as
of November 16, 2000, among HOUSEHOLD RECEIVABLES FUNDING, INC. III, a Delaware
corporation, as Transferor; HOUSEHOLD FINANCE CORPORATION, a Delaware
corporation, as Servicer; and WILMINGTON TRUST COMPANY, not in its individual
capacity but solely as Owner Trustee on behalf of the HOUSEHOLD CREDIT CARD
MASTER NOTE TRUST I, a common law trust organized and existing under the laws of
the State of Delaware amends and restates in full the Transfer and Servicing
Agreement, dated as of September 25, 2000, among the parties listed above.

          In consideration of the mutual agreements herein contained, each party
agrees as follows for the benefit of the other parties, the Noteholders and any
Series Enhancer (as defined below) to the extent provided herein, in the
Indenture and in any Indenture Supplement:

                                   ARTICLE I


                                  DEFINITIONS

          Section 1.01.  Definitions. Whenever used in this Agreement, the
                         -----------
following words and phrases shall have the following meanings, and the
definitions of such terms are applicable to the singular as well as the plural
forms of such terms and to the masculine as well as to the feminine and neuter
genders of such terms.

          "Account" shall mean (a) each Initial Account, (b) each Additional
           -------
Account (but only from and after the Addition Date with respect thereto), (c)
each Related Account, and (d) each Transferred Account, but shall exclude (i)
any Account that has been closed and terminated in accordance with the relevant
Credit Guidelines and (ii) any Account all the Receivables in which are (A)
after the Removal Date, removed by the Transferor pursuant to Section 2.10, (B)
reassigned to the Transferor pursuant to Section 2.05 or (C) assigned and
transferred to the Servicer pursuant to Section 3.03.

          "Account Owner" shall mean the Bank or any other 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 the Transferor.

          "Addition Date" shall mean (a) with respect to Aggregate Addition
           -------------
Accounts and New Accounts, the date from and after which such Aggregate Addition
Accounts and New Accounts are to be included as Accounts pursuant to subsection
2.09(a), (b) or (d), and (b) with respect to Participation Interests, the date
from and after which such Participation Interests are to be included as assets
of the Trust pursuant to subsection 2.09(a) or (b).

          "Additional Account" shall mean each New Account and each Aggregate
           ------------------
Addition Account.

          "Additional Cut-Off Date" shall mean (a) with respect to Aggregate
           -----------------------
Addition Accounts or Participation Interests, the date specified as such in the
notice delivered with respect thereto pursuant to subsection 2.09(c) and (b)
with respect to New Accounts, the later of the dates on which such New Accounts
are originated or designated pursuant to subsection 2.09(d).

          "Additional Transferor" shall have the meaning specified in subsection
           ---------------------
2.09(g).

          "Adverse Effect" shall mean, with respect to any action, that such
           --------------
action will (a) result in the occurrence of an Amortization Event, a
Reinvestment Event or an Event of Default or (b) materially
<PAGE>

adversely affect the amount or timing of distributions to be made to the
Noteholders of any Series or Class pursuant to this Agreement, the Indenture or
the related Indenture Supplement.

          "Affiliate" shall mean, with respect to any specified Person, any
           ---------
other Person controlling or controlled by or under common control with such
specified Person. For the purposes of this definition, "control" shall mean the
                                                        -------
power to direct the management and policies of a Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
               -----------       ----------
foregoing.

          "Affinity Agreement" shall mean (a) a written agreement between the
           ------------------
Bank or other Account Owner, as the case may be, and any merchant pursuant to
which such merchant sells, assigns or otherwise transfers to the Bank or other
Account Owner, as the case may be, certain Credit Agreements between such
merchant and Obligors, including all such merchant's rights and interests in the
Accounts and Receivables arising under such Credit Agreements, or (b) a written
agreement between the Bank or other Account Owner, as the case may be, and any
merchant or co-branding participant establishing private label or co-branded
credit programs pursuant to which the Bank will enter into Credit Agreements
with Obligors.

          "Aggregate Addition" shall mean the designation of additional Eligible
           ------------------
Accounts, other than New Accounts, to be included as Accounts or of
Participation Interests to be included as Trust Assets pursuant to subsection
2.09(a) or (b).

          "Aggregate Addition Account" shall mean each Eligible Account
           --------------------------
designated pursuant to subsection 2.09(a) or (b) to be included as an Account
and identified in the computer file or microfiche list delivered to the Owner
Trustee by the Transferor pursuant to Sections 2.01 and 2.09(h).

          "Agreement" shall mean this Transfer and Servicing Agreement, as the
           ---------
same may be amended, supplemented or otherwise modified from time to time.

          "Amortization Event" shall have the meaning specified in the
           ------------------
Indenture.

          "Appointment Date" shall have the meaning specified in Section 6.01.
           ----------------

          "Assignment" shall have the meaning specified in subsection 2.09(h).
           ----------

          "Authorized Newspaper" shall mean any newspaper or newspapers of
           ---------- ---------
general circulation in the Borough of Manhattan, City of New York, printed in
the English language (and, with respect to any Series or Class, if and so long
as the Notes of such Series are listed on the Luxembourg Stock Exchange and such
Exchange shall so require, in Luxembourg, printed in any language satisfying the
requirements of such Exchange) and customarily published on each business day at
such place, whether or not published on Saturdays, Sundays or holidays.

          "Bank" shall mean Household Bank (Nevada), N.A., and its successors
           ----
and permitted assigns.

          "Bankruptcy Code" shall have the meaning specified in subsection
           ---------------
4.02(a)(i)(x).

          "Bearer Notes" shall have the meaning specified in the Indenture.
           ------------

          "Business Day" shall mean any day other than (a) a Saturday or Sunday
           ------------
or (b) any other day on which national banking associations or state banking
institutions in New York City, New York,

                                       2
<PAGE>

Delaware, Nevada or any other State in which the principal executive offices of
the Bank, the Servicer, the Owner Trustee, the Indenture Trustee or other
Account Owner, as the case may be, are located, are authorized or obligated by
law, executive order or governmental decree to be closed or (c) for purposes of
any particular Series, any other day specified in the related Indenture
Supplement.

          "Cash Advance Fees" shall mean cash advance transaction fees and cash
           -----------------
advance late fees, if any, as specified in the Credit Agreement applicable to
each Account.

          "Class" shall have the meaning specified in the Indenture.
           -----

          "Closing Date" shall mean, with respect to any Series, the closing
           ------------
date specified in the related Indenture Supplement.

          "Collections" shall mean all payments by or on behalf of Obligors
           -----------
(including Insurance Proceeds) received in respect of the Receivables, in the
form of cash, checks, wire transfers, electronic transfers, ATM transfers or any
other form of payment in accordance with a Credit Agreement in effect from time
to time and all other amounts specified by this Agreement, the Indenture or any
Indenture Supplement as constituting Collections. As specified in any
Participation Interest Supplement or Indenture Supplement, Collections shall
include amounts received with respect to Participation Interests. All Recoveries
with respect to Receivables previously charged-off as uncollectible will be
treated as Collections of Finance Charge and Administrative Receivables.
Collections with respect to any Due Period shall include a portion, calculated
pursuant to subsection 2.07(h), of Interchange paid to the Trust with respect to
such Due Period, to be applied as if such amount were Collections of Finance
Charge and Administrative Receivables for all purposes.

          "Commission" shall mean the Securities and Exchange Commission and its
           ----------
successors in interest.

          "Corporate Trust Office" shall have the meaning (a) when used in
           ----------------------
respect of the Owner Trustee, specified in the Trust Agreement and (b) when used
in respect of the Indenture Trustee, specified in the Indenture.

          "Coupon" shall have the meaning specified in the Indenture.
           ------

          "Credit Agreement" shall mean, with respect to a revolving credit
           ----------------
account, the agreements between an Account Owner and the Obligor governing the
terms and conditions of such account, as such agreements may be amended,
modified or otherwise changed from time to time and as distributed (including
any amendments and revisions thereto) to holders of such account.

          "Credit Guidelines" shall mean the respective policies and procedures
           -----------------
of the Bank, the Servicer, and/or any other Account Owner, as the case may be,
as such policies and procedures may be amended from time to time, (a) relating
to the operation of its credit business, which generally are applicable to its
portfolio of revolving credit accounts or, in the case of an Account Owner that
has only a portion of its portfolio subject to a Receivables Purchase Agreement,
applicable to such portion of its portfolio, and in each case which are
consistent with prudent practice, including the policies and procedures for
determining the creditworthiness of Obligors and the extension of credit to
Obligors, and (b) relating to the maintenance of credit accounts and collection
of receivables created thereunder.

          "Date of Processing" shall mean, with respect to any transaction or
           ------------------
receipt of Collections, the date on which such transaction is first recorded on
the Servicer's computer file of revolving credit accounts (without regard to the
effective date of such recordation).

                                       3
<PAGE>

          "Defaulted Amount" shall mean, with respect to any Due Period, an
           ----------------
amount (which shall not be less than zero) equal to (a) the amount of Principal
Receivables which became Defaulted Receivables in such Due Period, minus (b) the
amount of any Defaulted Receivables of which the Transferor or the Servicer
became obligated to accept reassignment or assignment in accordance with the
terms of this Agreement during such Due Period; provided, however, that, if an
Insolvency Event occurs with respect to the Transferor, the amount of such
Defaulted Receivables which are subject to reassignment to the Transferor in
accordance with the terms of this Agreement shall not be added to the sum so
subtracted and, if any of the events described in subsection 7.01(d) occur with
respect to the Servicer, the amount of such Defaulted Receivables which are
subject to reassignment or assignment to the Servicer in accordance with the
terms of this Agreement shall not be added to the sum so subtracted.

          "Defaulted Receivables" shall mean, with respect to any Due Period and
           ---------------------
any Pool and related Group, all Principal Receivables which are charged off as
uncollectible in such Due Period in accordance with the Credit Guidelines and
the Servicer's customary and usual servicing procedures for servicing revolving
credit accounts. A Principal Receivable shall become a Defaulted Receivable on
the day on which such Principal Receivable is recorded as charged-off on the
Servicer's computer file of revolving credit accounts.

          "Discount Option Date" shall mean each date on which a Discount
           --------------------
Percentage designated by the Transferor pursuant to Section 2.12 takes effect.

          "Discount Option Receivable Collections" shall mean on any Date of
           --------------------------------------
Processing occurring after a Discount Option Date occurs, the product of (a) a
fraction the numerator of which is the Discount Option Receivables and the
denominator of which is the sum of the Principal Receivables and the Discount
Option Receivables in each case (for both the numerator and the denominator) at
the end of the preceding Due Period and (b) Collections of Principal Receivables
on such Date of Processing (without giving effect to the proviso in the
definition of Principal Receivables).

          "Discount Option Receivables" shall have the meaning specified in
           ---------------------------
Section 2.12. The aggregate amount of Discount Option Receivables outstanding on
any Date of Processing occurring on or after a Discount Option Date shall equal
the sum of (a) the aggregate Discount Option Receivables at the end of the prior
Date of Processing (which amount, prior to the Discount Option Date, shall be
zero) plus (b) any new Discount Option Receivables created on such Date of
Processing minus (c) any Discount Option Receivables Collections received on
such Date of Processing. Discount Option Receivables on any Date of Processing
shall mean the product of the amount of any Principal Receivables outstanding on
such Date of Processing (without giving effect to the proviso in the definition
of Principal Receivables) and the Discount Percentage.

          "Discount Percentage" shall mean the percentages, if any, designated
           -------------------
by the Transferor pursuant to Section 2.12.

          "Distribution Date" shall mean, with respect to any Series, the date
           -----------------
specified in the applicable Indenture Supplement.

          "Document Delivery Date" shall have the meaning specified in
           ----------------------
subsection 2.09(h).

          "Dollars", "$" or "U.S. $" shall mean United States dollars.
           -------    -      ------

          "Due Period" shall have the meaning specified in the Indenture.
           ----------

                                       4
<PAGE>

          "Eligible Account" shall mean a revolving credit account owned by the
           ----------------
Bank in the case of the Initial Accounts on the Initial Cut-Off Date, or the
Bank or other Account Owner, in the case of Additional Accounts which, as of the
Initial Cut-Off Date with respect to an Initial Account or as of the Additional
Cut-Off Date with respect to an Additional Account meets the following
requirements:

               (a)  is a revolving credit account in existence and maintained by
     the Bank or other Account Owner, as the case may be;

               (b)  is payable in Dollars;

               (c)  has an Obligor who has provided, as his most recent billing
     address, an address located in the United States or its territories,
     possessions or military bases provided, however, that as of any date of
     determination, up to 1% of the Principal Receivables arising under the
     revolving credit accounts may have account obligors who have provided as
     their billing addresses, addresses outside of the United States;

               (d)  except as provided below, has an Obligor who has not been
     identified by the Servicer in its computer files as being currently
     involved in a voluntary or involuntary bankruptcy proceeding;

               (e)  has not been identified as an account with respect to which
     (i) the related card, if any, has been lost or stolen or (ii) the related
     account number has been stolen;

               (f)  has not been sold or pledged to any other party except for
     any sale to another Account Owner that has either entered into a
     Receivables Purchase Agreement or is an Additional Transferor;

               (g)  does not have receivables which have been sold or pledged by
     the Bank or any other Account Owner, as the case may be, to any other party
     other than any Transferor pursuant to a Receivables Purchase Agreement;

               (h)  with respect to the Initial Accounts, is an account in
     existence and maintained by the Bank or other Account Owner as of the
     Initial Cut-Off Date, or as of the Additional Cut-Off Date with respect to
     Additional Accounts;

               (i)  except as provided below, does not have any Receivables that
     are Defaulted Receivables; and

               (j)  does not have any Receivables that have been identified by
     the Servicer or the relevant Obligor as having been incurred as a result of
     fraudulent use of any related credit card, if any, or related account
     number.

          Eligible Accounts may include Accounts, the Receivables of which have
been charged off, or with respect to which the Servicer believes the related
Obligor is bankrupt, in each case as of the Initial Cut-Off Date, with respect
to the Initial Accounts, and as of the related Additional Cut-Off Date, with
respect to Additional Accounts; provided, that (a) the balance of all
Receivables included in such Accounts is reflected on the books and records of
such Transferor (and is treated for purposes of this Agreement) as "zero" and
(b) charging privileges with respect to all such Accounts have been canceled in
accordance with the relevant Credit Guidelines.

                                       5
<PAGE>

          "Eligible Receivable" shall mean each Receivable, including, where
           -------------------
applicable, the underlying receivable:

               (a)  which has arisen in an Eligible Account;

               (b)  which was created in compliance in all material respects
     with all Requirements of Law applicable to the institution which owned such
     Receivable at the time of its creation and pursuant to a Credit Agreement
     which complies in all material respects with all Requirements of Law
     applicable to the Bank or other Account Owner, as the case may be;

               (c)  with respect to which all material consents, licenses,
     approvals or authorizations of, or registrations or declarations with, any
     Governmental Authority required to be obtained, effected or given in
     connection with the creation of such Receivable or the execution, delivery
     and performance by the Bank or other Account Owner, as the case may be, of
     the Credit Agreement pursuant to which such Receivable was created, have
     been duly obtained, effected or given and are in full force and effect;

               (d)  as to which at the time of the transfer of such Receivable
     to the Trust, the Transferor or the Trust will have good and marketable
     title thereto and which itself is, and the underlying receivables are, free
     and clear of all Liens (other than any Lien for municipal or other local
     taxes if such taxes are not then due and payable or if the Transferor is
     then contesting the validity thereof in good faith by appropriate
     proceedings and has set aside on its books adequate reserves with respect
     thereto);

               (e)  which has been the subject of either a valid transfer and
     assignment from the Transferor to the Trust of all the Transferor's right,
     title and interest therein (including any proceeds thereof), or the grant
     of a first priority perfected security interest therein (and in the
     proceeds thereof), effective until the termination of the Trust;

               (f)  which at all times will be the legal, valid and binding
     payment obligation of the Obligor thereon enforceable against such Obligor
     in accordance with its terms, except as such enforceability may be limited
     by applicable bankruptcy, insolvency, reorganization, moratorium or other
     similar laws, now or hereafter in effect, affecting the enforcement of
     creditors' rights in general and except as such enforceability may be
     limited by general principles of equity (whether considered in a suit at
     law or in equity);

               (g)  which, at the time of transfer to the Trust, has not been
     waived or modified except as permitted in accordance with the Credit
     Guidelines and which waiver or modification is reflected in the Servicer's
     computer file of revolving credit accounts;

               (h)  which, at the time of transfer to the Trust, is not subject
     to any right of rescission, setoff, counterclaim or any other defense
     (including defenses arising out of violations of usury laws) of the
     Obligor, other than defenses arising out of applicable bankruptcy,
     insolvency, reorganization, moratorium or other similar laws affecting the
     enforcement of creditors' rights in general;

               (i)  as to which, at the time of transfer to the Trust, the Bank
     or other Account Owner, as the case may be, has satisfied all of its
     obligations required to be satisfied by such time;

                                       6
<PAGE>

               (j)  as to which, at the time of transfer to the Trust, none of
     the Transferor, the Bank or any other Account Owner, as the case may be,
     has taken any action which would impair, or omitted to take any action the
     omission of which would impair, the rights of the Trust or the Noteholders
     therein; and

               (k)  which constitutes either an "account" or a "general
     intangible" under and as defined in Article 9 of the UCC as then in effect
     in the State of Delaware and any other state where the filing of a
     financing statement is required to perfect the Trust's interest in the
     Receivables and the proceeds thereof.

          "Eligible Servicer" shall mean the Indenture Trustee or, if the
           -----------------
Indenture Trustee is not acting as Servicer, an entity which, at the time of its
appointment as Servicer, (a) is servicing a portfolio of revolving credit
accounts, (b) is legally qualified and has the capacity to service the Accounts,
(c) in the sole determination of the Indenture Trustee, which determination
shall be conclusive and binding, has demonstrated the ability to service
professionally and competently a portfolio of similar accounts in accordance
with high standards of skill and care, (d) is qualified to use the software that
is then being used to service the Accounts or obtains the right to use or has
its own software which is adequate to perform its duties under this Agreement
and (e) has a net worth of at least $50,000,000 as of the end of its most recent
fiscal quarter.

          "Event of Default" shall have the meaning specified in the Indenture.
           ----------------

          "FDIA" shall mean the Federal Deposit Insurance Act, as amended by the
           ----
Financial Institutions Reform, Recovery and Enforcement Act of 1989 and as
further amended from time to time.

          "FDIC" shall mean the Federal Deposit Insurance Corporation or any
           ----
successor.

          "Finance Charge and Administrative Receivables" shall mean with
           ---------------------------------------------
respect to any Pool, all amounts billed to the Obligors on any Account in
respect of (a) all Periodic Rate Finance Charges, (b) Cash Advance Fees, (c)
annual membership fees and annual service charges, (d) Late Fees, (e) Overlimit
Fees, (f) Discount Option Receivables and (g) any other fees with respect to the
Accounts designated by the Transferor at any time and from time to time to be
included as Finance Charge and Administrative Receivables. Finance Charge and
Administrative Receivables shall also include the interest portion of
Participation Interests as shall be determined pursuant to, and only if so
provided in, the applicable Participation Interest Supplement or Indenture
Supplement for any Series.

          "Fitch" shall mean Fitch, Inc. or its successors.
           -----

          "Governmental Authority" shall mean the United States of America, any
           ----------------------
state or other political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.

          "Group" shall have the meaning set forth in the Indenture.
           -----

          "HRF" shall mean Household Receivables Funding, Inc. III, a Delaware
           ---
corporation, and its successors and permitted assigns.

          "Household Finance Corporation" shall mean Household Finance
           -----------------------------
Corporation, a Delaware corporation, and its successors and permitted assigns.

                                       7
<PAGE>

          "Household International" shall mean Household International, Inc., a
           -----------------------
Delaware corporation and its successors and assigns.

          "Indenture"  shall mean the Amended and Restated Master Indenture,
           ---------
dated as of November 16, 2000, between the Issuer and the Indenture Trustee, as
the same may be amended, supplemented or otherwise modified from time to time.

          "Indenture Supplement" shall have the meaning specified in the
           --------------------
Indenture.

          "Indenture Trustee" shall mean Wells Fargo Bank Minnesota, National
           -----------------
Association, a national banking association, in its capacity as trustee under
the Indenture, its successors in interest and any successor indenture trustee
under the Indenture.

          "Ineligible Receivables" shall have the meaning specified in
           ----------------------
subsection 2.05(a).

          "Initial Account" shall mean each MasterCard(R) and VISA(R) /1/
           ---------------
revolving credit account established pursuant to a Credit Agreement between the
Bank and any Person, which account is identified in the computer file or
microfiche list delivered to the Owner Trustee by the Transferor pursuant to
Section 2.01 on the Initial Issuance Date.

          "Initial Cut-Off Date" shall mean September 25, 2000.
           --------------------

          "Initial Issuance Date" shall mean September 25, 2000, the date the
           ---------------------
Transferor's Certificate is issued by the Trust to the Transferor pursuant to
the Trust Agreement.

          "Insolvency Event" shall have the meaning specified in Section 6.01.
           ----------------

          "Insurance Proceeds" shall mean any amounts received pursuant to the
           ------------------
payment of benefits under any credit life insurance policies, credit disability
or unemployment insurance policies covering any Obligor with respect to
Receivables under such Obligor's Account.

          "Interchange" shall mean interchange fees payable to the Bank or any
           -----------
other Account Owner, in its capacity as credit issuer, through MasterCard or
VISA or any similar entity or organization with respect to any type of revolving
credit accounts included as Accounts (except as otherwise provided in the
initial Assignment with respect to any such type of Accounts), in connection
with Obligor charges for goods or services with respect to the Accounts, as
calculated pursuant to the related Indenture Supplement for any Series. Any
reference in this Agreement, the Indenture or any Indenture Supplement to
Interchange shall refer to only the fractional undivided interest in the
interchange fees that are transferred by the Bank or an Account Owner to a
Transferor pursuant to a Receivables Purchase Agreement, which fractional
undivided interest may be less than a 100% interest therein.

          "Invested Amount" shall mean, with respect to any Series and for any
           ---------------
date, an amount equal to the invested amount or adjusted invested amount, as
applicable, specified in the related Indenture Supplement.

          "Issuer" shall mean the Trust.
           ------


_________________________
/1/ MasterCard and VISA are registered trademarks of MasterCard International
Incorporated and VISA USA, Inc., respectively.

                                       8
<PAGE>

          "Late Fees" shall have the meaning specified in the Credit Agreement
           ---------
applicable to each Account for late fees or similar terms.

          "Lien" shall mean any mortgage, deed of trust, pledge, hypothecation,
           ----
assignment, deposit arrangement, equity interest, encumbrance, lien (statutory
or other), preference, participation interest, priority or other security
agreement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing and
the filing of any financing statement under the UCC or comparable law of any
jurisdiction to evidence any of the foregoing; provided, however, that any
assignment permitted by subsection 3.06(b) of the Trust Agreement or Section
4.02 of, and the lien created by, this Agreement shall not be deemed to
constitute a Lien.

          "MasterCard" shall mean MasterCard International Incorporated, and its
           ----------
successors in interest.

          "Monthly Servicing Fee" shall have the meaning specified in Section
           ---------------------
3.02.

          "Moody's" shall mean Moody's Investors Service, Inc., or its
           -------
successor.

          "New Account" shall mean each MasterCard and VISA revolving credit
           -----------
account established pursuant to a Credit Agreement, which account is designated
pursuant to subsection 2.09(d) to be included as an Account and is identified in
the computer file or microfiche list delivered to the Owner Trustee by the
Transferor pursuant to Section 2.01 and subsection 2.09(h).

          "Note Owner" shall have the meaning specified in the Indenture.
           ----------

          "Note Register" shall have the meaning specified in the Indenture.
           -------------

          "Noteholder" or "Holder" shall have the meaning specified in the
           ----------      ------
Indenture.

          "Notices" shall have the meaning specified in subsection 9.04(a).
           -------

          "Obligor" shall mean, with respect to any Account, the Person or
           -------
Persons obligated to make payments with respect to such Account, including any
guarantor thereof, but excluding any merchant.

          "Officer's Certificate" shall have the meaning specified in the
           ---------------------
Indenture.

          "Opinion of Counsel" shall have the meaning specified in the
           ------------------
Indenture.

          "Overlimit Fees" shall have the meaning specified in the Credit
           --------------
Agreement applicable to each Account for overlimit fees or similar terms if such
fees are provided for with respect to such Account.

          "Owner Trustee" shall mean Wilmington Trust Company in its capacity as
           -------------
owner trustee under the Trust Agreement, its successors in interest and any
successor owner trustee under the Trust Agreement.

          "Participation Interest Supplement" shall mean a supplement to this
           ---------------------------------
Agreement entered into pursuant to subsection 2.09(a)(ii) or (b) in connection
with the conveyance of Participation Interests to the Trust.

                                       9
<PAGE>

          "Participation Interests" shall have the meaning specified in
           -----------------------
subsection 2.09(a)(ii).

          "Paying Agent" shall have the meaning specified in the Indenture.
           ------------

          "Periodic Rate Finance Charges" shall have the meaning specified in
           -----------------------------
the Credit Agreement applicable to each Account for finance charges (due to
periodic rate) or any similar term.

          "Person" shall mean any legal person, including any individual,
           ------
corporation, limited liability company, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization, governmental entity or
other entity of similar nature.

          "Pool" shall have the meaning specified in the Indenture.
           ----

          "Preferred Stock" shall mean the preferred shares of the Transferor
           ---------------
designated as such, with a par value of $1.00 per share and a liquidation value
of $1.00 per share.

          "Principal Receivables" shall mean with respect to any Pool all
           ---------------------
Receivables other than Finance Charge and Administrative Receivables or
Defaulted Receivables; provided, however, that after a Discount Option Date,
Principal Receivables on any Date of Processing thereafter shall mean Principal
Receivables as otherwise determined pursuant to this definition minus the amount
of any Discount Option Receivables. Principal Receivables shall also include the
principal portion of Participation Interests as shall be determined pursuant to,
and only if so provided in, the applicable Participation Interest Supplement or
Indenture Supplement for any Series. In calculating the aggregate amount of
Principal Receivables on any day, the amount of Principal Receivables shall be
reduced by the aggregate amount of credit balances in the Accounts on such day.
Any Principal Receivables which the Transferor is unable to transfer as provided
in Section 2.11 shall not be included in calculating the amount of Principal
Receivables.

          "Rating Agency" shall have the meaning specified in the Indenture.
           -------------

          "Rating Agency Condition" shall have the meaning specified in the
           -----------------------
Indenture.

          "Reassignment" shall have the meaning specified in Section 2.10.
           ------------

          "Receivables" shall mean all amounts shown on the Servicer'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. Receivables which become Defaulted Receivables will cease to be
included as Receivables as of the day on which they become Defaulted
Receivables. Receivables, where applicable, shall include also the interest and
principal portion of Participation Interests. Unless the context otherwise
requires (whether or not there is a specific reference to the underlying
receivable), any reference in this Agreement, the Indenture or any Indenture
Supplement to a Receivable (including any Principal Receivable, Finance Charge
and Administrative Receivable or Defaulted Receivable) and any Collections
thereon or other amounts recoverable with respect thereto (including any
Insurance Proceeds or Recoveries with respect thereto) shall refer to only the
fractional undivided interest in the amounts paid or payable by Obligors on the
Accounts that are transferred by the Bank or an Account Owner to a Transferor
pursuant to a Receivables Purchase Agreement, which undivided interest may be
less than a 100% undivided interest therein. Any reference in this Agreement,
the Indenture or any Indenture Supplement to the "underlying receivable" with
respect to a Receivable shall refer to the receivable in which such Receivable
represents an undivided interest.

                                       10
<PAGE>

          "Receivables Purchase Agreement" shall mean the Amended and Restated
           ------------------------------
Receivables Purchase Agreement, dated as of November 16, 2000, between the Bank
and the Transferor, as amended from time to time, and includes any receivables
purchase agreement, substantially in the form of such agreement entered into
between the Transferor and an Account Owner or other Affiliated entity in the
future.

          "Recoveries" shall mean all amounts received (net of out-of-pocket
           ----------
costs of collection) including Insurance Proceeds, which is reasonably estimated
by the Servicer to be attributable to Defaulted Receivables, including the net
proceeds of any sale of such Defaulted Receivables by the Transferor.

          "Registered Notes" shall have the meaning specified in the Indenture.
           ----------------

          "Reinvestment Event" shall have the meaning specified in the
           ------------------
Indenture.

          "Related Account" shall mean an Account with respect to which a new
           ---------------
account number has been issued by the applicable Account Owner or Servicer or
the applicable Transferor under circumstances resulting from a lost or stolen
credit card or account number, and not requiring standard application and credit
evaluation procedures under the Credit Guidelines.

          "Removal Date" shall have the meaning specified in Section 2.10.
           ------------

          "Removed Accounts" shall have the meaning specified in Section 2.10.
           ----------------

          "Removed Participation Interests" shall have the meaning specified in
           -------------------------------
Section 2.10.

          "Required Delivery Date" shall have the meaning specified in
           ----------------------
subsection 2.01(c).

          "Required Designation Date" shall have the meaning specified in
           -------------------------
subsection 2.09(a).

          "Required Minimum Principal Balance" shall mean, unless otherwise
           ----------------------------------
provided in an Indenture Supplement relating to a Series having a Paired Series,
with respect to any date and any Pool (a) the sum of the Series Adjusted
Invested Amounts for each Series outstanding on such date in such Pool plus the
Required Transferor Amount on such date, minus (b) the Special Funding Amount.

          "Required Transferor Amount" shall have the meaning specified in the
           --------------------------
Indenture.

          "Requirements of Law" shall mean any law, treaty, rule or regulation,
           -------------------
or determination of an arbitrator or Governmental Authority, whether Federal,
state or local (including usury laws, the Federal Truth in Lending Act and
Regulation B and Regulation Z of the Board of Governors of the Federal Reserve
System), and, when used with respect to any Person, the certificate of
incorporation and by-laws or other organizational or governing documents of such
Person.

          "Revolving Credit Agreement" shall mean the revolving credit agreement
           --------------------------
by and between the Transferor and Household Finance Corporation, dated as of
September 25, 2000, as such agreement may be amended from time to time in
accordance therewith, and any substantially similar agreement entered into
between any lender and the Transferor or any Additional Transferor in the future
in accordance with the provisions hereof.

          "Securities Act" shall mean the Securities Act of 1933, as amended.
           --------------

                                       11
<PAGE>

          "Series" shall have the meaning specified in the Indenture.
           ------

          "Series Account" shall have the meaning specified in the Indenture.
           --------------

          "Series Adjusted Invested Amount" shall have the meaning specified in
           -------------------------------
the related Indenture Supplement.

          "Series Enhancement" shall have the meaning specified in the
           ------------------
Indenture.

          "Series Enhancer" shall have the meaning specified in the Indenture.
           ---------------

          "Series Portfolio Yield" shall have the meaning specified in the
           ----------------------
related Indenture Supplement.

          "Service Transfer" shall have the meaning specified in Section 7.01.
           ----------------

          "Servicer" shall mean Household Finance Corporation, in its capacity
           --------
as Servicer pursuant to this Agreement, and, after any Service Transfer, the
Successor Servicer.

          "Servicer Default" shall have the meaning specified in Section 7.01.
           ----------------

          "Servicing Fee" shall have the meaning specified in Section 3.02.
           -------------

          "Special Funding Account" shall have the meaning specified in the
           -----------------------
Indenture.

          "Special Funding Amount" shall have the meaning specified in the
           ----------------------
Indenture.

          "Standard & Poor's" shall mean Standard & Poor's Ratings Group, or its
           -----------------
successor.

          "Successor Servicer" shall have the meaning specified in subsection
           ------------------
7.02(a).

          "Supplemental Certificate" shall have the meaning specified in the
           ------------------------
Trust Agreement.

          "Tax Opinion" shall have the meaning specified in the Indenture.
           -----------

          "Termination Notice" shall have the meaning specified in subsection
           ------------------
7.01(d).

          "Transfer Agent and Registrar" shall have the meaning specified in the
           ----------------------------
Indenture.

          "Transfer Restriction Event" shall have the meaning specified in
           --------------------------
Section 2.11.

          "Transferor" shall mean (a) HRF, a wholly owned special purpose
           ----------
subsidiary of Household Finance Corporation and incorporated in the State of
Delaware, or its successor under this Agreement and (b) any Additional
Transferor or Transferors. References to "each Transferor" shall refer to each
                                          ---------------
entity mentioned in the preceding sentence and references to "the Transferor"
                                                              --------------
shall refer to all of such entities.

          "Transferor Amount" shall have the meaning specified in the Indenture.
           -----------------

          "Transferor Certificate" shall have the meaning specified in the Trust
           ----------------------
Agreement.

                                       12
<PAGE>

          "Transferor Certificates" shall mean, collectively, the Transferor
           -----------------------
Certificate and any outstanding Supplemental Certificates.

          "Transferred Account" shall mean each account into which an Account
           -------------------
shall be transferred 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.

          "Trust" shall mean the Household 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 Amended and Restated Trust Agreement
           ---------------
relating to the Trust, dated as of November 16, 2000, between HRF and the Owner
Trustee, as the same may be amended, supplemented or otherwise modified from
time to time.

          "Trust Assets" shall have the meaning specified in Section 2.01.
           ------------

          "UCC" shall mean the Uniform Commercial Code, as amended from time to
           ---
time, as in effect in any specified jurisdiction.

          "Union Plus Program" shall mean the affinity arrangement between the
           ------------------
Bank and Union Privilege under which the Bank offers a credit card program to
members of the unions affiliated with the American Federation of Labor and
Congress of Industrial Organizations.

          "VISA" shall mean VISA USA, Inc., and its successors in interest.
           ----

          "Zero Balance Account" shall mean an account which, according to the
           --------------------
Servicer's records, has had a balance of zero for a period of at least 180
consecutive days.

          Section 1.02.  Other Definitional Provisions.
                         -----------------------------

          (a)  With respect to any Series, all terms used herein and not
otherwise defined herein shall have meanings ascribed to them in the Trust
Agreement, the Indenture or the related Indenture Supplement, as applicable.

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

          (c)  As used in this Agreement and in any certificate or other
document made or delivered pursuant hereto or thereto, accounting terms not
defined in this Agreement or in any such certificate or other document, and
accounting terms partly defined in this Agreement or in any such certificate or
other document to the extent not defined, shall have the respective meanings
given to them under generally accepted accounting principles or regulatory
accounting principles, as applicable and as in effect on the date of this
Agreement. To the extent that the definitions of accounting terms in this
Agreement or in any such certificate or other document are inconsistent with the
meanings of such terms under generally accepted accounting principles or
regulatory accounting principles in the United States, the definitions contained
in this Agreement or in any such certificate or other document shall control.

          (d)  The agreements, representations and warranties of HRF and
Household Finance Corporation in this Agreement in each of their respective
capacities as Transferor and Servicer shall be deemed to be the agreements,
representations and warranties of HRF and Household Finance Corporation

                                       13
<PAGE>

solely in each such capacity for so long as HRF and Household Finance
Corporation act in each such capacity under this Agreement.

          (e)  Any reference to each Rating Agency shall only apply to any
specific rating agency if such rating agency is then rating any outstanding
Series.

          (f)  Unless otherwise specified, references to any amount as on
deposit or outstanding on any particular date shall mean such amount at the
close of business on such day.

          (g)  The words "hereof," "herein" and "hereunder" and words of similar
                          ------    ------       ---------
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement; references to any subsection,
Section, Schedule or Exhibit are references to subsections, Sections, Schedules
and Exhibits in or to this Agreement unless otherwise specified; and the term
"including" means "including without limitation."
 ---------         ----------------------------

                              [END OF ARTICLE I]


                                       14
<PAGE>

                                  ARTICLE II

                           CONVEYANCE OF RECEIVABLES

          Section 2.01.  Conveyance of Receivables. (a) By execution of this
                         -------------------------
Agreement, each of HRF and, in the case of Additional Accounts, HRF or, if
applicable, any Additional Transferor does hereby transfer, assign, set over and
otherwise convey to the Owner Trustee on behalf of the Trust, 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 Initial Cut-Off Date,
in the case of Receivables arising in the Initial Accounts, and on each
Additional Cut-Off Date, in the case of Receivables arising in the Additional
Accounts, and in each case thereafter created from time to time until the
termination of the Trust, all Interchange and Recoveries allocable to the Trust
as provided herein, all monies due or to become due and all amounts received or
receivable with respect thereto and all proceeds (including "proceeds" as
defined in the UCC) thereof. Such property, together with all monies and other
property credited to the Collection Account, the Series Accounts and the Special
Funding Account (including any subaccounts of such account), the Preferred Stock
of the Transferor, the property conveyed to the Owner Trustee on behalf of the
Trust under any Participation Interest Supplement and the right to receive
Recoveries attributed to Obligor charges for merchandise and services in the
Accounts shall constitute the assets of the Trust (the "Trust Assets"). The
                                                        ------------
foregoing does not constitute and is not intended to result in the creation or
assumption by the Trust, the Owner Trustee, the Indenture Trustee or any
Noteholder of any obligation of the Bank or other Account Owner or the
Transferor, any Additional Transferor, the Servicer or any other Person in
connection with the Accounts or the Receivables or under any agreement or
instrument relating thereto, including any obligation to Obligors, merchant
banks, merchants clearance systems, VISA, MasterCard or insurers. The Obligors
shall not be notified in connection with the creation of the Trust of the
transfer, assignment, set-over and conveyance of the Receivables to the Owner
Trustee on behalf of the Trust.

          (b)  Each Transferor agrees to record and file, at its own expense,
financing statements (and continuation statements when applicable) with respect
to the Receivables conveyed by such Transferor existing on the Initial Cut-Off
Date and thereafter created meeting the requirements of applicable state law in
such manner and in such jurisdictions as are necessary to perfect, and maintain
the perfection of, the transfer and assignment of its interest in such
Receivables to the Owner Trustee on behalf of the Trust, and to deliver a file
stamped copy of each such financing statement or other evidence of such filing
to the Owner Trustee as soon as practicable after the first Closing Date, in the
case of Receivables arising in the Initial Accounts, and (if any additional
filing is so necessary) as soon as practicable after the applicable Addition
Date, in the case of Receivables arising in Additional Accounts. The Owner
Trustee shall be under no obligation whatsoever to file such financing or
continuation statements or to make any other filing under the UCC in connection
with such transfer and assignment.

          (c)  Each Transferor further agrees, at its own expense, on or prior
to (A) the first Closing Date, in the case of the Initial Accounts, (B) the
applicable Addition Date, in the case of Additional Accounts specified in the
Receivables Purchase Agreement with such Transferor, and (C) the applicable
Removal Date, in the case of Removed Accounts specified in the Receivables
Purchase Agreement with such Transferor, (i) to indicate in the appropriate
computer files that Receivables created (or reassigned, in the case of Removed
Accounts) in connection with the Accounts have been conveyed to the Owner
Trustee on behalf of the Trust pursuant to this Agreement (or conveyed to each
such Transferor or its designee in accordance with Section 2.10, in the case of
Removed Accounts) by including (or deleting in the case of Removed Accounts) in
such computer files the code that identifies each such Account and (ii) on or
prior to (A) the Closing Date, in the case of the Initial Accounts, (B) the

                                       15
<PAGE>

date that is five Business Days after the applicable Addition Date, in the case
of designation of Aggregate Addition Accounts, (C) the Distribution Date on
which the Opinion of Counsel is required to be delivered with respect to the Due
Period which includes the applicable Additional Date, in the case of New
Accounts, and (D) the date that is five Business Days after the applicable
Removal Date, in the case of Removed Accounts (the "Required Delivery Date"), to
deliver to the Owner Trustee a computer file or microfiche list containing a
true and complete list of all such Accounts specifying for each such Account, as
of the Initial Cut-Off Date, in the case of the Initial Accounts, the applicable
Additional Cut-Off Date in the case of Additional Accounts, and the applicable
Removal Date in the case of Removed Accounts, (1) its account number, (2) the
aggregate amount outstanding in such Account, and (3) the aggregate amount of
Principal Receivables outstanding in such Account. Each such file or list, as
supplemented, from time to time, to reflect Additional Accounts and Removed
Accounts, shall be marked as Schedule 1 to this Agreement and is hereby
                             ----------
incorporated into and made a part of this Agreement. Each Transferor further
agrees not to alter the code referenced in this paragraph with respect to any
Account during the term of this Agreement unless and until such Account becomes
a Removed Account.

          (d)  If the arrangements with respect to the Receivables hereunder
shall constitute a loan and not a purchase and sale of such Receivables, it is
the intention of the parties hereto that this Agreement shall constitute a
security agreement under applicable law, and that each Transferor shall be
deemed to have granted and does hereby grant to the Owner Trustee on behalf of
the Trust a first priority perfected security interest in all of such
Transferor's right, title and interest, whether now owned or hereafter acquired,
in, to and under the Receivables and the other Trust Assets conveyed by such
Transferor to secure its obligations hereunder.

          Section 2.02.  Acceptance by Owner Trustee.
                         ---------------------------

          (a)  The Owner Trustee hereby acknowledges its acceptance on behalf of
the Trust of all right, title and interest to the property, now existing and
hereafter created, conveyed pursuant to Section 2.01. The Owner Trustee further
acknowledges that, prior to or simultaneously with the execution and delivery of
this Agreement, the Transferor delivered to the Owner Trustee the computer file
or microfiche list relating to the Initial Accounts described in subsection
2.01(c). The Owner Trustee shall maintain a copy of Schedule 1, as delivered
                                                    ----------
from time to time, at the Corporate Trust Office.

          (b)  The Owner Trustee hereby agrees not to disclose to any Person any
of the account numbers or other information contained in the computer files or
microfiche lists marked as Schedule 1 and delivered to the Owner Trustee, from
                           ----------
time to time, except (i) to a Successor Servicer or as required by a Requirement
of Law applicable to the Owner Trustee, (ii) in connection with the performance
of the Owner Trustee's duties hereunder, (iii) to the Indenture Trustee in
connection with its duties in enforcing the rights of Noteholders or (iv) to
bona fide creditors or potential creditors of any Account Owner, the Bank, or
any Transferor for the limited purpose of enabling any such creditor to identify
Receivables or Accounts subject to this Agreement or the Receivables Purchase
Agreements. The Owner Trustee agrees to take such measures as shall be
reasonably requested by any Transferor to protect and maintain the security and
confidentiality of such information and, in connection therewith, shall allow
each Transferor or its duly authorized representatives to inspect the Owner
Trustee's security and confidentiality arrangements as they specifically relate
to the administration of the Trust from time to time during normal business
hours upon prior written notice. The Owner Trustee shall provide the applicable
Transferor with notice five Business Days prior to disclosure of any information
of the type described in this subsection 2.02(b).

          (c)  The Owner Trustee shall have no power to create, assume or incur
indebtedness or other liabilities in the name of the Trust other than as
contemplated in this Agreement and the Indenture.

                                       16
<PAGE>

          Section 2.03.  Representations and Warranties of Each Transferor
                         -------------------------------------------------
Relating to Such Transferor. Each Transferor hereby severally represents and
---------------------------
warrants to the Owner Trustee and the Trust (and agrees that the Indenture
Trustee may conclusively rely on each such representation and warranty in
authenticating the Notes) as of each Closing Date (but only if it was a
Transferor on such date) that:

          (a)  Organization and Good Standing. Such Transferor is a corporation
               ------------------------------
validly existing under the laws of the jurisdiction of its organization or
incorporation and has, in all material respects, full power and authority to own
its properties and conduct its business as presently owned or conducted, and to
execute, deliver and perform its obligations under this Agreement, any
Receivables Purchase Agreement to which it is a party and each applicable
Participation Interest Supplement.

          (b)  Due Qualification. Such Transferor is duly qualified to do
               -----------------
business and is in good standing as a foreign corporation 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 specified in the applicable Receivables
Purchase Agreement with such Transferor or any Receivable conveyed to the Trust
by such Transferor unenforceable by such Transferor or the Trust or (ii) have a
material adverse effect on the Noteholders.

          (c)  Due Authorization. The execution and delivery of this Agreement,
               -----------------
the applicable Receivables Purchase Agreement and each applicable Participation
Interest Supplement by such Transferor and the order to the Owner Trustee to
have the Notes authenticated and delivered and the consummation by such
Transferor of the transactions provided for in this Agreement, the applicable
Receivables Purchase Agreement and each applicable Participation Interest
Supplement have been duly authorized by such Transferor by all necessary
corporate action on the part of such Transferor.

          (d)  No Conflict. The execution and delivery by such Transferor of
               -----------
this Agreement, the applicable Receivables Purchase Agreement and each
applicable Participation Interest Supplement, and the performance of the
transactions contemplated by this Agreement, the applicable Receivables Purchase
Agreement and each applicable Participation Interest Supplement and the
fulfillment of the terms hereof and thereof applicable to such Transferor, will
not conflict with or violate any Requirements of Law applicable to such
Transferor or 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 such Transferor is a party or by
which it or its properties are bound.

          (e)  No Proceedings. There are no proceedings or investigations,
               --------------
pending or, to the best knowledge of such Transferor, threatened against such
Transferor before any Governmental Authority (i) asserting the invalidity of
this Agreement, the applicable Receivables Purchase Agreement or any applicable
Participation Interest Supplement, (ii) seeking to prevent the consummation of
any of the transactions contemplated by this Agreement, the applicable
Receivables Purchase Agreement or any applicable Participation Interest
Supplement, (iii) seeking any determination or ruling that, in the reasonable
judgment of such Transferor, would materially and adversely affect the
performance by such Transferor of its obligations under this Agreement, the
applicable Receivables Purchase Agreement or any applicable Participation
Interest Supplement, (iv) seeking any determination or ruling that would
materially and adversely affect the validity or enforceability of this
Agreement, the applicable Receivables Purchase Agreement or any applicable
Participation Interest Supplement or (v) seeking to affect adversely the income
or franchise tax attributes of the Trust under the United States Federal or any
State income or franchise tax systems.

          (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 such

                                       17
<PAGE>

Transferor in connection with the execution and delivery by such Transferor of
this Agreement, the applicable Receivables Purchase Agreement and each
applicable Participation Interest Supplement and the performance of the
transactions contemplated by this Agreement, the applicable Receivables Purchase
Agreement and each applicable Participation Interest Supplement by such
Transferor have been duly obtained, effected or given and are in full force and
effect.

          Section 2.04.  Representations and Warranties of each Transferor
                         -------------------------------------------------
Relating to the Agreement and Any Participation Interest Supplement and the
---------------------------------------------------------------------------
Receivables.
-----------

          (a) Representations and Warranties. Each Transferor hereby severally
              ------------------------------
represents and warrants to the Owner Trustee and the Trust as of the Initial
Issuance Date, each Closing Date and, with respect to Additional Accounts, as of
the related Addition Date (but only if, in either case, it was a Transferor on
such date and only with respect to Accounts it has designated on such date and
Receivables arising therein) that:

               (i)    this Agreement, the applicable Receivables Purchase
     Agreement, each applicable Participation Interest Supplement and, in the
     case of Additional Accounts, the related Assignment, each constitutes a
     legal, valid and binding obligation of such Transferor enforceable against
     such Transferor 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 Initial Cut-Off Date with respect to the Initial
     Accounts and as of the related Additional Cut-Off Date with respect to
     Additional Accounts, the portion of Schedule 1 to this Agreement under such
                                         ----------
     Transferor's name, as supplemented to such date, is, or will be on the
     Required Delivery Date in the case of Additional Accounts, an accurate and
     complete listing in all material respects of all the Accounts the
     Receivables in which were transferred by such Transferor on the first
     Closing Date or the Addition Date, as the case may be, and the information
     contained therein with respect to the identity of such Accounts and the
     Receivables existing thereunder is, or will be on the Required Delivery
     Date in the case of Additional Accounts, true and correct in all material
     respects as of the Initial Cut-Off Date or such Additional Cut-Off Date, as
     the case may be;

               (iii)  on the date each Receivable is conveyed to the Trust by
     such Transferor, such Receivable has been conveyed to the Trust free and
     clear of any Lien and, on such date, any related underlying receivable is
     free and clear of all Liens;

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

               (v)    either this Agreement or, in the case of Additional
     Accounts, the related Assignment constitutes a valid sale, transfer and
     assignment to the Trust of all right, title and interest of such Transferor
     in the Receivables conveyed to the Trust by such Transferor and the
     proceeds thereof and Recoveries and Interchange identified as relating to
     the Receivables conveyed to the Trust by such Transferor which have become
     Defaulted Receivables or, if this Agreement or, in the case of Additional
     Accounts, the related Assignment does not constitute a sale of such
     property, it constitutes a grant of a first priority perfected "security
     interest" (as defined in the UCC) in such property to the Trust, which, in
     the case of existing Receivables and the proceeds thereof and said
     Recoveries and Interchange, is enforceable upon execution and

                                       18
<PAGE>

     delivery of this Agreement, or, with respect to then existing Receivables
     in Additional Accounts, as of the applicable Addition Date, and which will
     be enforceable with respect to such Receivables hereafter and thereafter
     created and the proceeds thereof upon such creation. Upon the filing of the
     financing statements and, in the case of Receivables hereafter created and
     the proceeds thereof, upon the creation thereof, the Trust shall have a
     first priority perfected security or ownership interest in such property
     and proceeds;

               (vi)   on the Initial Cut-Off Date, each Initial Account
     specified in Schedule 1 with respect to such Transferor is an Eligible
                  ----------
     Account and, on the applicable Additional Cut-Off Date, each related
     Additional Account specified in Schedule 1 with respect to such Transferor
                                     ----------
     is an Eligible Account;

               (vii)  on the Initial Cut-Off Date, each Receivable then existing
     and conveyed to the Trust by such Transferor is an Eligible Receivable and,
     on the applicable Additional Cut-Off Date, each Receivable contained in the
     related Additional Accounts and conveyed to the Trust by such Transferor is
     an Eligible Receivable;

               (viii) as of the date of the creation of any new Receivable in an
     Account specified in the applicable Receivables Purchase Agreement, such
     Receivable is an Eligible Receivable;

               (ix)   no selection procedures believed by such Transferor to be
     materially adverse to the interests of the Noteholders have been used in
     selecting such Accounts; and

               (x)    each of the Initial Accounts is part of the Union Plus
     Program and is a consumer revolving credit account.

          (b)  Notice of Breach. The representations and warranties set forth in
               ----------------
Section 2.03, this Section 2.04 and subsection 2.09(f) shall survive the
transfers and assignments of the Receivables to the Trust, the pledge of the
Receivables to the Indenture Trustee pursuant to the Indenture, and the issuance
of the Notes. Upon discovery by any Transferor, the Servicer or the Owner
Trustee of a breach of any of the representations and warranties set forth in
Section 2.03, this Section 2.04 or subsection 2.09(f), the party discovering
such breach shall give notice to the other parties and to 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.

          Section 2.05.  Reassignment of Ineligible Receivables.
                         --------------------------------------

          (a)  Reassignment of Receivables. In the event (i) any representation
               ---------------------------
or warranty contained in subsection 2.04(a)(ii), (iii), (iv), (vi), (vii),
(viii) or (ix) 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 such
breach has a material adverse effect on any Receivable (which determination
shall be made without regard to whether funds are then available pursuant to any
Series Enhancement) unless cured within 60 days (or such longer period, not in
excess of 120 days, as may be agreed to by the Indenture Trustee and the
Servicer) after the earlier to occur of the discovery thereof by the Transferor
which conveyed such Receivables to the Trust or receipt by the Transferor of
written notice thereof given by the Owner Trustee, the Indenture Trustee or the
Servicer, or (ii) it is so provided in subsection 2.07(a) with respect to any
Receivables conveyed to the Trust by such Transferor, then such Transferor shall
accept reassignment of all Receivables in the related Account ("Ineligible
                                                                ----------
Receivables") on the terms and conditions set forth in paragraph (b) below.
-----------

                                       19
<PAGE>

          (b)  Price of Reassignment. The Servicer shall deduct the portion of
               ---------------------
such Ineligible Receivables reassigned to each Transferor which are Principal
Receivables from the aggregate amount of the Principal Receivables used to
calculate the Transferor Amount. In the event that, following the exclusion of
such Principal Receivables from the calculation of the Transferor Amount, the
Transferor Amount would be less than the Required Transferor Amount, not later
than 1:00 P.M., New York City time, on the first Distribution Date following the
Due Period in which such reassignment obligation arises, the applicable
Transferor shall make a deposit into the Special Funding Account in immediately
available funds in an amount equal to the amount by which the Transferor Amount
would be below the Required Transferor Amount (up to the amount of such
Principal Receivables).

          Upon reassignment of any Ineligible Receivable, the Trust shall
automatically and without further action be deemed to transfer, assign, set over
and otherwise convey to the applicable Transferor or its designee, without
recourse, representation or warranty, all the right, title and interest of the
Owner Trustee and the Trust in and to such Ineligible Receivable, all
Interchange and Recoveries related thereto, all monies and amounts due or to
become due and all proceeds thereof and such reassigned Ineligible Receivable
shall be treated by the Owner Trustee and the Trust as collected in full as of
the date on which it was transferred. The obligation of each Transferor to
accept reassignment of any Ineligible Receivables conveyed to the Trust by such
Transferor, and to make the deposits, if any, required to be made to the Special
Funding Account as provided in this Section, shall constitute the sole remedy
respecting the event giving rise to such obligation available to Noteholders (or
the Indenture Trustee on behalf of the Noteholders) or any Series Enhancer.
Notwithstanding any other provision of this subsection 2.05(b), a reassignment
of an Ineligible Receivable in excess of the amount that would cause the
Transferor Amount to be less than the Required Transferor Amount shall not occur
if the applicable Transferor fails to make any deposit required by this
subsection 2.05(b) with respect to such Ineligible Receivable. The Owner Trustee
shall execute such documents and instruments of transfer or assignment and take
such other actions as shall reasonably be requested and provided by the
applicable Transferor to effect the conveyance of such Ineligible Receivables
pursuant to this subsection 2.05(b), but only upon receipt of an Officer's
Certificate from such Transferor that states that all conditions set forth in
this Section 2.05 have been satisfied.

          Section 2.06.  Reassignment of Trust Portfolio. In the event any
                         -------------------------------
representation or warranty of a Transferor set forth in subsection 2.03(a) or
(c) or subsection 2.04(a)(i) or (v) is not true and correct in any material
respect and such breach has a material adverse effect on the Receivables or
Participation Interests conveyed to the Trust by such Transferor or the
availability of the proceeds thereof to the Trust (which determination shall be
made without regard to whether funds are then available pursuant to any Series
Enhancement), then either the Owner Trustee, the Indenture Trustee or the
Holders of Notes evidencing not less than 50% of the aggregate unpaid principal
amount of all outstanding Notes, by notice then given to such Transferor and the
Servicer (and to the Owner Trustee and Indenture Trustee if given by the
Noteholders), may direct such Transferor to accept a reassignment of the
Receivables and any Participation Interests conveyed to the Trust by such
Transferor if such breach and any material adverse effect caused by such breach
is not cured within 60 days of such notice (or within such longer period, not in
excess of 120 days, as may be specified in such notice), and upon those
conditions such Transferor shall be obligated to accept such reassignment on the
terms set forth below; provided, however, that such Receivables and
Participation Interests will not be reassigned to such Transferor if, on any day
prior to the end of such 60-day or longer period (i) the relevant representation
and warranty shall be true and correct in all material respects as if made on
such day and (ii) such Transferor shall have delivered to the Owner Trustee a
certificate of an authorized officer describing the nature of such breach and
the manner in which the relevant representation and warranty has become true and
correct.

          The applicable Transferor shall deposit in the Collection Account in
immediately available funds not later than 1:00 P.M., New York City time, on the
first Distribution Date following the

                                       20
<PAGE>

Due Period in which such reassignment obligation arises, in payment for such
reassignment, an amount equal to the sum of the amounts specified therefor with
respect to each outstanding Series in the related Indenture Supplement.
Notwithstanding anything to the contrary in this Agreement, such amounts shall
be distributed to the Noteholders on such Distribution Date in accordance with
the terms of each Indenture Supplement. If the Owner Trustee, the Indenture
Trustee or the Noteholders give notice directing the applicable Transferor to
accept a reassignment of the Receivables and Participation Interests as provided
above, the obligation of such Transferor to accept such reassignment pursuant to
this Section 2.06 and to make the deposit required to be made to the Collection
Account as provided in this paragraph shall constitute the sole remedy
respecting an event of the type specified in the first sentence of this Section
2.06 available to the Noteholders (or the Indenture Trustee on behalf of the
Noteholders) or any Series Enhancer. Upon reassignment of the Receivables and
Participation Interests on such Distribution Date, the Trust shall automatically
and without further action be deemed to transfer, assign, set over and otherwise
convey to the applicable Transferor, without recourse, representation or
warranty, all of the right, title and interest of the Owner Trustee and the
Trust in and to the Receivables and Participation Interests, all Interchange and
Recoveries allocable to the Trust, all monies and amounts due or to become due
with respect thereto and all proceeds thereof. The Owner Trustee shall execute
such documents and instruments of transfer or assignment and take such other
actions as shall reasonably be requested by the applicable Transferor to effect
the conveyance of such property pursuant to this subsection.

          Section 2.07.  Covenants of each Transferor. Each Transferor hereby
                         ----------------------------
severally covenants that:

          (a)  Receivables Not To Be Evidenced by Promissory Notes. Except in
               ---------------------------------------------------
connection with its enforcement or collection of an Account, such Transferor
will take no action to cause any Receivable conveyed by it to the Trust to be
evidenced by any instrument (as defined in the UCC) and if any such Receivable
(or any underlying receivable) is so evidenced it shall be deemed to be an
Ineligible Receivable in accordance with Section 2.05(a) and shall be reassigned
to such Transferor in accordance with Section 2.05(b).

          (b)  Security Interests. Except for the conveyances hereunder, such
               ------------------
Transferor will not sell, pledge, assign or transfer to any other Person, or
grant, create, incur, assume or suffer to exist any Lien on, any Receivable (or
any underlying receivable) or Participation Interest conveyed by it to the
Trust, whether now existing or hereafter created, or any interest therein, and
such Transferor shall defend the right, title and interest of the Trust and the
Indenture Trustee in, to and under the Receivables and any Participation
Interest, whether now existing or hereafter created, against all claims of third
parties claiming through or under such Transferor.

          (c)  Transferor Amount. Except for (i) the conveyances hereunder, in
               -----------------
connection with any transaction permitted by subsection 4.02(a)(i) and as
provided in subsection 2.09(g) of this Agreement or Section 2.12 of the
Indenture or (ii) conveyances with respect to which the Rating Agency Condition
shall have been satisfied and a Tax Opinion shall have been delivered, such
Transferor agrees not to transfer, sell, assign, exchange or otherwise convey or
pledge, hypothecate or otherwise grant a security interest in the Transferor
Amount, the Transferor Certificate or any Supplemental Certificate or the
Transferor's interest in the Trust and any such attempted transfer, assignment,
exchange, conveyance, pledge, hypothecation, grant or sale shall be void;
provided, however, that nothing in this subsection 2.07(c) shall prevent the
owner of an interest in the Transferor Amount from granting to an Affiliate a
participation interest or other beneficial interest in the rights to receive
cash flows related to the Transferor Amount, if (i) such interest does not grant
such Affiliate any rights hereunder or delegate to such Affiliate any
obligations or duties hereunder, (ii) the transferor of such interest obtains
the prior written consent of such Transferor and (iii) after giving effect to
such transfer, the interest in the

                                       21
<PAGE>

Transferor Amount owned directly by such Transferor represents an undivided
ownership interest in two percent (2.0%) or more of the Trust Assets.

          (d) Delivery of Collections or Recoveries.  In the event that such
              -------------------------------------
Transferor receives Collections or Recoveries, such Transferor agrees to pay the
Servicer all such Collections and Recoveries as soon as practicable after
receipt thereof.

          (e) Notice of Liens.  Such Transferor shall notify the Owner Trustee,
              ---------------
the Indenture Trustee and each Series Enhancer promptly after becoming aware of
any Lien on any Receivable (or on the underlying receivable) or Participation
Interest conveyed by it to the Trust other than the conveyances hereunder and
under the applicable Receivables Purchase Agreement and the Indenture.

          (f) Amendment of the Certificate of Incorporation.  Such Transferor
              ---------------------------------------------
will not amend in any material respect its certificate of incorporation without
providing the Rating Agency with notice no later than the fifth Business Day
prior to such amendment (unless the right to such notice is waived by the Rating
Agency) and satisfying the Rating Agency Condition.

          (g) Other Indebtedness.  Such Transferor shall not incur any
              ------------------
additional debt, unless (i) such debt is incurred pursuant to the Revolving
Credit Agreement or (ii) the Rating Agency is provided with notice no later than
the fifth Business Day prior to the incurrence of such additional debt (unless
the right to such notice is waived by the Rating Agency) and the Rating Agency
Condition is satisfied with respect to the incurrence of such debt.

          (h) Interchange.  Subject to Section 8.04 of the Indenture, with
              -----------              ------------
respect to any Distribution Date, on or prior to the immediately preceding
Transfer Date, the Servicer shall notify the Transferor of the amount of
Interchange required to be included as Collections of Finance Charge and
Administrative Receivables with respect to such Due Period, which amount for any
Series shall be specified in the related Indenture Supplement.  Not later than
1:00 p.m., New York City time, on the related Distribution Date, the Transferor
shall cause to be deposited into the Collection Account, in immediately
available funds, the amount of Interchange to be so included as Collections of
Finance Charge and Administrative Receivables with respect to such Due Period.

          Section 2.08.  Covenants of each Transferor with Respect to
                         --------------------------------------------
Receivables Purchase Agreement.  Each Transferor, in its capacity as purchaser
------------------------------
of Receivables from the Bank or another Account Owner pursuant to a Receivables
Purchase Agreement, hereby covenants that such Transferor will at all times
enforce the covenants and agreements of the Bank or such other Account Owner in
such Receivables Purchase Agreement, including covenants substantially to the
effect set forth below:

          (a) Periodic Rate Finance Charges.  (i) Except (A) as otherwise
              -----------------------------
required by any Requirements of Law or (B) as is deemed by the Bank or any other
Account Owner, as the case may be, to be necessary in order for it to maintain
its credit business or a program operated by such credit business on a
competitive basis based on a good faith assessment by it of the nature of the
competition with respect to the credit business or such program, it shall not at
any time take any action which would have the effect of reducing the Series
Portfolio Yield to a level that could be reasonably expected to result in an
Adverse Effect with respect to any Series based on the insufficiency of the
Series Portfolio Yield or any similar test.

          (b) Credit Agreements and Guidelines.  Subject to compliance with all
              --------------------------------
Requirements of Law and paragraph (a) above, the Bank (or other Account Owner if
the Bank is not the Account Owner) may change the terms and provisions of the
applicable Credit Agreements or the applicable Credit Guidelines of the Bank (or
other Account Owner if the Bank is not the Account Owner) in any

                                       22
<PAGE>

respect (including the calculation of the amount or the timing of charge-offs
and the Periodic Rate Finance Charges to be assessed thereon). Notwithstanding
the above, unless required by Requirements of Law or as permitted by paragraph
(a) above, the Bank (or other Account Owner if the Bank is not the Account
Owner) will not take any action unless (i) at the time of such action, the Bank
(or other Account Owner if the Bank is not the Account Owner) reasonably
believes that such action will not cause an Adverse Effect, and (ii) such change
is made applicable to the comparable segment of the revolving credit accounts
owned by the Bank (or other Account Owner if the Bank is not the Account Owner)
which have characteristics the same as, or substantially similar to, the
Accounts that are the subject of such change, except as otherwise restricted by
an endorsement, sponsorship, or other agreement between the Bank (or other
Account Owner if the Bank is not the Account Owner) and an unrelated third party
or by the terms of the Credit Agreements.

          Section 2.09.  Addition of Accounts.
                         --------------------

          (a)  Required Aggregate Additions.
               ----------------------------

               (i)   Required Additional Accounts.  If, as of the close of
                     ----------------------------
     business on the last Business Day of any calendar month, the aggregate
     amount of the Principal Receivables is less than the Required Minimum
     Principal Balance (as adjusted for any Series having a Paired Series as
     described in the Indenture Supplement for such Series) on such date, the
     Transferor shall on or prior to the close of business on the last Business
     Day of the next succeeding Due Period (the "Required Designation Date"),
                                                 -------------------------
     unless the aggregate amount of the Principal Receivables exceeds the
     Required Minimum Principal Balance as of the close of business on any day
     after the last Business Day of such calendar month and prior to the
     Required Designation Date, effect the addition of Eligible Accounts to be
     included as Accounts as of the Required Designation Date or any earlier
     date in a sufficient amount (or such lesser amount as shall represent all
     Eligible Accounts constituting revolving credit accounts then available to
     the Transferor under the Receivables Purchase Agreement) such that, after
     giving effect to such addition and the addition by each other Transferor,
     the aggregate amount of the Principal Receivables is at least equal to the
     Required Minimum Principal Balance on such date.

               (ii)  Optional Participation Interests.  In lieu of, or in
                    --------------------------------
     addition to, causing the designation of Additional Accounts pursuant to
     clause (i) above, the Transferor may (but shall not be required), subject
     to the conditions specified in paragraph (c) below, convey to the Trust
     participations (including 100% participations) representing undivided
     interests in a pool of assets primarily consisting of revolving credit
     receivables and any interests in any of the foregoing, including securities
     representing or backed by such receivables and collections, together with
     all earnings, revenue, dividends, distributions, income, issues and profits
     thereon ("Participation Interests").  The addition of Participation
               -----------------------
     Interests in the Trust pursuant to this paragraph (a) or paragraph (b)
     below shall be effected by a Participation Interest Supplement, dated the
     applicable Addition Date and entered into pursuant to subsection 9.01(a).

               (iii) Any Additional Accounts or Participation Interests
     designated to be included as Trust Assets pursuant to clauses (i) or (ii)
     above may only be so included if the applicable conditions specified in
     paragraph (c) below have been satisfied.

          (b) Permitted Aggregate Additions.  Each Transferor may from time to
              -----------------------------
time, in its sole discretion, subject to the conditions specified in paragraph
(c) below, voluntarily cause the designation of additional Eligible Accounts to
be included as Accounts or Participation Interests to be included as Trust
Assets, in either case as of the applicable Addition Date.

                                       23
<PAGE>

          (c) Conditions to Aggregate Additions.  On the Addition Date with
              ---------------------------------
respect to any Aggregate Additions, the Trust shall acquire the Receivables in
such Aggregate Addition Accounts (and such Aggregate Addition Accounts shall be
deemed to be Accounts for purposes of this Agreement) or shall acquire such
Participation Interests existing as of the close of business on the applicable
Additional Cut-Off Date, subject to the satisfaction of the following
conditions:

               (i)    on or before the fifth Business Day immediately preceding
     the Addition Date, the applicable Transferor shall have given the Owner
     Trustee, the Indenture Trustee, the Servicer and each Rating Agency notice
     (unless such notice requirement is otherwise waived by the Rating Agency)
     that the Aggregate Addition Accounts or Participation Interests will be
     included and specifying the applicable Addition Date, the Additional Cut-
     Off Date and the Pool or Pools to which such addition will be made;

               (ii)   as of the applicable Additional Cut-Off Date, such
     Aggregate Addition Accounts shall be Eligible Accounts;

               (iii)  on or before the Required Delivery Date, the applicable
     Transferor shall have delivered to the Owner Trustee and the Indenture
     Trustee copies of UCC-1 financing statements covering such Aggregate
     Addition Accounts or Participation Interests, if necessary to perfect the
     Owner Trustee's and the Trust's interest in the Receivables arising therein
     and a schedule of such Aggregate Addition Accounts;

               (iv)   to the extent required by Section 8.04 of the Indenture,
     such Transferor shall have deposited in the Collection Account all
     Collections with respect to such Aggregate Addition Accounts or
     Participation Interests since the Additional Cut-Off Date;

               (v)    as of each of the Additional Cut-Off Date and the Addition
     Date, no Insolvency Event with respect to the Bank or any other Account
     Owner, as applicable, or such Transferor shall have occurred nor shall the
     transfer to the Trust of the Receivables arising in the Aggregate Addition
     Accounts or of the Participation Interests have been made in contemplation
     of the occurrence thereof;

               (vi)   solely with respect to Aggregate Additions designated
     pursuant to subsection 2.09(b), the Rating Agency Condition shall have been
     satisfied;

               (vii)  such Transferor shall have delivered to the Owner Trustee
     and the Indenture Trustee an Officer's Certificate, dated the Addition
     Date, confirming, to the extent applicable, the items set forth in clauses
     (ii) through (vi) above;

               (viii) the addition to the Trust of the Receivables arising in
     the Aggregate Addition Accounts or of the Participation Interests will not
     result in an Adverse Effect and, in the case of Aggregate Additions, such
     Transferor shall have delivered to the Owner Trustee and the Indenture
     Trustee an Officer's Certificate, dated the Addition Date, stating that
     such Transferor reasonably believes that the addition to the Trust of the
     Receivables arising in the Aggregate Addition Accounts or of the
     Participation Interests will not have an Adverse Effect; and

               (ix)   such Transferor shall have delivered to the Owner Trustee,
     the Indenture Trustee and each Rating Agency an Opinion of Counsel, dated
     the Addition Date, in accordance with subsection 9.02(d)(ii) or (iv), as
     applicable.

                                       24
<PAGE>

          (d)  New Accounts.  (i) Each Transferor may from time to time, at its
               ------------
sole discretion, subject to the conditions specified in paragraph (e) below,
voluntarily designate newly originated Eligible Accounts to be included as New
Accounts.  For purposes of this paragraph, Eligible Accounts shall be deemed to
include only revolving credit accounts (a) originated or underwritten by the
Bank or any other Affiliate of Household International and (b) which are of the
same nature as those included as Initial Accounts or which have previously been
included in any Aggregate Addition if the Assignment related to such Aggregate
Addition expressly provides that such type of revolving credit account is
permitted to be designated as a New Account.

          (ii) The number of New Accounts designated with respect to any of the
three consecutive Due Periods commencing in January, April, July and October of
each calendar year shall not exceed 15% of the number of Accounts as of the
first day of the calendar year during which such Due Periods commence (or the
Initial Cut-Off Date, in the case of 2000) and the number of New Accounts
designated during any such calendar year shall not exceed 20% of the number of
Accounts as of the first day of such calendar year (or the Initial Cut-Off Date,
in the case of 2000); provided, however, New Accounts may be designated in
excess of such 15% and 20% limitations if the Rating Agency Condition is
satisfied with respect to such designation.

          (e)  Conditions to Addition of New Accounts.  On the Addition Date
               --------------------------------------
with respect to any New Accounts, the Trust shall acquire the Receivables in
such New Accounts (and such New Accounts shall be deemed to be Accounts for
purposes of this Agreement) as of the close of business on the applicable
Addition Date, subject to the satisfaction of the following conditions:

               (i)   the New Accounts shall all be Eligible Accounts;

               (ii)  on or before the Required Delivery Date, the applicable
     Transferor shall have delivered to the Owner Trustee and Indenture Trustee
     copies of UCC-1 financing statements covering such New Accounts, if
     necessary to perfect the Owner Trustee's and the Trust's interest and the
     Indenture Trustee's interest in the Receivables arising therein and a
     schedule of such New Accounts;

               (iii) to the extent required by Section 8.04 of the Indenture,
     the applicable Transferor shall have deposited in the Collection Account
     all Collections with respect to such New Accounts since the Additional Cut-
     Off Date;

               (iv)  as of each of the Additional Cut-Off Date and the Addition
     Date, no Insolvency Event with respect to the Bank or any other Account
     Owner, as applicable, or such Transferor shall have occurred nor shall the
     transfer to the Trust of the Receivables arising in the New Accounts have
     been made in contemplation of the occurrence thereof;

               (v)   such Transferor shall have delivered to the Owner Trustee
     and the Indenture Trustee an Officer's Certificate, dated the Addition
     Date, confirming, to the extent applicable, the items set forth in clauses
     (i) through (iv) above;

               (vi)  the addition of the Receivables arising in the New Accounts
     to the Trust will not result in an Adverse Effect and such Transferor shall
     have delivered to the Owner Trustee and the Indenture Trustee an Officer's
     Certificate, dated the Addition Date, stating that such Transferor
     reasonably believes that the addition to the Trust of the Receivables
     arising in the New Accounts will not have an Adverse Effect;

                                       25
<PAGE>

               (vii)  with respect to each Distribution Date following a Due
     Period ending in March, June, September, and December, such Transferor
     shall deliver to the Owner Trustee, the Indenture Trustee and each Rating
     Agency, an Opinion of Counsel substantially in the form of Exhibit D-2 with
                                                                -----------
     respect to the New Accounts, if any, included as Accounts during the three
     consecutive Due Periods ending prior to such Distribution Date.  The
     opinion delivery requirement set forth in the immediately preceding
     sentence may be modified provided that the Rating Agency Condition is
     satisfied; and

               (viii) on or before the fifth Business Day preceding the Addition
     Date the applicable Transferor shall have given each Rating Agency notice
     specifying the Pool or Pools to which such New Accounts will be added.

          (f)  Representations and Warranties.  Each Transferor conveying
               ------------------------------
Additional Accounts or Participation Interests hereby represents and warrants to
the Owner Trustee and the Trust as of the related Addition Date as to the
matters set forth in clauses (v) and (viii) of subsection 2.09(c) above and
that, in the case of Additional Accounts, the list delivered pursuant to
subsection 2.09(h) is, as of the applicable Additional Cut-Off Date, true and
complete in all material respects.

          (g)  Additional Transferors.  The Transferor may designate Affiliates
               ----------------------
of the Transferor to be included as Transferors ("Additional Transferors") under
                                                  ----------------------
this Agreement in an amendment hereto pursuant to subsection 9.01(a) and, in
connection with such designation, the Transferor shall (i) surrender the
Transferor Certificate to the Owner Trustee in exchange for a newly issued
Transferor Certificate modified to reflect such Additional Transferor's interest
in the Transferor Certificate or (ii) if the Transferor Certificate is
uncertificated, direct the Indenture Trustee to make the appropriate entries in
its books and records to reflect such Additional Transferor's interest in the
Transferor Certificate; provided, however, that prior to any such designation
and exchange the conditions set forth in clauses (iii) and (v) of subsection
3.06 of the Trust Agreement shall have been satisfied with respect thereto.

          (h)  Delivery of Documents.  In the case of the designation of
               ---------------------
Additional Accounts, the Transferor designating such Accounts shall deliver to
the Indenture Trustee and the Owner Trustee (i) the computer file or microfiche
list required to be delivered pursuant to Section 2.01 with respect to such
Additional Accounts on the date such file or list is required to be delivered
pursuant to Section 2.01 (the "Document Delivery Date") and (ii) a duly
                               ----------------------
executed, written Assignment (including an acceptance by the Trust),
substantially in the form of Exhibit A (the "Assignment"), on the Document
                             ---------       ----------
Delivery Date.

          Section 2.10.  Removal of Accounts and Participation Interests.  (a)
                         -----------------------------------------------
On any day of any Due Period each Transferor shall have the right to (x)
designate Zero Balance Accounts, specific terminated merchant or co-branding
participant accounts and randomly chosen removed accounts and to remove
participations from the trust and (y) require the reassignment to it or its
designee of all the Owner Trustee's and the Trust's right, title and interest
in, to and under the Receivables then existing and thereafter created, all
Interchange and Recoveries related thereto after the Removal Date, all monies
due or to become due and all amounts received or receivable with respect thereto
and all proceeds thereof in or with respect to the Accounts (the "Removed
                                                                  -------
Accounts") or Participation Interests conveyed to the Trust by such Transferor
--------
(the "Removed Participation Interests") (unless otherwise set forth in the
      -------------------------------
applicable Participation Interest Supplement or Indenture Supplement) and
designated for removal by the Transferor, upon satisfaction of the conditions in
clauses (i) through (v) below; provided, however, that the conditions listed in
clauses (iv) and (v) below need not be satisfied if the Removed Accounts (x) are
Zero Balance Accounts or (y) relate to a terminated Affinity Agreement and the
related merchant or co-branding participant or designee has elected to purchase
the Receivables in such Removed Accounts:

                                       26
<PAGE>

               (i)   on or before the fifth Business Day immediately preceding
     the Removal Date, such Transferor shall have given written notice to the
     Owner Trustee, the Indenture Trustee, the Servicer, the Rating Agency and
     each Series Enhancer (unless such notice requirement is otherwise waived)
     of such removal and specifying the date for removal of the Removed Accounts
     and removed Participation Interests (the "Removal Date");
                                               ------------

               (ii)  on or prior to the date that is five Business Days on or
     before the Removal Date, such Transferor shall amend Schedule 1 by
                                                          ----------
     delivering to the Owner Trustee a computer file or microfiche list
     containing a true and complete list of the Removed Accounts specifying for
     each such Account, as of the date notice of the Removal Date is given, its
     account number, the aggregate amount outstanding in such Account and the
     aggregate amount of Principal Receivables outstanding in such Account;

               (iii) such Transferor shall have represented and warranted as of
     the Removal Date that the list of Removed Accounts delivered pursuant to
     paragraph (ii) above, as of the Removal Date, is true and complete in all
     material respects;

               (iv)  the Rating Agency Condition shall have been satisfied with
     respect to the removal of the Removed Accounts and removed Participation
     Interests; and

               (v)   such Transferor shall have delivered to the Owner Trustee
     and the Indenture Trustee an Officer's Certificate, dated the Removal Date,
     to the effect that such Transferor reasonably believes that (A) such
     removal will not have an Adverse Effect and (B) no selection procedures
     believed by such Transferor to be materially adverse to the interests of
     the Noteholders have been used in selecting the Removed Accounts.

          Upon satisfaction of the above conditions, the Owner Trustee shall
execute and deliver to such Transferor a written reassignment in substantially
the form of Exhibit B (the "Reassignment") and shall, without further action, be
            ---------       ------------
deemed to transfer, assign, set over and otherwise convey to such Transferor or
its designee, effective as of the Removal Date, without recourse, representation
or warranty, all the right, title and interest of the Owner Trustee and the
Trust in and to the Receivables arising in the Removed Accounts and Removed
Participation Interests, all Interchange and Recoveries related thereto, all
monies due and to become due and all amounts received or receivable with respect
thereto after the Removal Date and all proceeds thereof and any Insurance
Proceeds relating thereto. The Owner Trustee may conclusively rely on the
Officer's Certificate delivered pursuant to this Section 2.10 and shall have no
duty to make inquiries with regard to the matters set forth therein and shall
incur no liability in so relying.

          In addition to the foregoing, on the date when any Receivable in an
Account becomes a Defaulted Receivable, the Trust shall automatically and
without further action or consideration be deemed to transfer, set over and
otherwise convey to the Transferor with respect to such Account, without
recourse, representation or warranty, all right, title and interest of the Owner
Trustee and the Trust in and to the Defaulted Receivables in such Account, all
Interchange related thereto, all monies and amounts due or to become due with
respect thereto, all proceeds thereof and any Insurance Proceeds relating
thereto; provided, that Recoveries of such Account shall be applied as provided
herein.

          (b) Anything to the contrary herein notwithstanding, the Transferor
shall be entitled to purchase all Receivables in Accounts designated for
purchase or re-purchase by a merchant or co-branding participant pursuant to the
termination of an Affinity Agreement to which such merchant or co-branding
participant is a party.  Any repurchase of Receivables pursuant to this
subsection 2.10(b) shall be effected in the manner, and at a price determined in
accordance with subsection 2.05(b) as if the

                                       27
<PAGE>

Receivables being repurchased were Ineligible Receivables. Amounts deposited in
the Collection Account in connection therewith shall be deemed to be Collections
of Principal Receivables and shall be applied in accordance with Article VIII of
the Indenture and the terms of each Indenture Supplement.

          Section 2.11.  Account Allocations.  In the event that any Transferor
                         -------------------
is unable for any reason to transfer Receivables to the Trust in accordance with
the provisions of this Agreement, including by reason of the application of the
provisions of Section 6.01 or any order of any Governmental Authority (a
"Transfer Restriction Event"), then, (a) such Transferor and the Servicer agree
---------------------------
(except as prohibited by any such order) to allocate and pay to the Trust, after
the date of such inability, all Collections, including Collections of
Receivables transferred to the Trust prior to the occurrence of such event, and
all amounts which would have constituted Collections but for such Transferor's
inability to transfer Receivables (up to an aggregate amount equal to the amount
of Receivables transferred to the Trust by such Transferor in the Trust on such
date), (b) such Transferor and the Servicer agree that such amounts will be
applied as Collections in accordance with Article VIII of the Indenture and the
terms of each Indenture Supplement and (c) for so long as the allocation and
application of all Collections and all amounts that would have constituted
Collections are made in accordance with clauses (a) and (b) above, Principal
Receivables and all amounts which would have constituted Principal Receivables
but for such Transferor's inability to transfer Receivables to the Trust which
are charged off as uncollectible in accordance with this Agreement shall
continue to be allocated in accordance with Article VIII of the Indenture and
the terms of each Indenture Supplement.  For the purpose of the immediately
preceding sentence, such Transferor and the Servicer shall treat the first
received Collections with respect to the Accounts as allocable to the Trust
until the Trust shall have been allocated and paid Collections in an amount
equal to the aggregate amount of Principal Receivables in the Trust as of the
date of the occurrence of such event.  If such Transferor and the Servicer are
unable pursuant to any Requirements of Law to allocate Collections as described
above, such Transferor and the Servicer agree that, after the occurrence of such
event, payments on each Account with respect to the principal balance of such
Account shall be allocated first to the oldest principal balance of such Account
and shall have such payments applied as Collections in accordance with Article
VIII of the Indenture and the terms of each Indenture Supplement.  The parties
hereto agree that Finance Charge and Administrative Receivables, whenever
created, accrued in respect of Principal Receivables which have been conveyed to
the Trust shall continue to be a part of the Trust notwithstanding any cessation
of the transfer of additional Principal Receivables to the Trust and Collections
with respect thereto shall continue to be allocated and paid in accordance with
Article VIII of the Indenture and the terms of each Indenture Supplement.

          Section 2.12.  Discount Option.
                         ---------------

          (a) The Transferor shall have the option to designate at any time and
from time to time a percentage or percentages, which may be a fixed percentage
or a variable percentage based on a formula (the "Discount Percentage"), of all
                                                  -------------------
or any specified portion of Principal Receivables existing on and after a
Discount Option Date to be treated as Finance Charge and Administrative
Receivables ("Discount Option Receivables").  The Transferor shall also have the
              ---------------------------
option of increasing, reducing or withdrawing the Discount Percentage, at any
time and from time to time; provided that the Discount Percentage shall be
reduced or withdrawn on the date which the Transferor shall deliver to the
Indenture Trustee and the Owner Trustee an Officer's Certificate to the effect
that, in the reasonable belief of the Transferor, the continued discounting of
Principal Receivables would have an adverse regulatory implication with respect
to the Transferor.  The Transferor shall provide to the Servicer, the Owner
Trustee, the Indenture Trustee and the Rating Agency 30 days' prior written
notice of a Discount Option Date and such designation shall become effective on
a Discount Option Date only if, (i) the Transferor delivers an Officer's
Certificate to the effect that such designation in the reasonable belief of the

                                       28
<PAGE>

Transferor, would not cause an Adverse Effect and (ii) the Rating Agency
Condition shall have been satisfied with respect to such designation.

          (b) Discount Option Receivable Collections shall be treated as
Collections of Finance Charge and Administrative Receivables.

                              [END OF ARTICLE II]

                                       29
<PAGE>

                                  ARTICLE III

                         ADMINISTRATION AND SERVICING
                                OF RECEIVABLES

          Section 3.01.  Acceptance of Appointment and Other Matters Relating to
                         -------------------------------------------------------
the Servicer.
------------

          (a) Household Finance Corporation agrees to act as the Servicer under
this Agreement and the Noteholders by their acceptance of Notes consent to
Household Finance Corporation acting as Servicer.

          (b) As agent for each Transferor, the Owner Trustee and the Trust, the
Servicer shall service and administer the Receivables (including the underlying
receivables) and any Participation Interests, shall collect and deposit into the
Collection Account amounts received under the Receivables (including the
underlying receivables) and any Participation Interests and shall charge-off as
uncollectible Receivables, all in accordance with its customary and usual
servicing procedures for servicing revolving credit receivables comparable to
the Receivables and in accordance with the Credit Guidelines. As agent for each
Transferor, the Owner Trustee and the Trust, the Servicer shall have full power
and authority, acting alone or through any party properly designated by it
hereunder, to do any and all things in connection with such servicing and
administration which it may deem necessary or desirable; provided, however, that
subject to the rights of the Owner Trustee, the Indenture Trustee and the
Noteholders hereunder, HRF shall have the absolute right to direct the Servicer
with respect to any power conferred on the Servicer hereunder in accordance with
any such direction. Without limiting the generality of the foregoing and subject
to Section 7.01, the Servicer or its designee is hereby authorized and
empowered, unless such power is revoked by the Indenture Trustee on account of
the occurrence of a Servicer Default pursuant to Section 7.01, (i) to instruct
the Owner Trustee or the Indenture Trustee to make withdrawals and payments from
the Collection Account, the Special Funding Account and any Series Account, as
set forth in this Agreement, the Indenture or any Indenture Supplement, (ii) to
take any action required or permitted under any Series Enhancement, as set forth
in this Agreement, the Indenture or any Indenture Supplement, (iii) to execute
and deliver, on behalf of the Trust, any and all instruments of satisfaction or
cancellation, or of partial or full release or discharge, and all other
comparable instruments, with respect to the Receivables and, after the
delinquency of any Receivable and to the extent permitted under and in
compliance with applicable Requirements of Law, to commence collection
proceedings with respect to such Receivables and (iv) to make any filings,
reports, notices, applications and registrations with, and to seek any consents
or authorizations from, the Commission and any state securities authority on
behalf of the Trust as may be necessary or advisable to comply with any Federal
or state securities or reporting requirements or other laws or regulations. Each
of the Owner Trustee and the Indenture Trustee shall furnish the Servicer with
any documents in such Person's possession reasonably necessary or appropriate to
enable the Servicer to carry out its servicing and administrative duties
hereunder.

          (c) The Servicer shall not, and no Successor Servicer shall, be
obligated to use separate servicing procedures, offices, employees or accounts
for servicing the Receivables from the procedures, offices, employees and
accounts used by the Servicer or such Successor Servicer, as the case may be, in
connection with servicing other revolving credit receivables.

          (d) The Servicer shall comply with and perform its servicing
obligations with respect to the Accounts and Receivables in accordance with the
Credit Agreements relating to the Accounts and the Credit Guidelines and all
applicable rules and regulations of MasterCard and VISA, except insofar as

                                       30
<PAGE>

any failure to so comply or perform would not materially and adversely affect
the Trust or the Noteholders.

          (e) The Servicer shall pay out of its own funds, without
reimbursement, all expenses incurred in connection with the Trust and the
servicing activities hereunder including expenses related to enforcement of the
Receivables, fees and disbursements of the Owner Trustee and the Indenture
Trustee (including the reasonable fees and expenses of its outside counsel) and
independent accountants and all other fees and expenses, including the costs of
filing UCC continuation statements, and the costs and expenses relating to
obtaining and maintaining the listing of any Notes on any stock exchange. The
Transferor shall pay out of its own funds, without reimbursement, the costs and
expenses relating to any stamp, documentary, excise, property (whether on real,
personal or intangible property) or any similar tax levied on the Trust or the
Trust's assets that are not expressly stated in this Agreement to be payable by
the Trust or the Transferor (other than federal, state, local and foreign income
and franchise taxes, if any, or any interest or penalties with respect thereto,
assessed on the Trust).

          Section 3.02.  Servicing Compensation.  As full compensation for its
                         ----------------------
servicing activities hereunder and as reimbursement for any expense incurred by
it in connection therewith, the Servicer shall be entitled to receive a
servicing fee (the "Servicing Fee") with respect to each Monthly Period, payable
                    -------------
monthly on the related Distribution Date, in an amount equal to one-twelfth of
the product of (a) the weighted average of the Servicing Fee Rates with respect
to each outstanding Series (based upon the Servicing Fee Rate for each Series)
and (b) the Invested Amount (or such other amount as specified in the related
Indenture Supplement) of such Series, in each case as of the last day of the
prior Monthly Period prior to the termination of the Trust pursuant to 8.01 of
the Trust Agreement.  The share of the Servicing Fee allocable to a particular
Series with respect to any Due Period (the "Monthly Servicing Fee") will each be
                                            ---------------------
determined in accordance with the relevant Indenture Supplement.  The portion of
the Servicing Fee with respect to any Due Period not so allocated to any
particular Series shall be paid by the Holders of the Transferor Certificates on
the related Distribution Date and in no event shall the Trust, the Owner
Trustee, the Indenture Trustee, the Noteholders of any Series or any Series
Enhancer be liable for the share of the Servicing Fee with respect to any Due
Period to be paid by the Holders of the Transferor Certificates.

          Section 3.03.  Representations, Warranties and Covenants of the
                         ------------------------------------------------
Servicer. Household Finance Corporation, as initial Servicer, hereby makes, and
--------
any Successor Servicer by its appointment hereunder shall make, with respect to
itself, on each Closing Date (and on the date of any such appointment), the
following representations, warranties and covenants on which the Owner Trustee
and the Indenture Trustee shall be deemed to have relied in accepting the
Receivables in trust and in entering into the Indenture:

               (a)       Organization and Good Standing.  The Servicer is a
                         ------------------------------
     corporation validly existing under the laws of the jurisdiction of its
     organization or incorporation and has, in all material respects, full power
     and authority to own its properties and conduct its credit servicing
     business as presently owned or conducted, and to execute, deliver and
     perform its obligations under this Agreement.

               (b)       Due Qualification.  The Servicer is duly qualified to
                         -----------------
     do business and is in good standing as a foreign corporation or other
     foreign entity (or is exempt from such requirements) and has obtained all
     necessary licenses and approvals in each jurisdiction in which the
     servicing of the Receivables (including the underlying receivables) and any
     Participation Interests as required by this Agreement requires such
     qualification except where the failure to so qualify or obtain licenses or
     approvals would not have a material adverse effect on its ability to
     perform its obligations as Servicer under this Agreement.

                                       31
<PAGE>

               (c)  Due Authorization.  The execution, delivery, and performance
                    -----------------
     of this Agreement and the other agreements and instruments executed or to
     be executed by the Servicer as contemplated hereby, have been duly
     authorized by the Servicer by all necessary action on the part of the
     Servicer.

               (d)  Binding Obligation.  This Agreement constitutes a legal,
                    ------------------
     valid and binding obligation of the Servicer, enforceable 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 by
     general principles of equity.

               (e)  No Conflict.  The execution and delivery of this Agreement
                    -----------
     by the Servicer, and the performance of the transactions contemplated by
     this Agreement and the fulfillment of the terms hereof and thereof
     applicable to the Servicer, 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 Servicer is a party or by which it or its
     properties are bound.

               (f)  No Violation.  The execution and delivery of this Agreement
                    ------------
     by the Servicer, the performance of the transactions contemplated by this
     Agreement and the fulfillment of the terms hereof and thereof applicable to
     the Servicer will not conflict with or violate any Requirements of Law
     applicable to the Servicer.

               (g)  No Proceedings.  There are no proceedings or investigations
                    --------------
     pending or, to the best knowledge of the Servicer, threatened against the
     Servicer before any Governmental Authority seeking to prevent the
     consummation of any of the transactions contemplated by this Agreement or
     seeking any determination or ruling that, in the reasonable judgment of the
     Servicer, would materially and adversely affect the performance by the
     Servicer of its obligations under this Agreement.

               (h)  Compliance with Requirements of Law.  The Servicer shall
                    -----------------------------------
     duly satisfy all obligations on its part to be fulfilled under or in
     connection with each Receivable (and the underlying receivable) and the
     related Account, if any, will maintain in effect all qualifications
     required under Requirements of Law in order to service properly each
     Receivable and the related Account, if any, and will comply in all material
     respects with all other Requirements of Law in connection with servicing
     each Receivable and the related Account the failure to comply with which
     would have an Adverse Effect.

               (i)  No Rescission or Cancellation.  The Servicer shall not
                    -----------------------------
     permit any rescission or cancellation of any Receivable (or the underlying
     receivable) except in accordance with the Credit Guidelines or as ordered
     by a court of competent jurisdiction or other Governmental Authority.

               (j)  Protection of Rights. The Servicer shall take no action
                    --------------------
     which, nor omit to take any action the omission of which, would impair the
     rights of the Trust, the Owner Trustee, the Indenture Trustee or the
     Noteholders in any Receivable (or the underlying receivable) or the related
     Account or any Participation Interest, if any, nor shall it reschedule,
     revise or defer payments due on any Receivable except in accordance with
     the Credit Guidelines.

                                       32
<PAGE>

               (k)  Receivables Not To Be Evidenced by Promissory Notes.  Except
                    ---------------------------------------------------
     in connection with its enforcement or collection of an Account, the
     Servicer will take no action to cause any Receivable to be evidenced by any
     instrument (as defined in the UCC) and if any Receivable is so evidenced it
     shall be reassigned or assigned to the Servicer as provided in this
     Section.

               (l)  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 Servicer in
     connection with the execution and delivery of this Agreement by the
     Servicer and the performance of the transactions contemplated by this
     Agreement by the Servicer, have been duly obtained, effected or given and
     are in full force and effect.

          (m)  Subject to compliance with all Requirements of Law, the Servicer
may change the terms and provisions of the applicable Credit Guidelines of the
Servicer in any respect (including the calculation of the amount or the timing
of charge-offs and the Periodic Rate Finance Charges to be assessed thereon).
Notwithstanding the above, unless required by Requirements of Law, the Servicer
will not take any action unless (i) at the time of such action, the Servicer
reasonably believes that such action will not cause an Amortization Event,
Reinvestment Event or Event of Default to occur, and (ii) such change is made
applicable to the comparable segment of the revolving credit accounts owned by
the Bank (or other Account Owner if the Bank is not the Account Owner) which
have characteristics the same as, or substantially similar to, the Accounts that
are the subject of such change, except as otherwise restricted by an
endorsement, sponsorship, or other agreement between the Bank (or other Account
Owner if the Bank is not the Account Owner) and an unrelated third party or by
the terms of the Credit Agreements.

          In the event (x) any of the representations, warranties or covenants
of the Servicer contained in subsection 3.03(h), (i) or (j) with respect to any
Receivable or the related Account is breached, and such breach has a material
adverse effect on such Receivable (which determination shall be made without
regard to whether funds are then available to any Noteholders pursuant to any
Series Enhancement) and is not cured within 60 days (or such longer period, not
in excess of 120 days, as may be agreed to by the Indenture Trustee and the
Transferor) of the earlier to occur of the discovery of such event by the
Servicer, or receipt by the Servicer of notice of such event given by the
Indenture Trustee or the Transferor, or (y) as provided in subsection 3.03(k)
with respect to any Receivable, all Receivables in the Account or Accounts to
which such event relates shall be assigned and transferred to the Servicer on
the terms and conditions set forth below.

          The Servicer shall effect such assignment by making a deposit into the
Collection Account in immediately available funds on the Distribution Date
following the Due Period in which such assignment obligation arises in an amount
equal to the amount of such Receivables.

          Upon each such reassignment or assignment to the Servicer, the Trust
shall automatically and without further action be deemed to sell, transfer,
assign, set over and otherwise convey to the Servicer, without recourse,
representation or warranty, all right, title and interest of the Owner Trustee
and the Trust in and to such Receivables, all Interchange and Recoveries related
thereto, all monies due or to become due and all amounts received or receivable
with respect thereto and all proceeds thereof.  The Owner Trustee shall execute
such documents and instruments of transfer or assignment and take such other
actions as shall be reasonably requested by the Servicer to effect the
conveyance of any such Receivables pursuant to this Section but only upon
receipt of an Officer's Certificate of the Servicer that states that all
conditions set forth in this section have been satisfied.  The obligation of the
Servicer to accept reassignment or assignment of such Receivables, and to make
the deposits, if any, required to be made to the Collection Account as provided
in the preceding paragraph, shall constitute the sole remedy

                                       33
<PAGE>

respecting the event giving rise to such obligation available to Noteholders (or
the Indenture Trustee on behalf of Noteholders) or any Series Enhancer, except
as provided in Section 5.04.

          Section 3.04.  Reports and Records for the Owner Trustee and the
                         -------------------------------------------------
Indenture Trustee.
-----------------

          (a)  Daily Records.  On each Business Day, the Servicer shall make or
               -------------
cause to be made available at the office of the Servicer for inspection by the
Owner Trustee and the Indenture Trustee upon request a record setting forth (i)
the Collections in respect of Principal Receivables and in respect of Finance
Charge and Administrative Receivables processed by the Servicer on the second
preceding Business Day in respect of each Account and (ii) the amount of
Receivables as of the close of business on the second preceding Business Day in
each Account.  The Servicer shall, at all times, maintain its computer files
with respect to the Accounts in such a manner so that the Accounts may be
specifically identified and shall make available to the Owner Trustee and the
Indenture Trustee at the office of the Servicer on any Business Day any computer
programs necessary to make such identification.  The Owner Trustee and the
Indenture Trustee shall enter into such reasonable confidentiality agreements as
the Servicer shall deem necessary to protect its interests and as are reasonably
acceptable in form and substance to the Owner Trustee and the Indenture Trustee.

          (b)  Monthly Servicer's Certificate.  Not later than the second
               ------------------------------
Business Day preceding each Distribution Date, the Servicer shall, with respect
to each outstanding Series, deliver to the Owner Trustee, the Indenture Trustee
and each Rating Agency a certificate of an Authorized Officer in substantially
the form set forth in the related Indenture Supplement.

          Section 3.05.  Annual Certificate of Servicer.  The Servicer shall
                         ------------------------------
deliver to the Owner Trustee, the Indenture Trustee and each Rating Agency on or
before March 31 of each calendar year, beginning with March 31, 2001, an
Officer's Certificate substantially in the form of Exhibit C.
                                                   ---------

          Section 3.06.  Annual Servicing Report of Independent Public
                         ---------------------------------------------
Accountants; Copies of Reports Available.
----------------------------------------

          (a)  On or before March 31 of each calendar year, beginning with March
31, 2001, the Servicer shall cause a firm of nationally recognized independent
public accountants (who may also render other services to the Servicer or the
Transferor) to furnish a report (addressed to the Owner Trustee) to the Owner
Trustee, the Indenture Trustee, the Servicer and each Rating Agency to the
effect that they have applied certain procedures agreed upon with the Servicer
and examined certain documents and records relating to the servicing of Accounts
under this Agreement, the Indenture and each Indenture Supplement and that, on
the basis of such agreed-upon procedures, nothing has come to the attention of
such accountants that caused them to believe that the servicing (including the
allocation of Collections) has not been conducted in compliance with the terms
and conditions as set forth in Article III and Section 5.08 of this Agreement
and the applicable provisions of the Indenture and each Indenture Supplement,
except for such exceptions as they believe to be immaterial and such other
exceptions as shall be set forth in such statement.  Such report shall set forth
the agreed-upon procedures performed.  In the event such firm requires the
Indenture Trustee to agree to the procedures performed by such firm, the
Servicer shall direct the Indenture Trustee in writing to so agree; it being
understood and agreed that the Indenture Trustee will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and the
Indenture Trustee shall not make any independent inquiry or investigation as to,
and shall have no obligation or liability in respect of, the sufficiency,
validity or correctness of such procedures.

          (b)  On or before March 31 of each calendar year, beginning with March
31, 2001, the Servicer shall cause a firm of nationally recognized independent
public accountants (who may also render other services to the Servicer or the
Transferor) to furnish a report (addressed to the Owner

                                       34
<PAGE>

Trustee) to the Owner Trustee, the Indenture Trustee, the Servicer and each
Rating Agency to the effect that they have applied certain procedures agreed
upon with the Servicer to compare the mathematical calculations of certain
amounts set forth in the Servicer's certificates delivered pursuant to
subsection 3.04(b) during the period covered by such report with the Servicer's
computer reports that were the source of such amounts and that on the basis of
such agreed-upon procedures and comparison, such accountants are of the opinion
that such amounts are in agreement, except for such exceptions as they believe
to be immaterial and such other exceptions as shall be set forth in such
statement. Such report shall set forth the agreed-upon procedures performed. In
the event such firm requires the Indenture Trustee to agree to the procedures
performed by such firm, the Servicer shall direct the Indenture Trustee in
writing to so agree; it being understood and agreed that the Indenture Trustee
will deliver such letter of agreement in conclusive reliance upon the direction
of the Servicer, and the Indenture Trustee shall not make any independent
inquiry or investigation as to, and shall have no obligation or liability in
respect of, the sufficiency, validity or correctness of such procedures.

          (c)  A copy of each certificate and report provided pursuant to
subsection 3.04(b), or Section 3.05 or 3.06 may be obtained by any Noteholder or
Note Owner by a request in writing to the Owner Trustee addressed to the
Corporate Trust Office.

          Section 3.07.  Tax Treatment.  Unless otherwise specified in the
                         -------------
Indenture or an Indenture Supplement with respect to a particular Series, the
Transferor has entered into this Agreement, and the Notes will be issued, with
the intention that, for federal, state and local income and franchise tax
purposes, (i) the Notes of each Series which are characterized as indebtedness
at the time of their issuance will qualify as indebtedness secured by the
Receivables and (ii) the Trust shall not be treated as an association or
publicly traded partnership taxable as a corporation.  The Transferor, by
entering into this Agreement, and each Noteholder, by the acceptance of any such
Note (and each Note Owner, by its acceptance of an interest in the applicable
Note), agree to treat such Notes for federal, state and local income and
franchise tax purposes as indebtedness of the Transferor.  Each Holder of such
Note agrees that it will cause any Note Owner acquiring an interest in a Note
through it to comply with this Agreement as to treatment as indebtedness under
applicable tax law, as described in this Section 3.07.  The parties hereto agree
that they shall not cause or permit the making, as applicable, of any election
under Treasury Regulation Section 301.7701-3 whereby the Trust or any portion
thereof would be treated as a corporation for federal income tax purposes and,
except as required by Section 6.13 of the Indenture, shall not file tax returns
or obtain any federal employer identification number for the Trust but shall
treat the Trust as a security device for such purposes.  The provisions of this
Agreement shall be construed in furtherance of the foregoing intended tax
treatment.

          Section 3.08.  Notices to Household Finance Corporation.  In the event
                         ----------------------------------------
that Household Finance Corporation is no longer acting as Servicer, any
Successor Servicer shall deliver or make available to Household Finance
Corporation each certificate and report required to be provided thereafter
pursuant to subsection 3.04(b) and Sections 3.05 and 3.06.

          Section 3.09.  Adjustments.
                         -----------

          (a)  If the Servicer adjusts downward the amount of any Receivable
because of a rebate, refund, unauthorized charge or billing error to an Obligor,
because such Receivable was created in respect of merchandise which was refused
or returned by an Obligor, or if the Servicer otherwise adjusts downward the
amount of any Receivable without receiving Collections therefor or charging off
such amount as uncollectible, then, in any such case, the amount of Principal
Receivables used to calculate the Transferor Amount, and (unless otherwise
specified) any other amount required herein or in the Indenture or any Indenture
Supplement to be calculated by reference to the amount of Principal Receivables,
will be reduced by the amount of the adjustment.  Similarly, the amount of
Principal Receivables used to

                                       35
<PAGE>

calculate the Transferor Amount and (unless otherwise specified) any other
amount required herein or in any Indenture Supplement to be calculated by
reference to the amount of Principal Receivables will be reduced by the
principal amount of any Receivable which was discovered as having been created
through a fraudulent or counterfeit charge or with respect to which the covenant
contained in subsection 2.07(b) was breached. Any adjustment required pursuant
to either of the two preceding sentences shall be made on or prior to the end of
the Due Period in which such adjustment obligation arises. In the event that,
following the exclusion of such Principal Receivables from the calculation of
the Transferor Amount, the Transferor Amount would be less than the Required
Transferor Amount, not later than 1:00 p.m., New York City time, on the
Distribution Date following the Due Period in which such adjustment obligation
arises, the Transferor shall make a deposit into the Special Funding Account in
immediately available funds in an amount equal to the amount by which the
Transferor Amount would be less than the Required Transferor Amount, due to
adjustments with respect to Receivables conveyed by such Transferor (up to the
amount of such Principal Receivables).

          (b)  If (i) the Servicer makes a deposit into the Collection Account
in respect of a Collection of a Receivable and such Collection was received by
the Servicer in the form of a check which is not honored for any reason or (ii)
the Servicer makes a mistake with respect to the amount of any Collection and
deposits an amount that is less than or more than the actual amount of such
Collection, the Servicer shall appropriately adjust the amount subsequently
deposited into the Collection Account to reflect such dishonored check or
mistake. Any Receivable in respect of which a dishonored check is received shall
be deemed not to have been paid. Notwithstanding the first two sentences of this
paragraph, adjustments made pursuant to this Section shall not require any
change in any report previously delivered pursuant to subsection 3.04(a).

          Section 3.10.  Reports to the Commission.  The Servicer shall, on
                         -------------------------
behalf of the Trust, cause to be filed with the Commission any periodic reports
required to be filed under the provisions of the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder.
The Transferor shall, at its own expense, cooperate in any reasonable request of
the Servicer in connection with such filings.

                             [END OF ARTICLE III]

                                       36
<PAGE>

                                  ARTICLE IV

                   OTHER MATTERS RELATING TO EACH TRANSFEROR

          Section 4.01.  Liability of each Transferor.  Each Transferor shall be
                         ----------------------------
severally, and not jointly, liable for all obligations, covenants,
representations and warranties of such Transferor arising under or related to
this Agreement.  Except as provided in the preceding sentence, each Transferor
shall be liable only to the extent of the obligations specifically undertaken by
it in its capacity as a Transferor.

          Section 4.02.  Merger or Consolidation of, or Assumption of the
                         ------------------------------------------------
Obligations of, a Transferor.
----------------------------

          (a)  No Transferor shall dissolve, liquidate, consolidate with or
merge into any other corporation or convey, transfer or sell its properties and
assets substantially as an entirety to any Person unless:

               (i)  (x) the corporation formed by such consolidation or into
     which such Transferor is merged or the Person which acquires by conveyance,
     transfer or sale the properties and assets of the Transferor substantially
     as an entirety shall be, if such Transferor is not the surviving entity,
     organized and existing under the laws of the United States of America or
     any State or the District of Columbia, and shall be a savings association,
     a national banking association, a bank or other entity which is not
     eligible to be a debtor in a case under Title 11 of the United States Code
     (the "Bankruptcy Code") or is a special purpose corporation whose powers
     and activities are limited to substantially the same degree as provided in
     the certificate of incorporation of HRF and, if such Transferor is not the
     surviving entity, shall expressly assume, by an agreement supplemental
     hereto, executed and delivered to the Owner Trustee and the Indenture
     Trustee, in form reasonably satisfactory to the Owner Trustee and the
     Indenture Trustee, the performance of every covenant and obligation of such
     Transferor hereunder; and (y) such Transferor or the surviving entity, as
     the case may be, has delivered to the Owner Trustee and the Indenture
     Trustee (with a copy to each Rating Agency) an Officer's Certificate and an
     Opinion of Counsel each stating that such consolidation, merger,
     conveyance, transfer or sale and such supplemental agreement comply with
     this Section, that such supplemental agreement is a valid and binding
     obligation of such surviving entity enforceable against such surviving
     entity 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, and that all conditions
     precedent herein provided for relating to such transaction have been
     complied with; and

               (ii) the Rating Agency Condition shall have been satisfied with
     respect to such consolidation, merger, conveyance or transfer.

          (b)  Except as permitted by subsection 2.07(c), the obligations,
rights or any part thereof of each Transferor hereunder shall not be assignable
nor shall any Person succeed to such obligations or rights of any Transferor
hereunder except (i) for conveyances, mergers, consolidations, assumptions,
sales or transfers in accordance with the provisions of the foregoing paragraph
and (ii) for conveyances, mergers, consolidations, assumptions, sales or
transfers to other entities (1) which such Transferor and the Servicer determine
will not result in an Adverse Effect, (2) which meet the requirements of clause
(ii) of the preceding paragraph and (3) for which such purchaser, transferee,
pledgee or entity shall expressly assume, in an agreement supplemental hereto,
executed and delivered to

                                       37
<PAGE>

the Owner Trustee and the Indenture Trustee in writing in form satisfactory to
the Owner Trustee and the Indenture Trustee, the performance of every covenant
and obligation of such Transferor thereby conveyed.

          Section 4.03.  Limitations on Liability of Each Transferor.  Subject
                         -------------------------------------------
to Section 4.01, no Transferor nor any of the directors, officers, employees,
incorporators or agents of any Transferor acting in such capacities shall be
under any liability to the Trust, the Owner Trustee, the Indenture Trustee, the
Noteholders, any Series Enhancer, any other Transferor or any other Person for
any action taken or for refraining from the taking of any action in good faith
in such capacities pursuant to this Agreement, it being expressly understood
that such liability is expressly waived and released as a condition of, and
consideration for, the execution of this Agreement, the Indenture and any
Indenture Supplement and the issuance of the Notes; provided, however, that this
provision shall not protect any Transferor or any such person against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder.  Each Transferor and any
director, officer, employee or agent of such Transferor may rely in good faith
on any document of any kind prima facie properly executed and submitted by any
Person (other than such Transferor) respecting any matters arising hereunder.

          Section 4.04.  Assumption of the Transferor Obligations.
                         ----------------------------------------
Notwithstanding the provisions of Section 4.02, each Transferor may assign,
convey and transfer its revolving credit accounts and the receivables arising
thereunder, which may include all, but not less than all, of the Accounts and
such Transferor's remaining interest in the Receivables arising thereunder and
the Transferor Amount (collectively, the "Assigned Assets"), together with all
                                          ---------------
servicing functions and other obligations under this Agreement or relating to
the transactions contemplated hereby (collectively, the "Assumed Obligations"),
                                                         -------------------
to other entities (such entity or entities, the "Assuming Entity"), which may be
                                                 ---------------
an entities that are not affiliated with such Transferor, and such Transferor
may assign, convey and transfer the Assigned Assets and the Assumed Obligations
to such Assuming Entity, without the consent or approval of the Holders of the
Notes, upon satisfaction of the following conditions:

          (a)  such Assuming Entity, such Transferor and the Trust shall have
     entered into an assumption agreement (the "Assumption Agreement") providing
                                                --------------------
     for the Assuming Entity to assume the Assumed Obligations, including the
     obligation under this Agreement to transfer the Receivables arising under
     the Accounts to the Trust, and such Transferor shall have delivered to the
     Owner Trustee and the Indenture Trustee an Officer's Certificate and an
     Opinion of Counsel each stating that such transfer and assumption comply
     with this Section, that such Assumption Agreement is a valid and binding
     obligation of such Assuming Entity enforceable against such Assuming Entity
     in accordance with its terms, except as such enforceability may be limited
     by applicable bankruptcy, insolvency, reorganization, moratorium,
     receivership, conservatorship or other similar laws affecting creditors'
     rights generally or creditors of national banking associations, from time
     to time, in effect and except as such enforceability may be limited by
     general principles of equity (whether considered in a suit at law or in
     equity), and that all conditions precedent herein provided for relating to
     such transaction have been complied with;

          (b)  such Transferor or such Assuming Entity shall have delivered to
     the Owner Trustee and the Indenture Trustee copies of UCC-1 financing
     statements covering such Accounts to perfect the Owner Trustee's and the
     Trust's interest and the Indenture Trustee's interest in the Receivables
     arising herein;

          (c)  if such Assuming Entity shall be eligible to be a debtor in a
     case under the Bankruptcy Code, such Transferor shall have delivered to the
     Rating Agency (with a copy to the Servicer and the Indenture Trustee)
     notice of such transfer and assumption, and that each Rating

                                       38
<PAGE>

     Agency that has rated an Outstanding Series of Notes confirm in writing
     that such transfer will not result in a reduction or withdrawal of its
     rating of any Class of any Outstanding Series of Notes or, if such Assuming
     Entity shall not be eligible to be a debtor under the Bankruptcy Code, such
     Transferor shall have delivered to the Rating Agency notice of such
     transfer and assumption;

          (d)  the Owner Trustee and the Indenture Trustee shall have received
     an Opinion of Counsel to the effect that (i) the transfer of such
     Receivables by such Assuming Entity shall constitute either a sale of, or
     the granting of a security interest in, such Receivables by such Assuming
     Entity to the Trust, (ii) the condition specified in clause (b) shall have
     been satisfied, and (iii) if such Assuming Entity shall be subject to the
     FDIA, the interest of the Trust in such Receivables should not be subject
     to reclamation or recovery by the FDIC if the FDIC were to become the
     receiver or conservator of such Assuming Entity;

          (e)  such Transferor shall have received written notice that the
     Rating Agency Condition has been satisfied with respect to such transfer
     and assumption and shall have delivered copies of each such written notice
     to the Servicer and the Owner Trustee and the Indenture Trustee; and

          (f)  the Indenture Trustee shall have received a Tax Opinion.

Upon any such transfer to and assumption by an Assuming Entity, the Transferors
shall surrender Transferor Certificate to the Transfer Agent and Registrar for
registration of transfer and the Owner Trustee shall issue a new Transferor
Certificate in the name of such Assuming Entity and any non-assigning
Transferor.  Notwithstanding such assumption, such assigning Transferor shall
continue to be liable for all representations and warranties and covenants made
by it and all obligations performed or to be performed by it in its capacity as
Transferor prior to such transfer.

          Notwithstanding the provisions of this Section 4.04 to the contrary,
any Transferor may transfer, from time to time, Assigned Assets to any other
Transferor upon the satisfaction of subsections (a) and (b), above.  Such
Transferor shall promptly provide notice to the Rating Agency indicating the
occurrence of any such transfer.

                              [END OF ARTICLE IV]

                                       39
<PAGE>

                                   ARTICLE V

                    OTHER MATTERS RELATING TO THE SERVICER

          Section 5.01.  Liability of the Servicer.  The Servicer shall be
                         -------------------------
liable under this Article only to the extent of the obligations specifically
undertaken by the Servicer in its capacity as Servicer.

          Section 5.02.  Merger or Consolidation of, or Assumption of the
                         ------------------------------------------------
Obligations of, the Servicer.  The Servicer shall not consolidate with or merge
----------------------------
into any other corporation or convey, transfer or sell its properties and assets
substantially as an entirety to any Person, unless:

          (a)  (i)   the corporation formed by such consolidation or into which
     the Servicer is merged or the Person which acquires by conveyance, transfer
     or sale the properties and assets of the Servicer substantially as an
     entirety shall be, if the Servicer is not the surviving entity, a
     corporation or a national banking association organized and existing under
     the laws of the United States of America or any State or the District of
     Columbia, and, if the Servicer is not the surviving entity, such
     corporation shall expressly assume, by an agreement supplemental hereto,
     executed and delivered to the Owner Trustee and the Indenture Trustee, in
     form satisfactory to the Owner Trustee and the Indenture Trustee, the
     performance of every covenant and obligation of the Servicer hereunder;

               (ii)  the Servicer has delivered to the Owner Trustee and the
     Indenture Trustee an Officer's Certificate and an Opinion of Counsel each
     stating that such consolidation, merger, conveyance, transfer or sale
     comply with this Section and that all conditions precedent herein provided
     for relating to such transaction have been complied with;

               (iii) the Servicer shall have given the Rating Agencies notice
     of such consolidation, merger or transfer or assets; and

          (b)  the corporation formed by such consolidation or into which the
Servicer is merged or the Person which acquires by conveyance or transfer the
properties and assets of the Servicer substantially as an entirety shall be an
Eligible Servicer.

          Section 5.03.  Limitation on Liability of the Servicer and Others.
                         --------------------------------------------------
Except as provided in Section 5.04, neither the Servicer nor any of the
directors, officers, employees or agents of the Servicer in its capacity as
Servicer shall be under any liability to the Trust, the Owner Trustee, the
Indenture Trustee, the Noteholders, any Series Enhancer or any other Person for
any action taken or for refraining from the taking of any action in good faith
in its capacity as Servicer pursuant to this Agreement; provided, however, that
this provision shall not protect the Servicer or any such Person against any
liability which would otherwise be imposed by reason of willful misfeasance, bad
faith or gross negligence in the performance of duties or by reason of reckless
disregard of obligations and duties hereunder.  The Servicer and any director,
officer, employee or agent of the Servicer may rely in good faith on any
document of any kind prima facie properly executed and submitted by any Person
(other than the Servicer) respecting any matters arising hereunder.  The
Servicer shall not be under any obligation to appear in, prosecute or defend any
legal action which is not incidental to its duties as Servicer in accordance
with this Agreement and which in its reasonable judgment may involve it in any
expense or liability.  The Servicer may, in its sole discretion, undertake any
such legal action which it may deem necessary or desirable for the benefit of
the Noteholders with respect to this Agreement and the rights and duties of the
parties hereto and the interests of the Noteholders hereunder.

                                       40
<PAGE>

          Section 5.04.  Servicer Indemnification of the Owner Trustee and the
                         -----------------------------------------------------
Indenture Trustee.  The Servicer shall indemnify and hold harmless the Owner
-----------------
Trustee and the Indenture Trustee and any trustees predecessor thereto
(including the Indenture Trustee in its capacity as Transfer Agent and Registrar
or as Paying Agent) and their respective directors, officers, employees and
agents from and against any and all loss, liability, claim, action, suit, cost,
expense, damage or injury of any kind or nature whatsoever suffered or sustained
by reason of (a) any acts or omissions of the Servicer with respect to the Trust
pursuant to this Agreement or (b) the administration by the Owner Trustee of the
Trust (in the case of clause (a) or (b), other than such as may arise from the
negligence or willful misconduct of the Owner Trustee or the Indenture Trustee,
as applicable), including any judgment, award, settlement, reasonable attorneys'
fees and other costs or expenses incurred in connection with the defense of any
action, proceeding or claim.  Indemnification pursuant to this Section shall not
be payable from the Trust Assets.  The Servicer's obligations under this Section
5.04 shall survive the termination of this Agreement or the Trust or the earlier
removal or resignation of the Owner Trustee or the Indenture Trustee, as
applicable.

          Section 5.05.  Resignation of the Servicer.  The Servicer shall not
                         ---------------------------
resign from the obligations and duties hereby imposed on it except (a) upon
determination that (i) the performance of its duties hereunder is no longer
permissible under applicable law and (ii) there is no reasonable action which
the Servicer could take to make the performance of its duties hereunder
permissible under applicable law or (b) upon the assumption, by an agreement
supplemental hereto, executed and delivered to the Owner Trustee and the
Indenture Trustee, in form satisfactory to the Owner Trustee and the Indenture
Trustee, of the obligations and duties of the Servicer hereunder by any of its
Affiliates that is a direct or indirect wholly owned subsidiary of Household
International or by any other entity the appointment of which shall have
satisfied the Rating Agency Condition and, in either case, qualifies as an
Eligible Servicer.  Any determination permitting the resignation of the Servicer
shall be evidenced as to clause (a) above by an Opinion of Counsel to such
effect delivered to the Owner Trustee and the Indenture Trustee.  No resignation
shall become effective until the Indenture Trustee or a Successor Servicer shall
have assumed the responsibilities and obligations of the Servicer in accordance
with Section 7.02 hereof.  If within 120 days of the date of the determination
that the Servicer may no longer act as Servicer under clause (a) above the
Indenture Trustee is unable to appoint a Successor Servicer, the Indenture
Trustee shall serve as Successor Servicer.  Notwithstanding the foregoing, the
Indenture Trustee shall, if it is legally unable so to act, petition a court of
competent jurisdiction to appoint any established institution qualifying as an
Eligible Servicer as the Successor Servicer hereunder.  The Indenture Trustee
shall give prompt notice to each Rating Agency and each Series Enhancer upon the
appointment of a Successor Servicer.  Notwithstanding anything in this Agreement
to the contrary, Household Finance Corporation may assign part or all of its
obligations and duties as Servicer under this Agreement to an Affiliate of
Household Finance Corporation so long as Household Finance Corporation shall
have fully guaranteed the performance of such obligations and duties under this
Agreement.

          Section 5.06.  Access to Certain Documentation and Information
                         -----------------------------------------------
Regarding the Receivables.  The Servicer shall provide to the Owner Trustee or
-------------------------
the Indenture Trustee, as applicable, access to the documentation regarding the
Accounts and the Receivables in such cases where the Owner Trustee or the
Indenture Trustee, as applicable, is required in connection with the enforcement
of the rights of Noteholders or by applicable statutes or regulations to review
such documentation, such access being afforded without charge but only (a) upon
reasonable request, (b) during normal business hours, (c) subject to the
Servicer's normal security and confidentiality procedures and (d) at reasonably
accessible offices in the continental United States designated by the Servicer.
Nothing in this Section shall derogate from the obligation of the Transferor,
the Owner Trustee, the Indenture Trustee and the Servicer to observe any
applicable law prohibiting disclosure of information regarding the Obligors and
the failure of the Servicer to provide access as provided in this Section as a
result of such obligation shall not constitute a breach of this Section.

                                       41
<PAGE>

          Section 5.07.  Delegation of Duties.  In the ordinary course of
                         --------------------
business, upon 10 days written notice to the Rating Agency, the Servicer may at
any time delegate its duties hereunder with respect to the Accounts and the
Receivables to any Person that agrees to conduct such duties in accordance with
the Credit Guidelines and this Agreement.  Such delegation shall not relieve the
Servicer of its liability and responsibility with respect to such duties, and
shall not constitute a resignation within the meaning of Section 5.05.

          Section 5.08.  Examination of Records.  Each Transferor and the
                         ----------------------
Servicer shall indicate generally in their computer files or other records that
the Receivables arising in the Accounts have been conveyed to the Owner Trustee,
on behalf of the Trust, pursuant to this Agreement.  Each Transferor and the
Servicer shall, prior to the sale or transfer to a third party of any receivable
held in its custody, examine its computer records and other records to determine
that such receivable is not, and does not include, a Receivable.

                              [END OF ARTICLE V]

                                       42
<PAGE>

                                  ARTICLE VI

                               INSOLVENCY EVENTS

          Section 6.01.  Rights upon the Occurrence of an Insolvency Event.  If
                         -------------------------------------------------
any Transferor shall consent or fail to object to the appointment of a
bankruptcy trustee or conservator, receiver, liquidator or similar official in
any bankruptcy proceeding or other insolvency, readjustment of debt, marshalling
of assets and liabilities or similar proceedings of or relating to any
Transferor or of or relating to all or substantially all of such Transferor's
property, or the commencement of an action seeking a decree or order of a court
or agency or supervisory authority having jurisdiction in the premises for the
appointment of a bankruptcy trustee or conservator, receiver or liquidator in
any insolvency, readjustment of debt, marshalling of assets and liabilities or
similar proceedings, or for the winding-up, insolvency, bankruptcy,
reorganization, conservatorship, receivership or liquidation of such entity's
affairs, or notwithstanding an objection by such Transferor any such action
shall have remained undischarged or unstayed for a period of 60 days or upon
entry of any order or decree providing for such relief; or such Transferor shall
admit in writing its inability to pay its debts generally as they become due,
file, or consent or fail to object (or object without dismissal of any such
filing within 30 days of such filing) to the filing of, a petition to take
advantage of any applicable bankruptcy, insolvency or reorganization,
receivership or conservatorship or similar statute, make an assignment for the
benefit of its creditors or voluntarily suspend payment of its obligations (any
such act or occurrence with respect to any Person being an "Insolvency Event"),
                                                            ----------------
such Transferor shall on the day any such Insolvency Event occurs (the
"Appointment Date"), immediately cease to transfer Principal Receivables to the
 ----------------
Owner Trustee or the Trust and shall promptly give notice to the Indenture
Trustee and the Owner Trustee thereof.  Notwithstanding any cessation of the
transfer to the Owner Trustee or the Trust of additional Principal Receivables,
Principal Receivables transferred to the Trust prior to the occurrence of such
Insolvency Event, Collections in respect of such Principal Receivables and
Finance Charge and Administrative Receivables (whenever created) accrued in
respect of such Principal Receivables shall continue to be a part of the Trust
Assets and shall be allocated and distributed to Noteholders in accordance with
the terms of the Indenture and each Indenture Supplement.

                              [END OF ARTICLE VI]

                                       43
<PAGE>

                                  ARTICLE VII

                               SERVICER DEFAULTS

          Section 7.01.  Servicer Defaults.  If any one of the following events
                         -----------------
(a "Servicer Default") shall occur and be continuing:
    ----------------

                    (a)  any failure by the Servicer to make any payment,
     transfer or deposit or to give instructions or to give notice to the
     Indenture Trustee to make such payment, transfer or deposit on or before
     the date occurring five Business Days after the date such payment, transfer
     or deposit or such instruction or notice is required to be made or given,
     as the case may be, under the terms of this Agreement the Indenture or any
     Indenture Supplement;

                    (b)  failure on the part of the Servicer duly to observe or
     perform in any material respect any other covenants or agreements of the
     Servicer set forth in this Agreement which has an Adverse Effect and which
     continues unremedied for a period of 60 days after the date on which notice
     of such failure, requiring the same to be remedied, shall have been given
     to the Servicer by the Owner Trustee or the Indenture Trustee, or to the
     Servicer, the Owner Trustee and the Indenture Trustee by Holders of Notes
     evidencing not less than 10% of the aggregate unpaid principal amount of
     all Notes (or, with respect to any such failure that does not relate to all
     Series, 10% of the aggregate unpaid principal amount of all Series to which
     such failure relates); or the Servicer shall assign or delegate its duties
     under this Agreement, except as permitted by Sections 5.02 and 5.07;

                    (c)  any representation, warranty or certification made by
     the Servicer in this Agreement or in any certificate delivered pursuant to
     this Agreement shall prove to have been incorrect when made, which has an
     Adverse Effect on the rights of the Noteholders of any Series (which
     determination shall be made without regard to whether funds are then
     available pursuant to any Series Enhancement) and which Adverse Effect
     continues for a period of 60 days after the date on which notice thereof,
     requiring the same to be remedied, shall have been given to the Servicer by
     the Owner Trustee or the Indenture Trustee, or to the Servicer, the Owner
     Trustee and the Indenture Trustee by the Holders of Notes evidencing not
     less than 10% of the aggregate unpaid principal amount of all Notes (or,
     with respect to any such representation, warranty or certification that
     does not relate to all Series, 10% of the aggregate unpaid principal amount
     of all Series to which such representation, warranty or certification
     relates); or

                    (d)  the Servicer shall consent to the appointment of a
     bankruptcy trustee, conservator, receiver, liquidator or similar official
     in any bankruptcy proceeding or other insolvency, readjustment of debt,
     marshalling of assets and liabilities or similar proceedings of or relating
     to the Servicer or of or relating to all or substantially all its property,
     or a decree or order of a court or agency or supervisory authority having
     jurisdiction in the premises for the appointment of a bankruptcy trustee,
     conservator, receiver, liquidator or similar official in any bankruptcy,
     insolvency, readjustment of debt, marshalling of assets and liabilities or
     similar proceedings, or the winding-up or liquidation of its affairs, shall
     have been entered against the Servicer; or the Servicer shall admit in
     writing its inability to pay its debts generally as they become due, file a
     petition to take advantage of any applicable bankruptcy, insolvency or
     reorganization statute, make any assignment for the benefit of its
     creditors or voluntarily suspend payment of its obligations;

                                       44
<PAGE>

          Then, in the event of any Servicer Default, so long as the Servicer
Default shall not have been remedied, either the Indenture Trustee or the
Holders of Notes evidencing more than 50% of the aggregate unpaid principal
amount of all Notes, by notice then given to the Servicer and the Owner Trustee
(and to the Indenture Trustee if given by the Noteholders) (a "Termination
                                                               -----------
Notice"), may terminate all but not less than all the rights and obligations of
------
the Servicer as Servicer under this Agreement; provided, however, if within 60
days of receipt of a Termination Notice the Indenture Trustee does not receive
any bids from Eligible Servicers in accordance with subsection 7.02(c) to act as
a Successor Servicer and receives an Officer's Certificate of the Servicer to
the effect that the Servicer cannot in good faith cure the Servicer Default
which gave rise to the Termination Notice, the Indenture Trustee shall grant a
right of first refusal to the Transferor which would permit the Transferor at
its option to acquire the Notes on the Distribution Date in the next calendar
month.

          The price for the Notes shall be equal to the sum of the amounts
specified therefor with respect to each outstanding Series in the related
Indenture Supplement.  The Transferor shall notify the Indenture Trustee prior
to the Record Date for the Distribution Date of the acquisition if it is
exercising such right of first refusal.  If the Transferor exercises such right
of first refusal, the Transferor shall deposit the price into the Collection
Account not later than 1:00 p.m., New York City time, on such Distribution Date
in immediately available funds.  The price shall be allocated and distributed to
Noteholders in accordance with the terms of the Indenture and each Indenture
Supplement.

          After receipt by the Servicer of a Termination Notice, and on the date
that a Successor Servicer is appointed by the Indenture Trustee pursuant to
Section 7.02, all authority and power of the Servicer under this Agreement shall
pass to and be vested in the Successor Servicer (a "Service Transfer"); and,
                                                    ----------------
without limitation, the Indenture Trustee is hereby authorized and empowered
(upon the failure of the Servicer to cooperate) to execute and deliver, on
behalf of the Servicer, as attorney-in-fact or otherwise, all documents and
other instruments upon the failure of the Servicer to execute or deliver such
documents or instruments, and to do and accomplish all other acts or things
necessary or appropriate to effect the purposes of such Service Transfer.  The
Servicer agrees to cooperate with the Indenture Trustee and such Successor
Servicer in effecting the termination of the responsibilities and rights of the
Servicer to conduct servicing hereunder, including the transfer to such
Successor Servicer of all authority of the Servicer to service the Receivables
provided for under this Agreement, including all authority over all Collections
which shall on the date of transfer be held by the Servicer for deposit, or
which have been deposited by the Servicer, in the Collection Account, or which
shall thereafter be received with respect to the Receivables, and in assisting
the Successor Servicer. The Servicer shall within 20 Business Days transfer its
electronic records relating to the Receivables to the Successor Servicer in such
electronic form as the Successor Servicer may reasonably request and shall
promptly transfer to the Successor Servicer all other records, correspondence
and documents necessary for the continued servicing of the Receivables in the
manner and at such times as the Successor Servicer shall reasonably request.  To
the extent that compliance with this Section shall require the Servicer to
disclose to the Successor Servicer information of any kind which the Servicer
deems to be confidential, the Successor Servicer shall be required to enter into
such customary licensing and confidentiality agreements as the Servicer shall
deem reasonably necessary to protect its interests.  The Servicer shall pay to
the Indenture Trustee and any Successor Servicer the reasonable transition
expenses incurred by such person and the agents in connection with any
transition of Servicing.

          Notwithstanding the foregoing, a delay in or failure of performance
referred to in paragraph (a) above for a period of 10 Business Days after the
applicable grace period or under paragraph (b) or (c) above for a period of 60
Business Days after the applicable grace period, shall not constitute a Servicer
Default if such delay or failure could not be prevented by the exercise of
reasonable diligence by the Servicer and such delay or failure was caused by an
act of God or the public enemy, acts of declared or undeclared war, public
disorder, rebellion or sabotage, epidemics, landslides, lightning, fire,

                                       45
<PAGE>

hurricanes, earthquakes, floods or similar causes.  The preceding sentence shall
not relieve the Servicer from using all commercially reasonable efforts to
perform its obligations in a timely manner in accordance with the terms of this
Agreement and the Servicer shall provide the Indenture Trustee, Owner Trustee,
each Transferor and any Series Enhancer with an Officer's Certificate giving
prompt notice of such failure or delay by it, together with a description of its
efforts so to perform its obligations.

          Section 7.02.  Indenture Trustee To Act; Appointment of Successor.
                         --------------------------------------------------

          (a)  On and after the receipt by the Servicer of a Termination Notice
pursuant to Section 7.01, the Servicer shall continue to perform all servicing
functions under this Agreement until the date specified in the Termination
Notice or otherwise specified by the Indenture Trustee or until a date mutually
agreed upon by the Servicer and the Indenture Trustee.  The Indenture Trustee
shall as promptly as possible after the giving of a Termination Notice appoint
an Eligible Servicer as a successor servicer (the "Successor Servicer"), and
                                                   ------------------
such Successor Servicer shall accept its appointment by a written assumption in
a form acceptable to the Indenture Trustee.  In the event that a Successor
Servicer has not been appointed or has not accepted its appointment at the time
when the Servicer ceases to act as Servicer, the Indenture Trustee without
further action shall automatically be appointed the Successor Servicer.  The
Indenture Trustee may delegate any of its servicing obligations to an Affiliate
or agent in accordance with subsection 3.01(b) and Section 5.07.
Notwithstanding the foregoing, the Indenture Trustee shall, if it is legally
unable so to act, petition at the expense of the Servicer a court of competent
jurisdiction to appoint any established institution qualifying as an Eligible
Servicer as the Successor Servicer hereunder.  The Indenture Trustee shall give
prompt notice to each Rating Agency and each Series Enhancer upon the
appointment of a Successor Servicer.

          (b)  Upon its appointment, the Successor Servicer shall be the
successor in all respects to the Servicer with respect to servicing functions
under this Agreement and shall be subject to all the responsibilities, duties
and liabilities relating thereto placed on the Servicer by the terms and
provisions hereof, and all references in this Agreement to the Servicer shall be
deemed to refer to the Successor Servicer.

          (c)  In connection with any Termination Notice, the Indenture Trustee
will review any bids which it obtains from Eligible Servicers and shall be
permitted to appoint any Eligible Servicer submitting such a bid as a Successor
Servicer for servicing compensation not in excess of the aggregate Monthly
Servicing Fees for all Series plus the sum of the amounts with respect to each
Series and with respect to each Distribution Date equal to any Collections of
Finance Charge and Administrative Receivables allocable to Noteholders of such
Series which are payable to the holders of the Transferor Certificates after
payment of all amounts owing to the Noteholders of such Series with respect to
such Distribution Date or required to be deposited in the applicable Series
Accounts with respect to such Distribution Date and any amounts required to be
paid to any Series Enhancer for such Series with respect to such Distribution
Date pursuant to the terms of any Enhancement Agreement; provided, however, that
the Holders of the Transferor Certificates shall be responsible for payment of
the Transferor's portion of such aggregate Monthly Servicing Fees and all other
such amounts, including any amount of reasonable transition expenses not paid by
the Servicer pursuant to subsection 7.01, in excess of such aggregate Monthly
Servicing Fees.  Each Holder of the Transferor's Certificates agrees that, if
Household Finance Corporation (or any Successor Servicer) is terminated as
Servicer hereunder, the portion of the Collections in respect of Finance Charge
and Administrative Receivables that the Transferor is entitled to receive
pursuant to this Agreement, the Indenture or any Indenture Supplement shall be
reduced by an amount sufficient to pay the Transferor's share of the
compensation of the Successor Servicer.

          (d)  All authority and power granted to the Servicer under this
Agreement shall automatically cease and terminate upon termination of the Trust
pursuant to Section 8.01 of the Trust

                                       46
<PAGE>

Agreement, and shall pass to and be vested in the Transferor and, without
limitation, the Transferor is hereby authorized and empowered to execute and
deliver, on behalf of the Servicer, as attorney-in-fact or otherwise, all
documents and other instruments, and to do and accomplish all other acts or
things necessary or appropriate to effect the purposes of such transfer of
servicing rights. The Servicer agrees to cooperate with the Transferor in
effecting the termination of the responsibilities and rights of the Servicer to
conduct servicing of the Receivables. The Servicer shall transfer its electronic
records relating to the Receivables to the Transferor or its designee in such
electronic form as it may reasonably request and shall transfer all other
records, correspondence and documents to it in the manner and at such times as
it shall reasonably request. To the extent that compliance with this Section
shall require the Servicer to disclose to the Transferor information of any kind
which the Servicer deems to be confidential, the Transferor shall be required to
enter into such customary licensing and confidentiality agreements as the
Servicer shall deem necessary to protect its interests.

          Section 7.03.  Notification to Noteholders.  Within five Business Days
                         ---------------------------
after the Servicer becomes aware of any Servicer Default, the Servicer shall
give notice thereof to the Owner Trustee, the Indenture Trustee, each Rating
Agency and each Series Enhancer and the Indenture Trustee shall give notice to
the Noteholders.  Upon any termination or appointment of a Successor Servicer
pursuant to this Article, the Indenture Trustee shall give prompt notice thereof
to the Noteholders.

                             [END OF ARTICLE VII]

                                       47
<PAGE>

                                 ARTICLE VIII

                                  TERMINATION

          Section 8.01.  Termination of Agreement.  This Agreement and the
                         ------------------------
respective obligations and responsibilities of the Trust, the Owner Trustee, the
Transferor and the Servicer under this Agreement shall terminate, except with
respect to the duties described in Section 5.04, on the Trust Termination Date.

                             [END OF ARTICLE VIII]

                                       48
<PAGE>

                                  ARTICLE IX

                           MISCELLANEOUS PROVISIONS

          Section 9.01.  Amendment; Waiver of Past Defaults.
                         ----------------------------------

          (a)  This Agreement may be amended by the parties hereto from time to
time prior to, or in connection with, the issuance of the first Series of Notes
hereunder without the requirement of any consents or the satisfaction of any
conditions set forth below.  This Agreement may be amended from time to time by
the Servicer, the Transferor and the Owner Trustee, by a written instrument
signed by each of them, without the consent of the Indenture Trustee or any of
the Noteholders, provided that (i) the Transferor shall have delivered to the
Indenture Trustee and the Owner Trustee an Officer's Certificate, dated the date
of any such Amendment, stating that the Transferor reasonably believes that such
amendment will not have an Adverse Effect and (ii) the Rating Agency Condition
shall have been satisfied with respect to any such amendment; provided, however,
the Servicer, the Transferor and the Owner Trustee, may enter into one or more
amendments, without the consent of the Indenture Trustee or the Holders of any
Notes or prior notice to the Rating Agencies (provided that a final amendment to
this Agreement signed by the parties hereto shall be delivered to each Rating
Agency within 10 days of its execution) in order to (A) cure any ambiguity, to
correct or supplement any provision herein or in any amendment hereto that may
be inconsistent with any other provision herein or in any amendment hereto, (B)
to make any other provisions with respect to matters or questions arising under
this Agreement or in any amendment hereto or (C) qualify for sale treatment
under generally accepted accounting principles; provided, that such amendment
shall not have an Adverse Effect and, in the case of clause (C), the Transferor
shall have delivered a Tax Opinion to the Indenture Trustee with respect to such
amendment.  Additionally, notwithstanding the preceding sentence, this Agreement
will be amended by the Servicer and the Owner Trustee at the direction of the
Transferor without the consent of the Indenture Trustee or any of the
Noteholders or Series Enhancers to add, modify or eliminate such provisions as
may be necessary or advisable in order to enable all or a portion of the Trust
(i) to qualify as, and to permit an election to be made to cause the Trust to be
treated as, a "financial asset securitization investment trust" as described in
the provisions of Section 860L of the Code, and (ii) to avoid the imposition of
state or local income or franchise taxes imposed on the Trust's property or its
income; provided, however, that (i) the Transferor delivers to the Indenture
Trustee and the Owner Trustee an Officer's Certificate to the effect that the
proposed amendments meet the requirements set forth in this subsection, (ii)
each Rating Agency will have notified the Transferor, the Servicer, the
Indenture Trustee and the Owner Trustee in writing that the amendment will not
result in a reduction or withdrawal of the rating of any outstanding Series or
Class as to which it is a Rating Agency and (iii) such amendment does not affect
the rights, duties or obligations of the Indenture Trustee or the Owner Trustee
hereunder.  The amendments which the Transferor may make without the consent of
Noteholders or Series Enhancers pursuant to the preceding sentence may include,
without limitation, the addition of a sale of Receivables.

          (b)  This Agreement may also be amended from time to time by the
Servicer, the Transferor and the Owner Trustee, with the consent of the Holders
of Outstanding Notes evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the Outstanding Notes of all affected Series for which the
Transferor has not delivered an Officer's Certificate stating that there is no
Adverse Effect, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Noteholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of or delay the timing of
any distributions (changes in Amortization Events or Reinvestment Events that
decrease the likelihood of the occurrence thereof shall not be considered delays
in the timing of distributions for purposes of this clause)

                                       49
<PAGE>

to be made to Noteholders or deposits of amounts to be so distributed or the
amount available under any Series Enhancement without the consent of each
affected Holder of Outstanding Notes, (ii) change the definition of or the
manner of calculating the interest of any Noteholder without the consent of each
affected Holder of Outstanding Notes, (iii) reduce the aforesaid percentage
required to consent to any such amendment without the consent of each Holder of
Outstanding Notes or (iv) adversely affect the rating of any Series or Class by
each Rating Agency without the consent of the Holders of Outstanding Notes of
such Series or Class evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the Outstanding Notes of such Series or Class.

          (c)  Promptly after the execution of any such amendment or consent
(other than an amendment pursuant to paragraph (a)), the Owner Trustee shall
furnish notification of the substance of such amendment to the Indenture Trustee
and each Noteholder, and the Servicer shall furnish notification of the
substance of such amendment to each Rating Agency and each Series Enhancer.

          (d)  It shall not be necessary for the consent of Noteholders under
this Section 9.01 to approve the particular form of any proposed amendment, but
it shall be sufficient if such consent shall approve the substance thereof.  The
manner of obtaining such consents and of evidencing the authorization of the
execution thereof by Noteholders shall be subject to such reasonable
requirements as the Indenture Trustee may prescribe.

          (e)  Notwithstanding anything in this Section 9.01 to the contrary, no
amendment may be made to this Agreement or any Participation Interest Supplement
which would adversely affect in any material respect the interests of any Series
Enhancer without the consent of such Series Enhancer.

          (f)  Any Indenture Supplement executed in accordance with the
provisions of Article X of the Indenture shall not be considered an amendment of
this Agreement for the purposes of this Section 9.01.

          (g)  The Holders of Outstanding Notes evidencing more than 66-2/3% of
the aggregate unpaid principal amount of the Outstanding Notes of each Series
or, with respect to any Series with two or more Classes, of each Class (or, with
respect to any default that does not relate to all Series, 66-2/3% of the
aggregate unpaid principal amount of the Outstanding Notes of each Series to
which such default relates or, with respect to any such Series with two or more
Classes, of each Class) may, on behalf of all Noteholders, waive any default by
the Transferor or the Servicer in the performance of their obligations hereunder
and its consequences, except the failure to make any distributions required to
be made to Noteholders or to make any required deposits of any amounts to be so
distributed.  Upon any such waiver of a past default, such default shall cease
to exist, and any default arising therefrom shall be deemed to have been
remedied for every purpose of this Agreement.  No such waiver shall extend to
any subsequent or other default or impair any right consequent thereon except to
the extent expressly so waived.

          (h)  The Owner Trustee may, but shall not be obligated to, enter into
any such amendment which affects the Owner Trustee's rights, duties or
immunities under this Agreement or otherwise.  In connection with the execution
of any amendment hereunder, the Owner Trustee shall be entitled to receive the
Opinion of Counsel described in subsection 9.02(d).

          Section 9.02.  Protection of Right, Title and Interest to Trust.
                         ------------------------------------------------

          (a)  The Transferor shall cause this Agreement, all amendments and
supplements hereto and all financing statements and continuation statements and
any other necessary documents covering the Indenture Trustee's and the Owner
Trustee's right, title and interest to the Trust to be

                                       50
<PAGE>

promptly recorded, registered and filed, and at all times to be kept recorded,
registered and filed, all in such manner and in such places as may be required
by law fully to preserve and protect the right, title and interest of the
Indenture Trustee, Noteholders and the Owner Trustee hereunder to all property
comprising the Trust. The Transferor shall deliver to the Owner Trustee and
Indenture Trustee file-stamped copies of, or filing receipts for, any document
recorded, registered or filed as provided above, as soon as available following
such recording, registration or filing. The Servicer shall cooperate fully with
the Transferor in connection with the obligations set forth above and will
execute any and all documents reasonably required to fulfill the intent of this
paragraph.

          (b)  Within 30 days after any Transferor makes any change in its name,
identity or corporate structure which would make any financing statement or
continuation statement filed in accordance with paragraph (a) seriously
misleading within the meaning of Section 9-402(7) (or any comparable provision)
of the UCC, such Transferor shall give the Owner Trustee and the Indenture
Trustee notice of any such change and shall file such financing statements or
amendments as may be necessary to continue the perfection of the Owner Trustee's
and the Trust's security interest or ownership interest in the Receivables and
the proceeds thereof.

          (c)  Each Transferor shall give the Owner Trustee and the Indenture
Trustee prompt notice of any relocation of its chief executive office or any
change in the jurisdiction of its organization and whether, as a result of such
relocation or change, the applicable provisions of the UCC would require the
filing of any amendment of any previously filed financing or continuation
statement or of any new financing statement and shall file such financing
statements or amendments as may be necessary to perfect or to continue the
perfection of the Owner Trustee's and the Trust's security interest in the
Receivables and the proceeds thereof.  Each Transferor shall at all times
maintain its chief executive offices within the United States and shall at all
times be organized under the laws of a jurisdiction located within the United
States.

          (d)  The Transferor shall deliver to the Owner Trustee and the
Indenture Trustee (i) upon the execution and delivery of each amendment of this
Agreement, an Opinion of Counsel to the effect specified in Exhibit D-1; (ii) on
                                                            -----------
each date specified in subsection 2.09(c)(ix) with respect to Aggregate
Additions to be designated as Accounts, an Opinion of Counsel substantially in
the form of Exhibit D-2, (iii) on each date specified in subsection
            -----------
2.09(e)(vii), with respect to any New Accounts included as Accounts, an Opinion
of Counsel substantially in the form of Exhibit D-2, (iv) on each Addition Date
                                        -----------
on which any Participation Interests are to be included in the Trust pursuant to
subsection 2.09(a) or (b), an Opinion of Counsel covering the same substantive
legal issues addressed by Exhibits D-1 and D-2 but conformed to the extent
                          ------------     ---
appropriate to relate to Participation Interests; and (v) on or before April 30
of each year, beginning with April 30, 2001, an Opinion of Counsel substantially
in the form of Exhibit D-3.
               -----------

          Section 9.03.  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 OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

          Section 9.04.  Notices; Payments.
                         -----------------

          (a)  All demands, notices, instructions, directions and communications
(collectively, "Notices") under this Agreement shall be in writing and shall be
                -------
deemed to have been duly given if personally delivered at, mailed by registered
mail, return receipt requested, or sent by facsimile transmission (i) in the
case of the Transferor, to Household Receivables Funding, Inc. III, 1111 Town
Center, Las Vegas, Nevada 89134, Attention: Manager-Compliance (facsimile no.
(702) 222-4096), (ii)

                                       51
<PAGE>

in the case of the Bank, to Household Bank (Nevada), National Association at
1111 Town Center, Las Vegas, Nevada 89134 Attention: General Counsel (facsimile
no. (702) 222-4096), (iii) in the case of the Servicer, to Household Finance
Corporation, at 2700 Sanders Road, Prospect Heights, Illinois 60070, Attention:
Vice President, Asset Securitization (facsimile no. (847) 205-7457), with copies
to Household International at 2700 Sanders Road, Prospect Heights, Illinois
60070, Attention: General Counsel's Office, Securities and Funding Unit
(facsimile no. (847) 205-7457), (iv) in the case of the Owner Trustee, to
Wilmington Trust Company, at Rodney Square North, 1100 North Market Street,
Wilmington, DE 19890-0001, Attention: Corporate Trust Administration (facsimile
no. (302) 651-8882), (v) in the case of Fitch, to Fitch, Inc., One State Street
Plaza, New York, NY 10004, Attention: ABS Surveillance (facsimile no. (212) 480-
4438), (vi) in the case of Moody's, to Moody's Investors Service Inc., 99 Church
Street, New York, NY 10007, Attention: ABS Monitoring Group (facsimile no. (212)
553-7820), (vii) in the case of Standard & Poor's, to Standard & Poor's Ratings
Group, 55 Water Street, New York, NY 10041, Attention: Credit Card ABS
(facsimile no. (212) 438-2648), and (viii) to any other Person as specified in
the Indenture or any Indenture Supplement; or, as to each party, at such other
address or facsimile number as shall be designated by such party in a written
notice to each other party.

          (b)  Any Notice required or permitted to be given to a Holder of
Registered Notes shall be given by first-class mail, postage prepaid, at the
address of such Holder as shown in the Note Register.  No Notice shall be
required to be mailed to a Holder of Bearer Notes or Coupons but shall be given
as provided below.  Any Notice so mailed within the time prescribed in this
Agreement shall be conclusively presumed to have been duly given, whether or not
the Noteholder receives such Notice.  In addition, (a) if and so long as any
Series or Class is listed on the Luxembourg Stock Exchange and such Exchange
shall so require, any Notice to Noteholders shall be published in an Authorized
Newspaper of general circulation in Luxembourg within the time period prescribed
in this Agreement and (b) in the case of any Series or Class with respect to
which any Bearer Notes are outstanding, any Notice required or permitted to be
given to Noteholders of such Series or Class shall be published in an Authorized
Newspaper within the time period prescribed in this Agreement.

          Section 9.05.  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 provisions shall be deemed
severable from the remaining provisions of this Agreement and shall in no way
affect the validity or enforceability of the remaining provisions or of the
Notes or the rights of the Noteholders.

          Section 9.06.  Further Assurances.  The Transferor and the Servicer
                         ------------------
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 Owner
Trustee and the Indenture Trustee more fully to effect the purposes of this
Agreement, including the execution of any financing statements or continuation
statements relating to the Receivables for filing under the provisions of the
UCC of any applicable jurisdiction.

          Section 9.07.  No Waiver; Cumulative Remedies.  No failure to exercise
                         ------------------------------
and no delay in exercising, on the part of the Owner Trustee, the Indenture
Trustee or the Noteholders, any right, remedy, power or privilege under this
Agreement shall operate as a waiver thereof; nor shall any single or partial
exercise of any right, remedy, power or privilege under this Agreement preclude
any other or further exercise thereof or the exercise of any other right,
remedy, power or privilege.  The rights, remedies, powers and privileges
provided under this Agreement are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.

          Section 9.08.  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.

                                       52
<PAGE>

          Section 9.09.  Third-Party Beneficiaries.  This Agreement will inure
                         -------------------------
to the benefit of and be binding upon the parties hereto, the Indenture Trustee,
the Owner Trustee, the Noteholders, any Series Enhancer and their respective
successors and permitted assigns.  Except as otherwise expressly provided in
this Agreement, no other Person will have any right or obligation hereunder.

          Section 9.10.  Actions by Noteholders.
                         ----------------------

          (a)  Wherever in this Agreement a provision is made that an action may
be taken or a Notice given by Noteholders, such action or Notice may be taken or
given by any Noteholder, unless such provision requires a specific percentage of
Noteholders.

          (b)  Any Notice, request, authorization, direction, consent, waiver or
other act by the Holder of a Note shall bind such Holder and every subsequent
Holder of such Note and of any Note issued upon the registration of transfer
thereof or in exchange therefor or in lieu thereof in respect of anything done
or omitted to be done by the Owner Trustee, the Transferor or the Servicer in
reliance thereon, whether or not notation of such action is made upon such Note.

          Section 9.11.  Rule 144A Information.  For so long as any of the Notes
                         ---------------------
of any Series or Class are "restricted securities" within the meaning of Rule
144(a)(3) under the Securities Act, each of the Transferor, the Owner Trustee,
the Indenture Trustee, the Servicer and any Series Enhancer agree to cooperate
with each other to provide to any Noteholders of such Series or Class and to any
prospective purchaser of Notes designated by such Noteholder, upon the request
of such Noteholder or prospective purchaser, any information required to be
provided to such holder or prospective purchaser to satisfy the condition set
forth in Rule 144A(d)(4) under the Securities Act.

          Section 9.12.  Merger and Integration.  Except as specifically stated
                         ----------------------
otherwise herein, this Agreement sets 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 9.13.  Headings.  The headings herein are for purposes of
                         --------
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.

                              [END OF ARTICLE IX]

                                       53
<PAGE>

          IN WITNESS WHEREOF, the Transferor, the Servicer and the Owner Trustee
have caused this Transfer and Servicing Agreement to be duly executed by their
respective officers as of the day and year first above written.

Dated: November 16, 2000      HOUSEHOLD RECEIVABLES FUNDING, INC. III,
                              Transferor

                              By: /s/ S.H. Smith
                                  ---------------------------------------------
                                  Name: S.H. Smith
                                  Title: Assistant
                                  Treasurer


                              HOUSEHOLD FINANCE CORPORATION,
                              Servicer

                              By: /s/ B.B. Moss, Jr.
                                  ---------------------------------------------
                                  Name: B.B. Moss, Jr.
                                  Title: Vice President and Treasurer


                              WILMINGTON TRUST COMPANY,
                              not in its individual capacity
                              but solely as Owner Trustee on
                              behalf of the HOUSEHOLD CREDIT
                              CARD MASTER NOTE TRUST I


                              By: /s/ Patricia A. Evans
                                  ---------------------------------------------
                                  Name: Patricia A. Evans
                                  Title: Senior Financial Services Officer

Acknowledged and Accepted:

By: Wells Fargo Bank Minnesota, National Association,
    not in its individual capacity but
    solely as Indenture Trustee


By: /s/ Timothy Matyi
    -------------------------
    Name: Timothy Matyi
    Title: Assistant Vice President

                                       54
<PAGE>

                                                                       EXHIBIT A

           FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL ACCOUNTS

                        (As required by Section 2.09 of
          the Amended and Restated Transfer and Servicing Agreement)

          ASSIGNMENT No. _________ OF RECEIVABLES IN ADDITIONAL ACCOUNTS, dated
as of ____________,/1/ by and among HOUSEHOLD RECEIVABLES FUNDING, INC. III, a
Delaware corporation, as Transferor (the "Transferor"), HOUSEHOLD FINANCE
                                          ----------
CORPORATION, a Delaware corporation, as Servicer (the "Servicer"), and
                                                       --------
WILMINGTON TRUST COMPANY, not in its individual capacity but solely as owner
trustee (the "Owner Trustee") of the HOUSEHOLD CREDIT CARD MASTER NOTE TRUST I
              -------------
(the "Trust"), a Delaware common law trust, pursuant to the Amended and Restated
      -----
Transfer and Servicing Agreement referred to below.

                                  WITNESSETH:

          WHEREAS the Transferor, the Servicer and the Owner Trustee are parties
to the Amended and Restated Transfer and Servicing Agreement dated as of
November 16, 2000 (as amended and supplemented, the "Agreement");
                                                     ---------

          WHEREAS, pursuant to the Agreement, the Transferor wishes to designate
Additional Accounts to be included as Accounts and to convey the Receivables of
such Additional Accounts, whether now existing or hereafter created, to the
Owner Trustee on behalf of the Trust; and

          WHEREAS the Owner Trustee on behalf of the Trust is willing to accept
such designation and conveyance subject to the terms and conditions hereof;

          NOW, THEREFORE, the Transferor, the Servicer and the Owner Trustee
hereby agree as follows:

          1.   Defined Terms.  All capitalized terms used herein shall have the
               -------------
meanings ascribed to them in the Agreement unless otherwise defined herein.

          "Addition Date" shall mean, with respect to the Additional Accounts
           -------------
designated hereby, __________, ____.

          "Additional Cut-Off Date" shall mean, with respect to the Additional
           -----------------------
Accounts designated hereby, __________, ____.

          2.   Designation of Additional Accounts.  On or before the Document
               ----------------------------------
Delivery Date, the Transferor will deliver to the Owner Trustee a computer file,
microfiche list or printed list containing a true and complete schedule
identifying all Additional Accounts designated hereby (the "Additional
Accounts") specifying for each such Account, as of the Additional Cut-Off Date,
its account number, the aggregate amount outstanding in such Account and the
aggregate amount of Principal Receivables outstanding in such Account, which
computer file, microfiche list or printed list shall be marked as Schedule 1 to
this Assignment and shall supplement Schedule 1 to the Agreement.
                                     ----------

_______________________
/1/ To be dated as of the applicable Addition Date.

                                      A-1
<PAGE>

          3.   Conveyance of Receivables.  (a)  The Transferor does hereby sell,
               -------------------------
transfer, assign, set over and otherwise convey, without recourse except as set
forth in the Transfer and Servicing Agreement, to the Owner Trustee on behalf of
the Trust, all its right, title and interest in, to and under the Receivables of
such Additional Accounts existing on the Additional Cut-Off Date and thereafter
created from time to time until the termination of the Trust, all Interchange
and Recoveries related thereto, all monies due or to become due and all amounts
received or receivable with respect thereto and all proceeds (including
"proceeds" as defined in the UCC) thereof.  The foregoing does not constitute
and is not intended to result in the creation or assumption by the Trust, the
Owner Trustee, the Indenture Trustee, any Noteholders or any Series Enhancer of
any obligation of the Servicer, the Transferor or any other Person in connection
with the Accounts, the Receivables or under any agreement or instrument relating
thereto, including any obligation to Obligors, merchant banks, merchants
clearance systems, VISA, MasterCard or insurers.

          (b)  The Transferor agrees to record and file, at its own expense,
financing statements (and continuation statements when applicable) with respect
to the Receivables existing on the Additional Cut-Off Date and thereafter
created in Additional 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 sale and assignment of its interest in such
Receivables to the Owner Trustee on behalf of the Trust, and to deliver a file-
stamped copy of each such financing statement or other evidence of such filing
to the Owner Trustee on or prior to the Addition Date.  The Owner Trustee shall
be under no obligation whatsoever to file such financing or continuation
statements or to make any other filing under the UCC in connection with such
sale and assignment.

          (c)  In connection with such sale, the Transferor further agrees, at
its own expense, on or prior to the date of this Assignment, to indicate in the
appropriate computer files that Receivables created in connection with the
Additional Accounts and designated hereby have been conveyed to the Owner
Trustee on behalf of the Trust pursuant to the Agreement and this Assignment.

          (d)  The Transferor does hereby grant to the Owner Trustee on behalf
of the Trust a security interest in all of its right, title and interest,
whether now owned or hereafter acquired, in and to the Receivables of the
Additional Accounts existing on the Additional Cut-Off Date and thereafter
created from time to time until the termination of the Trust, all Interchange
and Recoveries related thereto, all monies due or to become due and all amounts
received or receivable with respect thereto and all "proceeds" (including
"proceeds" as defined in the UCC) thereof. This Assignment constitutes a
security agreement under the UCC.

          4.   Acceptance by Owner Trustee on behalf of the Trust.  The Owner
               --------------------------------------------------
Trustee on behalf of the Trust hereby acknowledges its acceptance of all right,
title and interest to the property, now existing and hereafter created, conveyed
to the Owner Trustee on behalf of the Trust pursuant to Section 3 of this
Assignment.  The Trust further acknowledges that, prior to or simultaneously
with the execution and delivery of this Assignment, the Transferor delivered to
the Owner Trustee the computer file, microfiche list or printed list described
in Section 2 of this Assignment.

          5.  Representations and Warranties of the Transferor.  The Transferor
              ------------------------------------------------
hereby represents and warrants to the Owner Trustee on behalf of the Trust, as
of the date of this Assignment and as of the Addition Date that:

               (a)  Legal Valid and Binding Obligation.  This Assignment
                    ----------------------------------
     constitutes a legal, valid and binding obligation of the Transferor
     enforceable against the Transferor in accordance with its terms, except as
     such enforceability may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws now or hereafter in effect
     affecting

                                      A-2
<PAGE>

     the enforcement of creditors' rights in general and except as such
     enforceability may be limited by general principles of equity (whether
     considered in a suit at law or in equity);

               (b)  Eligibility of Accounts.  As of the Additional Cut-Off Date,
                    -----------------------
     each Additional Account designated hereby is an Eligible Account;

               (c)  Insolvency.  As of each of the Additional Cut-Off Date and
                    ----------
     the Addition Date, no Insolvency Event with respect to the Transferor has
     occurred and the transfer by the Transferor of Receivables arising in the
     Additional Accounts to the Trust has not been made in contemplation of the
     occurrence thereof;

               (d)  Amortization Event; Event of Default.  The Transferor
                    ------------------------------------
     reasonably believes that (A) the addition of the Receivables arising in the
     Additional Accounts will not, based on the facts known to the Transferor,
     then or thereafter cause an Amortization Event or Event of Default to occur
     with respect to any Series and (B) no selection procedure was utilized by
     the Transferor which would result in the selection of Additional Accounts
     (from among the available Eligible Accounts available to the Transferor)
     that would be materially adverse to the interests of the Noteholders of any
     Series as of the Addition Date;

               (e)  Security Interest.  This Assignment constitutes a valid
                    -----------------
     sale, transfer and assignment to the Trust of all right, title and
     interest, whether now owned or hereafter acquired, of the Transferor in the
     Receivables existing on the Additional Cut-Off Date and thereafter created
     in the Additional Accounts, all Interchange and Recoveries related thereto,
     all monies due or to become due and all amounts received or receivable with
     respect thereto and the "proceeds" (including "proceeds" as defined in the
     UCC) thereof, or, if this Assignment does not constitute a sale of such
     property, it constitutes a grant of a "security interest" (as defined in
     the UCC) in such property to the Owner Trustee on behalf of the Trust,
     which, in the case of existing Receivables and the proceeds thereof, is
     enforceable upon execution and delivery of this Assignment, and which will
     be enforceable with respect to such Receivables hereafter created and the
     proceeds thereof upon such creation. Upon the filing of the financing
     statements described in Section 3 of this Assignment and, in the case of
     the Receivables hereafter created and the proceeds thereof, upon the
     creation thereof, the Trust shall have a first priority perfected security
     or ownership interest in such property;

               (f)  No Conflict.  The execution and delivery by the Transferor
                    -----------
     of this Assignment, the performance of the transactions contemplated by
     this Assignment and the fulfillment of the terms hereof applicable to the
     Transferor, will not conflict with or violate any Requirements of Law
     applicable to the Transferor or 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
     the Transferor is a party or by which it or its properties are bound;

               (g)  No Proceedings.  There are no proceedings or investigations,
                    --------------
     pending or, to the best knowledge of the Transferor, threatened against the
     Transferor before any court, regulatory body, administrative agency or
     other tribunal or governmental instrumentality (i) asserting the invalidity
     of this Assignment, (ii) seeking to prevent the consummation of any of the
     transactions contemplated by this Assignment, (iii) seeking any
     determination or ruling that, in the reasonable judgment of the Transferor,
     would materially and adversely affect the performance by the Transferor of
     its obligations under this Assignment or (iv) seeking any determination or
     ruling that would materially and adversely affect the validity or
     enforceability of this Assignment; and

                                      A-3
<PAGE>

               (h)  All Consents.  All authorizations, consents, orders or
                    ------------
     approvals of any court or other governmental authority required to be
     obtained by the Transferor in connection with the execution and delivery of
     this Assignment by the Transferor and the performance of the transactions
     contemplated by this Assignment by the Transferor, have been obtained.

          6.   Ratification of Agreement.  As supplemented by this Assignment,
               -------------------------
the Agreement is in all respects ratified and confirmed and the Agreement as so
supplemented by this Assignment shall be read, taken and construed as one and
the same instrument.

          7.   Counterparts.  This Assignment 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 shall constitute one and the same
instrument.

          8.   GOVERNING LAW.  THIS ASSIGNMENT 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.

                                      A-4
<PAGE>

          IN WITNESS WHEREOF, the Transferor, the Servicer and the Owner Trustee
have caused this Assignment to be duly executed by their respective officers as
of the day and year first above written.

                              HOUSEHOLD RECEIVABLES FUNDING, INC. III,
                              Transferor,

                              By: ____________________________________________
                                  Name:
                                  Title:


                              HOUSEHOLD FINANCE CORPORATION,
                              Servicer,

                              By: ____________________________________________
                                  Name:
                                  Title:

                              WILMINGTON TRUST COMPANY,
                              not in its individual
                              capacity but solely as Owner
                              Trustee on behalf of the
                              HOUSEHOLD CREDIT CARD MASTER
                              NOTE TRUST I, Issuer


                              By: ____________________________________________
                                  Name:
                                  Title:
<PAGE>

                                                                       EXHIBIT B
            FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS

                        (As required by Section 2.10 of
          the Amended and Restated Transfer and Servicing Agreement)

          REASSIGNMENT No. ___________ OF RECEIVABLES dated as of ___________,
/1/ by and among HOUSEHOLD RECEIVABLES FUNDING, INC. III, a Delaware
corporation, as Transferor (the "Transferor"), HOUSEHOLD FINANCE CORPORATION, a
                                 ----------
Delaware corporation, as Servicer and WILMINGTON TRUST COMPANY, not in its
individual capacity but solely as owner trustee (the "Owner Trustee") of
                                                      -------------
the HOUSEHOLD CREDIT CARD MASTER NOTE TRUST I, (the "Trust"), a Delaware common
                                                     -----
law trust, pursuant to the Amended and Restated Transfer and Servicing
Agreement referred to below.


                                  WITNESSETH:

          WHEREAS the Transferor, the Servicer and the Owner Trustee are parties
to the Amended and Restated Transfer and Servicing Agreement dated as of
November 16, 2000 (as amended and supplemented, the "Agreement");
                                                     ---------

          WHEREAS pursuant to the Agreement, the Bank wishes to remove from the
Trust all Receivables owned by the Owner Trustee on behalf of the Trust in
certain designated Accounts and to cause the Owner Trustee on behalf of the
Trust to reconvey the Receivables of such Removed Accounts, whether now existing
or hereafter created to the Transferor; and

          WHEREAS the Owner Trustee on behalf of the Trust is willing to accept
such designation and to reconvey the Receivables in the Removed Accounts subject
to the terms and conditions hereof;

          NOW, THEREFORE, the Transferor and the Trust hereby agree as follows:

          1.   Defined Terms. All terms defined in the Agreement and used herein
               -------------
shall have such defined meanings when used herein, unless otherwise defined
herein.

               "Removal Date" shall mean, with respect to the Removed Accounts
                ------------
     designated hereby, __________, ____.

               "Removal Notice Date" shall mean, with respect to the Removed
                -------------------
     Accounts, __________, ____.

          2.   Designation of Removed Accounts. On or before the Document
               -------------------------------
Delivery Date, the Transferor will deliver to the Owner Trustee a computer file,
microfiche list or printed list containing a true and complete schedule
identifying all Accounts (the "Removed Accounts") the Receivables of which are
                               ----------------
being removed from the Trust, specifying for each such Account, as of the
Removal Notice Date, its account number, the aggregate amount outstanding in
such Account and the aggregate amount of Principal Receivables in such Account,
which computer file, microfiche list or printed list shall be marked as Schedule
1 of this Reassignment and shall supplement Schedule 1 to the Agreement.

____________________________

/1/ To be dated as of the Removal Date.

                                      B-1
<PAGE>

          3.   Conveyance of Receivables. (a) The Owner Trustee on behalf of the
               -------------------------
Trust does hereby transfer, assign, set over and otherwise convey to the
Transferor, without recourse, on and after the Removal Date, all right, title
and interest of the Owner Trustee and the Trust in, to and under the Receivables
existing at the close of business on the Removal Notice Date and thereafter
created from time to time in the Removed Accounts designated hereby, all
Interchange and Recoveries related thereto, all monies due or to become due and
all amounts received or receivable with respect thereto and all proceeds
thereof.

          (b)  In connection with such transfer, the Owner Trustee agrees to
execute and deliver to the Transferor on or prior to the date this Reassignment
is delivered, applicable termination statements prepared by the Transferor with
respect to the Receivables existing at the close of business on the Removal
Notice Date and thereafter created from time to time in the Removed Accounts
reassigned hereby and the proceeds thereof evidencing the release by the Owner
Trustee and the Trust of its interest in the Receivables in the Removed
Accounts, and meeting the requirements of applicable state law, in such manner
and such jurisdictions as are necessary to terminate such interest.

          4.   Representations and Warranties of the Transferor. The Transferor
               ------------------------------------------------
hereby represents and warrants to the Owner Trustee and the Trust as of the
Removal Date:

               (a)  Legal Valid and Binding Obligation.  This Reassignment
                    ----------------------------------
     constitutes a legal, valid and binding obligation of the Transferor
     enforceable against the Transferor, in accordance with its terms, except as
     such enforceability may be limited by applicable bankruptcy, insolvency,
     reorganization, moratorium or other similar laws now or hereafter in effect
     affecting the enforcement of creditors' rights in general and except as
     such enforceability may be limited by general principles of equity (whether
     considered in a suit at law or in equity); and

               (b)  Amortization Event; Event of Default.  The Transferor
                    ------------------------------------
     reasonably believes that (A) the removal of the Receivables existing in the
     Removed Accounts will not, based on the facts known to the Transferor, then
     or thereafter cause an Amortization Event or Event of Default to occur with
     respect to any Series and (B) no selection procedure was utilized by the
     Transferor which would result in a selection of Removed Accounts that would
     be materially adverse to the interests of the Noteholders of any Series as
     of the Removal Date.

               (c)  List of Removed Accounts.  The list of Removed Accounts
                    ------------------------
     delivered pursuant to subsection 2.10(a)(ii) of the Agreement, as of the
     Removal Notice Date, is true and complete in all material respects.

          5.   Ratification of Agreement. As supplemented by this Reassignment,
               -------------------------
the Agreement is in all respects ratified and confirmed and the Agreement as so
supplemented by this Reassignment shall be read, taken and construed as one and
the same instrument.

          6.   Counterparts. This Reassignment 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 shall constitute one and the same
instrument.

          7.   GOVERNING LAW. THIS REASSIGNMENT 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.

                                      B-2
<PAGE>

          IN WITNESS WHEREOF, the Transferor, the Servicer and the Owner Trustee
have caused this Reassignment to be duly executed by their respective officers
as of the day and year first above written.

                              HOUSEHOLD RECEIVABLES FUNDING, INC. III,
                              Transferor,

                              By:_______________________________________
                                  Name:
                                  Title:

                              HOUSEHOLD FINANCE CORPORATION,
                              Servicer,

                              By:_______________________________________
                                  Name:
                                  Title:

                              WILMINGTON TRUST COMPANY,
                              not in its individual capacity but solely
                              as Owner Trustee on behalf of the
                              HOUSEHOLD CREDIT CARD MASTER
                              NOTE TRUST I, Issuer

                              By:_______________________________________
                                  Name:
                                  Title:

                                      B-3
<PAGE>

                                                                       EXHIBIT C

                     FORM OF ANNUAL SERVICER'S CERTIFICATE

                   (To be delivered on or before March 31 of
               each calendar year beginning with March 31, 2001,
       pursuant to Section 3.05 of the Amended and Restated Transfer and
                     Servicing Agreement referred to below)

                   HOUSEHOLD CREDIT CARD MASTER NOTE TRUST I

          The undersigned, a duly authorized representative of Household Finance
Corporation, as Servicer ("Household Finance Corporation"), pursuant to the
                           -----------------------------
Amended and Restated Transfer and Servicing Agreement, dated as of November 16,
2000 (as amended and supplemented, the "Agreement"), among Household Receivables
                                        ---------
Funding, Inc. III, as transferor, Household Finance Corporation, and Household
Credit Card Master Note Trust I, does hereby certify that:

          1.   Household Finance Corporation is, as of the date hereof, the
Servicer under the Agreement.  Capitalized terms used in this Certificate have
their respective meanings as set forth in the Agreement.

          2.   The undersigned is an Authorized Officer who is duly authorized
pursuant to the Agreement to execute and deliver this Certificate to the Trust.

          3.   A review of the activities of the Servicer during the year ended
December 31, ____, and of its performance under the Agreement was conducted
under my supervision.

          4.   Based on such review, the Servicer has, to the best of my
knowledge, performed in all material respects its obligations under the
Agreement throughout such year and no default in the performance of such
obligations has occurred or is continuing except as set forth in paragraph 5
below.

          5.   The following is a description of each default in the performance
of the Servicer's obligations under the provisions of the Agreement known to me
to have been made by the Servicer during the year ended December 31, _____ which
sets forth in detail (i) the nature of each such default, (ii) the action taken
by the Servicer, if any, to remedy each such default and (iii) the current
status of each such default:  [If applicable, insert "None."]

          IN WITNESS WHEREOF, the undersigned has duly executed this Certificate
this ____ day of _____________, 20___.

                              HOUSEHOLD FINANCE CORPORATION,



                              By _______________________________________
                                 Name:
                                 Title:

                                      C-1
<PAGE>

                                                                     EXHIBIT D-1

                          FORM OF OPINION OF COUNSEL
                          WITH RESPECT TO AMENDMENTS

                         Provisions to be included in
                  Opinion of Counsel to be delivered pursuant
        to Section 9.02(d)(i) of the Amended and Restated Transfer and
                              Servicing Agreement

          The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the Opinions Of Counsel
delivered on any applicable Closing Date.

               (i)  The amendment to the Amended and Restated Transfer and
     Servicing Agreement, attached hereto as Schedule 1 (the "Amendment"), has
                                                              ---------
     been duly authorized, executed and delivered by the Transferor and
     constitutes the legal, valid and binding agreement of the Transferor,
     enforceable in accordance with its terms, except as such enforceability may
     be limited by applicable bankruptcy, insolvency, reorganization, moratorium
     or other laws from time to time in effect affecting creditors' rights
     generally.  The enforceability of the Transferor's obligations is also
     subject to general principles of equity (regardless of whether such
     enforceability is considered in a proceeding in equity or at law).

               (ii) The Amendment has been entered into in accordance with the
     terms and provisions of Section 9.01 of the Amended and Restated Transfer
     and Servicing Agreement.

                                     D-1-1
<PAGE>

                                                                     EXHIBIT D-2

                          FORM OF OPINION OF COUNSEL
                           WITH RESPECT TO ACCOUNTS

                         Provisions to be included in
                           Opinion of Counsel to be
                             delivered pursuant to
          subsection 9.02(d)(ii) or (iii) of the Amended and Restated
                       Transfer and Servicing Agreement

          The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the Opinions of Counsel
delivered on any applicable Closing Date.

          1.   To the extent that Article 9 of the New York UCC applies to the
transfer of the Additional Receivables and the proceeds thereof by [the Account
Owner] to the Transferor pursuant to the Supplemental Conveyance, the
Supplemental Conveyance creates in favor of the transferor a security interest
in the rights of [the Account Owner] in such Additional Receivables and the
proceeds thereof.

          2.   To the extent that the transfer of Additional Receivables by the
Transferor to the Owner Trustee pursuant to the Assignment does not constitute
an absolute assignment by the Transferor to the Owner Trustee of such Additional
Receivables or the proceeds thereof, the Assignment creates in favor of the
Owner Trustee a security interest in the rights of the Transferor in such
Additional Receivables and the proceeds thereof.

          3.   The security interests described in paragraphs 1 and 2 above are
perfected and of first priority.

                                     D-2-1
<PAGE>

                                                                     EXHIBIT D-3

                         PROVISIONS TO BE INCLUDED IN
                           ANNUAL OPINION OF COUNSEL


          The opinions set forth below may be subject to all the qualifications,
assumptions, limitations and exceptions taken or made in the Opinions of Counsel
delivered on any applicable Closing Date.  Unless otherwise indicated, all
capitalized terms used herein shall have the meanings ascribed to them in the
Amended and Restated Transfer and Servicing Agreement and in the Assignment.

          1.   The Amended and Restated Transfer and Servicing Agreement,
together with the Assignments, create in favor of the Owner Trustee a security
interest in the relevant Transferor's rights in the Receivables identified in
Schedule 1 to the Amended and Restated Transfer and Servicing Agreement. Such
security interest is perfected and of first priority.

                                     D-3-1
<PAGE>

                                                                      SCHEDULE 1

                                List of Accounts

                   [Original list delivered to Owner Trustee]

                                      1-1