EXHIBIT 10.8

June 25, 2002

METRIS COMPANIES INC.

CHANGE OF CONTROL SEVERANCE AGREEMENT

 

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TABLE OF CONTENTS

              Page
ARTICLE I
       
 
       
PURPOSES
    1  
 
       
ARTICLE II
       
 
       
CERTAIN DEFINITIONS
    1  
2.1 Accrued Obligations
    1  
2.2 Agreement Term
    1  
2.3 Article
    2  
2.4 Beneficial owner
    2  
2.5 Cause
    2  
2.6 Change of Control
    2  
2.7 Code
    3  
2.8 Disability
    3  
2.9 Effective Date
    3  
2.10 Good Reason
    4  
2.11 Imminent Control Change Date
    4  
2.12 IRS
    4  
2.13 1934 Act
    4  
2.14 Notice of Termination
    4  
2.15 Plans
    4  
2.16 Policies
    4  
2.17 Post-Change Period
    4  
2.18 SEC
    4  
2.19 Section
    4  
2.20 Subsidiary
    4  
2.21 Termination Date
    5  
2.22 Voting Securities
    5  
 
       
ARTICLE III
       
 
       
POST-CHANGE PERIOD PROTECTIONS
    5  
3.1 Position and Duties
    5  
3.2 Compensation
    6  
3.3 Stock Options
    7  
 
       
ARTICLE IV
       
 
       
TERMINATION OF EMPLOYMENT
    8  
4.1 Disability
    8  
4.2 Death
    8  
4.3 Cause
    8  
4.4 Good Reason
    9  
4.5 Termination Prior to Effective Date
    10  

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              Page
ARTICLE V
       
 
       
OBLIGATIONS OF THE COMPANY UPON TERMINATION
    10  
5.1 If by the Executive for Good Reason or by the Company Other Than for Cause
or Disability
    10  
5.2 If by the Company for Cause
    12  
5.3 If by the Executive Other Than for Good Reason
    12  
5.4 If by the Company for Disability
    12  
5.5 If upon Death
    12  
5.6 Certain Additional Payments by the Company
    14  
5.7 Withholding Taxes
    17  
5.8 Continued Employment
    17  
 
       
ARTICLE VI
       
 
       
NON-EXCLUSIVITY OF RIGHTS
    17  
6.1 Waiver of Other Severance Rights
    17  
6.2 Other Rights
    17  
 
       
ARTICLE VII
       
 
       
EXPENSES AND INTEREST
    18  
7.1 Legal Fees and Other Expenses
    18  
7.2 Interest
    18  
 
       
ARTICLE VIII
       
 
       
SET-OFF OR MITIGATION
    18  
8.1 Set-Off by Company
    18  
8.2 No Mitigation
    19  
 
       
ARTICLE IX
       
 
       
CONFIDENTIALITY AND NONCOMPETITION
    19  
9.1 Confidentiality
    19  
9.2 Intellectual Property
    19  
9.3 Noncompetition/Nonsolicitation
    20  
9.4 Remedy
    21  
9.5 Survival
    22  
 
       
ARTICLE X
       
 
       
MISCELLANEOUS
    22  
10.1 No Assignability
    22  
10.2 Successors
    22  
10.3 Payments to Beneficiary
    22  
10.4 Non-alienation of Benefits
    22  
10.5 Severability
    22  
10.6 Amendments
    23  
10.7 Notices
    23  

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              Page
10.8 Counterparts
    23  
10.9 Governing Law
    23  
10.10 Captions
    23  
10.11 Employment with Subsidiaries
    23  
10.12 Company’s Option to Fix Expiration Date
    23  
10.13 No Waiver
    24  
10.14 Entire Agreement
    24  

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METRIS COMPANIES INC.

CHANGE OF CONTROL SEVERANCE AGREEMENT

     THIS AGREEMENT dated as of June 25, 2002 is made between METRIS COMPANIES
INC., a Delaware corporation having its principal place of business in
Minnetonka, Minnesota (the “Company”), and Daniel N. Piteleski (the
“Executive”), a resident of the State of Minnesota.

ARTICLE I

PURPOSES

     The Board of Directors of the Company (the “Board”) has determined that it
is in the best interests of the Company and its stockholders to assure that the
Company will have the continued service of the Executive in the event of any
threat or occurrence of, or negotiation or other action that could lead to, or
create the possibility of, a Change of Control (as defined in Section 2.6). The
Board believes it is imperative to reduce the distraction of the Executive that
would result from the personal uncertainties caused by a pending or threatened
change of control, to encourage the Executive’s full attention and continued
dedication to the Company, and to provide the Executive with compensation and
benefits arrangements upon a change of control which ensure that the
expectations of the Executive will be satisfied and are competitive with those
of similarly-situated corporations. The Board also believes that there is a need
to protect confidential records, data and intellectual property of the Company
and provide certain noncompetition protection. This Agreement is intended to
accomplish these objectives.

ARTICLE II

CERTAIN DEFINITIONS

     When used in this Agreement, the terms specified below shall have the
following meanings:

     2.1 “Accrued Obligations” has the meaning set forth in Section 5.3.

     2.2 “Agreement Term” means the period commencing on the date of this
Agreement and ending on the date (the “Expiration Date”) which is the first to
occur of (a) the date on which the Executive’s employment by the Company
terminates prior to the Effective Date, (b) if the Executive’s employment by the
Company terminates by reason of death, the date of death of the Executive or
(c) the expiration date fixed by the Board pursuant to Section

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10.12.

     2.3 “Article” means an article of this Agreement.

     2.4 “Beneficial owner” means such term as defined in Rule 13d-3 of the SEC
under the 1934 Act.

     2.5 “Cause” has the meaning set forth in Section 4.3(b).

     2.6 “Change of Control” means, except as otherwise provided below, the
occurrence of any of the following:

          a. any person (as such term is used in Rule 13d-5 of the SEC under the
1934 Act) or group (as such term is defined in Section 13(d) of the 1934 Act),
other than a Subsidiary or any employee benefit plan (or any related trust) of
the Company or a Subsidiary, becomes, directly or indirectly, the beneficial
owner of 50% or more of the common stock of the Company or of Voting Securities
representing 50% or more of the combined voting power of all Voting Securities
of the Company, except that no Change of Control shall be deemed to have
occurred solely by reason of any Merger (as defined below) if, immediately after
such Merger, each of the conditions described in clauses (i), (ii) and (iii) of
Section 2.6.c(1) are satisfied.

          b. individuals who, as of the Effective Date, constitute the Board
(the “Incumbent Directors”) cease for any reason to constitute at least a
majority of the Board; provided that any individual who becomes a director after
the Effective Date whose election, or nomination for election by the Company’s
stockholders, was approved by a vote or written consent of at least two-thirds
of the directors then comprising the Incumbent Directors shall be considered an
Incumbent Director, but excluding, for this purpose, any such individual whose
initial assumption of office is in connection with an actual or threatened
election contest relating to the election of the directors of the Company (as
such terms are used in Rule 14a-11 of the SEC under the 1934 Act); or

          c. approval by the stockholders of the Company of any of the
following:

     (1) a merger, reorganization or consolidation (“Merger”) unless immediately
after such Merger (i) more than 50% of the then outstanding shares of common
stock of the corporation resulting from such merger and more than 50% of the
combined voting power of the then outstanding Voting Securities of such
corporation is then beneficially owned, directly or indirectly, by all or
substantially all of the individuals or entities in substantially the same
proportion as their ownership immediately prior to the Merger; (ii) no person
(as such term is used in Rule 13d-5 of the SEC under the 1934 Act) or group (as
such term is defined in Section 13(d) of the 1934 Act), other than a Subsidiary
or any

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employee benefit plan (or any related trust) of the Company or a Subsidiary
becomes the beneficial owner of 50% or more of the combined voting power of all
Voting Securities of the Company and (iii) at least a majority of the members of
the board of directors of the corporation resulting from such Merger were
Incumbent Directors at the time of execution of the original agreement or action
of the Board providing for such Merger.

     (2) the sale or other disposition of all or substantially all of the assets
of the Company; or

     (3) a plan of complete liquidation or dissolution of the Company.

Despite clauses (a), (b) and (c) of this definition, a Change of Control shall
not occur with respect to the Executive if the Executive is, by written
agreement executed before such Change of Control, a participant on such
Executive’s own behalf in a transaction in which the persons or entities (or
their affiliates) with whom the Executive has the written agreement Acquire the
Company (as defined below) and, pursuant to the written agreement, the Executive
has an equity interest in the resulting entity or a right to acquire such an
equity interest. “Acquire the Company” means the acquisition of beneficial
ownership by purchase, merger, or otherwise, of either more than 50% of the
stock (such percentage to be computed in accordance with Rule 13d-3(d)(1)(i) of
the SEC under the 1934 Act) or substantially all of the assets of the Company or
its successors.

     2.7 “Code” means the Internal Revenue Code of 1986, as amended.

     2.8 “Disability” has the meaning set forth in Section 4.1.b.

     2.9 “Effective Date” means the first date on which a Change of Control
occurs during the Agreement Term. Despite anything in this Agreement to the
contrary, if the Company terminates the Executive’s employment before the date
of a Change of Control, and if the Executive reasonably demonstrates that such
termination of employment (a) was at the request of a third party who had taken
steps reasonably calculated to effect the Change of Control or (b) otherwise
arose in connection with or in anticipation of the Change of Control, then
“Effective Date” shall mean the date immediately before the date of such
termination of employment.

     2.10 “Good Reason” has the meaning set forth in Section 4.4.b.

     2.11 “Imminent Control Change Date” means any date on which occurs (a) a
presentation to the Company’s stockholders generally or any of the Company’s
directors or executive officers of a

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proposal or offer for a Change of Control, (b) the public announcement (whether
by advertisement, press release, press interview, public statement, SEC filing
or otherwise) of a proposal or offer for a Change of Control, or (c) such
proposal or offer remains effective and unrevoked.

     2.12 “IRS” means the Internal Revenue Service.

     2.13 “1934 Act” means the Securities Exchange Act of 1934.

     2.14 “Notice of Termination” means a written notice given in accordance
with Section 10.7 which sets forth (a) the specific termination provision in
this Agreement relied upon by the party giving such notice, (b) in reasonable
detail the facts and circumstances claimed to provide a basis for termination of
the Executive’s employment under such termination provision and (c) if the
Termination Date is other than the date of receipt of such Notice of
Termination, the Termination Date.

     2.15 “Plans” means plans, programs, policies or practices of the Company.

     2.16 “Policies” means policies, practices or procedures of the Company.

     2.17 “Post-Change Period” means the period commencing on the Effective Date
and ending on the second anniversary of such date.

     2.18 “SEC” means the Securities and Exchange Commission.

     2.19 “Section” means, unless the context otherwise requires, a section of
this Agreement.

     2.20 “Subsidiary” means (a) a corporation of which more than 50% of the
combined voting power of the Voting Securities is owned, directly or indirectly,
by the Company or by one or more other Subsidiaries of the Company or by the
Company and one or more Subsidiaries or (b) any partnership, limited liability
company, joint venture, business trust or other entity (other than a
corporation) in which the Company or one or more other Subsidiaries of the
Company or the Company and one or more other Subsidiaries, directly or
indirectly, has at least majority ownership thereof and power to direct the
policies, management and affairs thereof.

     2.21 “Termination Date” means the date of receipt of the Notice of
Termination or any later date specified in such notice (which date shall be not
more than 15 days after the giving of such notice), as the case may be;
provided, however, that (a) if the Company terminates the Executive’s employment
other than for Cause or Disability, then the Termination Date shall be the date
of receipt of such Notice of Termination and (b) if the Executive’s employment
is terminated by reason of death or

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Disability, then the Termination Date shall be the date of death of the
Executive or the Disability Effective Date (as defined in Section 4.1.a), as the
case may be.

     2.22 “Voting Securities” of a corporation means securities of such
corporation that are entitled to vote generally in the election of directors of
such corporation.

ARTICLE III

POST-CHANGE PERIOD PROTECTIONS

     3.1 Position and Duties.

          a. During the Post-Change Period, (1) the Executive’s position
(including offices, titles, reporting requirements and responsibilities),
authority and duties shall be at least commensurate in all material respects
with the most significant of those held, exercised and assigned at any time
during the 90-day period immediately before the Effective Date and (2) the
Executive’s services shall be performed at the location where the Executive was
employed immediately before the Effective Date or any other location less than
40 miles from such former location.

          b. During the Post-Change Period (other than any periods of vacation,
sick leave or disability to which the Executive is entitled), the Executive
agrees to devote the Executive’s full attention and time to the business and
affairs of the Company and, to the extent necessary to discharge the duties
assigned to the Executive in accordance with this Agreement, to use the
Executive’s best efforts to perform faithfully and efficiently such duties.
During the Post-Change Period, the Executive may (1) serve on corporate, civic
or charitable boards or committees, (2) deliver lectures, fulfill speaking
engagements or teach at educational institutions and (3) manage personal
investments, so long as such activities are consistent with the Policies of the
Company at the Effective Date and do not significantly interfere with the
performance of the Executive’s duties under this Agreement. To the extent that
any such activities have been conducted by the Executive before the Effective
Date and were consistent with the Policies of the Company at the Effective Date,
the continued conduct of such activities (or activities similar in nature and
scope) after the Effective Date shall not be deemed to interfere with the
performance of the Executive’s duties under this Agreement.

     3.2 Compensation.

          a. Base Salary. During the Post-Change Period, the Company shall pay
or cause to be paid to the Executive an annual base salary in cash (“Guaranteed
Base Salary”), which shall be paid in a manner consistent with the Company’s
payroll practices in effect immediately before the Effective Date at a rate at

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least equal to 12 times the highest monthly base salary paid or payable to the
Executive by the Company in respect of the 12-month period immediately before
the Effective Date. During the Post-Change Period, the Guaranteed Base Salary
shall be reviewed at least annually and shall be increased at any time and from
time to time as shall be substantially consistent with increases in base salary
awarded to other peer executives of the Company. Any increase in Guaranteed Base
Salary shall not limit or reduce any other obligation of the Company to the
Executive under this Agreement. After any such increase, the Guaranteed Base
Salary shall not be reduced and the term “Guaranteed Base Salary” shall
thereafter refer to the increased amount.

          b. Incentive, Compensation, Savings and Retirement Plans. In addition
to Guaranteed Base Salary payable as provided in this Section, the Executive
shall be entitled to participate during the Post-Change Period in all incentive
(including long-term incentives), compensation, savings and retirement Plans
applicable to other peer executives of the Company, but in no event shall such
Plans provide the Executive with incentive (including long-term incentives),
compensation, savings and retirement benefits which, in any case, are less
favorable, in the aggregate, than the most favorable of those provided by the
Company for the Executive under such Plans as in effect at any time during the
90-day period immediately before the Effective Date.

          c. Welfare Benefit Plans. During the Post-Change Period, the Executive
and the Executive’s family shall be eligible to participate in, and receive all
benefits under, welfare benefit Plans provided by the Company (including,
without limitation, medical, prescription, dental, disability, salary
continuance, individual life, group life, dependent life, accidental death and
travel accident insurance Plans) and applicable to other peer executives of the
Company and their families, but in no event shall such Plans provide benefits
which in any case are less favorable, in the aggregate, than the most favorable
of those provided to the Executive under such Plans as in effect at any time
during the 90-day period immediately before the Effective Date.

          d. Fringe Benefits. During the Post-Change Period, the Executive shall
be entitled to fringe benefits in accordance with the most favorable Plans
applicable to peer executives of the Company, but in no event shall such Plans
provide fringe benefits which in any case are less favorable, in the aggregate,
than the most favorable of those provided by the Company to peer executives
under such Plans in effect at any time during the 90-day period immediately
before the Effective Date.

          e. Expenses. During the Post-Change Period, the Executive shall be
entitled to prompt reimbursement of all reasonable employment-related expenses
incurred by the Executive upon the Company’s receipt of accounting in accordance
with the

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most favorable Policies applicable to peer executives of the Company, but in no
event shall such Policies be less favorable, in the aggregate, than the most
favorable of those provided by the Company for the Executive under such Policies
in effect at any time during the 90-day period immediately before the Effective
Date.

          f. Office and Support Staff. During the Post-Change Period, the
Executive shall be entitled to an office or offices of a size and with
furnishings and other appointments, and no exclusive personal secretarial and
other assistance in accordance with the most favorable Policies applicable to
peer executives of the Company, but in no event shall such Policies be less
favorable, in the aggregate, than the most favorable of those provided by the
Company for the Executive under such Policies in effect at any time during the
90-day period immediately before the Effective Date.

          g. Vacation. During the Post-Change Period, the Executive shall be
entitled to paid vacation in accordance with the most favorable Policies
applicable to peer executives of the Company, but in no event shall such
Policies be less favorable, in the aggregate, than the most favorable of those
provided by the Company for the Executive under such Policies in effect at any
time during the 90-day period immediately before the Effective Date.

     3.3 Stock Options.

          In addition to the other benefits provided in this Section, on the
Effective Date, the Executive shall become fully vested in any and all
outstanding stock options granted to the Executive for shares of common stock of
the Company or to the extent that such options are not vested, shall receive a
lump-sum cash payment equal to the spread of all non-vested, forfeited options
as of the date such options are forfeited.

ARTICLE IV

TERMINATION OF EMPLOYMENT

     4.1 Disability.

          a. During the Post-Change Period, the Company may terminate the
Executive’s employment upon the Executive’s Disability (as defined in
Section 4.1.b) by giving the Executive or his legal representative, as
applicable, (1) written notice in accordance with Section 10.7 of the Company’s
intention to terminate the Executive’s employment pursuant to this Section and
(2) a certification of the Executive’s Disability by a physician selected by the
Company or its insurers and reasonably acceptable to the Executive or the
Executive’s legal representative. The Executive’s employment shall terminate
effective on the 30th day

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(the “Disability Effective Date”) after the Executive’s receipt of such notice
unless, before the Disability Effective Date, the Executive shall have resumed
the full-time performance of the Executive’s duties.

          b. “Disability” means any medically determinable physical or mental
impairment that has lasted for a continuous period of not less than six months
and can be expected to be permanent or of indefinite duration, and that renders
the Executive unable to perform the duties required under this Agreement.

     4.2 Death. The Executive’s employment shall terminate automatically upon
the Executive’s death during the Post-Change Period.

     4.3 Cause.

          a. During the Post-Change Period, the Company may terminate the
Executive’s employment for Cause.

          b. “Cause” means any of the following:

     (1) a material breach by the Executive of those duties and responsibilities
of the Executive which do not differ in any material respect from the duties and
responsibilities of the Executive during the 90-day period immediately before
the Effective Date (other than as a result of incapacity due to physical or
mental illness) which is demonstrably willful and deliberate on the Executive’s
part, which is committed in bad faith or without reasonable belief that such
breach is in the best interests of the Company and which is not remedied within
a reasonable period of time after receipt of written notice from the Company
specifying such breach;

     (2) any intentional act of fraud, embezzlement or theft by the Executive in
connection with the Executive’s duties in the course of the Executive’s
employment hereunder or any prior employment, or the Executive’s admission or
conviction of a felony or of any crime involving moral turpitude, fraud,
embezzlement, theft or misrepresentation;

     (3) any gross negligence or willful misconduct of the Executive in
performing the Executive’s duties which, if curable, has not been cured within
10 days of delivery by the Company to the Executive of written notice of such
gross negligence or willful misconduct; or

     (4) any violation in any material respect of any statutory or common law
duty of loyalty to the Company or any of its affiliates which, if curable, has
not been cured within 10 days of delivery by the Company to the Executive of
written notice of such violation.

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          c. Any termination of the Executive’s employment by the Company for
Cause shall be communicated to the Executive by Notice of Termination.

     4.4 Good Reason.

          a. During the Post-Change Period, the Executive may terminate his or
her employment for Good Reason.

          b. “Good Reason” means, without the Executive’s express written
consent, any of the following:

     (1) the assignment to the Executive of any duties inconsistent in any
respect with the Executive’s position (including offices, titles, reporting
requirements or responsibilities), authority or duties as contemplated by
Section 3.1.a(1), or any other action by the Company which results in a
diminution or other material adverse change in such position, authority or
duties;

     (2) any failure by the Company to comply with any of the provisions of
Article III;

     (3) the Company’s requiring the Executive to be based at any office or
location other than the location described in Section 3.1.a(2);

     (4) any other material adverse change to the terms and conditions of the
Executive’s employment; or

     (5) any purported termination by the Company of the Executive’s employment
other than as expressly permitted by this Agreement (any such purported
termination shall not be effective for any other purpose under this Agreement).

Any reasonable determination of “Good Reason” made in good faith by the
Executive shall be conclusive; provided, however, that an isolated,
insubstantial and inadvertent action taken in good faith and which is remedied
by the Company promptly after receipt of written notice thereof given by the
Executive shall not constitute “Good Reason.”

          c. Any termination of employment by the Executive for Good Reason
shall be communicated to the Company by Notice of Termination within 60 days of
the occurrence of the Good Reason. A failure by the Executive to include in the
Notice of Termination any fact or circumstance which contributes to a showing of
Good Reason shall not waive any right of the Executive under this Agreement or
preclude the Executive from asserting such fact or circumstance in enforcing
rights under this Agreement.

     4.5 Termination Prior to Effective Date. Nothing in this Agreement shall be
deemed to entitle the Executive to continued

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employment with the Company or any Subsidiary, and if the Executive’s employment
with the Company or any Subsidiary shall terminate prior to the Effective Date,
the Executive shall have no rights under Articles III, IV or V.

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ARTICLE V

OBLIGATIONS OF THE COMPANY UPON TERMINATION

     5.1 If by the Executive for Good Reason or by the Company Other Than for
Cause or Disability. If, during the Post-Change Period, the Company shall
terminate the Executive’s employment other than for Cause or Disability, or if
the Executive shall terminate employment for Good Reason, the Company shall
immediately pay the Executive, in addition to all vested rights arising from the
Executive’s employment as specified in Article III, a cash amount equal to the
sum of the following amounts:

          a. to the extent not previously paid, the Guaranteed Base Salary and
any accrued vacation pay through the Termination Date;

          b. an amount equal to the Executive’s highest annual bonus (or
annualized for any fiscal year consisting of less than 12 full months or with
respect to which the Executive has been employed by the Company for less than 12
full months) paid or payable, including by reason of any deferral, to the
Executive by the Company and its affiliated companies in respect of the two
fiscal years of the Company (or such portion thereof during which the Executive
shall have been employed by the Company for less than such two-year period)
immediately preceding the fiscal year in which the Effective Date occurs,
multiplied by a fraction, the numerator of which is the number of days in the
fiscal year in which the Effective Date occurs through the Termination Date and
the denominator of which is 365 or 366, as applicable;

          c. all amounts previously deferred by or an accrual to the benefit of
the Executive under any nonqualified deferred compensation or pension plan,
together with any accrued earnings thereon, and not yet paid by the Company;

          d. an amount equal to the product of (1) two multiplied by (2) the sum
of (A) Guaranteed Base Salary and (B) the Executive’s highest annual bonus (or
annualized bonus for any fiscal year consisting of less than 12 full months or
with respect to which the Executive has been employed by the Company for less
than 12 full months), paid or payable, including by reason of any deferral, to
the Executive by the Company and its affiliated companies in respect of the two
fiscal years of the Company (if the Executive shall have been employed by the
Company for less than such two fiscal year period) immediately preceding the
fiscal year in which the Effective Date occurs;

          e. an amount equal to the sum of the value of the unvested portion of
the Executive’s accounts or accrued benefits under any qualified plan maintained
by the Company as of the Termination Date; and

          f. pay on behalf of the Executive all fees and costs

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charged by the outplacement firm selected by the Executive to provide
outplacement services or at the election of the Executive, cash equal to the
fees and expenses such outplacement firm would charge.

Until the first anniversary of the Termination Date or such later date as any
Plan of the Company may specify, the Company shall continue to provide to the
Executive and the Executive’s family welfare benefits (including, without
limitation, medical, prescription, dental, disability, salary continuance,
individual life, group life, accidental death and travel accident insurance
plans and programs) which are at least as favorable as the most favorable Plans
of the Company applicable to other peer executives and their families as of the
Termination Date, but which are in no event less favorable than the most
favorable Plans of the Company applicable to other peer executives and their
families during the 90-day period immediately before the Effective Date. The
cost of such welfare benefits shall not exceed the cost of such benefits to the
Executive immediately before the Termination Date or, if less, the Effective
Date. Notwithstanding the foregoing, if the Executive is covered under any
medical, life, or disability insurance plan(s) provided by a subsequent
employer, then the amount of coverage required to be provided by the Employer
hereunder shall be reduced by the amount of coverage provided by the subsequent
employer’s medical, life, or disability insurance plan(s). The Executive’s
rights under this Section shall be in addition to, and not in lieu of, any
post-termination continuation coverage or conversion rights the Executive may
have pursuant to applicable law, including, without limitation, continuation
coverage required by Section 4980 of the Code.

     5.2 If by the Company for Cause. If the Company terminates the Executive’s
employment for Cause during the Post-Change Period, this Agreement shall
terminate without further obligation by the Company to the Executive, other than
the obligation immediately to pay the Executive in cash the Executive’s
Guaranteed Base Salary through the Termination Date, plus the amount of any
compensation previously deferred by the Executive, plus any accrued vacation
pay, in each case to the extent not previously paid.

     5.3 If by the Executive Other Than for Good Reason. If the Executive
terminates employment during the Post-Change Period other than for Good Reason,
Disability or death, this Agreement shall terminate without further obligations
by the Company, other than the obligation immediately to pay the Executive in
cash all amounts specified in clauses (a), (b) and (c) of the first sentence of
Section 5.1 (such amounts collectively, the “Accrued Obligations”).

     5.4 If by the Company for Disability. If the Company terminates the
Executive’s employment by reason of the Executive’s Disability during the
Post-Change Period, this

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Agreement shall terminate without further obligations to the Executive, other
than

          a. the Company’s obligation immediately to pay the Executive in cash
all Accrued Obligations, and

          b. the Executive’s right after the Disability Effective Date to
receive disability and other benefits at least equal to the greater of (1) those
provided under the most favorable disability Plans applicable to disabled peer
executives of the Company in effect immediately before the Termination Date or
(2) those provided under the most favorable disability Plans of the Company in
effect at any time during the 90-day period immediately before the Effective
Date.

     5.5 If upon Death. If the Executive’s employment is terminated by reason of
the Executive’s death during the Post-Change Period, this Agreement shall
terminate without further obligations to the Executive’s legal representatives
under this Agreement other than the obligation immediately to pay the
Executive’s estate or beneficiary in cash all Accrued Obligations. Despite
anything in this Agreement to the contrary, the Executive’s family shall be
entitled to receive benefits at least equal to the most favorable benefits
provided by the Company to the surviving families of peer executives of the
Company under such Plans, but in no event shall such Plans provide benefits
which in each case are less favorable, in the aggregate, than the most favorable
of those provided by the Company to the Executive under such Plans in effect at
any time during the 90-day period immediately before the Effective Date.

     5.6 Certain Additional Payments by the Company.

          a. Notwithstanding anything to the contrary in this Agreement, in the
event it shall be determined that any payment or distribution by the Company or
its affiliated companies to or for the benefit of the Executive (whether paid or
payable or distributed or distributable pursuant to the terms of this Agreement
or otherwise, but determined without regard to any additional payments required
under this Section 5.6) (a “Payment”) would be subject to the excise tax imposed
by Section 4999 of the Code, or any interest or penalties are incurred by the
Executive with respect to such excise tax (such excise tax, together with any
such interest and penalties, are hereinafter collectively referred to as the
“Excise Tax”), then the Executive shall be entitled to receive an additional
payment (a “Gross-Up Payment”) in an amount such that after payment by the
Executive of all taxes (including any interest or penalties imposed with respect
to such taxes), including, without limitation, any income taxes (and any
interest and penalties imposed with respect thereto) and Excise Tax imposed upon
the Gross-Up Payment, the Executive retains an amount of the Gross-Up Payment
equal to the Excise Tax imposed upon the Payments.

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          b. Subject to the provisions of Section 5.6.c, all determinations
required to be made under this Section 5.6, including whether and when a
Gross-Up Payment is required and the amount of such Gross-Up Payment and the
assumptions to be utilized in arriving at such determination, shall be made by
the Company’s public accounting firm (the “Accounting Firm”) which shall provide
detailed supporting calculations both to the Company and the Executive within 15
business days of the receipt of notice from the Executive that there has been a
Payment, or such earlier time as is requested by the Company. In the event that
the Accounting Firm is serving as accountant or auditor for the individual,
entity or group effecting the Change in Control, the Executive shall appoint
another nationally recognized public accounting firm to make the determinations
required hereunder (which accounting firm shall then be referred to as the
Accounting Firm hereunder). All fees and expenses of the Accounting Firm shall
be borne solely by the Company. Any Gross-Up Payment, as determined pursuant to
this Section 5.6, shall be paid by the Company to the Executive within five days
of the receipt of the Accounting Firm’s determination. If the Accounting Firm
determines that no Excise Tax is payable by the Executive, it shall furnish the
Executive with a written opinion that failure to report the Excise Tax on the
Executive’s applicable federal income tax return would not result in the
imposition of a negligence or similar penalty. Any determination by the
Accounting Firm shall be binding upon the Company and the Executive. As a result
of the uncertainty in the application of Section 4999 of the Code at the time of
the initial determination by the Accounting Firm hereunder, it is possible that
Gross-Up Payments which will not have been made by the Company should have been
made (“Underpayment”), consistent with the calculations required to be made
hereunder. In the event that the Company exhausts its remedies pursuant to
Section 5.6.c and the Executive thereafter is required to make a payment of any
Excise Tax, the Accounting Firm shall determine the amount of the Underpayment
that has occurred and any such Underpayment shall be promptly paid by the
Company to or for the benefit of the Executive.

          c. The Executive shall notify the Company in writing of any claim by
the IRS that, if successful, would require the payment by the Company of the
Gross-Up Payment. Such notification shall be given as soon as practicable but no
later than 10 business days after the Executive is informed in writing of such
claim and shall apprise the Company of the nature of such claim and the date on
which such claim is requested to be paid. The Executive shall not pay such claim
prior to the expiration of the 30-day period following the date on which the
Executive gives such notice to the Company (or such shorter period ending on the
date that any payment of taxes with respect to such claim is due). If the
Company notifies the Executive in writing prior to the expiration of such period
that it desires to contest such claim, the Executive shall:

     (1) give the Company any information reasonably

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requested by the Company relating to such claim,

     (2) take such action in connection with contesting such claim as the
Company shall reasonably request in writing from time to time, including,
without limitation, accepting legal representation with respect to such claim by
an attorney reasonably selected by the Company,

     (3) cooperate with the Company in good faith in order effectively to
contest such claim, and

     (4) permit the Company to participate in any proceedings relating to such
claim;

provided, however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in connection
with such contest and shall indemnify and hold the Executive harmless, on an
after-tax basis, for any Excise Tax or income tax (including interest and
penalties with respect thereto) imposed as a result of such representation and
payment of costs and expenses. Without limitation on the foregoing provisions of
this Section 5.6.c, the Company shall control all proceedings taken in
connection with such contest and, at its sole option, may pursue or forgo any
and all administrative appeals, proceedings, hearings and conferences with the
taxing authority in respect of such claim and may, at its sole option, either
direct the Executive to pay the tax claimed and sue for a refund or contest the
claim in any permissible manner, and the Executive agrees to prosecute such
contest to a determination before any administrative tribunal, in a court of
initial jurisdiction and in one or more appellate courts, as the Company shall
determine; provided further, that if the Company directs the Executive to pay
such claim and sue for a refund, the Company shall advance the amount of such
payment to the Executive on an interest-free basis and shall indemnify and hold
the Executive harmless, on an after-tax basis, from any Excise Tax or income tax
(including interest or penalties with respect thereto) imposed with respect to
such advance or with respect to any imputed income with respect to such advance;
and provided further, that any extension of the statute of limitations relating
to payment of taxes for the taxable year of the Executive with respect to which
such contested amount is claimed to be due is limited solely to such contested
amount. Furthermore, the Company’s control of the contest shall be limited to
issues with respect to which a Gross-Up Payment would be payable hereunder and
the Executive shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other taxing
authority.

          d. If, after the receipt by the Executive of an amount advanced by the
Company pursuant to Section 5.6.c, the Executive

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becomes entitled to receive, and receives, any refund with respect to such
claim, the Executive shall (subject to the Company’s complying with the
requirements of Section 5.6.c) promptly pay to the Company the amount of such
refund (together with any interest paid or credited thereon after taxes
applicable thereto). If, after the receipt by the Executive of an amount
advanced by the Company pursuant to Section 5.6.c, a determination is made that
the Executive shall not be entitled to any refund with respect to such claim and
the Company does not notify the Executive in writing of its intent to contest
such denial of refund prior to the expiration of 30 days after such
determination, then such advance shall be forgiven and shall not be required to
be repaid and the amount of such advance shall offset, to the extent thereof,
the amount of Gross-Up Payment required to be paid.

     5.7 Withholding Taxes. The Company may withhold from all payments due to
the Executive (or his beneficiary or estate) hereunder all taxes which, by
applicable federal, state, local or other law, the Company is required to
withhold therefrom.

     5.8 Continued Employment. Nothing expressed or implied herein shall create
any right or duty of continued employment of the Executive by the Company or any
Subsidiary. The Company and each of its Subsidiaries reserves all rights to
terminate the Executive’s employment at any time with or without cause unless
otherwise protected by law or contract.

ARTICLE VI

NON-EXCLUSIVITY OF RIGHTS

     6.1 Waiver of Other Severance Rights. To the extent that payments are made
to the Executive pursuant to Section 5.1, the Executive hereby waives the right
to receive severance payments under any other Plan or agreement of the Company.

     6.2 Other Rights. Except as provided in Section 6.1, this Agreement shall
not prevent or limit the Executive’s continuing or future participation in any
benefit, bonus, incentive or other Plans, provided by the Company or any of its
Subsidiaries and for which the Executive may qualify, nor shall this Agreement
limit or otherwise affect such rights as the Executive may have under any other
agreements with the Company or any of its Subsidiaries. Amounts which are vested
benefits or which the Executive is otherwise entitled to receive under any Plan
of the Company or any of its Subsidiaries and any other payment or benefit
required by law at or after the Termination Date shall be payable in accordance
with such Plan or applicable law except as expressly modified by this Agreement.

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ARTICLE VII

EXPENSES AND INTEREST

     7.1 Legal Fees and Other Expenses. a. If the Executive incurs legal fees or
other expenses in a good faith effort to obtain benefits under this Agreement,
the Company shall reimburse the Executive on a current basis for such fees and
expenses to the extent not reimbursed under the Company’s officers and directors
liability insurance policy, if any. The existence of any controlling case or
regulatory law which is directly inconsistent with the position taken by the
Executive shall be evidence that the Executive did not act in good faith.

          b. Reimbursement of legal fees and expenses shall be made monthly upon
the written submission of a request for reimbursement together with evidence
that such fees and expenses are due and payable or were paid by the Executive.
If the Company shall have reimbursed the Executive for legal fees and expenses
and it is later determined that the Executive was not acting in good faith or
the resolution of the dispute includes a finding denying, in total, the
Executive’s claims in such dispute, all amounts paid on behalf of, or reimbursed
to, the Executive shall be promptly refunded to the Company.

7.2 Interest. If the Company does not pay any amount due to the Executive under
this Agreement within three days after such amount became due and owing,
interest shall accrue on such amount from the date it became due and owing until
the date of payment at a annual rate equal to two percent (2.0%) above the
corporate base rate announced by Norwest Bank Minnesota, National Association,
in effect from time to time during the period of such nonpayment.

ARTICLE VIII

SET-OFF OR MITIGATION

     8.1 Set-Off by Company. Except as provided in the following sentence, the
Executive’s right to receive when due the payments and other benefits provided
for under this Agreement is absolute, unconditional and subject to no set-off,
counterclaim or legal or equitable defense. Notwithstanding anything to the
contrary in this Agreement, in the event that the Executive breaches in any
material respect any covenant or obligation set forth in Article IX, the Company
may withhold any further payment otherwise due to the Executive pursuant to
clauses d. and f. of Section 5.1. Time is of the essence in the performance by
the Company of its obligations under this Agreement.

     8.2 No Mitigation. The Executive shall not have any duty to mitigate the
amounts payable by the Company under this Agreement by seeking new employment
following termination. Except as specifically otherwise provided in this
Agreement, all amounts payable pursuant to this Agreement shall be paid without

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reduction regardless of any amounts of salary, compensation or other amounts
which may be paid or payable to the Executive as the result of the Executive’s
employment by another employer.

ARTICLE IX

CONFIDENTIALITY AND NONCOMPETITION

     9.1 Confidentiality. Executive acknowledges that it is the policy of the
Company and its subsidiaries to maintain as secret and confidential all valuable
and unique information and techniques acquired, developed or used by the Company
and its relating to their business, operations, employees and customers, which
gives the Company and its Subsidiaries a competitive advantage in the businesses
in which the Company and its Subsidiaries are engaged except to the extent that
such information is a matter of public record or is published and made available
to the general public (“Confidential Information”). Executive recognizes that
all such Confidential Information is the sole and exclusive property of the
Company and its Subsidiaries, and that disclosure of Confidential Information
would cause damage to the Company and its Subsidiaries. Executive agrees that,
except as required by the duties of Executive’s employment with the Company
and/or its Subsidiaries and except in connection with enforcing the Executive’s
rights under this Agreement or if compelled by a court or governmental agency,
Executive will not, without the consent of the Company, disseminate or otherwise
disclose any Confidential Information obtained during Executive’s employment
with the Company. When the Executive shall cease to be employed by the Company,
the Executive shall surrender to the Company all records, computer tapes,
software or other documents or data obtained by Executive or entrusted to
Executive (together with all copies thereof) which pertain to the businesses
engaged in by the Company or its affiliates.

     9.2 Intellectual Property. The Executive hereby assigns to the Company the
Executive’s entire right, title and interest in and to all discoveries and
improvements, patentable or otherwise, trade secrets and ideas, writings and
copyrightable material, which may be conceived by the Executive or developed or
acquired by the Executive during the Executive’s employment, which may pertain
directly or indirectly to the business of the Company or any of its affiliates.
The Executive agrees to disclose fully all such developments to the Company upon
its request, which disclosure shall be made in writing promptly following any
such request. The Executive shall, upon the Company’s request, execute,
acknowledge and deliver to the Company all instruments and do all other acts
which are necessary or desirable to enable the Company or any of its affiliates
to file and prosecute applications for, and to acquire, maintain and enforce,
all patents, trademarks and copyrights in all countries. All copyrightable
subject matter developed by the Executive under

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this Agreement is work made for hire vesting title in the Company.

     9.3 Noncompetition/Nonsolicitation. a. The Executive agrees that, during
the period of his employment with the Company and/or its Subsidiaries and, if
the Executive’s employment is terminated for any reason, thereafter for a period
of one year, the Executive will not at any time directly or indirectly, in any
capacity, engage or participate in, or become employed by or render advisory or
consulting or other services in connection with any Prohibited Business (as
defined in Section 9.3.d).

          b. The Executive agrees that, during the period of the Executive’s
employment with the Company and/or its Subsidiaries and, if the Executive’s
employment is terminated for any reason, thereafter for a period of one year,
the Executive shall not make any financial investment, whether in the form of
equity or debt, or own any interest, directly or indirectly, in any Prohibited
Business. Nothing in this Section 9.3.b shall, however, restrict the Executive
from making any investment in a mutual fund or diversified investment company or
any company whose stock is listed on a national securities exchange or actively
traded in the over-the-counter market; provided that (1) such investment does
not give the Executive the right or ability to control or influence the policy
decisions of any Prohibited Business, (2) such investment does not create a
conflict of interest between the Executive’s duties hereunder and the
Executive’s interest in such investment and (3) such investment does not exceed
three percent of the outstanding stock of any class of stock of a corporation or
three percent of the ownership interest of any other entity.

          c. The Executive agrees that, during the period of his employment with
the Company and/or its Subsidiaries and, if the Executive’s employment is
terminated for any reason, thereafter for a period of one year, the Executive
shall not (1) employ any employee of the Company and/or its Subsidiaries or
(2) interfere with the Company’s or any of its Subsidiaries’ relationship with,
or endeavor to entice away from the Company and/or its Subsidiaries any person,
firm, corporation, or other business organization who or which at any time
(whether before or after the date of the Executive’s termination of employment),
was an employee, customer, vendor or supplier of, or maintained a business
relationship with, any business of the Company and/or its Subsidiaries which was
conducted at any time during the period commencing one year prior to the
termination of employment.

          d. For the purpose of this Section 9.2, “Prohibited Business” shall be
defined as any business or other entity and any branch, office or operation
thereof, which is engaged in managing, distributing, marketing, administering or
otherwise providing general purpose payment cards or credit cards, extended
service plans and warranties, consumer credit products, fee-based

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products and services or any other business being conducted by or contemplated
by the Company or any of its Subsidiaries as of the Termination Date, in any
geographic area in which the Company does business, in the United States or
abroad.

     9.4 Remedy. a. The Executive and the Company specifically agree that, in
the event that the Executive shall breach the Executive’s obligations under this
Article IX, the Company and its subsidiaries will suffer irreparable injury and
no adequate remedy for such breach, and shall be entitled to injunctive relief
or other relief in order to enforce or present any such violation thereof
(including the extension of the non-competition and nonsolicitation periods by a
period equal to the length of the violation and the length of proceedings
necessary to stop such violation). In particular, without limiting the
generality of the foregoing, the Company shall not be precluded from pursuing
any and all remedies it may have at law or in equity for breach of such
obligations.

          If, at any time of enforcement of this Article IX, a court or an
arbitrator holds that the restrictions stated herein are unreasonable under
circumstances then existing, the parties hereto agree that the maximum period,
scope or geographical area reasonable under such circumstances shall be
substituted for the stated period, scope or area and that the court or
arbitrator shall be allowed to revise the restrictions contained herein to cover
the maximum period, scope and area permitted by law. This Agreement shall not
authorize a court or arbitrator to increase or broaden any of the restrictions
in this Article IX.

          b. In addition to any other remedies provided for herein, in the event
that the Executive shall breach in any material respect any obligation under
this Article IX, the Executive shall refund to the Company all compensation paid
to the Executive pursuant to paragraphs d. and f. of Section 5.1. Any such
refund shall neither relieve the Executive of his obligations under this
Article IX nor limit the remedies the Company may have at law or in equity for
breach of such obligation.

     9.5 Survival Article IX of this Agreement shall survive and continue in
full force and effect in accordance with its terms, notwithstanding the
expiration of the Agreement Term.

ARTICLE X

MISCELLANEOUS

     10.1 No Assignability. This Agreement is personal to the Executive and
without the prior written consent of the Company shall not be assignable by the
Executive otherwise than by will or the laws of descent and distribution. This
Agreement shall inure to the benefit of and be enforceable by the Executive’s
legal representatives.

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     10.2 Successors. This Agreement shall inure to the benefit of and be
binding upon the Company and its successors and assigns. The Company will
require any successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the business or
assets of the Company to assume expressly and agree to perform this Agreement in
the same manner and to the same extent that the Company would be required to
perform it if no such succession had taken place. Any successor to the business
and/or assets of the Company which assumes or agrees to perform this Agreement
by operation of law, contract, or otherwise shall be jointly and severally
liable with the Company under this Agreement as if such successor were the
Company.

     10.3 Payments to Beneficiary. If the Executive dies before receiving
amounts to which the Executive is entitled under this Agreement, such amounts
shall be paid in a lump sum to the beneficiary designated in writing by the
Executive, or if none is so designated, to the Executive’s estate.

     10.4 Non-alienation of Benefits. Benefits payable under this Agreement
shall not be subject in any manner to anticipation, alienation, sale, transfer,
assignment, pledge, encumbrance, charge, garnishment, execution or levy of any
kind, either voluntary or involuntary, before actually being received by the
Executive, and any such attempt to dispose of any right to benefits payable
under this Agreement shall be void.

     10.5 Severability. If any one or more articles, sections or other portions
of this Agreement are declared by any court or governmental authority to be
unlawful or invalid, such unlawfulness or invalidity shall not serve to
invalidate any article, section or other portion not so declared to be unlawful
or invalid. Any article, section or other portion so declared to be unlawful or
invalid shall be construed so as to effectuate the terms of such article,
section or other portion to the fullest extent possible while remaining lawful
and valid.

     10.6 Amendments. Except as provided in Section 2.2, this Agreement shall
not be altered, amended or modified except by written instrument executed by the
Company and the Executive.

     10.7 Notices. All notices and other communications under this Agreement
shall be in writing and delivered by hand or by first class registered or
certified mail, return receipt requested, postage prepaid, addressed as follows:

     If to the Executive:

      Daniel N. Piteleski
[address redacted]

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     If to the Company:

      Metris Companies Inc.
10900 Wayzata Boulevard
Minnetonka, MN 55305
Attention: General Counsel

or to such other address as either party shall have furnished to the other in
writing. Notice and communications shall be effective when actually received by
the addressee.

     10.8 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together constitute one and the same instrument.

     10.9 Governing Law. This Agreement shall be interpreted and construed in
accordance with the laws of the State of Minnesota, without regard to its choice
of law principles.

     10.10 Captions. The captions of this Agreement are not a part of the
provisions hereof and shall have no force or effect.

     10.11 Employment with Subsidiaries. Employment with the Company for
purposes of this Agreement shall include employment with any Subsidiary.

     10.12 Company’s Option to Fix Expiration Date. The Company shall have the
right prior to the Effective Date, in its sole discretion, pursuant to action by
the Board, to determine on expiration date for the Agreement Term, which
expiration date shall not become effective until the date fixed by the Board for
such expiration date, which date shall be at least 30 days after notice thereof
is given by the Company to the Executive in accordance with Section 10.7;
provided, however, that no such action shall be taken by the Board following an
Imminent Control Change Date until, in the opinion of the Board, any such
proposal or offer has been abandoned or terminated; and provided further, that
in no event shall the Board fix an expiration date pursuant to this Section on
and after the Effective Date.

     10.13 No Waiver. The Executive’s failure to insist upon strict compliance
with any provision of this Agreement shall not be deemed a waiver of such
provision or any other provision of this Agreement. A waiver of any provision of
this Agreement shall not be deemed a waiver of any other provision, and any
waiver of any default in any such provision shall not be deemed a waiver of any
later default thereof or of any other provision.

     10.14 Entire Agreement. This Agreement contains the entire understanding of
the Company and the Executive with respect to its subject matter.

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     IN WITNESS WHEREOF, the Executive and the Company have executed this
Agreement as of the date first above written.

     

  /s/Dan N. Piteleski

   
 
   

  METRIS COMPANIES INC.
 
   

  By: /s/Ronald N. Zebeck
 
   

  Title: CEO

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