May 17, 1999



Mr. Ronald N. Zebeck
Metris Companies Inc.
600 South Highway 169
Suite 1800
St. Louis Park, Minnesota 55426

Dear Ron:

                  Metris  Companies Inc. (the "Company")  desires to provide you
with incentives to continue to serve the Company as a key employee.  We are thus
pleased to inform you that in consideration of your continued  services as a key
employee,  the Company has decided to compensate  you by providing to you a loan
and certain other benefits specified in this letter (the  "Agreement"),  subject
to the terms and conditions set forth below:

         1.       Retention Consideration.

                  (a) Loan.  The  Company  will  loan you cash in the  principal
         amount of $5,000,000  (the "Loan") upon your  execution and delivery to
         the Company a copy of this Agreement and in the form attached hereto as
         Exhibit A.

                  (b) Special Interest Bonus Payment.  If you remain employed by
         the Company until the fifth  anniversary  of the date the Loan is made,
         or if your  employment  by the Company is  terminated  before the fifth
         anniversary  date of the Loan,  on account of your death or  disability
         (as determined by the Compensation  Committee of the Company's Board of
         Directors  in  its  sole  and  absolute  discretion),  or  if  you  are
         terminated  by the  Company  for any reason  other than Cause  (defined
         below),  you will  receive a cash  payment,  ("Special  Interest  Bonus
         Payment")  equal to (i) the amount of the interest  accrued on the Loan
         (the  "Interest  Amount");  plus  (ii)  plus  the  gross-up  of  taxes;
         including  federal,  state and local income  taxes and social  security
         taxes payable, with respect to your receipt of the Interest Amount. For
         purposes of the  preceding  sentence,  it shall be assumed that you are
         subject to the  highest  marginal  tax rates.  The  computation  of any
         amounts  payable  hereunder  shall be approved by the  Company's  Chief
         Financial  Officer,  and such  computation  shall be  binding  upon the
         parties.

                  If your  employment is terminated  because of your death,  the
         Special  Interest  Bonus  Payment  shall be made to your  estate or any
         other person who succeeds to your liabilities under the Loan.

                  (c) Option  Reload.  It is our  understanding  that as partial
         payment for the exercise price and taxes  associated with your exercise
         of all or a portion of the  options  presently  held by you to purchase
         656,075 shares of the Company's stock (the "Original Option"), you will
         instruct the Company to withhold a designated number of whole shares of
         Company stock which would otherwise have been delivered to you pursuant
         to such exercise (the "Withheld Shares").  On the date of each exercise
         of the Original Option, you will be granted a new non-qualified  option
         under the Metris  Companies  Inc. Long Term  Incentive and Stock Option
         Plan (the  "LTIP") to purchase  that number of whole  shares of Company
         stock equal to the number of Withheld Shares (a "Replacement Option") .
         The  exercise  price under such  Replacement  Option  shall be the fair
         market  value (as  defined in the LTIP) of the  Withheld  Shares on the
         date of exercise  of the  Original  Option  with  respect to which such
         Replacement  Option is granted.  Each  Replacement  Option shall become
         exercisable on the fifth  anniversary  of its date of grant,  provided,
         however,  that at any such  date you have  retained  ownership  of that
         number of shares of the Company's  stock at least equal to  twenty-five
         percent of the aggregate number of shares received by you upon exercise
         of the Original  Options and any Replacement  Options.  If prior to the
         fifth anniversary of the grant of any Replacement  Option you no longer
         own at least the number of shares of  Company  stock  described  in the
         immediately   preceding  sentence,   you  will  forfeit  any  remaining
         unexercised Replacement Options. The exercisability of each Replacement
         Option also is expressly  conditioned  upon your  continued  employment
         with the Company (or its affiliates)  through the fifth  anniversary of
         the date of your last exercise of the Original Option exercise,  unless
         your employment is terminated prior to such time (i) by the Company for
         any reason  (other than for Cause),  or (ii) by reason of your death or
         disability  (as  determined  by  the  Compensation   Committee  of  the
         Company's Board of Directors in its sole and absolute discretion). Each
         Replacement  Option  shall be  subject  to such  additional  terms  and
         conditions,  not  inconsistent  with the terms and  conditions  of this
         Agreement, as may be provided in the LTIP and standard option agreement
         under the LTIP.

                  (d) Restricted  Stock. You have been awarded 100,000 shares of
         Restricted Company stock (the "Restricted Stock"), that until March 31,
         2004 shall be  non-transferable  and forfeitable to the Company if your
         employment  is  terminated  prior to that date (i) by the  Company  for
         Cause or (ii) by you for any reason other than your death or disability
         (as determined by the Compensation  Committee of the Company's Board of
         Directors in its sole and absolute discretion).  Failure to satisfy the
         foregoing  condition  shall  result in the complete  forfeiture  of the
         Restricted  Stock.  The Restricted Stock shall be subject to additional
         terms and conditions, not inconsistent with the terms of this Agreement
         as provided in the standard restricted stock agreement.

         2. Definitions.  For purposes of this Agreement, "Cause" shall mean any
of the following:

                           (a) your material  breach of your  employment  duties
                  and responsibilities (other than as a result of incapacity due
                  to physical or mental illness) which is  demonstrably  willful
                  and deliberate on you 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;

                           (b) your  intentional  act of fraud,  embezzlement or
                  theft in connection with the your duties in the course of your
                  employment with the Company or any prior  employment,  or your
                  admission or conviction of a felony or of any crime  involving
                  moral    turpitude,    fraud,    embezzlement,     theft    or
                  misrepresentation;

                           (c) your gross  negligence  or willful  misconduct in
                  performing your duties which,  if curable,  has not been cured
                  within 10 days of  delivery  by the  Company to you of written
                  notice of such gross negligence or willful misconduct; or

                           (d) 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 you of written notice of
                  such violation.

         3.  Continued   Employment.   This  Agreement  is  not  a  contract  of
employment.  Nothing  expressed  or implied in this  Agreement  shall create any
right or duty of your continued  employment by the Company, or its affiliates or
the  successors  of the Company or its  affiliates  . The Company  reserves  all
rights to cause your  employment  to be  terminated  at any time with or without
Cause.

         4. Unfunded Agreement.  The Company's  obligations under this Agreement
shall be  unfunded.  Neither  the  Company  nor any of its  affiliates  shall be
required  to  establish  any  special  or  separate  fund or to make  any  other
segregation of assets to assure the payment of any award under this Agreement.

         5.  Successors  Bound.  The  rights  and  obligations  of  the  Company
hereunder  shall inure to the benefit of and be binding upon the  successors  of
the Company.

         6. Non-Assignability. It is a condition of this Agreement that no right
or interest  granted to you pursuant to this  Agreement  shall be  assignable or
transferable  in whole or in part,  either  directly or by  operation  of law or
otherwise,  including,  but  not by  way  of  limitation,  by  execution,  levy,
garnishment,  attachment,  pledge or  bankruptcy,  but  excluding  any rights or
interests  arising by reason of mental  incompetency,  and no right or  interest
granted to you  pursuant to this  Agreement  shall be liable for, or subject to,
any of your  obligations  or  liabilities,  including  claims for alimony or the
support of any  spouse or child;  provided,  however,  that in the event of your
death,  any  payments  then due and  owing  will be made  when due to the  legal
representative of your estate.

         7. Notices and Other Documents. All payments, requests, notices and the
like may be made to you by  mailing  the same to you at the  address  set  forth
below or at such other  address as you may file in writing  with the Company for
that purpose. Notices, requests and the like sent by you to the Company shall be
sufficient if mailed to Metris  Companies  Inc.,  600 South  Highway 169,  Suite
1800,  St.  Louis  Park,  MN 55426,  Attention:  Senior  Vice  President,  Human
Resources,  or to such other  address as the Company may furnish to you for this
purpose from time to time in writing.

         8.  Employment  Taxes.  All payments made under this Agreement shall be
subject to  withholding  tax,  other  employment  taxes and other  withholds and
deductions as required by applicable law or  regulation,  as in effect from time
to time.

         9. Term of Agreement.  This Agreement shall have a term expiring on the
fifth anniversary of the date of (i) this Agreement,  or (ii) your last exercise
of the  Original  Option,  whichever  is later,  at which time it shall be of no
further  force or effect,  except to the  extent  that  rights of  payment  have
accrued to you hereunder prior to such date.

         10. Governing Law/Jurisdiction. The substantive law (and not the law of
conflicts) of the State of Minnesota  will govern all questions  concerning  the
construction,  validity and interpretation of this Agreement and the performance
of the  obligations  imposed by this  Agreement.  The parties hereby waive their
rights to  request  or demand a trial by jury in the  event  controversy  arises
under this Agreement.

         11.  Entire  Agreement.  Except  as  otherwise  provided  herein,  this
Agreement  sets forth the entire  agreement  and  understanding  of the  parties
relating to the subject  matter hereof,  and  supersedes  all prior  agreements,
arrangements and understandings, written or oral, relating to the subject matter
hereof. No  representation,  promise or inducement has been made by either party
that is not embodied in this  Agreement,  and neither party shall be bound by or
liable for any illegal representation or promise of inducement not so set forth.

         12. Amendments.  This Agreement may be amended,  modified,  superseded,
canceled,  renewed or extended and the terms or covenants  hereof may be waived,
only by a written instrument executed by the parties hereto, or in the case of a
waiver, by the party waiving  compliance.  The failure of a party at any time or
times to require  performance of any provision  hereof shall in no manner affect
the right of such party at a later time to enforce the same. No waiver by either
party of the breach of any term or covenant contained in this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be deemed to be, or
construed as, a further or continuing  waiver of any such breach, or a waiver of
the breach of any other term or covenant contained in this Agreement.

         13. Headings.  The section headings  contained herein are for reference
purposes only and shall not in any way affect the meaning or  interpretation  of
this Agreement.

                  If the foregoing  correctly sets forth your  understanding  of
the Agreement between us, please sign both copies of this Agreement in the place
indicated below and return one copy in us.

                                      Very truly yours,

                                      Metris Companies Inc.


                                      By: /s/ David D. Wesselink
                                      Name: David D. Wesselink
                                      Title:  Executive Vice President & C.F.O.

Agreed to this 17th day of May, 1999

/s/ Ronald N. Zebeck
-------------------------------
Ronald N. Zebeck