RECEIVABLES PURCHASE AGREEMENT

                  RECEIVABLES  PURCHASE AGREEMENT,  dated as of December 9, 1998
(the "Agreement"),  by and between METRIS COMPANIES INC., a Delaware corporation
("Metris" or the "Seller"), and METRIS ASSET FUNDING CO., a Delaware corporation
(the "Buyer").

                                   WITNESSETH:

                  WHEREAS,  pursuant to that certain  Amended and Restated  Bank
Receivables  Purchase Agreement dated as of July 30, 1998 (the "Bank Receivables
Purchase  Agreement")  between  Metris and Direct  Merchants  Credit  Card Bank,
National  Association,  a national banking association (the "Bank"),  the Seller
purchases  from  time to time  revolving  credit  card  receivables  (including,
without limitation, MasterCard and Visa credit card receivables); and

                  WHEREAS,  the  Buyer  wishes  to  purchase  from  time to time
revolving credit card receivables acquired by the Seller on or after the Closing
Date in connection with the Accounts; and

                  WHEREAS,  the Seller  desires to sell and assign  from time to
time such receivables to the Buyer upon the terms and conditions hereinafter set
forth; and

                  WHEREAS, the Buyer is an Affiliate of the Seller;

                  NOW,  THEREFORE,  it is hereby agreed by and between the Buyer
and the Seller as follows:

                                    ARTICLE I

                                   DEFINITIONS

                  Section 1.1  Definitions.  For all purposes of this Agreement,
except as otherwise  expressly  provided herein or unless the context  otherwise
requires,  capitalized  terms  used  herein  shall have the  following  meanings
assigned to them:

      "Conveyed Property" shall have the meaning set forth in Section 2.1(a).

      "Credit Adjustment" shall have the meaning set forth in Section 3.2(b).

      "Involuntary Case" shall have the meaning set forth in Section 2.1(c).

      "Purchase Price" shall have the meaning set forth in Section 3.1.
      "Related Security" means all of the Seller's right, title and interest in,
to and under:

                  (i) all guarantees,  indemnities,  warranties,  insurance (and
proceeds and premium refunds thereof) or other agreements or arrangements of any
kind from time to time supporting or securing  payment of a Receivable,  whether
pursuant to the Account related to such Receivable or otherwise;

                  (ii)     all Records related to the Receivables;

                  (iii)  all  rights  and  remedies  of the  Seller  under or in
connection with the  Receivables  Purchase  Agreements,  including all financing
statements filed in connection therewith,  other than those financing statements
filed in  connection  therewith  which  name the  Purchaser  Agents  as  initial
assignee; and

                  (iv)     all Proceeds of any of the foregoing.

                  "Relevant UCC State" shall mean each jurisdiction in which the
         filing  of a UCC  financing  statement  is  necessary  to  perfect  the
         ownership interest and security interest of the Buyer established under
         this Agreement.

                  "Requirements   of  Law"  for  any   Person   shall  mean  the
         certificate of  incorporation or articles of association and by-laws or
         other  organizational  or governing  documents of such Person,  and any
         material  law,  treaty,  rule or  regulation,  or  determination  of an
         arbitrator or Official Body, in each case applicable to or binding upon
         such Person or to which such Person is subject.

                  "Sale Papers" shall have the meaning set forth in Section
         4.1(a).

                  "Secured Obligations" shall have the meaning set forth in
         Section 2.1(f).

                  "Transfer  Agreement"  means the Transfer  and  Administration
         Agreement  dated as of  December  9,  1998,  as  amended,  modified  or
         supplemented  from  time  to  time,  among  the  Buyer,  the  Bank,  as
         Collection Agent, Enterprise Funding Corporation,  as a Purchaser, Park
         Avenue Receivables Corporation,  as a Purchaser,  Sheffield Receivables
         Corporation,  as a  Purchaser,  The  Chase  Manhattan  Bank,  as a Bank
         Investor and as PARCO Agent,  Barclays Bank PLC, as a Bank Investor and
         as  Sheffield  Agent,  and  NationsBank,  N.A.,  as  a  Bank  Investor,
         Enterprise Agent, and NationsBank,  N.A., as the  Administrative  Agent
         for the Enterprise Agent and the PARCO Agent and the Sheffield Agent.

                  Section   1.2  Other   Definitional   Provisions.   The  words
"hereof,"'  "herein" and  "hereunder"  and words of similar  import when used in
this  Agreement or any Sale Papers shall refer to this  Agreement as a whole and
not to any  particular  provision of this  Agreement;  and Section,  Subsection,
Schedule and Exhibit  references  contained in this  Agreement are references to
Sections,  Subsections,  Schedules and Exhibits in or to this  Agreement  unless
otherwise  specified.  All  capitalized  terms not otherwise  defined herein are
defined  in the  Transfer  Agreement.  In the event  that any term or  provision
contained  herein shall  conflict with or be  inconsistent  with any  provisions
contained in the Transfer Agreement,  the terms and provisions  contained herein
shall govern with respect to this Agreement.

                  Section 1.3  Computation  of Time  Periods.  Unless  otherwise
stated  in this  Agreement,  in the  computation  of a  period  of  time  from a
specified  date to a later  specified  date,  the word  "from"  means  "from and
including" and the words "to" and "until" each means "to but excluding."

                                   ARTICLE II

                PURCHASE CONVEYANCE AND SERVICING OF RECEIVABLES

                  Section 2.1       Sale.

                  (a) Assets Conveyed.  In consideration  for the Purchase Price
and upon the terms and subject to the  conditions  set forth herein,  the Seller
does hereby sell, assign, transfer, set-over, and otherwise convey to the Buyer,
and the Buyer does hereby  purchase from the Seller,  all of the Seller's right,
title  and  interest  in,  to and under (i) the  Receivables  now  existing  and
hereafter  created  and  arising in  connection  with the  Accounts,  including,
without limitation, all accounts, general intangibles, contract rights and other
obligations  of any Obligor  with respect to the  Receivables,  now or hereafter
existing;  (ii) all Collections with respect thereto; (iii) all Proceeds of such
Receivables; and (iv) the Related Security (the "Conveyed Property") immediately
upon the Seller's acquisition of rights in such Conveyed Property. The foregoing
sale, transfer,  assignment,  set-over and conveyance does not constitute and is
not  intended  to  result in a  creation  or an  assumption  by the Buyer of any
obligation  of the  Seller  in  connection  with the  Conveyed  Property  or any
agreement or instrument relating thereto,  including,  without  limitation,  any
obligation to any Obligors,  merchant banks,  merchant clearance  systems,  VISA
U.S.A.,  Inc.,  MasterCard  International  Inc.  or  insurers.  Each  Account in
existence  on the  Closing  Date  shall be listed by  account  number and by the
outstanding  balance as of the Cut-Off Date in an Account Schedule  delivered to
the Buyer on the Closing Date.

                  (b) Financing  Statements.  In  connection  with the foregoing
sale, the Seller agrees to record and file promptly  following the Closing Date,
at its own  expense,  a financing  statement or  statements  with respect to the
Conveyed  Property  meeting the  requirements  of  applicable  state law in such
manner and in such  jurisdictions  as are  necessary  to perfect and protect the
interests  of the Buyer  created  hereby  under the  applicable  UCC against all
creditors of and purchasers from the Seller,  and to deliver a file-stamped copy
of such  financing  statements  or other  evidence of such  filings to the Buyer
within 10 days after the Closing Date.

                  (c)  Bankruptcy  of  Seller.  The  Buyer  shall  not  purchase
Receivables  hereunder if the Seller shall become an involuntary party to (or be
made  the  subject  of)  any  bankruptcy  proceeding  or any  other  insolvency,
readjustment  of  debt,   marshalling  of  assets  and  liabilities  or  similar
proceedings of or relating to the Seller or relating to all or substantially all
of its property (an  "Involuntary  Case") upon receipt by the Seller at its head
corporate office of notice of such Involuntary Case.

                  (d)  Insolvency  of  Seller.  The  Buyer  shall  not  purchase
Receivables  hereunder if the Seller shall admit in writing its inability to pay
its debts as they are due, or the Seller shall  commence a voluntary  case under
the federal  bankruptcy  laws, as now or hereafter in effect,  or any present or
future  federal or state  bankruptcy,  insolvency  or similar law, or the Seller
shall  consent  to  the  appointment  of or  taking  possession  by a  receiver,
liquidator, assignee, trustee, custodian, sequestrator or other similar official
of the Seller or of any  substantial  part of its  property or the Seller  shall
make an  assignment  for the  benefit  of  creditors  or the  Seller  shall fail
generally  to pay its debts as such debts  become  due or the Seller  shall take
corporate action in furtherance of any of the foregoing.

                  (e)  Marking   Records.   In  connection  with  the  sale  and
conveyance hereunder,  the Seller agrees, at its own expense, on or prior to the
Closing  Date and on each  Business Day  thereafter,  to indicate or cause to be
indicated clearly and  unambiguously in its accounting  records and with respect
to any  Receivables  purchased  by the Seller from the Bank to cause the Bank to
indicate  clearly and  unambiguously in the Bank's  accounting  records that the
Conveyed  Property has been sold to the Buyer  pursuant to this  Agreement as of
the Closing Date or such Business Day as applicable.

                  (f) Sale Intended; Security Interest. It is the express intent
of the Seller and the Buyer that the conveyance of the Conveyed  Property by the
Seller to the Buyer pursuant to this Agreement be construed as a sale thereof by
the Seller to the Buyer. It is, further, not the intention of the Seller and the
Buyer  that such  conveyance  be deemed a grant of a  security  interest  in the
Conveyed  Property  by the  Seller  to the  Buyer  to  secure  a debt  or  other
obligation of the Seller. However, if notwithstanding the intent of the parties,
the Conveyed Property is held to continue to be property of the Seller, then (i)
this  Agreement  also shall be deemed to be and  hereby is a security  agreement
within the meaning of the UCC; (ii) this  Agreement  and the Seller's  books and
records shall  evidence the Buyer's  obligation to pay the Purchase  Price;  and
(iii) the  conveyance  by the Seller  provided  for in this  Agreement  shall be
deemed to be, and the Seller hereby  grants to the Buyer a security  interest in
and to, all of the Seller's right,  title and interest in the Conveyed  Property
to secure all  obligations  now or hereafter  arising of the Seller to the Buyer
including  without  limitation loans to the Seller in the amount of the Purchase
Price as set forth in this Agreement (the "Secured Obligations"). The Seller and
the Buyer shall, to the extent consistent with this Agreement,  take such action
as may be  necessary  to ensure that if this  Agreement  were deemed to create a
security  interest in the Conveyed  Property,  such security  interest  would be
deemed to be a perfected  security  interest  of first  priority in favor of the
Buyer under applicable law and will be maintained as such throughout the term of
this  Agreement.  The  Seller  and the Buyer may rely upon an opinion of counsel
addressed to them as to what is required to provide the Buyer with such security
interest; and any such opinion of counsel shall permit the Administrative Agent,
the  Enterprise  Agent,  the PARCO Agent and the Sheffield  Agent,  on behalf of
Enterprise,  PARCO and  Sheffield,  respectively,  the Bank  Investors,  and any
rating agencies to rely on it.
                                   ARTICLE III

                            CONSIDERATION AND PAYMENT

                  Section  3.1  Purchase  Price.  The  purchase  price  for  the
Conveyed  Property (the "Purchase  Price") shall be a dollar amount equal to the
aggregate  amount of all Principal  Receivables  sold as of such date subject to
adjustment  from time to time with  respect to new  Receivables  to reflect such
factors  as Buyer and Seller  mutually  agree  will  result in a Purchase  Price
determined to approximate the fair market value of such new Receivables.

                  Section 3.2       Payment of Purchase Price.

                  (a)  The  Purchase  Price  for  Receivables  shall  be paid or
         provided  for on the  Closing  Date  with  respect  to the  Receivables
         existing on the Closing  Date and on each  Business Day  thereafter  on
         which  Receivables  are transferred  hereunder,  as the case may be, by
         payment in immediately available funds on the following Business Day.

                  (b) The Purchase Price shall be adjusted on a daily basis (the
         "Credit  Adjustment")  with  respect  to  any  Receivable  adjusted  as
         provided in Section 2.9 of the Transfer Agreement in an amount equal to
         the amount of such Credit  Adjustment  specified  in Section 2.9 of the
         Transfer Agreement.  If the Buyer is required to make payments pursuant
         to Section  2.9 of the  Transfer  Agreement,  the Seller  shall pay the
         amount so adjusted to the Buyer on the last day of the calendar month.

                  Section 3.3 Daily  Reports.  On each  Business Day, the Seller
shall  deliver to the Buyer a Daily  Report  (the  "Daily  Report")  showing the
aggregate Purchase Price of Receivables generated, the aggregate amount, if any,
owing to the Buyer  pursuant to Section 6.1 and the aggregate net amount of cash
owing for  Receivables  generated in each case for the period from and including
the preceding Business Day.

                                   ARTICLE IV

                         REPRESENTATIONS AND WARRANTIES

                  Section 4.1       Seller's Representations and Warranties.
The Seller represents and warrants to the Buyer, that:

                  (a)   Organization   and  Good  Standing.   The  Seller  is  a
         corporation  duly organized and validly existing in good standing under
         the laws of the  State of  Delaware  and has the  corporate  power  and
         authority  and legal right to own its property and conduct its business
         as  such  properties  are  presently  owned  and as  such  business  is
         presently conducted and to execute, deliver and perform its obligations
         under  this  Agreement  and each other  document  or  instrument  to be
         delivered by the Seller hereunder (collectively, the "Sale Papers").

                  (b) Due  Qualification.  The  Seller is duly  qualified  to do
         business and is in good standing (or is exempt from such requirements),
         as a foreign  corporation  in any state  required  in order to  conduct
         business,  and has obtained all necessary  licenses and approvals  with
         respect to the Seller required under  applicable law;  provided that no
         representation or warranty is made with respect to any  qualifications,
         licenses  or  approvals  which  the  Buyer  would  have to obtain to do
         business  in any  state  in  which  the  Buyer  seeks  to  enforce  any
         Receivable.

                  (c) Due Authorization.  The execution and delivery of the Sale
         Papers,  and the consummation of the  transactions  provided for herein
         and therein have been duly  authorized  by the Seller by all  necessary
         corporate action on its part.

                  (d)  Binding  Obligation.  Each of the  Sale  Papers,  and the
         consummation of the  transactions  provided for therein,  constitutes a
         legal,  valid and  binding  obligation  of the Seller,  enforceable  in
         accordance with its terms,  except as enforceability  may be limited by
         applicable bankruptcy, insolvency, reorganization,  moratorium or other
         similar laws now or hereinafter in effect, affecting the enforcement of
         creditors' rights in general.
                  (e) No  Conflicts.  The  execution  and  delivery  of the Sale
         Papers and the performance of the transactions contemplated thereby, do
         not (i) contravene the Seller's certificate of incorporation or by-laws
         or (ii)  violate any  material  provision  of law  applicable  to it or
         require any filing (except for the filings under the UCC, registration,
         consent or approval  under,  any law, rule,  regulation,  order,  writ,
         judgment,  injunction,  decree,  determination  or award  presently  in
         effect  having  applicability  to the Seller,  except for such filings,
         registrations,  consents or approvals as have already been obtained and
         are in full force and effect.

                  (f)  Taxes.  The  Seller has filed all  material  tax  returns
         required to be filed and has paid or made  adequate  provision  for the
         payment  of all  material  taxes,  assessments  and other  governmental
         charges due from the Seller or is contesting  any such tax,  assessment
         or  other  governmental   charge  in  good  faith  through  appropriate
         proceedings and having set up appropriate reserves.

                  (g) No  Violation.  The  execution  and  delivery  of the Sale
         Papers,  the performance of the  transactions  contemplated by the Sale
         Papers and the  fulfillment of the terms thereof,  will not violate any
         Requirements of Law applicable to the Seller, will not violate,  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 default
         under any Requirement of Law applicable to the Seller,  or any material
         indenture,  contract,  agreement,  mortgage,  deed of  trust  or  other
         material  instrument  to which the  Seller is a party or by which it or
         its properties are bound.

                  (h) No Proceedings. There are no proceedings or investigations
         pending or, to the best knowledge of the Seller, threatened against the
         Seller,  before any Official Body (i)  asserting the  invalidity of the
         Sale  Papers,  (ii) seeking to prevent the  consummation  of any of the
         transactions  contemplated thereby,  (iii) seeking any determination or
         ruling that would  materially and adversely  affect the  performance by
         the  Seller  of  its   obligations   thereunder  or  (iv)  seeking  any
         determination  or ruling that would materially and adversely affect the
         validity or enforceability thereof.

                  (i) All  Consents  Required.  All  approvals,  authorizations,
         consents,  orders or other  actions of any  Official  Body  required in
         connection  with the  execution  and delivery of the Sale  Papers,  the
         performance of the transactions contemplated by the Sale Papers and the
         fulfillment of the terms hereof and thereof, have been obtained.

                  (j) Bona Fide Receivables.  The Seller has no knowledge of any
         fact  which   should  have  led  it  to  expect  at  the  time  of  the
         classification  of any Receivable as an Eligible  Receivable  that such
         Receivable  would  not be paid in full when  due,  and each  Receivable
         classified  as an Eligible  Receivable by the Seller in any document or
         report  delivered  under this Agreement  satisfies the  requirements of
         eligibility  contained in the definition of "Eligible  Receivable"  set
         forth in the Transfer  Agreement.  No adverse  selection  criteria have
         been applied to the Receivables purchased hereunder.

                  (k) Place of Business.  The principal executive offices of the
         Seller are in St.  Louis  Park,  Minnesota  and the  offices  where the
         Seller  keeps  its  Records  concerning  the  Receivables  and  related
         Accounts are in Nebraska, Minnesota, Oklahoma, and Arizona.

                  (l) Use of Proceeds. No proceeds of the sale of any Receivable
         hereunder  received by the Seller will be used by the Seller to acquire
         any security in any transaction which is subject to Section 13 or 14 of
         the Securities Exchange Act of 1934, as amended.

                  (m) No Termination  Event. No Termination  Event, or Potential
         Termination Event, has occurred and is continuing.

                  (n)  Not  an  Investment   Company.   The  Seller  is  not  an
         "investment  company" within the meaning of the Investment  Company Act
         of 1940, as amended, or is exempt from all provisions of such Act.

                  (o) Tradenames,  Etc. As of the date hereof;  (i) the Seller's
         chief executive  office is located at the address for notices set forth
         in  Section  8.3;  and (ii) the  Seller  has,  within the last five (5)
         years,  operated  only  under its legal name or the  tradename  "Metris
         Companies"  and,  within the last five (5) years,  has not  changed its
         name,  identity  or  corporate  structure,   merged  with  or  into  or
         consolidated  with any other  corporation  or been the  subject  of any
         proceeding under the Bankruptcy Code.

                  (p)  Amount  of  Receivables.  As of  the  Cut-Off  Date,  the
         aggregate outstanding balance of the Principal Receivables in existence
         was at least $[ ].

                  (q) ERISA.  Each of the Seller and its ERISA  Affiliates is in
         compliance  in all material  respects  with ERISA and no lien exists in
         favor  of  the  Pension  Benefit  Guaranty  Corporation  on  any of the
         Receivables.

                  (r) Bulk Sales. No transaction  contemplated by this Agreement
         requires compliance with any bulk sales act or similar law.

                  (s)  Preference;  Voidability.  The Seller  warrants  that the
         conveyance of the applicable  Receivables and Collections to the Buyer,
         and each such conveyance, shall not have been made for or on account of
         an antecedent debt owed by the Seller to the Buyer and no such transfer
         is or may bc voidable under any section of the Bankruptcy Code.

                  (t) No  Restriction  on  Transfer.  To the  best  of  Seller's
         knowledge,  no Account requires the prior written consent of an Obligor
         or  contains  any  other  restriction   relating  to  the  transfer  or
         assignment  of rights of  payment  under  such  Account  (other  than a
         consent or waiver of such  restriction  that has been obtained prior to
         the related purchase date).

                  (u)  Accuracy  of  Information.   All  information  heretofore
         furnished by the Seller to the Buyer for  purposes of or in  connection
         with this Agreement or any transaction  contemplated hereby is, and all
         such  information  hereafter  furnished by the Seller to the Buyer will
         be,  true and  accurate  in every  material  respect,  on the date such
         information is stated or certified.

The  representations  and warranties set forth in this Section 4.1 shall survive
the sale of the  Receivables  to the Buyer.  The Seller  hereby  represents  and
warrants to the Buyer, that the representations and warranties of the Seller set
forth in this  Section  4.1 are true and correct as of the  Closing  Date.  Upon
discovery  by the  Seller  or  the  Buyer  of a  material  breach  of any of the
foregoing  representations  and warranties,  the party  discovering  such breach
shall give prompt written notice thereof to the other.

                  Section 4.2       Seller's Representations and Warranties
Regarding Receivables.

                  (a) Valid  Sale,  etc.  The Seller (x) hereby  represents  and
         warrants  as of the  Closing  Date,  with  respect  to the  Receivables
         outstanding  on such  date,  and (y) shall be deemed to  represent  and
         warrant as of the date of the creation or  acquisition  and sale to the
         Buyer of any  Receivables  after the Closing  Date with respect to such
         Receivables, that:

                           (i) Each of this  Agreement and the Bank  Receivables
                  Purchase  Agreement  constitutes the legal,  valid and binding
                  obligation  of the Seller,  enforceable  against the Seller 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.

                           (ii) The transfer of Receivables by the Seller to the
                  Buyer under this Agreement constitutes a valid sale, transfer,
                  assignment, set-over and conveyance to the Buyer of all right,
                  title and  interest  of the Seller in and to the  Receivables,
                  Collections and Proceeds,  whether then existing or thereafter
                  created and arising in connection with the Accounts,  and such
                  Receivables  will be held by the  Buyer  free and clear of any
                  Adverse  Claim of any  Person  claiming  through  or under the
                  Seller or any of its Affiliates.  This Agreement constitutes a
                  valid sale, transfer,  assignment,  set-over and conveyance to
                  the Buyer of all right,  title and  interest  of the Seller in
                  and to the Receivables purported to be sold hereunder, whether
                  existing on the Closing Date or  thereafter  created,  and the
                  proceeds thereof.

                           (iii)  The  Seller is not  insolvent  and will not be
                  rendered insolvent upon sale of the Receivables to the Buyer.

                           (iv)   Immediately   preceding   the   sale   of  the
                  Receivables and related  property  pursuant to this Agreement,
                  the Seller is (or, with respect to  Receivables  arising after
                  the date hereof,  will be) the legal and  beneficial  owner of
                  all right,  title and interest in and to each  Receivable  and
                  each  Receivable  has been or will be transferred to the Buyer
                  free and clear of any Adverse Claim.

                           (v)   All    consents,    licenses,    approvals   or
                  authorizations  of or registrations  or declarations  with any
                  Official  Body  requested in  connection  with the transfer of
                  such Receivables to the Buyer have been obtained.

                           (vi) Each Account  classified as an Eligible  Account
                  by the Seller in any  document or report  delivered  hereunder
                  will satisfy the  requirements  contained in the definition of
                  Eligible Account as of the date of such document or report and
                  each  Receivable  classified as an Eligible  Receivable by the
                  Seller in any  document  or report  delivered  hereunder  will
                  satisfy  the  requirements  contained  in  the  definition  of
                  "Eligible  Receivable"  as of the  time  of such  document  or
                  report.

                           (vii) Each Receivable then existing has been conveyed
                  to the Buyer free and clear of any Adverse Claim of any Person
                  claiming  through or under the Seller or any of its Affiliates
                  and  in  compliance,   in  all  material  respects,  with  all
                  Requirements  of Law  applicable  to  the  Seller.  (b)  Daily
                  Representations  and Warranties.  On each day on which any new
                  Receivable is
         created  or  acquired  by the  Seller,  the  Seller  shall be deemed to
         represent  and  warrant  to the  Buyer  that  all  representations  and
         warranties  contained  in Section 4.1 and  Section  4.2(a) are true and
         correct on and as of such date (in  addition  to the  Closing  Date) as
         though  made  on and as of such  date  (except  for the  representation
         contained in Section 4.1(p)).

                  (c) Notice of Breach. The  representations  and warranties set
         forth  in this  Section  4.2  shall  survive  the  sale,  transfer  and
         assignment of the respective  Receivables to the Buyer.  Upon discovery
         by the  Seller or the  Buyer of a breach of any of the  representations
         and  warranties  set forth in this Section  4.2, the party  discovering
         such breach shall give prompt written notice thereof to the other.  The
         Seller  agrees to cooperate  with the Buyer in  attempting  to cure any
         such breach.

                  Section 4.3  Representations  and Warranties of the Buyer. The
Buyer hereby represents and warrants as of the Closing Date, and shall be deemed
to represent and warrant as of the date of the creation of any  Receivable  sold
to the Buyer hereunder, that:

                  (a) Organization and Good Standing. The Buyer is a corporation
         duly organized and validly  existing in good standing under the laws of
         the State of Delaware and has the  corporate  power and  authority  and
         legal  right to own its  property  and  conduct  its  business  as such
         properties are presently owned and such business is presently conducted
         and to execute,  deliver,  and perform its obligation's  under the Sale
         Papers.

                  (b) Due  Qualification.  The  Buyer  is duly  qualified  to do
         business and is in good standing (or is exempt from such  requirements)
         as a foreign  corporation  in any state  required  in order to  conduct
         business and has obtained all  necessary  licenses and  approvals  with
         respect to the Buyer required under federal and Delaware law.

                  (c) Due Authorization.  The execution and delivery of the Sale
         Papers and the  consummation  of the  transactions  provided for in the
         Sale Papers  have been duly  authorized  by the Buyer by all  necessary
         corporate action on its part.

                  (d) No  Conflicts.  The  execution  and  delivery  of the Sale
         Papers and the performance of the transactions  contemplated thereby do
         not (i) contravene the Buyer's  certificate of incorporation or by-laws
         or (ii) violate any  material  provision  of law  applicable  to it, or
         require  any  filing   (except   for  the   filings   under  the  UCC),
         registration,  consent or approval  under,  any law, rule,  regulation,
         order,  writ,  judgment,  injunction,  decree,  determination  or award
         presently in effect having  applicability to the Buyer, except for such
         filings,  registrations,  consents or  approvals  as have  already been
         obtained and are in full force and effect.

                  (e) No  Violation.  The  execution  and  delivery  of the Sale
         Papers,  the performance of the  transactions  contemplated by the Sale
         Papers,  and the  fulfillment  of the terms of the Sale Papers will not
         violate  any  Requirements  of Law  applicable  to the Buyer,  will not
         violate,  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  default  under any  Requirement  of Law  applicable  to the
         Buyer, or any material indenture,  contract, agreement,  mortgage, deed
         of trust or other material  instrument to which the Buyer is a party or
         by which it or its properties are bound.

                  (f) No Proceedings. There are no proceedings or investigations
         pending or, to the best knowledge of the Buyer,  threatened against the
         Buyer,  before any Official Body (i)  asserting  the  invalidity of the
         Sale  Papers,  (ii) seeking to prevent the  consummation  of any of the
         transactions  contemplated  by  the  Sale  Papers,  (iii)  seeking  any
         determination  or ruling that would materially and adversely affect the
         performance by the Buyer of its obligations  thereunder or (iv) seeking
         any  determination or ruling that would materially and adversely affect
         the validity or enforceability or the Sale Papers.

                  (g) All  Consents  Required.  All  approvals,  authorizations,
         consents,  orders,  or other  actions of any Official  Body required in
         connection  with the  execution  and delivery of the Sale  Papers,  the
         performance of the  transactions  contemplated by the Sale Papers,  and
         the fulfillment of the terms of the Sale Papers have been obtained.

                  (h)  Solvency.  The  Buyer  is not  insolvent  and will not be
         rendered insolvent upon the purchase of the Receivables.

The  representations  and warranties set forth in this Section 4.3 shall survive
the sale of the  Receivables  to the  Buyer.  The Buyer  hereby  represents  and
warrants to the Seller that the  representations and warranties of the Buyer set
forth in Section 4.3 are true and correct as of the Closing Date. Upon discovery
by the Buyer or the Seller of a breach of any of the  foregoing  representations
and  warranties,  the party  discovering  such breach shall give prompt  written
notice to the other.

                                    ARTICLE V

                          COVENANTS OF SELLER AND BUYER

                  Section 5.1       Seller Covenants.  The Seller hereby
covenants that:

                  (a)  Receivables  to be Accounts or General  Intangibles.  The
         Seller will take no action to cause any  Receivable  to be evidenced by
         any  "instrument"  or to constitute  "chattel paper" (as defined in the
         UCC as in effect in the Relevant UCC State),  except in connection with
         the  enforcement  or  collection  of  a  Receivable.   Except  in  such
         circumstances,  the Seller will take no action to cause any  Receivable
         to be anything  other than an "account" or a "general  intangible"  (as
         defined in the UCC as in effect in the Relevant UCC State).

                  (b) Security Interests.  Except for the conveyances hereunder,
         the  Seller  will not sell,  pledge,  assign or  transfer  to any other
         Person, or grant, create,  incur, assume or suffer to exist any Adverse
         Claim, on any Receivable, whether now existing or hereafter created, or
         any interest therein;  the Seller will immediately  notify the Buyer of
         the  existence of any Adverse Claim on any  Receivable;  and the Seller
         shall  defend the  right,  title and  interest  of the Buyer in, to and
         under the  Receivables,  whether  now  existing or  hereafter  created,
         against  all  claims of third  parties  claiming  through  or under the
         Seller.

                  (c)  Periodic  Finance  Charges  and  Other  Fees.  Except  as
         otherwise  required by any  Requirement  of Law, or as is deemed by the
         Seller in its sole  discretion to be necessary in order to maintain its
         credit card business on a competitive  basis,  it shall not at any time
         reduce the annual  percentage  rates of the  periodic  finance  charges
         assessed  on  the  Receivables  or  other  fees  charged  on any of the
         Accounts if, as a result of any such reduction, either (i) the Seller's
         reasonable  expectation is that such reduction will cause a Termination
         Event to occur  or (ii)  such  reduction  is not  also  applied  to any
         comparable  segment of consumer revolving credit card accounts owned by
         the  Seller  that have  characteristics  the same as, or  substantially
         similar to, such Accounts.

                  (d) Credit and Collection Policy and Account  Agreements.  The
         Seller shall comply with the Credit and Collection  Policy in regard to
         the Receivables and the related Accounts, except insofar as any failure
         to  so  comply  could  not  be   reasonably   expected  to  impair  the
         collectibility  of the  Receivables,  on the  whole,  or a  substantial
         amount  thereof,  or otherwise  have a Material  Adverse Effect and the
         Receivables and related Accounts shall be serviced in all respects in a
         manner  consistent  with and similar to the revolving  credit  consumer
         credit card  amounts  and  receivables  conveyed  to the Metris  Master
         Trust.
                  (e)  Delivery  of  Collections.  In the event  that the Seller
         receives  Collections,  the Seller  agrees to deposit such  Collections
         into the Collection  Account as soon as  practicable  after the receipt
         thereof,  but in no event later than the second  Business Day following
         the Date of Processing thereof.

                  (f) Conveyance of  Receivables.  Except as provided in Section
         8.5, the Seller  covenants and agrees that it will not convey,  assign,
         exchange or otherwise transfer any Receivable arising in an Account, to
         any Person other than the Buyer.

                  (g) Notice of Adverse  Claims.  The  Seller  shall  notify the
         Buyer  promptly  after  becoming  aware  of any  Adverse  Claim  on any
         Receivable.

                  (h) Separate  Business.  The Seller will not permit its assets
         to be commingled  with those of the Buyer and shall  maintain  separate
         corporate  records  and books of account  from those of the Buyer.  The
         Seller will not conduct its  business in the name of the Buyer and will
         cause the Buyer to conduct  its  business  solely in its own name so as
         not to mislead others as to the identity of the entity with which those
         others are  concerned.  The Seller will  provide for its own  operating
         expenses and liabilities  from its own funds.  The Seller will not hold
         itself out, or permit  itself to be held out, as having  agreed to pay,
         or as generally  being liable for, the debts of the Buyer,  except that
         the organizational expenses of the Buyer may be paid by the Seller. The
         Seller  shall cause the Buyer not to hold itself out, or permit  itself
         to be held out, as having  agreed to pay, or as being  liable for,  the
         debts  of  the  Seller.  The  Seller  will  maintain  an  arm's  length
         relationship  with the Buyer with respect to any  transactions  between
         the Seller, on the one hand, and the Buyer, on the other.

                  (i)  Conduct of  Business.  The Seller will do, and will cause
         each of its  Subsidiaries  to do, all things  necessary  to remain duty
         incorporated,  validly  existing  and in good  standing  as a  domestic
         corporation in its jurisdiction of incorporation  and will maintain all
         requisite  authority  to conduct its business in each  jurisdiction  in
         which its business is conducted.

                  (j)  Compliance  with Laws.  The Seller  shall comply with all
         laws,  rules,  regulations,  orders,  writs,  judgments,   injunctions,
         decrees  or  awards  to which it or its  respective  properties  may be
         subject,  except  where such  failure  to comply  could  reasonably  be
         expected to have,  individually or in the aggregate, a Material Adverse
         Effect.

                  (k) Furnishing of Information  and Inspection of Records.  The
         Seller  shall  furnish to the Buyer from time to time such  information
         with respect to the  Receivables as the Buyer may  reasonably  request,
         including, without limitation, listings identifying the Obligor and the
         outstanding principal balance for each Receivable. The Seller shall, at
         any time and from time to time during  regular  business hours and upon
         reasonable  notice permit the Buyer, or its agents or  representatives,
         (i) to examine and make copies of and take  abstracts from all Records,
         to visit the  offices  and  properties  of the  Seller  and to  discuss
         matters relating to Receivables or the Seller's  performance  hereunder
         and under the other  Transaction  Documents to which it is a party with
         any  of  the  officers,  directors,  employees  or  independent  public
         accountants of the Seller having  knowledge of such matters and (ii) to
         conduct  as many  audits  of the  Receivables  during  the term of this
         Agreement as the Buyer may reasonably request; provided,  however, that
         the Seller shall only be required to  reimburse  the Buyer for the cost
         of one such audit per year.

                  (l) Keeping of Records  and Books of Account.  The Seller will
         maintain  a  system  of  accounting  established  and  administered  in
         accordance with generally accepted accounting principles,  consistently
         applied,  and will maintain and implement  administrative and operating
         procedures  (including,  without  limitation,  an ability  to  recreate
         records  evidencing  Receivables in the event of the destruction of the
         originals  thereof),  and  keep and  maintain,  all  documents,  books,
         records and other information reasonably necessary or advisable for the
         collection of all Receivables (including,  without limitation,  records
         adequate to permit the daily  identification of each new Receivable and
         all  Collections of and adjustments to each existing  Receivable).  The
         Seller will give the Administrative Agent notice of any material change
         in the administrative  and operating  procedures of the Seller referred
         to in the previous sentence.

                  (m) Performance and Compliance with  Receivables and Accounts.
         The Seller at its expense will timely and fully perform and comply with
         all material  provisions,  covenants and other promises  required to be
         observed by it under the Accounts related to the Receivables.

                  (n) ERISA.  The Seller shall promptly give the  Administrative
         Agent written  notice upon becoming aware that the Seller or any of its
         Subsidiaries  is not in compliance in all material  respects with ERISA
         or that any ERISA lien on any of the Receivables exists.

                  (o) Bank Receivables  Purchase Agreement.  The Seller will not
         amend the Bank Receivables  Purchase Agreement in any manner materially
         adverse to the  interests of the Buyer with respect to the  Receivables
         without obtaining the prior written consent of the Buyer.

                  (p) Year 2000 Compliance.  The Seller will promptly notify the
         Buyer in the event the Seller discovers or determines that any computer
         application  (including  those of its  suppliers  and vendors)  that is
         material to its or any of its  Subsidiaries'  business  and  operations
         will not be Year 2000 compliant on a timely basis, except to the extent
         that such failure  could not  reasonably be expected to have a Material
         Adverse Effect.

                  Section 5.2 Buyer Covenant Regarding Sale Treatment. The Buyer
will not (i) account for or otherwise treat,  the  transactions  contemplated by
this  Agreement in any manner  other than as a sale of the Conveyed  Property by
the  Seller  to the  Buyer or  account  for  (other  than for tax  purposes)  or
otherwise treat the transactions contemplated hereby in any manner other than as
a sale of the  Conveyed  Property by the Seller to the Buyer and shall  disclose
(in a footnote or otherwise) in all of its financial  statements  (including any
such  financial  statements  consolidated  with  any  other  Person's  financial
statements) the existence and nature of the transaction  contemplated hereby and
the interest of the Buyer in the Affected Assets.

                  Section 5.3  Indemnification  by the Seller.  Without limiting
any other rights which the Buyer may have hereunder or under applicable law, the
Seller  hereby agrees to indemnify  the Buyer and any  successors  and permitted
assigns and their respective  officers,  directors and employees  (collectively,
"Indemnified  Parties")  from and against any and all damages,  losses,  claims,
liabilities,  costs and  expenses,  including,  without  limitation,  reasonable
attorneys'  fees and  disbursements  (all of the  foregoing  being  collectively
referred to as "Indemnified Amounts") awarded against or incurred by any of them
in any action or proceeding between any of the Indemnified Parties and any third
party or otherwise  arising out of or as a result of this Agreement or the other
Transaction  Documents  or  any  transaction  contemplated  hereby  or  thereby,
excluding,  however,  (i)  Indemnified  Amounts  to the  extent  resulting  from
negligence  or willful  misconduct on the part of an  Indemnified  Party or (ii)
recourse  (except as  otherwise  specifically  provided in this  Agreement)  for
uncollectible Receivables. Without limiting the generality of the foregoing, the
Seller shall indemnify each Indemnified  Party for Indemnified  Amounts relating
to or resulting from:

                  (a) any  representation  or warranty made by the Seller or any
         officers of the Seller under or in connection with this Agreement,  the
         Receivable Purchase Agreements, any of the other Transaction Documents,
         any Investor Report or any other information or report delivered by the
         Seller pursuant hereto, which shall have been false or incorrect in any
         material respect when made or deemed made;

                  (b) the  failure by the Seller to comply  with any  applicable
         law, rule or regulation  with respect to any  Receivable or the related
         Account,  or the nonconformity of any Receivable or the related Account
         with any such applicable law, rule or regulation;

                  (c) the failure (i) to vest and maintain  vested in the Buyer,
         an undivided first priority, perfected percentage ownership interest in
         the  Affected  Assets  free and clear of any  Adverse  Claim or (ii) to
         create  or  maintain  a valid and  perfected  first  priority  security
         interest in favor of the Buyer, in the Affected Assets,  free and clear
         of any Adverse Claim;

                  (d) the  failure to file,  or any delay in  filing,  financing
         statements,  continuation  statements,  or other similar instruments or
         documents  under  the  UCC  of any  applicable  jurisdiction  or  other
         applicable laws with respect to any of the Affected Assets;

                  (e)      the transfer of an ownership interest in any
         Receivable other than an Eligible Receivable;

                  (f) the  failure  of the  Seller  to pay when  due any  taxes,
         including without limitation,  sales, excise or personal property taxes
         payable in connection with any of the Receivables;

                  (g)      the commingling by the Seller of Collections of
         Receivables at any time with other funds;

                  (h) any  failure of the Seller to give  reasonably  equivalent
         value to the Bank, in  consideration of the transfer to the Seller from
         the Bank,  of any  Receivable,  or any  attempt  by any Person to void,
         rescind or set aside any such transfer  under  statutory  provisions or
         common law or equitable  action,  including,  without  limitation,  any
         provision of the Bankruptcy Code; or

                  (i)      any action taken by the Seller in the enforcement or
         collection of any Receivable.

                                   ARTICLE VI

                              REPURCHASE OBLIGATION

                  Section 6.1       Mandatory Repurchase.

                  (a) Breach of Warranty.  In the event of a breach with respect
         to a Receivable of any of the  representations and warranties set forth
         in  Subsections  (a),  (b),  (c),  (d),  (e) or (j) of  Section  4.1 or
         Subsections  (a)  or  (b)  of  Section  4.2,  or in  the  event  that a
         Receivable is not an Eligible Receivable on the date of its transfer to
         the Buyer as a result of the  failure to  satisfy  the  conditions  set
         forth in the definition of "Eligible Receivable", such Receivable shall
         be designated an  "Ineligible  Receivable"  and the Seller shall pay to
         the Buyer an amount in cash  equal to the  purchase  price paid for any
         such  Ineligible  Receivable  by the Buyer to the Seller plus any costs
         and  expenses  of the  Buyer  associated  therewith  less  any  amounts
         collected by Buyer on such Receivable. Such payment must be made by the
         close of business on the next succeeding Business Day following the day
         such Receivable has been designated an Ineligible Receivable; provided,
         however,  that prior to the  Termination  Date (except in the case of a
         breach  of any of the  representations  listed  in the  first  sentence
         above) such amount may be offset against any amounts due from the Buyer
         to the Seller with respect to the Purchase Price for  Receivables  sold
         to the Buyer on such day.  The  obligation  of the  Seller set forth in
         this Section 6.1 shall constitute the sole remedy respecting any breach
         of the representations and warranties set forth in the above-referenced
         Sections or failure to meet the  conditions set forth in the definition
         of "Eligible  Receivable" with respect to such Receivable  available to
         the Buyer.

                  (b) Reassignment of the Sold Assets.  In the event of a breach
         of any of the  representations  and  warranties  set forth in  Sections
         4.1(a),  (b) and (c) and 4.2(a)(i) and (ii),  the Buyer by notice given
         in writing  to the Seller may direct the Seller to accept  reassignment
         of the Receivables at the amount specified below within 60 days of such
         notice  (or  within  such  longer  period as may be  specified  in such
         notice),  and the Seller shall be obligated to accept  reassignment  of
         the  Receivables  within such  applicable  period on and conditions set
         forth below;  provided,  however,  that no such  reassignment  shall be
         required to be made if, at any time during such applicable  period, the
         Seller delivers to the Buyer an officer's  certificate stating that the
         representations and warranties contained in Section 4.1(a), (b) and (c)
         and  4.2(a)(i)  and (ii) shall then be true and correct in all material
         respects as if made on such day.  The Seller  shall pay to the Buyer on
         the day of such  reassignment an amount equal to the Aggregate  Unpaids
         plus the  Transferor's  Percentage  Interest.  On the day on which such
         amount has been paid, each  Receivable  shall be sold and reassigned to
         the Seller, and the Buyer shall execute and deliver such instruments of
         sale and assignment,  in each case without recourse,  representation or
         warranty, as shall be reasonably requested by the Seller to vest in the
         Seller, or its designee or assignee,  all right,  title and interest of
         the Buyer in and to each  Receivable.  The  obligation of the Seller to
         purchase each Receivable  pursuant to this Section 6.1 shall constitute
         the  sole  remedy   available   to  the  Buyer  for  a  breach  of  the
         representations and warranties contained in Section 4.1(a), (b) and (c)
         and 4.2(a)(i) and (ii).

                  Section 6.2  Conveyance  of  Reassigned  Receivable.  Upon the
request of the  Seller,  the Buyer  shall  execute  and  deliver to the Seller a
reconveyance  substantially  in such  form  and  upon  such  terms  as  shall be
acceptable to the Seller,  pursuant to which the Buyer  evidences the conveyance
to  the  Seller  of all  of  the  Buyer's  right,  title,  and  interest  in any
Receivables reconveyed to the Seller pursuant to Section 6.1(b). The Buyer shall
(and shall cause the  Administrative  Agent and each Purchaser Agent to) execute
such other  documents or instruments of conveyance or take such other actions as
the  Seller may  reasonably  require to effect  any  repurchase  of  Receivables
pursuant to Section 6.1.

                  Section 6.3 Sales are Non-Recourse. Other than the obligations
to repurchase  Receivables under the limited  circumstances set forth in Section
6.1 and to make payments with respect to Credit Adjustments under Section 3.2(b)
and the indemnity  provided in Section 5.3, the sales of Receivables  under this
Agreement shall be without recourse to the Seller.

                                   ARTICLE VII

                              CONDITIONS PRECEDENT

                  Section 7.1  Conditions to the Buyer's  Obligations  Regarding
Receivables.  The  obligations  of the Buyer to purchase the  Receivables on any
Business Day shall be subject to the satisfaction of the following conditions:

                  (a) All representations and warranties of the Seller contained
         in this  Agreement  shall be true and correct on the  Closing  Date and
         (except  for  the  representation  in  Section  4.1(p))  on the  day of
         creation of any Receivable  created  thereafter with the same effect as
         though such representations and warranties had been made on such date;

                  (b) All information concerning the Receivables provided to the
         Buyer  shall be true and  correct in all  material  respects  as of the
         Closing  Date,  in the  case of  Receivables  sold to the  Buyer on the
         Closing  Date, or the  applicable  Date of  Processing,  in the case of
         Receivables created after the Closing Date;

                  (c) At the Closing Date,  the Seller shall have  substantially
         performed  all  other  obligations  required  to be  performed  by  the
         provisions of this Agreement;

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

                  Section 7.2 Conditions Precedent to the Seller's  Obligations.
The  obligations of the Seller to sell  Receivables on any Business Day shall be
subject to the satisfaction of the following conditions:

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

                  (b) Payment or provision for payment of the Purchase  Price in
         accordance with the provisions of Section 3.2 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 the Seller,  and the Seller
         shall have received from the Buyer copies of all documents  (including,
         without limitation,  records of corporate  proceedings) relevant to the
         transactions  herein  contemplated  as the Seller may  reasonably  have
         requested.

                                  ARTICLE VIII

                            MISCELLANEOUS PROVISIONS

                  Section  8.1  Amendment.  This  Agreement  and any other  Sale
Papers  and the rights  and  obligations  of the  parties  hereunder  may not be
changed orally, but only by an instrument in writing signed by the Buyer and the
Seller.  The Seller shall provide prompt written notice of any such amendment to
the Agent.

                  Section 8.2 Governing  Law. THIS  AGREEMENT AND THE OTHER SALE
PAPERS SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF MINNESOTA,
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 8.3 Notices.  All demands,  notices and communications
hereunder  shall be in  writing  and shall be deemed to have been duly  given if
personally  delivered at or mailed by registered mail, return receipt requested,
to:

                  (a)      in the case of the Buyer, to:

                           Metris Asset Funding Co.
                           600 South Highway 169, Suite 300
                           St. Louis Park, Minnesota 55426
                           Attention:  Treasurer
                           Telephone:  (612) 593-4845
                           Telecopy:  (612) 525-5070

                           with a copy to:

                           NationsBank, N.A., Administrative Agent
                           Corporate Center-10th Floor
                           100 North Tryon Street
                           NCI-007-10-07
                           Charlotte, NC 28255
                           Attention:  Michelle M. Heath (NC 1-007-10-07)
                           Structured Finance
                           Telephone:  (704) 386-7922
                           Telecopy:  (704) 388-9169

                  (b)      in the case of the Seller, to:

                           Metris Companies Inc.
                           600 South Highway 169, Suite 1800
                           St. Louis Park, Minnesota 55426
                           Attention:  Chief Financial Officer
                           Telephone:  (612) 525-5094
                           Telecopy:  (612) 595-0510

or, as to each party, at such other address as shall be designated by such party
in a written notice to each other party.

                  Section 8.4 Severability of Provisions.  If any one or more of
the covenants, agreements,  provisions or terms of the Sale Papers 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,  or terms of the Sale Papers and shall in no way affect the validity
or enforceability of the other provisions of the Sale Papers.

                  Section  8.5  Assignment.   Notwithstanding  anything  to  the
contrary  contained  herein,  this Agreement may not be assigned by the Buyer or
the  Seller  except  as  contemplated  by this  Section  8.5  and  the  Transfer
Agreement;  provided,  however,  that  simultaneously  with  the  execution  and
delivery of this Agreement,  the Buyer may assign its rights hereunder  pursuant
to the Transfer  Agreement to the (a) PARCO Agent, for the benefit of PARCO, (b)
to the  Enterprise  Agent for the benefit of  Enterprise,  (c) to the  Sheffield
Agent for the  benefit  of  Sheffield  and (d) to the Bank  Investors;  and that
PARCO,  Enterprise  or  Sheffield  may  assign  any or all of its  rights to any
Liquidity   Provider.   The  Buyer  hereby   notifies  (and  the  Seller  hereby
acknowledges that) the Buyer,  pursuant to the Transfer Agreement,  has assigned
its  rights  hereunder  to the  PARCO  Agent  and the  Enterprise  Agent and the
Sheffield Agent. All rights of the Buyer hereunder may be exercised by the PARCO
Agent,  the  Enterprise  Agent  or  the  Sheffield  Agent  or  their  respective
assignees,   to  the  extent  of  their  respective   rights  pursuant  to  such
assignments.

                  Section 8.6 Further Assurances. The Buyer and the Seller 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 more
fully to effect the purposes of the Sale Papers, including,  without limitation,
the  execution  of  any  financing  statements  or  continuation  statements  or
equivalent documents relating to the Receivables for filing under the provisions
of the UCC or other laws of any applicable jurisdiction.

                  Section  8.7 No  Waiver;  Cumulative  Remedies.  No failure to
exercise and no delay in exercising, on the part of the Buyer or the Seller, 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.  The rights,  remedies,
powers and privileges  herein  provided are cumulative and not exhaustive of any
rights, remedies, powers and privileges provided by law.

                  Section 8.8 Counterparts. The Sale Papers may each be executed
in two or more  counterparts  including  telecopy  transmission  thereof (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 8.9 Binding  Effect;  Third-Party  Beneficiaries.  The
Sale Papers will inure to the benefit of and be binding upon the parties  hereto
and their respective successors and permitted assigns.

                  Section 8.10 Merger and  Integration.  Except as  specifically
stated otherwise herein,  the Sale 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 the Sale Papers.
                  Section 8.11      Headings.  The headings herein are for
purposes of reference only and shall not otherwise affect the meaning or
interpretation of any provision hereof.

                  Section  8.12  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 8.13 No  Bankruptcy  Petition  Against the Buyer.  The
Seller hereby covenants and agrees that, prior to the date which is one year and
one day  after  the  payment  in  full of all  Aggregate  Unpaids,  it will  not
institute against or join any other Person in instituting  against the Buyer any
bankruptcy,  reorganization,  arrangement, insolvency or liquidation proceedings
or other similar  proceeding under die laws of the United States or any state of
the United States.

                  Section 8.14 Merger or Consolidation  of, or Assumption of the
Obligations of the Seller.  The Seller shall not consolidate  with or merge into
any  other   corporation  or  convey  or  transfer  its  properties  and  assets
substantially as an entirety to any Person, unless:

                  (a) the corporation formed by such consolidation or into which
         the Seller is merged or the Person  which  acquires  by  conveyance  or
         transfer the  properties and assets of the Seller  substantially  as an
         entirety  shall be a corporation  organized and existing under the laws
         of the  United  States  of  America  or any  State or the  District  of
         Columbia  and,  if  the  Seller  is not  the  surviving  entity,  shall
         expressly assume,  by an agreement  supplemental  hereto,  executed and
         delivered  to  the  Buyer  in  form  satisfactory  to  the  Buyer,  the
         performance of every  covenant and  obligation of the Seller  hereunder
         (to the extent that any right, covenant or obligation of the Seller, as
         applicable  hereunder,  is inapplicable to the successor  entity,  such
         successor  entity shall be subject to such covenant or  obligation,  or
         benefit from such right, as would apply, to the extent practicable,  to
         such successor entity); and

                  (b) the  Seller  shall  have  delivered  to the  Buyer  (i) an
         officer's  certificate that such consolidation,  merger,  conveyance or
         transfer and such supplemental agreement comply with this Section 8 .14
         and that all conditions  precedent herein provided for relating to such
         transaction  have  been  complied  with and (ii) the  Company  and Bank
         Investors  shall have received an opinion of legal  counsel  reasonably
         acceptable to them that the Transaction  Documents to which Seller is a
         party  are  legal,  valid and  binding  obligations  of such  successor
         corporation,   enforceable   against  such  successor   corporation  in
         accordance  with  their  terms,   subject  to  applicable   bankruptcy,
         insolvency,   reorganization,    moratorium,   fraudulent   conveyance,
         fraudulent transfer and other similar laws affecting  creditors' rights
         generally, and to the application of general principles of equity; and

                  (c)  there  shall  exist no  Termination  Event  or  Potential
Termination Event.

                  Section 8.15      Protection of Right, Title and Interest to
Receivables.

                  (a) The Seller  shall  cause this  Agreement,  all  amendments
         hereto and/or all financing statements and continuation  statements and
         any other  necessary  documents  covering  the Seller's and the Buyer'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 the
         Buyer  hereunder to the Receivables  and proceeds  thereof.  The Seller
         shall deliver to the Buyer  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
         Buyer  shall  cooperate  fully with the Seller in  connection  with the
         obligations  set forth  above and will  execute  any and all  documents
         reasonably required to fulfill the intent of this Subsection (a).

                  (b) Within 30 days  after the  Seller  makes any change in its
         name,  identity or corporate  structure  which would make any financing
         statement or continuation statement filed in accordance with Subsection
         (a) materially misleading within the meaning of Section 9-402(7) of the
         UCC as in effect in the Relevant  UCC State,  the Seller shall give the
         Buyer written  notice of any such change and shall file such  financing
         statements or amendments as may be necessary to continue the perfection
         of the Buyer's  security  interest in the  Receivables and the proceeds
         thereof.

                  (c) The Seller will give the Buyer  prompt  written  notice of
         any  relocation  of any office  from which it services  Receivables  or
         keeps records concerning the Receivables or of its principal  executive
         office and  whether,  as a result of such  relocation,  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  continue  the  perfection  of the
         Buyer's security  interest in the Receivables and the proceeds thereof.
         The  Seller  will at all  times  maintain  each  office  from  which it
         services  Receivables  and its  principal  executive  office within the
         United States of America.

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<PAGE>


                  IN WITNESS WHEREOF,  the Buyer and the Seller each have caused
this  Receivables  Purchase  Agreement to be duly  executed by their  respective
officers as of the day and year first above written.

                                METRIS ASSET FUNDING CO., as Buyer


                                By: /s/ Paul Runice
                                  Its: President and Treasuer

                                METRIS COMPANIES INC., as Seller,


                                By: /s/ Paul Runice
                                  Its: Senior Vice President and Treasurer