Document:

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                                                                    EXHIBIT 10.1

                                                                  EXECUTION COPY

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                   HOUSEHOLD AFFINITY FUNDING CORPORATION III,
                                   TRANSFEROR,

                         HOUSEHOLD FINANCE CORPORATION,
                                    SERVICER,

                                       and

                         HOUSEHOLD AFFINITY CREDIT CARD
                              MASTER NOTE TRUST I,
                                     ISSUER

                              AMENDED AND RESTATED
                        TRANSFER AND SERVICING AGREEMENT

                           Dated as of March 13, 2003,
                       amending and restating in full the
         Transfer and Servicing Agreement, dated as of February 18, 2003

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                                TABLE OF CONTENTS

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

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

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

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

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

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

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

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

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

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

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

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

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

         Section 2.10.  Removal of Accounts and Treatment of Defaulted Receivables.....................     26

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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                           TABLE OF CONTENTS (Cont'd.)

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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                           TABLE OF CONTENTS (Cont'd.)

                                    EXHIBITS

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

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

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

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

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

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

                                    SCHEDULES

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

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          This AMENDED AND RESTATED TRANSFER AND SERVICING AGREEMENT, dated as
of March 13, 2003, amending and restating in full the Transfer and Servicing
Agreement, dated as of February 18, 2003, among HOUSEHOLD AFFINITY FUNDING
CORPORATION III, a Delaware corporation, as Transferor; HOUSEHOLD FINANCE
CORPORATION, a Delaware corporation, as Servicer; and HOUSEHOLD AFFINITY CREDIT
CARD MASTER NOTE TRUST I, a statutory trust created and existing under the laws
of the State of Delaware.

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

                                    ARTICLE I

                                   DEFINITIONS

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

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

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

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

          "Additional Account" shall mean each Automatic Additional Account and
each Aggregate Addition Account.

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

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

          "Adverse Effect" shall mean, with respect to any action, that such
action will (a) result in the occurrence of an Amortization Event, a
Reinvestment Event or an Event of Default, (b) materially adversely affect the
amount or timing of distributions to be made to the Noteholders of any Series or

<PAGE>

Class pursuant to this Agreement, the Indenture or the related Indenture
Supplement or (c) materially adversely affect the rights and obligations of the
Series Enhancer.

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

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

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

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

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

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

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

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

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

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

          "Bank" shall mean Household Bank (SB), National Association, and its
successors and permitted assigns.

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          "Bank RPA" shall mean the Second Amended and Restated Receivables
Purchase Agreement, dated as of July 1, 2002, between the Bank and HRAC II, as
amended from time to time, and includes any other receivables purchase
agreement, substantially in the form of such agreement, entered into between the
Bank or HRAC II and an Account Owner or other Affiliated entity in the future.

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

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

          "Business Day" shall mean any day other than (a) a Saturday or Sunday
or (b) any other day on which national banking associations or state banking
institutions in New York City, New York, Delaware, Nevada or any other State in
which the principal executive offices of the Bank, the Servicer, the Owner
Trustee, the Indenture Trustee or other Account Owner, as the case may be, are
located, are authorized or obligated by law, executive order or governmental
decree to be closed or (c) for purposes of any particular Series, any other day
specified in the related Indenture Supplement.

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

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

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

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

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

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

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

          "Credit Guidelines" shall mean the respective policies and procedures
of the Bank, the Servicer, and/or any other Account Owner, as the case may be,
as such policies and procedures may be amended from time to time, (a) relating
to the operation of its credit business, which generally are applicable to its
portfolio of revolving credit accounts or, in the case of an Account Owner that
has only a

                                        3

<PAGE>

portion of its portfolio subject to a Receivables Purchase Agreement, applicable
to such portion of its portfolio, and in each case which are consistent with
prudent practice, including the policies and procedures for determining the
creditworthiness of Obligors and the extension of credit to Obligors, and (b)
relating to the maintenance of credit accounts and collection of receivables
created thereunder.

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

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

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

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

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

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

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

                                        4

<PAGE>

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

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

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

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

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

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

                  (b)  is payable in Dollars;

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

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

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

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

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

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

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

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

                                        5

<PAGE>

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

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

                  (a)  which has arisen in an Eligible Account;

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

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

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

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

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

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

                  (h)  which, at the time of transfer to the Trust, is not
     subject to any right of rescission, setoff, counterclaim or any other
     defense (including defenses arising out of violations of usury laws) of the
     Obligor, other than defenses arising out of applicable bankruptcy,

                                        6

<PAGE>

     insolvency, reorganization, moratorium or other similar laws affecting the
     enforcement of creditors' rights in general;

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

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

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

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

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

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

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

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

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

          "Funding" shall mean Household Affinity Funding Corporation III, a
Delaware corporation, and its successors and permitted assigns.

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

                                        7

<PAGE>

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

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

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

          "Indenture" shall mean the Amended and Restated Master Indenture,
dated as of March 13, 2003, between the Issuer and the Indenture Trustee, as the
same may be amended, supplemented or otherwise modified from time to time.

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

          "Indenture Trustee" shall mean The Bank of New York, a New York
banking corporation, in its capacity as trustee under the Indenture, its
successors in interest and any successor indenture trustee under the Indenture.

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

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

          "Initial Cut-Off Date" shall mean February 18, 2003.

          "Initial Issuance Date" shall mean February 18, 2003, the date the
Transferor Certificate is issued by the Trust to the Transferor pursuant to the
Trust Agreement.

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

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

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

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

----------
/1/ MasterCard is a registered trademark of MasterCard International
    Incorporated.

                                        8

<PAGE>

          "Issuer" shall mean the Trust.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

                                        9

<PAGE>

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

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

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

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

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

          "Quarter" shall mean the three consecutive Due Periods commencing in
January, April, July and October of each calendar year.

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

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

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

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

          "Receivables Purchase Agreement" shall mean the Bank RPA, the
Transferor RPA or the Sale Agreement, as applicable.

                                       10

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

          "Revolving Credit Agreement" shall mean the revolving credit agreement
by and between the Transferor and Household Finance Corporation, dated as of
February 18, 2003, as such agreement may be amended from time to time in
accordance therewith, and any substantially similar agreement entered into
between any lender and the Transferor or any Additional Transferor in the future
in accordance with the provisions hereof.

          "Sale Agreement" shall mean the Sale Agreement, dated February 18,
2003, between Household Affinity Funding Corporation II and the Transferor, as
amended from time to time, and includes any other sale agreement, substantially
in the form of such agreement, entered into between Household Affinity Funding
Corporation II and the Transferor in the future.

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

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

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

                                       11

<PAGE>

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

          "Transferor" shall mean (a) Funding, a special purpose corporation
incorporated in the State of Delaware, or its successor or permitted assigns
under this Agreement and (b) any Additional Transferor or Transferors.
References to "each Transferor" shall refer to each entity mentioned in the
preceding sentence and references to "the Transferor" shall refer to all of such
entities.

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

          "Transferor RPA" shall mean the Receivables Purchase Agreement, dated
as of February 18, 2003, between HRAC II and the Transferor, as amended,
supplemented or otherwise modified from time to time, and includes any other
receivables purchase agreement, substantially in the form of such agreement,
entered into between Transferor and an Account Owner or other Affiliated entity
in the future.

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

                                       12

<PAGE>

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

          "Transferred Account" shall mean each account into which an Account
shall be transferred; provided that (i) such transfer was made in accordance
with the Credit Guidelines and (ii) such account can be traced or identified as
an account into which an Account has been transferred.

          "Trust" shall mean the Household Affinity Credit Card Master Note
Trust I, a Delaware statutory trust.

          "Trust Agreement" shall mean the Trust Agreement relating to the
Trust, dated as of February 14, 2003, between Funding and Wilmington Trust
Company, as the same may be amended, supplemented or otherwise modified from
time to time.

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

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

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

          "Zero Balance Account" shall mean an account which, according to the
Servicer's records, has had a balance of zero for a period of time in accordance
with the Credit Guidelines.

          Section 1.02.    Other Definitional Provisions.

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

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

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

          (d)     Notwithstanding anything to the contrary herein, the
agreements, representations and warranties of Funding and Household Finance
Corporation in this Agreement in each of their respective capacities as
Transferor and Servicer shall be deemed to be the agreements, representations
and warranties of Funding and Household Finance Corporation solely in each such
capacity for so long as Funding and Household Finance Corporation act in each
such capacity under this Agreement.

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

                                       13

<PAGE>

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

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

                               [END OF ARTICLE I]

                                       14

<PAGE>

                                   ARTICLE II

                            CONVEYANCE OF RECEIVABLES

          Section 2.01.    Conveyance of Receivables. (a) By execution of this
Agreement, each of Funding and, in the case of Additional Accounts, Funding or,
if applicable, any Additional Transferor does hereby transfer, assign, set over
and otherwise convey to the Trust, without recourse except as provided herein,
all its right, title and interest in, to and under the Receivables existing at
the close of business on the Initial Cut-Off Date, in the case of Receivables
arising in the Initial Accounts, and on each Additional Cut-Off Date, in the
case of Receivables arising in the Additional Accounts, and in each case
thereafter created from time to time until the termination of the Trust, all
Interchange and Recoveries allocable to the Trust as provided herein, all monies
due or to become due and all amounts received or receivable with respect thereto
and all proceeds (including "proceeds" as defined in the UCC) thereof. Such
property, together with all monies and other property credited to the Collection
Account, the Series Accounts and the Special Funding Account (including any
subaccounts of such account), the Preferred Stock of the Transferor, the
property conveyed to the Trust under any Participation Interest Supplement and
the right to receive Recoveries attributed to Obligor charges for merchandise
and services in the Accounts shall constitute the assets of the Trust (the
"Trust Assets"). The foregoing does not constitute and is not intended to result
in the creation or assumption by the Trust, the Owner Trustee, the Indenture
Trustee or any Noteholder of any obligation of the Bank or other Account Owner
or the Transferor, any Additional Transferor, the Servicer or any other Person
in connection with the Accounts or the Receivables or under any agreement or
instrument relating thereto, including any obligation to Obligors, merchant
banks, merchants clearance systems, VISA, MasterCard or insurers. The Obligors
shall not be notified in connection with the creation of the Trust of the
transfer, assignment, set-over and conveyance of the Receivables to the Trust.

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

          (c)     Each Transferor further agrees, at its own expense, on or
prior to (A) the first Closing Date, in the case of the Initial Accounts, (B)
the applicable Addition Date, in the case of Additional Accounts specified in
the Receivables Purchase Agreement with such Transferor, and (C) the applicable
Removal Date, in the case of Removed Accounts specified in the Receivables
Purchase Agreement with such Transferor, (i) to indicate or cause to be
indicated in the appropriate computer files that Receivables created (or
reassigned, in the case of Removed Accounts) in connection with the Accounts
have been conveyed to the Trust pursuant to this Agreement (or conveyed to each
such Transferor or its designee in accordance with Section 2.10, in the case of
Removed Accounts) by including (or deleting in the case of Removed Accounts) in
such computer files the Trust ID Code "761" and (ii) on or prior to (A) the date
that is five Business Days after 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

                                       15

<PAGE>

designation of Aggregate Addition Accounts, (C) the Distribution Date on which
the Opinion of Counsel is required to be delivered with respect to the Due
Period which includes the applicable Additional Date, in the case of Automatic
Additional Accounts, and (D) except for Zero Balance Accounts, the date that is
five Business Days after the applicable Removal Date, in the case of Removed
Accounts (and of (A), (B), (C) or (D), the "Required Delivery Date"), to deliver
to the Trust a computer file or microfiche list containing a true and complete
list of all such Accounts specifying for each such Account, as of the Initial
Cut-Off Date, in the case of the Initial Accounts, the applicable Additional
Cut-Off Date in the case of Additional Accounts, and the applicable Removal Date
in the case of Removed Accounts, (1) its account number, (2) the aggregate
amount outstanding in such Account, and (3) the aggregate amount of Principal
Receivables outstanding in such Account. Each such file or list, as
supplemented, from time to time, to reflect Additional Accounts and Removed
Accounts, shall be marked as Schedule 1 to this Agreement and is hereby
incorporated into and made a part of this Agreement. Each Transferor further
agrees not to alter the code referenced in this paragraph with respect to any
Account during the term of this Agreement unless and until such Account becomes
a Removed Account; provided that such Transferor may alter the code if it
provides prior written notice of such alteration to the Trust, the Owner Trustee
and the Indenture Trustee and files, or causes to be filed, any necessary
financing statements or amendments thereto with respect to such alteration.

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

          Section 2.02.    Acceptance by Trust.

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

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

                                       16

<PAGE>

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

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

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

          (b)     Due Qualification. Such Transferor is duly qualified to do
business and is in good standing as a foreign corporation and has obtained all
necessary licenses and approvals, in each jurisdiction in which failure to so
qualify or to obtain such licenses and approvals would (i) render any Credit
Agreement relating to an Account specified in the applicable Receivables
Purchase Agreement with such Transferor or any Receivable conveyed to the Trust
by such Transferor unenforceable by such Transferor or the Trust or (ii) have a
material adverse effect on the Noteholders.

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

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

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

                                       17

<PAGE>

affect adversely the income or franchise tax attributes of the Trust under the
United States Federal or any State income or franchise tax systems.

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

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

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

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

                  (ii)   as of the Initial Cut-Off Date with respect to the
     Initial Accounts and as of the related Additional Cut-Off Date with respect
     to Additional Accounts, the portion of Schedule 1 to this Agreement under
     such Transferor's name, as supplemented to such date, is, or will be on the
     Required Delivery Date in the case of Additional Accounts, an accurate and
     complete listing in all material respects of all the Accounts the
     Receivables in which were transferred by such Transferor on the first
     Closing Date or the Addition Date, as the case may be, and the information
     contained therein with respect to the identity of such Accounts and the
     Receivables existing thereunder is, or will be on the Required Delivery
     Date in the case of Additional Accounts, true and correct in all material
     respects as of the Initial Cut-Off Date or such Additional Cut-Off Date, as
     the case may be;

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

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

                  (v)    either this Agreement or, in the case of Additional
     Accounts, the related Assignment constitutes a valid sale, transfer and
     assignment to the Trust of all right, title and interest of such Transferor
     in the Receivables conveyed to the Trust by such Transferor and the
     proceeds thereof and Recoveries and Interchange identified as relating to
     the Receivables

                                       18

<PAGE>

     conveyed to the Trust by such Transferor which have become Defaulted
     Receivables or, if this Agreement or, in the case of Additional Accounts,
     the related Assignment does not constitute a sale of such property, it
     constitutes a grant of a first priority perfected "security interest" (as
     defined in the UCC) in such property to the Trust, which, in the case of
     existing Receivables and the proceeds thereof and said Recoveries and
     Interchange, is enforceable upon execution and delivery of this Agreement,
     or, with respect to then existing Receivables in Additional Accounts, as of
     the applicable Addition Date, and which will be enforceable with respect to
     such Receivables hereafter and thereafter created and the proceeds thereof
     upon such creation. Upon the filing of the financing statements and, in the
     case of Receivables hereafter created and the proceeds thereof, upon the
     creation thereof, the Trust shall have a first priority perfected security
     or ownership interest in such property and proceeds;

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

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

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

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

                  (x)    each of the Initial Accounts is a consumer revolving
     credit account.

          (b)     Notice of Breach. The representations and warranties set forth
in Section 2.03, this Section 2.04 and subsection 2.09(f) shall survive the
transfers and assignments of the Receivables to the Trust, the pledge of the
Receivables to the Indenture Trustee pursuant to the Indenture, and the issuance
of the Notes. Upon discovery by any Transferor, the Servicer or the Owner
Trustee of a breach of any of the representations and warranties set forth in
Section 2.03, this Section 2.04 or subsection 2.09(f), the party discovering
such breach shall give notice to the other parties and to the Indenture Trustee
within three Business Days following such discovery, provided that the failure
to give notice within three Business Days does not preclude subsequent notice.

          Section 2.05.    Reassignment of Ineligible Receivables.

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

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<PAGE>

Receivables conveyed to the Trust by such Transferor, then such Transferor shall
accept reassignment of all Receivables in the related Account ("Ineligible
Receivables") on the terms and conditions set forth in paragraph (b) below.

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

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

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

                                       20

<PAGE>

          The applicable Transferor shall deposit in the Collection Account in
immediately available funds not later than 1:00 P.M., New York City time, on the
first Distribution Date following the Due Period in which such reassignment
obligation arises, in payment for such reassignment, an amount equal to the sum
of the amounts specified therefor with respect to each outstanding Series in the
related Indenture Supplement. Notwithstanding anything to the contrary in this
Agreement, such amounts shall be distributed to the Noteholders on such
Distribution Date in accordance with the terms of each Indenture Supplement. If
the Trust, the Indenture Trustee or the Noteholders give notice directing the
applicable Transferor to accept a reassignment of the Receivables and
Participation Interests as provided above, the obligation of such Transferor to
accept such reassignment pursuant to this Section 2.06 and to make the deposit
required to be made to the Collection Account as provided in this paragraph
shall constitute the sole remedy respecting an event of the type specified in
the first sentence of this Section 2.06 available to the Noteholders (or the
Indenture Trustee on behalf of the Noteholders) or any Series Enhancer. Upon
reassignment of the Receivables and Participation Interests on such Distribution
Date, the Trust shall automatically and without further action be deemed to
transfer, assign, set over and otherwise convey to the applicable Transferor,
without recourse, representation or warranty, all of the right, title and
interest of the Trust in and to the Receivables and Participation Interests, all
Interchange and Recoveries allocable to the Trust, all monies and amounts due or
to become due with respect thereto and all proceeds thereof. The Trust shall
execute such documents and instruments of transfer or assignment and take such
other actions as shall reasonably be requested by the applicable Transferor to
effect the conveyance of such property pursuant to this subsection.

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

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

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

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

                                       21

<PAGE>

interest obtains the prior written consent of such Transferor and (iii) after
giving effect to such transfer, the interest in the Transferor Amount owned
directly by such Transferor represents an undivided ownership interest in two
percent (2.0%) or more of the Trust Assets.

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

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

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

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

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

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

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

          (b)     Credit Agreements and Guidelines. Subject to compliance
with all Requirements of Law and paragraph (a) above, the Servicer or the Bank
(or other Account Owner if the Bank is not the

                                       22

<PAGE>

Account Owner) may change the terms and provisions of the applicable Credit
Agreements or the applicable Credit Guidelines of the Servicer or the Bank (or
other Account Owner if the Bank is not the Account Owner) 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 or as permitted by paragraph (a)
above, the Servicer or the Bank (or other Account Owner if the Bank is not the
Account Owner) will not take any action unless (i) at the time of such action,
the Servicer or the Bank (or other Account Owner if the Bank is not the Account
Owner) reasonably believes that such action will not cause an Adverse Effect,
and (ii) such change is made applicable to the comparable segment of the
revolving credit accounts owned by the Bank (or other Account Owner if the Bank
is not the Account Owner) 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 the Bank (or other Account Owner if the Bank is not the
Account Owner) and an unrelated third party or by the terms of the Credit
Agreements.

          Section 2.09.    Addition of Accounts.

          (a)     Required Aggregate Additions.

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

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

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

          (b)     Permitted Aggregate Additions. Each Transferor may from time
to time, in its sole discretion, subject to the conditions specified in
paragraph (c) below, voluntarily cause the

                                       23

<PAGE>

designation of additional Eligible Accounts to be included as Accounts or
Participation Interests to be included as Trust Assets, in either case as of the
applicable Addition Date.

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

                  (i)    on or before the fifth Business Day immediately
     preceding the Addition Date, or solely with respect to Aggregate Additions
     designated pursuant to subsection 2.09(a), on or before the tenth day
     preceding the Required Designation Date, the applicable Transferor shall
     have given the Owner Trustee, the Indenture Trustee, the Servicer and each
     Rating Agency notice (unless such notice requirement is otherwise waived by
     the Rating Agency) that the Aggregate Addition Accounts or Participation
     Interests will be included and specifying the applicable Addition Date, the
     Additional Cut-Off Date and the Pool or Pools to which such addition will
     be made;

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

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

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

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

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

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

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

                                       24

<PAGE>

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

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

          (ii)    The number of Automatic Additional Accounts designated with
respect to any of the three consecutive Due Periods commencing in January,
April, July and October of each calendar year shall not exceed 15% of the number
of Accounts as of the first day of the calendar year during which such Due
Periods commence (or the Initial Cut-Off Date, in the case of 2003) and the
number of Automatic Additional Accounts designated during any such calendar year
shall not exceed 20% of the number of Accounts as of the first day of such
calendar year (or the Initial Cut-Off Date, in the case of 2003); provided,
however, Automatic Additional Accounts may be designated in excess of such 15%
and 20% limitations if the Rating Agency Condition is satisfied with respect to
such designation.

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

                  (i)    as of the applicable Additional Cut-Off Date, the
     Automatic Additional Accounts shall all be Eligible Accounts;

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

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

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

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

                                       25

<PAGE>

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

                  (vii)  on or before the first Distribution Date following the
     end of a Quarter in which Automatic Additional Accounts are designated to
     the Trust, such Transferor shall deliver to the Owner Trustee, the
     Indenture Trustee and each Rating Agency, an Opinion of Counsel
     substantially in the form of Exhibit D-2 with respect to the Receivables in
     such Automatic Additional Accounts. The opinion delivery requirement set
     forth in the immediately preceding sentence may be modified provided that
     the Rating Agency Condition is satisfied; and

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

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

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

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

          Section 2.10.    Removal of Accounts and Treatment of Defaulted
Receivables. (a) Removal of Accounts. On any day of any Due Period each
Transferor shall have the right to (x) designate (i) Zero Balance Accounts,
specific terminated merchant or co-branding participant accounts as requested by
the terminated merchant or co-branding participant and (ii) randomly chosen
removed accounts from the Trust and (y) require the reassignment to it or its
designee of all the Trust's right, title and interest in, to and under the
Receivables then existing and thereafter created, all Interchange and Recoveries
related thereto, all monies due or to become due and all amounts received or
receivable with respect thereto after the Removal Date and all proceeds thereof
in or with respect to such Accounts and any Insurance Proceeds relating thereto
(the "Removed Accounts") (unless otherwise set forth in the applicable

                                       26

<PAGE>

Indenture Supplement) designated for removal by the Transferor, upon
satisfaction of the conditions in clauses (i) through (v) below; provided,
however, that the conditions listed in clauses (iv) and (v) below need not be
satisfied if the Removed Accounts are relate to a terminated Affinity Agreement
and the related merchant or co-branding participant or designee has elected to
purchase or direct the purchase of the Receivables in such Removed Accounts;
provided further, however, that the conditions listed in clauses (i) through (v)
below need not be satisfied if the Removed Accounts are Zero Balance Accounts:

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

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

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

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

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

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

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

                                       27

<PAGE>

          (c)     Termination of Affinity Agreements. Anything to the contrary
herein notwithstanding, the Transferor shall be entitled to purchase all
Receivables in Accounts designated for purchase or re-purchase by a merchant or
co-branding participant pursuant to the termination of an Affinity Agreement to
which such merchant or co-branding participant is a party. Any repurchase of
Receivables pursuant to this subsection 2.10(c) shall be effected in the manner,
and at a price determined in accordance with subsection 2.05(b), as if the
Receivables being repurchased were Ineligible Receivables. Amounts deposited in
the Collection Account in connection therewith shall be deemed to be Collections
of Principal Receivables and shall be applied in accordance with Article VIII of
the Indenture and the terms of each Indenture Supplement.

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

          Section 2.12.    Discount Option.

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

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<PAGE>

Transferor, the Bank or other Account Owner. The Transferor shall provide to the
Servicer, the Owner Trustee, the Indenture Trustee and the Rating Agency 30
days' prior written notice of a Discount Option Date and such designation shall
become effective on a Discount Option Date only if, (i) the Transferor delivers
an Officer's Certificate to the effect that such designation in the reasonable
belief of the Transferor, would not cause an Adverse Effect and (ii) the Rating
Agency Condition shall have been satisfied with respect to such designation.

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

                               [END OF ARTICLE II]

                                       29

<PAGE>

                                   ARTICLE III

                          ADMINISTRATION AND SERVICING
                                 OF RECEIVABLES

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

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

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

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

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

                                       30

<PAGE>

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

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

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

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

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

                  (b)   Due Qualification. The Servicer is duly qualified to do
     business and is in good standing as a foreign corporation or other foreign
     entity (or is exempt from such requirements) and has obtained all necessary
     licenses and approvals in each jurisdiction in which the servicing of the
     Receivables (including the underlying receivables) and any Participation
     Interests as required by this Agreement requires such qualification except
     where the failure to so

                                       31

<PAGE>

     qualify or obtain licenses or approvals would not have a material adverse
     effect on its ability to perform its obligations as Servicer under this
     Agreement.

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

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

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

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

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

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

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

                  (j)   Protection of Rights. The Servicer shall take no action
     which, nor omit to take any action the omission of which, would impair the
     rights of the Trust, the Indenture Trustee or the Noteholders in any
     Receivable (or the underlying receivable) or the related Account or any

                                       32

<PAGE>

     Participation Interest, if any, nor shall it reschedule, revise or defer
     payments due on any Receivable except in accordance with the Credit
     Guidelines.

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

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

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

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

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

          Upon each such reassignment or assignment to the Servicer, the Trust
shall automatically and without further action be deemed to sell, transfer,
assign, set over and otherwise convey to the Servicer, without recourse,
representation or warranty, all right, title and interest of the Trust in and to
such Receivables, all Interchange and Recoveries related thereto, all monies due
or to become due and all amounts received or receivable with respect thereto and
all proceeds thereof. The Trust shall execute such documents and instruments of
transfer or assignment and take such other actions as shall be reasonably
requested by the Servicer to effect the conveyance of any such Receivables
pursuant to this

                                       33

<PAGE>

Section but only upon receipt of an Officer's Certificate of the Servicer that
states that all conditions set forth in this section have been satisfied. The
obligation of the Servicer to accept reassignment or assignment of such
Receivables, and to make the deposits, if any, required to be made to the
Collection Account as provided in the preceding paragraph, shall constitute the
sole remedy respecting the event giving rise to such obligation available to
Noteholders (or the Indenture Trustee on behalf of Noteholders) or any Series
Enhancer, except as provided in Section 5.04.

          Section 3.04.    Reports and Records for the Trust and the Indenture
Trustee.

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

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

          Section 3.05.    Annual Certificate of Servicer. The Servicer shall
deliver to the Owner Trustee, the Indenture Trustee and each Rating Agency on or
before March 31 of each calendar year, beginning with March 31, 2004, an
Officer's Certificate substantially in the form of Exhibit C.

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

          (a)     On or before March 31 of each calendar year, beginning with
March 31, 2004, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Transferor) to furnish a report (addressed to the Servicer) to
the Owner Trustee, the Indenture Trustee, the Servicer and each Rating Agency to
the effect that they have performed procedures in order to provide an
examination report on management's assertion that the servicing of receivables
has been conducted in compliance with the terms and conditions set forth in
Article III and Section 5.08 of this Agreement and the applicable provisions of
the Indenture and each Indenture Supplement and that such assertion is fairly
presented.

          (b)     On or before March 31 of each calendar year, beginning
with March 31, 2004, the Servicer shall cause a firm of nationally recognized
independent public accountants (who may also render other services to the
Servicer or the Transferor) to furnish a report (addressed to the Owner Trustee)
to the Owner Trustee, the Indenture Trustee, the Servicer and each Rating Agency
to the effect that they have applied certain procedures agreed upon with the
Servicer to compare the mathematical calculations of certain amounts set forth
in the Servicer's certificates delivered pursuant to subsection 3.04(b) during
the period covered by such report with the Servicer's computer reports that were
the source of such amounts and that such amounts are in agreement, except for
any discrepancies disclosed. Such report shall set forth the agreed-upon
procedures performed. In the event such firm requires the

                                       34

<PAGE>

Indenture Trustee to agree to the procedures performed by such firm, the
Servicer shall direct the Indenture Trustee in writing to so agree; it being
understood and agreed that the Indenture Trustee will deliver such letter of
agreement in conclusive reliance upon the direction of the Servicer, and the
Indenture Trustee shall not make any independent inquiry or investigation as to,
and shall have no obligation or liability in respect of, the sufficiency,
validity or correctness of such procedures.

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

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

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

          Section 3.09     Adjustments.

          (a)     If the Servicer adjusts downward the amount of any Receivable
because of a rebate, refund, unauthorized charge or billing error to an Obligor,
because such Receivable was created in respect of merchandise which was refused
or returned by an Obligor, or if the Servicer otherwise adjusts downward the
amount of any Receivable without receiving Collections therefor or charging off
such amount as uncollectible, then, in any such case, the amount of Principal
Receivables used to calculate the Transferor Amount, and (unless otherwise
specified) any other amount required herein or in the Indenture or any Indenture
Supplement to be calculated by reference to the amount of Principal Receivables,
will be reduced by the amount of the adjustment. Similarly, the amount of
Principal Receivables used to calculate the Transferor Amount and (unless
otherwise specified) any other amount required herein or in any Indenture
Supplement to be calculated by reference to the amount of Principal Receivables
will be reduced by the principal amount of any Receivable which was discovered
as having been created through a fraudulent or counterfeit charge or with
respect to which the covenant contained in subsection 2.07(b) was breached. Any
adjustment required pursuant to either of the two preceding sentences shall be
made on or prior to the end of the Due Period in which such adjustment
obligation arises. In the event that, following the exclusion of such Principal
Receivables from the calculation of the Transferor Amount, the Transferor Amount
would be less than the Required Transferor Amount, not later than 1:00 p.m.,

                                       35

<PAGE>

New York City time, on the Distribution Date following the Due Period in which
such adjustment obligation arises, the Transferor shall make a deposit into the
Special Funding Account in immediately available funds in an amount equal to the
amount by which the Transferor Amount would be less than the Required Transferor
Amount, due to adjustments with respect to Receivables conveyed by such
Transferor (up to the amount of such Principal Receivables).

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

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

                              [END OF ARTICLE III]

                                       36

<PAGE>

                                   ARTICLE IV

                    OTHER MATTERS RELATING TO EACH TRANSFEROR

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

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

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

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

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

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

                                       37

<PAGE>

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

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

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

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

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

          (c)     if such Assuming Entity shall be eligible to be a debtor in a
     case under the Bankruptcy Code, such Transferor shall have delivered to the
     Rating Agency (with a copy to the

                                       38

<PAGE>

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

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

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

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

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

                               [END OF ARTICLE IV]

                                       39

<PAGE>

                                    ARTICLE V

                     OTHER MATTERS RELATING TO THE SERVICER

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

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

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

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

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

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

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

                                       40

<PAGE>

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

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

          Section 5.06.    Access to Certain Documentation and Information
Regarding the Receivables. The Servicer shall provide to the Trust or the
Indenture Trustee, as applicable, access to the documentation regarding the
Accounts and the Receivables in such cases where the Trust or the Indenture
Trustee, as applicable, is required in connection with the enforcement of the
rights of Noteholders or by applicable statutes or regulations to review such
documentation, such access being afforded without charge but only (a) upon
reasonable request, (b) during normal business hours, (c) subject to the
Servicer's normal security and confidentiality procedures and (d) at reasonably
accessible offices in the continental United States designated by the Servicer.
Nothing in this Section shall derogate from the obligation of the Transferor,
the Trust, the Indenture Trustee and the Servicer to observe any applicable law
prohibiting disclosure of information regarding the Obligors and the failure of
the Servicer to provide

                                       41

<PAGE>

access as provided in this Section as a result of such obligation shall not
constitute a breach of this Section.

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

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

                               [END OF ARTICLE V]

                                       42

<PAGE>

                                   ARTICLE VI

                                INSOLVENCY EVENTS

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

                               [END OF ARTICLE VI]

                                       43

<PAGE>

                                   ARTICLE VII

                                SERVICER DEFAULTS

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

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

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

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

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

                                       44

<PAGE>

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

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

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

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

                                       45

<PAGE>

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

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

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

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

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

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

                                       46

<PAGE>

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

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

                              [END OF ARTICLE VII]

                                       47

<PAGE>

                                  ARTICLE VIII

                                   TERMINATION

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

                              [END OF ARTICLE VIII]

                                       48

<PAGE>

                                   ARTICLE IX

                            MISCELLANEOUS PROVISIONS

          Section 9.01.    Amendment; Waiver of Past Defaults.

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

          (b)     This Agreement may also be amended from time to time by the
Servicer, the Transferor and the Trust, with the consent of the Holders of
Outstanding Notes evidencing not less than 66-2/3% of the aggregate unpaid
principal amount of the Outstanding Notes of all affected Series for which the
Transferor has not delivered an Officer's Certificate stating that there is no
Adverse Effect, for the purpose of adding any provisions to or changing in any
manner or eliminating any of the provisions of this Agreement or of modifying in
any manner the rights of the Noteholders; provided, however, that no such
amendment shall (i) reduce in any manner the amount of or delay the timing of
any distributions (changes in Amortization Events or Reinvestment Events that
decrease the likelihood of the occurrence thereof shall not be considered delays
in the timing of distributions for purposes of this clause) to be made to
Noteholders or deposits of amounts to be so distributed or the amount available
under any Series Enhancement without the consent of each affected Holder of
Outstanding Notes, (ii) change the definition

                                       49

<PAGE>

of or the manner of calculating the interest of any Noteholder without the
consent of each affected Holder of Outstanding Notes, (iii) reduce the aforesaid
percentage required to consent to any such amendment without the consent of each
Holder of Outstanding Notes or (iv) adversely affect the rating of any Series or
Class by each Rating Agency without the consent of the Holders of Outstanding
Notes of such Series or Class evidencing not less than 66-2/3% of the aggregate
unpaid principal amount of the Outstanding Notes of such Series or Class.

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

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

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

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

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

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

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

          (a)     The Transferor shall cause this Agreement, all amendments and
supplements hereto and all financing statements and continuation statements and
any other necessary documents covering the Indenture Trustee's and the Trust's
right, title and interest to the Receivables to be promptly recorded, registered
and filed, and at all times to be kept recorded, registered and filed, all in
such manner and in such places as may be required by law fully to preserve and
protect the right, title and interest of

                                       50

<PAGE>

the Indenture Trustee, Noteholders and the Trust hereunder to all property
comprising the Trust. The Transferor shall deliver to the Owner Trustee and
Indenture Trustee file-stamped copies of, or filing receipts for, any document
recorded, registered or filed as provided above, as soon as available following
such recording, registration or filing. The Servicer shall cooperate fully with
the Transferor in connection with the obligations set forth above and will
execute any and all documents reasonably required to fulfill the intent of this
paragraph.

          (b)     Within 30 days after any Transferor makes any change in its
name, identity, corporate structure or jurisdiction of organization which would
make any financing statement or amendment to any financing statement filed in
accordance with paragraph (a) seriously misleading within the meaning of Section
9-506 (or any comparable provision) of the UCC, such Transferor shall give the
Owner Trustee and the Indenture Trustee notice of any such change and shall,
within 90 days of such change or such earlier time as prescribed by law, file
such financing statements or amendments as may be necessary to continue the
perfection of the Trust's security interest or ownership interest in the
Receivables and the proceeds thereof.

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

          (d)     The Transferor shall deliver to the Owner Trustee and the
Indenture Trustee (i) upon the execution and delivery of each amendment of this
Agreement, an Opinion of Counsel to the effect specified in Exhibit D-1; (ii) on
each date specified in subsection 2.09(c)(ix) with respect to Aggregate
Additions to be designated as Accounts, an Opinion of Counsel substantially in
the form of Exhibit D-2, (iii) on each date specified in subsection
2.09(e)(vii), with respect to any Automatic Additional Accounts included as
Accounts, an Opinion of Counsel substantially in the form of Exhibit D-2, (iv)
on each Addition Date on which any Participation Interests are to be included in
the Trust pursuant to subsection 2.09(a) or (b), an Opinion of Counsel covering
the same substantive legal issues addressed by Exhibits D-1 and D-2 but
conformed to the extent appropriate to relate to Participation Interests; and
(v) on or before April 30 of each year, beginning with April 30, 2004, an
Opinion of Counsel substantially in the form of Exhibit D-3.

          Section 9.03.    Governing Law. THIS AGREEMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND OBLIGATIONS, RIGHTS AND REMEDIES OF THE PARTIES
HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

          Section 9.04.    Notices; Payments.

          (a)     All demands, notices, instructions, directions and
communications (collectively, "Notices") under this Agreement shall be in
writing and shall be deemed to have been duly given if personally delivered at,
mailed by registered mail, return receipt requested, or sent by facsimile
transmission (i) in the case of the Transferor, to Household Affinity Funding
Corporation III, 1111 Town Center, Las Vegas, Nevada 89144, Attention:
Manager-Compliance (facsimile no. (702) 222-4096), (ii) in the case of the Bank,
to Household Bank (SB), National Association at 1111 Town Center, Las Vegas,
Nevada 89144, Attention: General Counsel (facsimile no. (702) 222-4096), (iii)
in the case of the Servicer,

                                       51

<PAGE>

to Household Finance Corporation, at 2700 Sanders Road, Prospect Heights,
Illinois 60070, Attention: S.H. Smith, Assistant Treasurer (facsimile no. (847)
205-7538), with copies to Household International at 2700 Sanders Road, Prospect
Heights, Illinois 60070, Attention: General Counsel's Office, Securities and
Funding Unit (facsimile no. (847) 205-7457), (iv) in the case of the Trust, to
Wilmington Trust Company, Rodney Square North, 1100 North Market Street,
Wilmington, Delaware 19890-0001, Attention: Corporate Trust Administration, (v)
in the case of Fitch, to Fitch, Inc., One State Street Plaza, New York, New York
10004, Attention: ABS Surveillance (facsimile no. (212) 480-4438), (vi) in the
case of Moody's, to Moody's Investors Service Inc., 99 Church Street, New York,
New York 10007, Attention: ABS Monitoring Group (facsimile no. (212) 553-7820),
(vii) in the case of Standard & Poor's, to Standard & Poor's Ratings Group, 55
Water Street, New York, New York 10041, Attention: Credit Card ABS (facsimile
no. (212) 438-2648), and (viii) to any other Person as specified in the
Indenture or any Indenture Supplement; or, as to each party, at such other
address or facsimile number as shall be designated by such party in a written
notice to each other party.

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

          Section 9.05.    Severability of Provisions. If any one or more of
the covenants, agreements, provisions or terms of this Agreement shall for any
reason whatsoever be held invalid, then such provisions shall be deemed
severable from the remaining provisions of this Agreement and shall in no way
affect the validity or enforceability of the remaining provisions or of the
Notes or the rights of the Noteholders.

          Section 9.06.    Additional Obligations of the Servicer. The Servicer
further agrees to perform all duties of the Servicer as described in the
Indenture and any Indenture Supplement.

          Section 9.07.    Further Assurances. The Transferor and the Servicer
agree to do and perform, from time to time, any and all acts and to execute any
and all further instruments required or reasonably requested by the Owner
Trustee and the Indenture Trustee more fully to effect the purposes of this
Agreement, including the execution of any financing statements or continuation
statements relating to the Receivables for filing under the provisions of the
UCC of any applicable jurisdiction.

          Section 9.08.    No Waiver; Cumulative Remedies. No failure to
exercise and no delay in exercising, on the part of the Owner Trustee, the
Indenture Trustee or the Noteholders, any right, remedy, power or privilege
under this Agreement shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege under this Agreement
preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges
provided under this Agreement are cumulative and not exhaustive of any rights,
remedies, powers and privileges provided by law.

                                       52

<PAGE>

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

          Section 9.11.    Actions by Noteholders.

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

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

          Section 9.12.    Rule 144A Information. For so long as any of the
Notes of any Series or Class are "restricted securities" within the meaning of
Rule 144(a)(3) under the Securities Act, each of the Transferor, the Trust, the
Indenture Trustee, the Servicer and any Series Enhancer agree to cooperate with
each other to provide to any Noteholders of such Series or Class and to any
prospective purchaser of Notes designated by such Noteholder, upon the request
of such Noteholder or prospective purchaser, any information required to be
provided to such holder or prospective purchaser to satisfy the condition set
forth in Rule 144A(d)(4) under the Securities Act.

          Section 9.13.    Merger and Integration. Except as specifically
stated otherwise herein, this Agreement sets forth the entire understanding of
the parties relating to the subject matter hereof, and all prior understandings,
written or oral, are superseded by this Agreement. This Agreement may not be
modified, amended, waived or supplemented except as provided herein.

          Section 9.14.    Headings. The headings herein are for purposes of
reference only and shall not otherwise affect the meaning or interpretation of
any provision hereof.

          Section 9.14.    Representative Capacity. It is expressly understood
and agreed by and between the parties hereto that this Agreement is executed and
delivered by Wilmington Trust Company, not in its individual capacity but solely
as Owner Trustee under the Trust Agreement in the exercise of the power and
authority conferred and vested in it as such Owner Trustee. In no event shall
Wilmington Trust Company in its individual capacity have any liability for the
representations, warranties, covenants, agreements or other obligations of the
Issuer hereunder, as to all of which recourse shall be had solely to the assets
of the Issuer; and for all purposes of this Agreement and each other document,
the Owner Trustee (as such or in its individual capacity) should be subject to,
and entitled to the benefits of, the terms and provisions of the Trust
Agreement.

          Section 9.15.    Certain Commercial Law Representations and
Warranties. The Transferor hereby makes the following representations and
warranties. Such representations and warranties shall survive until the
termination of this Agreement. Such representations and warranties speak of the
date that the Receivables are transferred to the Trust, but shall not be waived
by any of the

                                       53

<PAGE>

parties to this Agreement unless each Rating Agency shall have notified the
Transferor, the Servicer and the Owner Trustee in writing that such waiver will
not result in a reduction or withdrawal of the rating of any outstanding Series
or Class to which it is a Rating Agency.

          (a)     This Agreement creates a valid and continuing security
interest (as defined in the applicable UCC) in favor of the Trust in the
Receivables described in Section 2.01 of this Agreement or in Section 3(a) of
any Assignment, which security interest is prior to all other liens, and is
enforceable as such against creditors of and purchasers from the Transferor.

          (b)     The Receivables constitute "accounts" within the meaning of
the applicable UCC.

          (c)     At the time of its grant of any security interest in the
Receivables pursuant to this Agreement or an Assignment, the Transferor owned
and had good and marketable title to the Receivables free and clear of any lien,
claim or encumbrance of any Person.

          (d)     The Transferor has caused or will have caused, within ten (10)
days of the initial execution of this Agreement and each Assignment, the filing
of all appropriate financing statements in the proper filing office in the
appropriate jurisdictions under applicable law in order to perfect the security
interest in the Receivables granted to the Trust pursuant to this Agreement or
such Assignment.

          (e)     Other than the security interest granted to the Trust pursuant
to this Agreement or an Assignment, the Transferor has not pledged, assigned,
sold, granted a security interest in, or otherwise conveyed the Receivables. The
Transferor has not authorized the filing of and is not aware of any financing
statements against the Transferor that include a description of the Receivables
other than any financing statement relating to the security interest granted to
the Trust and the Indenture Trustee pursuant to this Agreement, an Assignment or
the Indenture, as applicable, or that has been terminated. The Transferor is not
aware of any judgment or tax lien filings against the Transferor.

          Section 9.16.    Nonpetition Covenants.

          (a)     Notwithstanding any prior termination of this Agreement, none
of the Transferor, the Servicer, the Owner Trustee or the Indenture Trustee
shall, prior to the date which is one year and one day after the termination of
this Agreement, with respect to the Issuer acquiesce, petition or otherwise
invoke or cause the Issuer to invoke the process of any court or governmental
authority for the purpose of commencing or sustaining a case against the Issuer
under any federal or state bankruptcy, insolvency or other similar law now or
hereafter in effect or appointing a receiver, conservator, liquidator, assignee,
trustee, custodian, sequestrator or other similar official of the Issuer or any
substantial part of its property, or ordering the winding up or liquidation of
the affairs of the Issuer; provided, however, that this subsection 9.16(a) shall
not operate to preclude any remedy described in Article V of the Indenture.

          (b)     Notwithstanding any prior termination of this Agreement, none
of the Trust, the Servicer, the Owner Trustee or the Indenture Trustee shall,
prior to the date which is one year and one day after the termination of this
Agreement, with respect to the Transferor acquiesce, petition or otherwise
invoke or cause the Transferor to invoke the process of any court or
governmental authority for the purpose of commencing or sustaining a case
against the Transferor under any federal or state bankruptcy, insolvency or
other similar law now or hereafter in effect or appointing a receiver,
conservator, liquidator, assignee, trustee, custodian, sequestrator or other
similar official of the Transferor or any substantial part of its property, or
ordering the winding up or liquidation of the affairs of the Transferor;
provided, however, that this subsection 9.16(b) shall not operate to preclude
any remedy described in Article V of the Indenture.

                                       54

<PAGE>

                               [END OF ARTICLE IX]

                                       55

<PAGE>

                                    ARTICLE X

                            ADMINISTRATION PROVISIONS

          Section 10.01.   Administrative Duties.

          (a)     Duties With Respect to the Transaction Documents. The Servicer
shall perform all its duties and the duties of the Issuer under the Transaction
Documents. In addition, the Servicer shall consult with the Owner Trustee as the
Servicer deems appropriate regarding the duties of the Issuer and the Owner
Trustee under the Transaction Documents. The Servicer shall monitor the
performance of the Issuer and shall advise the Owner Trustee when action is
necessary to comply with the Issuer's or the Owner Trustee's duties under the
Transaction Documents. The Servicer shall prepare for execution by the Issuer or
shall cause the preparation by other appropriate Persons of all such documents,
reports, filings, instruments, certificates and opinions as it shall be the duty
of the Issuer to prepare, file or deliver pursuant to the Transaction Documents.
In furtherance of the foregoing, the Servicer shall take all necessary action
that is the duty of the Issuer to take pursuant to the Indenture, including,
without limitation, pursuant to Sections 2.03, 2.05, 2.06, 2.09(a), 2.11,
2.12(d), 2.15, 2.16, 3.03, 3.04, 3.05, 3.06, 3.07(b), 3.07(d), 3.09, 3.10, 3.19,
4.01, 5.05, 6.08, 6.10, 7.01, 8.09, 10.01, 10.02, 10.03, 10.06, 12.01(a),
12.01(b), 12.05 and 12.06.

          (b)     Duties With Respect to the Issuer. (i) In addition to the
duties of the Servicer set forth in this Agreement or any of the Transaction
Documents, the Servicer shall perform such calculations and shall prepare for
execution by the Issuer or the Owner Trustee, or shall cause the preparation by
other appropriate Persons of all such documents, reports, filings, instruments,
certificates and opinions as it shall be the duty of the Issuer or the Owner
Trustee, to prepare, file or deliver pursuant to this Agreement or any of the
Transaction Documents or under state or federal tax and securities laws
(including, without limitation, any certification required by 13a-14(e) or
15d-14(e) of the Rules and Regulations promulgated under the Securities Exchange
Act of 1934, as amended), and shall take all appropriate action that it is the
duty of the Issuer to take pursuant to this Agreement or any of the Transaction
Documents. In accordance with the directions of the Issuer or the Owner Trustee,
the Servicer shall administer, perform or supervise the performance of such
other activities in connection with the Trust Estate (including the Transaction
Documents) as are not covered by any of the foregoing provisions and as are
expressly requested by the Issuer or the Owner Trustee and are reasonably within
the capability of the Servicer.

                  (ii)   Notwithstanding anything in this Agreement or any of
     the Transaction Documents to the contrary, the Servicer shall be
     responsible for promptly notifying the Owner Trustee and the Indenture
     Trustee in the event that any withholding tax is imposed on the Issuer's
     payments (or allocations of income) to a Transferor as contemplated by this
     Agreement or any of the Transaction Documents. Any such notice shall be in
     writing and specify the amount of any withholding tax required to be
     withheld by the Owner Trustee or the Indenture Trustee pursuant to such
     provision.

                  (iii)  The Servicer shall perform the duties of the
     Servicer specified in Section 9.02 of the Trust Agreement required to be
     performed in connection with the resignation or removal of the Owner
     Trustee, and any other duties expressly required to be performed by the
     Servicer under this Agreement or any of the Transaction Documents.

                  (iv)   In carrying out the foregoing duties or any of its
     other obligations under this Agreement, the Servicer may enter into
     transactions with or otherwise deal with any of its Affiliates; provided,
     however, that the terms of any such transactions or dealings shall be in

                                       56

<PAGE>

     accordance with any directions received from the Issuer and shall be, in
     the Servicer's opinion, no less favorable to the Issuer in any material
     respect.

          (c)     Tax Matters. The Servicer shall prepare and file, or cause to
be prepared and filed, all required tax returns, tax elections, financial
statements and such annual or other reports of the Issuer as are necessary for
preparation of tax reports, including, without limitation, Form 1099. All tax
returns will be signed by the Issuer.

          (d)     Non-Ministerial Matters. With respect to any matters that in
the reasonable judgment of the Servicer are non-ministerial, the Servicer shall
not take any action pursuant to this Article X unless within a reasonable time
before the taking of such action, the Servicer shall have notified the Owner
Trustee and the Indenture Trustee of the proposed action and the Owner Trustee
and the Indenture Trustee shall not have withheld consent or provided an
alternative direction. For the purpose of the preceding sentence,
"non-ministerial matters" shall include:

                  (i)    the initiation of any claim or lawsuit by the Issuer
and the compromise of any action, claim or lawsuit brought by or against the
Issuer;

                  (ii)   the appointment of successor Note Registrars, successor
Paying Agents and successor Indenture Trustees pursuant to the Indenture or the
consent to the assignment by the Note Registrar, Paying Agent or Indenture
Trustee of its obligations under the Indenture; or

                  (iii)  the removal of the Indenture Trustee.

          (e)     Exceptions. Notwithstanding anything to the contrary in this
Agreement, except as expressly provided herein or in the Transaction Documents,
the Servicer, in its capacity hereunder, shall not be obligated to, and shall
not, (1) making any payments to the Noteholders or the Transferor under the
Transaction Documents, (2) sell any of the assets of the Trust, (3) take any
other action that the Issuer directs the Servicer not to take on its behalf or
(4) in connection with its duties hereunder assume any indemnification
obligation of any other Person.

          (f)     Neither the Indenture Trustee nor any successor Servicer
shall be responsible for any obligations or duties of a predecessor Servicer
under this Section 10.01.

          Section 10.02.   Records. The Servicer shall maintain appropriate
books of account and records relating to services performed under this
Agreement, which books of account and records shall be accessible for inspection
by the Issuer and the Indenture Trustee at any time during normal business
hours.

          Section 10.03.   Additional Information to be Furnished to the Trust.
The Servicer shall furnish to the Issuer and the Indenture Trustee, from time to
time, such additional information regarding the Trust Estate as the Issuer and
the Indenture Trustee shall reasonably request.

                               [END OF ARTICLE X]

                                       57

<PAGE>

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

                                        HOUSEHOLD AFFINITY FUNDING
                                        CORPORATION III,
                                        Transferor

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

                                        HOUSEHOLD FINANCE CORPORATION,
                                        Servicer

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

                                        HOUSEHOLD AFFINITY CREDIT CARD MASTER
                                        NOTE TRUST I

                                        By: WILMINGTON TRUST COMPANY, not in its
                                            individual capacity but solely as
                                            Owner Trustee of the Trust

                                        By: /s/ Patricia A. Evans
                                           -------------------------------------
                                             Name:  Patricia A. Evans
                                             Title: Assistant Vice President

Acknowledged and Accepted:

By: THE BANK OF NEW YORK,
    not in its individual capacity but
    solely as Indenture Trustee

By:  /s/ Helen Lam
    -----------------------------------
     Name:  Helen Lam
     Title: Assistant Treasurer

                                       58

<PAGE>

                                                                       EXHIBIT A

            FORM OF ASSIGNMENT OF RECEIVABLES IN ADDITIONAL ACCOUNTS

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

          ASSIGNMENT No. _________ OF RECEIVABLES IN ADDITIONAL ACCOUNTS, dated
as of ____________ (this "Assignment"),1 by and among HOUSEHOLD AFFINITY FUNDING
CORPORATION III, a Delaware corporation, as Transferor (the "Transferor"),
HOUSEHOLD FINANCE CORPORATION, a Delaware corporation, as Servicer (the
"Servicer"), and HOUSEHOLD AFFINITY CREDIT CARD MASTER NOTE TRUST I (the
"Trust"), a Delaware statutory trust, pursuant to the Transfer and Servicing
Agreement referred to below.

                                   WITNESSETH:

          WHEREAS, the Transferor, the Servicer and the Trust are parties to the
Transfer and Servicing Agreement, dated as of February 18, 2003 (as amended and
supplemented, the "Agreement");

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

          WHEREAS, the Trust is willing to accept such designation and
conveyance subject to the terms and conditions hereof;

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

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

          "Addition Date" shall mean, with respect to the Additional Accounts
designated hereby,______________, ________.

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

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

          3.   Conveyance of Receivables. (a) The Transferor does hereby sell,
transfer, assign, set over and otherwise convey, without recourse except as set
forth in the Transfer and Servicing

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

                                       A-1

<PAGE>

Agreement, to the Trust, all its right, title and interest in, to and under the
Receivables of such Additional Accounts existing on the Additional Cut-Off Date
and thereafter created from time to time until the termination of the Trust, all
Interchange and Recoveries related thereto, all monies due or to become due and
all amounts received or receivable with respect thereto and all proceeds
(including "proceeds" as defined in the UCC) thereof. The foregoing does not
constitute and is not intended to result in the creation or assumption by the
Trust, the Owner Trustee, the Indenture Trustee, any Noteholders or any Series
Enhancer of any obligation of the Servicer, the Transferor or any other Person
in connection with the Accounts, the Receivables or under any agreement or
instrument relating thereto, including any obligation to Obligors, merchant
banks, merchants clearance systems, VISA, MasterCard or insurers.

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

          (c)     In connection with such sale, the Transferor further agrees,
at its own expense, on or prior to the date of this Assignment, to indicate in
the appropriate computer files that Receivables created in connection with the
Additional Accounts and designated hereby have been conveyed to the Trust
pursuant to the Agreement and this Assignment by including in such computer
files the Trust ID Code "761"; provided that such Transferor may alter the code
if it provides prior written notice of such alteration to the Trust, the Owner
Trustee and the Indenture Trustee and files, or causes to be filed, any
necessary financing statements or amendments thereto with respect to such
alteration.

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

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

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

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

                                       A-2

<PAGE>

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

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

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

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

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

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

                  (h)    All Consents. All authorizations, consents, orders or
     approvals of any court or other governmental authority required to be
     obtained by the Transferor in connection

                                       A-3

<PAGE>

     with the execution and delivery of this Assignment by the Transferor and
     the performance of the transactions contemplated by this Assignment by the
     Transferor, have been obtained.

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

          7.      Counterparts. This Assignment may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.

          8.      GOVERNING LAW. THIS ASSIGNMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

                                       A-4

<PAGE>

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

                                  HOUSEHOLD AFFINITY FUNDING
                                  CORPORATION III,
                                  Transferor

                                  By:
                                     -------------------------------------------
                                       Name:
                                       Title:

                                  HOUSEHOLD FINANCE CORPORATION,
                                  Servicer

                                  By:
                                     -------------------------------------------
                                       Name:
                                       Title:

                                  HOUSEHOLD AFFINITY CREDIT CARD MASTER
                                  NOTE TRUST I,
                                  Issuer

                                  By: WILMINGTON TRUST COMPANY,
                                      not in its individual capacity, but solely
                                      as Owner Trustee on behalf of the Trust

                                  By:
                                     -------------------------------------------
                                       Name:
                                       Title:

                                       A-5

<PAGE>

                                                                       EXHIBIT B

             FORM OF REASSIGNMENT OF RECEIVABLES IN REMOVED ACCOUNTS

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

          REASSIGNMENT No. ___________ OF RECEIVABLES dated as of ___________
(this "Reassignment"),1 by and among HOUSEHOLD AFFINITY FUNDING CORPORATION III,
a Delaware corporation, as Transferor (the "Transferor"), HOUSEHOLD FINANCE
CORPORATION, a Delaware corporation, as Servicer, and HOUSEHOLD AFFINITY CREDIT
CARD MASTER NOTE TRUST I, (the "Trust"), a Delaware statutory trust, pursuant to
the Transfer and Servicing Agreement referred to below.

                                   WITNESSETH:

          WHEREAS, the Transferor, the Servicer and the Trust are parties to the
Transfer and Servicing Agreement, dated as of February 18, 2003 (as amended and
supplemented, the "Agreement");

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

          WHEREAS, the Trust is willing to accept such designation and to
reconvey the Receivables in the Removed Accounts subject to the terms and
conditions hereof;

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

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

                  "Removal Date" shall mean, with respect to the Removed
     Accounts designated hereby,______________, ________.

                  "Removal Notice Date" shall mean, with respect to the Removed
     Accounts,______________, ________.

          2.      Designation of Removed Accounts. On or prior to the date that
is five Business Days after the Removal Date, the Transferor will deliver to the
Trust a computer file, microfiche list or printed list containing a true and
complete schedule identifying all Accounts (the "Removed Accounts") the
Receivables of which are being removed from the Trust, specifying for each such
Account, as of the Removal Notice Date, its account number, the aggregate amount
outstanding in such Account and the aggregate amount of Principal Receivables in
such Account, which computer file, microfiche list or printed list shall be
marked as Schedule 1 to this Reassignment, is hereby incorporated into and made
a part of this Reassignment and shall supplement Schedule 1 to the Agreement.

          3.      Conveyance of Receivables. (a) The Trust does hereby transfer,
assign, set over and otherwise convey to the Transferor, without recourse, on
and after the Removal Date, all right, title

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

                                       B-1

<PAGE>

and interest of the Trust in, to and under the Receivables existing at the close
of business on the Removal Notice Date and thereafter created from time to time
in the Removed Accounts designated hereby, all Interchange and Recoveries
related thereto, all monies due or to become due and all amounts received or
receivable with respect thereto and all proceeds thereof.

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

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

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

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

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

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

          6.      Counterparts. This Reassignment may be executed in two or more
counterparts, and by different parties on separate counterparts, each of which
shall be an original, but all of which shall constitute one and the same
instrument.

          7.      GOVERNING LAW. THIS REASSIGNMENT SHALL BE CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO ITS
CONFLICT OF LAW PROVISIONS, AND THE OBLIGATIONS, RIGHTS AND REMEDIES OF THE
PARTIES HEREUNDER SHALL BE DETERMINED IN ACCORDANCE WITH SUCH LAWS.

                                       B-2

<PAGE>

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

                                     HOUSEHOLD AFFINITY FUNDING CORPORATION III,
                                     Transferor

                                     By:
                                        ----------------------------------------
                                         Name:
                                         Title:

                                     HOUSEHOLD FINANCE CORPORATION,
                                     Servicer

                                     By:
                                        ----------------------------------------
                                         Name:
                                         Title:

                                     HOUSEHOLD AFFINITY CREDIT CARD MASTER
                                     NOTE TRUST I,
                                     Issuer

                                     By: WILMINGTON TRUST COMPANY, not in its
                                         individual capacity but solely as
                                         Owner Trustee of the Trust

                                     By:
                                        ----------------------------------------
                                         Name:
                                         Title:

                                       B-3

<PAGE>

                                                                       EXHIBIT C

                      FORM OF ANNUAL SERVICER'S CERTIFICATE

                    (To be delivered on or before March 31 of
                     each calendar year beginning with 2004,
                  pursuant to Section 3.05 of the Transfer and
                     Servicing Agreement referred to below)

               HOUSEHOLD AFFINITY CREDIT CARD MASTER NOTE TRUST I

          The undersigned, a duly authorized representative of Household
Finance Corporation, as Servicer ("Household Finance Corporation"), pursuant to
the Transfer and Servicing Agreement, dated as of February 18, 2003 (as amended
and supplemented, the "Agreement"), among Household Affinity Funding Corporation
III, as transferor, Household Finance Corporation, and Household Affinity Credit
Card Master Note Trust I, does hereby certify that:

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

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

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

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

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

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

                         HOUSEHOLD FINANCE CORPORATION,

                                     By:
                                        ----------------------------------------
                                          Name:
                                          Title:

                                       C-1

<PAGE>

                                                                     EXHIBIT D-1

                           FORM OF OPINION OF COUNSEL
                           WITH RESPECT TO AMENDMENTS

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

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

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

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

                                      D-1-1

<PAGE>

                                                                     EXHIBIT D-2

                           FORM OF OPINION OF COUNSEL
                            WITH RESPECT TO ACCOUNTS

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

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

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

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

          3.      The security interests described in paragraphs 1 and 2 above
are perfected, a UCC lien search against the Transferor shall be conducted and
such search shall not identify any secured party who has on file with the
appropriate state office a currently effective financing statement naming the
Transferor as debtor and describing the Receivables prior to the filing of the
financing statements related to paragraphs 1 and 2 above.

                                      D-2-1

<PAGE>

                                                                     EXHIBIT D-3

                          PROVISIONS TO BE INCLUDED IN
                            ANNUAL OPINION OF COUNSEL

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

          1.      The Transfer and Servicing Agreement, together with the
Assignments, creates in favor of the Trust a security interest in the relevant
Transferor's rights in the Receivables identified in Schedule 1 to the Transfer
and Servicing Agreement. Such security interest is perfected, a UCC lien search
against the Transferor shall be conducted and such search shall not identify any
secured party who has on file with the appropriate state office a currently
effective financing statement naming the Transferor as debtor and describing the
Receivables prior to the filing of the financing statements related to this
paragraph.

                                      D-3-1

<PAGE>

                                                                      SCHEDULE 1

                                List of Accounts

                     [Original list delivered to the Trust]

                                       1-1<PAGE>

                                                                    EXHIBIT 10.2

                                                                  EXECUTION COPY

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

                  HOUSEHOLD RECEIVABLES ACQUISITION COMPANY II

                                       and

                   HOUSEHOLD AFFINITY FUNDING CORPORATION III

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

                         RECEIVABLES PURCHASE AGREEMENT

                          Dated as of February 18, 2003

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<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

     Section 2.02.    Addition of Aggregate Addition Accounts. .........................................   5

     Section 2.03.    Addition of Automatic Additional Accounts. .......................................   5

     Section 2.04.    Representations and Warranties. ..................................................   5

     Section 2.05.    Removal and Deletion of Accounts. ................................................   5

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

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

     Section 3.02.    Adjustments to Purchase Price. ...................................................   6

     Section 3.03.    Use of Name, Logo and Marks. .....................................................   6

ARTICLE IV        REPRESENTATIONS AND WARRANTIES .......................................................   7

     Section 4.01.    HRAC II's Representations and Warranties Relating to HRAC II. ....................   7

     Section 4.02.    Representations and Warranties of HRAC II Relating to the Agreement and the
                       Receivables. ....................................................................   8

     Section 4.03.    Representations and Warranties of Funding. .......................................   9

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

     Section 5.01.    HRAC II Covenants. ...............................................................  11

ARTICLE VI        REPURCHASE OBLIGATION ................................................................  13

     Section 6.01.    Reassignment of Ineligible Receivables. ..........................................  13

     Section 6.02.    Reassignment of Trust Portfolio. .................................................  13

ARTICLE VII       CONDITIONS PRECEDENT .................................................................  15

     Section 7.01.    Conditions to Funding's Obligations Regarding Additional Receivables. ............  15

     Section 7.02.    Conditions Precedent to HRAC II's Obligations. ...................................  15

ARTICLE VIII      TERM AND PURCHASE TERMINATION ........................................................  16

     Section 8.01.    Term. ............................................................................  16

     Section 8.02.    Purchase Termination. ............................................................  16

ARTICLE IX        SERVICING ............................................................................  17

     Section 9.01.    Transfer and Servicing Agreement Controls with respect to the Receivables. .......  17
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<S>                                                                                                      <C>
ARTICLE X           MISCELLANEOUS PROVISIONS ..........................................................  18

     Section 10.01.   Amendment. ......................................................................  18

     Section 10.02.   GOVERNING LAW. ..................................................................  18

     Section 10.03.   Notices. ........................................................................  18

     Section 10.04.   Severability of Provisions. .....................................................  18

     Section 10.05.   Assignment. .....................................................................  18

     Section 10.06.   Acknowledgment and Agreement of HRAC II. ........................................  19

     Section 10.07.   Further Assurances. .............................................................  19

     Section 10.08.   No Waiver; Cumulative Remedies. .................................................  19

     Section 10.09.   Counterparts. ...................................................................  19

     Section 10.10.   Binding Effect; Third-Party Beneficiaries. ......................................  19

     Section 10.11.   Merger and Integration. .........................................................  19

     Section 10.12.   Headings. .......................................................................  19

     Section 10.13.   Schedules and Exhibits. .........................................................  20

     Section 10.14.   Survival of Representations and Warranties. .....................................  20

     Section 10.15.   Nonpetition Covenant ............................................................  20
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Exhibit A    Form of Supplemental Conveyance

Schedule 1   List of Accounts

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<PAGE>

     RECEIVABLES PURCHASE AGREEMENT, dated as of February 18, 2003, by and
between HOUSEHOLD RECEIVABLES ACQUISITION COMPANY II, a Delaware corporation
(together with its permitted successors and assigns, "HRAC II"), and HOUSEHOLD
AFFINITY FUNDING CORPORATION III, a Delaware corporation (together with its
permitted successors and assigns, "Funding").

                              W I T N E S S E T H:

     WHEREAS, HRAC II desires to sell and assign from time to time certain
Receivables (hereinafter defined) to Funding, and Funding desires to purchase
such Receivables;

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

     WHEREAS, HRAC II agrees that all representations, covenants and agreements
made by HRAC II with respect to the Accounts (hereinafter defined) shall also be
for the benefit of the Owner Trustee (hereinafter defined), the Indenture
Trustee (hereinafter defined) and all holders of the Notes.

     NOW, THEREFORE, it is hereby agreed by and between HRAC II and Funding as
follows:

                                    ARTICLE I

                                   DEFINITIONS

          Section 1.01. Definitions. All capitalized terms used herein 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, (d) any account originated as a replacement of an Account in
connection with the upgrade of such Account to premium status (provided that
such replacement account can be traced or identified by reference to, or by way
of, the applicable computer file or microfiche list previously filed pursuant
hereto), (e) each Transferred Account, and (f) each surviving account resulting
from the combination, in accordance with the Credit Guidelines, of two or more
of the Accounts; provided, however, that the term "Account" shall not include
Deleted Accounts and any Account all of the Receivables in which are reassigned
to HRAC II pursuant to Section 6.01 or Section 6.02.

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

     "Addition Date" shall mean, with respect to any Additional Account, the
date from and after which such Additional Account is included as an Additional
Account pursuant to this Agreement and the related Supplemental Conveyance.

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

     "Additional Account" shall mean each Automatic Additional Account and each
Aggregate Addition Account.

     "Additional Cut-Off Date" shall have the meaning specified in the
applicable Supplemental Conveyance.

     "Adverse Effect" shall have the meaning specified in the Transfer and
Servicing Agreement.

     "Aggregate Addition Account" shall mean each revolving credit account
established pursuant to a Credit Agreement between the Account Owner and an
Obligor, which account is owned by the Account Owner, is designated pursuant to
Section 2.02, and is identified in the computer file or microfiche list
delivered pursuant to Section 2.01 and Section 2.04 of this Agreement.

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

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

     "Applicable Transferee" shall mean the Owner Trustee or the Indenture
Trustee, as applicable.

     "Appointment Date" shall have the meaning specified in Section 8.02.

     "Automatic Additional Account" shall mean each revolving credit account
established pursuant to a Credit Agreement between the Account Owner and an
Obligor, which account is owned by the Account Owner, is designated pursuant to
Section 2.03, and is identified in the computer file or microfiche list
delivered pursuant to Section 2.01 and Section 2.04 of this Agreement.

     "Bank" shall mean Household Bank (SB), National Association, a national
bank or any successors or assigns of Household Bank (SB), National Association.

     "Bank Purchase Agreement" shall mean the Second Amended and Restated
Receivables Purchase Agreement, dated as of July 1, 2002, between the Bank and
HRAC II, and all amendments and supplements thereto.

     "Business Day" shall mean any day other than a Saturday, a Sunday or a day
on which banking institutions in New York, New York, or Las Vegas, Nevada, are
authorized or obligated by law or executive order to be closed.

     "Closing Date" shall mean February 18, 2003.

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     "Collections" shall mean all payments received (including Recoveries and
Insurance/Debt Cancellation Proceeds) in respect of the Receivables, in the form
of cash, checks, wire transfers, electronic transfers, ATM transfers or any
other form of payment.

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

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

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

     "Credit Agreement" shall mean, with respect to a revolving credit account,
the agreements between the Account Owner and the Obligor governing the terms and
conditions of such account, as such agreements may be amended, modified or
otherwise changed from time to time.

     "Credit Guidelines" shall mean the Bank's, Servicer's and/or any other
Account Owner's policies and procedures, as amended from time to time, (a)
relating to the operation of its revolving credit business, which are consistent
with prudent practice, including the policies and procedures for determining the
creditworthiness of credit card customers and the extension of credit to credit
card customers, and (b) relating to the maintenance of revolving credit accounts
and the collection of receivables created under revolving credit accounts.

     "Defaulted Receivable" shall mean a Principal Receivable which is charged
off as uncollectible in accordance with the Credit Guidelines or the Servicer's
customary and usual servicing procedures for servicing revolving credit
accounts. A Principal Receivable shall become a Defaulted Receivable no later
than the day on which such Principal Receivable is recorded as charged-off on
the Servicer's computer file of revolving credit accounts.

     "Deleted Account" shall mean any Removed Account as to which there are no
Receivables arising therein owned by Funding.

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

     "Distribution Date" shall have the meaning specified in the Indenture.

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

     "Finance Charge and Administrative Receivables" shall mean Receivables
created in respect of Periodic Rate Finance Charges, cash advance fees, late
fees, overlimit fees, fees and charges relating to debt cancellation, debt
waiver and other enhancement and insurance programs administered by the Account
Owner, annual membership fees and all other incidental and miscellaneous fees
and charges.

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

     "HRAC II" shall have the meaning specified in the recitals of this
Agreement.

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<PAGE>

     "Indenture" shall mean the Master Indenture between the Note Trust and the
Indenture Trustee, dated as of February 18, 2003, as supplemented by Indenture
Supplements (as defined in the Indenture) applicable to any Series (as defined
in the Indenture) that may be issued from time to time, and all other amendments
and supplements thereto.

     "Indenture Trustee" shall mean The Bank of New York, a New York banking
corporation, the institution executing the Indenture as, and acting in the
capacity of, Indenture Trustee thereunder, or its successor in interest, or any
successor trustee appointed as provided in the Indenture.

     "Initial Account" shall mean each revolving credit account established
pursuant to a Credit Agreement between the Account Owner and an Obligor, which
account is owned by the Account Owner, and is identified in the computer file or
microfiche list delivered to Funding by HRAC II pursuant to Section 2.01 on or
prior to the date that is five Business Days after the Closing Date.

     "Insurance/Debt Cancellation Proceeds" shall mean all Insurance/Debt
Cancellation Proceeds as defined in the Bank Purchase Agreement (or, with
respect to an Account Owner other than the Bank, in a similar agreement between
such Account Owner and HRAC II) that are paid to HRAC II as provided in the Bank
Purchase Agreement (or such similar agreement).

     "Interchange" shall mean interchange fees paid to HRAC II pursuant to the
Bank Purchase Agreement (or, with respect to an Account Owner other than the
Bank, pursuant to a similar agreement between such Account Owner and HRAC II).

     "Lien" shall mean any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, deposit arrangement, equity interest, encumbrance,
lien (statutory or other), preference, participation interest, priority or other
security agreement or preferential arrangement of any kind or nature whatsoever,
including any conditional sale or other title retention agreement, any financing
lease having substantially the same economic effect as any of the foregoing and
the filing of any financing statement under the UCC or comparable law of any
jurisdiction to evidence any of the foregoing; provided, however, that the term
"Lien" shall not include any lien or other encumbrance for municipal or other
local taxes if such taxes are not then due and payable or if the validity of
such taxes is then being contested in good faith by appropriate proceedings and
adequate reserves with respect to such taxes have been set aside on the
appropriate books.

     "Monthly Period" shall mean the period from and including the first day of
a calendar month to and including the last day of such calendar month.

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

     "Note Trust" shall mean the Household Affinity Credit Card Master Note
Trust I, a Delaware statutory trust, acting by and through the Owner Trustee.

     "Note Trust Collection Account" shall mean the Collection Account as
defined in the Indenture.

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     "Note Trust Eligible Account" shall mean a revolving credit account owned
by the Bank or any other Account Owner which, as of the Initial Cut-Off Date
with respect to an Initial Account or as of the Additional Cut-Off Date with
respect to an Additional Account, meets the requirements below: (i) (a) is a
revolving credit account in existence and maintained by the Account Owner; (b)
is payable in United States dollars; (c) has an Obligor who has provided, as his
most recent billing address, an address located in the United States or its
territories, possessions or military bases; provided, however, that such
revolving credit account may have an Obligor who has provided, as his or her
most recent billing address, an address outside of the United States if, on the
Initial Cut-Off Date or the related Additional Cut-Off Date, as applicable, no
more than 1% of the revolving credit accounts, calculated by number of accounts,
sold to Funding and then outstanding have such an Obligor; (d) except as
provided below, has an Obligor who has not been identified by either the Account
Owner or HRAC II in its computer files as being currently involved in a
voluntary or involuntary bankruptcy proceeding; (e) has not been identified by
the Account Owner or HRAC II as an account with respect to which (i) the related
card, if any, has been lost or stolen or (ii) the related account number has
been stolen; (f) has not been sold or pledged by the Account Owner to any other
Person; (g) does not have any Receivables which have been sold or pledged by the
Account Owner or HRAC II to any other Person other than any Transferor pursuant
to a Receivables Purchase Agreement; (h) except as provided below, does not have
any Receivables that are Defaulted Receivables; (i) does not have any
Receivables that have been identified by the Account Owner or HRAC II as having
been incurred as a result of fraudulent use of any related credit card, if any,
or related account number; and (j)(i) with respect to the Initial Accounts, is
an account in existence and maintained by the Account Owner or HRAC II as of the
Initial Cut-Off Date or (ii) with respect to Aggregate Addition Accounts, is an
account in existence and maintained by the Account Owner or HRAC II as of the
related Additional Cut-Off Date. Note Trust Eligible Accounts may include
revolving credit accounts owned by an Account Owner, the Receivables in which
have been charged off or an Obligor with respect to which is involved in a
bankruptcy proceeding, in each case on the related Additional Cut-Off Date;
provided that (i) such attributes are treated as a factor by HRAC II and Funding
in calculating a Purchase Price determined to be the fair market value of the
related Receivables and the related Purchased Assets, and (ii) charging
privileges with respect to such revolving credit accounts have been canceled in
accordance with the Credit Guidelines.

     "Note Trust Eligible Receivable" shall mean a Receivable:

     (a) which has arisen in a Note Trust Eligible Account;

     (b) which was created in compliance in all material respects with all
Requirements of Law applicable to the Account Owner and pursuant to a Credit
Agreement which complies in all material respects with all Requirements of Law
applicable to the Account Owner;

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

                                        5

<PAGE>

     (d) as to which, at the time of the sale of such Receivable to Funding,
HRAC II has good and marketable title thereto and which itself is, and the
related underlying receivable is, free and clear of all Liens;

     (e) which has been the subject of a valid sale and assignment from HRAC II
to Funding of all of HRAC II's right, title and interest therein (including any
proceeds thereof);

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

     (g) which, at the time of the sale of such Receivable to Funding, has not
been waived or modified except as permitted in accordance with the Credit
Guidelines and which waiver or modification is reflected in the Account Owner's
and HRAC II's computer file of revolving credit accounts at the time of its sale
to Funding;

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

     (i) as to which, at the time of the sale of such Receivable to Funding,
HRAC II has satisfied all of its obligations required to be satisfied by such
time;

     (j) as to which, at the time of the sale of such Receivable to Funding,
HRAC II has not taken any action which, or omitted to take any action the
omission of which, would impair at the time of such sale the rights of Funding
therein; and

     (k) which constitutes an "account" as defined in Article 9 of the UCC as
then in effect in the State of New York and any state where the filing of a
financing statement is required to perfect Funding's interest in the Receivables
and the proceeds thereof.

     "Noteholder" shall have the meaning specified in the Indenture.

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

     "Officer's Certificate" shall mean a certificate delivered and signed by
the Controller, Treasurer or any Vice President or more senior officer of HRAC
II or Funding, as applicable.

     "Owner Trustee" shall mean Wilmington Trust Company, a Delaware banking
corporation, the institution executing the Trust Agreement as, and acting in the
capacity of,

                                        6

<PAGE>

Owner Trustee thereunder, or its successor in interest, or any successor trustee
appointed as provided in the Trust Agreement.

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

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

     "Principal Receivables" shall mean all Receivables other than Finance
Charge and Administrative Receivables. In calculating the aggregate amount of
Principal Receivables on any day, the amount of Principal Receivables shall be
reduced by the aggregate amount of credit balances in the Accounts on such day.

     "Purchase Price" shall have the meaning specified in Section 3.01(a).

     "Purchase Price Payment Date" shall have the meaning specified in Section
3.01(a).

     "Purchased Assets" shall have the meaning specified in Section 2.01(a).

     "Rating Agency" shall mean the nationally-recognized statistical rating
agency or agencies, if any, selected by Funding to rate any Notes.

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

     "Receivables" shall mean all amounts payable by Obligors on any Account
from time to time, including amounts payable for Principal Receivables and
Finance Charge and Administrative Receivables, but only to the extent that such
amounts payable have been conveyed by the Bank to HRAC II pursuant to the Bank
Purchase Agreement (or, with respect to an Account Owner other than the Bank,
pursuant to a similar agreement between such Account Owner and HRAC II). If HRAC
II sells only a fractional undivided interest in a receivable to Funding
pursuant to the express terms of a Supplemental Conveyance, and unless the
context otherwise requires (whether or not there is a specific reference to the
underlying receivable), any reference in this Agreement or any Supplemental
Conveyance to such Receivable and any Collections thereon shall refer to only
the fractional undivided interest that is sold by HRAC II to Funding, which
fractional interest may be less than a 100% undivided interest therein. Any
reference in this Agreement to the "underlying receivable" with respect to a
Receivable shall refer to the receivable in which such Receivable represents an
undivided interest.

     "Recoveries" shall mean all Recoveries as defined in the Bank Purchase
Agreement (or, with respect to an Account Owner other than the Bank, in a
similar agreement between such Account Owner and HRAC II) that are paid to HRAC
II as provided in the Bank Purchase Agreement (or such similar agreement).

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

                                        7

<PAGE>

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

     "Removed Account" shall mean any Account as to which HRAC II has received
notice from the Servicer that such Account is a "Removed Account" as defined in
the Transfer and Servicing Agreement.

     "Repurchase Price" shall have the meaning specified in Section 6.01(b).

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

     "Servicer" shall mean the entity acting as Servicer under the Transfer and
Servicing Agreement.

     "Stop Date" shall have the meaning specified in Section 2.05(a).

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

     "Transfer and Servicing Agreement" shall mean the Transfer and Servicing
Agreement, dated as of February 18, 2003, among Household Finance Corporation,
as Servicer, Funding, as Transferor, and the Note Trust, and all amendments and
supplements thereto.

     "Transfer Date" shall have the meaning specified in the Indenture.

     "Transferred Account" shall mean an Account into which an Account shall be
transferred pursuant to the Credit Guidelines; provided, however, that such
Transferred Account can be traced or identified as an account into which an
Account has been transferred.

     "Trust Agreement" shall mean the Trust Agreement relating to the Note
Trust, dated as of February 14, 2003, between Funding, as Transferor, and
Wilmington Trust Company, as Owner Trustee, and all amendments and supplements
thereto.

     "UCC" shall mean the Uniform Commercial Code as in effect in the applicable
jurisdiction.

          Section 1.02. Other Definitional Provisions. (a)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.

          (a) 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

                                        8

<PAGE>

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

                               [END OF ARTICLE I]

                                   ARTICLE II

                     PURCHASE AND CONVEYANCE OF RECEIVABLES

     Section 2.01. Purchase. (a) Subject to the terms of this Agreement, and by
execution from time to time of certain assignments substantially in the form of
Exhibit A hereto (each, a "Supplemental Conveyance") supplementing this
Agreement, HRAC II hereby sells, transfers, assigns, sets over and otherwise
conveys to Funding (collectively, the "Conveyance"), without recourse, all of
its right, title and interest in, to and under the Receivables of the Accounts
existing on the Closing Date with respect to Initial Accounts and the related
Additional Cut-Off Date with respect to Additional Accounts and thereafter
created from time to time until the termination of this Agreement pursuant to
Article VIII hereof, all Interchange, Insurance/Debt Cancellation Proceeds and
Recoveries allocable to such Receivables, all monies due or to become due and
all amounts received or receivable with respect thereto, all Collections with
respect thereto and all proceeds (including "proceeds" as defined in the UCC)
thereof (the "Purchased Assets"). The Receivables existing in Accounts on the
Closing Date with respect to Initial Accounts and the related Additional Cut-Off
Date with respect to Additional Accounts and thereafter arising in such Accounts
on or prior to such dates, and the related Purchased Assets, shall be sold by
HRAC II and purchased by Funding on the Closing Date with respect to Initial
Accounts and the related Addition Date with respect to Additional Accounts.
Receivables arising after such dates in such Accounts and the related Purchased
Assets shall be sold by HRAC II and purchased by Funding on the date such
Receivables arise.

     (a) In connection with each Conveyance of Receivables arising under
Accounts, HRAC II agrees (i) to record and file, at its own expense, any
financing statements (and amendments with respect to such financing statements
when applicable) with respect to such Receivables and the related Purchased
Assets, 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 other Purchased Assets from HRAC II to
Funding, and to deliver such documents to Funding as soon as practicable after
the Closing Date, in the case of Receivables arising in the Initial Accounts,
and as soon as practicable after the applicable Addition Date, in the case of
Receivables arising in Additional Accounts, (ii) to cause such financing
statements and amendments to name HRAC II, as seller, and Funding, as purchaser,
of such Receivables and other Purchased Assets and (iii) to deliver a
file-stamped copy of such financing statements or amendments or other evidence
of such filings to Funding (and to one or more Applicable Transferees, if
Funding so directs) as soon as is practicable after filing.

     (b) In connection with each Conveyance of Receivables arising under
Accounts, HRAC II further agrees that it will, at its own expense, (i) on or
prior to the Closing Date or the respective Addition Date, as applicable,
indicate in its computer files and microfiche lists that Receivables created in
connection with such Accounts and the related Purchased Assets have been sold to
Funding in accordance with this Agreement and the Supplemental Conveyance

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<PAGE>

by including in such computer files and microfiche lists Trust ID Code "761,"
and (ii) on or prior to the date that is five Business Days after the Closing
Date or the respective Addition Date, as applicable, deliver to Funding (and to
one or more Applicable Transferees, if Funding so directs) 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 or the Additional
Cut-Off Date, as applicable, (A) its account number, (B) the aggregate amount
outstanding in such Account and (C) the aggregate amount of Principal
Receivables in such Account. Such computer files and microfiche lists, as
supplemented from time to time to reflect Accounts and Deleted Accounts, shall
be marked as Schedule 1 to this Agreement, shall be delivered to Funding (and to
one or more Applicable Transferees, if so directed by Funding), shall be marked
as proprietary and confidential, and are hereby incorporated into and made a
part of this Agreement. HRAC II 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 is no longer an Account; provided
that HRAC II may alter the code if it provides prior written notice of such
alteration to Funding and files, or causes to be filed, any necessary financing
statements or amendments thereto with respect to such alteration.

          (c) The parties hereto intend that the conveyance of HRAC II's right,
title and interest in and to the Purchased Assets pursuant to this Agreement and
any Supplemental Conveyance shall constitute an absolute sale, conveying good
title free and clear of any Liens from HRAC II to Funding and that the Purchased
Assets shall not be part of HRAC II's estate in the event of the insolvency of
HRAC II or a bankruptcy or similar event with respect to HRAC II. It is the
intention of the parties hereto that the arrangements with respect to the
Purchased Assets pursuant to this Agreement and any Supplemental Conveyance
shall constitute a purchase and sale of such Purchased Assets and not a loan or
borrowing secured by such Purchased Assets, including for accounting purposes.
In the event, however, that notwithstanding such intent it were determined that
the transactions evidenced hereby constitute a loan or borrowing 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 II
shall be deemed to have granted, and HRAC II does hereby grant, to Funding a
first priority perfected security interest in all of HRAC II's right, title and
interest, whether now owned or hereafter acquired, in, to and under the
Receivables and other Purchased Assets.

          Section 2.02. Addition of Aggregate Addition Accounts. (a) If, from
time to time, Funding becomes obligated to designate Aggregate Addition Accounts
(as defined in the Transfer and Servicing Agreement) pursuant to Section 2.09(a)
of the Transfer and Servicing Agreement, then Funding may, at its option, give
HRAC II written notice thereof on or before the fifth Business Day (the
"Addition Notice Date") prior to the Addition Date therefor, and HRAC II shall
on or before the related Addition Date designate sufficient Note Trust Eligible
Accounts to be included as Aggregate Addition Accounts so that, after the
inclusion thereof, Funding will be in compliance with the requirements of said
Section 2.09(a). In addition, from time to time and subject to Funding's
covenant in the Transfer and Servicing Agreement to comply with Sections 2.09(b)
and (c) of the Transfer and Servicing Agreement, Note Trust Eligible Accounts
may be designated to be included as Aggregate Addition Accounts upon the mutual
agreement of HRAC II and Funding.

     (b)  On the Addition Date with respect to any designation of Aggregate
Addition

                                       10

<PAGE>

     Accounts, Funding shall purchase HRAC II's right, title and interest in, to
     and under the Receivables in such Aggregate Addition Accounts and the
     related Purchased Assets (and such Aggregate Addition Accounts shall become
     Accounts for purposes of this Agreement), subject to the satisfaction of
     the following conditions on such Addition Date:

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

     (ii)  HRAC II shall have delivered to Funding copies of UCC financing
     statements covering such Aggregate Addition Accounts, if necessary to
     perfect Funding's interest in the Receivables arising therein;

     (iii) HRAC II shall have delivered to Funding (or deposited in the Note
     Trust Collection Account, if required under Section 2.09(c) of the Transfer
     and Servicing Agreement and so directed by Funding) all Collections with
     respect to such Aggregate Addition Accounts since the Additional Cut-Off
     Date;

     (iv)  as of each of the Additional Cut-Off Date and the Addition Date, no
     Dissolution Event with respect to HRAC II shall have occurred nor shall the
     sale of the Receivables arising in the Aggregate Addition Accounts to
     Funding have been made in contemplation of the occurrence thereof;

     (v)   HRAC II shall have delivered to Funding an Officer's Certificate of
     HRAC II, dated the Addition Date, confirming, to the extent applicable, the
     items set forth in clauses (i) through (iv) above; and

     (vi)  HRAC II and Funding shall have entered into a duly executed, written
     Supplemental Conveyance.

           Section 2.03. Addition of Automatic Additional Accounts. (a) Upon the
mutual agreement of HRAC II and Funding, and subject to Funding's covenant in
the Transfer and Servicing Agreement to comply with Sections 2.09(d) and (e) of
the Transfer and Servicing Agreement, HRAC II may designate Note Trust Eligible
Accounts to be included as Automatic Additional Accounts. HRAC II shall
cooperate with Funding to enable Funding to comply with the requirements of
Section 2.09 of the Transfer and Servicing Agreement and to enable Funding to
perform with respect to the Receivables in the Automatic Additional Accounts all
actions specified in Section 2.09(d) or (e) of the Transfer and Servicing
Agreement.

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

     (i)   all Automatic Additional Accounts shall be Note Trust Eligible
Accounts;

     (ii)  HRAC II shall have delivered to Funding copies of UCC financing
statements covering such Automatic Additional Accounts, if necessary to perfect
Funding's interest in the

                                       11

<PAGE>

Receivables arising therein;

     (iii) HRAC II shall have delivered to Funding (or deposited in the Note
Trust Collection Account, if required under Section 2.09(e) of the Transfer and
Servicing Agreement and so directed by Funding) all Collections with respect to
such Automatic Additional Accounts since the Additional Cut-Off Date;

     (iv)  as of each of the Additional Cut-Off Date and the Addition Date, no
Dissolution Event with respect to HRAC II shall have occurred nor shall the sale
of the Receivables arising in the Automatic Additional Accounts to Funding have
been made in contemplation of the occurrence thereof;

     (v)   HRAC II shall have delivered to Funding an Officer's Certificate of
HRAC II, dated the Addition Date, confirming, to the extent applicable, the
items set forth in clauses (i) through (iv) above; and

     (vi)  HRAC II and Funding shall have entered into a duly executed, written
Supplemental Conveyance.

           Section 2.04. Representations and Warranties. HRAC II hereby
represents and warrants to Funding on the related Addition Date as to the
matters set forth in Sections 2.02(b)(ii) and 2.03(b)(ii) above and that, in the
case of Additional Accounts, the computer file or microfiche list delivered
pursuant to Section 2.01(c) is, as of the applicable Additional Cut-Off Date,
true and complete in all material respects

           Section 2.05. Removal and Deletion of Accounts. (a) If an Account
becomes a Removed Account, then HRAC II shall stop selling to Funding Principal
Receivables arising in such Removed Account effective on the Business Day (the
"Stop Date") after the date such Account becomes a Removed Account.
Notwithstanding the cessation of the sale to Funding of additional Principal
Receivables arising in such Removed Account, Principal Receivables sold to
Funding prior to the Stop Date, Collections in respect of such Principal
Receivables, Finance Charge and Administrative Receivables whenever created that
accrue in respect of such Principal Receivables, and Collections in respect of
such Finance Charge and Administrative Receivables, shall continue to be
property of Funding available for transfer by Funding to the Note Trust. To the
extent that it is not clear to HRAC II whether collections relate to a Principal
Receivable that was sold to Funding or to a principal receivable that HRAC II
did not sell to Funding, HRAC II shall allocate payments on each such Removed
Account with respect to the principal balance of such Removed Account first to
the oldest principal balance of such Removed Account.

     (b)   On and after the Stop Date for a Removed Account, HRAC II may mark
its books and records to indicate that such Account is a Removed Account, but
HRAC II shall not (i) alter the code referenced in clause (i) of Section 2.01(c)
with respect to such Removed Account unless and until such Account becomes a
Deleted Account, or (ii) delete such Removed Account from Schedule 1 hereto.

     (c)   Once a Removed Account becomes a Deleted Account, HRAC II shall
promptly delete such Deleted Account from Schedule 1 hereto and shall indicate
in its computer files that such Deleted Account is no longer an Account.

                                       12

<PAGE>

                               [END OF ARTICLE II]

                                       13

<PAGE>

                                  ARTICLE III

                            CONSIDERATION AND PAYMENT

          Section 3.01. Purchase Price. (a) The "Purchase Price" for the
Receivables in Accounts existing on the related Additional Cut-Off Date, and the
related Purchased Assets, that are conveyed to Funding under this Agreement and
the related Supplemental Conveyance shall be payable in cash on the Addition
Date in an amount equal to the sum of (i) 100% of the aggregate balance of the
Principal Receivables, and such of the Finance Charge and Administrative
Receivables as constitute fees and charges relating to debt cancellation, debt
waiver and other enhancement and insurance programs administered by the Account
Owner, so conveyed, plus (ii) the present value of anticipated excess spread,
including Interchange, computed by taking into account factors such as
historical losses (and discounted to take into account any uncertainty as to
future performance matching historical performance), servicing fees,
delinquencies, payment rates and yield, such sum adjusted to reflect any other
factors as HRAC II and Funding mutually may agree will result in a Purchase
Price determined to be the fair market value of such Receivables and the related
Purchased Assets. This computation of initial Purchase Price shall assume no
reinvestment in new Receivables. The Purchase Price for the Receivables in
Accounts which come into existence after the Closing Date or the related
Additional Cut-Off Date, as applicable, and the related Purchased Assets, shall
be payable on a date (the "Purchase Price Payment Date") mutually agreed to by
HRAC II and Funding (but no later than the Distribution Date following the
Monthly Period in which such Receivables and the related Purchased Assets are
conveyed by HRAC II to Funding) in cash in an amount equal to the sum of (i)
100% of the aggregate balance of the Principal Receivables, and such of the
Finance Charge and Administrative Receivables as constitute fees and charges
relating to debt cancellation, debt waiver and other enhancement and insurance
programs administered by the Account Owner, so conveyed, plus (ii) the present
value of anticipated excess spread, including Interchange, computed by taking
into account factors such as historical losses (and discounted to take into
account any uncertainty as to future performance matching historical
performance), servicing fees, delinquencies, payment rates and yield, such sum
adjusted to reflect any other factors as HRAC II and Funding mutually may agree
will result in a Purchase Price determined to be the fair market value of such
Receivables and the related Purchased Assets.

          (b) Notwithstanding any other provision of this Agreement, HRAC II
shall not be obligated to continue to sell Receivables or other Purchased Assets
to Funding to the extent that HRAC II is not paid the Purchase Price therefor as
provided herein.

          Section 3.02. Adjustments to Purchase Price. The Purchase Price shall
be adjusted on each Purchase Price Payment Date (a "Credit Adjustment") with
respect to any Receivable previously conveyed to Funding by HRAC II which has
since been reversed by HRAC II or the Servicer because of a rebate, refund,
unauthorized charge or billing error to an Obligor or because such Receivable
was created in respect of merchandise which was refused or returned by an
Obligor, but in each case other than by reason of Servicer error. 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 payable on such
Purchase Price Payment Date computed in accordance with Section 3.01(a) divided
by (ii) the amount of Principal Receivables, and such of

                                       14

<PAGE>

the Finance Charge and Administrative Receivables as constitute fees and charges
relating to debt cancellation, debt waiver and other insurance and enhancement
programs administered by the Account Owner, 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 II agrees that, not
later than 1:00 p.m. New York City time on such Purchase Price Payment Date,
HRAC II shall pay or cause to be paid to Funding an amount equal to the amount
by which the Credit Adjustment exceeds the unadjusted Purchase Price.

          Section 3.03. Use of Name, Logo and Marks. HRAC II does hereby grant
to Funding a non-exclusive license to use the name "Household Receivables
Acquisition Company II" and all related identifying trade or service marks,
signs, symbols, logos, designs, servicing software, customer lists and other
intangibles (including those of any Account Owner in which HRAC II has rights)
in connection with the servicing of the Receivables purchased hereunder. The
license granted shall be co-extensive with the term of the Agreement.

                              [END OF ARTICLE III]

                                       15

<PAGE>

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

          Section 4.01. HRAC II's Representations and Warranties Relating to
HRAC II. HRAC II hereby represents and warrants to, and agrees with, Funding on
the date of this Agreement and each Addition Date, that:

          (a) Organization and Good Standing. HRAC II 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 II 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 unenforceable or (ii) have a
material adverse effect on this Agreement or the transactions contemplated
hereby or on the ability of HRAC II to perform its obligations under this
Agreement.

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

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

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

                                       16

<PAGE>

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 II, would materially and adversely
affect the performance by HRAC II 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 Note Trust under United States, New York, California, Nevada
or Illinois 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 II in connection with the execution and
delivery by HRAC II of this Agreement or the Conveyance Papers and the
performance of the transactions contemplated by this Agreement or the Conveyance
Papers by HRAC II 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 sale and assignment of the Purchased Assets to Funding. Upon
discovery by HRAC II or Funding 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 five Business Days following such discovery.

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

          (a)   Representations and Warranties. HRAC II hereby represents and
warrants to Funding, with respect to Additional Accounts, on 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 II enforceable against HRAC II in accordance with its terms,
except as such enforceability may be limited by (A) applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws, now or hereafter
in effect, relating to creditors' rights generally, (B) the possible
unavailability of remedies of specific performance and injunctive and other
forms of equitable relief, and (C) equitable defenses and to the discretion of
the court before which any proceeding therefor may be brought;

          (ii)  as of the related Additional Cut-Off Date with respect to
Additional Accounts, Schedule 1 to this Agreement, as supplemented to such date,
is an accurate and complete listing in all material respects of all the
Additional Accounts, and the information contained therein supplied by HRAC II
with respect to the identity of such Additional Accounts and the Receivables
existing thereunder is true and correct in all material respects;

          (iii) each Receivable sold to Funding has been sold free and clear of
any Lien, and each related underlying receivable is then free and clear of all
Liens;

          (iv)  with respect to each Receivable, all consents, orders, approvals
or authorizations of or registrations or declarations with any Governmental
Authority required to be

                                       17

<PAGE>

obtained, effected or given by HRAC II in connection with the conveyance of such
Receivable to Funding have been duly obtained, effected or given and are in full
force and effect;

          (v)    each related Supplemental Conveyance constitutes a valid sale,
transfer and assignment to Funding of all right, title and interest of HRAC II
in the Receivables of the related Accounts and the proceeds thereof, and the
Interchange, Insurance/Debt Cancellation Proceeds and Recoveries allocable to
such Receivables;

          (vi)   on the Additional Cut-Off Date, in the case of each related
Additional Account, each such Account is a Note Trust Eligible Account;

          (vii)  on the Additional Cut-Off Date, in the case of each related
Additional Account, each Receivable contained in such Account on such date and
sold to Funding by HRAC II is a Note Trust Eligible Receivable;

          (viii) on the date of the creation of any new Receivable sold to
Funding by HRAC II, such Receivable is a Note Trust Eligible Receivable; and

          (ix)   no selection procedures believed by HRAC II to be materially
adverse to the interests of Funding, the Owner Trustee, the Indenture Trustee or
the Note Trust have been used by HRAC II in selecting the Accounts from among
any pool of accounts of a similar type available to HRAC II.

          (b)    Notice of Breach. The representations and warranties set forth
in this Section 4.02 shall survive the sale and assignment of the Purchased
Assets to Funding. Upon discovery by either HRAC II or Funding 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 five Business Days following such
discovery; provided that the failure to give notice within five Business Days
does not preclude subsequent notice. HRAC II hereby acknowledges that Funding
intends to rely on the representations hereunder in connection with
representations made by Funding to secured parties, assignees or subsequent
transferees, including but not limited to transfers made by Funding to the Note
Trust pursuant to the Transfer and Servicing Agreement and by the Note 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 II.

          Section 4.03. Representations and Warranties of Funding. On the date
of this Agreement and each Addition Date, Funding hereby represents and warrants
to, and agrees with, HRAC II that:

          (a)    Organization and Good Standing. Funding 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 and the Conveyance Papers to which Funding is a party.

          (b)    Due Authorization. The execution and delivery by Funding of
this Agreement and the Conveyance Papers to which Funding is a party, and the
consummation by

                                       18

<PAGE>

Funding of the transactions provided for in this Agreement and the Conveyance
Papers to which Funding is a party, have been duly authorized by Funding by all
necessary corporate action on the part of Funding.

          (c)    No Conflict. The execution and delivery by Funding of this
Agreement and the Conveyance Papers to which Funding is a party, the performance
by Funding of the transactions contemplated by this Agreement and the Conveyance
Papers to which Funding is a party, and the fulfillment by Funding of the terms
hereof and thereof, 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 Funding is a party or by
which it or any of its properties are bound.

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

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

          (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 Funding in connection with the execution and
delivery by Funding of this Agreement and the Conveyance Papers to which Funding
is a party and the performance by Funding of the transactions contemplated by
this Agreement and the Conveyance Papers to which Funding is a party or the
fulfillment by Funding of the terms of this Agreement and the Conveyance Papers
to which Funding is a party 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 sale and assignment of the Purchased Assets to Funding. Upon
discovery by HRAC II or Funding 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 five Business Days following such discovery.

                               [END OF ARTICLE IV]

                                       19

<PAGE>

                                    ARTICLE V

                                    COVENANTS

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

          (a)  Receivables Not To Be Evidenced by Instruments. HRAC II will take
no action to cause any Receivable (or any underlying receivable) to be evidenced
by any instrument or chattel paper (as defined in the UCC), except in connection
with the enforcement or collection undertaken with regard to the related
Account. In the event of a breach of this Section 5.01(a), such Receivable shall
be reassigned to HRAC II in accordance with Section 6.01(b).

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

          (c)  Account Allocations. In the event that HRAC II is unable for any
reason to sell Receivables to Funding 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 Governmental Authority having regulatory
authority over HRAC II or any court of competent jurisdiction ordering that HRAC
II not sell any additional Principal Receivables to Funding), then, in any such
event, HRAC II agrees (except as prohibited by any such order) to allocate and
pay to Funding, after the date of such inability, all Collections with respect
to Principal Receivables previously sold to Funding. To the extent that it is
not clear to HRAC II whether collections relate to a Principal Receivable that
was sold to Funding or to a principal receivable that HRAC II is unable to sell
to Funding, HRAC II agrees that it shall allocate payments on each Account with
respect to the principal balance of such Account first to the oldest principal
balance of such Account. Notwithstanding any cessation of the sale to Funding of
additional Principal Receivables, Principal Receivables sold to Funding prior to
the occurrence of the event giving rise to such inability, Collections in
respect of such Principal Receivables, Finance Charge and Administrative
Receivables whenever created that accrue in respect of such Principal
Receivables, and Collections in respect of such Finance Charge and
Administrative Receivables, shall continue to be property of Funding available
for transfer by Funding to the Note Trust.

          (d)  Delivery of Collections. In the event that HRAC II receives
Collections in respect of the Purchased Assets sold to Funding hereunder, HRAC
II agrees to pay to Funding (or to the Servicer if Funding so directs) all such
Collections as soon as practicable after receipt thereof.

                                       20

<PAGE>

          (e)  Notice of Liens. HRAC II shall notify Funding promptly after
becoming aware of any Lien on any Purchased Asset other than the conveyances
hereunder

          (f)  Enforcement of Agreements. HRAC II hereby covenants that HRAC II
will at all times enforce the covenants and agreements of the Bank under the
Bank Purchase Agreement (or, with respect to an Account Owner other than the
Bank, in a similar agreement between such Account Owner and HRAC II), including
those relating to periodic rate finance charges, credit agreements, and credit
guidelines related to the Accounts.

          (g)  Interchange. Not later than 1:00 p.m., New York City time, on
each Distribution Date, HRAC II shall pay to or at the direction of Funding, in
immediately available funds, the amount of Interchange allocable to the
Receivables and received by HRAC II.

          (h)  Documentation of Transfer. HRAC II shall undertake to file the
documents which would be necessary to perfect and maintain the perfection of the
sale of the Purchased Assets to Funding.

          (i)  Approval of Office Records. HRAC II shall cause this Agreement
and all Conveyance Papers to be duly approved by HRAC II's Board of Directors,
and HRAC II shall maintain this Agreement and all Conveyance Papers as a part of
the official records of HRAC II for the term of the Agreement.

          (j)  Name and Type and Jurisdiction of Organization. HRAC II shall not
change its name or its type or jurisdiction of organization without previously
having delivered to Funding an opinion of counsel to the effect that all actions
have been taken, and all filings have been made, as are necessary to continue
and maintain the first-priority perfected ownership interest of Funding in the
Purchased Assets.

                               [END OF ARTICLE V]

                                       21

<PAGE>

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) or (viii) 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 Funding is required to accept a
reassignment of the Receivables previously sold by HRAC II to Funding pursuant
to Section 2.05 of the Transfer and Servicing Agreement, HRAC II shall accept
reassignment of such Receivables on the terms and conditions set forth in
Section 6.01(b).

          (b) (b) HRAC II shall accept reassignment of any Receivables described
in Section 6.01(a), and any related Purchased Assets, from Funding on the date
on which such Receivables and related Purchased Assets are reassigned to
Funding, and shall pay for such reassigned Receivables and related Purchased
Assets by paying to Funding in immediately available funds on the next Purchase
Price Payment Date an amount equal to 100% of the aggregate balance of such
reassigned Receivables as constitute Principal Receivables and Finance Charge
and Administrative Receivables representing fees and charges relating to debt
cancellation, debt waiver and other enhancement and insurance programs
administered by the Account Owner, 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 prior Monthly Period (the "Repurchase Price").
Upon reassignment of such Receivables and related Purchased Assets, Funding
shall automatically and without further action sell, transfer, assign, set over
and otherwise convey to HRAC II, without recourse, representation or warranty,
all the right, title and interest of Funding in and to such Receivables and
related Purchased Assets, and such reassigned Receivables and related Purchased
Assets shall be treated by Funding as collected in full as of the date on which
they are transferred. Funding shall execute such documents and instruments of
transfer or assignment and take such other actions as shall reasonably be
requested by HRAC II to effect the conveyance of such Receivables and related
Purchased Assets pursuant to this Section 6.01(b).

          Section 6.02. Reassignment of Other Receivables. (a) In the event any
representation or warranty set forth in Section 4.01(a) or (c) 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 Funding is required to accept a reassignment of the
Receivables previously sold by HRAC II to Funding pursuant to Section 2.06 of
the Transfer and Servicing Agreement, HRAC II shall accept reassignment of such
Receivables on the terms and conditions set forth in Section 6.02 (b).

          (b) HRAC II shall accept reassignment of any Receivables described in
Section 6.02(a), and any related Purchased Assets, from Funding on the date on
which such Receivables and related Purchased Assets are reassigned to Funding,
and shall pay for such reassigned Receivables and related Purchased Assets by
paying to Funding in immediately available funds, not later than 1:00 p.m. New
York City time, on the Transfer Date following the Monthly Period in which such
reassignment obligation arises, an amount equal to the Repurchase Price. If

                                       22

<PAGE>

Funding so directs, HRAC II shall deposit such payment directly into the Note
Trust Collection Account in accordance with the terms of the Transfer and
Servicing Agreement and the Indenture. Upon reassignment of such Receivables and
related Purchased Assets, Funding shall automatically and without further action
sell, transfer, assign, set over and otherwise convey to HRAC II, without
recourse, representation or warranty, all the right, title and interest of
Funding in and to such Receivables and related Purchased Assets, and such
reassigned Receivables and related Purchased Assets shall be treated by Funding
as collected in full as of the date on which they are transferred. Funding shall
execute such documents and instruments of transfer or assignment and take such
other actions as shall reasonably be requested by HRAC II to effect the
conveyance of such Receivables and related Purchased Assets pursuant to this
Section 6.02(b).

                               [END OF ARTICLE VI]

                                       23

<PAGE>

                                   ARTICLE VII

                              CONDITIONS PRECEDENT

          Section 7.01. Conditions to Funding's Obligations Regarding
Receivables. The obligations of Funding to purchase any Receivables created on
or after any Addition Date shall be subject to the satisfaction of the following
conditions:

          (a) All representations and warranties of HRAC II 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 (except that, to the
extent any such representation or warranty expressly relates to an earlier date,
such representation or warranty was true and correct on such earlier date);

          (b) All information (concerning any Account to which such Receivables
relate) provided or to be provided to Funding shall be true and correct in all
material respects;

          (c) HRAC II shall have indicated in its computer files and microfiche
lists that such Receivables have been sold to Funding in accordance with this
Agreement; and

          (d) HRAC II shall have recorded and filed, at its own expense, any
financing statements with respect to such Receivables meeting the requirements
of applicable state law in such jurisdictions as would be necessary to perfect
the sale of such Receivables from HRAC II to Funding, and shall deliver a
file-stamped copy of such financing statements or other evidence of such filings
to Funding.

          Section 7.02. Conditions Precedent to HRAC II's Obligations. The
obligations of HRAC II to sell, on any date, Receivables shall be subject to the
satisfaction of the following conditions:

          (a) All representations and warranties of Funding 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 (except that, to the
extent any such representation or warranty expressly relates to an earlier date,
such representation or warranty was true and correct on such earlier date);

          (b) Payment or provision for payment of the Purchase Price in
accordance with Sections 3.01 and 3.02 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 II, and HRAC II shall have received
from Funding copies of all documents (including, without limitation, records of
corporate proceedings) relevant to the transactions herein contemplated as HRAC
II may reasonably have requested.

                              [END OF ARTICLE VII]

                                       24

<PAGE>

                                  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 at least until the termination
of the Note Trust as provided in Article VIII of the Trust Agreement. Thereafter
this Agreement may be terminated by the mutual agreement of the parties hereto.

          Section 8.02. Purchase Termination. If (a) HRAC II shall file a
petition or commence a proceeding (i) to take advantage of any bankruptcy,
conservatorship, receivership, insolvency or similar laws or (ii) for the
appointment of a trustee, conservator, receiver, liquidator or similar official
for or relating to HRAC II or all or substantially all of its property, (b) HRAC
II shall consent or fail to object to any such petition filed or proceeding
commenced against or with respect to it or all or substantially all of its
property, or any such petition or proceeding shall not have been dismissed or
stayed within sixty (60) days of its filing or commencement, or a court, agency,
or other supervisory authority with jurisdiction shall have decreed or ordered
relief with respect to any such petition or proceeding, (c) HRAC II shall admit
in writing its inability to pay its debts generally as they become due, (d) HRAC
II shall make an assignment for the benefit of its creditors, (e) HRAC II shall
voluntarily suspend payment of its obligations, or (f) HRAC II shall take any
action in furtherance of any of the foregoing (any of the foregoing, a
"Dissolution Event"), HRAC II shall, on the day of such Dissolution Event (the
"Appointment Date"), immediately cease to sell additional Principal Receivables
to Funding and shall promptly give notice to Funding and the Applicable
Transferees of such Dissolution Event. Notwithstanding any cessation of the sale
to Funding of additional Principal Receivables, Principal Receivables sold to
Funding prior to such Appointment Date, Collections in respect of such Principal
Receivables, Finance Charge and Administrative Receivables whenever created
accrued in respect of such Principal Receivables, and Collections in respect of
such Finance Charge and Administrative Receivables, shall continue to be
property of Funding available for transfer by Funding to the Note Trust.

                              [END OF ARTICLE VIII]

                                       25

<PAGE>

                                   ARTICLE IX

                                    SERVICING

          Section 9.01. Transfer and Servicing Agreement Controls with respect
to the Receivables. HRAC II acknowledges that the Receivables are to be
deposited in the Note Trust pursuant to the Transfer and Servicing Agreement and
are to be serviced by the Servicer. HRAC II agrees to cooperate fully with the
Servicer and to permit the Servicer to take any and all actions necessary in
connection with the Receivables.

                               [END OF ARTICLE IX]

                                       26

<PAGE>

                                   ARTICLE X

                            MISCELLANEOUS PROVISIONS

          Section 10.01. 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 Funding and HRAC
II in accordance with this Section 10.01. This Agreement and any Conveyance
Papers may be amended from time to time by Funding and HRAC II, provided that
Funding provides to HRAC II (a) an Officer's Certificate of Funding to the
effect that Funding reasonably believes that such amendment will not have an
Adverse Effect, and (b) an opinion of counsel addressed and delivered to HRAC
II, dated the date of such amendment, to the effect that the conditions
precedent to any such amendment have been satisfied.

          Section 10.02. 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 10.03. 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 certified mail, return receipt requested,
to (a) in the case of HRAC II, Household Receivables Acquisition Company II,
1111 Town Center Drive, Las Vegas, Nevada 89144, Attention: Manager-Compliance
(facsimile no. (702) 243-1214); (b) in the case of Funding, Household Affinity
Funding Corporation III, 1111 Town Center Drive, Las Vegas, Nevada 89144,
Attention: Manager-Compliance (facsimile no. (702) 243-1214); (c) in the case of
the Owner Trustee, Wilmington Trust Company, as Owner Trustee, Rodney Square
North, 1100 North Market Street, Wilmington, Delaware 19890-0001; (d) in the
case of the Indenture Trustee, The Bank of New York, as Indenture Trustee, 101
Barclay Street, Floor 8 West, New York, New York 10286; or (e) as to each party,
at such other address as shall be designated by such party in a written notice
to each other party.

          Section 10.04. 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 10.05. Assignment. Notwithstanding anything to the contrary
contained herein, other than Funding's assignment of its right, title and
interest in, to and under this Agreement to the Note Trust (and the subsequent
assignment pursuant to the Indenture), this Agreement may not be assigned by the
parties hereto, except for an assignment by a party hereto of its right, title
and interest in, to and under this Agreement to (i) a successor by merger
assuming this Agreement, (ii) any affiliate of Household International, Inc. (or
any successor to

                                       27

<PAGE>

Household International, Inc.) which assumes the obligations of this Agreement
or (iii) any entity provided that the Rating Agency Condition has been
satisfied.

          Section 10.06. Acknowledgment and Agreement of HRAC II. By execution
below, HRAC II expressly acknowledges and agrees that all of Funding's right,
title and interest in, to and under this Agreement, including, without
limitation, all of Funding's right, title and interest in and to the
Receivables, shall be assigned by Funding to the Note Trust pursuant to the
Transfer and Servicing Agreement and by the Note Trust to the Indenture Trustee
pursuant to the Indenture. HRAC II hereby expressly consents to such
assignments. Additionally, HRAC II agrees to pay, or cause to be paid, directly
to the Indenture Trustee any amounts payable by HRAC II to Funding hereunder
which are identified to HRAC II as required to be paid by Funding to the Note
Trust and by the Note Trust to the Indenture Trustee. Any payment required to be
made on or before a specified date in same-day funds may be made on the prior
Business Day in next- day funds.

          Section 10.07. Further Assurances. HRAC II and Funding 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 and the Conveyance Papers, including, without limitation, the
execution of any financing statements or amendments thereto or equivalent
documents relating to the Purchased Assets for filing under the provisions of
the UCC or other law of any applicable jurisdiction.

          Section 10.08. No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of HRAC II or Funding, 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 10.06, the rights,
remedies, powers and privileges herein provided are cumulative and not
exhaustive of any rights, remedies, powers and privileges provided by law.

          Section 10.09. Counterparts. This Agreement and the 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 10.10. Binding Effect; 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 Applicable Transferees shall be considered third-party beneficiaries of this
Agreement.

          Section 10.11. 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.

                                       28

<PAGE>

          Section 10.12. Headings. The headings are for purposes of reference
only and shall not otherwise affect the meaning or interpretation of any
provision hereof.

          Section 10.13. 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 10.14. 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 the conveyance of any Purchased Assets by
Funding to the Note Trust pursuant to the Transfer and Servicing Agreement and
by the Note Trust to the Indenture Trustee pursuant to the Indenture.

          Section 10.15. Nonpetition Covenant. Notwithstanding any prior
termination of this Agreement, HRAC II 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 Funding or the Note Trust to petition or invoke the
process of any Governmental Authority for the purpose of commencing or
sustaining a case against Funding or the Note Trust under any bankruptcy,
insolvency or similar law or appointing a trustee, receiver, conservator,
liquidator, assignee, custodian, sequestrator or other similar official of
Funding or the Note Trust or any substantial part of its property or ordering
the winding-up or liquidation of the affairs of Funding or the Note Trust.

                               [END OF ARTICLE X]

                                       29

<PAGE>

     IN WITNESS WHEREOF, HRAC II and Funding 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 II

                                     By: /s/ P. L. Krupowicz
                                        ------------------------------
                                         Name:  P. L. Krupowicz
                                         Title: Vice President and Assistant
                                                Treasurer

                                     HOUSEHOLD AFFINITY FUNDING
                                      CORPORATION III

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

                                       30

<PAGE>

                                                                       EXHIBIT A

                        FORM OF SUPPLEMENTAL CONVEYANCE

                (As required by Section 2.02 and Section 2.03 of
                       the Receivables Purchase Agreement)

     SUPPLEMENTAL CONVEYANCE No. , dated as of , by and between HOUSEHOLD
RECEIVABLES ACQUISITION COMPANY II, as Seller (together with its permitted
successors and assigns, "HRAC II"), and HOUSEHOLD AFFINITY FUNDING CORPORATION
III (together with its permitted successors and assigns, "Funding"), pursuant to
the Receivables Purchase Agreement referred to below.

                              W I T N E S S E T H :

     WHEREAS, HRAC II and Funding are parties to the Receivables Purchase
Agreement, dated as of February 18, 2003 (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 II wishes to
designate Additional Accounts and to sell the Receivables of such Additional
Accounts, whether existing on the Additional Cut-Off Date or thereafter created,
to Funding pursuant to the Receivables Purchase Agreement; and

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

     NOW THEREFORE, HRAC II and Funding 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,____________ ,.

     "Additional Accounts" shall have the meaning specified in Section 2.

     "Additional Cut-Off Date" shall mean, with respect to the Additional
Accounts [the close of business on], __________________.

     "Additional Purchased Assets" shall have the meaning specified in Section
3(a)

     2. Designation of Additional Accounts. Within five Business Days of the
Addition Date, HRAC II shall deliver a computer file or microfiche list
containing a true and complete schedule identifying all Additional Accounts
designated hereby (the "Additional Accounts") and specifying for each such
Additional Account, as of the Additional Cut-Off Date, (a) its

                                      A-1

<PAGE>

account number, (b) the aggregate amount outstanding in such Additional Account
and (c) the aggregate amount of Principal Receivables in such Additional
Account. On the date of this Supplemental Conveyance, such computer file or
microfiche list shall be incorporated into and made part of this Supplemental
Conveyance and the Receivables Purchase Agreement and is marked as Schedule 1 to
this Supplemental Conveyance and shall supplement Schedule 1 of the Receivables
Purchase Agreement.

     3. Conveyance of Receivables.

          (a) HRAC II does hereby sell, transfer, assign, set over and otherwise
     convey to Funding, without recourse, all of its right, title and interest
     in, to and under the Receivables of the Additional Accounts existing on the
     Additional Cut-Off Date and thereafter created from time to time until the
     termination of the Receivables Purchase Agreement pursuant to Article VIII
     thereof, all Interchange, Insurance/Debt Cancellation Proceeds and
     Recoveries allocable to such Receivables, all monies due or to become due
     and all amounts received or receivable with respect thereto, all
     Collections with respect thereto and all proceeds (including "proceeds" as
     defined in the UCC) thereof (the "Additional Purchased Assets").

          (b) In connection with such sale and if necessary, HRAC II agrees to
     record and file, at its own expense, one or more financing statements (and
     amendments with respect to such financing statements when applicable) with
     respect to the Additional Purchased Assets meeting the requirements of
     applicable state law in such manner and in such jurisdictions as are
     necessary to perfect the sale of the Additional Purchased Assets to
     Funding, and to deliver a file-stamped copy of such financing statements or
     amendments or other evidence of such filing to Funding.

          (c) In connection with such sale, HRAC II further agrees, at its own
     expense, on or prior to the date of this Supplemental Conveyance, to
     indicate in the appropriate computer files and microfiche lists that all
     Receivables created in connection with the Additional Accounts and the
     related Additional Purchased Assets have been sold to Funding pursuant to
     this Supplemental Conveyance by including in such computer files and
     microfiche lists the Trust ID Code "761."

          (d) The parties hereto intend that the conveyance of the Additional
     Purchased Assets described in Section 3(a) constitute an absolute sale
     consistent with the intent expressed in Section 2.01(d) of the Receivables
     Purchase Agreement. It is the intention of the parties hereto that the
     arrangements with respect to the Additional Purchased Assets shall
     constitute a purchase and sale of such Additional Purchased Assets and not
     a loan, including for accounting purposes. In the event, however, that
     notwithstanding such intent it were 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 Supplemental Conveyance shall
     constitute a security agreement under applicable law, and that HRAC II
     shall be deemed to have granted, and HRAC II does hereby grant, to Funding
     a first priority perfected security interest in all of HRAC II's right,
     title and interest, whether now owned or hereafter acquired, in, to and
     under the Additional Purchased Assets to

                                      A-2

<PAGE>

     secure the obligations of HRAC II hereunder and under the Receivables
     Purchase Agreement.

     4. Acceptance by Funding. Subject to the satisfaction of the conditions set
forth in Section 6 of this Supplemental Conveyance, Funding hereby acknowledges
its acceptance of the Additional Purchased Assets, now existing and hereafter
created, conveyed to Funding pursuant to Section 3 of this Supplemental
Conveyance. Funding further agrees to enforce HRAC II's covenant to deliver to
Funding (and to the Applicable Transferees if Funding has so directed) the
computer file or microfiche list described in Section 2 of this Supplemental
Conveyance within five Business Days of the Addition Date.

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

          (a) Legal, Valid and Binding Obligation. This Supplemental Conveyance
     constitutes a legal, valid and binding obligation of HRAC II enforceable
     against HRAC II in accordance with its terms, except as such enforceability
     may be limited by (i) applicable bankruptcy, insolvency, reorganization,
     moratorium or other similar laws, now or hereafter in effect, relating to
     creditors' rights generally, (ii) the possible unavailability of remedies
     of specific performance and injunctive and other forms of equitable relief
     and (iii) equitable defenses and the discretion of the court before which
     any proceeding therefor may be brought;

          (b) Selection Procedures. No selection procedures believed by HRAC II
     to be materially adverse to the interests of Funding, the Owner Trustee,
     the Indenture Trustee or the Note Trust have been used by HRAC II in
     selecting the Additional Accounts from among any pool of accounts of a
     similar type available to HRAC II;

          (c) Insolvency. HRAC II is not insolvent and, after giving effect to
     the conveyance set forth in Section 3 of this Supplemental Conveyance, will
     not be insolvent;

          (d) Sale of Receivables. This Supplemental Conveyance constitutes a
     valid sale, transfer and assignment to Funding of all right, title and
     interest of HRAC II in the Receivables of the Additional Accounts and the
     proceeds thereof, and the Interchange, Insurance/Debt Cancellation Proceeds
     and Recoveries allocable to such Receivables;

          (e) No Conflict. The execution and delivery of this Supplemental
     Conveyance by HRAC II, the performance by HRAC II of the transactions
     contemplated by this Supplemental Conveyance, and the fulfillment by HRAC
     II of the terms of this Supplemental Conveyance applicable to HRAC II 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 II is a party or
     by which it or any of its properties are bound;

          (f) No Violation. The execution, delivery and performance of this
     Supplemental Conveyance by HRAC II and the fulfillment by HRAC II of the
     terms

                                      A-3

<PAGE>

     contemplated herein applicable to HRAC II will not conflict with or violate
     any Requirements of Law applicable to HRAC II;

          (g) No Proceedings. There are no proceedings or investigations,
     pending or, to the best knowledge of HRAC II, threatened against HRAC II
     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 II, would materially and adversely affect the performance by HRAC II
     of its obligations under this Supplemental Conveyance, (iv) seeking any
     determination or ruling that would materially and adversely affect the
     validity or enforceability of this Supplemental Conveyance or (v) seeking
     to affect adversely the income tax attributes of the Note Trust under
     United States, New York, California, Nevada or Illinois income tax systems;

          (h) 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 II in connection with the
     execution and delivery by HRAC II of this Supplemental Conveyance and the
     performance of the transactions contemplated by this Supplemental
     Conveyance by HRAC II have been duly obtained, effected or given and are in
     full force and effect;

          (i) No Liens. Each Receivable sold to Funding has been sold free and
     clear of any Lien, and each related underlying receivable is then free and
     clear of all Liens;

          (j) Eligibility of Additional Accounts. On the Additional Cut-Off
     Date, each Additional Account is a Note Trust Eligible Account; and

          (k) Eligibility of Receivables. On the Additional Cut-Off Date, each
     Receivable contained in an Additional Account on such date and sold to
     Funding by HRAC II is a Note Trust Eligible Receivable.

     6. Conditions Precedent. The acceptance of Funding set forth in Section 4
of this Supplemental Conveyance is subject to the satisfaction, on or prior to
the Addition Date, of the following conditions precedent:

          (a) Representations and Warranties. Each of the representations and
     warranties made by HRAC II in Section 5 of this Supplemental Conveyance
     shall be true and correct on the date of this Supplemental Conveyance and
     on the Addition Date.

          (b) Officer's Certificate. HRAC II shall have delivered to Funding an
     Officer's Certificate of HRAC II confirming that (i) no selection
     procedures believed by HRAC II to be materially adverse to the interests of
     Funding, the Owner Trustee, the Indenture Trustee or the Note Trust have
     been used by HRAC II in selecting the Additional Accounts from among any
     pool of accounts of a similar type available to HRAC II; and (ii) the list
     of Additional Accounts, as of the Additional Cut-Off Date, is a true and
     complete schedule identifying all such Additional Accounts and specifies
     for each such Additional Account, as of the Additional Cut-Off Date, (x)
     its account number,

                                      A-4

<PAGE>

     (y) the aggregate amount outstanding in such Additional Account and (z) the
     aggregate amount of Principal Receivables in such Additional Account.

          (c) Additional Information. HRAC II shall have delivered to Funding
     such information as was reasonably requested by Funding to satisfy itself
     as to the accuracy of the representation and warranty set forth in Section
     5(d) of this Supplemental Conveyance.

     7. 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 as supplemented by this Supplemental Conveyance.
Except as expressly amended and supplemented 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.

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

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

                                      A-5

<PAGE>

     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.

                                 HOUSEHOLD RECEIVABLES
                                  ACQUISITION COMPANY II

                                 By: ________________________
                                     Name:
                                     Title:

                                 HOUSEHOLD AFFINITY FUNDING
                                  CORPORATION III

                                 By: ________________________
                                     Name:
                                     Title:

                                      A-6

<PAGE>

                                                                   Schedule 1 to
                                                                    Supplemental
                                                                      Conveyance

                               Additional Accounts

     Computer Files Containing Account Information Delivered to Funding are
Incorporated by Reference

<PAGE>

                                                                      Schedule 1

                                LIST OF ACCOUNTS

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

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