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     Administration. The Amended Stock Plan is generally administered by either the board of directors or the compensation committee of the board of directors. Our compensation committee has full authority, subject to the provisions of the Plan to, among other things, determine the persons to whom awards will be granted, the type of award to be granted, the number of shares to be made subject to awards, the exercise price and other terms and conditions of the awards and to interpret the Amended Stock Plan and prescribe, amend and rescind the rules and regulations relating to the Plan. It is intended that the members of the compensation committee be “non-employee directors” within the meaning of Section 16 under the Securities Exchange Act of 1934 and “outside directors” within the meaning of Code Section 162(m). The board of directors may delegate to one or more officers of LendingTree the authority to make grants of awards to our employees who are not executive officers or directors, subject to certain limitations that are described in the Amended Stock Plan.

     Eligibility. Awards may be granted under the Amended Stock Plan to employees, directors, including directors who are not employees, and consultants of LendingTree or any of our affiliates, as selected by the compensation committee. As of February 27, 2003, approximately 260 employees and directors were eligible to receive awards under the Amended Stock Plan.

     Terms and Conditions of Options. Stock options granted under the Amended Stock Plan may be either incentive stock options or non-qualified stock options. The exercise price of a stock option granted under the Amended Stock Plan is determined by the compensation committee at the time the option is granted, but the exercise price per share of an incentive stock option may not be less than the fair market value per share of common stock on the date of grant. Stock options are exercisable at the times and upon the conditions that the compensation committee may determine, as reflected in the applicable option agreement. The exercise period is determined by the compensation committee, but in the case of an incentive stock option, generally, the exercise period of an option may not exceed 10 years from the date of grant.

     The option exercise price must be paid in full at the time of exercise and may be payable by one or more of the following methods:

     The compensation committee may provide at the time of grant of an option that the participant may elect to exercise all or any part of the option before it becomes vested and exercisable. If the participant elects to exercise all or part of a non-vested option, the participant will be issued shares of stock subject to repurchase by LendingTree until those shares become vested, which will occur in accordance with the vesting schedule set forth in the original option agreement.

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     Restricted Stock. The Amended Stock Plan provides for awards of common stock that are subject to restrictions on transferability and other restrictions imposed by the compensation committee. Except to the extent restricted under the award agreement relating to the restricted stock, a participant granted restricted stock will have all of the rights of a stockholder (including voting rights).

     Phantom Stock. The Amended Stock Plan provides for awards of phantom stock, which, upon vesting, entitle the participant to receive cash and/or shares of common stock (as determined by the compensation committee) equal in value to the fair market value of the number of shares subject to such award. Awards of phantom stock under the Amended Stock Plan also accrue dividend equivalents during the period prior to payment that are also payable in cash or shares at the applicable payment date. Vesting of all or a portion of a phantom stock award may be subject to various conditions established by the compensation committee. Unless and until a participant receives actual shares in payment of the award, the participant does not have any voting rights.

     Stock Bonuses; Other Awards. The Amended Stock Plan provides that awards of unrestricted shares of common stock may be granted to Plan participants at the discretion of the compensation committee. In addition, other awards valued in whole or in part by reference to, or otherwise based on, common stock may be granted either alone or in addition to other awards under the Amended Stock Plan, in the compensation committee’s discretion.

     Current Award Program for Outside Directors. Each director who is not an employee or executive officer of LendingTree (an Outside Director) currently is eligible under the 2001 Stock Incentive Plan to receive certain non-qualified stock option awards. The first stock option award is granted at the time the Outside Director is appointed or elected to the board. The initial award is made only to those Outside Directors who beneficially own (or represent an organization that beneficially owns) less than 5% of the combined voting power of LendingTree. The number of shares subject to the award is determined by dividing $66,000 by one-third of the average closing price of LendingTree common stock for the five trading days immediately preceding the date on which the Outside Director is elected or appointed. The second stock option award is granted as of each annual meeting of LendingTree’s shareholders to each Outside Director who is then a member of the board. This stock option permits the Outside Director to purchase whole shares, determined by dividing $22,000 by one-third of the average closing price of LendingTree common stock for the five trading days immediately preceding the annual shareholder meeting as of which it is granted. This annual stock option award may, at the election of the Outside Director, instead be awarded in the form of shares of restricted stock.

     Proposed New Award Program for Outside Directors. The Amended Stock Plan completely revises the grant program for Outside Directors. Under the Amended Stock Plan, Outside Directors are eligible to receive the following types of awards.

     First, upon the initial election or appointment to the board of an Outside Director who is a beneficial owner of (or represents an organization that is a beneficial owner of) less than 5% of the combined voting power of LendingTree, such Outside Director will be granted shares of restricted stock. The number of shares awarded to the Outside Director will be determined by dividing $60,000 by the average closing price of LendingTree common stock for the five trading days immediately preceding the date on which the Outside Director was first elected or appointed to the Board (rounded to the nearest whole share). Such restricted stock shall be subject to a vesting schedule, under which one-third of the total shares will become vested on each of the first, second and third anniversaries of the date on which the Outside Director was first elected or appointed to the board if the Outside Director continuously serves on the board to each of those dates. If the Amended Stock Plan is approved, these provisions will apply to persons who first become Outside Directors on or after April 23, 2003.

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     Second, immediately following each annual shareholders’ meeting date, each Outside Director then on the board will be granted a non-qualified stock option with a fair value of $25,000, calculated as of the date of the annual meeting. The fair value of the options shall be determined by the board or the compensation committee in good faith using an option-pricing model that the board or the compensation committee deems appropriate and by applying that option-pricing model as of the date of the annual meeting. In lieu of receiving this stock option, an Outside Director may instead elect in advance to receive shares of restricted stock equal to one-third of the number of shares that the Outside Director would have been able to purchase under the stock option if he had instead received the stock option, rounded to the nearest whole share. The stock option or shares of restricted stock, as applicable, shall become fully vested (and exercisable in the case of the stock option) on the first anniversary of the annual shareholders’ meeting as of which they were granted if the Outside Director continuously serves on the board to that date. If the Amended Stock Plan is approved, these provisions will apply to persons who are Outside Directors on April 24, 2003 or on the date of any annual shareholders’ meetings thereafter.

     Finally, Outside Directors may elect to defer 0%, 50% or 100% of their meeting fees (beginning with fees to be earned on or after July 1, 2003) and have those fees instead paid in the form of restricted stock (The meeting fees that Outside Directors are expected to receive are described on page 23 of this Proxy Statement under the heading “Director Compensation.”) If an Outside Director makes an election to defer meeting fees (which election shall be irrevocable for the calendar year to which it relates), the fees will be credited to a book account established by LendingTree. On the last business day of each calendar quarter, the total amount of deferred meeting fees which have been credited to each Outside Director’s account will be multiplied by 1.176 and the result will then be divided by the average closing price of our common stock for the five immediately preceding trading days to determine the number of shares of restricted stock to be granted to the Outside Director (rounded to the nearest whole share). Such shares of restricted stock will become fully vested on the first anniversary of the date on which they were issued if the Outside Director continuously serves on the board to that date.

     Change in Control. In the event of a change in control, the time-vested portion of an outstanding award that is not vested or exercisable at the time of the change in control will become 50% vested and (in the case of options) exercisable. In addition to the automatic acceleration, the compensation committee has the discretion to accelerate the vesting or exercisability of the remainder of any award granted under the Amended Stock Plan.

     Termination of Employment. Unless otherwise determined by our compensation committee, the unvested portion of awards granted under the Amended Stock Plan will immediately be cancelled upon termination of a participant’s employment or service with LendingTree and, in the case of stock purchased upon exercise of a non-vested option, the purchase price of such stock will be refunded. Unless otherwise determined by our compensation committee, the post-termination exercise period for stock options awarded under the Amended Stock Plan will vary depending on the reason of termination as follows: (i) if a participant’s employment or service terminates other than because of death, disability or retirement, all options that are exercisable at the time of termination may be exercised by the participant for no longer than 90 days after the date of termination; (ii) if a participant’s employment or service terminates for cause, all options held by the participant will immediately terminate; (iii) if a participant’s employment or service terminates as a result of death, all options that are exercisable at the time of death may be exercised by the participant’s heirs or distributees for one year, provided that if so determined by the compensation committee as of the grant date, an award agreement for options granted to non-employee directors may provide for a post-death exercise period of up to three years; and (iv) if a participant’s employment or service terminates because of disability or retirement, all options that are exercisable at the time of termination may be exercised for a period of one year immediately following termination. In no case may an option be exercised after it expires in accordance with its terms.

     Notwithstanding the foregoing, if an employee or an Outside Director dies or becomes disabled while employed by us or while a member of our board, the stock options held by the employee or Outside

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Director will become fully vested and exercisable. Our compensation committee has the authority to determine whether an employee or Outside Director has become disabled.

     Amendment, Termination of Plan. The 2001 Stock Incentive Plan was adopted by the board on October 25, 2000 and approved by our shareholders on May 24, 2001. Our board of directors may modify or terminate all or any portion of the Amended Stock Plan at any time, except that an amendment that requires stockholder approval in order for the Amended Stock Plan to continue to comply with any law, regulation or stock exchange requirement will not be effective unless approved by our stockholders. No awards may be granted under the Amended Stock Plan after the day immediately preceding the tenth anniversary on which the 2001 Stock Incentive Plan was adopted by the board. Finally, if the Amended Stock Plan is not approved by our shareholders, the 2001 Stock Incentive Plan will continue in effect on its current terms.

     Code Section 162(m). Code Section 162(m) precludes a publicly held corporation from claiming a compensation deduction for compensation in excess of $1.0 million paid to the chief executive officer or any of the four most highly compensated officers other than the chief executive officer. This limitation does not apply, however, to qualified “performance-based compensation.”

     Stock options granted under the Amended Stock Plan that have an exercise price equal at least to fair market value at the date of grant should qualify as “performance-based compensation” under Section 162(m).

     In addition, the Amended Stock Plan authorizes our compensation committee to make, or provide for the vesting of, awards of restricted stock and phantom stock that are conditioned on the satisfaction of certain performance criteria. For such awards intended to qualify as “performance-based compensation” under Section 162(m), our compensation committee will establish prior to or within 90 days after the start of the applicable performance period the applicable performance conditions. Our compensation committee may select from the following performance measures (the “Performance Goals”) for such purpose: (i) pre-tax income or after-tax income; (ii) operating profit; (iii) return on equity, assets, capital or investment; (iv) earnings or book value per share; (v) sales or revenues; (vi) operating expenses; (vii) common stock price appreciation; (viii) implementation or completion of critical projects or processes; (ix) increase in the volume of qualification forms completed or submitted, which goals may be expressed in terms of absolute numbers and/or as a percentage increase; (x) comparison of actual performance during a performance period against budget for such period; (xi) increase in the number of loans closed, which may be measured by type(s) of loan or in the aggregate; (xii) growth of revenue, which growth may be expressed in terms of absolute numbers and/or as a percentage increase; or (xiii) reductions in expenses, which reductions may be expressed in terms of absolute numbers and/or as a percentage increase; provided that with respect to clauses (xi) through (xiii), such achievement may be measured against budget for the same period.

     Where applicable, the Performance Goals may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to one or more of LendingTree, a subsidiary or affiliate, or a division or strategic business unit of LendingTree, or may be applied to the performance of LendingTree relative to a market index, a group of other companies or a combination thereof, all as determined by the compensation committee. The Performance Goals may include a threshold level of performance below which no vesting will occur, levels of performance at which specified vesting will occur, and a maximum level of performance at which full vesting will occur. Each of the foregoing Performance Goals will be determined in accordance with generally accepted accounting principles, provided that the compensation committee will have the authority to make equitable adjustments to the Performance Goals in recognition of unusual or non-recurring events affecting LendingTree or any subsidiary or affiliate or the financial

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statements of LendingTree or any subsidiary or affiliate in response to changes in applicable laws or regulations, or to account for items of gain, loss or expense determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles.

     The Performance Goals and the related compensation formula for determining the awards or vesting of awards will be stated in the form of an objective, nondiscretionary formula, and the compensation committee will certify in writing the attainment of such performance conditions prior to any payout with respect to such awards.

     Grants. A total of 3,784,935 options to acquire shares of common stock have been issued to date under awards granted under the 2001 Stock Incentive Plan. As of February 27, 2003, the fair market value of the common stock was $11.25 per share (based on the average of the highest and lowest price reported for such date).

     As of February 27, 2003, the following stock option awards have been granted under the 2001 Stock Incentive Plan:

     No person other than Mr. Lebda has received more than 5% of the total stock options that have been awarded under the 2001 Stock Incentive Plan.

     The following entity was granted options under the 2001 Stock Incentive Plan and has representatives on our board:

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     No awards have been made to date under the terms of the Amended Stock Plan, although it is anticipated that awards, including stock option awards, will be granted during 2003 if the Amended Stock Plan is approved by our stockholders. Because the amount of awards to be received by any participant in the Amended Stock Plan (other than an Outside Director in connection with the outside director award program described above) is determined by our compensation committee in its discretion, the amount of future awards to be granted to any person or group of persons under the Amended Stock Plan in any particular year is not currently determinable. Messrs. Field, Lieber, Spass and Tozer are the Outside Directors currently eligible to be granted options under the Amended Stock Plan’s outside director award program. It is anticipated that Messrs. Field, Lieber, Spass and Tozer will each be granted stock options to purchase shares of common stock under this program during our current year, but the amount of shares subject to such options is not currently determinable, nor is it known whether any of these Outside Directors will elect to instead receive restricted stock in lieu of the stock option. In addition, it is not known at this time whether Messrs. Field, Lieber, Spass and Tozer will elect to defer any of their meeting fees in exchange for shares of restricted stock under the proposed Amended Stock Plan. Our board of directors from time to time reviews industry information relating to director compensation and may adjust the number of options to be granted under this program in appropriate circumstances.

Equity Compensation Plan Information.

     The table below contains certain information regarding our equity compensation plans as of the end of 2002.

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Federal Income Tax Consequences

     Incentive Stock Options. Incentive stock options granted under the Amended Stock Plan will be subject to the applicable provisions of the Internal Revenue Code, including Code Section 422. If shares of common stock are issued to an optionee upon the exercise of an ISO, and if no “disqualifying disposition” of such shares is made by such optionee within one year after the exercise of the ISO or within two years after the date the ISO was granted, then (i) no income will be recognized by the optionee at the time of the grant of the ISO, (ii) no income, for regular income tax purposes, will be realized by the optionee at the date of exercise, (iii) upon sale of the shares of the common stock acquired by exercise of the ISO, any amount realized in excess of the option price will be taxed to the optionee, for regular income tax purposes, as a capital gain (at varying rates depending upon the optionee’s holding period in the shares and income level) and any loss sustained will be a capital loss, and (iv) no deduction will be allowed to LendingTree for federal income tax purposes. If a “disqualifying disposition” of such shares is made, the optionee will realize taxable ordinary income in an amount equal to the excess of the fair market value of the shares purchased at the time of exercise over the exercise price (the “bargain purchase element”) and LendingTree will generally be entitled to a federal income tax deduction equal to such amount. The amount of any gain in excess of the bargain purchase element realized upon a “disqualifying disposition” will be taxable as capital gain to the holder (at varying rates depending upon such holder’s holding period in the shares and income level), for which LendingTree will not be entitled to a federal tax deduction. Upon exercise of an ISO, the optionee may be subject to alternative minimum tax.

     Non-qualified Stock Options. With respect to non-qualified stock options (NQSOs) granted to optionees under the Amended Plan, (i) no income is realized by the optionee at the time the NQSO is granted, (ii) at exercise, ordinary income is realized by the optionee in an amount equal to the difference between the exercise price and the fair market value of the shares on the date of exercise, and LendingTree generally receives a tax deduction for the same amount, and (iii) when the shares are disposed of, appreciation or depreciation after the date of exercise is treated as capital gain or loss and taxed at varying rates depending upon the holder’s holding period in the shares and income level.

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     Restricted Stock. A recipient will generally not incur federal income tax when he or she is granted restricted stock. When the restrictions imposed on the restricted stock lapse, the recipient will be treated as having received ordinary income equal to the fair market value of the restricted stock on the date the restrictions lapsed. However, a recipient who makes an election under Code Section 83(b) within 30 days of the date of the grant will have ordinary income on the date of the grant equal to the fair market value of the shares of restricted stock as if the shares were unrestricted and could be sold immediately. If the shares subject to such election are forfeited, the recipient will not be entitled to any deduction, refund or loss for tax purposes. Upon the sale of the shares after the forfeiture period has expired, the holding period to determine whether the recipient has long-term or short-term capital gain or loss begins when the restriction period expires, and the tax basis will be equal to the fair market value of the shares when the restricted period expires. However, if the recipient timely elects to be taxed as of the date of grant, the holding period commences on the date of the grant and the tax basis will be equal to the fair market value of the shares on date of the grant as if the shares were then unrestricted and could be sold immediately. LendingTree generally will be entitled to a deduction equal to the amount that is taxable as ordinary compensation income to the recipient.

     Phantom Stock. A participant who is awarded phantom stock will not recognize income and LendingTree will not be allowed a deduction at the time the award is made. When a participant receives payment for phantom stock in cash or shares of common stock, the amount of the cash and the fair market value of the shares of common stock received will be ordinary income to the participant and will be allowed as a deduction for federal income tax purposes to LendingTree. However, if there is a substantial risk that any shares of common stock used to pay out earned phantom stock will be forfeited (for example, because the compensation committee conditions such shares on the performance of future services), the taxable event is deferred until the risk of forfeiture lapses. In this case, the participant can elect to make a Code Section 83(b) election as previously described concerning restricted stock. LendingTree can take the deduction at the time the income is recognized by the participant.

     As mentioned above, Section 162(m) of the Code imposes a $1 million limit on the amount of the annual compensation deduction allowable to a publicly-held company with respect to the compensation paid to its chief executive officer and each of its other four most highly compensated officers. An exception to this limit is provided for performance-based compensation if certain requirements are met. The Amended Stock Plan permits the committee to grant stock options, restricted stock and phantom stock that will qualify for this exception from the deduction limit.

     The foregoing is only a summary of the federal income tax consequences of awards issued under the Amended Stock Plan. It does not purport to be complete, and does not address the tax consequences of a participant’s death or the state, local and foreign tax laws that may also be applicable to awards and transactions involving awards.

     THE BOARD UNANIMOUSLY RECOMMENDS VOTING “FOR” APPROVAL OF THE AMENDED STOCK PLAN.

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EXECUTIVE COMPENSATION AND OTHER MATTERS

Executive Compensation

     The table below sets forth certain compensation information for the last three fiscal years for our Chief Executive Officer and our four next most highly compensated executive officers (collectively, the Named Executive Officers).

SUMMARY COMPENSATION TABLE

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Option Grants in Last Fiscal Year

     The table below summarizes the stock options granted during fiscal 2002 to each Named Executive Officer and the potential realizable value of each grant of options assuming annualized appreciation in our common stock at the rate of 5% and 10% over the term of the option.

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Aggregated Option Exercises in Last Fiscal Year and Fiscal Year-End Option Values

     The table below sets forth information related to the exercises of stock options during 2002 by each Named Executive Officer and the fiscal year-end number and value of unexercised stock options:

Employment Agreements and Change of Control Arrangements

     Douglas Lebda. We have an employment agreement with Douglas Lebda with a term that began on September 2, 1999 and ends on September 2, 2003, unless earlier terminated as provided under the agreement. In addition to providing for salary and benefits, Mr. Lebda’s agreement provides for his participation in our bonus programs and for the grant of an option to purchase 190,500 shares of our common stock. In the event Mr. Lebda’s employment is terminated by us either without cause or for bad performance, or if Mr. Lebda terminates his employment for good reason, Mr. Lebda is entitled to receive as severance pay a continuation of his then-current base salary until the first anniversary of the effective date of termination, subject to reduction to the extent he receives any compensation from any subsequent employment during the one-year severance period.

     In the event Mr. Lebda’s employment is terminated as a result of any merger, acquisition, share exchange or other business combination, Mr. Lebda is entitled to receive a lump sum payment in an amount equal to 12 months of his then current base salary.

     With respect to his stock options, in the event that Mr. Lebda’s employment is terminated by us without cause, by Mr. Lebda for good reason, or as a result of a merger, acquisition, share exchange or other business combination, all 1,115,006 of Mr. Lebda’s stock options will continue to vest in accordance with their vesting schedules in effect prior to termination and he will have a right to exercise the options for a period of 30 days following the final vesting date. Mr. Lebda will be subject to a non-compete and non-solicitation covenant for one year following any termination of his employment and will be required to give a general release to us in order to receive severance payments.

     Thomas Reddin. We have an employment agreement with Thomas Reddin with an initial term that began on December 10, 1999. At each anniversary date, the term of the agreement automatically extends for an additional one-year term, unless at least 30 days prior to the last day of any such extended term, we give notice to the Mr. Reddin that the agreement term shall not be extended. In addition to providing for salary, benefits and a fixed bonus for his first year of employment, Mr. Reddin’s agreement provides for the payment of an annual discretionary bonus of up to 65% of his salary following the first anniversary of his employment with us. In the event Mr. Reddin’s employment is terminated by us other than for cause, he is entitled to receive his then-current salary for one year, provided, that if he becomes employed elsewhere during that period, our obligation to continue salary payments will be reduced on a dollar-for-dollar basis by salary and bonus received from the subsequent employer. In addition, if Mr. Reddin’s employment is terminated by us other than for cause, he will be entitled to additional vesting of

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a pro-rata portion of all option tranches that would have vested on the next following anniversary of his employment had he remained employed on that date. Any exercisable options held by Mr. Reddin at the time of such termination without cause will remain exercisable for 90 days thereafter. Mr. Reddin is subject to non-competition and non-solicitation covenants during his employment with LendingTree and he will be subject to such covenants during the one-year period following termination of his employment.

     Change of Control Arrangements. We have entered into Employment Continuity Agreements with each of Messrs. Lebda, Reddin, Hall, Campbell and Cunliffe, and certain other executive officers and key employees. These agreements provide employment protection for these employees with LendingTree (or any successor to LendingTree) following a change of control of LendingTree (as defined under the agreements). The agreements for Messrs. Lebda, Reddin and Hall provide employment protection for two years following a change of control, and the agreements for Messrs. Campbell, Cunliffe and the other executive officers and key employees provide for employment protection for one year following a change of control. During each executive’s employment protection period, the executive will be entitled to receive an annual base salary based on the highest monthly base salary he was receiving during the 12 months immediately preceding the change of control; a bonus award opportunity with a target and maximum bonus level not less than the largest target and maximum annual incentive award payable under LendingTree’s annual incentive program as in effect during the 12-month period immediately preceding the change of control; and participation in retirement, incentive, welfare and other employee benefit plans which, in general, are no less favorable than the greater of (1) those provided by LendingTree during the 90-day period immediately preceding the change of control or (2) those provided after the change of control to other peer executives. In addition, a change of control will cause each executive to become fully vested in all stock option and other stock incentive awards that had been granted to the executive under a LendingTree stock incentive plan or similar arrangement, to the extent that such awards had not already become vested pursuant to the terms of the incentive plan or similar arrangement on account of the change of control, and the stock options that vest under the agreement will remain exercisable until their specified expiration date. In the case of Messrs. Campbell, Cunliffe and the other executive officers and key employees, the LendingTree board may in its discretion replace any stock options that become vested under their Employment Continuity Agreement with common stock of LendingTree or of a successor that is equal in value to such stock options, or with equivalent value.

     If LendingTree or a successor terminates an executive’s employment during his employment protection period on account of his disability or for reasons other than death or cause, or if an executive resigns because of a constructive termination during his employment protection period, he will be entitled to a lump sum payment equal to the sum of (1) any unpaid annual base salary and accrued time off through the termination date, (2) his target annual bonus for the performance period in which the termination occurs, prorated for the number of days he actually worked during the performance period, and (3) any amounts previously deferred by such executive under any non-qualified deferred compensation plan (together with earnings accrued thereon). In addition, Messrs. Campbell, Cunliffe and the other executive officers and key employees will each be entitled to receive a payment equal to the sum of their then-current annual base salary and the annual bonus they were paid or are entitled to be paid for the 12-month period ending immediately before the date of the change of control. Messrs. Lebda, Reddin and Hall will be entitled to receive a payment equal to two times that amount. Unless the executive’s employment terminates on account of disability, the executive will also be entitled to receive continued coverage for him and his family under the most favorable welfare benefit plans that were in place (1) during the 90-day period immediately preceding the executive’s termination date or (2) with respect to other peer executives during the employment continuation period (which shall include health plan coverage). This coverage will continue for two years following the termination of Messrs. Lebda, Reddin and Hall, and will continue for one year following the termination of Messrs. Campbell, Cunliffe and the other executive officers and key employees. LendingTree or its successor may, in lieu of providing such

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continued welfare benefits, pay the executive in a lump sum the estimated after–tax value to him and his family of such continued welfare benefits.

     The Employment Continuity Agreement may only be modified or terminated with the executive’s consent, except that the agreement automatically terminates if the executive’s employment with LendingTree terminates prior to the occurrence of a change of control. For those executives who are subject to our Stock Retention Policy (as described on page 31 of this Proxy Statement), the Employment Continuity Agreements described above were provided by LendingTree as consideration for each executive’s agreement to be bound by the terms of the Stock Retention Policy.

Director Compensation

     Members of our board of directors were not paid director fees for their attendance at meetings of the board or any of its committees during 2002. All of our non-employee directors are reimbursed for out-of-pocket expenses incurred in connection with their attendance at board or committee meetings.

     Under our 2001 Stock Incentive Plan, a non-employee director who is a beneficial owner of (or represents an organization that is a beneficial owner of) less than 5% of our combined voting power, is eligible to receive upon his or her initial election or appointment to the board, a non-qualified stock option to purchase a number of shares of common stock calculated by dividing $66,000 by one-third of the average closing price of the common stock for five trading days immediately preceding the date of election or appointment. In addition, immediately following each annual meeting of our stockholders, each such non-employee director then serving is eligible to receive a non-qualified stock option to purchase a number of shares of our common stock, calculated by dividing $22,000 by one-third of the average closing price of our common stock for five trading days immediately preceding the date of the annual stockholders’ meeting. In lieu of the annual option grants, directors may elect to receive an equivalent number of shares of restricted stock.

     No persons were initially elected or appointed to the board in 2002, and therefore no initial stock option grants were awarded in 2002 under the 2001 Stock Incentive Plan. Messrs. Field and Tozer were members of the board as of the date of our 2002 annual stockholders’ meeting and each received a non-qualified stock option to purchase 4,366 shares of our common stock under the annual stock option award provisions of the plan. Specialty Finance Partners, an affiliate of Capital Z Partners, represented on our board by Messrs. Lieber and Spass, received non-qualified option to purchase 8,732 shares of our common stock as of the date of our 2002 annual shareholders meeting. The Union Labor Life Insurance Company, on Behalf of its Separate Account P, which at the time of our 2002 annual stockholders’ meeting had Mr. Robert Kennedy as its representative on our board, received 1,455 shares of restricted stock. Zions Bancorporation, which at the time of our 2002 annual stockholders’ meeting had Mr. Michael DeVico as its representative on our board, received a non-qualified stock option to purchase 4,366 shares of our common stock.

     Our non-employee directors are also eligible to participate in a deferred compensation program whereby a director may defer the income from any director’s fees that may be paid to the director and from the exercise of stock options. Under that program, in the event of a change in control, we will be required to fund a so-called “rabbi trust” sufficient to pay the deferred compensation.

     The compensation committee reviewed our current director compensation programs in 2003. A process similar to the process used in establishing the compensation of our executive officers was used by the compensation committee to evaluate board compensation. A consultant was engaged and their findings were supplemented by information obtained through researching other publicly available sources as well as discussion with recruiters that specialize in board placements. Based on the analysis on these

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data, recommendations were made on board compensation, including options awards, relative to competitive levels of compensation at companies of similar size. These recommendations resulted in the adoption of the proposed Amended and Restated 2001 Stock Incentive Plan (the “Amended Stock Plan”), and a program for paying meetings fees to our non-employee directors.

     The Amended Stock Plan completely revises the stock incentive award program for our non-employee directors. Please review the summary of the proposed Amended Stock Plan for a description of the new program. The summary is located at page 10 of this Proxy Statement. If the Amended Stock Plan is approved by shareholders, the new stock award program for non-employee directors generally will take effect on April 23, 2003. On January 1, 2003, the non-employee members of our board of directors began to earn meeting fees for the board meetings and committee meetings that they attend or participate in by teleconference. The amounts of the fees are as follows:

     Under the proposed Amended Stock Plan, non-employee directors will be permitted to defer 0%, 50% or 100% of their meeting fees (beginning with fees to be earned on or after July 1, 2003) and have those fees instead paid in the form of restricted stock. A description of the deferral program for meeting fees is contained in the summary of the Amended Stock Plan beginning on page 11 of this Proxy Statement.

Compensation Committee Interlocks and Insider Participation

     The compensation committee of the board of directors currently consists solely of Mr. Lieber. Mr. Spass served on the compensation committee until May 2002. Michael DeVico served on the compensation committee until his resignation from our board of directors on January 1, 2003. None of Messrs. Lieber, Spass, or DeVico has ever been an officer or employee of LendingTree. No interlocking relationship exists between any member of our board of directors or our compensation committee and any members of the board of directors or compensation committee of any other company, and no such interlocking relationship has existed in the past.

Executive Officers and Key Employees

     Certain information regarding our executive officers and certain other key employees is set forth below:

     Douglas Lebda (33) has served as Chief Executive Officer and a director since September 1998. Additional information about Mr. Lebda can be found above under “Election of Directors”.

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     Thomas Reddin (42) is President and Chief Operating Officer. From 1995 to 1999, he was Vice President, Consumer Marketing for Coca-Cola USA. Mr. Reddin was responsible for leading the strategy and all marketing activities for the Coca-Cola brand, the non-carbonated brand portfolio and the consumer occasions marketing department. Prior to joining The Coca-Cola Company, Mr. Reddin spent 13 years with Kraft General Foods in various brand management capacities. Mr. Reddin joined LendingTree in December 1999.

     Keith Hall (49) is Senior Vice President, Chief Financial Officer and Treasurer. From July 1997 until May 1999, Mr. Hall was the Chief Financial Officer and Senior Vice President of Broadway & Seymour, Inc., a software product and services firm. From 1996 until 1997, Mr. Hall was Vice President and Chief Financial Officer of Loctite Corporation, a specialty chemical producer and marketing company. During 1995, Mr. Hall was the Chief Financial Officer of Legent Corporation, a software and services company. Between 1983 and 1995 Mr. Hall worked in various financial positions at United Technologies Corporation, including Chief Financial Officer at Carrier North America. Mr. Hall has been with LendingTree since June 1999.

     Stephen Campbell (38) is Senior Vice President and Chief Information Officer. From 1987 until November 1999, Mr. Campbell worked in various capacities with American Management Systems Inc., an international business and information technology consulting company, most recently as the director of Software Development for the Consumer Financial Services Group. Mr. Campbell has been with LendingTree since November 1999.

     Eric Cunliffe (57) is Senior Vice President, General Manager of Realty Services, overseeing our real estate operations and network. From January 1996 to July 2000, Mr. Cunliffe was Executive Vice President and, subsequently, President and Chief Operating Officer of HomeSpace, Inc. Mr. Cunliffe was Vice President of Norwest Mortgage, Inc. from 1994 to 1996. Prior to 1994, Mr. Cunliffe spent 18 years in various roles at US Mortgage (PHH/Cendant), including as Executive Vice President.

     Robert J. Flemma, Jr. (42) is Senior Vice President, General Counsel and Secretary. From 1998 to 1999, Mr. Flemma was a private investor. From 1986 to 1997, Mr. Flemma was an attorney at Whyte Hirschboeck Dudek S.C., where he was a partner and the administrative head of the firm’s consumer finance law team. Mr. Flemma joined LendingTree in October 1999.

     Matthew Packey (35) is Vice President – Controller and Principal Accounting Officer. Prior to joining LendingTree, Mr. Packey worked at Broadway & Seymour, Inc., a software product and services firm from 1996 until 1999 where he also served as Controller. Prior to joining Broadway & Seymour, Mr. Packey was employed by Deloitte & Touche from 1989 until 1996.

     David Anderson (37) is Senior Vice President of Sales and Strategic Initiatives. From July 1998 until March 1999, Mr. Anderson worked in various capacities at American Management Systems, Inc., an international business and information technology consulting company, most recently as a senior principal. Mr. Anderson has been with LendingTree since March 1999.

     Lori Collins (42) is Senior Vice-President – Account Management and Product Management. Prior to joining LendingTree in February 2000, Ms. Collins was a Senior Vice President at Bank of America from 1996 to 2000, a Vice President at Fidelity Investments from 1991 to 1996 and a Director of Marketing for American Express Company from to 1986 to 1991.

     Kimberly Gorsuch-Bradbury (42) is Senior Vice President of Corporate Strategy and Development. Prior to joining LendingTree, Ms. Gorsuch-Bradbury worked at IBM Corporation from

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1981 to 1999. In her most recent role, she led IBM’s e-finance strategy consulting team as the Executive Consultant. Ms. Gorsuch-Bradbury joined LendingTree in November 1999.

     Robert Harris (42) is Senior Vice President of Marketing. Prior to joining LendingTree in June 2000, Mr. Harris was a managing director of consumer marketing at The Coca-Cola Company from March 1997 to June 2000. Prior to joining The Coca-Cola Company, Mr. Harris was employed by McCormick & Company from August 1986 to March 1997, where he was responsible for leading marketing and sales initiatives within the U.S. Consumer Products Group.

     Richard Stiegler (46) is Senior Vice President and Chief Technology Officer. From 1993 until 1997, Mr. Stiegler served as vice president of Advanced Technology at Greenwich Capital Markets. From 1987 until 1993, Mr. Stiegler was a Vice President at Morgan Stanley. Mr. Stiegler has been with LendingTree since November 1997.

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Shareholder Return Performance Graph

     Presented below is a line graph comparing the percentage change in the cumulative total shareholder return on LendingTree’s common stock against the cumulative total return of the NASDAQ Stock Market Index and the Dow Jones Internet Commerce Index for the period commencing February 16, 2000 (the date trading began in our common stock) and ending December 31, 2002. In our proxy statement for our 2002 annual meeting of stockholders, we provided the information required on this graph against the H&Q Internet Index. We have decided to change to the Dow Jones Internet Commerce Index because the H&Q Internet Index is no longer available.

     This graph assumes that $100 was invested in our common stock; in the NASDAQ Stock Market Index and the Dow Jones Internet Commerce Index and that all dividends were reinvested.

Certain Relationships And Related Party Transactions

     In March 2001, in connection with the sale of our Series A Preferred Stock, we entered into a promissory note and pledge agreement with Douglas Lebda, our Chief Executive Officer, to provide him with a $700,000 loan to acquire 200,000 shares of Series A Preferred Stock. This note and pledge agreement also amended and restated other notes and pledge agreements then in effect with respect to $1.7 million in loans to Mr. Lebda for option exercises. In August 2001, we entered into an amended and restated note and pledge agreement with Mr. Lebda relating to all the outstanding loans and interest accrued thereon totaling approximately $2.5 million. This amended and restated note bore interest at a fixed rate of 8% per annum and was not prepayable.

     In February 2000, we entered into a promissory note and pledge agreement with Keith Hall, our Chief Financial Officer, in the principal amount of $100,000 for the purpose of enabling him to exercise nonqualified stock options and paying the related withholding taxes on such exercise.

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     On December 31, 2002, our board of directors determined that it was in the best interests of the Company and its shareholders that the loans be repaid. Accordingly, the Company waived the no-prepayment clause in Mr. Lebda’s note and requested that both he and Mr. Hall repay their loans. On December 31, 2002, Mr. Lebda repaid in full the $2.6 million of principal and interest then outstanding under his note and in February 2003, Mr. Hall repaid in full the approximately $69,000 of principal and interest then outstanding under his note.

     On or about September 10, 2002, we entered into an agreement with Fidelity National Information Services (“FNIS”), an affiliate of one of our largest shareholders, Fidelity National Financial, Inc., pursuant to which FNIS will provide automated property valuation reports to visitors to our Website and other websites we host. We paid FNIS $0 pursuant to this agreement in 2002. Under this agreement, we will pay FNIS access fees on a monthly basis, which may exceed more than $60,000 in the aggregate during 2003. We also expect to generate revenue related to our role in providing our customers with access to these services.

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Compensation Committee Report

     The following is the report of the compensation committee of our board of directors with respect to the compensation paid to our executive officers during 2002, a description of a stock retention policy for our executives that was adopted by the board in 2003 upon the recommendation of the compensation committee and other actions taken in 2003.

     Compensation Philosophy. Our philosophy in setting our compensation policies for executive officers is to maximize stockholder value over time. The primary goal of the executive compensation program is therefore to closely align the interests of the executive officers with those of our stockholders. To achieve this goal, we attempt to (i) offer competitive compensation opportunities that attract and retain executives whose abilities are critical to our long-term success, motivate individuals to perform at their highest level and reward outstanding achievement, (ii) maintain a significant portion of the executive’s total compensation at risk, tied to achievement of financial, organizational and management performance goals and (iii) encourage executives to manage from the perspective of owners with an equity stake in LendingTree.

     Executive Compensation. The compensation program for our executive officers consists of three basic components: (i) base salary, (ii) annual cash incentive awards and (iii) long-term stock incentive awards.

          Base Salary. Except to the extent otherwise provided for under an employment agreement, the compensation committee annually reviews and establishes the level of base salaries for our executive officers based upon competitive compensation data for similarly situated companies in the e-commerce, technology and financial services industries, as well as the executive’s job responsibilities, level of experience, individual performance and contribution to our business. In order to evaluate LendingTree’s competitive position in the industry, the compensation committee reviewed and analyzed the compensation packages, including base salary levels, offered by other companies in the e-commerce industry and other industries. The competitive information was obtained from surveys prepared by a national consulting company and publications. In making base salary decisions, the compensation committee exercised its discretion and judgment based upon these factors. No specific formula was applied to determine the weight of each factor, although the philosophy of the committee and board in assessing overall compensation packages is to weigh the compensation associated with stock options more heavily than other, non-technology companies our size.

          Annual Cash Incentive Awards. The compensation committee recommends and the Board of Directors awards annual cash incentive compensation pursuant to the LendingTree, Inc. Management Incentive Plan (the MIP). Under the MIP, the compensation committee and Board establish an award formula for a year for each executive officer based on the achievement of various financial performance factors or other specific goals. The actual award formula for a year may vary among the executive officers. The target award is established as either a dollar amount or a percentage of base salary, although no award may exceed 150% of an executive officer’s base salary. Actual performance at 100% of the target performance goal will generally result in an annual incentive award equal to the target amount, with actual performance between 80% and 100% of the target performance goal producing a lower award and actual performance between 100% and 150% of the target performance goal producing a larger award. Generally, no amount will be payable under the MIP if actual performance is less than 80% of the target performance goal.

          Long-Term Stock Option Incentives. LendingTree provides its executive officers with long-term incentive compensation through grants of stock-based awards, principally stock options, under our 1997, 1998, 1999 and 2001 Stock Incentive Plans. The compensation committee believes that stock

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options provide executive officers with the opportunity to purchase and maintain an equity interest in LendingTree and to share in the appreciation of the value of our common stock, thereby motivating our executive officers to maximize long-term stockholder value. The options also utilize vesting periods that encourage our executive officers to continue in the employ of LendingTree. All options granted to executive officers in 2002 were granted at an exercise price that was equal to the fair market value of our common stock on the date of grant. The compensation committee considers the grant of each option subjectively, considering factors such as the individual performance of the executive officer and the anticipated contribution of the executive officer to the attainment of long-term strategic performance goals, as well as the nature and amount of any long-term incentives that have previously been granted to an executive officer. The compensation committee also considers data gathered on competitive practices at other companies as described in the “Base Salary” section above. The Board of Directors reviews and approves the compensation committee’s recommendations with respect to equity based incentive awards to executive officers.

     Compensation for the Chief Executive Officer. Effective September 2, 1999, LendingTree entered into an employment agreement with Douglas Lebda, our Chief Executive Officer. See “Employment Agreements and Change of Control Arrangements.” The compensation committee and the board of directors approved Mr. Lebda’s employment agreement after a detailed review of competitive compensation data for chief executive officers in similarly situated companies in the internet-based, services-provider industry and after extensive discussion of Mr. Lebda’s qualifications. In February 2000 in connection with our initial public offering, the compensation committee increased Mr. Lebda’s annual rate of base salary based on the committee’s analysis of a national consulting company compensation study in order to provide Mr. Lebda with a market base salary level as compared with competitor businesses. Pursuant to the employment agreement and the Management Incentive Plan, the compensation committee calculated and the Board of Directors approved and awarded Mr. Lebda an annual cash incentive for 2002 based on the attainment of the financial performance goals approved for purposes of that award. In particular, the compensation committee considered actual revenue and income for the year in comparison to budget.

     On December 31, 2002, our board of directors determined that it was in the best interest of the Company and our shareholders that Mr. Lebda’s approximately $2.6 million loan from the Company and accrued interest be repaid. Accordingly, the Company waived the no-prepayment clause in Mr. Lebda’s note and requested that he repay his loan. On December 31, 2002, Mr. Lebda repaid in full the $2.6 million then outstanding under his note.

     The Committee also reviewed the compensation of all other executive officers. A consultant was engaged and their findings were supplemented by information obtained through researching other publicly available sources. Based on the analysis on these data, recommendations were made on total compensation for each executive, including options awards, relative to competitive levels of compensation at companies of similar size. The Committee first reviewed the recommendations. Final approval was obtained by the board of directors.

     Section 162(m). The compensation committee has considered the potential future effects of Section 162(m) of the Internal Revenue Code on the compensation paid to LendingTree’s executive officers. Section 162(m) generally disallows a tax deduction for any publicly held corporation for individual compensation exceeding $1.0 million in any taxable year for any of the named executive officers, unless compensation is performance-based. LendingTree has adopted a policy that, where reasonably practicable, we will seek to qualify the variable compensation paid to its executive officers for an exemption from the deductibility limitations of Section 162(m).

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     Employment Continuity Agreements. The compensation committee also evaluated the existing executive retention agreements that have been in place since 2000. A consultant was engaged and their findings were supplemented by information obtained through researching other publicly available sources. Based on the analysis on these data, recommendations were made to modify the existing retention agreements. Based on these recommendations, the board decided to modify the existing executive retention agreements (which are described on page 22 of this Proxy Statement).

     Stock Retention Policy. Effective as of March 3, 2003, the board adopted a stock retention policy covering our Named Executive Officers and certain other executive employees of the LendingTree. The policy prohibits each covered employee from transferring at any time more than 30% of the total shares of common stock that he or she has been awarded under our stock incentive plans (which number includes any shares subject to stock options regardless of whether the options have been exercised). The types of transfers prohibited include any sale, offer, assignment, pledge or other disposition (with or without consideration, whether voluntary or involuntary or by operation of law). The policy continues in effect for six months following an employee’s termination of employment with LendingTree, except if the employee is involuntarily terminated for reasons other than cause (in which case the policy ceases to apply 45 days following termination of employment), or if the employee dies or becomes disabled (in which case the policy terminates immediately). If the Company experiences a change of control, the policy will automatically terminate. The compensation committee may in its discretion grant a waiver of the policy in those circumstances that the committee deems appropriate.

     The compensation committee and the board believe that this policy will help promote a long-term focus among our key employees and better align their interests with those of LendingTree’s shareholders. The board may periodically review the policy, and may amend or terminate the policy at its discretion, although it cannot impose additional restrictions on covered employees without their consent. LendingTree has the right to discipline any covered employee who materially fails to comply with the policy, which may include termination of his or her employment.

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Audit Committee Report

     The audit committee’s purpose is to provide assistance to the board of directors in fulfilling its legal and fiduciary obligations with respect to matters involving our accounting, auditing, financial reporting, internal control and legal compliance functions. A full description of the audit committee’s roles and responsibilities is contained in the Audit Committee Charter, a copy of which is attached hereto as Appendix B.

     Membership on the Audit Committee during 2002 was as follows:

     Each of the current members of our audit committee is “independent” under Rule 4200(a)(14) of Nasdaq’s listing standards. While Mr. Tozer met Nasdaq’s independence requirements effective January 1, 2003, he did not meet them during 2002 because of a stock option grant that was made to him during 2001. Our board nonetheless determined that it was in the best interests of the Company and its shareholders that Mr. Tozer serve on the audit committee.

     Some of the duties carried out by the Audit Committee for the year ending December 31, 2002 included:

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     During the past year, the audit committee of the board of directors has also:

     Based on the review, discussions and disclosures referred to above, the audit committee recommended to the board of directors that our audited financial statements for 2002 be included in our Annual Report on Form 10-K for the year ended December 31, 2002 for filing with the Securities and Exchange Commission.

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Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Exchange Act requires our executive officers, directors and certain persons who own more than ten percent of our common stock to file reports of ownership and changes in ownership with the Securities and Exchange Commission. Such executive officers, directors and greater than ten percent stockholders are required to furnish us with copies of all Section 16(a) forms they file. Based solely on our review of the copies of such forms received by us and written representations from the reporting persons, we believe that during 2002 all such forms were filed on a timely basis, except as described below. Eric Cunliffe reported one transaction on a Form 4 that was not reported on a timely basis; Douglas Lebda reported one transaction on a Form 4 that was not reported on a timely basis; and Robert Kennedy reported one transaction by a company with which he is affiliated on a Form 4 that was not reported on a timely basis.

RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS

     The Board of Directors has selected PricewaterhouseCoopers LLP as independent accountants to examine our financial statements for the fiscal year ending December 31, 2003. This selection is being presented to our stockholders for ratification at the annual meeting. PricewaterhouseCoopers LLP audited our financial statements for 2002 and for each fiscal year since 1997. Representatives of PricewaterhouseCoopers LLP are expected to be present at the annual meeting of stockholders with an opportunity to make a statement if they desire to do so, and they are expected to be available to respond to appropriate questions.

     The audit committee has considered whether the provision of services by PricewaterhouseCoopers LLP other than the audit of our financial statements for 2002 and the review of our quarterly financial statements for 2002 is compatible with maintaining PricewaterhouseCoopers LLP’s independence.

     Audit Fees. PricewaterhouseCoopers LLP billed us $173,000 for professional services rendered for the audit of our annual financial statements for 2002 and reviews of the financial statements included in our quarterly reports on Form 10-Q filed during 2002.

     Financial Information Systems Design and Implementation Fees. PricewaterhouseCoopers LLP rendered no professional services to us for the design and implementation of financial information systems during 2002.

     All Other Fees. PricewaterhouseCoopers LLP billed us $172,000 for all other professional services rendered during 2002 generally including services related to tax and employee benefit plan matters.

     The Board of Directors recommends a vote FOR ratification of the selection of PricewaterhouseCoopers LLP as independent accountants to examine our financial statements for the year ending December 31, 2003, and proxies solicited by the Board of Directors will be so voted unless stockholders specify otherwise. If our stockholders do not ratify the selection of PricewaterhouseCoopers LLP, the selection of independent accountants will be reconsidered by our Board of Directors.

OTHER MATTERS

     We know of no other matters to be submitted or considered at the meeting. If any other matters properly come before the meeting, it is the intention of the persons named in the enclosed proxy to vote the shares they represent as our board of directors may recommend.

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APPENDIX A

AMENDED AND RESTATED
2001 STOCK INCENTIVE PLAN
OF
LENDINGTREE, INC.

1. Purpose and Types of Awards

     The purpose of the Amended and Restated 2001 Stock Incentive Plan of LendingTree, Inc. (the “Plan”) is to promote the long-term growth and profitability of LendingTree, Inc. (the “Company”) by (i) providing key people with incentives to improve stockholder value and to contribute to the growth and financial success of the Company, and (ii) enabling the Company to attract, retain and reward the best available persons for positions of substantial responsibility.

     The Plan permits the granting of Options (including Incentive Stock Options), Restricted Stock, Phantom Stock Units, Stock Bonuses and Other Stock-Based Awards.

2. Definitions

     Under the Plan, except where the context otherwise indicates, the following definitions apply:

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3. Administration

     (a)     Procedure. The Plan shall be administered by the Board. In the alternative, the Board may appoint a Committee consisting of not less than two members of the Board to administer the Plan on behalf of the Board, subject to such terms and conditions as the Board may prescribe. The members of the Committee shall be both “non-employee directors” within the meaning of Rule 16b-3 and, to the extent that the Board has resolved to take actions necessary to enable compensation arising with respect to Awards under the Plan to constitute performance-based compensation for purposes of Section 162(m) of the Code, “outside directors” within the meaning of Section 162(m) of the Code. Once appointed, the Committee shall continue to serve until otherwise directed by the Board. The Board may, by a resolution adopted by the Board, delegate to one or more officers of the Company the authority to designate employees of the Company, who are not executive officers or directors of the Company, to be recipients of Awards, and to determine the number of Awards to be received by such employees; provided that the resolution shall specify the total number of Awards that such officer or officers may grant. The Board shall not authorize an officer to designate himself or herself as a recipient of Awards in accordance with a delegation described in the preceding sentence. From time to time, the Board may increase the size of the Committee and appoint additional members thereof, remove members (with or without cause) and appoint new members in substitution therefore, fill vacancies, however caused, and remove all members of the Committee and, thereafter, directly administer the Plan. In the event that the Board is the administrator of the Plan in lieu of a Committee, the term “Committee” as used herein shall be deemed to mean the Board.

     The Committee shall meet at such times and places and upon such notice as it may determine. A majority of the Committee shall constitute a quorum. Any acts by the Committee may be taken at any meeting at which a quorum is present and shall be by majority vote of those members entitled to vote. Additionally, any acts reduced to writing or approved in writing by all of the members of the Committee shall be valid acts of the Committee.

     Members of the Board or the Committee who are either eligible for Awards or have been granted Awards may vote on any matters affecting the administration of the Plan or the grant of Awards pursuant to the Plan, except that no such member shall act upon the granting of an Award to himself or herself, but any such member may be counted in determining the existence of a quorum at any meeting of the Board or the Committee during which action is taken with respect to the granting of an Award to him or her.

     (b)     Powers of the Committee. The Committee shall have all the powers vested in it by the terms of the Plan, such powers to include authority, in its sole and absolute discretion, to grant Awards under the Plan, prescribe Award Agreements evidencing such Awards and establish programs for granting Awards. The Committee shall have full power and authority to take all other actions necessary to carry out the purpose and intent of the Plan, including, but not limited to, the authority to:

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The Committee shall have full power and authority to administer and interpret the Plan and to adopt such rules, regulations, agreements, guidelines and instruments for the administration of the Plan and for the conduct of its business as the Committee deems necessary or advisable and to interpret same, all within the Committee’s sole and absolute discretion.

     (c)     Limited Liability. To the maximum extent permitted by law, no member of the Board or Committee shall be liable for any action taken or decision made in good faith relating to the Plan or any Award there under.

     (d)     Indemnification. To the maximum extent permitted by law and the Company’s charter or by-laws, the members of the Board and Committee shall be indemnified by the Company in respect of all their activities under the Plan.

     (e)     Effect of Committee’s Decision. All actions taken and decisions and determinations made by the Committee on all matters relating to the Plan pursuant to the powers vested in it hereunder shall be in the Committee’s sole and absolute discretion and shall be conclusive and binding on all parties concerned, including the Company, its stockholders, any participants in the Plan and any other employee of the Company, and their respective successors in interest.

4.    Shares Available for the Plan

     Subject to the adjustments described below, the shares of stock that may be delivered or purchased with respect to Awards granted under the Plan, including with respect to Incentive Stock Options intended to qualify under Section 422 of the Code, shall not exceed an aggregate of 6,500,000 shares of Common Stock of the Company. The Company shall reserve such number of shares for Awards under the Plan, subject to adjustments as provided below. No executive officer of the Company shall receive Awards within any 12-month period covering more than 4,000,000 shares of Common Stock If any Award, or portion of an Award, under the Plan expires or terminates unexercised, becomes unexercisable or is forfeited or otherwise terminated, surrendered or canceled as to any shares without the delivery of shares of Common Stock or other consideration, the shares subject to such Award shall thereafter be shares with respect to which further Awards may be granted under the Plan.

     In the event that the Committee shall determine that any reclassification, recapitalization, stock split, dividend or other distribution (whether in the form of cash, stock or other property), combination, merger, consolidation, spin-off, share exchange, repurchase or other similar corporate transaction or event affects the Common Stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the rights of Grantees under the Plan, the maximum number and kind of shares reserved for issuance or with respect to which Awards may be granted under the Plan shall be adjusted to reflect such event, and the Committee shall make such adjustments as it deems appropriate and equitable in the

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number, kind and price of shares covered by outstanding Awards previously granted under the Plan, and in any other matters which relate to Awards and which are affected by the changes in the Common Stock referred to above; provided, however, that with respect to Incentive Stock Options, such adjustment shall be made in accordance with Section 424(h) of the Code.

     The Committee is authorized to make adjustments in the terms and conditions of, and the criteria included in, Awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in the preceding paragraph of this Section 4) affecting the Company, or the financial statements of the Company or any Subsidiary, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

5.    Participation

     Participation in the Plan shall be open to all employees, directors, officers and consultants of the Company, or of any Affiliate of the Company, as may be selected by the Committee from time to time. Notwithstanding the foregoing, participation in the Plan with respect to grants of Incentive Stock Options shall be limited to employees of the Company or of any Parent or Subsidiary of the Company.

     Awards may be granted to such eligible persons and for such number of shares of Common Stock as the Committee shall determine, subject to the limitations in Section 4. A grant of any type of Award made in any one year to an eligible person shall neither guarantee nor preclude a further grant of that or any other type of Award to such person in that year or subsequent years.

6.    Stock Options

     Subject to the other applicable provisions of the Plan, the Committee may from time to time grant to eligible participants Awards of Incentive Stock Options or Non-Qualified Stock Options. In addition to such terms and conditions as may not inconsistent with the terms of the Plan and shall be set forth in the applicable Award Agreement, Options shall be subject to the following terms and conditions.

     (a)     Grant of Option. The grant of an Option shall be evidenced by a Award Agreement, executed by the Company and the Grantee, stating the number of shares of Common Stock subject to the Option evidenced thereby and the terms and conditions of such Option, in such form as the Committee may from time to time determine.

     (b)     Price. The price per share payable upon the exercise of each Option (“exercise price”) shall be determined by the Committee in its discretion; provided, however, that in the case of Incentive Stock Options, the exercise price shall not be less than 100% of the Fair Market Value of a share of Common Stock on the Grant Date.

     (c)     Term and Exercisability. Unless otherwise determined by the Committee at the time of grant, the term of each Option shall be no longer than 10 years from the Grant Date; provided, however, that in the case of Incentive Stock Options, the term of such option shall not exceed 10 years from the Grant Date. Unless earlier terminated pursuant to the provisions of the Plan or the Award Agreement, each Option shall become vested in accordance with the vesting schedule specified in the Award Agreement, which vesting schedule shall be determined by the Committee in its discretion. Notwithstanding the foregoing, each Option shall become fully vested and exercisable if the Grantee dies or incurs a Disability while employed by the Company or while he or she is a member of the Board.

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     (d)     Payment. Options may be exercised in whole or in part by payment of the exercise price of the shares to be acquired in accordance with the provisions of the Award Agreement, or such rules and regulations as the Committee may have prescribed, or such determinations, orders, or decisions as the Committee may have made. Payment may be made by one or a combination of the following methods: (i) in cash (or cash equivalents acceptable to the Committee); (ii) the surrender of previously acquired shares of Common Stock having a Fair Market Value less than or equal to the aggregate exercise price, which shares shall have been held by the Grantee for at least six months prior to the date of such surrender; (iii) if so determined by the Committee as of the Grant Date and set forth in the applicable Award Agreement, authorization for the Company to withhold a number of shares otherwise payable pursuant to the exercise of an Option having a Fair market Value less than or equal to the aggregate exercise price; or (iv) by delivery of a properly executed exercise notice, together with irrevocable instructions: (1) to a brokerage firm designated by the Grantee and approved by the Company to deliver promptly to the Company the aggregate amount of sale or loan proceeds to pay the exercise price and any withholding tax obligations that may arise in connection with the exercise, and (2) to the Company to deliver the certificates for such purchased shares directly to such brokerage firm.

     (e)     Exercise of Options Following Termination of Employment or Service Relationship. Subject to Section 6(f) (with respect to Incentive Stock Options) and unless otherwise determined by the Committee in its discretion, Options shall be subject to the following conditions with respect to their post-termination exercisability.

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     (f)     Restrictions on Incentive Stock Options. Incentive Stock Options granted under the Plan shall comply in all respects with Section 422 of the Code and, as such, shall meet the following additional requirements:

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     (g)     Exercise Prior to Vesting. The Committee may in its sole discretion provide at the time of grant of any Option that the Grantee may elect at any time during both (1) the term of such Option and (2) the period during which such Grantee is employed by or providing services to the Company or any of its Affiliates, that the Grantee may exercise all or any portion of such Option, including the unvested portion of such Option; provided, however, that

     (i)     Restrictions on Transfer. The Committee may in its sole discretion provide at the time of grant of any Option that, upon its exercise, the shares of Common Stock to be issued to the Grantee shall be subject to such restrictions on transfer as the Committee may determine are advisable.

7.    Restricted Stock

     (a)     Issue Date and Vesting Date. At the time of the grant of an Award of Restricted Stock, the Committee shall establish an Issue Date or Issue Dates and a Vesting Date or Vesting Dates with respect to such shares. The Committee may divide such shares into classes and assign a different Issue Date and/or Vesting Date for each class. If the Grantee is employed by or providing services to the Company on an Issue Date (which may be the Grant Date), the specified number of shares of Restricted Stock shall be issued in accordance with the provisions of Section 7(e). Provided that all conditions to the vesting of a share of Restricted Stock imposed pursuant to Section 7(b) are satisfied, and except as provided in Section 7(g), upon the occurrence of the Vesting Date with respect to a share of Restricted Stock, such share shall vest and the restrictions of Section 7(c) shall lapse.

     (b)     Conditions to Vesting. At the time of the grant of shares of Restricted Stock, the Committee may impose such restrictions or conditions to the vesting of such shares as it, in its absolute discretion, deems appropriate.

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     (c)     Restrictions on Transfer Prior to Vesting. Prior to the vesting of a share of Restricted Stock, no transfer of a Grantee’s rights with respect to such share, whether voluntary or involuntary, by operation of law or otherwise, shall be permitted. Immediately upon any attempt to transfer such rights, such share, and all of the rights related thereto, shall be forfeited by the Grantee.

     (d)     Dividends on Restricted Stock. The Committee in its discretion may require that any dividends paid on shares of Restricted Stock be held in escrow until all restrictions on such shares have lapsed.

     (e)     Issuance of Certificates.

     (f)     Consequences of Vesting. Upon the vesting of a share of Restricted Stock pursuant to the terms hereof, the restrictions of Section 7(c) shall lapse with respect to such share. Reasonably promptly after a share of Restricted Stock vests, the Company shall cause to be delivered to the Grantee to whom such shares were granted, a certificate evidencing such share, free of the legend set forth in Section 7(e).

     (g)     Effect of Termination of Employment or Cessation of Services as an Outside Director. Subject to such other provision as the Committee may set forth in the applicable Agreement, and to the Committee’s amendment authority pursuant to Section 15, upon the termination of a Grantee’s employment for any reason or cessation of his or her membership on the Board as an Outside Director, any and all shares to which restrictions on transferability apply shall be immediately forfeited by the Grantee and transferred to, and reacquired by, the Company. In the event of a forfeiture of shares pursuant to this Section 7(g), the Company shall repay to the Grantee (or the Grantee’s estate) any amount paid by the Grantee for such shares. In the event that the Company requires a return of shares, it shall also have the right to require the return of all dividends paid on such shares, whether by termination of any escrow arrangement under which such dividends are held or otherwise.

     (h)     Special Provisions Regarding Restricted Stock. Notwithstanding anything to the contrary contained herein, Restricted Stock granted pursuant to this Section 7 may be based on the attainment of

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Performance Goals. Such shares of Restricted Stock shall be released from restrictions only after the attainment of such Performance Goals has been certified by the Committee.

8.    Phantom Stock

     (a)     Vesting Date. At the time of the grant of shares of Phantom Stock, the Committee shall establish a Vesting Date or Vesting Dates with respect to such shares. The Committee may divide such shares into classes and assign a different Vesting Date for each class. Provided that all conditions to the vesting of a share of Phantom Stock imposed pursuant to Section 8(c) are satisfied, and except as provided in Section 8(d), upon the occurrence of the Vesting Date with respect to a share of Phantom Stock, such share shall vest.

     (b)     Benefit Upon Vesting. Upon the vesting of a share of Phantom Stock, the Grantee shall be entitled to receive, within 30 days of the date on which such share vests, an amount, in cash and/or shares of Common Stock, as determined by the Committee, equal to the sum of (i) the Fair Market Value of a share of Common Stock on the date on which such share of Phantom Stock vests and (ii) the aggregate amount of cash dividends paid with respect to a share of Common Stock during the period commencing on the date on which the share of Phantom Stock was granted and terminating on the date on which such share vests.

     (c)     Conditions to Vesting. At the time of the grant of shares of Phantom Stock, the Committee may impose such restrictions or conditions to the vesting of such shares as it, in its absolute discretion, deems appropriate.

     (d)     Effect of Termination of Employment. Subject to such other provision as the Committee may set forth in the applicable Agreement, and to the Committee’s amendment authority pursuant to Section 15, shares of Phantom Stock that have not vested, together with any dividends credited on such shares, shall be forfeited upon the Grantee’s termination of employment for any reason.

     (e)     Special Provisions Regarding Awards. Notwithstanding anything to the contrary contained herein, the vesting of Phantom Stock granted pursuant to this Section 8 may be based on the attainment by the Company of one or more Performance Goals. No payment in respect of any such Phantom Stock award will be paid until the attainment of the respective Performance Goals have been certified by the Committee.

9.    Stock Bonuses

     In the event that the Committee grants a Stock Bonus, a certificate for the shares of Common Stock comprising such Stock Bonus shall be issued in the name of the Grantee to whom such Award was granted and delivered to such Grantee as soon as practicable after the date on which such Stock Bonus is payable.

10.    Other Stock-Based Awards

     Other forms of Awards (“Other Stock-Based Awards”) valued in whole or in part by reference to, or otherwise based on, Common Stock may be granted either alone or in addition to other Awards under the Plan. Subject to the provisions of the Plan, the Committee shall have sole and complete authority to determine the persons to whom and the time or times at which such Other Stock-Based Awards shall be granted, the number of shares of Common Stock to be granted pursuant to such Other Stock-Based Awards and all other conditions of such Other Stock-Based Awards.

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11.    Outside Director Awards

     Outside Directors shall be entitled to receive Awards under the terms and conditions set forth in this Section 11 and otherwise in accordance with the terms and conditions of the Plan, including Section 7 regarding Restricted Stock and Section 6 regarding Options.

     (a)     Restricted Stock Grant Upon Election or Appointment. As of the date of the initial election or appointment to the Board of an Outside Director who is a beneficial owner or represents an organization that is a beneficial owner (as such term is defined in Rule 13d-3 promulgated under the Exchange Act) of less than five percent (5%) of the combined voting power of the Company (such date, the “Initial Grant Date”), such Director shall be granted, without further action on the part of the Board or the Committee, shares of Restricted Stock. The number of shares of Restricted Stock granted to the Outside Director shall be determined by dividing $60,000 by the Grant Value of the Common Stock, calculated as of the Initial Grant Date and rounded to the nearest whole share. The Award Agreement evidencing such grant of Restricted Stock shall provide that the restrictions (as determined in accordance with Section 7) applicable to the Award shall cumulatively lapse with respect to one-third of the shares covered thereby on the first, second and third anniversaries of the Initial Grant Date, which shall be Vesting Dates for purposes of Section 7. The Initial Grant Date shall be the Issue Date for the Restricted Stock for purposes of Section 7.

     (b)     Annual Option Grants. Immediately following each annual meeting of the Company’s stockholders (the “Annual Grant Date”), each Outside Director then serving shall be granted an Option with a fair value of $25,000, calculated as of the Annual Grant Date. The Option’s fair value shall be determined by the Board or the Committee in good faith using an option-pricing model that the Board or the Committee deems appropriate, and by applying that option-pricing model as of the Annual Grant Date. Each Option granted under this Section 11(b) shall be designated a Non-Qualified Stock Option in the Award Agreement evidencing such Option, and shall become vested and exercisable with respect to one-hundred percent (100%) of the shares covered thereby on the first anniversary of the Annual Grant Date if the Outside Director has continuously been a member of the Board to that date. Notwithstanding the forgoing, each Outside Director shall, prior to the Annual Grant Date, be given the opportunity to make the election provided for in Section 11(f) below.

     (c)     Meeting Fee Deferral Election. Each Outside Director may elect in advance to have zero percent (0%), fifty percent (50%) or one-hundred percent (100%) of the meeting fees that the Outside Director is entitled to receive during a calendar year (the “Meeting Fees”) paid in the form of shares of Restricted Stock instead of in cash. A deferral election shall be irrevocable for the calendar year to which it relates. If an Outside Director makes such an election, the Meeting Fees that would otherwise have been paid to the Outside Director in cash shall instead be credited by the Company to a book account (the “Deferred Fees Account”). On the last business day of each calendar quarter (the “Quarterly Award Date”), the total amount of Meeting Fees credited to the Outside Directors’ Deferred Fees Account shall be withdrawn from the account, converted to shares of Restricted Stock and such shares shall be awarded to the Outside Director as soon as practicable thereafter. The number of shares of Restricted Stock awarded to an Outside Director following each Quarterly Award Date shall be determined by multiplying (i) the total amount credited to the Outside Director’s Deferred Meeting Fees Account as of the Quarterly Award Date by 1.176, and then (ii) dividing that amount by the Grant Value of the Common Stock on that date. The Award Agreement evidencing such grant of Restricted Stock shall provide that the restrictions (as determined in accordance with Section 7) applicable to the Award shall lapse with respect to one-hundred percent (100%) of the shares covered thereby on the first anniversary of the Quarterly Award Date, and the Quarterly Award Date shall be the Issue Date for purposes of Section 7.

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     (d)     For purposes of this Section 11, “Grant Value” means (i) if the Common Stock is then traded on any national securities exchange or any automated quotation system, the average closing price rounded to three (3) decimal places of the Common Stock for the five (5) trading days immediately preceding the Initial Grant Date, the Annual Grant Date and/or the Quarterly Award Date, as applicable, or (ii) if the Common Stock is not then traded on any national securities exchange or any automated quotation system, the per share Fair Market Value of the Common Stock.

     (e)     Term and Exercise of Options. Each Option granted under this Section 11 shall have a term of ten years, may be exercised, in whole or in part, with respect to whole shares of Common Stock, to the extent then exercisable, and shall be exercised by delivering notice to the Company’s principal office, to the attention of its Secretary. Such notice shall be accompanied by the applicable Award Agreement, shall specify the number of whole shares of Common Stock with respect to which the Option is being exercised and the effective date of the proposed exercise and shall be signed by the Grantee or other person then having the right to exercise the Option. The methods of payment with respect to the exercise price of Options granted under this Section 11 shall be consistent with Section 6(d).

     (f)     Annual Grant Election. Prior to the Annual Grant Date, each Outside Director may elect to receive as of the Annual Grant Date a grant of shares of Restricted Stock in lieu of the Option that he would otherwise be entitled to receive pursuant to Section 11(b) above. The number of shares of Restricted Stock awarded to an Outside Director who makes this election shall be one-third of the number of shares that would have been subject to the Option described in Section 11(b) (rounded to the nearest whole share). The Award Agreement evidencing such grant of Restricted Stock shall provide that the restrictions applicable to such Award (as determined in accordance with Section 7) shall lapse with respect to one hundred percent (100%) of the shares covered thereby on the first anniversary of the Annual Grant Date.

     (g)     Effective Dates. Sections 11(a) and 11(b) above shall be effective as of the first annual shareholder meeting in 2003, and for all annual shareholder meetings thereafter. Notwithstanding any provision of this Plan to the contrary, the Annual Grant Date for 2003 shall be the day immediately following the annual shareholder meeting. Meeting Fee deferral elections pursuant to Section 11(c) may first be made by Outside Directors for Meeting Fees to be earned on or after July 1, 2003, and for each calendar year commencing thereafter.

12.    Withholding of Taxes

     The Company may require, as a condition to the exercise of any Option under the Plan or the delivery of certificates for shares issued or payments of cash to a Grantee pursuant to the Plan or an Award Agreement (hereinafter collectively referred to as a “taxable event”), that the Grantee pay to the Company in cash any federal, state or local taxes of any kind required by law to be withheld with respect to any taxable event under the Plan. The Company, to the extent permitted or required by law, shall have the right to deduct from any payment of any kind (including salary or bonus) otherwise due to a Grantee any federal, state or local taxes of any kind required by law to be withheld with respect to any taxable event under the Plan, or to retain or sell without notice a sufficient number of the shares to be issued to such Grantee to cover any such taxes. If shares of Common Stock are to be withheld by the Company from shares of Common Stock otherwise to be issued upon the exercise of an Option or in satisfaction or settlement of any Award, for purposes of satisfying withholding tax obligations, the number of shares to be so withheld shall be calculated using the minimum statutory withholding rates for federal and state tax purposes, including payroll taxes, that are applicable to the taxable event then applicable to such Award.

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13.    Transferability

     Except as otherwise determined by the Committee, and in any event in the case of an Incentive Stock Option, no Award granted under the Plan shall be transferable by a Grantee otherwise than by will or the laws of descent and distribution. Unless otherwise determined by the Committee in accord with the provisions of the immediately preceding sentence, an Option may be exercised during the lifetime of the Grantee, only by the Grantee or, during the period the Grantee is under a legal disability, by the Grantee’s guardian or legal representative.

14.    Change in Control

     In the event of a Change in Control, 50% of the time-vesting portion of any outstanding Award (i.e., that portion of an Award that vests or becomes exercisable only through the passage of time and is not subject to any Performance Goal) that is not then vested and/or exercisable shall become immediately vested and/or exercisable. In addition to the acceleration provided for in the immediately preceding sentence, the Committee may, in its sole discretion, provide that all or any part of the remaining portion of an outstanding Award that is not then vested and/or exercisable shall become immediately vested and/or exercisable.

15.    Termination and Modification of the Plan

     The Board, without further approval of the stockholders, may modify or terminate the Plan or any portion thereof at any time, except that no modification shall become effective without prior approval of the stockholders of the Company if stockholder approval is necessary to comply with any tax or regulatory requirement or rule of any exchange or listing or quotation system established by the National Association of Securities Dealers, Inc. (“NASDAQ System”) upon which the Common Stock is listed or quoted; including for this purpose stockholder approval that is required to enable the Committee to grant Incentive Stock Options pursuant to the Plan or to qualify compensation paid under the plan as “performance based compensation” within the meaning of Section 162(m) of the Code.

     The Committee shall be authorized to make minor or administrative modifications to the Plan as well as modifications to the Plan that may be dictated by requirements of federal or state laws applicable to the Company or that may be authorized or made desirable by such laws. The Committee may amend or modify any outstanding Award in any manner to the extent that the Committee would have had the authority to make such Award as so modified or amended.

16.   Non-Guarantee of Employment or Service

     Nothing in the Plan or in any Award Agreement there under shall confer any right on an employee, director, or consultant to continue in the employ or service of the Company or shall interfere in any way with the right of the Company to terminate an employee or sever any service relationship of an individual at any time.

17.   Termination of Employment

     For purposes of maintaining a Grantee’s continuous status as an employee and accrual of rights under any Award granted pursuant to the Plan, transfer of an employee among the Company and the Company’s affiliates shall not be considered a termination of employment with the employer.

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18.    Written Agreement

     Each Award Agreement entered into between the Company and a Grantee with respect to an Award granted under the Plan shall incorporate the terms of this Plan and shall contain such provisions, consistent with the provisions of the Plan, as may be established by the Committee.

19.    Non-Uniform Determinations

     The Committee’s determinations under the Plan (including without limitation determinations of the persons to receive Awards, the form, amount and timing of such Awards, the terms and provisions of such Awards and the agreements evidencing same) need not be uniform and may be made by it selectively among persons who receive, or are eligible to receive, Awards under the Plan, whether or not such persons are similarly situated.

20.    Application of Funds

     The proceeds received by the Company from the sale of Common Stock pursuant to Awards granted under the Plan will be used for general corporate purposes.

21.    Listing and Registration

     If the Company determines that the listing, registration or qualification upon any securities exchange or upon any NASDAQ System or under any law, of shares subject to any Award is necessary or desirable as a condition of, or in connection with, the granting of same or the issue or purchase of shares there under, no such Award may be exercised in whole or in part, unless such listing, registration or qualification is effected free of any conditions not acceptable to the Company.

22.    Compliance with Securities Law

     Common Stock shall not be issued with respect to an Award granted under the Plan unless the issuance and delivery of share certificates for such Common Stock pursuant thereto shall comply with all relevant provisions of law, including, without limitation, the Securities Act of 1933, the Exchange Act, the rules and regulations promulgated there under, and the requirements of any national securities exchange or NASDAQ System upon which the Common Stock may then be listed or quoted, and shall be further subject to the approval of counsel for the Company with respect to such compliance to the extent such approval is sought by the Committee. All certificates for Common Stock delivered under the Plan pursuant to any Award or the exercise thereof shall be subject to such stop transfer orders and other restrictions as the Committee may deem advisable under the Plan or the rules, regulations, and other requirements of the Securities and Exchange Commission, any stock exchange or NASDAQ System upon which such securities are then listed or quoted, and any applicable Federal or state laws, and the Committee may cause a legend or legends to be put on any such certificates to make appropriate reference to such restrictions.

23.    No Limit on Other Compensation Arrangements

     Nothing contained in the Plan shall prevent the Company or its Parent or any of its Subsidiaries from adopting or continuing in effect other compensation arrangements (whether such arrangements be generally applicable or applicable only in specific cases) as the Committee in its discretion determines desirable, including without limitation the granting of stock-based incentive awards otherwise than under the Plan.

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24.    No Trust or Fund Created

     Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a Grantee or any other person. To the extent that any Grantee or other person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company.

25.    Governing Law

     The validity, construction and effect of the Plan, of Award Agreements entered into pursuant to the Plan, and of any rules, regulations, determinations or decisions made by the Board or Committee relating to the Plan or such Award Agreements, and the rights of any and all persons having or claiming to have any interest therein or there under, shall be determined exclusively in accordance with applicable federal laws and the laws of the State of North Carolina, without regard to its conflict of laws rules and principles.

26.    Plan Subject to Charter and By-Laws

     This Plan is subject to the Charter and By-Laws of the Company, as they may be amended from time to time.

27.   Effective Date; Termination Date

     The Plan became effective on October 25, 2000. No Award shall be granted under the Plan after the close of business on the day immediately preceding the tenth anniversary of the effective date of the Plan. Subject to other applicable provisions of the Plan, all Awards made under the Plan prior to such termination of the Plan shall remain in effect until such Awards have been satisfied or terminated in accordance with the Plan and the terms of such Awards.

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APPENDIX B

CHARTER OF THE AUDIT COMMITTEE OF THE
BOARD OF DIRECTORS OF LENDINGTREE, INC.
AS ADOPTED BY THE BOARD ON OCTOBER 25, 2000 (revised 9-2002)

I. AUTHORITY

     The Audit Committee (the “Committee”) of the Board of Directors (the “Board”) of LendingTree, Inc. (the “Corporation”) is established pursuant to Article III, Section 11 of the Corporation’s Amended and Restated Bylaws and Section 141(c) of the Delaware General Corporation Law. The Committee shall be comprised of three or more directors as determined from time to time by resolution of the Board. Consistent with the appointment of other Board committees, the members of the Committee shall be elected by the Board at the annual organizational meeting of the Board or at such other time as may be determined by the Board. The Chairman of the Committee shall be designated by the Board, provided that if the Board does not so designate a Chairman, the members of the Committee, by majority vote, may designate a Chairman. The presence in person or by telephone of a majority of the Committee’s members shall constitute a quorum for any meeting of the Committee. All actions of the Committee will require the vote of a majority of its members present at a meeting of the Committee at which a quorum is present.

II. PURPOSE OF THE COMMITTEE

     The Committee’s purpose is to provide assistance to the Board in fulfilling its legal and fiduciary obligations with respect to matters involving the accounting, auditing, financial reporting, internal control and legal compliance functions of the Corporation and its subsidiaries.

     The Committee shall directly oversee the audit efforts of the Corporation’s independent accountants and internal auditors and, in that regard, shall take such actions as it may deem necessary to satisfy itself that the Corporation’s auditors are independent of management. It is the objective of the Committee to maintain free and open means of communications among the Board, the independent accountants, the internal auditors and the financial and senior management of the Corporation.

III. COMPOSITION OF THE COMMITTEE

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IV. MEETINGS OF THE COMMITTEE

     The Committee shall meet with such frequency and at such intervals as it shall determine is necessary to carry out its duties and responsibilities. As part of its purpose to foster open communications, the Committee shall meet at least annually with management and the Corporation’s independent accountants in separate executive sessions to discuss any matters that the Committee or each of these groups or persons believe should be discussed privately. In addition, the Committee (or the Chairman) should meet or confer with the independent accountants and management quarterly to review the Corporation’s periodic financial statements prior to their filing with the Securities and Exchange Commission (“SEC”). The Chairman

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should work with the Chief Financial Officer and management to establish the agendas for Committee meetings. The Committee, in its discretion, may ask members of management or others to attend its meetings (or portions thereof) and to provide pertinent information as necessary. The Committee shall maintain minutes of its meetings and records relating to those meetings and the Committee’s activities and provide copies of such minutes to the Board.

V. DUTIES AND RESPONSIBILITIES OF THE COMMITTEE

     In carrying out its duties and responsibilities, the Committee’s policies and procedures should remain flexible, so that it may be in a position to best react or respond to changing circumstances or conditions. The Committee should review and reassess annually the adequacy of the Committee’s charter. The charter must specify: (1) the scope of the Committee’s responsibilities and how it carries out those responsibilities, (2) the ultimate accountability of the Corporation’s independent auditors to the Board and the Committee, (3) the responsibility of the Committee and the Board for the selection, evaluation, compensation and replacement of the Corporation’s independent auditors, and (4) that the Committee is responsible for ensuring that the Corporation’s independent auditors submit on a periodic basis to the Committee a formal written statement delineating all relationships between the independent auditors and the Corporation and that the Committee is responsible for actively engaging in a dialogue with the independent auditors with respect to any disclosed relationships or services that may impact the objectivity and independence of the independent auditors and for recommending that the Board take appropriate action to ensure the independence of the independent auditors.

     While there is no “blueprint” to be followed by the Committee in carrying out its duties and responsibilities, the following should be considered within the authority of the Committee:

Selection and Evaluation of Auditors

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Oversight of Annual Audit and Quarterly Reviews

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Oversight of Financial Reporting Process and Internal Controls

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Other Matters

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With respect to the duties and responsibilities listed above, the Committee should:

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     While the Committee has the duties and responsibilities set forth in this charter, the Committee is not responsible for planning or conducting the audit or for determining whether the Corporation’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. Similarly, it is not the responsibility of the Committee to resolve disagreements, if any, between management and the independent auditors or to ensure that the Corporation complies with all laws and regulations and its Code of Conduct.

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LENDINGTREE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE TO:

LENDINGTREE, INC.
C/O WACHOVIA BANK, N.A.
PROXY TABULATION
P.O. BOX 217950
CHARLOTTE, NC 28254-3555

FOLD AND DETACH HERE

LENDINGTREE, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD APRIL 23, 2003

     The undersigned hereby appoints DOUGLAS R. LEBDA and KEITH B. HALL, and each or either of them, proxies, with full power of substitution, with the powers the undersigned would possess if personally present, to vote, as designated below, all shares of the common stock and Series A Preferred Stock of the undersigned in LendingTree, Inc. at the Annual Meeting of Stockholders to be held April 23, 2003, and at any adjournment thereof.

     This proxy will be voted FOR the election of all nominees as directors, FOR Item 2 and FOR Item 3 unless otherwise specified. The Board of Directors recommends voting FOR each item.

(Continued and to be signed on the reverse)

LENDINGTREE, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD
PROMPTLY USING THE ENCLOSED ENVELOPE TO:

LENDINGTREE, INC.
C/O WACHOVIA BANK, N.A.
PROXY TABULATION
P.O. BOX 217950
CHARLOTTE, NC 28254-3555

FOLD AND DETACH HERE

     In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting.

     Receipt of the notice of annual meeting and accompanying proxy statement is hereby acknowledged. This proxy will be voted as specified herein, and, unless otherwise directed, will be voted FOR the election of both nominees, FOR Item 2 and FOR Item 3.

     Please date, sign exactly as printed below and return promptly in the enclosed postage-paid envelope.