Table of Contents

þ  Preliminary Proxy Statement
o  Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
o  Definitive Proxy Statement
o  Definitive Additional Materials
o  Soliciting Material Pursuant to § 240.14a-12

(1)	Title of each class of securities to which transaction applies:

(2)	Aggregate number of securities to which transaction applies:

(3)	Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

(4)	Proposed maximum aggregate value of transaction:

(5)	Total fee paid:

o	Fee paid previously with preliminary materials.

---

Table of Contents

o	Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

(1)	Amount Previously Paid:

(2)	Form, Schedule or Registration Statement No.:

(3)	Filing Party:

(4)	Date Filed:

	Persons who are to respond to the collection of information contained in this form are not required to respond unless the form displays a currently valid OMB control number.

---

Table of Contents

	Very truly yours,
	David D. Wesselink
	Chairman and Chief Executive Officer

---

Table of Contents

	1. To consider and vote upon a proposal to adopt the Agreement and Plan of Merger, dated as of August 4, 2005, by and among HSBC Finance Corporation, HSBC Corporation I and Metris Companies Inc. pursuant to which HSBC Corporation I will merge with and into Metris Companies Inc.
	2. To transact such other business as is properly presented at the special meeting or any adjournment or postponement of the special meeting.

	By Order of the Board of Directors
	Richard G. Evans
	Secretary

---

Table of Contents

---

Table of Contents

QUESTIONS AND ANSWERS ABOUT THE MERGER				1
SUMMARY				4
	Parties			4
	Proposed Acquisition			4
	Metris Stock Price			5
	Unanimous Board Recommendation			5
	Reasons for the Merger			5
	Opinions of Metris’ Financial Advisors			6
	The Special Meeting of Stockholders			6
	Shares Held by Directors and Executive Officers			7
	Dissenters’ Rights of Appraisal			7
	Material United States Federal Income Tax Consequences			7
	Required Regulatory Approvals			7
	When the Merger Will Be Completed			8
	Conditions to Completing the Merger			8
	Interests of Directors and Officers in the Merger that Differ From Your Interests			8
	Procedure for Receiving Merger Consideration			8
	No Solicitation			8
	Termination and Effects of Termination			9
	Termination Fee			9
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING INFORMATION				9
THE PARTIES TO THE MERGER				10
	Metris Companies Inc.			10
	HSBC Finance Corporation			10
	HSBC Corporation I			11
THE SPECIAL MEETING OF METRIS STOCKHOLDERS				11
	Place, Date, Time and Purpose of the Special Meeting			11
	Who Can Vote at the Special Meeting			11
	Vote Required; Quorum			11
	Voting by Proxy			12
THE MERGER				13
	Background of the Merger			13
	Unanimous Board Recommendation			16
	Metris’ Reasons for the Merger			16
	Opinions of Metris’ Financial Advisors			18
	Interests of Metris’ Directors and Executive Officers in the Merger			30
	Material United States Federal Income Tax Consequences			33
	Accounting Treatment			34
	Required Regulatory Approvals			34
	SEC Investigation			35
THE MERGER AGREEMENT				36
	Structure of the Merger			36

i

---

Table of Contents

	Effective Time and Timing of Closing			36
	Consideration to be Received in the Merger			37
	Treatment of Stock Options and Stock Units			37
	Conversion of Shares; Exchange of Certificates			38
	Representations and Warranties			39
	Conduct of Business Pending the Merger			41
	Stockholder Approval and Duty to Recommend			43
	No Solicitation			44
	Employee Matters			45
	Fees and Expenses			46
	Indemnification and Insurance			46
	Conditions to Completion of the Merger			47
	Termination and Effects of Termination			48
	Termination Fee			49
	Amendment and Waiver			49
THE STOCKHOLDER AGREEMENT				50
MARKET PRICE FOR METRIS COMMON STOCK				51
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT				52
	Persons Owning More than 5% of Metris Common Stock			52
	Metris Common Stock Owned by Officers and Directors			56
DISSENTERS’ RIGHTS OF APPRAISAL				59
OTHER MATTERS				61
WHERE YOU CAN FIND MORE INFORMATION				62
ANNEX A: Agreement and Plan of Merger, dated as of August 4, 2005, by and among HSBC Finance Corporation, HSBC Corporation I, a wholly owned subsidiary of HSBC, and Metris Companies, Inc.
ANNEX B: Stockholder Agreement, dated as of August 4, 2005, among HSBC Finance Corporation and the Stockholders listed therein
ANNEX C: Opinion of Goldman, Sachs & Co.
ANNEX D: Opinion of UBS Securities LLC
ANNEX E: Section 262 of the General Corporation Law of the State of Delaware

ii

---

Table of Contents

1.	Why did you send me this proxy statement?

2.	When and where will the special meeting be held?

3.	What will I receive for my Metris common stock in the merger?

4.	What vote is required for Metris stockholders to adopt the merger agreement?

1

---

Table of Contents

5.	What do I need to do now?

6.	What happens if I do not vote?

7.	If my shares are held in “street name” by my broker, will my broker vote my shares for me?

8.	Can I change my vote after I have mailed my proxy card or voted by telephone or Internet?

9.	Do I need to attend the Metris special meeting in person?

10.	When will holders of Metris common stock receive the merger consideration?

11.	Who will own Metris after the merger?

12.	Should I send in my Metris stock certificates now?

2

---

Table of Contents

13.	Will I owe taxes as a result of the merger?

14.	Who can help answer my questions?

	Metris Companies Inc.
	Attention: Investor Relations
	10900 Wayzata Boulevard
	Minnetonka, Minnesota 55305-1534
	Phone: (952) 525-5074

3

---

Table of Contents

	•	Stockholder Vote. You are being asked to vote to adopt a merger agreement whereby Metris Companies Inc. will be acquired by HSBC Finance through a merger of HSBC Corporation I with and into Metris. Metris will be the surviving entity in the merger and will become a wholly owned subsidiary of HSBC Finance.
	•	Consideration for Your Stock. If the merger agreement is approved and the merger is subsequently completed on or before December 9, 2005, each outstanding share of Metris common stock will be cancelled and converted automatically into the right to receive $15.00 in cash, and all of the shares of Metris Series C preferred stock will be cancelled and converted automatically into the right to receive in the aggregate $682,561,140 in cash. If the merger is completed after December 9, 2005, the per share consideration to be received by the common stockholders in the merger will decrease based on the amount of pay-in-kind dividends that accumulate on the Series C preferred stock, in accordance with its terms, from December 10, 2005 to the closing date of the merger and the aggregate consideration payable to the holders of the Series C preferred stock will increase. For illustrative purposes only, if the closing was on March 31, 2006 (the date after which either party may terminate the merger agreement if the merger is not yet closed), the

4

---

Table of Contents

		common stockholders would receive approximately $14.82 per share, and the Series C preferred stockholders would receive in the aggregate $693,455,779. Regardless of when the merger occurs, holders of the Series C preferred stock will receive an amount equal to 101% of the aggregate merger consideration that they would have received had they converted all of their Series C preferred stock into common stock immediately prior to the merger, which is the same amount Metris would pay to redeem the Series C preferred stock pursuant to the change in control provisions of the Series C preferred stock terms.
	•	Consideration for Stock Options and Other Equity-Based Awards. If the merger agreement is approved, as of the effective time of the merger, each outstanding option to acquire Metris common stock granted under Metris’ stock incentive plans, whether or not exercisable, will be cancelled in exchange for the right to receive a single lump sum cash payment equal to the excess, if any, of (i) the product of the consideration to be received by the common stockholders per share of common stock in the merger and the number of shares of Metris common stock subject to such stock option over (ii) the product of the exercise price per share with respect to each share of Metris common stock subject to such stock option and the number of shares of Metris common stock subject to such stock option. If the exercise price per share of any such stock option is equal to or greater than the price per share paid for each share of common stock, such stock option will be cancelled without any cash payment. Each right to be issued shares of Metris common stock pursuant to a Metris restricted stock unit agreement that is outstanding immediately prior to the effective time of the merger, whether vested or unvested, will be cancelled in exchange for the right to receive a single lump sum cash payment equal to the product of (i) the consideration to be received by the common stockholders per share of common stock in the merger and (ii) the number of shares of Metris common stock subject to issuance upon settlement of such restricted stock unit agreement. Each participant in Metris’ management stock purchase plan will have all company match amounts under that plan vest and receive a cash payment in an amount equal to the number of shares of common stock then credited to that participant under the plan multiplied by the price per share to be received by the common stockholders in the merger.

5

---

Table of Contents

	Opinion of Goldman, Sachs & Co. (see page 18)

	Opinion of UBS Securities LLC (see page 24)

	•	Place, Date and Time. The special meeting will be held at the offices of Dorsey & Whitney LLP, 50 South Sixth Street, Minneapolis, Minnesota 55402 at [                    ] on [                    ], 2005.
	•	Who Can Vote at the Meeting. You can vote at the special meeting all of the shares of Metris common stock and Series C preferred stock you own of record as of [                    ], 2005, which is the record date for the special meeting. If you own shares that are registered in someone else’s name, for example, a broker, you need to direct that person to vote those shares or obtain an authorization from them and vote the shares yourself at the meeting. As of the close of business on [                    ], 2005, there were [                    ] shares of Metris common stock outstanding held by approximately [                    ] stockholders, and [                    ] shares of Metris Series C preferred stock outstanding held by approximately [                    ] stockholders.
	•	What Vote is Required for Adoption of the Merger Agreement. The adoption of the merger agreement requires the affirmative vote of a majority of the voting power of the outstanding shares of Metris common stock and Series C preferred stock, voting together as a single class. Each share of Series C preferred stock is entitled to the number of votes to which the holder thereof would be entitled if that share was converted into common stock on the record date. One share of Series C preferred stock was convertible into [                    ] shares of common stock as of the record date. The failure to vote has the same effect as a vote against adoption of the merger agreement.
	•	Stockholder Agreement. All of the holders of the Series C preferred stock have executed a stockholder agreement to vote their Metris capital stock in favor of the adoption of the merger agreement and against any other acquisition proposal and have provided HSBC Finance with an irrevocable proxy to vote their stock. These stockholders own approximately [43.5%] of the voting

6

---

Table of Contents

		power of the capital stock of Metris entitled to vote at the special meeting. A copy of the stockholder agreement is attached as Annex B to this proxy statement.
	•	Procedure for Voting. You can vote your shares by: (1) signing and dating the enclosed proxy card and mailing it, (2) voting by telephone or by the Internet in accordance with the instructions provided to you in your proxy card, or (3) attending the special meeting and voting in person. You may revoke your proxy at any time before the vote is taken at the special meeting. To revoke your proxy, you must either advise the Secretary of Metris in writing, or deliver a new proxy, dated after the date of the proxy being revoked, before your common stock has been voted at the special meeting, or you must attend the special meeting and vote your shares in person. Merely attending the special meeting without voting will not constitute revocation of a proxy submitted prior to the special meeting.

7

---

Table of Contents

	•	adoption of the merger agreement by the requisite vote of Metris stockholders;
	•	the receipt of all regulatory approvals which are necessary for the consummation of the merger and the subsequent merger of Direct Merchants Credit Card Bank, National Association, a wholly owned subsidiary of Metris, with and into HSBC Bank Nevada, N.A., which is referred to in this proxy statement as the bank merger; and
	•	the receipt by Metris of a notice from the Staff of the SEC that it will not recommend that charges be brought against Metris and its subsidiaries with respect to the allegations against Metris set forth in the “Wells Notices” dated as of July 12, 2005 with respect to Metris and one or more of its subsidiaries or, if such notice is not obtained by September 30, 2005 and is not reasonably likely to be obtained in Metris’ good faith determination after consultation with its outside legal counsel, the receipt by Metris of a final court or administrative order as to it and its subsidiaries with respect to the SEC’s investigation, which order may include fines, penalties or settlement if the aggregate amount is not substantial in relation to the consolidated financial condition, assets or stockholders’ equity of Metris and which order may not impose adverse restrictions or limitations on the business or operations of Metris or any of its subsidiaries.

8

---

Table of Contents

	•	the fact that completion of the merger is dependent on, among other things, receipt of stockholder and regulatory approvals, the timing of which cannot be predicted with precision and which may not be received at all;
	•	financial performance of each of HSBC Finance and Metris through completion of the merger;
	•	changes in the capital markets;
	•	the occurrence of any circumstance or event that would constitute a material adverse effect with respect to Metris for purposes of the merger agreement;
	•	adverse governmental or regulatory policies;
	•	failure to resolve Metris’ pending SEC investigation in the manner contemplated by the terms of the merger agreement;
	•	competition from other financial services companies in Metris’ and HSBC Finance’s markets;
	•	the loss of key employees; and
	•	general economic conditions, including movements in interest rates, that could adversely affect credit quality and loan originations and the costs or availability of funding.

9

---

Table of Contents

	•	Direct Merchants Bank owns all credit card accounts and sells receivables on accounts assigned to the Metris Master Trust to Metris on a daily basis.
	•	Metris sells receivables on a daily basis to MRI, which then sells them to our off balance sheet entity, the Metris Master Trust.
	•	The Metris Master Trust owns the receivables and finances them with borrowings under our conduit and asset-backed term securitizations.

10

---

Table of Contents

11

---

Table of Contents

12

---

Table of Contents

13

---

Table of Contents

14

---

Table of Contents

15

---

Table of Contents

	•	Its understanding of Metris’ business, operations, management, financial condition, earnings and prospects.
	•	The challenges presented by the relatively high cost of funding faced by Metris, the relatively high equity capital as a percentage of managed assets needed by Metris to operate its business, Metris’

16

---

Table of Contents

		below investment grade debt ratings (which subject it to potential volatility in the cost of raising money in the capital markets) and the requirements of Metris’ regulatory agreements entered into in 2002-2003.
	•	Its knowledge of the current and prospective environment in which Metris operates, including: national economic conditions, the competitive environment in the financial services industry generally and in the credit card industry in particular, the trend towards consolidation in the financial services industry, the evolving regulatory environment faced by financial services companies generally and in the credit card industry in particular, including monoline credit card companies such as Metris, and the likely effect of these factors on Metris.
	•	The complementary fit of the business of Metris and HSBC Finance, and the expectation that the merger would entail minimal disruption for Metris’ customers.
	•	The process conducted by Metris management in exploring the potential value that could be realized for Metris stockholders in a business combination transaction involving Metris, including the contacts with a number of selected financial institutions regarding their potential interest in a business combination transaction involving Metris, and the results of those contacts and the fact that HSBC Finance emerged as the only financial institution to complete due diligence and submit a written indication of interest to Metris.
	•	The potential impact of the transaction on Metris employees and other key constituencies.
	•	The financial and other terms of the merger.
	•	The financial presentation of Goldman Sachs and Goldman Sachs’ opinion, dated August 4, 2005, to the Metris board of directors as to the fairness, from a financial point of view and as of the date of the opinion and subject to factors and assumptions set forth in the opinion, of the merger consideration to be received by holders of Metris common stock pursuant to the merger agreement. See “The Merger — Opinion of Goldman, Sachs & Co.”
	•	UBS’ opinion, dated August 4, 2005, to the Metris board of directors as to the fairness, from a financial point of view and as of the date of the opinion, of the merger consideration to be received by holders of Metris common stock, as more fully described below under the caption “The Merger — Opinion of UBS Securities LLC.”
	•	The anticipated timeframe to complete the merger and the potential impact on the value of the Metris common stock of the pay-in-kind dividends that would accrue on the Series C preferred stock after December 9, 2005, in accordance with its terms.
	•	The conditions to closing, including resolution as to Metris and its subsidiaries of the matters referred to in the Wells Notice received by Metris on July 12, 2005 from the staff of the SEC, and the likelihood that the merger would be completed pursuant to the terms of the merger agreement.
	•	The required regulatory and other consents needed for the completion of the merger, and the likelihood that such required regulatory and other consents would be received.
	•	The terms relating to the restrictions on Metris’ ability to take certain actions with respect to potential acquisitions of Metris or its subsidiaries and to the potential payment of a $57.4 million termination fee under certain circumstances, and the possibility that these provisions could have the effect of discouraging other parties potentially interested in a transaction with Metris from proposing a transaction.
	•	The fact that the holders of the Series C preferred stock had been requested by HSBC Finance to grant HSBC Finance an irrevocable proxy to vote in favor of the merger, and the holders of the Series C preferred stock had agreed to grant the irrevocable proxy to HSBC, and the effect that the granting of the irrevocable proxy by the holders of the Series C preferred stock might have on the likely timing of completion of the transaction, and that the existence of the irrevocable proxy could

17

---

Table of Contents

		have the effect of discouraging other parties which might potentially be interested in a transaction with Metris from proposing a transaction.
	•	The fact that some of Metris’ executive officers have other financial interests in the merger that are in addition to their interests as Metris stockholders, including as a result of employment compensation arrangements with Metris and the manner in which they would be affected by the merger. See “The Merger — Interests of Metris’ Directors and Executive Officers in the Merger.”

	•	the merger agreement;
	•	the stockholder agreement;
	•	annual reports to stockholders and Annual Reports on Form 10-K of Metris for the five years ended December 31, 2004;
	•	certain interim reports to stockholders and Quarterly Reports on Form 10-Q of Metris;
	•	certain other communications from Metris to its stockholders; and
	•	certain internal financial analyses and forecasts for Metris prepared by its management.

18

---

Table of Contents

	Indicated Transaction Multiples

	•	the closing price per share of Metris common stock on August 2, 2005;
	•	the average closing prices per share of Metris common stock for the one-week, three-month and 2005 year-to-date periods ended August 2, 2005;
	•	the highest and lowest closing prices per share in the 52-week period ended August 2, 2005; and
	•	Metris’ managed receivables as of June 30, 2005 (calculated as the aggregate consideration less tangible book value as a percentage of managed receivables).

19

---

Table of Contents

			Hypothetical Close of Merger:
			On or Before
			December 9,				On March 31,
			2005				2006
Premium (Discount) to:
	Closing Share Price at August 2, 2005			(0.6	)%			(1.8	)%
	One-Week Average Closing Share Price			0.6				(0.5	)
	Three-Month Average Closing Share Price			9.9				8.6
	Year to Date Average Closing Share Price			18.0				16.6
	52-Week High Closing Share Price			(0.6	)			(1.8	)
	52-Week Low Closing Share Price			155.1				152.1
	Managed Receivables			9.9				9.9

			Hypothetical Close of Merger:
			On or Before
			December 9,				On March 31,
			2005				2006
Price as a Multiple of:
	Median IBES Estimates
	2005E EPS			19.2	x			19.0	x
	2006E EPS			16.3				16.1
	Metris Management Forecast
	2005E GAAP EPS			25.1	x			24.8	x
	2006E GAAP EPS			24.2				24.0
	2007E GAAP EPS			45.8				45.3
	2005E “Cash” EPS			42.6	x			42.1	x
	2006E “Cash” EPS			30.5				30.2
	2007E “Cash” EPS			27.4				27.1
	Book Value			1.6	x			1.6	x
	Tangible Book Value			1.6				1.6

	Selected Companies Analysis

	•	MBNA Corporation
	•	Capital One Financial Corporation
	•	Providian Financial Corporation
	•	CompuCredit Corporation
	•	Advanta Corp.

20

---

Table of Contents

	•	price to calendar year 2005 and 2006 IBES earnings estimates ratio;
	•	price to tangible book value ratio; and
	•	premium to managed receivables.

Metris-Management

Selected Companies

Forecast

Metris-IBES

GAAP

“Cash”

Range

Median

Estimates

Earnings

Earnings

Price/2005E Earnings

10.6x-14.7

x

12.0

x

19.3

x

25.2

x

42.8

x

Price/2006E Earnings

10.7x-12.9

x

11.4

x

16.4

x

24.4

x

30.7

x

Price/ Tangible Book

1.9x-4.6

x

3.2

x

1.6

x

N/A

N/A

Premium to Managed Receivables

12.5-63.1

%

20.0

%

10.1

%

N/A

N/A

	Selected Transactions Analysis

	•	Banc One Corporation/ First USA, Inc.
	•	Household International, Inc./ Transamerica Consumer Finance
	•	Travelers Group Inc./ Security Pacific Financial Services
	•	Associates First Capital Corporation/ Beneficial Canada Holdings Corporation
	•	First Union Corporation/ The Money Store Inc.
	•	Conseco, Inc./ Green Tree Financial Corporation
	•	Household International, Inc./ Beneficial Corporation
	•	Associates First Capital Corporation/ Avco Financial Services, Inc.
	•	Citigroup Inc./ Associates First Capital Corporation
	•	HSBC Holdings plc/ Household International, Inc.
	•	Citigroup Inc./ Sears, Roebuck & Co. credit card business
	•	Citigroup Inc./ Washington Mutual Finance Corporation
	•	Barclays PLC/ Juniper Financial Corporation
	•	Washington Mutual, Inc./ Providian Financial Corporation
	•	Bank of America Corporation/ MBNA Corporation

21

---

Table of Contents

	•	the implied premium represented by the price paid for that target in the transaction to:

	•	the closing price per common share of that target on the day prior to the announcement date; and
	•	that target’s managed receivables (calculated as the price paid less the tangible equity value of that target divided by the latest publicly available managed receivables of the target at the time of the announcement of the transaction); and

	•	the implied ratio of the price paid for that target in the transaction to:

	•	tangible equity value of that target, based on the latest publicly available financial statements of that target available prior to the announcement of the transaction;
	•	earnings of that target for the latest twelve months (“LTM”) of results publicly available prior to the announcement of the transaction; and
	•	projected earnings of that target for the fiscal year in which the transaction was announced (“Projected Year”).

		Selected Transactions
		Range				Median
Premium/ Market			4-83%				39	%
Premium/ Managed Receivables			4-40%				23	%
Price to Tangible Equity			1.9-11.7x				3.4	x
Price/ LTM Earnings			8.2-33.0x				17.1	x
Price/ Projected Year Earnings			7.0-27.3x				14.3	x

	Sum-of-the-Parts Valuation Analysis

		Valuation
										Base Case with
										Strategic Acquirer
		Low Case				Base Case				Synergies
Implied Total Equity Value ($ in millions)			$851				$1,157			$	1,786	(1)

(1)	Net of hypothetical after-tax restructuring of $38 million.

22

---

Table of Contents

	•	financial advisor to Metris in connection with a placement of a Term Loan due June 2004 (aggregate principal amount $125,000,000) in June 2003;
	•	financial advisor to Metris in connection with the sale of a $494,270,439 gross balance of receivables portfolio in September 2003;
	•	financial advisor to Metris in connection with the sale of a $590,972,733 gross balance of receivables portfolio in November 2003;
	•	lead manager with respect to a placement of Metris’ senior secured notes due 2006 (aggregate principal amount $300,000,000) in May 2004; and
	•	co-manager on three of Metris’ asset-backed securitization transactions: 2004-1 (due April 2007) in April 2004, 2004-2 (due November 2006) in November 2004, and 2005-1 (due March 2007) in April 2005, with $200,000,000, $652,800,000 and $544,350,000 of principal balances, respectively.

	•	co-manager in the placement of an affiliate of HSBC Finance’s GBP 350,000,000 of 5% medium term Notes (due March 2023) in March 2003;

23

---

Table of Contents

	•	co-manager in the placement of an affiliate of HSBC Finance’s $1,250,000,000 of perpetual preferred stock in June 2003;
	•	co-manager in the placement of an affiliate of HSBC Finance’s GBP 500,000,000 of 5.375% Notes (due August 2033) in August 2003;
	•	co-manager in the placement of an affiliate of HSBC Finance’s GBP 300,000,000 of 5.862% perpetual callable securities in March 2004; and
	•	co-manager in the placement of an affiliate of HSBC Finance’s EUR 1,500,000,000 floating rate notes (due November 2006) in November 2004.

24

---

Table of Contents

	•	reviewed publicly available business and historical financial information relating to Metris;
	•	reviewed internal financial information and other data relating to the business and financial prospects of Metris that were provided to UBS by Metris’ management and not publicly available, including financial forecasts and estimates prepared by Metris’ management;
	•	conducted discussions with members of Metris’ senior management concerning Metris’ business and financial prospects;
	•	reviewed current and historical market prices of Metris common stock;
	•	reviewed publicly available financial and stock market data with respect to companies which UBS believed to be generally relevant;
	•	compared the financial terms of the merger with publicly available financial terms of other transactions which UBS believed to be generally relevant;
	•	conducted discussions with Metris and its advisors regarding their efforts on behalf of Metris to solicit indications of interest in a possible acquisition of all or part of Metris;
	•	reviewed the merger agreement; and
	•	conducted other financial studies, analyses and investigations, and considered other information, as UBS deemed necessary or appropriate.

25

---

Table of Contents

	Selected Public Companies Analysis

	•	MBNA Corporation
	•	Capital One Financial Corporation
	•	Providian Financial Corporation
	•	CompuCredit Corporation
	•	Advanta Corp.

26

---

Table of Contents

															Implied Multiples for Metris Based on
															Merger Consideration
															If Merger Closes
															on or Before								If Merger Closes on
			Implied Multiples for												December 9, 2005								March 31, 2006
			Selected Companies
															Management				Street				Management				Street
			High				Median				Low				Case				Case				Case				Case
Closing Stock Price as Multiples of:
EPS
	Calendar Year 2005			15.4	x			12.1	x			11.5	x			14.4	x			19.2	x			14.4	x			19.0	x
	Calendar Year 2006			13.3	x			11.6	x			10.7	x			13.3	x			16.3	x			13.3	x			16.1	x
Book Value				2.72	x			2.10	x			1.66	x			1.57	x			1.57	x			1.57	x			1.57	x
Tangible Book Value				3.24	x			2.27	x			1.67	x			1.58	x			1.58	x			1.58	x			1.58	x
Premium over Tangible Book Value as Percentage of:
Managed Receivables				61.4	%			16.3	%			9.5	%			9.8%				9.8	%			9.8%				9.8	%

	Selected Precedent Transactions Analysis

Acquiror
				Target
•		Bank of America Corporation		•		MBNA Corporation
•		Washington Mutual, Inc.		•		Providian Financial Corporation
•		Barclays plc		•		Juniper Financial Corporation
•		The Royal Bank of Scotland Group plc		•		People’s Bank (Card Business)
•		Citigroup Inc.		•		Sears, Roebuck and Co. (Card Services)

27

---

Table of Contents

															Implied Multiples for Metris Based on
															Merger Consideration
															If Merger Closes
															on or Before								If Merger Closes on
			Implied Multiples for												December 9, 2005								March 31, 2006
			Selected Transactions
															Management				Street				Management				Street
			High				Median				Low				Case				Case				Case				Case
Purchase Price as Multiples of:
EPS
	Calendar Year 2005			13.8	x			12.8	x			11.8	x			14.4	x			19.2	x			14.4	x			19.0	x
	Calendar Year 2006			12.6	x			11.8	x			10.9	x			13.3	x			16.3	x			13.3	x			16.1	x
Book Value				2.77	x			2.35	x			1.93	x			1.57	x			1.57	x			1.57	x			1.57	x
Tangible Book Value				3.84	x			2.89	x			1.93	x			1.58	x			1.58	x			1.58	x			1.58	x
Premium over Tangible Book Value as Percentage of:
Managed Receivables				22.5	%			15.5	%			10.0	%			9.8	%			9.8	%			9.8	%			9.8	%

	Discounted Cash Flow Analysis

28

---

Table of Contents

	•	a managed asset growth rate of 5.0% per annum;
	•	a target tangible equity/tangible managed assets ratio of 12.0%; and
	•	a pre-tax funding charge related to changes in capital of 9.5%.

		Implied per Share Equity		Implied per Share Equity
		Value for Metris Based on		Value for Metris Based on
Implied per Share Equity		Merger Consideration if Merger		Merger Consideration if Merger
Reference Range for Metris		Closes on or Before December 9, 2005		Closes on March 31, 2006
$5.44 - $6.58		$15.00		$14.82

	Other Factors

	•	the premiums implied for Metris in the merger based on the merger consideration relative to the closing price of Metris common stock on August 3, 2005, the high and low closing prices of Metris common stock over the 52-week period ended August 3, 2005, and Metris’ managed receivables as of June 30, 2005;
	•	the relative historical financial and stock price performance, and next 12 months’ EPS trading multiples, of Metris and the selected companies referred to under “Selected Public Companies Analysis;” and
	•	the historical price performance of Metris common stock over various periods ended August 3, 2005.

	Miscellaneous

29

---

Table of Contents

	Ownership of Series C Preferred Stock

	Equity Compensation Awards

	•	[          ], [          ], [          ], [          ], [          ] and [          ] shares, respectively, subject to in-the-money stock options that would not otherwise have been exercisable,
	•	[          ], [          ], [          ], [          ], [          ] and [          ] shares, respectively, subject to restricted stock unit agreement awards that would not otherwise have vested and
	•	[          ], [          ], [          ], [          ], [          ] and [                    ] restricted shares, respectively, that would not otherwise have vested.

30

---

Table of Contents

	Change of Control Severance Agreements

	•	an amount equal to the covered employee’s base salary and accrued vacation through the applicable termination date;
	•	a lump-sum payment in cash equal to either one or two times the sum of the covered employee’s base salary plus the highest annual bonus paid to that employee during the two years immediately preceding the fiscal year in which the merger becomes effective;
	•	a cash payment equal to a pro rata share of the covered employee’s bonus for the year of termination based on the highest annual bonus paid to that employee during the two years immediately preceding the fiscal year in which the merger becomes effective;
	•	all deferred amounts under the supplemental executive retirement plan described below, together with accrued but unpaid earnings thereon; and
	•	an amount equal to fees and costs charged by an outplacement firm.

	Supplemental Executive Retirement Plan

31

---

Table of Contents

	Management Stock Purchase Plan

	Indemnification and Insurance

32

---

Table of Contents

	•	a citizen or resident of the U.S.,
	•	a corporation created or organized in or under the laws of the U.S. or any political subdivision thereof (including the District of Columbia),
	•	an estate the income of which is subject to U.S. federal income taxation regardless of its source, or
	•	a trust if either (a) a court within the U.S. is able to exercise primary supervision over the administration of that trust and one or more U.S. persons have the authority to control all substantial decisions of the trust or (b) the trust has a valid election in effect to be treated as a U.S. person for U.S. federal income tax purposes.

	General

	Appraisal Rights

33

---

Table of Contents

	Backup Withholding

	Bank Merger Approval

34

---

Table of Contents

	Other Requisite Regulatory Approvals, Consents and Notices

35

---

Table of Contents

36

---

Table of Contents

37

---

Table of Contents

38

---

Table of Contents

	•	corporate matters, including due organization, good standing, qualification and corporate power and authority to conduct their businesses;

39

---

Table of Contents

	•	authority relative to execution and delivery of the merger agreement and the absence of conflicts with, or violations of, their organizational documents or other obligations, or applicable laws or regulations, as a result of the merger agreement;
	•	required governmental filings and consents;
	•	compliance with applicable laws;
	•	legal proceedings;
	•	its use of brokers or finders; and
	•	the accuracy of information supplied for inclusion in this document and other similar documents.

	•	its capitalization;
	•	the timely filing of reports with governmental entities, and the absence of investigations by regulatory agencies;
	•	tax matters;
	•	material contracts;
	•	employee matters, including its employee benefit plans and compliance with certain federal regulations applicable to such plans;
	•	agreements with regulators;
	•	the absence of certain changes or events;
	•	board approval of the merger and the merger agreement;
	•	the stockholder approval required to approve the merger agreement;
	•	its title to and ownership of its assets;
	•	its intellectual property;
	•	certain securitization matters;
	•	its loans, advances, credit lines and credit card receivables;
	•	its servicing rights;
	•	environmental matters;
	•	risk management instruments and derivatives;
	•	the opinions of Metris’ financial advisors;
	•	its internal controls and procedures;
	•	its insurance;
	•	absence of undisclosed liabilities;
	•	reserves; and
	•	insurance matters.

40

---

Table of Contents

	•	ownership of HSBC Corporation I and the conduct of its activities prior to the effective time;
	•	the availability of cash to pay the merger consideration; and
	•	their beneficial ownership of Metris capital stock.

	•	will carry on their businesses in the ordinary course consistent with past practice since January 1, 2003 and will use commercially reasonable efforts to preserve their business organizations, maintain their rights, franchises, licenses and other authorizations issued by governmental entities, and preserve their relationships with employees, customers, suppliers and others with whom they have business dealings;
	•	will not enter into any new material line of business;
	•	will not change any of its material banking, operating or other policies in any respect that is material to Metris or the subsidiary, except as required by law or policies imposed by a governmental entity;
	•	will not make any changes in significant accounting methods, principles or practices, except to the extent required by a change in generally accepted accounting principles or regulatory accounting practices;
	•	will not incur or commit to any capital expenditures or other expenditures with respect to property, plant, or equipment in excess of $250,000 in the aggregate for Metris and its subsidiaries taken as a whole, other than as provided in Metris’ 2005 annual budget;
	•	will not enter into, modify, amend, extend or terminate any agreement for goods, property, property rights or services between Metris or any of its subsidiaries and (i) any director, officer, or any affiliate of any director or officer, or (ii) any other person where the agreement obligates Metris or any affiliate of Metris to pay in excess of $500,000 in any twelve-month period, subject to certain exceptions set forth in the merger agreement;
	•	will not knowingly waive, release or assign any material right or claims;
	•	will not initiate, compromise or settle any material investigation, litigation, arbitration proceeding or other proceeding with any governmental entity where such compromise or settlement would involve amounts in excess of the corresponding reserves as of the date of the merger agreement or which would result in a material restriction on Metris’ or any of its subsidiaries’ business;
	•	will not open or close any facility or office;
	•	will not fail to maintain insurance at levels substantially comparable to levels existing on the date of the merger agreement;
	•	will not fail to pay accounts payable and other obligations in the ordinary course of business;
	•	will not enter into any new co-branding or secondary issuer arrangement under which Metris or any of its subsidiaries reasonably expects to originate more than 50,000 accounts in any twelve-month period or make payments to the counterparty to such co-branding or secondary issuer arrangement in amounts in excess of $5 million in any twelve-month period;
	•	except for the declaration and payment of regular quarterly dividends on the Series C preferred stock in accordance with the Series C Certificate of Designations and except for dividends or

41

---

Table of Contents

		distributions paid by wholly owned subsidiaries of Metris to Metris or to other wholly owned subsidiaries of Metris, will not declare or pay any dividend or other distribution on the capital stock Metris;
	•	except for the declaration and payment of regular quarterly dividends on the Series C preferred stock in accordance with the Series C Certificate of Designations, will not split, combine, reclassify, subdivide, recapitalize or exchange any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, instead of, or in substitution for shares of Metris capital stock, or repurchase, redeem or otherwise acquire any shares of Metris capital stock or any of its other securities or any securities convertible into or exercisable for any shares of its capital stock or any of its other securities;
	•	will not issue, deliver, sell, grant, pledge or authorize or propose the issuance, delivery, sale, grant or pledge of, any shares of Metris capital stock or any other voting securities or equity equivalent or securities convertible into shares of Metris capital stock, other than (1) the issuance of shares of Metris common stock upon the exercise or settlement of Metris stock options, Metris restricted stock units or other equity rights or obligations under grants made on or before March 31, 2005 under Metris’ equity compensation plans, (2) the declaration and payment of regular quarterly dividends on the Series C preferred stock in accordance with the Series C Certificate of Designations and (3) stock dividends or stock distributions paid by wholly owned subsidiaries of Metris to Metris or to other wholly owned subsidiaries of Metris;
	•	will not amend or propose to amend its corporate governance documents and will not enter into a plan of consolidation, merger or reorganization with any Person other than a wholly owned subsidiary of Metris;
	•	will not, subject to certain exceptions, acquire or agree to acquire (whether by merger or consolidation or asset purchase or any other means) any business or any corporation, partnership, association or other business organization or division of any other entity or acquire or agree to acquire any material amount of assets;
	•	will not, subject to certain exceptions, dispose of any assets that are material, individually or in the aggregate, to Metris;
	•	will not incur any indebtedness, guarantee any indebtedness of any other person or entity or issue or sell any debt securities or any warrants or rights to acquire any debt securities or guarantee any debt securities of any other entity, other than indebtedness of any subsidiary of Metris to Metris or to another subsidiary of Metris, and other than debt securities maturing not more than 90 days after the date of issuance that are sold in the ordinary course of business consistent with past practice;
	•	will not take any action that would, or would reasonably be expected to, result in any of the representations and warranties in the merger agreement being or becoming untrue (except for exceptions that would not and would not reasonably be expected to have, individually or in the aggregate, a material adverse effect on Metris and its subsidiaries taken as a whole);
	•	will not take any action that would, or would reasonably be expected to, result in any conditions to the merger not being satisfied or in violation of any provision of the merger agreement;
	•	will not take any action that would, or would reasonably be expected to, adversely affect the ability of the parties to obtain any regulatory approvals required in connection with the merger;
	•	subject to certain exceptions, will not pay, discharge, settle or satisfy any material claims, liabilities or obligations of Metris,
	•	will not waive any material benefits of, modify in any adverse respect, fail to enforce, or consent to any matter with respect to which its consent is required under, any confidentiality, standstill or similar agreements to which Metris or any of its subsidiaries is a party;

42

---

Table of Contents

	•	will not, without HSBC Finance’s prior written consent, enter into, adopt, amend or terminate any employee benefit plan or other arrangement for the compensation and benefit of employees, other than in the ordinary course of business or as otherwise provided in the merger agreement;
	•	will not, without HSBC Finance’s prior written consent, increase the compensation or fringe benefits of any director, officer or employee or pay any benefit not required by any Metris employee benefit or other arrangement for the compensation and benefit of employees as in effect as of March 31, 2005, except for normal payments, awards and increases in the ordinary course of business;
	•	will not, without HSBC Finance’s prior written consent, enter into or renew any contract, agreement, commitment or arrangement providing for the payment to any director, officer or employee of compensation or benefits contingent, or the terms of which are materially altered, upon the occurrence of any of the transactions contemplated by the merger agreement, other than a renewal in accordance with the existing terms of such contract, agreement, commitment or arrangement;
	•	will not, except in connection with the merger of Direct Merchants Credit Card Bank, National Association with and into HSBC Bank Nevada, N.A., enter into an agreement for the merger, consolidation or combination, or any acquisition or disposition of all or substantially all of the assets or securities of Metris or any of its subsidiaries, or adopt a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or a dissolution, restructuring, recapitalization or reorganization;
	•	will not make or rescind any material tax election except as required by law, settle or compromise any material tax liability or amend any material tax return, except as consistent with past practices or with the written consent of HSBC Finance; and
	•	will not agree to, or make any commitment to, take, or authorize, any of the foregoing prohibited actions.

43

---

Table of Contents

	•	initiate, solicit, encourage or knowingly facilitate any inquiries or the making of any proposals or offers with respect to, or a transaction to effect, an “Acquisition Proposal” (as defined below);
	•	have any discussions with or provide any confidential information or data to any person relating to an Acquisition Proposal, or engage in any negotiations concerning an Acquisition Proposal; or
	•	approve or recommend, or propose to approve or recommend, or execute or enter into, any letter of intent, agreement in principle, merger agreement, asset purchase or share exchange agreement, option agreement or other similar agreement related to any Acquisition Proposal.

44

---

Table of Contents

	•	for a period of six months following the effective time of the merger, HSBC Finance or the surviving corporation will provide annual base compensation, incentive compensation (other than equity based compensation), and employee benefit plans and benefit arrangements (other than equity based compensation) that are, in the aggregate, at least as favorable as those in effect immediately prior to the effective time of the merger;
	•	those employees who were also covered by the Metris management incentive plan or the annual incentive plan for designated corporate officers immediately prior to the effective time will receive a 2005 bonus to the extent payable as set forth in the merger agreement;
	•	for a period of twelve months following the effective time, any employee who is offered employment with HSBC Finance or its U.S. affiliates that would require such employee to relocate to a different work location that is more than 40 miles from such employee’s current work location, will be allowed to either accept the position and receive relocation benefits under the Metris relocation policy as in effect on March 31, 2005, or to decline the position and receive severance benefits available under Metris’ severance plan as in effect on March 31, 2005 (or, for certain employees having a separate change of control severance agreement or key employee severance protection agreement, the severance benefits available to such employees under such separate agreements);
	•	any such employee whose employment is terminated without cause within twelve months following the effective time who is not otherwise covered by an individual agreement with respect to severance will be eligible to receive severance under Metris’ severance pay plan as in effect on March 31, 2005;
	•	all such employees will be credited for the amount of their accrued but unused paid time off, or PTO, under the paid time off program (or equivalent) of HSBC Finance in effect at the effective time, and employees with accrued but unused PTO in excess of the amount that may be credited under HSBC Finance’s program (or equivalent) will receive a payment equal to the value of any excess accrued but unused PTO;

45

---

Table of Contents

	•	participants in Metris’ supplemental executive retirement plan who are age 55 or older will receive a pro-rata payment to their supplemental executive retirement plan account at the effective time based on the expected Metris annual contribution for 2005;
	•	for any such employees and their eligible dependents who were covered under comparable Metris employee medical plans, HSBC Finance will cause to be waived all pre-existing condition limitations, eligibility waiting periods and evidence of insurability requirements under each HSBC Finance employee medical plan in which Metris employees participate after the effective time;
	•	HSBC Finance will provide credit under any welfare plan for any co-payments, deductibles and offsets made during the plan year for purposes of satisfying any applicable deductible, out-of-pocket or similar requirements under any HSBC Finance benefit plan in which they are eligible to participate during the plan year including the effective time; and
	•	for such employees who are covered by Metris benefit plans providing life insurance and disability coverage immediately prior to the effective time, HSBC Finance or the surviving corporation will continue the life insurance and disability coverage for at least six months following the effective time.

46

---

Table of Contents

	Conditions to Each Party’s Obligations

	•	the approval of the merger by holders of a majority of the voting power of the outstanding shares of Metris common stock and Series C preferred stock, voting together as a single class;
	•	the receipt of all regulatory approvals required to complete the merger and the bank merger, or which would reasonably be expected to have a material adverse effect on the surviving corporation or the surviving bank if not obtained, which regulatory approvals will remain in full force and effect, and the expiration of all related waiting periods required to complete the merger; and
	•	the absence of any temporary restraining order, injunction or other order issued by any governmental entity or other legal restraint or prohibition preventing consummation of the merger or the bank merger, and the absence of any action taken or any statute, rule, regulation, order, injunction or decree enacted, entered, enforced or deemed applicable by any governmental entity which prohibits or makes illegal the consummation of the merger or the bank merger.

	Conditions to the Obligations of HSBC Finance and HSBC Corporation I

	•	the truth and correctness of the representations and warranties of Metris in the merger agreement, subject to the materiality and material adverse effect standards provided in the merger agreement, and the receipt by each of HSBC Finance and HSBC Corporation I of a certificate from Metris to that effect;
	•	the performance by Metris in all material respects of its obligations under the merger agreement and the receipt by each of HSBC Finance and HSBC Corporation I of a certificate from Metris to that effect;
	•	the receipt by Metris of certain specified third party consents and approvals;
	•	the receipt by HSBC Finance of resignations, effective as of the effective time of the merger, of each director of Metris and its subsidiaries;
	•	the repurchase, redemption or payment in full by Metris of all of its outstanding 101/8% Senior Notes due 2006 and the payment of any associated prepayment penalties, which was completed on August 15, 2005;
	•	the stockholder agreement having not been terminated without the consent of HSBC Finance;
	•	the receipt by Metris of a notice from the Staff of the SEC that it will not recommend that charges be brought against Metris and its subsidiaries with respect to the allegations against Metris set forth in the “Wells Notices” dated as of July 12, 2005 with respect to Metris and one or more of its subsidiaries or, if such notice is not obtained by September 30, 2005 and is not reasonably likely to be obtained in Metris’ good faith determination after consultation with its outside legal counsel, the receipt by Metris of a final court or administrative order as to it and its subsidiaries with respect to the SEC’s investigation, which may include fines, penalties or settlement if the aggregate amount is not substantial in relation to the consolidated financial condition, assets or

47

---

Table of Contents

		stockholders’ equity of Metris and will not impose adverse restrictions or limitations on the business or operations of Metris or any of its subsidiaries; and
	•	the completion of the liquidation and dissolution of Metris Companies Foundation and the Metris Companies Inc. Political Action Committee.

	Conditions to the Obligations of Metris

	•	the truth and correctness of the representations and warranties of HSBC Finance and HSBC Corporation I in the merger agreement, subject to the materiality and material adverse effect standards provided in the merger agreement, and the receipt by Metris of a certificate from each of HSBC Finance and HSBC Corporation I to that effect.
	•	the performance by HSBC Finance and HSBC Corporation I in all material respects of all obligations required by the merger agreement at or prior to the effective time of the merger and the receipt by Metris of a certificate from each of HSBC Finance and HSBC Corporation I to that effect.

	•	by the mutual written consent of HSBC Finance and HSBC Corporation I and Metris;
	•	by either HSBC Finance or Metris, upon written notice to the other party, if any of the required regulatory approvals are denied (and the denial is final and nonappealable), or if any governmental entity with authority to do so has acted to permanently restrain, enjoin or otherwise prohibit the merger and such action has become final and nonappealable, unless the terminating party’s failure to comply with the merger agreement has caused or resulted in the denial or action;
	•	by either HSBC Finance or Metris, upon written notice to the other party, if the merger has not been completed on or before March 31, 2006, unless the failure to complete the merger by that date is due to the terminating party’s failure to comply with the merger agreement;
	•	by either HSBC Finance or Metris, if the required vote of the Metris stockholders has not been obtained upon a vote taken on the merger agreement at a duly convened meeting of Metris stockholders;
	•	by either HSBC Finance and HSBC Corporation I on the one hand or Metris on the other hand, upon written notice to the other party, if there is a breach by the other party that would cause the failure of a condition to the terminating party’s obligation to complete the merger, unless the breach is capable of being, and is, cured within 30 days after the giving of written notice of the breach;
	•	by HSBC Finance, upon written notice to Metris, if Metris has failed to recommend adoption of the merger agreement to the stockholders of Metris at the stockholders meeting held for the purpose of approving the merger agreement, or has withdrawn, modified or qualified in any manner adverse to HSBC Finance such recommendation, or has materially breached its obligations under the merger agreement by reason of a failure to call the stockholders meeting;
	•	by HSBC Finance, upon written notice to Metris, if the stockholder agreement entered into among HSBC and the stockholders of Metris has been breached in any material manner by any stockholder that is a party to such stockholder agreement; or

48

---

Table of Contents

	•	by Metris, upon written notice to HSBC Finance, if the Metris board of directors has changed its recommendation of the transaction in favor of a Superior Proposal and Metris has otherwise fulfilled its obligations with regard to such Superior Proposal.

	•	the merger agreement is terminated by HSBC Finance because the Metris board of directors fails to recommend stockholder approval of the merger agreement, withdraws its recommendation to approve the merger agreement, or modifies or changes its recommendation in a manner adverse to the interests of HSBC Finance, and within twelve months after the date of such termination Metris or any of its subsidiaries consummates an “acquisition transaction,” as defined in the merger agreement; or
	•	the merger agreement is terminated by Metris if the Metris board of directors has changed its recommendation of the transaction in favor of a Superior Proposal and Metris has otherwise fulfilled its obligations with regard to such Superior Proposal, and within twelve months after the date of such termination Metris or any of its subsidiaries consummates an “acquisition transaction.”

49

---

Table of Contents

	•	the effective time of the merger; and
	•	any termination of the merger agreement in accordance with its terms.

50

---

Table of Contents

			Price Range of
			Common Stock
											Dividends
			High				Low				Declared
2002
	First Quarter		$	27.90			$	12.15			$	0.01
	Second Quarter		$	23.35			$	6.50			$	0.01
	Third Quarter		$	9.16			$	1.55			$	0.01
	Fourth Quarter		$	4.70			$	1.43			$	0.01
2003
	First Quarter		$	2.95			$	1.25				—
	Second Quarter		$	7.54			$	2.06				—
	Third Quarter		$	6.75			$	2.25				—
	Fourth Quarter		$	5.18			$	3.76				—
2004
	First Quarter		$	8.26			$	4.28				—
	Second Quarter		$	9.56			$	6.02				—
	Third Quarter		$	9.81			$	5.70				—
	Fourth Quarter		$	13.35			$	9.05				—
2005
	First Quarter		$	12.95			$	11.10				—
	Second Quarter		$	14.60			$	11.31				—
	Third Quarter (through [          ])		$	—			$	—				—

51

---

Table of Contents

			Number of Shares				Percent of
Name and Address of Beneficial Owner			Beneficially Owned				Class(1)
HSBC Finance Corporation(2)				45,053,541				43.5	%
	2700 Sanders Road Prospect Heights, IL 60070
Thomas H. Lee and certain of his affiliates(3)				44,097,603				43.0	%
	c/o Thomas H. Lee Partners, L.P. 100 Federal Street Boston, MA 02110
David V. Harkins and certain of his affiliates(4)				43,368,082				42.6	%
	c/o Thomas H. Lee Partners, L.P. 100 Federal Street Boston, MA 02110
C. Hunter Boll and certain of his affiliates(5)				43,330,779				42.6	%
	c/o Thomas H. Lee Partners, L.P. 100 Federal Street Boston, MA 02110
Thomas M. Hagerty and certain of his affiliates(6)				43,330,779				42.6	%
	c/o Thomas H. Lee Partners, L.P. 100 Federal Street Boston, MA 02110
THL Equity Advisors IV, LLC and certain of its affiliates(7)				43,173,909				42.5	%
	c/o Thomas H. Lee Partners, L.P. 100 Federal Street Boston, MA 02110
Thomas H. Lee Equity Fund IV, L.P.(8)				38,141,967				39.5	%
	c/o Thomas H. Lee Partners, L.P. 100 Federal Street Boston, MA 02110
Second Curve Capital, LLC(9)				5,476,325				9.4	%
	200 Park Avenue Suite 3300 New York, NY 10166

52

---

Table of Contents

			Number of Shares				Percent of
Name and Address of Beneficial Owner			Beneficially Owned				Class(1)
Dimensional Fund Advisors Inc.(10)				4,388,849				7.5	%
	129 Ocean Avenue, 11th Floor Santa Monica, CA 90401
NewSouth Capital Management, Inc.(11)				4,307,027				7.4	%
	1100 Ridgeway Loop Road, Suite 444 Memphis, TN 38120
Longwood Investment Advisors, Inc.(12)				3,550,350				6.1	%
	1275 Drummers Lane Suite 207 Wayne, PA 19087
Thomas H. Lee Foreign Fund IV-B, L.P.(13)				3,712,908				6.0	%
	c/o Thomas H. Lee Partners, L.P. 100 Federal Street Boston, MA 02110
Disciplined Growth Investors, Inc.(14)				3,463,419				5.9	%
	100 South Fifth Street Suite 2100 Minneapolis, MN 55402

	(1)	Shares of common stock subject to options currently exercisable or exercisable within 60 days of August 12, 2005, are deemed outstanding for purposes of computing the percentage beneficially owned by the person holding such options, but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person. Shares of common stock currently convertible from Series C preferred stock are deemed outstanding for purposes of computing the percentage beneficially owned by the person holding such Series C preferred stock, but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person. Unless otherwise noted, the persons or entities named have sole voting and investment power for all shares shown as beneficially owned by them.
	(2)	The shares beneficially owned by HSBC Finance equal the maximum number of shares of common stock into which the shares of Series C preferred stock subject to the stockholder agreement could have been voluntarily converted. HSBC Finance disclaims beneficial ownership of those shares. Information for security ownership of HSBC Finance is based on Metris’ records and the Schedule 13D filed on August 12, 2005.
	(3)	The shares beneficially owned by Thomas H. Lee (“Lee”) equal the maximum number of shares of common stock into which the Series C preferred stock could have been voluntarily converted. Shares beneficially owned by Lee include shares held by the following affiliates of Lee:

Name		Number of Shares
Thomas H. Lee Equity Fund IV, L.P.			38,141,967
Thomas H. Lee Foreign Fund IV, L.P.			1,319,034
Thomas H. Lee Foreign Fund IV-B, L.P.			3,712,908
1997 Thomas H. Lee Nominee Trust			583,426
Thomas H. Lee Charitable Investment L.P.			284,167
Thomas H. Lee Investors Limited Partnership			11,101

53

---

Table of Contents

	(4)	The shares beneficially owned by David V. Harkins (“Harkins”) equal the maximum number of shares of common stock into which the Series C preferred stock could have been voluntarily converted. Shares beneficially owned by Harkins include shares held by the following affiliates of Harkins:

Name		Number of Shares
Thomas H. Lee Equity Fund IV, L.P.			38,141,967
Thomas H. Lee Foreign Fund IV, L.P.			1,319,034
Thomas H. Lee Foreign Fund IV-B, L.P.			3,712,908
The 1995 Harkins Gift Trust			14,969

	(5)	The shares beneficially owned by C. Hunter Boll (“Boll”) equal the maximum number of shares of common stock into which the Series C preferred stock could have been voluntarily converted. Shares beneficially owned by Boll include shares held by the following affiliates of Boll:

Name		Number of Shares
Thomas H. Lee Equity Fund IV, L.P.			38,141,967
Thomas H. Lee Foreign Fund IV, L.P.			1,319,034
Thomas H. Lee Foreign Fund IV-B, L.P.			3,712,908

	(6)	The shares beneficially owned by Thomas M. Hagerty (“Hagerty”) equal the maximum number of shares of common stock into which the Series C preferred stock could have been voluntarily

54

---

Table of Contents

		converted. Shares beneficially owned by Hagerty include shares held by the following affiliates of Hagerty:

Name		Number of Shares
Thomas H. Lee Equity Fund IV, L.P.			38,141,967
Thomas H. Lee Foreign Fund IV, L.P.			1,319,034
Thomas H. Lee Foreign Fund IV-B, L.P.			3,712,908

	(7)	The shares beneficially owned by THL Equity Advisors IV, LLC (“THL Advisors”) equal the maximum number of shares of common stock into which the Series C preferred stock could have been voluntarily converted. Shares beneficially owned by THL Advisors include shares held by the following affiliates of THL Advisors:

Name		Number of Shares
Thomas H. Lee Equity Fund IV, L.P.			38,141,967
Thomas H. Lee Foreign Fund IV, L.P.			1,319,034
Thomas H. Lee Foreign Fund IV-B, L.P.			3,712,908

	(8)	The shares beneficially owned by Thomas H. Lee Equity Fund IV, L.P. (“Equity Fund”) equal the maximum number of shares of common stock into which the Series C preferred stock could have been voluntarily converted. Shares owned by Equity Fund may also be deemed to be beneficially owned by THL Equity Advisors IV, LLC, as its general partner. Information for security ownership of Equity Fund is based on Schedule 13D Amendment No. 5 filed on August 5, 2005.
	(9)	Information for security ownership of Second Curve Capital, LLC (“Second Curve”) is based on the Schedule 13G Amendment No. 2 filed by Second Curve on February 14, 2005.

(10)	Dimensional Fund Advisors Inc. (“Dimensional”), an investment advisor registered under Section 203 of the Investment Advisors Act of 1940, furnishes investment advice to four investment companies registered under the Investment Company Act of 1940, and serves as investment manager to certain other commingled group trusts and separate accounts. (These investment companies, trusts and accounts collectively are referred to as the “Funds.”) In its role as investment advisor or manager, Dimensional possesses voting and/or investment power over the securities of the Company that are owned by the Funds, and may be deemed to be the beneficial owner of the shares of common stock of the Company held by the Funds. However, all the shares of common stock reported in this table are owned by the Funds. Dimensional disclaims beneficial ownership of such securities. Information for security ownership of Dimensional is based on the Schedule 13G Amendment No. 1 filed by Dimensional on February 9, 2005.
(11)	NewSouth Capital Management, Inc. (“NewSouth”) has sole voting power over 4,297,027 shares of common stock and sole investment power over 4,307,027 shares of common stock. Information for

55

---

Table of Contents

	security ownership of NewSouth is based on the Schedule 13G Amendment No. 7 filed by NewSouth on February 4, 2005.
(12)	Information for security ownership of Longwood Investment Advisors, Inc. (“Longwood”) is based on the Schedule 13G filed by Longwood on February 15, 2005.
(13)	The shares beneficially owned by Thomas H. Lee Foreign Fund IV-B, L.P. (“Foreign Fund B”) equal the maximum number of shares of common stock into which the Series C preferred stock could have been voluntarily converted. Shares owned by Foreign Fund B may also be deemed to be beneficially owned by THL Equity Advisors IV, LLC, as its general partner. Information for security ownership of Foreign Fund B is based on the Schedule 13D Amendment No. 5 filed on August 5, 2005.
(14)	Disciplined Growth Investors, Inc. (“Disciplined Growth”) has sole voting power over 3,064,319 shares of common stock, shared voting power over 399,100 shares of common stock, and sole dispositive power over 3,463,419 shares of common stock. Information for security ownership of Disciplined Growth is based on the Schedule 13G filed by Disciplined Growth on August 3, 2005.

		Number of Shares				Percent of
Name and Address of Beneficial Owner		Beneficially Owned				Class(1)
Thomas H. Lee			44,097,603	(2)			43.0	%
David V. Harkins			43,368,082	(3)			42.6	%
C. Hunter Boll			43,330,779	(4)			42.6	%
Thomas M. Hagerty			43,330,779	(5)			42.6	%
David D. Wesselink			1,099,744	(6)			1.8	%
Frank D. Trestman			162,500	(7)			*
John A. Cleary			75,500	(8)			*
Edward B. Speno			45,460	(9)			*
Leo R. Breitman			15,000	(10)			*
Jerome J. Jenko			15,000	(11)			*
Donald J. Sanders			15,000	(12)			*
Matthew S. Melius			246,142	(13)			*
William A. Houlihan			180,421	(14)			*
Richard G. Evans			166,567	(15)			*
Dan N. Piteleski			117,589	(16)			*
All directors and executive officers as a group (18 persons)			46,969,125	(17)			44.7	%

56

---

Table of Contents

	*	Less than 1%.

	(1)	Shares of common stock subject to options currently exercisable or exercisable within 60 days of August 12, 2005, and restricted stock units vesting in the same period, are deemed outstanding for purposes of computing the percentage beneficially owned by the person holding such options, but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person. Shares of common stock currently convertible from our Series C preferred stock are deemed outstanding for purposes of computing the percentage beneficially owned by the person holding such Series C preferred stock, but are not deemed outstanding for purposes of computing the percentage beneficially owned by any other person. Unless otherwise noted, the persons named have sole voting and investment power for all shares shown as beneficially owned by them.
	(2)	The shares beneficially owned by Mr. Lee equal the maximum number of shares of common stock into which the Series C preferred stock could have been voluntarily converted. Shares beneficially owned by Mr. Lee include shares held by the following affiliates of Mr. Lee:

Name		Number of Shares
Thomas H. Lee Equity Fund IV, L.P.			38,141,967
Thomas H. Lee Foreign Fund IV, L.P.			1,319,034
Thomas H. Lee Foreign Fund IV-B, L.P.			3,712,908
1997 Thomas H. Lee Nominee Trust			583,426
Thomas H. Lee Charitable Investment L.P.			284,167
Thomas H. Lee Investors Limited Partnership			11,101

	(3)	The shares beneficially owned by Mr. Harkins equal the maximum number of shares of common stock into which the Series C preferred stock could have been voluntarily converted. Shares beneficially owned by Mr. Harkins include shares held by the following affiliates of Mr. Harkins:

Name		Number of Shares
Thomas H. Lee Equity Fund IV, L.P.			38,141,967
Thomas H. Lee Foreign Fund IV, L.P.			1,319,034
Thomas H. Lee Foreign Fund IV-B, L.P.			3,712,908
The 1995 Harkins Gift Trust			14,969

57

---

Table of Contents

	(4)	The shares beneficially owned by Mr. Boll equal the maximum number of shares of common stock into which the Series C preferred stock could have been voluntarily converted. Shares beneficially owned by Mr. Boll include shares held by the following affiliates of Mr. Boll:

Name		Number of Shares
Thomas H. Lee Equity Fund IV, L.P.			38,141,967
Thomas H. Lee Foreign Fund IV, L.P.			1,319,034
Thomas H. Lee Foreign Fund IV-B, L.P.			3,712,908

	(5)	The shares beneficially owned by Mr. Hagerty equal the maximum number of shares of common stock into which the Series C preferred stock could have been voluntarily converted. Shares beneficially owned by Mr. Hagerty include shares held by the following affiliates of Mr. Hagerty:

Name		Number of Shares
Thomas H. Lee Equity Fund IV, L.P.			38,141,967
Thomas H. Lee Foreign Fund IV, L.P.			1,319,034
Thomas H. Lee Foreign Fund IV-B, L.P.			3,712,908

	(6)	Includes (a) 1,013,279 shares of common stock that Mr. Wesselink has the right to acquire within 60 days of August 12, 2005, through the exercise of stock options; (b) 27,859 shares of common stock held in Mr. Wesselink’s family foundation; and (c) 450 shares of common stock held by Mr. Wesselink’s son, over which Mr. Wesselink has power of attorney.
	(7)	Includes 97,500 shares of common stock that Mr. Trestman has the right to acquire within 60 days of August 12, 2005, through the exercise of stock options.
	(8)	Includes 62,500 shares of common stock that Mr. Cleary has the right to acquire within 60 days of August 12, 2005, through the exercise of stock options.
	(9)	Includes 45,000 shares of common stock that Mr. Speno has the right to acquire within 60 days of August 12, 2005, through the exercise of stock options.

(10)	Includes 15,000 shares of common stock that Mr. Breitman has the right to acquire within 60 days of August 12, 2005, through the exercise of stock options.

58

---

Table of Contents

(11)	Includes 15,000 shares of common stock that Mr. Jenko has the right to acquire within 60 days of August 12, 2005, through the exercise of stock options.
(12)	Includes 15,000 shares of common stock that Mr. Sanders has the right to acquire within 60 days of August 12, 2005, through the exercise of stock options.
(13)	Includes (a) 215,835 shares of common stock that Mr. Melius has the right to acquire within 60 days of August 12, 2005, through the exercise of stock options; and (b) 4,037 shares held in Mr. Melius’ 401(k) account.
(14)	Includes 33,333 shares of common stock that Mr. Houlihan has the right to acquire within 60 days of August 12, 2005, through the vesting of restricted stock units.
(15)	Includes (a) 143,984 shares of common stock that Mr. Evans has the right to acquire within 60 days of August 12, 2005, through the exercise of stock options; and (b) 2,500 shares held by Mr. Evans’ revocable trust.
(16)	Includes 100,287 shares of common stock that Mr. Piteleski has the right to acquire within 60 days of August 12, 2005, through the exercise of stock options.
(17)	Includes (a) 2,122,459 shares of common stock that the directors and executive officers have the right to acquire within 60 days of August 12, 2005, through the exercise of stock options or vesting of restricted stock units; and (b) 44,425,516 shares of common stock through the conversion of Series C preferred stock.

	•	You must deliver to Metris a written demand for appraisal of your shares before the vote with respect to the merger is taken. This written demand for appraisal must be in addition to and separate from any proxy or vote abstaining from or voting against adoption of the merger agreement. Voting against or failing to vote for adoption of the merger agreement by itself does not constitute a demand for appraisal within the meaning of Section 262.
	•	You must not vote in favor of adoption of the merger agreement. A vote in favor of the adoption of the merger agreement, by proxy or in person, will constitute a waiver of your appraisal rights in respect of the shares so voted and will nullify any previously filed written demands for appraisal.

59

---

Table of Contents

		Failure to vote against adoption of the merger agreement will not constitute waiver of your appraisal rights.

60

---

Table of Contents

	•	you must notify the secretary in writing not less than 45 days before the first anniversary of the date that Metris first mailed the proxy statement with respect to its 2005 annual meeting, or February 11, 2006; and

61

---

Table of Contents

	•	your notice must contain the specific information required in Metris’ bylaws.

62

---

Table of Contents

---

Table of Contents

				Page
ARTICLE I THE MERGER					A-1
Section 1.1		Effective Time of the Merger			A-1
Section 1.2		Closing			A-1
Section 1.3		Effects of the Merger			A-1
Section 1.4		Certificate of Incorporation and Bylaws			A-2
Section 1.5		Directors and Officers			A-2
Section 1.6		Bank Merger			A-2
ARTICLE II CONVERSION OF SECURITIES; PAYMENT OF MERGER CONSIDERATION					A-2
Section 2.1		Conversion of Securities			A-2
Section 2.2		Payment of Merger Consideration			A-4
Section 2.3		Dissenters’ Rights			A-5
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY					A-6
Section 3.1		Organization, Standing and Power			A-6
Section 3.2		Capital Structure			A-7
Section 3.3		Authority			A-8
Section 3.4		SEC Documents; Regulatory Reports			A-9
Section 3.5		Compliance with Applicable Laws			A-11
Section 3.6		Legal Proceedings			A-11
Section 3.7		Taxes			A-11
Section 3.8		Certain Agreements			A-13
Section 3.9		Benefit Plans			A-13
Section 3.10		Subsidiaries			A-17
Section 3.11		Agreements with Regulators			A-18
Section 3.12		Absence of Certain Changes or Events			A-18
Section 3.13		Board Approval			A-18
Section 3.14		Vote Required			A-18
Section 3.15		Properties			A-18
Section 3.16		Company Information			A-19
Section 3.17		Intellectual Property			A-19
Section 3.18		Securitization Matters			A-19
Section 3.19		Covered Receivables			A-20
Section 3.20		Servicing Rights			A-20
Section 3.21		Environmental Matters			A-20
Section 3.22		Brokers or Finders			A-21
Section 3.23		Derivative Transactions			A-21
Section 3.24		Opinions			A-22
Section 3.25		Controls			A-22
Section 3.26		Insurance			A-23
Section 3.27		No Undisclosed Liabilities; Reserves			A-23
Section 3.28		Insurance Matters			A-23
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB					A-24
Section 4.1		Organization, Standing and Power			A-24
Section 4.2		Authority			A-24
Section 4.3		Information Supplied			A-25
Section 4.4		Legal Proceedings			A-25

i

---

Table of Contents

				Page
Section 4.5		Ownership of Merger Sub; No Prior Activities			A-25
Section 4.6		Compliance with Applicable Laws			A-25
Section 4.7		Financing			A-25
Section 4.8		Brokers or Finders			A-25
Section 4.9		Ownership of Company Capital Stock			A-25
ARTICLE V COVENANTS RELATING TO CONDUCT OF BUSINESS					A-26
Section 5.1		Covenants of the Company			A-26
Section 5.2		Investigation			A-29
ARTICLE VI ADDITIONAL AGREEMENTS					A-29
Section 6.1		Preparation of Proxy Statement; Stockholders Meeting			A-29
Section 6.2		Advice of Changes; Government Filings			A-30
Section 6.3		Control of the Company’s Business			A-30
Section 6.4		Access to Information			A-30
Section 6.5		Reasonable Best Efforts			A-30
Section 6.6		Acquisition Proposals			A-31
Section 6.7		Employees; Employee Benefit Plans			A-33
Section 6.8		Fees and Expenses			A-35
Section 6.9		Indemnification; Directors’ and Officers’ Insurance			A-35
Section 6.10		Public Announcements			A-36
Section 6.11		Additional Agreements			A-36
Section 6.12		Other Actions by Parent			A-37
ARTICLE VII CONDITIONS PRECEDENT					A-37
Section 7.1		Conditions to Each Party’s Obligation To Effect the Merger			A-37
Section 7.2		Conditions to Obligations of Parent and Merger Sub			A-37
Section 7.3		Conditions to Obligations of the Company			A-39
ARTICLE VIII TERMINATION AND AMENDMENT					A-39
Section 8.1		Termination			A-39
Section 8.2		Effect of Termination			A-40
Section 8.3		Amendment			A-41
Section 8.4		Extension; Waiver			A-41
ARTICLE IX GENERAL PROVISIONS					A-41
Section 9.1		Non-Survival of Representations, Warranties and Agreements			A-41
Section 9.2		Notices			A-41
Section 9.3		Interpretation			A-42
Section 9.4		Counterparts			A-42
Section 9.5		Entire Agreement; No Third Party Beneficiaries			A-42
Section 9.6		Governing Law			A-43
Section 9.7		Severability			A-43
Section 9.8		Assignment			A-43
Section 9.9		Submission to Jurisdiction			A-43
Section 9.10		Enforcement			A-43
Section 9.11		Waiver of Jury Trial			A-43

ii

---

Table of Contents

Term		Section
2005 Company Budget		Section 5.1(a)
Acquisition Proposal		Section 6.6(a)
Acquisition Transaction		Section 8.2(c)
Affiliate		Section 3.4(e)
Agreement		Preamble
AIP		Section 6.7(b)(i)
Bank		Preamble
Bank Merger		Preamble
Bank RAP Documents		Section 3.4(c)
Bank Servicing Rights		Section 3.20(a)
Banking Authorities		Section 3.4(c)
Benefit Arrangement		Section 3.9(a)(i)
Benefit Plan		Section 3.9(a)(ii)
BHCA		Section 3.1(a)
Bylaws		Section 3.1(a)
Cause		Section 6.7(b)(vi)
Certificate of Incorporation		Section 3.1(a)
Certificate of Merger		Section 1.1
Certificates		Section 2.2(b)
Closing		Section 1.2
Closing Date		Section 1.2
COBRA		Section 3.9(c)(viii)
Code		Section 2.2(g)
Company		Preamble
Company Actuarial Analyses		Section 3.28(c)
Company Benefit Arrangement		Section 3.9(a)(iii)
Company Board Approval		Section 3.13
Company Capital Stock		Section 2.1(g)
Company Common Stock		Section 2.1(c)
Company Contracts		Section 3.8
Company Disclosure Schedule		Article III
Company Employees		Section 6.7(a)
Company Intellectual Property		Section 3.17
Company Permits		Section 3.5(a)
Company Plan		Section 3.9(a)(iv)
Company Restricted Stock Unit Agreement		Section 2.1(f)
Company SEC Documents		Section 3.4(a)
Company Series C Preferred Stock		Section 2.1(d)
Company Sponsored Asset Securitization Transaction		Section 3.18(a)
Company Stock Option		Section 2.1(e)
Company Stock Plans		Section 3.2
Company Stockholders Meeting		Section 6.1(a)
Company Termination Fee		Section 8.2(b)
Company’s Current Premium		Section 6.9(b)

---

Table of Contents

Term		Section
Confidentiality Agreement		Section 6.4(b)
Covered Employees		Section 6.7(b)(i)
Covered Receivables		Section 3.19
Derivative Transactions		Section 3.23
DGCL		Section 1.1
Dissenting Shares		Section 2.3
Dissenting Stockholder		Section 2.3
Effective Time		Section 1.1
Environmental Laws		Section 3.21(a)
ERISA		Section 3.9(a)(v)
ERISA Affiliate		Section 3.9(a)(vi)
Exchange Act		Section 3.4(a)
Exchange Fund		Section 2.2(a)
FDIC		Section 2.1(e)
Florida DFS		Section 3.3(c)
Governmental Entity		Section 3.3(c)
Hazardous Materials		Section 3.21(e)
Holders		Section 2.2(a)
HSR Act		Section 3.3(c)
ICOM		Section 3.1(a)
Indemnified Liabilities		Section 6.9(a)
Indemnified Parties		Section 6.9(a)
Injunction		Section 7.1(c)
Insurance and Warranty Subsidiaries		Section 3.1(a)
Insurance Authorities		Section 3.4(d)
Insurance or Warranty Subsidiary		Section 3.1(a)
Insurance Policies		Section 3.26
Insurance SAP Documents		Section 3.4(d)
IRS		Section 3.9(c)(i)
Knowledge of Parent		Section 4.4
Knowledge of the Company		Section 3.5(b)
Law		Section 3.5(a)
Liability		Section 3.9(a)(vii)
material		Article III
Material Adverse Effect		Article III
MBOs		Section 6.7(b)(i)
Merger		Preamble
Merger Consideration		Section 2.1(g)
Merger Sub		Preamble
MES		Section 3.1(a)
Minnesota DOC		Section 3.3(c)
MIP		Section 6.7(b)(i)
MRI		Section 3.4(a)
MWSF		Section 3.1(a)
MWSI		Section 3.1(a)
Notice of Superior Proposal		Section 6.6(c)

---

Table of Contents

Term		Section
OCC		Section 2.1(e)
Organizational Documents		Section 3.1(a)
Parent		Preamble
Parent Bank Sub		Preamble
Parent Benefit Plan		Section 6.7(c)
Parent Disclosure Schedule		Article IV
Parent SEC Report		Section 4.4
Paying Agent		Section 2.2(a)
Pension Plan		Section 3.9(a)(viii)
Per Common Share Price		Section 2.1(c)
Person		Section 2.2(d)
Proxy Statement		Section 6.1(b)
PTO		Section 6.7(b)(iv)
Qualified Plan		Section 3.9(a)(ix)
RAP		Section 3.4(c)
Receivables		Section 3.19
Regulatory Agreement		Section 3.11
Related Employer		Section 3.9(a)(x)
Required Company Vote		Section 3.14
Requisite Regulatory Approvals		Section 7.1(b)
SAP		Section 3.4(d)
SEC		Section 3.3(c)
SEC Investigation		Section 5.2
Securities Act		Section 3.2(c)
Securitization Disclosure Documents		Section 3.18(a)
SERP		Section 6.7(b)(v)
Stockholder Agreement		Preamble
Stub Period		Section 6.7(b)(i)
Subsidiary		Section 3.1(b)
Superintendent		Section 3.3(c)
Superior Proposal		Section 6.6(e)
Surviving Bank		Section 1.6
Surviving Corporation		Section 1.3
tax		Section 3.7(a)
taxable		Section 3.7(a)
taxes		Section 3.7(a)
Trust Account Shares		Section 2.1(b)
U.S. Affiliates		Section 6.7(b)(i)
Violation		Section 3.3(b)
Voting Debt		Section 3.2(b)
WARN Act		Section 3.9(d)(iv)

---

Table of Contents

---

Table of Contents

	(a) Conversion of Merger Sub Stock. Each issued and outstanding share of common stock, par value $1.00 per share, of Merger Sub shall be converted into one validly issued, fully paid and nonassessable share of common stock, par value $.01 per share, of the Surviving Corporation and shall constitute the only shares of capital stock of the Surviving Corporation outstanding immediately after the Effective Time.
	(b) Cancellation of Treasury Stock. All shares of Company Common Stock (as defined in Section 2.1(c)) that are owned by the Company as treasury stock and all shares of Company Common Stock that are owned, directly or indirectly, by Parent or Company (other than shares of Company Common Stock held directly or indirectly in trust accounts, managed accounts and the like or otherwise held in a fiduciary capacity for the benefit of third parties (“Trust Account Shares”)) shall be cancelled and retired and shall cease to exist, and no stock of Parent, cash or other consideration shall be delivered in exchange therefor.
	(c) Conversion of Common Stock. Subject to Section 2.3 with regard to Dissenting Shares (as defined in Section 2.3(a)), each share of Common Stock, par value $.01 per share, of the Company (the “Company Common Stock”) issued and outstanding immediately prior to the Effective Time (other than as provided in Section 2.1(b)), shall be converted into the right to receive $15.00 in cash to be distributed in accordance with Section 2.2, without interest (the “Per Common Share Price”); provided, however, that if the Effective Time occurs after December 9, 2005, then the Per Common Share Price shall instead be the amount set forth in Annex 2.1. All such shares of Company Common Stock shall otherwise no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist. The Company will amend the terms of any existing restricted stock agreements with respect to outstanding shares of Company Common Stock that do not provide for acceleration of termination of restrictions in connection with the Merger such that all such restrictions will terminate as of the Effective Time.
	(d) Conversion of Company Series C Preferred Stock. Subject to Section 2.3 with regard to Dissenting Shares, all of the shares of Series C Perpetual Convertible Preferred Stock, par value $.01 per share, of the Company (the “Company Series C Preferred Stock”) issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive in the aggregate $682,561,140.00 in cash to be distributed in accordance with Section 2.2, without interest; provided,

A-2

---

Table of Contents

	however, that if the Effective Time occurs after December 9, 2005, then all of the shares of Company Series C Preferred Stock issued and outstanding immediately prior to the Effective Time shall be converted into the right to receive in the aggregate the amount set forth in Annex 2.1. All such shares of the Company Series C Preferred Stock shall otherwise no longer be outstanding and shall automatically be cancelled and retired and shall cease to exist.
	(e) Cancellation and Conversion of Company Stock Options. Each option to purchase Company Common Stock (a “Company Stock Option”) that is outstanding immediately prior to the Effective Time (whether or not exercisable) shall be cancelled as of the Effective Time, in exchange for the right to receive a single lump sum cash payment equal to the excess, if any, of (i) the product of the Per Common Share Price and the number of shares of Company Common Stock subject to such Company Stock Option over (ii) the product of the exercise price per share with respect to each share of Company Common Stock subject to such Company Stock Option and the number of shares of Company Common Stock subject to such Company Stock Option, such lump sum cash payment to be made less any applicable withholding tax at the Effective Time or, if consent or approval of the Office of the Comptroller of the Currency (“OCC”) or the Federal Deposit Insurance Corporation (“FDIC”) is required for such lump sum cash payment, at such time as such consent or approval is obtained (but in no event before the Effective Time), and subject in that case to any conditions, requirements or restrictions imposed by the OCC or the FDIC; provided, that if the exercise price per share of any such Company Stock Option is equal to or greater than the Per Common Share Price, such Company Stock Option shall be cancelled without any cash payment being made in respect thereof. Prior to the Closing, the Company, in consultation with Parent, shall take or cause to be taken any and all actions reasonably necessary, including the amendment of the Company Stock Plans (as defined in Section 3.2(a)) and, as necessary, any stock option agreements entered into under the Company Stock Plans, and shall use reasonable best efforts to obtain any necessary consent of each holder of a Company Stock Option, to give effect to the treatment of Company Stock Options pursuant to this Section 2.1(e), to the extent such treatment is not expressly provided for by the terms of the applicable Company Stock Plan and related award agreements.
	(f) Cancellation and Conversion of Company Stock Units. Each right to be issued shares of Company Common Stock pursuant to a restricted stock unit agreement of the Company (a “Company Restricted Stock Unit Agreement”) that is outstanding immediately prior to the Effective Time (whether vested or unvested) shall be cancelled as of the Effective Time, in exchange for the right to receive a single lump sum cash payment equal to the product of (i) the Per Common Share Price and (ii) the number of shares of Company Common Stock subject to issuance upon settlement of such Company Restricted Stock Unit Agreement, such lump sum cash payment to be made less any applicable withholding tax. Payments with respect to the Company Restricted Stock Unit Agreements shall be made at the Effective Time or, if consent or approval of the OCC or the FDIC is required for such lump sum cash payment, at such time as such consent or approval is obtained (but in no event before the Effective Time), and subject in that case to any conditions, requirements or restrictions imposed by the OCC or the FDIC. Prior to the Closing, the Company, in consultation with Parent, shall take or cause to be taken any and all actions reasonably necessary, including the amendment of the Company Stock Plans and, as necessary, any Company Restricted Stock Unit Agreements, and shall use reasonable best efforts to obtain any necessary consent of each holder of a Company Restricted Stock Unit Agreement, to (x) provide that all shares of Company Common Stock issuable pursuant to outstanding Company Restricted Stock Unit Agreements will vest in connection with the Merger and (y) give effect to the treatment of Company Restricted Stock Unit Agreements pursuant to this Section 2.1(f), to the extent such treatment is not expressly provided for by the terms of the applicable Company Stock Plan and related Company Restricted Stock Unit Agreements.
	(g) Merger Consideration. The aggregate consideration payable by Parent pursuant to Sections 2.1(c), (d), (e) and (f) is referred to herein as the “Merger Consideration.” The components of the Merger Consideration are detailed on Annex 2.1. The Merger Consideration will in

A-3

---

Table of Contents

no event exceed the sum of $1,593,667,377 plus the aggregate amount of cash received by the Company, if any, on or after the date hereof up to the Effective Time from the exercise of Company Stock Options (it being understood that the maximum number of shares subject to Company Stock Options which will become exercisable during such period is 2,326,556 and the maximum cash proceeds to the Company from such exercises, assuming all such Options were exercised for cash, would be $19,124,290.32). At the Effective Time, each holder of Company Common Stock and Company Series C Preferred Stock (the Company Common Stock and the Company Series C Preferred Stock are collectively referred to as the “Company Capital Stock”) shall cease to have any rights (other than Dissenting Shares as set forth in Section 2.3) with respect to such issued and outstanding shares of Company Capital Stock (including, without limitation, the right to vote), except for the right to receive his, her or its respective portion of the Merger Consideration.

A-4

---

Table of Contents

A-5

---

Table of Contents

A-6

---

Table of Contents

A-7

---

Table of Contents

A-8

---

Table of Contents

A-9

---

Table of Contents

A-10

---

Table of Contents

A-11

---

Table of Contents

A-12

---

Table of Contents

(i) “Benefit Arrangement” means any benefit arrangement, obligation, custom, or practice to provide benefits (other than merely as salary or under a Benefit Plan) as compensation for services rendered, to present or former directors, employees, agents, or independent contractors, including employment or consulting agreements, severance agreements or pay policies, stay or retention bonuses or compensation, executive or incentive compensation programs or arrangements, sick leave, vacation pay, plant closing benefits, patent award programs, salary continuation for disability, workers’ compensation, retirement, deferred compensation, bonus, equity compensation, stock option or purchase plans or programs, tuition reimbursement or scholarship programs, employee discount programs, meals, travel, or vehicle allowances, any plans subject to Code Section 125 and any plans providing benefits or payments in the event of a change in control, change in ownership or effective

A-13

---

Table of Contents

	control, or sale of a substantial portion (including all or substantially all) of the assets of any business or portion thereof, in each case with respect to any present or former employees, directors, independent contractors, or agents.
	(ii) “Benefit Plan” has the meaning given in ERISA Section 3(3), together with plans or arrangements that would be so defined if they were not (A) otherwise exempt from ERISA by that or another section, (B) maintained outside the United States, or (C) individually negotiated or applicable only to one person.
	(iii) “Company Benefit Arrangement” means any Benefit Arrangement any Related Employer sponsors or maintains or with respect to which any Related Employer has or may have any current or future Liability, in each case with respect to any present or former directors, employees, officers, or agents of, or service providers to, any Related Employer.
	(iv) “Company Plan” means any Benefit Plan any Related Employer sponsors or maintains or to which any Related Employer is obligated to make payments or has or may have any Liability, in each case with respect to any present or former employees of any Related Employer, and any Qualified Plan that was terminated on or after January 1, 1995.
	(v) “ERISA” means the Employee Retirement Income Security Act of 1974, as amended, and all regulations and rules issued thereunder, or any successor Law.
	(vi) “ERISA Affiliate” means any Person that, together with any Related Employer, would be or was at any time treated as a single employer under Section 414 of the Code or Section 4001 of ERISA.
	(vii) “Liability” means any direct or indirect liability, indebtedness, guaranty, endorsement, claim, loss, damage, deficiency, cost, expense, obligation or responsibility, whether accrued, absolute, contingent, mature, unmature or otherwise and whether known or unknown, fixed or unfixed, choate or inchoate, liquidated or unliquidated, secured or unsecured (individually, a “Liability” and collectively, the “Liabilities”).
	(viii) “Pension Plan” means any Benefit Plan subject to Code Section 412 or ERISA Section 302 or Title IV (including any multiemployer plan as described in Section 3(37) of ERISA) or any comparable plan not covered by ERISA.
	(ix) “Qualified Plan” means any Benefit Plan that is intended to meet the requirements of Section 401(a) of the Code, including any such Benefit Plan that was terminated on or after January 1, 1995.
	(x) “Related Employer” means the Company and any Subsidiary of the Company employing any non-Company employee or service provider.

(i) The Company has delivered to Parent true and complete copies of the following documents with respect to each Company Plan and Company Benefit Arrangement, to the extent applicable: (A) all plan or arrangement documents (or, if no plan document exists, a written description of the Company Plan or Company Benefit Arrangement), including trust agreements, insurance policies, service agreements and formal and informal amendments to each; (B) the most recent Form 5500 or other comparable documents and any attached financial statements and those for the prior three years and any related actuarial reports; (C) the last Internal Revenue Service (“IRS”) determination or opinion letter and the last IRS determination or opinion letter that covered the qualification of the entire plan (if different); (D) summary plan descriptions, summaries of material modifications, any prospectuses that describe the Company Plans or Company Benefit Arrangements, and Statement of Financial Accounting Standards Nos. 87, 106, 112, and 123R reports or other comparable documents;

A-14

---

Table of Contents

	(E) the most recent written descriptions of all non-written agreements relating to any such plan or arrangement; (F) all material notices the IRS, Department of Labor, or any other domestic or foreign Governmental Entity issued to the Related Employers within the four years preceding the date of this Agreement; and (G) employee manuals or handbooks containing personnel or employee relations policies.
	(ii) Each Company Plan and each Company Benefit Arrangement has been maintained in all material respects in accordance with its constituent documents and with all applicable provisions of domestic and foreign Laws, including federal and state securities Laws and any reporting and disclosure requirements. With respect to any Company Plan or Company Benefit Arrangement that is subject to Section 409A of the Code, the Company will adopt amendments by December 31, 2005 (or such other extended deadline as the Treasury may permit under Section 409A of the Code), so that no such Company Plan or Company Benefit Arrangement is likely to result in any participant’s incurring income acceleration or penalties under Section 409A of the Code. Section 3.9(c)(ii) of the Company Disclosure Schedule lists all Company Plans or Company Benefit Arrangement that are or may be subject to Section 409A of the Code. The only Qualified Plan currently in operation is the 401(k) Retirement Benefit Plan. No Related Employer has maintained or contributed to another Qualified Plan. The Company has received a favorable determination letter from the IRS that has not been revoked, no Qualified Plan has been amended since the date of its most recent determination letter or application therefor in any material respect, and, to the Knowledge of the Company, nothing has occurred with respect to the operation of any Qualified Plan that could cause the loss of such qualification or exemption or the imposition of any Liability, lien, penalty or Tax under ERISA or the Code or materially increase its cost; with respect to each Company Plan, to the Knowledge of the Company, no transactions prohibited by Code Section 4975 or ERISA Section 406 and no breaches of fiduciary duty described in ERISA Section 404 have occurred; the Related Employers have fiduciary liability insurance of at least $55.0 million in effect covering the fiduciaries of the Company Plans with respect to whom the Related Employers could have Liability; no Qualified Plan has experienced a termination or partial termination; no act or omission has occurred and, to the Knowledge of the Company, no condition exists with respect to any Company Plan that would subject the Related Employers to any contractual indemnification or contribution obligation protecting any fiduciary, insurer or service provider with respect to any Company Plan, nor, to the Knowledge of the Company, will any of the transactions contemplated by this agreement give rise to such an obligation; and the Related Employers have never sponsored an employee stock ownership plan. Each Qualified Plan that provides for compliance with ERISA Section 404(c), or is intended to comply with such provision, so complies.
	(iii) Neither any Related Employer nor any ERISA Affiliate has ever sponsored or maintained or had any Liability with respect to any Pension Plan.
	(iv) There are no pending claims (other than routine benefit claims) or lawsuits that have been asserted or instituted by, against, or relating to, any Company Plans or Company Benefit Arrangements nor, to the Knowledge of the Company, is there any basis for any such claim or lawsuit. No Company Plans or Company Benefit Arrangements are or have been under audit or examination (nor has notice been received of a potential audit or examination) by any Governmental Entity; and no matters are pending under the IRS’s Employee Plans Compliance Resolutions System or any successor or predecessor program.
	(v) No Company Plan or Company Benefit Arrangement contains any provision or is subject to any Law that would (A) increase, accelerate, or vest any benefit; (B) require severance, termination or other payments; (C) provide any term of employment or compensation guarantee; (D) trigger any Liabilities (including any obligation to provide a tax gross-up); or (E) measure any values of benefits on the basis of any of the transactions contemplated by this Agreement. Any payments that would be treated as change in control payments for purposes of bank regulation under 12 CFR 359.4(a)(3) will comport with such regulation and, prior to being made, will have received proper approval from the OCC and, as may be required, with the concurrence of the FDIC. No stockholder, employee, officer,

A-15

---

Table of Contents

	or director of any Related Employer has been promised or paid any bonus or incentive compensation related to the transactions contemplated pursuant to this Agreement. The Related Employers have provided to Parent such accurate information as Parent would reasonably be expected to need to enable Parent to calculate any excise tax due under Code Section 4999 as a result of the transactions contemplated by this Agreement for which any Related Employer or Parent may directly or indirectly become liable, and the amount of deductions that may be disallowed under Code Section 280G as a result of the transactions contemplated by this Agreement.
	(vi) Each Company Plan and Company Benefit Arrangement is amendable and terminable unilaterally by the applicable Related Employer at any time without liability or expense to the Related Employers or such plan or arrangement as a result thereof (other than for benefits accrued through the date of amendment or termination and reasonable administrative expenses related thereto), and no plan documentation or agreement or communication distributed generally to employees by its terms prohibits the Related Employers from amending or terminating such Company Plan or Company Benefit Arrangement.
	(vii) Each Related Employer has paid all amounts it is required to pay as contributions to the Company Plans as of the date hereof; all benefits accrued under any unfunded Company Plan or Company Benefit Arrangement will have been paid, accrued, or otherwise adequately reserved in accordance with generally accepted accounting principles and records of such Related Employer; all monies withheld from employee paychecks for Company Plans have been transferred to the relevant plan within the time applicable regulations specify; the assets of each Company Plan that is funded are reported at their fair market value on the books and records of such Company Plan; within the preceding three (3) fiscal years, no Related Employer has, as a result of a retroactive rate adjustment or loss sharing arrangement, incurred any material liability with respect to a Company Plan or state workers’ compensation arrangement that is funded wholly or partially through an insurance policy or public or private fund.
	(viii) All group health plans of the Related Employers and their ERISA Affiliates materially comply with the requirements of Part 6 of Title I of ERISA (“COBRA”), Code Section 5000, the Health Insurance Portability and Accountability Act, and any other comparable domestic or foreign Laws; no Related Employer has any Liability under or with respect to COBRA for its own actions or omissions or those of any predecessor or ERISA Affiliate; no Related Employer provides benefits through a voluntary employee beneficiary association as defined in Code Section 501(c)(9); no current or former employee or director (or beneficiary of any of the foregoing) of any Related Employer is now, or after completing additional service or applying at a future date will be, entitled to receive any post-employment benefits from any Related Employer, including death or medical benefits (whether or not insured) beyond retirement or other termination of employment, other than as applicable Law or the terms of the Qualified Plan require and there have been no written or oral commitments inconsistent with the foregoing.
	(ix) No Related Employer has taken any action since March 31, 2005 that would have required consent under Section 5.1(i) if Section 5.1(i) had been in effect beginning as of such date.
	(x) No Related Employer has had any Benefit Plan or Benefit Arrangement covering any employee which plan or arrangement is subject to the Laws of any jurisdiction outside the United States.
	(xi) All actions to be taken under this Agreement with respect to equity or equity-based compensation (A) are permitted by the terms of the applicable Company Benefit Arrangements (or appropriate consents have been or will be obtained from the affected participants); (B) will be consistent with material communications to recipients of such compensation; and (C) will comply in all material respects with applicable Law.

A-16

---

Table of Contents

	(i) Each Related Employer has complied in all material respects with all applicable domestic and foreign Laws respecting employment and employment practices, terms and conditions of employment and wages and hours, including any such Laws respecting employment discrimination, employee classification, workers’ compensation, family and medical leave, the Immigration Reform and Control Act, and occupational safety and health requirements, and has complied in all material respects with all employment agreements, and no claims, controversies, investigations or suits are pending or, to the Knowledge of the Company, threatened, with respect to such Laws or agreements, either by private individuals or by Governmental Entities; and all employees are at-will.
	(ii) No labor union has ever represented the Related Employer’s employees and no collective bargaining agreement has been binding against the Related Employers; the Related Employers have not engaged in any unfair labor practice, and there is not now, nor within the past three years has there been, any unfair labor practice complaint against the Related Employers pending or, to the Knowledge of the Company, threatened, before the National Labor Relations Board or any other comparable foreign or domestic authority or any workers’ council.
	(iii) All persons who have performed services for the Related Employers while classified as independent contractors have satisfied the requirements of Law to be so classified, and the applicable Related Employer has fully and accurately reported their compensation on IRS Forms 1099 or other applicable Tax forms for independent contractors when required to do so.
	(iv) Since January 1, 2004, no Related Employer has effectuated (A) a plant closing as defined in the Worker Adjustment and Retraining Notification Act of 1988, as amended from time to time (the “WARN Act”) affecting any site of employment or one or more operating units within any site of employment of the Company or (B) a mass layoff as defined in the WARN Act, nor has any Related Employer been affected by any transaction or engaged in layoffs or employment terminations sufficient in number to trigger application of any similar state or local Law. Since January 1, 2004, the Related Employers have provided notices under the WARN Act as described in Section 3.9(d)(iv) of the Company Disclosure Schedule.
	(v) There are no loans or extensions of credit (other than (A) for routine business expenses or (B) under credit cards issued by the Bank, in either case, in compliance with Regulation O under 12 C.F.R. Part 215) between the Related Employers and any current director, officer, or employee in excess of $1,000, and any such loans or extensions comply with applicable Law.
	(vi) All employees of the Related Employers are employed within the United States. All persons employed in the United States are citizens of the United States. Section 3.9(d)(vi) of the Company Disclosure Schedule indicates the immigration status of any persons employed in the United States who are not citizens of the United States.
	(vii) The Company has provided to Parent a complete and accurate list, as of the date hereof, of (A) all employees of a Related Employer who earned more than $100,000 in 2004 or who it is reasonably expected will earn more than $100,000 in 2005; (B) all officers and all directors of the Related Employers; (C) all employment agreements with any employees, officers, and directors; and (D) the current annual compensation (and the portions thereof attributable to salary, bonus, and other compensation respectively) of each such employee, officer or director as of (x) the date of this Agreement and (y) as of the Closing Date. Any accruals for incentive bonuses to employees of the Company for the fiscal year 2005 are accurately reflected on the Company’s financial statements and will be accurately reflected on the Company’s financial statements through the Closing Date. The Company has provided to Parent a complete and accurate list as of July 28, 2005 of the totals accrued for paid time off for all employees.

A-17

---

Table of Contents

A-18

---

Table of Contents

A-19

---

Table of Contents

A-20

---

Table of Contents

A-21

---

Table of Contents

A-22

---

Table of Contents

A-23

---

Table of Contents

A-24

---

Table of Contents

A-25

---

Table of Contents

	(a) Ordinary Course. The Company shall and shall cause its Subsidiaries to carry on their respective businesses in the ordinary course consistent with past practice since January 1, 2003 and use commercially reasonable efforts to (x) preserve intact their respective business organizations, (y) maintain their rights, franchises, licenses and other authorizations issued by Governmental Entities and (z) preserve their relationships with employees, customers, suppliers and others having business dealings with them to the end that their goodwill and ongoing businesses shall not be impaired in any material respect at the Effective Time. The Company shall not, nor shall it permit any of its Subsidiaries to, (i) enter into any new material line of business, (ii) change its or any of its Subsidiaries’ lending, investment, underwriting, risk and asset-liability management and other material banking or operating policies in any respect which is material to the Company or such Subsidiary, except as required by Law or by policies imposed by a Governmental Entity, (iii) make any changes in significant accounting methods, principles or practices, except to the extent required by a change in generally accepted accounting principles, RAP or SAP, (iv) incur or commit to any capital expenditures or other expenditures with respect to property, plant or equipment in excess of $250,000 in the aggregate for the Company and its Subsidiaries, taken as a whole, other than as provided in the Company’s 2005 annual budget, a true and complete copy of which the Company has provided to Parent (the “2005 Company Budget”), (v) except as otherwise permitted by this Section 5.1, enter into, modify, amend, extend or terminate any agreement or agreements for goods, property, property rights, or services between the Company or any of its Subsidiaries and (A) any director, officer, or any Affiliate of such Person, or (B) any other Person which agreement obligates the Company, or any Affiliate of the Company, to pay in excess of $500,000 in any twelve month period, other than, in the case of agreements covered by clause (v)(B), actions that are provided for in the 2005 Company Budget, (vi) knowingly waive, release or assign any material right or claims (including any write-off or other compromise of accounts receivable of the Company or any of its Subsidiaries), (vii) initiate, compromise or settle any material investigation, litigation, arbitration proceeding or other proceeding with any Government Entity, provided that the foregoing shall only apply to a compromise or settlement if it would (A) involve amounts that exceed the corresponding reserves as of the date of this Agreement or (B) result in a material restriction on the Company’s or any of its Subsidiaries’ business, (viii) open or close any facility or office, (ix) fail to maintain insurance at levels substantially comparable to levels existing as of the date of this Agreement, (x) fail to pay accounts payable and other obligations in the ordinary course of business, or (xi) enter into any new co-branding or secondary issuer arrangement under which the Company or any of its Subsidiaries reasonably expects to (A) originate more than 50,000 accounts in any twelve-month period or (B) make payments to the counterparty to such co-branding or secondary issuer arrangement in amounts in excess of $5 million in any twelve-month period.
	(b) Dividends; Changes in Stock. Except for declaration and payment of regular quarterly dividends on the Company Series C Preferred Stock in accordance with the Series C Certificate of Designation, the Company shall not, and shall not permit any of its Subsidiaries to, (i) declare or pay

A-26

---

Table of Contents

	any dividends on or make other distributions in respect of any Company Capital Stock, except for dividends or distributions paid by wholly-owned Subsidiaries of the Company to the Company, or to other wholly-owned Subsidiaries of the Company, (ii) split, combine, reclassify, subdivide, recapitalize or exchange any of its capital stock or issue or authorize or propose the issuance of any other securities in respect of, in lieu of or in substitution for, shares of its capital stock or any other of its securities, or (iii) repurchase, redeem or otherwise acquire, or permit any Subsidiary of the Company to redeem, repurchase or otherwise acquire any shares of its capital stock or any of its other securities or any securities convertible into or exercisable for any shares of its capital stock or any of its other securities.
	(c) Issuance of Securities. The Company shall not, and shall not permit any of its Subsidiaries to, issue, deliver, sell, grant, pledge or authorize or propose the issuance, delivery, sale, grant or pledge of, any shares of its capital stock, any Voting Debt, any stock appreciation rights, or any securities convertible into or exercisable or exchangeable for, or any rights, warrants or options to acquire, any such shares or Voting Debt, or enter into any agreement with respect to any of the foregoing, other than (i) the issuance of Company Common Stock upon the exercise or settlement of Company Stock Options, Company Restricted Stock Units or other equity rights or obligations under grants made on or before March 31, 2005 under the Company Stock Plans or Company Plans in accordance with the terms of the applicable Company Stock Plan or Company Plan in effect on the date of this Agreement, (ii) the declaration and payment of regular quarterly dividends on the Company Series C Preferred Stock in accordance with the Series C Certificate of Designation, and (iii) issuances by one of the Company’s wholly-owned Subsidiaries of such Subsidiary’s capital stock to its parent or to another wholly-owned Subsidiary of the Company.
	(d) Governing Documents, Etc. The Company shall not amend or propose to amend the Certificate of Incorporation or Bylaws and shall not permit any of its Subsidiaries to amend or propose to amend its Organizational Documents. The Company shall not enter into, and, except as permitted by Section 5.1(e), (f) or (j), shall not permit any of its Subsidiaries to enter into, a plan of consolidation, merger or reorganization with any Person other than a wholly-owned Subsidiary of the Company.
	(e) No Acquisitions. The Company shall not, and shall not permit any of its Subsidiaries to, acquire or agree to acquire, by merging or consolidating with, by purchasing a substantial equity interest in or a substantial portion of the assets of, by forming a partnership or joint venture with, or by any other manner, any business or any corporation, partnership, association or other business organization or division thereof or otherwise acquire or agree to acquire any material amount of assets; provided, however, that the foregoing shall not prohibit (i) foreclosures and other debt-previously-contracted acquisitions in the ordinary course of business or (ii) acquisitions of financial assets and securitization activities in the ordinary course of business consistent with past practice.
	(f) No Dispositions. Other than (i) dispositions referred to in the Company SEC Documents filed prior to the date of this Agreement and (ii) securitization activities and other activities in the ordinary course of business consistent with past practice, the Company shall not, and shall not permit any of its Subsidiaries to, sell, lease, license, pledge, assign, encumber or otherwise dispose of, or agree to sell, lease, license, pledge, assign, encumber or otherwise dispose of, any of its assets (including capital stock of its Subsidiaries and indebtedness of others held by the Company and its Subsidiaries) which are material, individually or in the aggregate, to the Company.
	(g) Indebtedness. The Company shall not, and shall not permit any of its Subsidiaries to, incur, create, suffer to exist or assume any indebtedness for borrowed money (or modify any of the material terms of any such outstanding indebtedness), guarantee any such indebtedness or issue or sell any debt securities or any warrants or rights to acquire any debt securities of the Company or any of its Subsidiaries or guarantee any debt securities of others, other than (i) indebtedness of any Subsidiary of the Company to the Company or to another Subsidiary of the Company, or (ii) debt securities

A-27

---

Table of Contents

	maturing not more than 90 days after the date of issuance that are sold in the ordinary course of business consistent with past practice.
	(h) Other Actions. The Company shall not, and shall not permit any of its Subsidiaries to, take any action that would, or would reasonably be expected to, result in any of its representations and warranties set forth in this Agreement being or becoming untrue, subject to such exceptions as do not have, and would not reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole, or in any of the conditions to the Merger set forth in Article VII not being satisfied or in a violation of any provision of this Agreement, or (unless such action is required by applicable Law) which would adversely affect the ability of the parties to obtain any of the Requisite Regulatory Approvals. The Company shall not, and shall not permit any of its Subsidiaries to, (i) other than as permitted pursuant to Section 5.1(a)(vii), pay, discharge, settle or satisfy any material claims, liabilities or obligations (whether absolute, accrued, asserted or unasserted, contingent or otherwise), other than the payment, discharge or satisfaction, in the ordinary course of business or in accordance with their terms as in effect on the date of this Agreement, of claims, liabilities or obligations reflected or reserved against in, or contemplated by, the most recent consolidated financial statements (or the notes thereto) of the Company included in the Company SEC Documents filed prior to the date of this Agreement (to the extent so reflected or reserved against) or incurred since the date of such financial statements in the ordinary course of business or (ii) waive any material benefits of, modify in any adverse respect, fail to enforce, or consent to any matter with respect to which its consent is required under, any confidentiality, standstill or similar agreements to which the Company or any of its Subsidiaries is a party.
	(i) Compensation and Benefit Plans. During the period from the date of this Agreement and continuing until the Effective Time, the Company agrees as to itself and its Subsidiaries that it will not, without the prior written consent of Parent, (i) other than in the ordinary course of business or as otherwise provided in this Agreement, enter into, adopt, amend (except for such amendments as may be required by Law) or terminate any Company Plan or Company Benefit Arrangement, (ii) except for normal payments, awards and increases in the ordinary course of business or as required by any Company Plan or Company Benefit Arrangement as in effect as of March 31, 2005, increase in any manner the compensation or fringe benefits of any director, officer or employee or pay any benefit not required by any Company Plan or Company Benefit Arrangement as in effect as of March 31, 2005, or enter into any contract, agreement, commitment or arrangement to do any of the foregoing, and (iii) enter into or renew any contract, agreement, commitment or arrangement (other than a renewal occurring in accordance with the terms thereof) providing for the payment to any director, officer or employee of such party of compensation or benefits contingent, or the terms of which are materially altered, upon the occurrence of any of the transactions contemplated by this Agreement.
	(j) No Liquidation or Reorganization. Other than the execution and delivery of a merger agreement and related documents with respect to the Bank Merger, the Company shall not, and shall not permit any of its Subsidiaries to, enter into an agreement with respect to any merger, consolidation or business combination, or any acquisition or disposition of all or substantially all of the assets or securities of the Company or any of its Subsidiaries, or adopt a plan of complete or partial liquidation or resolutions providing for or authorizing such a liquidation or a dissolution, restructuring, recapitalization or reorganization.
	(k) Taxes. Except as consistent with past practices or to the extent that Parent shall otherwise consent in writing (which consent shall not be unreasonably delayed or withheld), the Company shall not, and shall not permit any of its Subsidiaries to, make or rescind any material tax election (except as required by Law), settle or compromise any material tax liability or amend any material tax return.

A-28

---

Table of Contents

	(l) Other Agreements. The Company shall not, and shall not permit any of its Subsidiaries to, agree to, or make any commitment to, take, or authorize, any of the actions prohibited by this Section 5.1.

A-29

---

Table of Contents

A-30

---

Table of Contents

A-31

---

Table of Contents

	(i) The Company shall notify Parent promptly (but in no event later than 24 hours) after receipt of any Acquisition Proposal, or any request for nonpublic information relating to the Company or any of its Subsidiaries by any Person that informs the Company or any of its Subsidiaries that it is considering making, or has made, an Acquisition Proposal, or any inquiry from any Person seeking to have discussions or negotiations with the Company relating to a possible Acquisition Proposal. Such notice shall be made orally and confirmed in writing, and shall indicate the identity of the Person making the Acquisition Proposal, inquiry or request and the material terms and conditions of any inquiries, proposals or offers. The Company shall also promptly, and in any event within 24 hours, notify Parent, orally and in writing, if it enters into discussions or negotiations concerning any Acquisition Proposal or provides nonpublic information or data to any Person in accordance with this Section 6.6(b).
	(ii) Nothing contained in this Section 6.6 shall prohibit the Company from taking and disclosing to its stockholders a position required by Rule 14e-2(a) or Rule 14d-9 promulgated under the Exchange Act; provided, however, that compliance with such rules shall not in any way limit or modify the effect that any action taken pursuant to such rules has under any other provision of this Agreement, including Section 8.1(f).

A-32

---

Table of Contents

(i) Any Company Employee covered by the Management Incentive Plan (“MIP”) or the Annual Incentive Plan (“AIP”) for Designated Corporate Officers (“Covered Employees”) (each of the MIP and the AIP, as provided to Parent on May 11, 2005) shall receive a 2005 bonus payable as follows. As of the Effective Time, all Covered Employees shall be credited with a bonus based on Payout Achievement Level as set forth on Section 6.7(b) of the Company Disclosure Schedule based on the Company’s Net Income, as set forth in the MIP and the AIP, with payment of such bonuses to be made on or before March 15, 2006 (or such earlier date as may be required by applicable state Law), which payment shall be made whether or not a particular Covered Employee who is entitled to such bonus payment is employed at the time of payment, provided that such Covered Employee has not been terminated for Cause (as defined in Section 6.7(b)(vi)) before the time of payment. In addition, all Covered Employees shall receive a prorated bonus on or before March 15, 2006 (or such earlier date as may be required by applicable state Law), to reflect the achievement of Individual Management Bonus Objectives (“MBOs”) through the Effective Time, which shall be determined at the Effective Time by the Company in a manner consistent with the Company’s past practice and agreed to by Parent (which agreement shall not be unreasonably withheld). By March 15, 2006 (or such earlier date as may be required by applicable state Law), all Covered Employees who are employed by Parent or its Affiliates with operations in the United States (the “U.S. Affiliates”) as of

A-33

---

Table of Contents

	December 31, 2005 shall receive a prorated bonus to cover the period from the Effective Time through December 31, 2005 (“Stub Period”) and persons whose employment was terminated without cause will receive a prorated bonus for the shorter period during which the persons were employed during the Stub Period. Such prorated bonus will reflect the achievement of MBOs achieved by the Covered Employee during the Stub Period as determined by the Surviving Corporation in a manner consistent with the Company’s past practice and agreed to by Parent (which agreement shall not be unreasonably withheld).
	(ii) For a period of 12 months following the Effective Time, any Company Employees who are offered employment with Parent or its U.S. Affiliates that would require them to relocate to a different work location that is more than 40 miles from their current work location will be allowed to choose one of the following two options: (i) accept the position, in which case each such relocated Company Employee will be entitled to receive relocation benefits under the Company’s relocation policy as in effect March 31, 2005, or (ii) decline the position and receive the severance benefit under the Company’s Severance Plan as in effect on March 31, 2005, or, if applicable, as outlined in such employee’s Change of Control Severance Agreement or Key Employee Severance Protection Agreement.
	(iii) Any Company Employee terminated without Cause within 12 months following the Effective Time who is not otherwise covered by an individual agreement with respect to severance shall be eligible to receive severance under the Company’s Severance Pay Plan (including, but not limited to, outplacement benefits) as in effect on March 31, 2005. For those Company Employees who receive severance benefits under this clause (iii) and who are then eligible for COBRA coverage, Parent, the Surviving Corporation, or their Affiliates will, during the months in which each such severed Company Employee receives severance payments, pay that portion of the severed Company Employee’s monthly COBRA insurance coverage costs equal to the amount of the monthly difference between (1) the severed employee’s monthly COBRA cost and (2) the monthly amount that the severed employee would have paid to obtain medical and dental coverage under the applicable plans if the severed employee were an active employee.
	(iv) Following the Effective Time, all Company Employees shall be credited with the amount of their accrued but unused paid time off (“PTO”) under the paid time off program (or equivalent) of Parent in effect at the Effective Time; provided that any Company Employee who has accrued but unused PTO in excess of the amount that may be credited under Parent’s paid time off program (or equivalent) shall receive a payment, as soon as reasonably practical after the Effective Time, equal to the value of such excess accrued but unused PTO.
	(v) Participants in the Company’s Supplemental Executive Retirement Plans (“SERP”) who are age 55 or older will receive a pro-rata payment to their SERP account at the Effective Time based on the expected Company annual contribution for 2005.
	(vi) For purposes of this Section 6.7(b), “Cause” shall mean a Company Employee’s (A) failure to perform his/her material duties, which failure continues for ten (10) days after the Parent or Surviving Corporation has given written notice to the employee specifying in reasonable detail the manner in which the employee has failed to perform such duties; (B) commission of an act or omission constituting (x) a felony, (y) embezzlement, theft or material dishonesty with respect to the Surviving Corporation, Parent, or their Affiliates, or (z) fraud; (C) commission of an act or omission that (x) could adversely and materially affect the Surviving Corporation’s, Parent’s, or their Affiliates’ business or reputation, or (y) involves moral turpitude; or (D) breach, non-performance or non-observance of any restrictive covenant or any other written agreement with the Surviving Corporation, Parent, or their Affiliates prohibiting any or all of (x) the disclosure of confidential trade secrets and other information, (y) competitive activities or the solicitation of customers, or (z) the solicitation of employees or former employees.

A-34

---

Table of Contents

A-35

---

Table of Contents

A-36

---

Table of Contents

	(a) Stockholder Approval. The Company shall have obtained the Required Company Vote in connection with the adoption of the Merger Agreement.
	(b) Other Approvals. Other than the filing provided for by Section 1.1, all authorizations, consents, orders or approvals of, or declarations or filings with, and all expirations of waiting periods required from, any Governmental Entity which are necessary for the consummation of the Merger and the Bank Merger or those the failure of which to be obtained would reasonably be expected to have, either individually or in the aggregate, a Material Adverse Effect on the Surviving Corporation or the Surviving Bank, shall have been filed, have occurred or been obtained (all such authorizations, consents, orders, approvals, declarations and filings and the lapse of all such waiting periods being referred to as the “Requisite Regulatory Approvals”) and all such Requisite Regulatory Approvals shall be in full force and effect. The parties specifically agree that the Requisite Regulatory Approvals include the filing of all appropriate applications and notices with the OCC and the approval thereof with respect to the Merger and the Bank Merger.
	(c) No Injunctions or Restraints; Illegality. No temporary restraining order, preliminary or permanent injunction or other order issued by any court of competent jurisdiction or other legal restraint or prohibition (an “Injunction”) preventing the consummation of the Merger or the Bank Merger shall be in effect. There shall not be any action taken, or any statute, rule, regulation or order enacted, entered, enforced or deemed applicable to the Merger or the Bank Merger, by any Governmental Entity of competent jurisdiction which makes the consummation of the Merger or the Bank Merger illegal.

(a) Representations and Warranties. The representations and warranties of the Company set forth in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date, except to the extent such representations and warranties are specifically made as of an earlier date, in which case such representations and warranties shall be true and correct as of such date; provided, that for purposes of determining the satisfaction of this condition, no effect shall be given to any exception or qualification in such representations and warranties relating to materiality or a Material Adverse Effect and, instead, for purposes of this condition (i) such representations and warranties (other than the representations and warranties in Section 3.2 (Capital Structure), the last three sentences of Section 3.5(a) (Compliance

A-37

---

Table of Contents

	with Applicable Laws) solely with respect to the business or operations of the Bank or MRI, Section 3.8 (Certain Agreements) solely with respect to Regulatory Agreements, and Section 3.11 (Agreements with Regulators), which are addressed in clause (ii)) shall be deemed to be true and correct unless the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect on the Company and its Subsidiaries, taken as a whole, and (ii) the representations and warranties in Section 3.2 must be true and correct in all but de minimis respects, and the representations and warranties in the last three sentences of Section 3.5(a) solely with respect to banking or consumer lending Laws, the Securities Act or Exchange Act as applicable to the business or operations of the Bank or MRI, the representations and warranties in Section 3.8 solely with respect to Regulatory Agreements and the representations and warranties in Section 3.11 must be true and correct in all material respects. Each of Parent and Merger Sub shall have received from the Company a certificate signed on behalf of Company by the Chief Executive Officer and Chief Financial Officer of the Company to such effect.
	(b) Performance of Obligations of the Company. The Company shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and each of Parent and Merger Sub shall have received a certificate signed on behalf of the Company by the Chief Executive Officer and Chief Financial Officer of the Company to such effect.
	(c) Third Party Consents. The Company shall have obtained all consents and approvals of third parties listed in Section 7.2(c) of the Company Disclosure Schedule.
	(d) Resignations. Parent shall have received copies of the resignations, effective as of the Effective Time, of each director of the Company and its Subsidiaries.
	(e) Stockholders Agreement. The Stockholders Agreement shall not have been terminated without the consent of Parent and shall be in full force and effect.
	(f) Senior Notes. The Company shall have repurchased, redeemed or otherwise paid in full all of the outstanding 101/8% Senior Notes due 2006, and have paid any prepayment penalties associated therewith.
	(g) SEC Investigation. The Company shall have either (i) received notice from the Staff of the SEC that it will not recommend that charges be brought against the Company and its Subsidiaries with respect to the SEC Investigation or (ii) in the event the notice referred to in clause (i) is not obtained by September 30, 2005 and is not reasonably likely to be obtained in the Company’s good faith determination after consultation with its outside legal counsel, obtained a final court or administrative order as to the Company and its Subsidiaries with respect to the SEC Investigation, which order may include fines, penalties or settlement; provided, however that the aggregate of any such fines, penalties or settlement is not substantial in relation to the Company’s consolidated financial condition, assets or stockholders’ equity and shall not include provisions that impose adverse restrictions or limitations on the business or operations of the Company or any of its Subsidiaries (it being understood that (i) nothing herein shall require that any order shall have been entered with respect to any investigation, action, claim or proceeding against any director, officer or employee of the Company in his or her individual capacity as such in order for this condition to be satisfied and (ii) administrative or supervisory obligations or restrictions imposed upon the Company and its Subsidiaries shall not constitute adverse restrictions or limitations on the business or operations of the Company or any of its Subsidiaries).
	(h) Liquidation and Dissolution of Certain Entities. Metris Companies Foundation and the Metris Companies Inc. Political Action Committee shall have been fully liquidated and dissolved.

A-38

---

Table of Contents

	(a) Representations and Warranties. The representations and warranties of Parent and Merger Sub set forth in this Agreement shall be true and correct as of the date of this Agreement and as of the Closing Date as though made on and as of the Closing Date except to the extent such representations and warranties are specifically made as of an earlier date, in which case such representations and warranties shall be true and correct as of such date; provided, that for purposes of determining the satisfaction of this condition, no effect shall be given to any exception or qualification in such representations and warranties relating to materiality or a Material Adverse Effect and, instead, for purposes of this condition such representations and warranties (other than the representations and warranties in Section 4.9 (Ownership of Company Capital Stock), which must be true and correct in all respects) shall be deemed to be true and correct unless the failure or failures of such representations and warranties to be so true and correct, individually or in the aggregate, has had, or would reasonably be expected to have, a Material Adverse Effect on Parent and its Subsidiaries, taken as a whole. The Company shall have received a certificate from each of Parent and Merger Sub signed on behalf of each of Parent and Merger Sub by their respective Chief Executive Officers and Chief Financial Officers to such effect.
	(b) Performance of Obligations of Parent and Merger Sub. Each of Parent and Merger Sub shall have performed in all material respects all obligations required to be performed by it under this Agreement at or prior to the Closing Date, and the Company shall have received a certificate signed on behalf of each of Parent and Merger Sub by their respective Chief Executive Officers and Chief Financial Officers to such effect.

	(a) by mutual consent of Parent and Merger Sub and the Company in a written instrument;
	(b) by either Parent or the Company, upon written notice to the other party, if (i) a Governmental Entity of competent jurisdiction which must grant a Requisite Regulatory Approval has denied approval of the Merger and such denial has become final and non-appealable; or (ii) any Governmental Entity of competent jurisdiction shall have issued an order, decree or ruling or taken any other action permanently restraining, enjoining or otherwise prohibiting the Merger, and such order, decree, ruling or other action has become final and nonappealable; provided, however, that the right to terminate this Agreement under this Section 8.1(b) shall not be available to any party whose failure to comply with any provision of this Agreement has been the cause of, or has resulted in, the denial described in clause (i) above or the issuance described in clause (ii) above;
	(c) by either Parent or the Company, upon written notice to the other party, if the Merger shall not have been consummated on or before March 31, 2006; provided, however, that the right to terminate this Agreement under this Section 8.1(c) shall not be available to any party whose failure to comply with any provision of this Agreement has been the cause of, or has resulted in, the failure of the Effective Time to occur on or before such date;
	(d) by either Parent or the Company, if the Required Company Vote shall not have been obtained upon a vote taken thereon at the duly convened Company Stockholders Meeting;
	(e) by either Parent and Merger Sub on the one hand or the Company on the other hand, upon written notice to the other party, if there shall have been a breach by the other party of any of the covenants or agreements or any of the representations or warranties set forth in this Agreement on the

A-39

---

Table of Contents

	part of such other party, which breach, either individually or in the aggregate, would result in, if occurring or continuing on the Closing Date, the failure of any of the conditions set forth in Section 7.2 or Section 7.3, as the case may be, and which breach has not been cured within 30 days following written notice thereof to the breaching party or, by its nature, cannot be cured within such time period;
	(f) by Parent upon written notice to the Company, if (x) the Company shall have (i) failed to recommend adoption of this Agreement at the Company Stockholders Meeting, or withdrawn, modified or qualified in any manner adverse to Parent such recommendation, whether or not permitted by the terms hereof, or (ii) materially breached its obligations under this Agreement by reason of a failure to call the Company Stockholders Meeting in accordance with Section 6.1(a) or (y) the Stockholder Agreement has been breached in any material manner by any stockholder that is a party thereto; or
	(g) by the Company, upon written notice to the Parent, in accordance with the terms of Section 6.6.

	(i) if Parent shall terminate this Agreement pursuant to Section 8.1(f)(x), and within 12 months after the date of such termination, the Company or any of its Subsidiaries consummates an Acquisition Transaction (as defined in Section 8.2(c)), then the Company shall pay Parent the Termination Fee on the date of such consummation; and
	(ii) if the Company shall terminate this Agreement pursuant to Section 8.1(g) and within 12 months after the date of such termination, the Company or any of its Subsidiaries consummates an Acquisition Transaction, then the Company shall pay Parent the Termination Fee on the date of such consummation.

A-40

---

Table of Contents

	HSBC Finance Corporation
	2700 Sanders Road
	Prospect Heights, Illinois 60070
	Attention: General Counsel
	Telecopy No.: (847) 564-6366

	Wilmer Cutler Pickering Hale and Dorr LLP
	2445 M Street, NW
	Washington, DC 20037
	Attention: Russell J. Bruemmer, Esq.
	Telecopy No.: (202) 663-6363

A-41

---

Table of Contents

	HSBC Corporation I
	2700 Sanders Road
	Prospect Heights, Illinois 60070
	Attention: General Counsel
	Telecopy No.: (847) 564-6366

	Wilmer Cutler Pickering Hale and Dorr LLP
	2445 M Street, NW
	Washington, DC 20037
	Attention: Russell J. Bruemmer, Esq.
	Telecopy No.: (202) 663-6363

	Metris Companies Inc.
	10900 Wayzata Boulevard
	Minnetonka, Minnesota 55305
	Attention: General Counsel
	Telecopy No.: (952) 593-4884

	Dorsey & Whitney LLP
	50 South Sixth Street
	Minneapolis, Minnesota 55402
	Attention: Matthew J. Knopf, Esq.
	Telecopy No.: (612) 340-7800
	Skadden, Arps, Slate, Meagher & Flom LLP
	4 Times Square
	New York, New York 10036
	Attention: Fred B. White, III, Esq.
	Telecopy No.: (212) 735-2000

A-42

---

Table of Contents

A-43

---

Table of Contents

	HSBC FINANCE CORPORATION

	By:	/s/ Siddharth N. Mehta

	Name: Siddharth N. Mehta
	Title: Chairman and Chief Executive Officer
	HSBC CORPORATION I

	By:	/s/ Loren C. Klug

	Name: Loren C. Klug
	Title: Vice President
	METRIS COMPANIES INC.

	By:	/s/ David D. Wesselink

	Name: David D. Wesselink
	Title: Chairman and CEO

A-44

---

Table of Contents

---

Table of Contents

---

Table of Contents

						To Common
						Stockholders,
		Per Common				Restricted Stock Units				To Series C				Merger
Date		Share Price				and Stock Options				Preferred Stock				Consideration
8/4-12/9		$	15.000000			$	911,106,237			$	682,561,140			$	1,593,667,377
12/10		$	14.998413			$	911,007,820			$	682,659,557			$	1,593,667,377
12/11		$	14.996826			$	910,909,430			$	682,757,947			$	1,593,667,377
12/12		$	14.995240			$	910,811,061			$	682,856,316			$	1,593,667,377
12/13		$	14.993654			$	910,712,713			$	682,954,664			$	1,593,667,377
12/14		$	14.992069			$	910,614,386			$	683,052,991			$	1,593,667,377
12/15		$	14.990483			$	910,516,079			$	683,151,298			$	1,593,667,377
12/16		$	14.988899			$	910,417,793			$	683,249,583			$	1,593,667,377
12/17		$	14.987314			$	910,319,528			$	683,347,849			$	1,593,667,377
12/18		$	14.985730			$	910,221,284			$	683,446,093			$	1,593,667,377
12/19		$	14.984146			$	910,123,060			$	683,544,316			$	1,593,667,377
12/20		$	14.982562			$	910,024,858			$	683,642,519			$	1,593,667,377
12/21		$	14.980979			$	909,926,676			$	683,740,701			$	1,593,667,377
12/22		$	14.979396			$	909,828,515			$	683,838,862			$	1,593,667,377
12/23		$	14.977814			$	909,730,374			$	683,937,003			$	1,593,667,377
12/24		$	14.976231			$	909,632,254			$	684,035,122			$	1,593,667,377
12/25		$	14.974649			$	909,534,155			$	684,133,221			$	1,593,667,377
12/26		$	14.973068			$	909,436,077			$	684,231,300			$	1,593,667,377
12/27		$	14.971487			$	909,338,020			$	684,329,357			$	1,593,667,377
12/28		$	14.969906			$	909,239,983			$	684,427,394			$	1,593,667,377
12/29		$	14.968325			$	909,141,967			$	684,525,410			$	1,593,667,377
12/30		$	14.966745			$	909,043,971			$	684,623,406			$	1,593,667,377
12/31		$	14.965165			$	908,945,996			$	684,721,380			$	1,593,667,377
1/1		$	14.963585			$	908,848,042			$	684,819,334			$	1,593,667,377
1/2		$	14.962006			$	908,750,109			$	684,917,268			$	1,593,667,377
1/3		$	14.960427			$	908,652,196			$	685,015,181			$	1,593,667,377
1/4		$	14.958849			$	908,554,304			$	685,113,073			$	1,593,667,377
1/5		$	14.957271			$	908,456,433			$	685,210,944			$	1,593,667,377
1/6		$	14.955693			$	908,358,582			$	685,308,795			$	1,593,667,377
1/7		$	14.954115			$	908,260,752			$	685,406,625			$	1,593,667,377
1/8		$	14.952538			$	908,162,942			$	685,504,435			$	1,593,667,377
1/9		$	14.950961			$	908,065,153			$	685,602,223			$	1,593,667,377
1/10		$	14.949384			$	907,967,385			$	685,699,992			$	1,593,667,377
1/11		$	14.947808			$	907,869,637			$	685,797,739			$	1,593,667,377
1/12		$	14.946232			$	907,771,910			$	685,895,466			$	1,593,667,377
1/13		$	14.944657			$	907,674,204			$	685,993,173			$	1,593,667,377
1/14		$	14.943081			$	907,576,518			$	686,090,859			$	1,593,667,377
1/15		$	14.941507			$	907,478,853			$	686,188,524			$	1,593,667,377
1/16		$	14.939932			$	907,381,208			$	686,286,168			$	1,593,667,377
1/17		$	14.938358			$	907,283,584			$	686,383,792			$	1,593,667,377
1/18		$	14.936784			$	907,185,981			$	686,481,396			$	1,593,667,377
1/19		$	14.935210			$	907,088,398			$	686,578,979			$	1,593,667,377
1/20		$	14.933637			$	906,990,835			$	686,676,541			$	1,593,667,377

---

Table of Contents

						To Common
						Stockholders,
		Per Common				Restricted Stock Units				To Series C				Merger
Date		Share Price				and Stock Options				Preferred Stock				Consideration
1/21		$	14.932064			$	906,893,294			$	686,774,083			$	1,593,667,377
1/22		$	14.930491			$	906,795,772			$	686,871,604			$	1,593,667,377
1/23		$	14.928919			$	906,698,272			$	686,969,105			$	1,593,667,377
1/24		$	14.927347			$	906,600,791			$	687,066,585			$	1,593,667,377
1/25		$	14.925776			$	906,503,332			$	687,164,045			$	1,593,667,377
1/26		$	14.924204			$	906,405,893			$	687,261,484			$	1,593,667,377
1/27		$	14.922633			$	906,308,474			$	687,358,903			$	1,593,667,377
1/28		$	14.921063			$	906,211,076			$	687,456,301			$	1,593,667,377
1/29		$	14.919493			$	906,113,698			$	687,553,678			$	1,593,667,377
1/30		$	14.917923			$	906,016,341			$	687,651,036			$	1,593,667,377
1/31		$	14.916353			$	905,919,004			$	687,748,372			$	1,593,667,377
2/1		$	14.914784			$	905,821,688			$	687,845,688			$	1,593,667,377
2/2		$	14.913215			$	905,724,393			$	687,942,984			$	1,593,667,377
2/3		$	14.911646			$	905,627,117			$	688,040,259			$	1,593,667,377
2/4		$	14.910078			$	905,529,863			$	688,137,514			$	1,593,667,377
2/5		$	14.908510			$	905,432,628			$	688,234,748			$	1,593,667,377
2/6		$	14.906942			$	905,335,414			$	688,331,962			$	1,593,667,377
2/7		$	14.905375			$	905,238,221			$	688,429,156			$	1,593,667,377
2/8		$	14.903808			$	905,141,048			$	688,526,329			$	1,593,667,377
2/9		$	14.902241			$	905,043,895			$	688,623,481			$	1,593,667,377
2/10		$	14.900675			$	904,946,763			$	688,720,613			$	1,593,667,377
2/11		$	14.899109			$	904,849,652			$	688,817,725			$	1,593,667,377
2/12		$	14.897544			$	904,752,560			$	688,914,816			$	1,593,667,377
2/13		$	14.895978			$	904,655,489			$	689,011,887			$	1,593,667,377
2/14		$	14.894413			$	904,558,439			$	689,108,938			$	1,593,667,377
2/15		$	14.892849			$	904,461,409			$	689,205,968			$	1,593,667,377
2/16		$	14.891284			$	904,364,399			$	689,302,978			$	1,593,667,377
2/17		$	14.889720			$	904,267,410			$	689,399,967			$	1,593,667,377
2/18		$	14.888157			$	904,170,441			$	689,496,936			$	1,593,667,377
2/19		$	14.886593			$	904,073,492			$	689,593,885			$	1,593,667,377
2/20		$	14.885030			$	903,976,564			$	689,690,813			$	1,593,667,377
2/21		$	14.883467			$	903,879,656			$	689,787,721			$	1,593,667,377
2/22		$	14.881905			$	903,782,768			$	689,884,608			$	1,593,667,377
2/23		$	14.880343			$	903,685,901			$	689,981,476			$	1,593,667,377
2/24		$	14.878781			$	903,589,054			$	690,078,323			$	1,593,667,377
2/25		$	14.877220			$	903,492,228			$	690,175,149			$	1,593,667,377
2/26		$	14.875659			$	903,395,421			$	690,271,955			$	1,593,667,377
2/27		$	14.874098			$	903,298,635			$	690,368,741			$	1,593,667,377
2/28		$	14.872538			$	903,201,870			$	690,465,507			$	1,593,667,377
3/1		$	14.870978			$	903,105,124			$	690,562,252			$	1,593,667,377
3/2		$	14.869418			$	903,008,399			$	690,658,977			$	1,593,667,377
3/3		$	14.867859			$	902,911,695			$	690,755,682			$	1,593,667,377
3/4		$	14.866299			$	902,815,010			$	690,852,367			$	1,593,667,377
3/5		$	14.864741			$	902,718,346			$	690,949,031			$	1,593,667,377

---

Table of Contents

						To Common
						Stockholders,
		Per Common				Restricted Stock Units				To Series C				Merger
Date		Share Price				and Stock Options				Preferred Stock				Consideration
3/6		$	14.863182			$	902,621,702			$	691,045,675			$	1,593,667,377
3/7		$	14.861624			$	902,525,078			$	691,142,298			$	1,593,667,377
3/8		$	14.860066			$	902,428,475			$	691,238,902			$	1,593,667,377
3/9		$	14.858509			$	902,331,892			$	691,335,485			$	1,593,667,377
3/10		$	14.856951			$	902,235,303			$	691,432,074			$	1,593,667,377
3/11		$	14.855394			$	902,138,734			$	691,528,643			$	1,593,667,377
3/12		$	14.853837			$	902,042,185			$	691,625,192			$	1,593,667,377
3/13		$	14.852281			$	901,945,657			$	691,721,720			$	1,593,667,377
3/14		$	14.850724			$	901,849,149			$	691,818,228			$	1,593,667,377
3/15		$	14.849168			$	901,752,661			$	691,914,716			$	1,593,667,377
3/16		$	14.847613			$	901,656,193			$	692,011,184			$	1,593,667,377
3/17		$	14.846058			$	901,559,745			$	692,107,631			$	1,593,667,377
3/18		$	14.844503			$	901,463,318			$	692,204,059			$	1,593,667,377
3/19		$	14.842948			$	901,366,911			$	692,300,466			$	1,593,667,377
3/20		$	14.841394			$	901,270,524			$	692,396,853			$	1,593,667,377
3/21		$	14.839840			$	901,174,157			$	692,493,220			$	1,593,667,377
3/22		$	14.838286			$	901,077,810			$	692,589,566			$	1,593,667,377
3/23		$	14.836733			$	900,981,484			$	692,685,893			$	1,593,667,377
3/24		$	14.835180			$	900,885,178			$	692,782,199			$	1,593,667,377
3/25		$	14.833627			$	900,788,892			$	692,878,485			$	1,593,667,377
3/26		$	14.832075			$	900,692,626			$	692,974,751			$	1,593,667,377
3/27		$	14.830523			$	900,596,380			$	693,070,997			$	1,593,667,377
3/28		$	14.828971			$	900,500,154			$	693,167,222			$	1,593,667,377
3/29		$	14.827420			$	900,403,949			$	693,263,428			$	1,593,667,377
3/30		$	14.825869			$	900,307,763			$	693,359,613			$	1,593,667,377
3/31		$	14.824318*			$	900,211,598			$	693,455,779	**		$	1,593,667,377

*	In the event the Effective Time occurs after March 31, 2006, appropriate adjustment will be made to the Per Common Share Price, determined in a manner consistent with the foregoing.
**	In the event the Effective Time occurs after March 31, 2006, appropriate adjustment will be made to the amount payable to the holders of Company Series C Preferred, determined in a manner consistent with the foregoing.

---

Table of Contents

B-1

---

Table of Contents

	(a) Ownership of Shares. The Stockholder beneficially owns all of the Shares as set forth on Schedule I hereto and has good and marketable title to such Shares, free and clear of any claims, liens, encumbrances and security interests whatsoever. The Stockholder owns no Shares of Company Common Stock or Company Series C Preferred Stock other than the Shares as set forth on Schedule I hereto. The Stockholder has the power to authorize the voting of the Shares as contemplated hereby, without restrictions, with respect to all of the Shares.
	(b) Power, Binding Agreement. The Stockholder has the legal capacity and all requisite power and authority to enter into and perform all of its obligations, under this Agreement. This Agreement has been duly and validly executed and delivered by the Stockholder and constitutes a valid and binding obligation of the Stockholder, enforceable against the Stockholder in accordance with its terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium and similar laws affecting creditors’ rights and remedies generally, and subject, as to enforceability, to general principles of equity, including principles of commercial reasonableness, good faith and fair dealing (regardless of whether enforcement is sought in a proceeding at law or in equity).
	(c) No Conflicts. The execution and delivery of this Agreement do not, and the consummation of the transactions contemplated hereby will not, conflict with or result in any violation of, or default (with or without notice or lapse of time, or both) under, or give rise to a right of termination, cancellation or acceleration of any obligation or to loss of a material benefit under, any provision of any loan or credit agreement, note, bond, mortgage, indenture, lease, or other agreement, instrument, permit, concession, franchise, license, judgment, order, decree, statute, law, ordinance, rule or regulation applicable to the Stockholder, the Shares or any of the Stockholder’s properties or assets. Except as expressly contemplated hereby, and other than requirements that the Stockholders dispose of their Shares in a pro rata manner, the Stockholder is not a party to, and the Shares are not subject to or bound in any manner by, any contract or agreement relating to the Shares, including without limitation, any voting agreement, option agreement, purchase agreement, stockholders’ agreement, partnership agreement or voting trust. Except for informational filings with the SEC, no consent, approval, order or authorization of, or registration, declaration or filing with, any court, administrative agency or commission or other governmental authority or instrumentality, domestic, foreign or supranational, is required by or with respect to the Stockholder in connection with the execution and delivery of this Agreement or the consummation by the Stockholder of the transactions contemplated hereby.
	(d) Brokers or Finders. Except as contemplated by Section 3.22 of the Merger Agreement, no agent, broker, investment banker, financial advisor or other firm or Person retained by the Stockholder

B-2

---

Table of Contents

	or the Company is or will be entitled to any broker’s or finder’s fee or any other similar commission or fee in connection with any of the transactions contemplated by this Agreement.

B-3

---

Table of Contents

	c/o Thomas H. Lee Partners, L.P.
	100 Federal Street
	35th Floor
	Boston, MA 02110

	Weil, Gotshal & Manges LLP
	100 Federal Street
	34th Floor
	Boston, MA 02110
	Attn: James Westra, Esq.
	Telecopy: (617) 772-8333

	HSBC Finance Corporation
	2700 Sanders Road
	Prospect Heights, Illinois 60070
	Attention: General Counsel
	Telecopy No.: (847) 564-6366

	Wilmer Cutler Pickering Hale and Dorr LLP
	2445 M Street, NW
	Washington, D.C.
	Attn: Russell Bruemmer, Esq.
	Telecopy: (202) 663-6363

B-4

---

Table of Contents

B-5

---

Table of Contents

	HSBC FINANCE CORPORATION

	By:	/s/ Siddharth N. Mehta

	Name: Siddharth N. Mehta

	Title:	Chairman and Chief Executive Officer

B-6

---

Table of Contents

B-7

---

Table of Contents

		Number of Shares of				Number of Shares of
		Company				Company Series C
Stockholder		Common Stock				Preferred Stock
Thomas H. Lee Equity Fund IV, LP							1,169,420.22
Thomas H. Lee Foreign Fund IV, LP							40,441.18
Thomas H. Lee Foreign Fund IV-B, LP							113,836.58
Thomas H. Lee Investors Limited Partnership							340.61
Thomas H. Lee Charitable Investment L.P.							7,608.69
1997 Thomas H. Lee Nominee Trust							17,887.67
David V. Harkins							4,114.69
The 1995 Harkins Gift Trust							458.98
Scott A. Schoen							3,429.91
C. Hunter Boll							3,429.91
Scott M. Sperling							3,429.91
Anthony J. DiNovi							3,429.91
Thomas M. Hagerty							3,429.91
Warren C. Smith, Jr.							3,429.91
Seth W. Lawry							1,432.51
Kent R. Weldon							954.00
Terence M. Mullen							760.89
Todd M. Abbrecht							760.89
Charles A. Brizius							569.51
Scott Jaeckel							217.71
Soren Oberg							217.71
Thomas R. Shepherd							401.12
Wendy L. Masler							87.66
Andrew D. Flaster							87.66
Kristina A. Watts							57.86
Robert Schiff Lee 1998 Irrevocable Trust							344.99
Stephen Zachary Lee							344.99
Charles W. Robins as Trustee for Jesse Albert Lee							226.37
Charles W. Robins							87.66
James Westra							87.66

S-1

---

Table of Contents

C-1

---

Table of Contents

	Very truly yours,
	/s/ Goldman, Sachs & Co.
	(GOLDMAN, SACHS & CO.)

C-2

---

Table of Contents

D-1

---

Table of Contents

	Very truly yours,
	/s/ UBS Securities LLC
	UBS SECURITIES LLC

D-2

---

Table of Contents

SECTION 262	APPRAISAL RIGHTS.

	(1) Provided, however, that no appraisal rights under this section shall be available for the shares of any class or series of stock, which stock, or depository receipts in respect thereof, at the record date fixed to determine the stockholders entitled to receive notice of and to vote at the meeting of stockholders to act upon the agreement of merger or consolidation, were either (i) listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers. Inc. or (ii) held of record by more than 2,000 holders; and further provided that no appraisal rights shall be available for any shares of stock of the constituent corporation surviving a merger if the merger did not require for its approval the vote of the stockholders of the surviving corporation as provided in subsection (f) of § 251 of this title.
	(2) Notwithstanding paragraph (1) of this subsection, appraisal rights under this section shall be available for the shares of any class or series of stock of a constituent corporation if the holders thereof are required by the terms of an agreement of merger or consolidation pursuant to §§ 251, 252, 254, 257, 258, 263 and 264 of this title to accept for such stock anything except:

	a. Shares of stock of the corporation surviving or resulting from such merger or consolidation, or depository receipts in respect thereof;
	b. Shares of stock of any other corporation, or depository receipts in respect thereof, which shares of stock (or depository receipts in respect thereof) or depository receipts at the effective date of the merger or consolidation will be either listed on a national securities exchange or designated as a national market system security on an interdealer quotation system by the National Association of Securities Dealers, Inc. or held of record by more than 2,000 holders;
	c. Cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a. and b. of this paragraph; or
	d. Any combination of the shares of stock, depository receipts and cash in lieu of fractional shares or fractional depository receipts described in the foregoing subparagraphs a., b. and c. of this paragraph.

E-1

---

Table of Contents

	(3) In the event all of the stock of a subsidiary Delaware corporation party to a merger effected under § 253 of this title is not owned by the parent corporation immediately prior to the merger, appraisal rights shall be available for the shares of the subsidiary Delaware corporation.

	(1) If a proposed merger or consolidation for which appraisal rights are provided under this section is to be submitted for approval at a meeting of stockholders, the corporation, not less than 20 days prior to the meeting, shall notify each of its stockholders who was such on the record date for such meeting with respect to shares for which appraisal rights are available pursuant to subsection (b) or (c) hereof that appraisal rights are available for any or all of the shares of the constituent corporations, and shall include in such notice a copy of this section. Each stockholder electing to demand the appraisal of such stockholder’s shares shall deliver to the corporation, before the taking of the vote on the merger or consolidation, a written demand for appraisal of such stockholder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such stockholder’s shares. A proxy or vote against the merger or consolidation shall not constitute such a demand. A stockholder electing to take such action must do so by a separate written demand as herein provided. Within 10 days after the effective date of such merger or consolidation, the surviving or resulting corporation shall notify each stockholder of each constituent corporation who has complied with this subsection and has not voted in favor of or consented to the merger or consolidation of the date that the merger or consolidation has become effective; or
	(2) If the merger or consolidation was approved pursuant to § 228 or § 253 of this title, then, either a constituent corporation before the effective date of the merger or consolidation, or the surviving or resulting corporation within 10 days thereafter, shall notify each of the holders of any class or series of stock of such constituent corporation who are entitled to appraisal rights of the approval of the merger or consolidation and that appraisal rights are available for any or all shares of such class or series of stock of such constituent corporation, and shall include in such notice a copy of this section. Such notice may, and, if given on or after the effective date of the merger or consolidation, shall, also notify such stockholders of the effective date of the merger or consolidation. Any stockholder entitled to appraisal rights may, within 20 days after the date of mailing of such notice, demand in writing from the surviving or resulting corporation the appraisal of such holder’s shares. Such demand will be sufficient if it reasonably informs the corporation of the identity of the stockholder and that the stockholder intends thereby to demand the appraisal of such holder’s shares. If such notice did not notify stockholders of the effective date of the merger or consolidation, either (i) each such constituent corporation shall send a second notice before the effective date of the merger or consolidation notifying each of the holders of any class or series of stock of such constituent corporation that are entitled to appraisal rights of the effective date of the merger or consolidation or (ii) the surviving or resulting corporation shall send such a second notice to all such holders on or within 10 days after such effective date; provided, however, that if such second notice is sent more than 20 days following the sending of the first notice, such second notice need only be sent to each stockholder who is entitled to appraisal rights and who has demanded appraisal of such holder’s shares in accordance with this subsection. An affidavit of the secretary or assistant secretary or of the transfer agent of the corporation that is required to give either notice that such notice has been given shall, in the absence of fraud, be prima facie evidence of the facts stated therein. For purposes of determining the stockholders entitled to receive either notice, each constituent corporation may fix, in advance, a record date that shall be not more than 10 days prior to the date the notice is given,

E-2

---

Table of Contents

	provided, that if the notice is given on or after the effective date of the merger or consolidation, the record date shall be such effective date. If no record date is fixed and the notice is given prior to the effective date, the record date shall be the close of business on the day next preceding the day on which the notice is given.

E-3

---

Table of Contents

E-4

---

Table of Contents

---

Table of Contents

---

Table of Contents

---

Table of Contents