Document:

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________________________________________________________________________________

                   HOUSEHOLD RECEIVABLES ACQUISITION COMPANY

                                      and

                             HRSI FUNDING, INC. II

                         RECEIVABLES PURCHASE AGREEMENT

                            Dated as of ______, 2001

________________________________________________________________________________

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                               TABLE OF CONTENTS
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ARTICLE I DEFINITIONS 1

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

ARTICLE II PURCHASE AND CONVEYANCE OF RECEIVABLES.........................  5

  Section 2.01.  Purchase.................................................  5
  Section 2.02.  Addition of Aggregate Addition Accounts..................  7
  Section 2.03.  Addition of New Accounts.................................  8
  Section 2.04.  Representations and Warranties...........................  9
  Section 2.05.  Delivery of Documents....................................  9

ARTICLE III CONSIDERATION AND PAYMENT.....................................  9

  Section 3.01.  Purchase Price...........................................  9
  Section 3.02.  Adjustments to Purchase Price............................ 10

ARTICLE IV REPRESENTATIONS AND WARRANTIES................................. 10

  Section 4.01.  Representations and Warranties of HRAC Relating to HRAC.. 10
  Section 4.02.  Representations and Warranties of HRAC Relating to
                 the Agreement and the Receivables........................ 11
  Section 4.03.  Representations and Warranties of the Company............ 13
  Section 4.04.  Assignment of Rights to the Company...................... 14

ARTICLE V COVENANTS....................................................... 14

  Section 5.01.  Covenants of HRAC........................................ 14

ARTICLE VI REPURCHASE OBLIGATION.......................................... 15

  Section 6.01.  Reassignment of Ineligible Receivables................... 15
  Section 6.02.  Reassignment of Trust Portfolio.......................... 16

ARTICLE VII CONDITIONS PRECEDENT.......................................... 17

  Section 7.01.  Conditions to the Company's Obligations Regarding
                 Initial Receivables...................................... 17
  Section 7.02.  Conditions Precedent to HRAC's Obligations............... 17

ARTICLE VIII TERM AND PURCHASE TERMINATION................................ 18

  Section 8.01.  Term..................................................... 18
  Section 8.02.  Purchase Termination..................................... 18

ARTICLE IX MISCELLANEOUS PROVISIONS....................................... 19

  Section 9.01.  Amendment................................................ 19

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  Section 9.02.  Governing Law............................................ 19
  Section 9.03.  Notices.................................................. 19
  Section 9.04.  Severability of Provisions............................... 20
  Section 9.05.  Assignment............................................... 20
  Section 9.06.  Acknowledgement and Agreement of HRAC.................... 20
  Section 9.07.  Further Assurances....................................... 20
  Section 9.08.  No Waiver; Cumulative Remedies........................... 21
  Section 9.09.  Counterparts............................................. 21
  Section 9.10.  Binding; Third-Party Beneficiaries....................... 21
  Section 9.11.  Merger and Integration................................... 21
  Section 9.12.  Headings................................................. 21
  Section 9.13.  Schedules and Exhibits................................... 21
  Section 9.14.  Survival of Representations and Warranties............... 21
  Section 9.15.  Nonpetition Covenant..................................... 21

EXHIBIT A ................................................................ A-1

FORM OF SUPPLEMENTAL CONVEYANCE .......................................... A-1

Schedule I ............................................................... I-1

LIST OF ACCOUNTS  ........................................................ I-2

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     RECEIVABLES PURCHASE AGREEMENT, dated as of ________, by and between HRSI
FUNDING, INC. II, a Delaware corporation (the "Company"), and HOUSEHOLD
RECEIVABLES ACQUISITION COMPANY, a Delaware corporation ("HRAC").

                              W I T N E S S E T H:

     WHEREAS, the Company desires to purchase, from time to time, certain
Receivables (hereinafter defined) arising under certain revolving credit
accounts;

     WHEREAS, HRAC desires to sell and assign from time to time certain
Receivables to the Company upon the terms and conditions hereinafter set forth;

     WHEREAS, it is contemplated that the Receivables purchased hereunder will
be transferred by the Company to the Trust (hereinafter defined) in connection
with the issuance of certain Securities (hereinafter defined); and

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

     NOW, THEREFORE, it is hereby agreed by and between the Company and HRAC
as follows:

                                   ARTICLE I

                                  DEFINITIONS

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

     "Account" shall mean (a) each Initial Account, (b) each Additional Account
(but only from and after the Addition Date with respect thereto), (c) each
Related Account, and (d) each account into which an Account shall be transferred
(a "Transferred Account") provided that (i) such transfer was made in accordance
with the Credit Guidelines and (ii) such account can be traced or identified as
an account into which an Account has been transferred, but shall exclude (e) any
Account that (x) after the Removal Date, the newly generated Receivables in
which shall not be assigned to the Company hereunder, (y) the right, title and
interest of the Company in the Receivables in which are reassigned to HRAC
pursuant to Section 6.01 or (z) the right, title and interest of the Trust in
the Receivables in which are assigned and transferred to the Servicer pursuant
to Section 3.03 of the Transfer and Servicing Agreement.

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

     "Addition Date" shall mean (a) with respect to Aggregate Addition Accounts
(or Participation Interests), the date from and after which such Aggregate
Addition Accounts are to be included as Accounts pursuant to Section 2.02 and
(b) with respect to New Accounts, the first Distribution Date following the
calendar month in which the later of the dates on which such New Accounts are
originated or designated (or such Participation Interests are included) pursuant
to Section 2.03 occurs.

     "Addition Notice Date" shall have the meaning specified in Section 2.02 of
this Agreement.

     "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, the date specified as such in the notice delivered with respect
thereto pursuant to Section 2.02, and (b) with respect to New Accounts, the
later of the dates on which such New Accounts are originated or designated
pursuant to Section 2.03.

     "Aggregate Addition Account" shall mean each Eligible Account that is
designated pursuant to Section 2.02 to be included as an Account and is
identified in the computer file or microfiche list delivered to the Company by,
or at the direction of, HRAC pursuant to Sections 2.01 and 2.05.

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

     "Closing Date" shall mean ______, 2001.

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

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

     "Conveyance Papers" shall have the meaning specified in subsection 4.01(c).

     "Credit Adjustment" shall have the meaning specified in Section 3.02.

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

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

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

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

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

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

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

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

     "Initial Account" shall mean each Account included in the computer file
delivered to the Indenture Trustee as of the Closing Date.

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

     "New Account" shall mean each revolving credit account established pursuant
to a Credit Agreement, which account is designated pursuant to Section 2.03 to
be included as an Account and is identified in the computer file or microfiche
list delivered to the Company by, or at the direction of, HRAC pursuant to
Sections 2.01 and 2.05.

     "New Principal Receivables" shall have the meaning set forth in
Section 3.01.

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

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

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

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

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

     "Receivables" shall mean all amounts shown on HRAC'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 that become Defaulted Receivables will cease to be included as
Receivables as of the day on which they become Defaulted Receivables.

     "Removed Account" shall mean an Account hereunder that is a "Removed
Account" (as such term is defined in the Transfer and Servicing Agreement) that
is designated for removal pursuant to Section 2.10 of the Transfer and Servicing
Agreement.

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

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

     "Supplemental Conveyance" shall have the meaning set forth in Section 2.05.

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

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

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

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

     Section 1.02.  Other Definitional Provisions.

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

     The words "hereof," "herein" and "hereunder" and words of similar import
when used in this Agreement or any Conveyance Paper shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
Section, Subsection, Schedule and Exhibit

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references contained in this Agreement are references to Sections, Subsections,
Schedules and Exhibits in or to this Agreement unless otherwise specified.

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

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

                                   ARTICLE II

                     PURCHASE AND CONVEYANCE OF RECEIVABLES

     Section 2.01.  Purchase.

     (a)  By execution of this Agreement, HRAC does hereby sell, transfer,
assign, set over and otherwise convey to the Company (collectively, the
"Conveyance"), without recourse except as provided herein, all its right, title
and interest in, to and under the Receivables existing at the close of business
on the Closing Date, in the 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 the Participation Interests conveyed pursuant to a
Participation Interest Supplement, and in each case thereafter created from time
to time until the termination of this Agreement pursuant to Article VIII hereof,
all Recoveries with respect to such Accounts and such Participation Interests,
all monies due or to become due and all amounts received or receivable with
respect thereto, and all proceeds (including, without limitation, "proceeds" as
defined in the UCC) thereof (the "Purchased Assets").

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

     (c)  In connection with each such Conveyance, HRAC further agrees, acting
directly, or through agents, that it will, at its own expense, (i) on or prior
to (A) the Closing Date, in the case of Initial Accounts, (B) the applicable
Addition Date, in the case of Additional Accounts, and (C) the applicable
Removal Date, in the case of Removed Accounts, indicate in its

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computer files that, in the case of the Initial Accounts or the Additional
Accounts, Receivables created in connection with such Accounts have been
conveyed to the Company in accordance with this Agreement and have been conveyed
by the Company to the Trust pursuant to the Transfer and Servicing Agreement and
have been pledged by the Trust to the Indenture Trustee pursuant to the
Indenture for the benefit of the Noteholders by including (or deleting, in the
case of newly originated Receivables in 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 date that is five
Business Days after the applicable Addition Date, in the case of designation of
Aggregate Addition Accounts, (C) the date that is 30 days after the applicable
Addition 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, to deliver to the Company a computer file or microfiche list
containing a true and complete list of all such Accounts specifying for each
such Account, as of the Closing Date, 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 in such Account. Each such computer
file or microfiche list, as supplemented from time to time to reflect Additional
Accounts or Removed Accounts, shall be marked as Schedule I to this Agreement,
shall be delivered to the Company, and is hereby incorporated into and made a
part of this Agreement. HRAC further agrees not to alter the code referenced in
clause (i) of this paragraph with respect to any Account during the term of this
Agreement unless and until such Account becomes a Removed Account.

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

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

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     Section 2.02.  Addition of Aggregate Addition Accounts.

     (a)  If, from time to time, the Company becomes obligated to designate
Aggregate Addition Accounts (as such term is defined in the Transfer and
Servicing Agreement) pursuant to subsection 2.09(a) of the Transfer and
Servicing Agreement, then the Company may, at its option, give HRAC written
notice thereof on or before the fifth Business Day (the "Addition Notice Date")
prior to the Addition Date therefor, and upon receipt of such notice HRAC shall
on or before the Addition Date, designate sufficient Eligible Accounts to be
included as Additional Accounts so that after the inclusion thereof the Company
will be in compliance with the requirements of said subsection 2.09(a).
Additionally, subject to subsections 2.09(b) and (c) of the Transfer and
Servicing Agreement and subsection 2.02(b), from time to time Eligible Accounts
may be designated to be included as Aggregate Addition Accounts, upon the mutual
agreement of the Company and HRAC. In either event, HRAC shall have sole
responsibility for selecting the Aggregate Addition Accounts.

     (b)  On the Addition Date with respect to any designation of Aggregate
Addition Accounts, the Company shall purchase HRAC's right, title and interest
in, to and under the Receivables in Aggregate Addition Accounts (and such
Aggregate Addition Accounts shall be deemed to be Accounts for purposes of this
Agreement) and the related Purchased Assets, subject to the satisfaction of the
following conditions on such Addition Date:

          (i)    all Aggregate Addition Accounts shall be Eligible Accounts;

          (ii)   HRAC shall have delivered, or caused to be delivered, to the
     Company copies of UCC-1 financing statements covering such Aggregate
     Addition Accounts or Participation Interests, if necessary to perfect the
     Company's undivided interest in the Receivables arising therein;

          (iii)  to the extent required of the Company by Section 2.09(c) of
     the Transfer and Servicing Agreement, HRAC shall have deposited, or caused
     to be deposited, in the Collection Account (as such term is defined in the
     Indenture) all Collections with respect to such Aggregate Addition Accounts
     or Participation Interests 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 HRAC or other Account Owner, as
     the case may be, shall have occurred nor shall the transfer of the
     Receivables arising in the Aggregate Addition Accounts or Participation
     Interests to the Company have been made in contemplation of the occurrence
     thereof;

          (v)    solely with respect to Aggregate Addition Accounts designated
     pursuant to the second sentence of subsection 2.02(a), the Rating Agency
     Condition shall have been satisfied;

          (vi)   HRAC shall have delivered, or caused to be delivered, to the
     Company an Officer's Certificate, dated the Addition Date, confirming, to
     the extent applicable, the items set forth in clauses (i) through (v)
     above; and

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          (vii)  the transfer of the Receivables arising in the Aggregate
     Addition Accounts or Participation Interests to the Company will not result
     in an Adverse Effect and HRAC shall have delivered, or caused to be
     delivered, to the Company an Officer's Certificate, dated the Addition
     Date, stating that HRAC reasonably believes that the addition of the
     Receivables arising in the Aggregate Addition Accounts or Participation
     Interests to the Company will not have an Adverse Effect.

     Section 2.03.  Addition of New Accounts.

     (a)  Upon the mutual agreement of the Company and HRAC, subject to
compliance with the conditions specified in subsections 2.09(d) and (e) of the
Transfer and Servicing Agreement and compliance with subsection 2.03(b), HRAC
may designate newly originated Eligible Accounts to be included as New Accounts.
Upon such designation, such New Accounts shall be deemed to be Accounts
hereunder. HRAC shall cooperate with the Company to enable the Company to comply
with the requirements of Section 2.09 of the Transfer and Servicing Agreement
and shall cooperate with the Company to enable it to perform with respect to the
Receivables in such New Accounts all actions specified in subsections 2.09(d)
and (e) of the Transfer and Servicing Agreement.

     (b)  On the Addition Date with respect to any New Accounts, the Company
shall purchase the HRAC's right, title and interest in, to and under the
Receivables in 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 Additional Cut-Off Date and the related Purchased Assets, subject to
the satisfaction of the following conditions on such Addition Date:

          (i)    all New Accounts shall be Eligible Accounts;

          (ii)   HRAC shall have delivered, or caused to be delivered, to the
     Company copies of UCC-1 financing statements covering such New Accounts, if
     necessary to perfect the Company's interest in the Receivables arising
     therein;

          (iii)  to the extent required of the Company by Section 2.09(e) of
     the Transfer and Servicing Agreement, HRAC shall have deposited, or caused
     to be 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 HRAC or other Account Owner, as
     applicable, shall have occurred nor shall the transfer of the Receivables
     arising in the New Accounts to the Company have been made in contemplation
     of the occurrence thereof;

          (v)    HRAC shall have delivered, or caused to be delivered, to the
     Company an officer's certificate, dated the Addition Date, confirming, to
     the extent applicable, the items set forth in clauses (ii) through (iv)
     above; and

          (vi)   the transfer of the Receivables arising in the New Accounts
     to the Company will not result in an Adverse Effect, and HRAC shall have
     delivered, or caused to be delivered, to the Company an officer's
     certificate, dated the Addition Date, stating

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<PAGE>   12
     that HRAC reasonably believes that the addition to the Trust of the
     Receivables arising in the New Accounts will not have an Adverse Effect.

     Section 2.04.  Representations and Warranties.  HRAC hereby represents and
warrants to the Company as of the related Addition Date as to the matters set
forth in subsections 2.02(b)(ii) and 2.03(b)(ii) above and that, in the case of
Additional Accounts, the list delivered pursuant to Section 2.05 below is, as of
the applicable Additional Cut-Off Date, true and complete in all material
respects.

     Section 2.05.  Delivery of Documents.  In the case of the designation of
Additional Accounts, HRAC shall deliver to the Company (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 Company),
substantially in the form of Exhibit A (the "Supplemental Conveyance"), on the
Document Delivery Date. In addition, in the case of the designation of New
Accounts, HRAC shall deliver to the Company on the Document Delivery Date an
Officer's Certificate confirming, to the extent applicable, the items set forth
in clause (i) through (vi) of subsection 2.03(b) above.

                                  ARTICLE III

                           CONSIDERATION AND PAYMENT

     Section 3.01.  Purchase Price.

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

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<PAGE>   13
     (b)  The Purchase Price to be paid by the Company on the Closing Date and
on each Distribution Date following a Due Period during which New Principal
Receivables are conveyed to the Company shall be paid in cash (including netting
against other payments).

     Section 3.02.  Adjustments to Purchase Price.  The Purchase Price shall be
adjusted on each Distribution Date (a "Credit Adjustment") with respect to any
Receivable previously conveyed to the Company by HRAC which has since been
reversed because of a rebate, refund, unauthorized charge or billing error to a
cardholder because such Receivable was created in respect of merchandise which
was refused or returned by a cardholder. The amount of such adjustment shall
equal (x) the reduction in the principal balance of such Receivable resulting
from the occurrence of such event multiplied by (y) the quotient (expressed as a
percentage) of (i) the Purchase Price for Principal Receivables payable on such
Distribution Date computed in accordance with Section 3.01(a) divided by (ii)
the Principal Receivables paid for on such date pursuant to such Section. In the
event that an adjustment pursuant to this Section 3.02 causes the Purchase Price
to be a negative number, HRAC agrees that, not later than 1:00 P.M. New York
City time on such Distribution Date, HRAC shall pay to the Company an amount
equal to the amount by which the Purchase Price minus the Credit Adjustment
would be reduced below zero.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

     Section 4.01.  Representations and Warranties of HRAC Relating to HRAC.
HRAC hereby represents and warrants to, and agrees with, the Company as of the
Closing Date and on each Addition Date, that:

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

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

     (c)  Due Authorization.  The execution, delivery and performance of this
Agreement and any other document or instrument delivered pursuant hereto,
including any Supplemental Conveyance to which HRAC is a party (such other
documents or instruments, collectively, the "Conveyance Papers"), and the
consummation of the transactions provided for in this Agreement and the
Conveyance Papers have been duly authorized by HRAC by all necessary corporate
action on the part of HRAC.

                                       10
<PAGE>   14
     (d)  No Conflict.  The execution and delivery of this Agreement and the
Conveyance Papers by HRAC, the performance of the transactions contemplated by
this Agreement and the Conveyance Papers, and the fulfillment of the terms of
this Agreement and the Conveyance Papers applicable to HRAC 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 HRAC is a party or by which it or any of its
properties are bound.

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

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

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

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

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

     (a)  Representations and Warranties.  HRAC hereby represents and warrants
to the Company as of the date of this Agreement, as of the Closing Date and,
with respect to Additional Accounts, as of the related Addition Date that:

          (i)    this Agreement and, in the case of Additional Accounts, the
     related Supplemental Conveyance, each constitutes a legal, valid and
     binding obligation of HRAC enforceable against HRAC in accordance with its
     terms, except as such enforceability may

                                       11
<PAGE>   15
     be limited by applicable bankruptcy, insolvency, reorganization, moratorium
     or other similar laws affecting creditors' rights generally from time
     to time in effect or general principles of equity;

          (ii)   as of the Closing Date with respect to Initial Accounts, and as
     of the related Additional Cut-Off Date with respect to Additional Accounts,
     Schedule I to this Agreement, as supplemented to such date, is an accurate
     and complete listing in all material respects of all the Accounts as of the
     Closing Date or such Additional Cut-Off 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 true and correct in all material
     respects as of the Closing Date or such applicable Additional Cut-Off Date,
     as the case may be;

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

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

          (v)    this Agreement or, in the case of Additional Accounts, the
     related Supplemental Conveyance constitutes a valid sale, transfer and
     assignment to the Company of all right, title and interest of HRAC in the
     Receivables and the proceeds thereof and the Recoveries payable pursuant to
     this Agreement;

          (vi)   on the Closing Date or on the Additional Cut-Off Date, as
     applicable, each related Initial Account or each related Additional
     Account, as applicable, is an Eligible Account;

          (vii)  on the Closing Date or on the applicable Additional Cut-Off
     Date, as applicable, each Receivable generated under the related Initial
     Account or Additional Account , as applicable, is an Eligible Receivable;

          (viii) as of the date of the creation of any new Receivable, such
     Receivable is an Eligible Receivable; and

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

     (b)  Notice of Breach.  The representations and warranties set forth in
this Section 4.02 shall survive the transfer and assignment of the Receivables
to the Company. Upon discovery by either HRAC or the Company of a breach of any
of the representations and warranties set forth in this Section 4.02, the party
discovering such breach shall give written notice to the other party, the Owner
Trustee and the Indenture Trustee within three Business Days following such
discovery; provided that the failure to give notice within three Business Days
does not preclude subsequent notice. HRAC hereby acknowledges that the Company
intends to rely on the representations hereunder in connection with
representations made by the Company to secured

                                       12

<PAGE>   16
parties, assignees or subsequent transferees including but not limited to
transfers made by the Company to the Trust pursuant to the Transfer and
Servicing Agreement and by the Trust to the Indenture Trustee pursuant to the
Indenture and that the Owner Trustee and the Indenture Trustee may enforce such
representations directly against HRAC.

     Section 4.03.  Representations and Warranties of the Company.  As of the
Closing Date and on each Addition Date, the Company hereby represents and
warrants to, and agrees with, HRAC that:

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

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

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

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

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

     (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 the Company in connection with the execution and
delivery by the Company of this Agreement and the Conveyance Papers and the
performance of the transactions contemplated by

                                       13

<PAGE>   17
this Agreement and the Conveyance Papers have been duly obtained, effected or
given and are in full force and effect.

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

     Section 4.04.  Assignment of Rights to the Company.  HRAC also assigns to
the Company its rights as to the representations and warranties (a) made to HRAC
by Household Bank (SB) as set forth in Sections 4.01 and 4.02 of the Receivables
Purchase Agreement, dated _______, 2001, by and between HRAC and Household Bank
(SB) and (b) made to HRAC by Household Bank (SB) and HRSI Funding, Inc., as set
forth in Sections 4.01, 4.02 and 4.04 of the Receivables Purchase Agreement,
dated ________, 2001, among HRAC, Household Bank (SB) and HRSI Funding, Inc.,
provided, however, that if the Company chooses to exercise its rights against
HRAC under this Article hereto, then HRAC will, nonetheless, in such case retain
all of its rights against Household Bank (SB) and HRSI Funding, Inc. under the
before mentioned Receivables Purchase Agreements.

                                   ARTICLE V

                                   COVENANTS

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

     (a)  Receivables Not To Be Evidenced by Promissory Notes.  Except in
connection with its enforcement or collection of an Account, HRAC 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 as a result of any action by HRAC
it shall be deemed to be an Ineligible Receivable in accordance with Section
6.01(a) and shall be reassigned to HRAC in accordance with Section 6.01(b)

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

     (c)  Account Allocations.  In the event that HRAC is unable for any reason
to transfer Receivables to the Company in accordance with the provisions of this
Agreement (including, without limitation, by reason of the application of the
provisions of Section 8.02 or any order of any Governmental Authority), then, in
any such event, HRAC agrees (except as

                                       14

<PAGE>   18
prohibited by any such order) to allocate and pay to the Company, after the date
of such inability, all amounts that the Company will be required to allocate and
pay to the Trust pursuant to Section 2.11 of the Transfer and Servicing
Agreement.

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

     (e)  Notice of Liens.  HRAC shall notify the Company promptly after
becoming aware of any Lien on any Receivable other than the conveyances
hereunder, under the Transfer and Servicing Agreement and under the Indenture.

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

     (g)  Credit Agreements and Guidelines.  Subject to compliance with all
Requirements of Law, HRAC (or other Account Owner if HRAC is not the Account
Owner) or the Servicer may change the terms and provisions of the applicable
Credit Agreements or the applicable Credit Guidelines of HRAC (or other Account
Owner if HRAC is not the Account Owner) or 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, HRAC (or other Account Owner if
HRAC is not the Account Owner) or the Servicer will not take any action unless
(i) at the time of such action, HRAC (or other Account Owner, as the case may
be) or the Servicer 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 HRAC (or other Account Owner,
as the case may be) or serviced by the Servicer 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 HRAC or other Account Owner, as the case may be, and an
unrelated third party or by the terms of the Credit Agreements.

     (h)  Approval and Official Records.  HRAC shall cause this Agreement to be
duly approved by the HRAC's Board of Directors, and HRAC shall maintain this
Agreement as a part of the official records of HRAC for the term of this
Agreement.

                                   ARTICLE VI

                             REPURCHASE OBLIGATION

     Section 6.01.  Reassignment of Ineligible Receivables.

     (a)  In the event any representation or warranty under Section 4.02(a)(ii),
(iii), (iv), (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 as a result of such breach the

                                       15

<PAGE>   19
Company is required to accept reassignment of Ineligible Receivables previously
sold by HRAC to the Company pursuant to Section 2.05(a) of the Transfer and
Servicing Agreement, HRAC shall accept reassignment of the Company's interest in
such Ineligible Receivables on the terms and conditions set forth in Section
6.01(b).

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

     Section 6.02.  Reassignment of Trust Portfolio.  In the event any
representation or warranty set forth in Section 4.01(a), (c), (d), (f) or (g) or
Section 4.02(a)(i) or (a)(v) is not true and correct in any material respect and
as a result of such breach the Company is required to accept a reassignment of
the Receivables previously sold by HRAC to the Company pursuant to Section 2.06
of the Transfer and Servicing Agreement, HRAC shall be obligated to accept a
reassignment of the Company's interest in such Receivables on the terms set
forth below.

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

                                       16
<PAGE>   20

                                  ARTICLE VII

                              CONDITIONS PRECEDENT

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

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

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

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

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

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

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

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

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

                                       17
<PAGE>   21
     (b)  Payment or provision for payment of the Purchase Price in accordance
with the provision of Section 3.01 hereof shall have been made; and

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

                                  ARTICLE VIII

                         TERM AND PURCHASE TERMINATION

     Section 8.01.  Term.  This Agreement shall commence as of the date of
execution and delivery hereof and shall continue until the termination of the
Trust as provided in Article VIII of the Trust Agreement.

     Section 8.02.  Purchase Termination.  If HRAC shall fail generally to, or
admit in writing its inability to, pay its debts as they become due; or if a
proceeding shall have been instituted in a court having jurisdiction in the
premises seeking a decree or order for relief in respect of HRAC in an
involuntary case under any Debtor Relief Law, or for the appointment of a
receiver, liquidator, assignee, trustee, custodian, sequestrator, conservator or
other similar official of HRAC or for any substantial part of the HRAC's
property, or for the winding-up or liquidation of HRAC's affairs and, if
instituted against HRAC, any such proceeding shall continue undismissed or
unstayed and in effect, for a period of 60 consecutive days, or any of the
actions sought in such proceeding shall occur; or if HRAC shall commence a
voluntary case under any Debtor Relief Law, or if HRAC shall consent to the
entry of an order for relief in an involuntary case under any Debtor Relief Law,
or consent to the appointment of or taking possession by a receiver, liquidator,
assignee, trustee, custodian, sequestrator, conservator or other similar
official of, or for, any substantial part of its property, or any general
assignment for the benefit of its creditors; or HRAC or any subsidiary of HRAC
shall have taken any corporate action in furtherance of any of the foregoing
actions (each an "Insolvency Event"); then HRAC shall immediately cease to
transfer Principal Receivables to the Company and shall promptly give notice to
the Company, the Owner Trustee and the Indenture Trustee of such Insolvency
Event. Notwithstanding any cessation of the transfer to the Company of
additional Principal Receivables, Principal Receivables transferred to the
Company prior to the occurrence of such Insolvency Event and 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 property of the Company available for transfer by the
Company to the Trust pursuant to the Transfer and Servicing Agreement.

                                       18

<PAGE>   22

                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

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

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

     Section 9.03.  Notices.  All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, return receipt requested, to (a) in
the case of the HRAC, 2700 Sanders Road, Prospect Heights, Illinois 60070,
Attention: General Counsel, (b) in the case of the Company, 2700 Sanders Road,
Prospect Heights, Illinois 60070, Attention: President, (c) in the case of the
Owner Trustee, Wilmington Trust Company, at Rodney Square North, 1100 North
Market Street, Wilmington, Delaware 19890-0001, Attention: Corporate Trust
Administration (facsimile no. (302) 651-8882), (d) in the case of the Indenture
Trustee, U.S. Bank National Association, 111 East Wacker Drive, Chicago,
Illinois 60601, Attention: Corporate Trust Department, (e) in the case of the
Servicer, Household Finance Corporation, 2700 Sanders Road, Prospect Heights,
Illinois 60070, Attention: S.H. Smith, Assistant Treasurer, (f) in the case of
Fitch, Fitch, Inc., One State Street Plaza, New York, New York 10004, Attention:
ABS Surveillance, (g) in the case of Moody's, Moody's Investors Service Inc.,
99 Church Street, New York, New York 10007, Attention: ABS Monitoring Group, or
(h) in the case of Standard & Poor's, Standard & Poor's Ratings Group, 55 Water
Street, New York, New York 10041, Attention: Credit Card ABS; or, as to each
party, at such other address as shall be designated by such party in a written
notice to each other party.

                                       19
<PAGE>   23
     Section 9.04.  Severability of Provisions.  If any one or more of the
covenants, agreements, provisions or terms of this Agreement or any Conveyance
Paper shall for any reason whatsoever be held invalid, then such covenants,
agreements, provisions, or terms shall be deemed severable from the remaining
covenants, agreements, provisions, and terms of this Agreement or any Conveyance
Paper and shall in no way affect the validity or enforceability of the other
provisions of this Agreement or of any Conveyance Paper.

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

     Section 9.06.  Acknowledgement and Agreement of HRAC.  By execution below,
HRAC expressly acknowledges and agrees that all of the Company's right, title,
and interest in, to, and under this Agreement, including, without limitation,
all of the Company's right, title, and interest in and to the Receivables
purchased pursuant to this Agreement, shall be assigned by the Company to the
Owner Trustee, and shall be assigned by the Owner Trustee to the Indenture
Trustee for the benefit of the beneficiaries of the Trust, including the
Noteholders, and HRAC consents to such assignments. HRAC further agrees that
notwithstanding any claim, counterclaim, right of setoff or defense which it may
have against the Company, due to a breach by the Company of this Agreement or
for any other reason, and notwithstanding the bankruptcy of the Company or any
other event whatsoever, HRAC's sole remedy shall be a claim against the Company
for money damages, and then only to the extent of funds received by the Company
pursuant to the Transfer and Servicing Agreement, and in no event shall HRAC
assert any claim on or any interest in the Receivables or any proceeds thereof
or take any action which would reduce or delay receipt by the Owner Trustee of
collections with respect to the Receivables. Additionally, HRAC agrees for the
benefit of the Noteholders that any amounts payable by HRAC to the Company
hereunder which are to be paid by the Company to the Owner Trustee and pledged
to the Indenture Trustee for the benefit of the Noteholders shall be paid by
HRAC, on behalf of the Company, directly to the Owner Trustee.

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

                                       20

<PAGE>   24
     Section 9.08.  No Waiver; Cumulative Remedies.  No failure to exercise and
no delay in exercising, on the part of the Company or HRAC, any right, remedy,
power or privilege hereunder, shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, remedy, power or privilege hereunder
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege, provided that where the Company exercises its
rights assigned to the Company by HRAC as per Section 4.04 of this Agreement,
then it will not exercise any of its rights under Section 4.01 and 4.02 hereto
against HRAC. Notwithstanding the foregoing and subject to Section 9.06, the
rights, remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.

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

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

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

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

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

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

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

                                       21

<PAGE>   25
     IN WITNESS WHEREOF, the Company and HRAC have caused this Agreement to be
duly executed by their respective officers as of the day and year first above
written.

                                       HOUSEHOLD RECEIVABLES ACQUISITION
                                       COMPANY

                                       By: _____________________________________
                                           Name:
                                           Title:

                                       HRSI FUNDING, INC. II

                                       By: _____________________________________
                                           Name:
                                           Title:

                                       22

<PAGE>   26

                                                                       EXHIBIT A

                        FORM OF SUPPLEMENTAL CONVEYANCE

                        (As required by Section 2.05 of
            the Amended and Restated Receivables Purchase Agreement)

     SUPPLEMENTAL  CONVEYANCE  No. ____ dated as of  ____________  __,  ____,
by and between  HOUSEHOLD RECEIVABLES  ACQUISITION  COMPANY ("HRAC"),  and HRSI
FUNDING,  INC. II ("the Company"),  pursuant to the Receivables Purchase
Agreement referred to below.

                                  W I T N E S S E T H:

     WHEREAS, HRAC and the Company are parties to an Receivables Purchase
Agreement, dated as of ________, 2001 (hereinafter as such agreement may have
been, or may from time to time be, amended, supplemented or otherwise modified,
the "Receivables Purchase Agreement");

     WHEREAS, pursuant to the Receivables Purchase Agreement, HRAC wishes to
designate Additional Accounts to be included as Accounts and HRAC wishes to
convey its right, title and interest in the Receivables of such Additional
Accounts, whether now existing or hereafter created, to the Company pursuant to
the Receivables Purchase Agreement; and

     WHEREAS, the Company is willing to accept such designation and conveyance
subject to the terms and conditions hereof.

     NOW, THEREFORE, HRAC and the Company hereby agree as follows:

     1.   Defined  Terms.  All capitalized  terms used herein shall have the
meanings ascribed to them in the Receivables Purchase 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.  HRAC delivers herewith, or has
caused the delivery of, a computer file or microfiche list containing a true and
complete schedule identifying all such Additional Accounts designated hereby
(the "Additional Accounts") and specifying for each such Additional 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 in
such Additional Account. Such computer file, microfiche list or other
documentation shall be as of the date of this Supplemental Conveyance
incorporated into and

                                      A-1

<PAGE>   27
made part of this Supplemental Conveyance and is marked as Schedule I to this
Supplemental Conveyance.

     3.   Conveyance of Receivables.

     (a)  HRAC does hereby sell, transfer, assign, set over and otherwise convey
to the Company, without recourse except as provided in the Receivables Purchase
Agreement, all its right, title and interest in, to and under the Receivables
generated by such Additional Accounts, existing at the close of business on the
Additional Cut-Off Date and thereafter created until termination of the
Receivables Purchase Agreement pursuant to Article VIII thereof, all Recoveries
with respect to such Accounts, all monies due or to become due and all amounts
received or receivable with respect thereto and all "proceeds" (including,
without limitation, "proceeds" as defined in Article 9 of the UCC) thereof.

     (b)  In connection with such sale, HRAC agrees to record and file, at its
own expense, one or more financing statements (and continuation statements with
respect to such financing statements when applicable) with respect to the
Receivables, existing on the Additional Cut-Off Date and thereafter created, for
the transfer of accounts and general intangibles meeting the requirements of
applicable state law in such manner and in such jurisdictions as are necessary
to perfect the sale and assignment of and the security interest in the
Receivables to the Company, and to deliver a file-stamped copy of such financing
statement or other evidence of such filing to the Company.

     (c)  In connection with such sale, HRAC further agrees, at its own expense,
on or prior to the date of this Supplemental Conveyance, to indicate in the
appropriate computer files or microfiche list that all Receivables created in
connection with the Additional Accounts designated hereby have been conveyed to
the Company pursuant to this Supplemental Conveyance.

     (d)  The parties hereto intend that the conveyance described in
Section 3(a) constitute an absolute sale consistent with the intent expressed in
Section 2.01(d) of the Receivables Purchase Agreement. In the event, however,
that notwithstanding such intent a court of competent jurisdiction were to hold
that the transactions evidenced hereby constitute a loan and not a purchase and
sale, it is the intention of the parties hereto that this Supplemental
Conveyance shall constitute a security agreement under applicable law, and that
HRAC shall be deemed to have granted, and HRAC does hereby grant, to the Company
a first priority perfected security interest in all of the HRAC's right, title
and interest, whether now owned or hereafter acquired, in, to and under all
Receivables existing on the Additional Cut-Off Date in the Additional Accounts
and thereafter created from time to time until the termination of the
Receivables Purchase Agreement pursuant to Article VIII thereof, all Recoveries
with respect to such Accounts, all monies due or to become due and all amounts
received or receivable with respect thereto, and all proceeds (including,
without limitation, "proceeds" as defined in Article 9 of the UCC) thereof.

     4.   Acceptance by the Company.  The Company hereby acknowledges its
acceptance of all right, title and interest to the property, now existing and
hereafter created, conveyed to the Company pursuant to Section 3 of this
Supplemental Conveyance, and declares that it shall maintain such right, title
and interest. The Company further acknowledges that, prior

                                      A-2
<PAGE>   28
to or simultaneously with the execution and delivery of this Supplemental
Conveyance, HRAC delivered to the Company the computer file or microfiche list
described in Section 2 of this Supplemental Conveyance.

     5.   Representations and Warranties of HRAC.  HRAC hereby represents and
warrants to the Company as of the date of this Supplemental Conveyance and as of
the Addition Date that:

     (a)  Legal, Valid and Binding Obligation.  This Supplemental Conveyance
constitutes a legal, valid and binding obligation of HRAC enforceable against
HRAC 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;

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

     (c)  No Liens.  Each Receivable in an Additional Account  designated
hereby has been conveyed to the Company free and clear of any Lien;

     (d)  Eligibility of Receivables.  On the Additional Cut-Off Date, each
Receivable existing in an Additional Account designated hereby is an Eligible
Receivable and as of the date of creation of any Receivable in an Additional
Account designated hereby, such Receivable is an Eligible Receivable;

     (e)  Selection Procedures.  No selection procedure believed by HRAC to be
adverse to the interests of the Company or the Noteholders was utilized in
selecting the Additional Accounts;

     (f)  Transfer of Receivables.  This Supplemental Conveyance constitutes a
valid sale, transfer and assignment to the Company of all right, title and
interest of HRAC in the Receivables arising in the Additional Accounts
designated hereby now existing or hereafter created, all monies due or to become
due and all amounts received with respect thereto and the "proceeds" (including,
without limitation, "proceeds" as defined in Article 9 of the UCC) thereof and
the Recoveries with respect thereto;

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

     (h)  No Violation.  The execution and delivery of this Supplemental
Conveyance by HRAC, the performance of the transactions contemplated by this
Supplemental Conveyance and the fulfillment of the terms hereof applicable to
HRAC will not conflict with or violate any Requirements of Law applicable to
HRAC;

                                      A-3
<PAGE>   29
     (i)  No Proceedings.  There are no proceedings or investigations, pending
or, to the best knowledge of HRAC, threatened against HRAC before any
Governmental Authority (i) asserting the invalidity of this Supplemental
Conveyance, (ii) seeking to prevent the consummation of any of the transactions
contemplated by this Supplemental Conveyance, (iii) seeking any determination or
ruling that, in the reasonable judgment of HRAC, would materially and adversely
affect the performance by HRAC of its obligations under this Supplemental
Conveyance or (iv) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Supplemental Conveyance;
and

     (j)  All Consents.  All authorizations, consents, orders or approvals of
any Governmental Authority required to be obtained by HRAC in connection with
the execution and delivery of this Supplemental Conveyance by HRAC and the
performance of the transactions contemplated by this Supplemental Conveyance by
HRAC, have been obtained.

     6.   Ratification of the Receivables Purchase Agreement.  The Receivables
Purchase Agreement is hereby ratified, and all references to the "Receivables
Purchase Agreement," to "this Agreement" and "herein" shall be deemed from and
after the Addition Date to be a reference to the Receivables Purchase Agreement
as supplemented by this Supplemental Conveyance. Except as expressly amended
hereby, all the representations, warranties, terms, covenants and conditions of
the Receivables Purchase Agreement shall remain unamended and shall continue to
be, and shall, remain, in full force and effect in accordance with its terms and
except as expressly provided herein shall not constitute or be deemed to
constitute a waiver of compliance with or consent to non-compliance with any
term or provision of the Receivables Purchase Agreement.

     7.   Counterparts.  This Supplemental Conveyance may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument.

     8.   Governing Law.  THIS SUPPLEMENTAL CONVEYANCE SHALL BE CONTRUED 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>   30
     IN WITNESS WHEREOF, the undersigned have caused this Supplemental
Conveyance to be duly executed and delivered by their respective duly authorized
officers on the day and the year first above written.

Dated: ____________ ___, 200_          HOUSEHOLD RECEIVABLES ACQUISITION
                                         COMPANY

                                       By: _____________________________________
                                           Name:
                                           Title:

                                       HRSI FUNDING, INC. II

                                       By: _____________________________________
                                           Name:
                                           Title:

                                      A-5

<PAGE>   31
                                                                   Schedule I to
                                                                    Supplemental
                                                                      Conveyance

                              ADDITIONAL ACCOUNTS

         COMPUTER FILES CONTAINING ACCOUNT INFORMATION DELIVERED TO THE
                     COMPANY ARE INCORPORATED BY REFERENCE

                                      I-1

<PAGE>   32
                                                                      Schedule I

                                LIST OF ACCOUNTS

         COMPUTER FILES CONTAINING ACCOUNT INFORMATION DELIVERED TO THE
                     COMPANY ARE INCORPORATED BY REFERENCE

                                      I-2<PAGE>   1
________________________________________________________________________________

                               HRSI FUNDING, INC.,

                            HOUSEHOLD BANK (SB), N.A.

                                       and

                    HOUSEHOLD RECEIVABLES ACQUISITION COMPANY

                         RECEIVABLES PURCHASE AGREEMENT

                            Dated as of _______, 2001

________________________________________________________________________________

<PAGE>   2

                               TABLE OF CONTENTS

<TABLE>
<CAPTION>
                                                                                         Page
                                                                                         ----
<S>                                                                                      <C>

ARTICLE I DEFINITIONS 1

  Section 1.01.  Definitions............................................................   1
  Section 1.02.  Other Definitional Provisions..........................................   3

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

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

ARTICLE III CONSIDERATION AND PAYMENT...................................................   5

  Section 3.01.  Purchase Price.........................................................   5

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

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

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

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

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

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

ARTICLE VII CONDITIONS PRECEDENT........................................................  12

  Section 7.01.  Conditions to HRAC's Obligations Regarding Initial Receivables.........  12
  Section 7.02.  Conditions Precedent to the HRSIFI's Obligations.......................  13

ARTICLE VIII TERM AND PURCHASE TERMINATION..............................................  13

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

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

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

                                       i
<PAGE>   3

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

EXHIBIT A.............................................................................

FORM OF SUPPLEMENTAL CONVEYANCE.......................................................

Schedule I............................................................................   I-1

LIST OF ACCOUNTS......................................................................   I-1
</TABLE>

                                       ii

<PAGE>   4
     RECEIVABLES PURCHASE AGREEMENT, dated as of ________, 2001 by and among
HRSI FUNDING, INC., a Nevada Corporation ("HRSIFI"), HOUSEHOLD RECEIVABLES
ACQUISITION COMPANY, a Delaware corporation ("HRAC"), and HOUSEHOLD BANK
(SB), N.A., a national banking association (the "Bank").

                              W I T N E S S E T H:

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

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

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

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

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

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

                                   ARTICLE I

                                  DEFINITIONS

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

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

<PAGE>   5
     "Account Owner" shall mean HRSIFI, the Bank, or any entity which is the
issuer of the revolving credit relating to an Account pursuant to a Credit
Agreement and/or a seller of Receivables to HRAC.

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

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

     "Closing Date" shall mean _________, 2001.

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

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

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

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

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

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

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

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

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

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

                                       2
<PAGE>   6
     "Initial Account" shall mean each Account included in the computer file
delivered to the Indenture Trustee as of the Closing Date.

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

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

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

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

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

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

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

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

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

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

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

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

     Section 1.02.  Other Definitional Provisions.

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

                                       3

<PAGE>   7
     The words "hereof," "herein" and "hereunder" and words of similar import
when used in this Agreement or any Conveyance Paper shall refer to this
Agreement as a whole and not to any particular provision of this Agreement; and
Section, Subsection, Schedule and Exhibit references contained in this Agreement
are references to Sections, Subsections, Schedules and Exhibits in or to this
Agreement unless otherwise specified.

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

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

                                   ARTICLE II

                     PURCHASE AND CONVEYANCE OF RECEIVABLES

     Section 2.01.  Purchase.

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

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

     (c)  In connection with each such Conveyance, HRSIFI further agrees that it
will, at its own expense, (i) on or prior to the Closing Date, indicate in its
computer files that, Receivables created in connection with the Initial Accounts
have been conveyed to HRAC in accordance with this Agreement and have been
conveyed by HRAC to the Company in accordance with the Receivables Purchase
Agreement by and between HRAC and the Company and have been conveyed by the
Company to the Trust pursuant to the Transfer and Servicing Agreement and have
been pledged by the Trust to the Indenture Trustee pursuant to the Indenture for
the benefit of the Noteholders by including in such computer files the code that
identifies each such Account and (ii)

                                       4

<PAGE>   8
on or prior to the Closing Date, to deliver to HRAC, or its designee, a computer
file or microfiche list containing a true and complete list of all such Accounts
specifying for each such Account, as of the Closing Date, (1) its account
number, (2) the aggregate amount outstanding in such Account and (3) the
aggregate amount of Principal Receivables in such Account. Each such computer
file or microfiche list, as supplemented from time to time to reflect Removed
Accounts, shall be marked as Schedule I to this Agreement, shall be delivered to
HRAC, or its designee, and is hereby incorporated into and made a part of this
Agreement. HRSIFI further agrees not to alter the code referenced in clause (i)
of this paragraph with respect to any Account during the term of this Agreement
unless and until such Account becomes a Removed Account.

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

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

                                  ARTICLE III

                           CONSIDERATION AND PAYMENT

     Section 3.01.  Purchase Price.

     (a)  The "Purchase Price" for the Receivables in the Initial Accounts and
the related Purchased Assets conveyed to HRAC under this Agreement shall be
payable on the Closing Date and shall be an amount equal to 100% of the
aggregate balance of Principal Receivables in those Accounts as of the Closing
Date, plus the present value of anticipated excess spread, computed by taking
into account factors such as historical losses, servicing fees, delinquencies
and paydown rates, yield and such other factors as HRSIFI and HRAC mutually
agree (and discounted to take into account any uncertainty as to future
performance matching

                                       5

<PAGE>   9
historical performances) will result in a Purchase Price determined to be the
fair market value of such Purchased Assets. This computation of initial purchase
price shall assume no reinvestment in new Receivables.

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

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

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

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

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

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

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

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

     (f)  No Proceedings.  There are no proceedings or investigations pending
or, to the best knowledge of the Bank, threatened against the Bank, before any
Governmental Authority (i) asserting the invalidity of this Agreement,
(ii) seeking to prevent the consummation of any of

                                       6

<PAGE>   10
the transactions contemplated by this Agreement, (iii) seeking any determination
or ruling that, in the reasonable judgment of the Bank, would materially and
adversely affect the performance by the Bank of its obligations under this
Agreement, (iv) seeking any determination or ruling that would materially and
adversely affect the validity or enforceability of this Agreement or (v) seeking
to affect adversely the income tax attributes of the Trust under the United
States Federal or Delaware income tax systems.

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

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

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

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

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

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

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

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

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

                                       7
<PAGE>   11
          (vi)   on the Closing Date, each Receivable generated under an Initial
     Account is an Eligible Receivable; and

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

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

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

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

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

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

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

     (e)  No Proceedings.  There are no proceedings or investigations pending
or, to the best knowledge of HRAC, threatened against HRAC, before any
Governmental Authority (i) asserting the invalidity of this Agreement,
(ii) seeking to prevent the consummation of any of the

                                       8
<PAGE>   12
transactions contemplated by this Agreement, (iii) seeking any determination or
ruling that, in the reasonable judgment of HRAC, would materially and adversely
affect the performance by HRAC of its obligations under this Agreement or
(iv) seeking any determination or ruling that would materially and adversely
affect the validity or enforceability of this Agreement.

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

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

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

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

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

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

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

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

                                       9

<PAGE>   13
     All Consents.  All authorizations, consents, orders or approvals of or
registrations or declarations with any Governmental Authority required to be
obtained, effected or given by HRSIFI in connection with the execution and
delivery by HRSIFI of this Agreement and the performance of the transactions
contemplated by this Agreement have been duly obtained, effected or given and
are in full force and effect.

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

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

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

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

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

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

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

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

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

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

                                       10

<PAGE>   14
                                   ARTICLE V

                                   COVENANTS

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

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

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

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

                                   ARTICLE VI

                             REPURCHASE OBLIGATION

     Section 6.01.  Reassignment of Ineligible Receivables.

     (a)  In the event any representation or warranty under Section 4.02(a)(ii),
(iii), (iv), (v), (vi) or (vii) is not true and correct in any material respect
as of the date specified therein with respect to any Receivable or the related
Account and as a result of such breach HRAC is required to accept reassignment
of Ineligible Receivables previously sold by HRSIFI to HRAC pursuant to Section
6.01(b) of the Receivables Purchase Agreement between HRAC and the Company, the
Bank shall accept reassignment of HRAC's interest in such Ineligible Receivables
on the terms and conditions set forth in Section 6.01(b) of this Agreement.

     (b)  The Bank shall accept reassignment from HRAC of any Ineligible
Receivables previously sold by HRSIFI to HRAC on the date on which such
reassignment obligation arises, and shall pay for such reassigned Ineligible
Receivables by paying to HRAC, not later than 3:00 p.m., New York City time on
such date, an amount equal to the unpaid principal balance of such Ineligible
Receivables plus accrued and unpaid finance charges at the annual percentage
rate applicable to such Receivables from the last date billed through the end of
the Due Period in which such reassignment obligation arises. Upon reassignment
of such Ineligible Receivables, HRAC shall automatically and without further
action be deemed to sell, transfer, assign, set-over and otherwise convey to the
Bank, without recourse, representation or warranty, all the right, title and
interest of HRAC in and to such Ineligible Receivables, all Recoveries

                                       11

<PAGE>   15
related thereto, all monies and amounts due or to become due with respect
thereto and all proceeds thereof; and such reassigned Ineligible Receivables
shall be treated by HRAC as collected in full as of the date on which they were
transferred. HRAC shall execute such documents and instruments of transfer or
assignment and take such other actions as shall reasonably be requested by the
Bank to effect the conveyance of such Ineligible Receivables and other property
pursuant to this subsection.

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

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

                                  ARTICLE VII

                              CONDITIONS PRECEDENT

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

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

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

     (c)  HRSIFI shall have delivered to HRAC, or its designee, a computer file
or microfiche list containing a true and complete list of all Initial Accounts
identified by account number and by the Receivables balance as of the Closing
Date and (ii) HRSIFI and the Bank

                                       12

<PAGE>   16
substantially performed all other obligations required to be performed by the
provisions of this Agreement;

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

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

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

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

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

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

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

                                  ARTICLE VIII

                         TERM AND PURCHASE TERMINATION

                                       13

<PAGE>   17
     Section 8.01.  Term.  This Agreement shall commence as of the date of
execution and delivery hereof and shall continue until the earlier of (i) the
termination of the Trust as provided in Article VIII of the Trust Agreement or
(ii) such time when all amounts payable under all Receivables purchased under
this agreement have been paid out by the Trust.

                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

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

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

     Section 9.03.  Notices.  All demands, notices and communications hereunder
shall be in writing and shall be deemed to have been duly given if personally
delivered at or mailed by registered mail, return receipt requested, to (a) in
the case of the Bank, 1111 Town Center Drive, Las Vegas, Nevada 89134,
Attention: General Counsel, (b) in the case of HRAC, 2700 Sanders Road, Prospect
Heights, IL 60070, Attention: General Counsel, (c) HRSIFI , 2700 Sanders Road,
Prospect Heights, IL 60070, Attention: Legal Department, (d) in the case of the
Owner Trustee, Rodney Square North, 1100 North Market Street, Wilmington,
DE 19890-0001, (e) in the case of the Indenture Trustee, 111 East Wacker Drive,
Chicago, Illinois, 60601, Attention: Corporate Trust Department, (f) in the case
of the Servicer, Household Finance Corporation, 2700 Sanders Road, Prospect
Heights, Illinois 60070, Attention: S.H. Smith, Assistant Treasurer, (g) in
the case of Fitch, Fitch, Inc., One State Street Plaza, New York, NY 10004,
Attention: ABS Surveillance,

                                       14

<PAGE>   18
(h) in the case of Moody's, Moody's Investors Service Inc., 99 Church Street,
New York, NY 10007, Attention: ABS Monitoring Group, or (i) in the case of
Standard & Poor's, Standard & Poor's Ratings Group, 55 Water Street, New York,
NY 10041, Attention: Credit Card ABS; or, as to each party, at such other
address as shall be designated by such party in a written notice to each other
party.

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

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

     Section 9.06.  Acknowledgement and Agreement of the Bank and HRSIFI.  By
execution below, each of HRSIFI and the Bank expressly acknowledges and agrees
that all of HRAC's right, title, and interest in, to, and under this Agreement,
including, without limitation, all of HRAC's right, title, and interest in and
to the Receivables purchased pursuant to this Agreement, shall be assigned by
HRAC to the Company, and shall be assigned by the Company to the Owner Trustee,
and shall be assigned by the Owner Trustee to the Indenture Trustee for the
benefit of the beneficiaries of the Trust, including the Noteholders, and each
of HRSIFI and the Bank consents to such assignments. Each of HRSIFI and the Bank
further agrees that notwithstanding any claim, counterclaim, right of setoff or
defense which it may have against HRAC, due to a breach by HRAC of this
Agreement or for any other reason, and notwithstanding the bankruptcy of HRAC or
any other event whatsoever, each of HRSIFI and the Bank's sole remedy shall be
a claim against HRAC for money damages, and then only to the extent of funds
received by HRAC pursuant to the Receivables Purchase Agreement between HRAC and
the Company, and in no event shall the Bank or HRSIFI assert any claim on or any
interest in the Receivables or any proceeds thereof or take any action which
would reduce or delay receipt by the Company or the Owner Trustee of collections
with respect to the Receivables. Additionally, the Bank agrees for the benefit
of the Noteholders that any amounts payable by the Bank to HRAC hereunder which
are to be paid by HRAC to the Company then paid by the Company to the Owner
Trustee and pledged to the Indenture Trustee for the benefit of the Noteholders
shall be paid by the Bank, on behalf of HRAC, directly to the Company.
Additionally, the Bank agrees for the benefit of the Noteholders that any
amounts payable by the Bank to HRAC hereunder which are to be paid by HRAC to
the Company then paid by the Company to the Owner Trustee and pledged to the

                                       15

<PAGE>   19
Indenture Trustee for the benefit of the Noteholders shall be paid by the Bank,
on behalf of HRAC, directly to the Company. Additionally, HRSIFI agrees for the
benefit of the Noteholders that any amounts payable by HRSIFI to HRAC hereunder
which are to be paid by HRAC to the Company then paid by the Company to the
Owner Trustee and pledged to the Indenture Trustee for the benefit of the
Noteholders shall be paid by HRSIFI, on behalf of HRAC, directly to the Company.

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

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

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

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

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

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

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

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

                                       16

<PAGE>   20
and thereafter by the Company to the Trust pursuant to the Transfer and
Servicing Agreement and by the Trust and the Indenture Trustee pursuant to the
Indenture.

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

                                       17

<PAGE>   21

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

                                       HRSI FUNDING, INC.

                                       By: _____________________________________
                                           Name:
                                           Title:

                                       HOUSEHOLD BANK (SB), N.A.

                                       By: _____________________________________
                                           Name:
                                           Title:

                                       HOUSEHOLD RECEIVABLES ACQUISITION COMPANY

                                       By: _____________________________________
                                           Name:
                                           Title:

                                       18
<PAGE>   22
                                                                      Schedule I

                                LIST OF ACCOUNTS

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

                                      I-1

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