QuickLinks -- Click here to rapidly navigate through this document

SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

SCHEDULE TO

Tender Offer Statement under Section 14(d)(1) or 13(e)(1) of the
Securities Exchange Act of 1934

Tree.com, Inc.
(Name of Subject Company (Issuer) and Name of Filing Person (Offeror))

---

Common Stock, par value $.01 per share
(Title of Class of Securities)

---

894675107
(CUSIP Number of Class of Securities)

Douglas R. Lebda
Tree.com, Inc.
Chief Executive Officer and President
11115 Rushmore Drive
Charlotte, NC 28277
Telephone: 704-541-5351
(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications on Behalf of the Filing Person(s) Filing Statement)

Copy to:
Richard W. Viola, Esq.
Elizabeth G. Wren, Esq.
McGuireWoods LLP
201 N. Tryon Street
Charlotte, NC 28202
(704) 343-2000

---

CALCULATION OF FILING FEE

o

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

o

Check the box if the filing relates solely to preliminary communications made before the commencement of a tender offer.

Check the appropriate boxes below to designate any transactions to which this statement relates:

Check the following box if the filing is a final amendment reporting the results of the tender offer:    o

If applicable, check the appropriate box(es) below to designate the appropriate rule provision(s) relied upon:

o

Rule 13e-4(i) (Cross-Border Issuer Tender Offer)

o

Rule 14d-I(d) (Cross-Border Third-Party Tender Offer)

---

INTRODUCTORY STATEMENT

        This Tender Offer Statement on Schedule TO ("Schedule TO") is being filed by Tree.com, Inc., a Delaware corporation (the "Company" or "Tree"), pursuant to Rule 13e-4 under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), in connection with the Company's offer to purchase for cash up to $15,000,000 in value of shares of its common stock, par value $.01 (the "Shares"), at a price per Share not greater than $7.75 nor less than $7.25 per Share, net to the seller in cash, without interest and less any applicable withholding taxes. The Company's offer is being made upon the terms and subject to the conditions set forth in the Offer to Purchase dated November 18, 2010 (the "Offer to Purchase") and in the related Letter of Transmittal ("Letter of Transmittal"), which, as amended or supplemented from time to time, together constitute the offer (the "Offer").

        This Schedule TO is intended to satisfy the disclosure requirements of Rule 13e-4(c)(2) of the Exchange Act. All information in the Offer to Purchase and the related Letter of Transmittal, copies of which are attached to this Schedule TO as Exhibits (a)(1)(A)(i) and (a)(1)(A)(ii), respectively, is hereby expressly incorporated by reference in response to all of the items in this Schedule TO, and as more particularly set forth below.

Item 1.    Summary Term Sheet.

        The information under the heading "Summary Term Sheet" in the Offer to Purchase is incorporated herein by reference.

Item 2.    Subject Company Information.

        (a)    Name and Address.    The name of the subject company and issuer is Tree.com, Inc., a company organized under the laws of the State of Delaware. The address of the Company's principal executive offices is 11115 Rushmore Drive, Charlotte, NC 28277. The Company's telephone number is (704) 541-5351.

        (b)    Securities.    The information set forth in the Offer to Purchase on the cover page thereof and under Section 7 ("Price Range of Shares; Dividends") is incorporated herein by reference.

        (c)    Trading Market and Price.    The information set forth in the Offer to Purchase under Section 7 ("Price Range of Shares; Dividends") is incorporated herein by reference.

Item 3.    Identity and Background of Filing Person.

        The filing person is the Company. The Company's business address and telephone number are set forth in Item 2 above. Pursuant to General Instruction C to Schedule TO, the information set forth on Annex B to the Offer to Purchase and in Section 10 ("Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Shares") of the Offer to Purchase is incorporated herein by reference.

Item 4.    Terms of the Transaction.

        (a)    Material Terms.    The following sections of the Offer to Purchase contain a description of the material terms of the transaction and are incorporated by reference:

•

"Summary Term Sheet";



•

Section 1 ("Number of Shares; Purchase Price; Proration");



•

Section 2 ("Purpose of the Offer; Certain Effects of the Offer");



•

Section 3 ("Procedures for Tendering Shares");

2

---

•

Section 4 ("Withdrawal Rights");



•

Section 5 ("Purchase of Shares and Payment of Purchase Price");



•

Section 6 ("Conditions of the Offer");



•

Section 8 ("Source and Amount of Funds");



•

Section 10 ("Interest of Directors and Executive Officers; Transactions and Arrangements Concerning Shares");



•

Section 11 ("Effects of the Offer on the Market for Shares; Registration under the Exchange Act");



•

Section 13 ("Material U.S. Federal Income Tax Consequences"); and



•

Section 14 ("Extension of the Offer; Termination; Amendment").

        (b)    Purchases of Securities.    The information set forth in Section 10 ("Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Shares") of the Offer to Purchase is incorporated herein by reference.

Item 5.    Past Contracts, Transactions, Negotiations and Arrangements.

        (e)    Agreements Involving the Subject Company's Securities.    The information set forth in Section 10 ("Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Shares") of the Offer to Purchase is incorporated herein by reference.

Item 6.    Purposes of the Transaction and Plans or Proposals.

        (a)    Purposes.    The information set forth in the section of the Offer to Purchase titled "Summary Term Sheet" and in Section 2 ("Purpose of the Offer; Certain Effects of the Offer") of the Offer to Purchase is incorporated herein by reference.

        (b)    Uses of Securities Acquired.    The information set forth in Section 2 ("Purpose of the Offer; Certain Effects of the Offer") of the Offer to Purchase is incorporated herein by reference.

        (c)    Plans.    The information set forth in Section 2 ("Purpose of the Offer; Certain Effects of the Offer"), Section 9 ("Certain Information Concerning Tree") and Section 10 ("Interest of Directors and Executive Officers; Transactions and Arrangements Concerning Shares") of the Offer to Purchase is incorporated herein by reference.

Item 7.    Source and Amount of Funds or Other Consideration.

        (a)    Sources of Funds.    The information set forth in the section of the Offer to Purchase titled "Summary Term Sheet," and in Section 8 ("Source and Amount of Funds") is incorporated herein by reference.

        (b)    Conditions.    Not applicable.

        (d)    Borrowed Funds.    Not applicable

Item 8.    Interest in Securities of the Subject Company.

        (a)    Securities Ownership.    The information set forth in Section 10 ("Interest of Directors and Executive Officers; Transactions and Arrangements Concerning Shares") of the Offer to Purchase is incorporated herein by reference.

3

---

        (b)    Securities Transaction.    The information set forth in Section 10 ("Interest of Directors and Executive Officers; Transactions and Arrangements Concerning Shares") of the Offer to Purchase is incorporated herein by reference.

Item 9.    Person/Assets, Retained, Employed, Compensated or Used.

        (a)    Solicitations or Recommendations.    The information set forth in Section 15 ("Fees and Expenses") of the Offer to Purchase is incorporated herein by reference.

Item 10.    Financial Statements.

        (a)    Financial Information.    Not applicable.

        (b)    Pro Forma Information.    Not applicable.

Item 11.    Additional Information.

        (a)    Agreements, Regulatory Requirements and Legal Proceedings.    The information set forth in Section 9 of the Offer to Purchase ("Certain Information Concerning Tree"), Section 10 of the Offer to Purchase ("Interests of Directors and Executive Officers; Transactions and Arrangements Concerning Shares") and Section 12 of the Offer to Purchase ("Legal Matters; Regulatory Approvals") is incorporated herein by reference.

        (b)    Other Material Information.    The information set forth in the Offer to Purchase and the Letter of Transmittal, copies of which are filed herewith as Exhibits (a)(1)(A)(i) and (a)(1)(A)(ii), respectively, as each may be amended or supplemented from time to time, is incorporated herein by reference.

Item 12.    Exhibits.

4

---

5

---

Item 13.    Information Required by Schedule 13E-3.

        Not applicable.

6

---

SIGNATURE

        Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Date: November 18, 2010

7

---

EXHIBIT INDEX

8

---

9

---

QuickLinks

CALCULATION OF FILING FEE
INTRODUCTORY STATEMENT

Item 1. Summary Term Sheet.
Item 2. Subject Company Information.
Item 3. Identity and Background of Filing Person.
Item 4. Terms of the Transaction.
Item 5. Past Contracts, Transactions, Negotiations and Arrangements.
Item 6. Purposes of the Transaction and Plans or Proposals.
Item 7. Source and Amount of Funds or Other Consideration.
Item 8. Interest in Securities of the Subject Company.
Item 9. Person/Assets, Retained, Employed, Compensated or Used.
Item 10. Financial Statements.
Item 11. Additional Information.
Item 12. Exhibits.
Item 13. Information Required by Schedule 13E-3.

SIGNATURE
EXHIBIT INDEX

QuickLinks -- Click here to rapidly navigate through this document

Exhibit (a)(1)(A)(i)

Offer to Purchase for Cash
Up to $15,000,000 in Value of Shares of its Common Stock
at a Purchase Price Not Greater Than $7.75 Nor Less Than $7.25 Per Share

         Tree.com, Inc. ("Tree," "we" or "us") hereby offers to purchase for cash up to $15,000,000 in value of shares of our common stock, par value $.01 per share (the "Shares"), at a price per Share not greater than $7.75 nor less than $7.25, net to the seller in cash, without interest and subject to applicable withholding taxes, for Shares properly tendered in the Offer and not properly withdrawn, upon the terms and subject to the conditions set forth in this offer to purchase ("Offer to Purchase") and the related letter of transmittal ("Letter of Transmittal," which, together with the Offer to Purchase, as they may be amended and supplemented from time to time, constitute the "Offer").

         Promptly after the Expiration Date, and on the terms and subject to the conditions of the Offer, we will determine a single price per Share, taking into account the total number of Shares properly tendered and not properly withdrawn and the prices specified by the tendering shareholders, of not greater than $7.75 nor less than $7.25 (such price per Share, the "Purchase Price"), that we will pay for Shares purchased in the Offer. The Purchase Price will be the lowest price within such range (in increments of $.10) that will allow us to purchase $15,000,000 in value of Shares, or a lower amount depending on the number of Shares properly tendered and not properly withdrawn. If, based on the Purchase Price we determine, Shares having an aggregate value of less than $15,000,000 are properly tendered, we will buy all the Shares that are properly tendered at or below such Purchase Price and not properly withdrawn. All Shares we purchase in the Offer will be purchased at the same Purchase Price regardless of whether the shareholder tendered at a lower price. We will purchase only Shares properly tendered at prices at or below the Purchase Price we determine and not properly withdrawn prior to the Expiration Date. However, because of the "odd lot" priority and proration provisions described in this Offer to Purchase, we may not purchase all of the Shares tendered at or below the Purchase Price if, based on the Purchase Price we determine, more than $15,000,000 in value of Shares are properly tendered and not properly withdrawn. In accordance with the rules of the Securities and Exchange Commission (the "SEC") under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), we reserve the right to purchase pursuant to the Offer an additional amount of Shares not to exceed 2% of the outstanding Shares, without amending or extending the Offer. Shares tendered but not purchased in the Offer will be returned to the tendering shareholders at our expense promptly after the Expiration Date. See Sections 1, 3, 4 and 5.

         If $15,000,000 in value of Shares is purchased in the Offer, at the maximum Purchase Price of $7.75 per Share, we would purchase 1,935,484 Shares, which would represent approximately 17.5% of our issued and outstanding Shares as of November 9, 2010. If $15,000,000 in value of Shares is purchased in the Offer, at the minimum Purchase Price of $7.25 per Share, we would purchase 2,068,966 Shares, which would represent approximately 18.7% of our issued and outstanding Shares as of November 9, 2010.

         The Offer is not conditioned on any minimum number of Shares being tendered. The Offer is, however, subject to other conditions. See Section 6.

         The Shares are listed and traded on the NASDAQ Global Market ("NASDAQ") under the symbol "TREE." On November 17, 2010, the last full trading day before the announcement of the Offer, the last reported sale price of our common stock on NASDAQ was $6.86 per Share. Shareholders are urged to obtain current market quotations for the Shares. See Section 7.

         Our Board of Directors has approved our making the Offer. However, none of us, our Board of Directors, the Depositary or the Information Agent makes any recommendation as to whether you should tender or refrain from tendering your Shares or as to the price or prices at which you may choose to tender your Shares. You must make your own decision as to whether to tender your Shares and, if so, how many Shares to tender and the price or prices at which you may choose to tender your Shares. In doing so, you should read carefully the information set forth or incorporated by reference in this Offer to Purchase and in the related Letter of Transmittal, including the purpose of the Offer. See Section 2.

         Neither the SEC nor any state securities commission has approved or disapproved of this transaction or passed upon the merits or fairness of such transaction or passed upon the adequacy or accuracy of the information contained in this document. Any representation to the contrary is a criminal offense.

         You may direct questions and requests for assistance or additional copies of this Offer to Purchase, the Letter of Transmittal or the notice of guaranteed delivery ("Notice of Guaranteed Delivery") to D.F. King & Co., Inc. which is acting as the Information Agent for the Offer, at the telephone numbers and address set forth on the back cover of this Offer to Purchase. Shareholders may also contact their broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer.

November 18, 2010

---

IMPORTANT

        If you want to tender all or any portion of your Shares, you must do one of the following before the Expiration Date: (1) if you hold certificates in your own name, complete and sign a Letter of Transmittal according to its instructions and mail or deliver it, together with any required signature guarantees and any other required documents, including the Share certificates, to BNY Mellon Shareowner Services, the depositary (the "Depositary") for the Offer, at one of the addresses shown on the Letter of Transmittal; (2) if your Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, contact the nominee and request the nominee to tender your Shares for you; or (3) tender the Shares according to the procedure for book-entry transfer described in Section 3.

        If you want to tender your Shares but your Share certificates are not immediately available or cannot be delivered to the Depositary by the Expiration Date, you cannot comply with the procedure for book-entry transfer by the Expiration Date or you cannot deliver the other required documents to the Depositary by the Expiration Date, you can still tender your Shares if you comply with the guaranteed delivery procedure described in Section 3.

        If you hold vested but unexercised options, you may exercise your vested options in accordance with their terms, and tender any of the Shares issued upon exercise in accordance with the Offer. However, you should exercise your vested options at least four business days prior to the Expiration Date in order to provide you with sufficient time to properly tender the Shares in the Offer. Holders of vested options who exercise and tender the Shares underlying such options will have their Shares purchased on the same basis as other holders of Shares, and will be subject to the same conditions and potential proration. Accordingly, some or all of the Shares issued on exercise, and tendered, may not be purchased. No exercise of vested options may be revoked even if some or all of the Shares that are issued on exercise of the options are not purchased in the Offer. Holders of unvested stock awards or other restricted equity interests may not tender Shares or Shares represented by such interests until they are fully vested.

        If you wish to maximize the chance that your Shares will be purchased in the Offer, you should check the box in the section of the Letter of Transmittal captioned "Shares Tendered at Price Determined Pursuant to the Offer." If you agree to accept the Purchase Price (as defined in this Offer to Purchase) determined pursuant to the Offer, your Shares will be deemed to be tendered at the minimum price of $7.25 per Share. You should understand that this election may lower the Purchase Price and could result in your Shares being purchased at the minimum price of $7.25 per Share. However, all Shares we purchase pursuant to the Offer will be purchased at the same Purchase Price, even if you have selected a lower price, but we will not purchase any Shares above the Purchase Price we determine.

        None of us, our Board of Directors, the Information Agent or the Depositary has authorized any person to make any recommendation on our behalf as to whether you should tender or refrain from tendering your Shares in the Offer or the price or prices at which you may choose to tender your Shares, and such parties have not authorized any person to give any information or to make any representation in connection with the Offer other than those contained in this Offer to Purchase and the related Letter of Transmittal.

        We are not making the Offer to, and we will not accept any tender of Shares from or on behalf of, holders in any jurisdiction in which the making of the Offer or the acceptance of any tender of Shares would not be in compliance with the laws of such jurisdiction, provided that we will comply with the requirements of Rule 13e-4(f)(8) under the Exchange Act. In any jurisdiction where the securities, blue sky or other laws require the Offer to be made by a licensed broker or dealer, the Offer shall be deemed to be made on our behalf by one or more registered brokers or dealers licensed under the laws of that jurisdiction.

ii

---

TABLE OF CONTENTS

iii

---

SUMMARY TERM SHEET

        We are providing this summary term sheet for your convenience. This summary term sheet highlights certain material information in this Offer to Purchase, but you should realize that it does not describe all of the details of the Offer to the same extent described elsewhere in this Offer to Purchase. We urge you to read the entire Offer to Purchase and the Letter of Transmittal and other related materials because they contain the full details of the Offer. We have included references to the sections of this Offer to Purchase where you will find a more complete discussion of the topics in this summary. Unless otherwise indicated, references to "Shares" are to Shares of our common stock, and not to shares of any other securities.

Who is offering to purchase my Shares?

        Tree.com, Inc.

What is the Company offering to purchase?

        We are offering to purchase up to $15,000,000 in value of Shares, based on the Purchase Price we determine as provided herein. See Section 1.

What will the Purchase Price for the Shares be and what will be the form of payment?

        We are conducting the Offer by means of a modified "Dutch auction." This procedure allows you to select the price or prices (in increments of $.10) within a price range specified by us at which you are willing to sell your Shares. The price range for the Offer is $7.25 to $7.75 per Share. The Purchase Price will be the lowest price per Share within such range at which, based on the number of Shares tendered and the prices specified by the tendering shareholders, we can purchase up to $15,000,000 in value of Shares, or a lower amount depending on the number of Shares properly tendered and not properly withdrawn. All Shares we purchase in the Offer will be purchased at the same Purchase Price, even if you have selected a lower price, but we will not purchase any Shares above the Purchase Price we determine.

        We will determine the Purchase Price promptly after the Expiration Date. We will publicly announce the Purchase Price promptly after we have determined it and, upon the terms and subject to the conditions of the Offer (including the "odd lot" priority and proration provisions), we will pay the Purchase Price in cash, without interest and subject to applicable withholding taxes, for all the Shares accepted for payment by us pursuant to the Offer.

How many Shares will we purchase?

        Subject to the terms and conditions of the Offer, we are offering to purchase up to $15,000,000 in value of Shares properly tendered pursuant to the Offer and not properly withdrawn, based on the Purchase Price. Since the Purchase Price will only be determined after the Expiration Date, the number of Shares that will be purchased will not be known until after that time. If $15,000,000 in value of Shares are purchased in the Offer, at the maximum Purchase Price of $7.75 per Share, we would purchase 1,935,484 Shares, which would represent approximately 17.5% of our issued and outstanding Shares as of November 9, 2010 (and approximately 17.0% of issued and outstanding Shares as of such date assuming exercise of all vested but unexercised options). If $15,000,000 in value of Shares are purchased in the Offer, at the minimum Purchase Price of $7.25 per Share, we would purchase 2,068,966 Shares, which would represent approximately 18.7% of our issued and outstanding Shares as of November 9, 2010 (and approximately 18.2% of issued and outstanding Shares as of such date assuming exercise of all vested but unexercised options). See Section 1.

        In accordance with the rules of the SEC, we may purchase an additional amount of Shares not to exceed 2% of our outstanding Shares (approximately 221,619 Shares as of November 9, 2010) without

1

---

amending or extending the Offer. If we increase the amount of Shares being sought in the Offer by more than 2% of the outstanding Shares, we must amend the Offer and notify you of our plans to purchase the additional Shares and extend the Offer so that at least ten business days remain in the Offer following such notification.

        The Offer is not conditioned on any minimum number of Shares being tendered. See Section 6 for information regarding the conditions of the Offer.

What will happen if the number of Shares tendered in the Offer is more than $15,000,000 in value?

        We are offering to purchase up to $15,000,000 in value of Shares based on the Purchase Price we determine as provided herein. If, based on the Purchase Price we determine, more than $15,000,000 in value of Shares are properly tendered and not properly withdrawn, we will purchase all Shares tendered at or below the Purchase Price on a pro rata basis, except for "odd lots" of less than 100 Shares, which we will purchase on a priority basis (though tenders of less than all of the Shares owned by an "odd lot holder" will not qualify for this priority).

        Because of the "odd lot" priority and proration of the tender provisions described herein, we may not purchase all of the Shares that you tender even if you tender them at or below the Purchase Price if, based on the Purchase Price we determine, more than $15,000,000 in value of shares are properly tendered and not properly withdrawn. See Section 1.

If I own fewer than 100 Shares and I tender all of my Shares, will I be subject to proration?

        If you own, beneficially or of record, fewer than 100 Shares in the aggregate, you properly tender all of these Shares at or below the Purchase Price before the Expiration Date and do not properly withdraw these Shares, all of the conditions to the Offer are satisfied or waived and you complete the section entitled "Odd Lots" in the Letter of Transmittal (and, if applicable, in the Notice of Guaranteed Delivery), we will purchase all of your Shares without subjecting them to proration. See Section 1.

How will Tree pay for the Shares?

        We will fund the purchase of Shares properly tendered in the Offer and accepted for purchase and pay related fees and expenses from our available cash on hand. See Section 5 and Section 8.

How long do I have to tender my Shares?

        You may tender your Shares until the Expiration Date. The Offer will expire on December 17, 2010, at 5:00 p.m., New York City time, unless we extend or terminate the Offer. See Section 1. We may choose to extend the Offer for any reason, subject to applicable laws. We cannot assure you that we will extend the Offer or, at this time, indicate the length of any extension that we may provide. See Section 14.

        If a broker, dealer, commercial bank, trust company or other nominee holds your Shares, it is likely that they have an earlier deadline, for administrative reasons, for you to act to instruct them to accept the Offer on your behalf. We urge you to immediately contact your broker, dealer, commercial bank, trust company or other nominee to find out their deadline. See Section 3.

        If you hold vested but unexercised options and wish to exercise those options in advance of the Offer in accordance with the terms of the options and the Stock Plan (as defined below) and tender the Shares received upon exercise into the Offer, you should exercise your unexercised options at least four business days prior to the Expiration Date in order to have sufficient time for the exercise to settle and for you to tender the Shares received upon exercise in the Offer. See Section 3.

2

---

Can the Offer be extended, amended or terminated, and under what circumstances?

        We can extend, amend or terminate the Offer in our sole discretion, subject to applicable laws. If we extend the Offer, we will delay the acceptance of any Shares that have been tendered. See Section 14.

How will I be notified if Tree extends the Offer or amends the terms of the Offer?

        If the Offer is extended, we will issue a press release no later than 9:00 a.m., New York City time, on the business day after the previously scheduled Expiration Date. We will promptly announce any amendment to the Offer by issuing a press release announcing the amendment. See Section 14.

What is the purpose of the Offer?

        The Offer provides shareholders with an opportunity to obtain liquidity with respect to all or a portion of their Shares, without potential disruption to the Share price and the usual transaction costs associated with market sales. Furthermore, "odd lot holders" who hold Shares registered in their names and tender their Shares directly to the Depositary and whose Shares are purchased pursuant to the Offer will avoid not only the payment of brokerage commissions but also any applicable "odd lot" discounts that might be payable on sales of their Shares. In addition, shareholders who wish to achieve a greater percentage of equity ownership will be able to do so by not tendering their Shares in the Offer, and if we complete the Offer, will have a greater percentage ownership in us and our future earnings and assets, while also bearing the attendant risks associated with owning Shares. See Section 2 and Section 11.

Are there any conditions to the Offer?

        Yes. Our obligation to accept and pay for your tendered Shares is subject to a number of conditions that must be satisfied or waived by us on or prior to the Expiration Date. The conditions to which the Offer is subject are described in greater detail in Section 6.

Following the Offer, will Tree continue as a public company?

        Yes. The completion of the Offer in accordance with its terms and conditions will not cause the Company to be delisted from NASDAQ or to stop being subject to the periodic reporting requirements of the Exchange Act.

How do I tender my Shares?

        If you want to tender all or part of your Shares, you must do one of the following before the Expiration Date, or earlier, as described below as required for option holders, or as your broker, dealer, commercial bank, trust company or other nominee may require:

•

if you hold certificates in your own name, complete and sign a Letter of Transmittal according to its instructions and deliver it, together with any required signature guarantees, the certificates for your Shares and any other documents required by the Letter of Transmittal, to the Depositary at its address shown on the Letter of Transmittal;



•

if your Shares are registered in the name of a broker, dealer, commercial bank, trust company or other nominee, contact the nominee and have the nominee tender your Shares for you; or



•

tender your Shares according to the procedure for book-entry transfer described in Section 3.

3

---

        If you want to tender your Shares, but:

•

the certificates for your Shares are not immediately available or cannot be delivered to the Depositary by the required time;



•

you cannot comply with the procedure for book-entry transfer by the required time; or



•

your other required documents cannot be delivered to the Depositary by the required time,

you can still tender your Shares if you comply with the guaranteed delivery procedure described in Section 3.

        You should contact the Information Agent or your broker or other nominee if you need assistance. The contact information for the Information Agent is on the back cover of this Offer to Purchase. See Section 3 and the instructions to the Letter of Transmittal. See below for details if you hold options to acquire the Shares.

        Please note that we will not purchase your Shares in the Offer unless the Depositary receives the required documents prior to the Expiration Date. If a broker, dealer, commercial bank, trust company or other nominee holds your Shares, it is likely that, for administrative reasons, they have an earlier deadline for you to act to instruct them to accept the Offer on your behalf. We urge you to immediately contact your broker, dealer, commercial bank, trust company or other nominee to find out their applicable deadline.

How do holders of currently exercisable stock options or vested stock awards participate in the Offer?

        Options to purchase Shares cannot be tendered in the Offer. If you hold vested but unexercised options to purchase Shares, you may exercise such options in accordance with the terms of such options and the Stock Plan and tender the Shares received upon such exercise in accordance with the Offer. An exercise of an option cannot be revoked for any reason even if Shares received upon the exercise thereof and tendered in the Offer are not purchased in the Offer. See Section 3. If you hold Shares received pursuant to stock awards and these Shares have vested, you should follow the instructions applicable to Shares held by a broker, dealer, commercial bank, trust company or other nominee or Shares held in your own name, as applicable to you. Holders of unvested stock awards may not tender Shares represented by such awards unless they are fully vested.

        You should evaluate this Offer to Purchase carefully to determine if participation would be advantageous to you, based on your option exercise prices, the date of your option grants, the remaining time during which you can exercise your options, the range of tender prices and the provisions for prorated purchases by us described in Section 1. We strongly encourage you to discuss the Offer with your tax advisor, financial advisor and/or broker. See Section 3.

        Please be advised that if you want to exercise your vested options in order to tender Shares in the Offer, it is your responsibility to exercise and secure delivery of the Shares issued pursuant to your vested option in a time period sufficient to allow tender of those Shares prior to the Expiration Date. Accordingly, we suggest that you exercise your vested options and satisfy the exercise price for such Shares in accordance with the terms of the related option agreement and the Stock Plan at least four business days prior to the Expiration Date. See Section 3.

Once I have tendered Shares in the Offer, can I withdraw my tender?

        Yes. You may withdraw any Shares you have tendered at any time before the Expiration Date. In addition, if not previously returned, you may withdraw any Shares you have tendered to us that are not accepted for purchase after 12:00 midnight, New York City time, on January 18, 2011, the fortieth business day following November 18, 2010, which is the date of commencement of the Offer. See Section 4.

4

---

How do I withdraw Shares I previously tendered?

        To properly withdraw tendered Shares, you must deliver, on a timely basis, a written or facsimile notice of your withdrawal to the Depositary at the address appearing on the back cover page of this Offer to Purchase, while you still have the right to withdraw such Shares. Your notice of withdrawal must specify your name, the number of Shares to be withdrawn and the name of the registered holder of these Shares. Some additional requirements apply if the Share certificates to be withdrawn have been delivered to the Depositary, if you have tendered Shares at more than one price or if your Shares have been tendered under the procedure for book-entry transfer set forth in Section 3. If you have tendered your Shares by giving instructions to a broker, dealer, commercial bank, trust company or other nominee, you must instruct that person to arrange for withdrawal of your Shares. See Section 4.

Has Tree or the Board of Directors adopted a position on the Offer?

        No. Our Board of Directors has approved the Offer. However, none of us, our Board of Directors, the Information Agent or the Depositary has made or is making any recommendation to you as to whether you should tender or refrain from tendering your Shares or as to the price or prices at which you may choose to tender your Shares. You must make your own decisions as to whether to tender your Shares and, if so, how many Shares to tender and the price or prices at which you may choose to tender your Shares. In doing so, you should read carefully the information included in, or incorporated by reference in, this Offer to Purchase and in the Letter of Transmittal, including the purposes and effects of the Offer. See Section 2 and Section 11. You should consult your own financial, legal, tax and other advisors.

Do the directors or executive officers of the Company intend to tender their Shares in the Offer?

        Our directors and executive officers are entitled to participate in the Offer on the same basis as all other shareholders. However, our directors and executive officers have informed us that they do not intend to tender Shares in the Offer. We do not presently know the intentions of any affiliate that is not a director or executive officer. See Section 10 for a more detailed discussion of the interests of insiders in the Offer. The percentage of Shares owned by our executive officers and directors and, if they do not participate in the Offer, any affiliate that is not our director or executive officer will increase after the Offer has been completed. See Section 2 for a more detailed discussion of the effects of the Offer and Section 10 for the current beneficial ownership of our directors and executive officers.

If I decide not to tender, how will the Offer affect my Shares?

        If the Offer is completed, to the extent shareholders choose not to tender their Shares, those shareholders will own a greater percentage interest in our outstanding common stock following the Offer.

When will Tree pay for the Shares I tender?

        If your Shares are purchased in the Offer, we will pay the Purchase Price, net to you in cash, without interest and less any applicable withholding taxes, for the Shares we purchase in the Offer promptly after the acceptance of the Shares for purchase. We will announce the preliminary results of the Offer, including any proration, promptly after the Expiration Date. We will pay for the Shares accepted for purchase by depositing the aggregate purchase price with the Depositary promptly after the Expiration Date. The Depositary will act as your agent and will transmit to you the payment for all of your Shares accepted for payment pursuant to the Offer. See Section 5.

5

---

Will I have to pay brokerage commissions if I tender my Shares?

        If you are a registered shareholder and you tender your Shares directly to the Depositary, you will not incur any brokerage fees or commissions. If you hold Shares through a broker, dealer, commercial bank, trust company or other nominee and that person tenders Shares on your behalf, that person may charge you a fee for doing so. We encourage you to consult your broker, dealer, commercial bank, trust company or other nominee to determine whether any such charges or other transaction costs will apply. See Section 3.

What are the U.S. federal income tax consequences if I tender my Shares?

        Generally, if you are a U.S. Holder (as defined in Section 13 hereof), you will be subject to U.S. federal income taxation when you receive cash from us in exchange for the Shares you properly tender and we accept for purchase. The receipt of cash for your tendered Shares generally will be treated for U.S. federal income tax purposes either as (1) consideration received in respect of a sale or exchange of the tendered Shares eligible for capital gain or loss treatment or (2) a distribution from us in respect of our stock. You should consult your tax advisor as to the particular consequences to you of participation in the Offer. See Section 13.

Will I have to pay any stock transfer tax if I tender my Shares?

        If you instruct the Depositary in the Letter of Transmittal to make the payment for the tendered Shares to the registered holder, you will not incur any domestic stock transfer tax. See Section 5.

What is the recent market price of my Shares?

        On November 17, 2010, the last full trading day before the announcement of the Offer, the last reported sale price of our common stock on NASDAQ was $6.86 per Share. You are urged to obtain current market quotations for the Shares before deciding whether to tender your Shares. See Section 7.

Does Tree intend to repurchase any Shares other than pursuant to the Offer during or after the Offer?

        Rule 13e-4 and Rule 14e-5 of the Exchange Act prohibit us and our affiliates from purchasing any Shares, other than pursuant to the Offer, during the Offer and for the period ending ten business days after the Expiration Date, except pursuant to certain limited exceptions provided in Rule 14e-5 of the Exchange Act. Accordingly, any repurchases outside of the Offer may not be consummated until at least ten business days after the Expiration Date. Any of these repurchases may be on the same terms or on terms that are more or less favorable to the selling shareholders in those transactions than the terms of the Offer.

        In January 2010, our Board of Directors authorized a Share repurchase program, pursuant to which we are authorized to repurchase up to $10,000,000 in outstanding Shares at prevailing market prices or in privately negotiated transactions. We began making repurchases under this program in February 2010. Repurchases have been pursuant to Rule 10b5-1 plans and we have used available cash to finance these repurchases. As of November 4, 2010, we had repurchased Shares under the program for approximately $5.7 million in aggregate consideration. Although the repurchase program remains in place, on November 4, 2010, we suspended repurchases under the program. Depending on the availability of funds for future repurchases, the results and prospects for our business, prevailing economic and market conditions and the market price of the Shares, we may continue repurchases under this repurchase program following the ten business day period after the Expiration Date.

Whom can I contact if I have questions?

        If you have any questions regarding the Offer, please contact the Information Agent, toll-free at (800) 967-4612 or, collect, at (212) 269-5550. Additional contact information for the Information Agent is set forth on the back cover page of this Offer to Purchase. You may also contact your broker, dealer, commercial bank, trust company or other nominee for assistance concerning the Offer.

6

---

FORWARD-LOOKING STATEMENTS

        This Offer to Purchase and the documents incorporated by reference herein contain use of words such as "anticipates," "estimates," "expects," "projects," "intends," "plans" and "believes," which, among others, generally identify forward-looking statements. These forward-looking statements also include statements related to: our anticipated financial performance; our business prospects and strategy; anticipated trends and prospects in the various industries in which our businesses operate; new products, services and related strategies; and other similar matters. These forward-looking statements are based on management's current expectations and assumptions about future events, which are inherently subject to uncertainties, risks and changes in circumstances that are difficult to predict. Factors currently known to management that could cause actual results to differ materially from those in forward-looking statements include the following: volatility in our stock price and trading volume; our ability to obtain financing on acceptable terms; adverse conditions in the primary and secondary mortgage markets and in the economy; adverse conditions in our industries; adverse conditions in the credit markets and the inability to renew or replace warehouse lines of credit; seasonality in our businesses; potential liabilities to secondary market purchasers; changes in our relationships with network lenders, real estate professionals, credit providers and secondary market purchasers; breaches of our network security or the misappropriation or misuse of personal consumer information; our failure to provide competitive service; our failure to maintain brand recognition; our ability to attract and retain customers in a cost-effective manner; our ability to develop new products and services and enhance existing ones; competition from our network lenders and affiliated real estate professionals; our failure to comply with existing or changing laws, rules or regulations, or to obtain and maintain required licenses; failure of our network lenders or other affiliated parties to comply with regulatory requirements; failure to maintain the integrity of our systems and infrastructure; liabilities as a result of privacy regulations; failure to adequately protect our intellectual property rights or allegations of infringement of intellectual property rights; changes in our management; deficiencies in our disclosure controls and procedures and internal control over financial reporting; and our ability to successfully implement our strategic initiatives in the Real Estate and LendingTree Loans businesses. These and additional factors to be considered are set forth under "Risk Factors" in our Annual Report on Form 10-K/A for the period ended December 31, 2009, our Quarterly Reports on Form 10-Q for the periods ended March 31, 2010, June 30, 2010, and September 30, 2010, and in our other filings with the SEC. Other unknown or unpredictable factors that could also adversely affect our business, financial condition and results of operations may arise from time to time. In light of these risks and uncertainties, these forward-looking statements may not prove to be accurate. Accordingly, you should not place undue reliance on these forward-looking statements, which speak only as of the dates they are made.

7

---

THE OFFER

1.     Number of Shares; Purchase Price; Proration

        General.    Upon the terms and subject to the conditions of the Offer, we will purchase $15,000,000 in value of Shares, based on the Purchase Price we determine as provided herein, or if a lower amount of Shares is properly tendered and not properly withdrawn, all Shares that are properly tendered and not properly withdrawn, at the Purchase Price, net to the seller in cash, less any applicable withholding taxes and without interest. Since the Purchase Price will only be determined after the Expiration Date, the number of Shares that will be purchased will not be known until after that time. If $15,000,000 in value of Shares are purchased in the Offer at the maximum Purchase Price of $7.75 per Share, we would purchase 1,935,484 Shares, which would represent approximately 17.5% of our issued and outstanding Shares as of November 9, 2010 (and approximately 17.0% of issued and outstanding Shares as of such date assuming exercise of all vested but unexercised options). If $15,000,000 in value of Shares are purchased in the Offer at the minimum Purchase Price of $7.25 per Share, we would purchase 2,068,966 Shares, which would represent approximately 18.7% of our issued and outstanding Shares as of November 9, 2010 (and approximately 18.2% of issued and outstanding Shares as of such date assuming exercise of all vested but unexercised options). The Offer is not conditioned on any minimum number of Shares being tendered. See Section 6 for information about conditions of the Offer. We reserve the right, in our sole discretion, to increase the amount of Shares that we will purchase in the Offer, subject to applicable law. In accordance with the rules of the SEC, we may purchase an additional amount of Shares not to exceed 2% of the outstanding Shares (approximately 221,619 Shares as of November 9, 2010) without amending or extending the Offer.

        Promptly after the Expiration Date, upon the terms and subject to the conditions of this Offer, we will determine the Purchase Price. We will examine the prices chosen by tendering shareholders for all of the Shares properly tendered and not properly withdrawn. We will then select the lowest Purchase Price within the price range specified (in increments of $.10) that will allow us to purchase up to $15,000,000 in value of Shares, or a lower amount depending on the number of Shares properly tendered and not properly withdrawn, which will be the Purchase Price. If, based on the Purchase Price, Shares having an aggregate value of less than $15,000,000 are properly tendered and not properly withdrawn, we will purchase all such Shares that are properly tendered and not properly withdrawn. Once the Purchase Price has been determined, we will promptly disclose such price in a manner reasonably designed to inform shareholders of this information, which will include a press release through a national news service, and shareholders whose Shares are purchased in the Offer will receive the Purchase Price, payable in cash, without interest and subject to applicable withholding taxes.

        All Shares we acquire in the Offer will be acquired at the same Purchase Price regardless of whether any shareholder tendered at a lower price. We will purchase only Shares properly tendered at or below the Purchase Price and not properly withdrawn. However, because of the "odd lot" priority and proration provisions described in this Offer to Purchase, we may not purchase all of the Shares tendered, even if shareholders tendered at or below the Purchase Price, if, based on the Purchase Price, more than $15,000,000 in value of Shares are properly tendered and not properly withdrawn. Shareholders also can specify the order in which we will purchase the specified portions in the event that, as a result of the proration provisions or otherwise, we purchase some but not all of the tendered Shares pursuant to the Offer. We will return Shares tendered at prices in excess of the Purchase Price and Shares that we do not purchase because of the "odd lot" priority or proration provisions to the tendering shareholders at our expense promptly after the Expiration Date. See Section 3.

        Shareholders desiring to tender Shares must, in accordance with Instruction 5 of the Letter of Transmittal, specify the price or prices (in increments of $.10) not greater than $7.75 nor less than $7.25 per Share at which they are willing to sell their Shares to us in the Offer. Alternatively, shareholders desiring to tender Shares and seeking to maximize the chance that their Shares will be

8

---

purchased can choose not to specify a price and, instead, specify that they will sell their Shares at the Purchase Price determined by us pursuant to the Offer. To do so, shareholders should check the box in the section of the Letter of Transmittal captioned "Shares Tendered at Price Determined Pursuant to the Offer." Note that this election is deemed to be a tender of Shares at the minimum price of $7.25 per Share and could result in the tendered Shares being purchased at the minimum price of $7.25 per Share. See Section 3. By following the instructions to the Letter of Transmittal, shareholders can specify one minimum price for a specified portion of their Shares and a different minimum price for other specified Shares, but shareholders must submit a separate Letter of Transmittal for Shares tendered at each price. Shareholders are urged to obtain current market quotations for the Shares before deciding whether, and at what purchase price or purchase prices, to tender their Shares.

        In the event of an over-subscription of the Offer as described below, Shares tendered at or below the Purchase Price will be subject to proration, except for "odd lots." The proration period and, except as described herein, withdrawal rights, each expire at the Expiration Date.

        If we:

•

increase the maximum price to be paid for Shares above $7.75 per Share, decrease the minimum price to be paid for Shares below $7.25 per Share or otherwise change the price range at which we are offering to purchase Shares in the Offer;



•

increase the aggregate Purchase Price limit and thereby increase the number of Shares that we may purchase pursuant to the Offer and such increase in the number of Shares being sought exceeds 2% of our outstanding Shares; or



•

decrease the aggregate Purchase Price limit and thereby decrease the number of Shares purchasable in the Offer; and

the Offer is scheduled to expire at any time earlier than the expiration of a period ending on the tenth business day from, and including, the date that we first publish, send or give notice, in the manner specified in Section 14, of any such increase or decrease, we will extend the Offer until the expiration of ten business days from the date that we first publish notice of any such increase or decrease. For the purposes of the Offer, a "business day" means any day other than a Saturday, Sunday or U.S. federal holiday and consists of the time period from 12:01 a.m. through 12:00 midnight, New York City time on any such day.

        More generally, if we materially change the terms of the Offer or the information concerning the Offer, or if we waive a material condition of the Offer, we will extend the Offer to the extent required by Rules 13e-4(d)(2), 13e-4(e)(3) and 13e-4(f)(1) promulgated under the Exchange Act. These rules and certain related releases and interpretations of the SEC provide that the minimum period during which the Offer must remain open following material changes in the terms of the Offer or information concerning the Offer (other than a change in price or a change in percentage of securities sought) will depend on the facts and circumstances, including the relative materiality of such terms or information.

        The Offer is not conditioned on any minimum number of Shares being tendered. The Offer is, however, subject to other conditions. See Section 6.

        Priority of Purchases.    Upon the terms and subject to the conditions of the Offer, if Shares with an aggregate value of less than $15,000,000 are properly tendered at or below the Purchase Price, we will purchase all Shares that are properly tendered and not properly withdrawn. If the number of Shares properly tendered at or below the Purchase Price and not properly withdrawn prior to the Expiration Date would result in our purchase of Shares with an aggregate value of more than $15,000,000, we will,

9

---

upon the terms and subject to the conditions of the Offer, purchase properly tendered Shares on the basis set forth below:

•

First, we will purchase all Shares tendered by all holders of "odd lots" of less than 100 Shares who:



•

properly tender all Shares owned beneficially or of record at a price at or below the Purchase Price and do not properly withdraw them before the Expiration Date (partial tenders will not qualify for this preference); and



•

complete the section entitled "Odd Lots" in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery; and



•

Second, we will purchase all other Shares tendered at prices at or below the Purchase Price on a pro rata basis with appropriate adjustments to avoid purchases of fractional Shares, as described below, until we have purchased $15,000,000 in value of Shares at the Purchase Price.

        As a result of the foregoing priorities applicable to the purchase of Shares tendered, we may not purchase all of the Shares that a shareholder tenders in the Offer even if they are tendered at prices at or below the Purchase Price.

        Odd Lots.    For purposes of the Offer, the term "odd lots" means all Shares properly tendered prior to the Expiration Date at prices at or below the Purchase Price and not properly withdrawn by any person, referred to as an "odd lot holder," who owns beneficially or of record an aggregate of fewer than 100 Shares and so certifies in the appropriate place on the Letter of Transmittal and, if applicable, on the Notice of Guaranteed Delivery. To qualify for this preference, an "odd lot holder" must tender all Shares owned beneficially or of record by the "odd lot holder" in accordance with the procedures described in Section 3. As set forth above, we will accept "odd lots" for payment before proration, if any, of the purchase of other tendered Shares. This preference is not available to partial tenders or to beneficial or record holders of an aggregate of 100 or more Shares, even if these holders have separate accounts or Share certificates representing fewer than 100 Shares. By tendering Shares in the Offer, an "odd lot holder" who holds Shares and tenders Shares directly to the Depositary would not only avoid the payment of brokerage commissions, but also would avoid any applicable "odd lot" discounts in a sale of the "odd lot holder's" Shares. Any "odd lot holder" wishing to tender all of their Shares pursuant to the Offer should complete the section entitled "Odd Lots" in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery.

        Proration.    If proration of tendered Shares is required, we will determine the proration factor promptly following the Expiration Date. Subject to adjustment to avoid the purchase of fractional Shares, proration for each shareholder tendering Shares other than "odd lot holders" will be based on the ratio of the total number of Shares properly tendered and not withdrawn by the shareholder to the total number of Shares properly tendered and not withdrawn by all shareholders (other than "odd lot holders") at or below the Purchase Price. The preliminary results of any proration will be announced by press release promptly after the Expiration Date. Shareholders may obtain preliminary proration information from the Information Agent and also may be able to obtain this information from their brokers or other nominees.

        As described in Section 13, the number of Shares that we will purchase from a shareholder pursuant to the Offer may affect the U.S. federal income tax consequences to that shareholder and, therefore, may be relevant to that shareholder's decision as to whether or not to tender their Shares.

        This Offer to Purchase and the Letter of Transmittal will be mailed to record holders of Shares and will be furnished to brokers, dealers, commercial banks and trust companies whose names, or the names of whose nominees, appear on our shareholder list or, if applicable, that are listed as

10

---

participants in a clearing agency's security position listing for subsequent transmittal to beneficial owners of Shares.

2.     Purpose of the Offer; Certain Effects of the Offer.

        As a result of modifications to certain financial covenants in our secured warehouse lines of credit in July 2010, additional cash and cash equivalents of ours become available for use. Our Board of Directors reviewed our expected cash requirements for operations, capital expenditures, commitments and otherwise, as well as our needs for appropriate financial flexibility for general corporate purposes, taking into account a reduction of our available cash as a result of the Offer. Our Board of Directors determined that the Offer is a prudent use of our available cash and presents an appropriate balance between meeting the needs of our business and providing liquidity to our shareholders.

        The Offer provides shareholders with an opportunity to obtain liquidity with respect to all or a portion of their Shares, without incurring the usual transaction costs associated with market sales or, we believe, without potential disruption to the Share price. Furthermore, "odd lot holders" who hold Shares registered in their names and tender their Shares directly to the Depositary and whose Shares are purchased pursuant to the Offer will avoid not only the payment of brokerage commissions but also any applicable "odd lot" discounts that might be payable on sales of their Shares on NASDAQ.

        Shareholders who do not tender their Shares pursuant to the Offer and shareholders who otherwise retain an equity interest in us as a result of a partial tender of Shares or proration will continue to be our owners and will realize a proportionate increase in their relative equity interests in us immediately following consummation of the Offer. Shareholders may be able to sell non-tendered Shares in the future at a net price significantly higher or lower than the Purchase Price pursuant to the Offer. We can give no assurance as to the price at which a shareholder may be able to sell our Shares in the future. See Section 11 for discussion of additional effects of the Offer.

        Our Board of Directors has approved the Offer. However, none of us, our Board of Directors, the Information Agent or the Depositary has made or is making any recommendation to you as to whether you should tender or refrain from tendering your Shares or as to the price or prices at which you may choose to tender your Shares. You must make your own decision as to whether to tender your Shares and, if so, how many Shares to tender and the price or prices at which you may choose to tender your Shares. In doing so, you should read carefully the information in, or incorporated by reference in, this Offer to Purchase and the related Letter of Transmittal, including the purposes and effects of the Offer. You should consult your own financial, legal, tax and other advisors.

        The Offer will reduce our "public float" (the number of Shares owned by non-affiliated shareholders and available for trading in the securities markets) and is likely to reduce the number of our shareholders. These reductions may reduce the volume of trading in our Shares and may result in lower stock prices and reduced liquidity in the trading of our Shares following completion of the Offer. We will hold in treasury any Shares that we acquire pursuant to the Offer, and such Shares will be available for us to issue without further shareholder action (except as required by applicable law or the rules of NASDAQ or any other securities exchange on which the Shares may then be listed) for various purposes including, without limitation, acquisitions, raising additional capital and the satisfaction of obligations under existing or future employee benefit or compensation programs or stock plans or compensation programs for directors, as we may duly determine. We have no current plans for the issuance of Shares purchased in the Offer.

        Recently, Steve Ozonian resigned from our Board of Directors, and, as a result of his resignation, we received a notice from NASDAQ indicating that we are not in compliance with NASDAQ's independent director requirements. We have a cure period in order to regain compliance by the earlier of our next annual shareholder's meeting or October 31, 2011. We are currently conducting a search for a qualified candidate to fill the independent director vacancy on our Board of Directors, and we fully

11

---

expect that we will regain compliance with the NASDAQ independent director requirements within the cure period. Based on the foregoing, the published guidelines of the NASDAQ and the conditions of the Offer, we believe that our purchase of $15,000,000 in value of Shares pursuant to the Offer will not result in delisting of the remaining Shares on NASDAQ.

        The Shares are registered under the Exchange Act, which requires, among other things, that we furnish certain information to our shareholders and the SEC and comply with the SEC's proxy rules in connection with meetings of our shareholders. We believe that our purchase of $15,000,000 in value of Shares pursuant to the Offer will not result in the Shares becoming eligible for termination of registration under the Exchange Act.

        The Offer is conditioned upon, among other things, our having determined that the consummation of the Offer will not cause the Shares to be delisted from NASDAQ or to be eligible for deregistration under the Exchange Act. See Section 6.

        The accounting for the purchase of Shares pursuant to the Offer will result in a reduction of our shareholders' equity in an amount equal to the aggregate purchase price of the Shares we purchase plus associated fees and expenses and a corresponding reduction in total cash. Any reduction in the number of Shares of common stock outstanding will also be included in the computation of earnings per Share and diluted earnings per Share.

        After the completion of the Offer, we expect to have sufficient cash flow and access to funding to meet our cash needs for normal operations, anticipated capital expenditures and acquisition opportunities that may arise. See Section 8.

        Our directors and executive officers are entitled to participate in the Offer on the same basis as all other shareholders. However, our directors and executive officers have informed us that they do not intend to tender Shares in the Offer. We do not presently know the intentions of any affiliate that is not our director or executive officer with respect to its participation in the Offer. See Section 10 for a more detailed discussion of the interests of insiders in the transaction. The percentage of Shares owned by the executive officers and directors and, if they do not participate in the Offer, any affiliate that is not a director or executive officer will increase after the Offer has been completed. See Section 10. After termination of the Offer, our directors and executive officers may, in compliance with applicable law, sell their Shares in open market transactions or otherwise, at prices that may be more or less favorable than the Purchase Price to be paid to our shareholders for properly tendered Shares that we accept for payment pursuant to the Offer. See Section 11 for additional information about the effects of the Offer on the market for Shares.

        The repurchase of Shares pursuant to the Offer is in addition to our Share repurchase program authorized by our Board of Directors in January 2010, pursuant to which we are authorized to repurchase up to $10,000,000 of Shares, at prevailing market prices or in privately negotiated transactions. As of November 4, 2010, we had repurchased Shares under the program for approximately $5.7 million in aggregate consideration and had approximately $4.3 million in capacity available for Share repurchases under this stock repurchase authorization. Although the program remains in place, on November 4, 2010, we suspended repurchases under the program. Depending on the availability of funds for future repurchases, the results and prospects for our business, prevailing economic and market conditions and the market price of the Shares, and further subject to applicable law, we may continue repurchase under this program following the ten business day period after the Expiration Date. Rule 13e-4 of the Exchange Act prohibits us and our affiliates from purchasing any Shares, other than pursuant to the Offer, until at least ten business days after the Expiration Date of the Offer, except pursuant to certain limited exceptions provided in Rule 14e-5 of the Exchange Act. Any future repurchases of Shares under this Share repurchase program or otherwise may be on the same terms or on terms that are more or less favorable to the selling shareholders than the terms of the Offer.

12

---

        Except as disclosed in this Offer to Purchase, we currently have no plans, proposals or negotiations underway that relate to or would result in:

•

any extraordinary transaction, such as a merger, reorganization or liquidation, involving us or any of our subsidiaries;



•

any purchase, sale or transfer of a material amount of our assets or any of our subsidiaries;



•

any material change in our present dividend rate or policy, or indebtedness or capitalization;



•

any change in the present Board of Directors or management of us, including, but not limited to, any plans or proposals to change the number or the term of directors or to fill any existing vacancies on the Board of Directors or to change any material term of the employment contract of any executive officer (other than as noted below);



•

any other material change in our corporate structure or business;



•

any class of our equity securities becoming eligible for termination of registration under Section 12(g)(4) of the Exchange Act or ceasing to be authorized for listing on the NASDAQ (other than as noted below);



•

the suspension of our obligation to file reports under Section 15(d) of the Exchange Act;



•

the acquisition by any person of our securities, or the disposition by any person of our securities, other than purchases pursuant to outstanding options to purchase Shares and outstanding restricted stock units granted to certain employees (including directors and officers); or



•

any changes in our amended and restated articles of incorporation or amended and restated bylaws or other governing instruments or other actions that could impede the acquisition of control of us.

        As described above, Steve Ozonian recently resigned from our Board of Directors. We are currently conducting a search for a qualified candidate to fill Mr. Ozonian's position as an independent director on our Board of Directors, and we fully expect that we will fill that vacancy and regain compliance with the NASDAQ independent director requirements within the cure period described above in this Section 2.

        Notwithstanding the foregoing, we may evaluate from time to time the potential acquisition of various assets and other businesses that may complement our current services, enhance our capabilities, improve or sustain our competitive position, or otherwise offer growth opportunities. From time to time, also we may consider the potential disposition of certain of our assets, subsidiaries or lines of businesses.

3.     Procedures for Tendering Shares.

        Proper Tender of Shares.    For shareholders to properly tender Shares pursuant to the Offer:

•

the Depositary must receive, at the Depositary's address set forth on the back cover page of this Offer to Purchase, before the Expiration Date, certificates representing the tendered Shares (or confirmation of receipt of such Shares under the procedure for book-entry transfer set forth below), together with a properly completed and duly executed Letter of Transmittal, including any required signature guarantees, or an "Agent's Message," as defined below, in the case of a book-entry transfer, and any other documents required by the Letter of Transmittal, or



•

the tendering shareholder must, prior to the Expiration Date, comply with the guaranteed delivery procedure described below.

13

---

        If a broker, dealer, commercial bank, trust company or other nominee holds your Shares, it is likely that, for administrative reasons, they have an earlier deadline than the Expiration Date for you to act to instruct them to accept the Offer on your behalf. We urge you to immediately contact your broker, dealer, commercial bank, trust company or other nominee to find out their applicable deadline.

        The proper tender of Shares by you by one of the procedures described in this Section 3 will constitute a binding agreement between you and us on the terms of, and subject to the conditions to, the Offer.

        If tendering shareholders wish to maximize the chance that we will purchase their Shares, they should check the box in the section of the Letter of Transmittal captioned "Shares Tendered at Price Determined Pursuant to the Offer." Note that this election could have the effect of decreasing the price at which we purchase tendered Shares because Shares tendered using this election will be deemed tendered at the minimum price of $7.25 per Share. As a result, this election could increase the chance of us purchasing all tendered Shares at the minimum price of $7.25 per Share. Shareholders are urged to obtain current market quotations for the Shares before deciding whether and at what purchase price or purchase prices to tender their Shares. See Section 7.

        Each shareholder desiring to tender Shares pursuant to the Offer must either (1) check one, and only one, of the boxes corresponding to the price at which Shares are being tendered in the section of the Letter of Transmittal captioned "Shares Tendered at Price Determined By You," or (2) check the box in the section of the Letter of Transmittal captioned "Shares Tendered at Price Determined Pursuant to the Offer," in which case you will be deemed to have tendered your Shares at the minimum price of $7.25 per Share (YOU SHOULD UNDERSTAND THAT THIS ELECTION COULD RESULT IN THE TENDERED SHARES BEING PURCHASED AT THE MINIMUM PRICE OF $7.25 PER SHARE). A tender of Shares will be valid only if one, and only one, of these boxes is checked on the Letter of Transmittal. If you check more than one box or if you fail to check any box at all, you will not have validly tendered your Shares.

        If tendering shareholders wish to indicate a specific price at which their Shares are being tendered, they must check the applicable price box in the section of the Letter of Transmittal captioned "Shares Tendered at Price Determined by You." Tendering shareholders should be aware that this election could mean that none of their Shares will be purchased if the price selected by the shareholder is higher than the Purchase Price we eventually determine after the Expiration Date.

        A shareholder who desires to tender Shares at more than one price must complete a separate Letter of Transmittal for each price at which such shareholder tenders Shares, provided that a shareholder may not tender the same Shares (unless properly withdrawn previously in accordance with Section 4) at more than one price.

        "Odd lot holders" who tender all Shares must complete the section captioned "Odd Lots" in the Letter of Transmittal and, if applicable, in the Notice of Guaranteed Delivery, to qualify for the preferential treatment available to "odd lot holders" as set forth in Section 1.

        Shareholders holding Shares in a brokerage account or otherwise through a broker, dealer, commercial bank, trust company or other nominee, must contact their broker, dealer, commercial bank, trust company or other nominee in order to tender their Shares. We urge shareholders who hold Shares through brokers, banks, dealers, commercial banks, trust companies or other nominees to consult such persons or entities to determine whether transaction costs are applicable if they tender Shares through such persons or entities and not directly to the Depositary.

        Book-Entry Delivery.    The Depositary will establish an account with respect to the Shares for purposes of the Offer at The Depository Trust Company ("DTC") after the date of this Offer to Purchase, and any financial institution that is a participant in DTC's system may make book-entry delivery of the Shares by causing DTC to transfer Shares into the Depositary's account in accordance

14

---

with DTC's procedures for transfer. Although participants in DTC may effect delivery of Shares through a book-entry transfer into the Depositary's account at DTC, either:

•

a properly completed and duly executed Letter of Transmittal, including any required signature guarantees, or an Agent's Message (as defined below), and any other required documents must, in any case, be transmitted to and received by the Depositary at its address set forth on the back cover page of this Offer to Purchase before the Expiration Date; or



•

the guaranteed delivery procedure described below must be followed if book-entry transfer of the Shares cannot be effected prior to the Expiration Date.

Delivery of the Letter of Transmittal and any other required documents to DTC does not constitute delivery to the Depositary.

        Signature Guarantees and Method of Delivery.    Except as otherwise provided below, all signatures on a Letter of Transmittal must be guaranteed by a financial institution (including most banks, savings and loans associations and brokerage houses) which is a participant in the Securities Transfer Agents Medallion Program. Signatures on a Letter of Transmittal need not be guaranteed if:

•

the Letter of Transmittal is signed by the registered holder of the Shares (which term, for purposes of this Section 3, shall include any participant in DTC whose name appears on a security position listing as the owner of the Shares) tendered therewith and the holder has not completed either the box captioned "Special Delivery Instructions" or the box captioned "Special Payment Instructions" in the Letter of Transmittal; or



•

Shares are tendered for the account of a bank, broker, dealer, credit union, savings association or other entity which is a member in good standing of the Securities Transfer Agents Medallion Program, the New York Stock Exchange, Inc. Medallion Signature Program, the Stock Exchange Medallion Program, or a bank, broker, dealer, credit union, savings association or other entity which is an "eligible guarantor institution," as such term is defined in Rule 17Ad-15 under the Exchange Act (each such entity, an "Eligible Institution"). See Instruction 1 of the Letter of Transmittal.

        If a Share certificate is registered in the name of a person other than the person executing a Letter of Transmittal, or if payment is to be made to a person other than the registered holder, then the certificate must be endorsed or accompanied by an appropriate stock power, in either case signed exactly as the name of the registered holder appears on the certificate, with the signature guaranteed by an Eligible Institution.

        We will make payment for Shares properly tendered and accepted for payment pursuant to the Offer only after the Depositary timely receives Share certificates or a timely confirmation of the book-entry transfer of the Shares into the Depositary's account at DTC as described above, a properly completed and duly executed Letter of Transmittal, or an Agent's Message in the case of a book-entry transfer, and any other documents required by the Letter of Transmittal.

        The method of delivery of all documents, including Share certificates, the Letter of Transmittal and any other required documents, including delivery through DTC, is at the sole election and risk of the tendering shareholder. If you choose to deliver required documents by mail, we recommend that you use registered mail with return receipt requested, properly insured. Shares will be deemed delivered only when actually received by the Depositary (including, in the case of a book-entry transfer, by book-entry confirmation). In all cases, sufficient time should be allowed to ensure timely delivery.

        The term "Agent's Message" means a message transmitted by DTC to, and received by, the Depositary, which states that DTC has received an express acknowledgment from the participant in DTC tendering the Shares that the participant has received and agrees to be bound by the terms of the Letter of Transmittal and that we may enforce the agreement against the participant.

15

---

        Guaranteed Delivery.    If a shareholder desires to tender Shares pursuant to the Offer and the shareholder's Share certificates are not immediately available or the shareholder cannot deliver the Share certificates to the Depositary before the Expiration Date, or the shareholder cannot complete the procedure for book-entry transfer on a timely basis, or if time will not permit all required documents to reach the Depositary before the Expiration Date, the shareholder may nevertheless tender the Shares, provided that the shareholder satisfies all of the following conditions:

•

the shareholder makes the tender by or through an Eligible Institution;



•

the Depositary receives by mail, overnight courier or facsimile transmission, before the Expiration Date, a properly completed and duly executed Notice of Guaranteed Delivery in the form we have provided with this Offer to Purchase, specifying the price at which the shareholder is tendering Shares, including (where required) a signature guarantee by an Eligible Institution in the form set forth in such Notice of Guaranteed Delivery; and



•

the Depositary receives, at one of its addresses set forth on the back cover of this Offer to Purchase, the Share certificates, in proper form for transfer, or confirmation of book-entry transfer of the Shares into the Depositary's account at DTC, together with a properly completed and duly executed Letter of Transmittal, or a manually signed facsimile thereof, and including any required signature guarantees, or an Agent's Message, and any other documents required by the Letter of Transmittal, within three trading days after the date of receipt by the Depositary of the Notice of Guaranteed Delivery.

        For these purposes, a "trading day" is any day on which the NASDAQ is open for business.

        Procedures for Holders of Vested Options under the Stock Plan.    Option holders with vested but unexercised options to acquire our Shares under the Stock Plan can participate in the Offer. An option holder may exercise vested but unexercised options in advance of the Offer in accordance with the terms of such options and the Stock Plan and tender the Shares received upon exercise into the Offer. However, an option exercise cannot be revoked even if all or a portion of the Shares received upon the exercise and tendered in the Offer are not purchased by us.

        If you are a holder of vested but unexercised options, you should evaluate this Offer to Purchase carefully to determine if participation would be advantageous to you, based on your option exercise prices, the date of your option grants, the time left to exercise your options, the range of tender prices and the provisions for prorated purchases described in Section 1. We strongly encourage you to discuss the Offer with your tax advisor, broker and/or financial advisor. If you want to exercise your vested options in order to tender Shares in the Offer, it is your responsibility to exercise and secure delivery of the Shares issued pursuant to your vested option in a time period sufficient to allow tender of those Shares prior to the Expiration Date. Accordingly, we suggest that you exercise your vested options and satisfy the exercise price for such Shares in accordance with the terms of the options and the Stock Plan at least four business days prior to the Expiration Date.

        If you hold Shares received pursuant to stock awards and these Shares have vested, you should follow the instructions applicable to Shares held by a broker or Shares held in your own name, as applicable to you. Holders of unvested stock awards may not tender Shares represented by such awards unless they are fully vested.

        Federal Backup Withholding Tax.    Under the federal income tax backup withholding rules, 28% of the gross proceeds payable to a shareholder or other payee pursuant to the Offer must be withheld and remitted to the IRS, unless the shareholder or other payee provides his or her taxpayer identification number (employer identification number or social security number) to the Depositary and certifies under penalties of perjury that such number is correct or otherwise establishes an exemption. Therefore, tendering shareholders who are U.S. Holders should complete and sign the Substitute Form W-9 included as part of the Letter of Transmittal in order to provide the information and

16

---

certification necessary to avoid backup withholding, unless the shareholder otherwise establishes to the satisfaction of the Depositary that the shareholder is not subject to backup withholding. If a U.S. Holder does not provide the Depositary with the correct taxpayer identification number, such U.S. Holder may be subject to penalties imposed by the IRS. Certain shareholders (including, among others, all corporations and certain Non-U.S. Holders (as defined below in Section 13)) are not subject to these backup withholding and reporting requirements. In order for a Non-U.S. Holder to qualify as an exempt recipient, that shareholder must submit an IRS Form W-8BEN or other applicable form, signed under penalties of perjury, attesting to that individual's exempt status. Tendering shareholders can obtain the applicable forms from the Depositary. See Instruction 10 of the Letter of Transmittal.

        TO PREVENT U.S. FEDERAL BACKUP WITHHOLDING TAX ON THE GROSS PAYMENTS MADE TO YOU FOR SHARES PURCHASED BY US PURSUANT TO THE OFFER, IF YOU DO NOT OTHERWISE ESTABLISH AN EXEMPTION FROM SUCH WITHHOLDING, YOU MUST PROVIDE THE DEPOSITARY WITH YOUR CORRECT TAXPAYER IDENTIFICATION NUMBER AND PROVIDE OTHER INFORMATION BY COMPLETING THE SUBSTITUTE FORM W-9 INCLUDED WITH THE LETTER OF TRANSMITTAL.

        Federal Income Tax Withholding for Non-U.S. Holders.    Gross proceeds payable pursuant to the Offer to a Non-U.S. Holder or his or her agent will be subject to withholding of federal income tax at a rate of 30%, unless a reduced rate of withholding is applicable pursuant to an income tax treaty or an exemption from withholding is applicable because such gross proceeds are effectively connected with the conduct of a trade or business within the United States (and, if an income tax treaty applies, the gross proceeds are generally attributable to a United States permanent establishment maintained by such Non-U.S. Holder). In order to claim a reduction of or an exemption from withholding tax, a Non-U.S. Holder must deliver to the Depositary a validly completed and executed IRS Form W-8BEN (with respect to income tax treaty benefits) or W-8ECI (with respect to amounts effectively connected with the conduct of a trade or business within the United States) claiming such exemption or reduction before the payment is made. Tendering Non-U.S. Holders can obtain the applicable forms from the Depositary.

        A Non-U.S. Holder may be eligible to file for a refund of such tax or a portion of such tax if such shareholder meets the "complete termination," "substantially disproportionate" or "not essentially equivalent to a dividend" tests described in Section 13 or if such shareholder is entitled to a reduced rate of withholding pursuant to a tax treaty and we withheld at a higher rate. Non-U.S. Holders should consult their own tax advisors regarding the tax consequences to them of participating in the Offer, including the application of federal income tax withholding, their potential eligibility for a withholding tax reduction or exemption and the refund procedure.

        See Section 13 for a discussion of the material United States federal income tax consequences to tendering shareholders.

        Return of Unpurchased Shares.    The Depositary will return certificates for unpurchased Shares promptly after the Expiration Date or the proper withdrawal of the Shares, as applicable, or, in the case of Shares tendered by book-entry transfer at DTC, the Depositary will credit the Shares to the appropriate account maintained by the tendering shareholder at DTC, in each case without expense to the shareholder.

        Determination of Validity; Rejection of Shares; Waiver of Defects; No Obligation to Give Notice of Defects.    We will determine, in our sole discretion, all questions as to the number of validly tendered Shares that we will accept, the price that we will pay for Shares that we accept and the validity, form, eligibility (including time of receipt) and acceptance for payment of any tender of Shares. We reserve the absolute right to reject any or all tenders of any Shares that we determine are not in proper form or the acceptance for payment of or payment for which we determine may be unlawful. We also reserve

17

---

the absolute right to waive any defect or irregularity in any tender with respect to any particular Shares or any particular shareholder either before or after the Expiration Date. No tender of Shares will be deemed to have been properly made until the shareholder cures, or we waive, all defects or irregularities. None of us, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any tender or incur any liability for failure to give this notification. Any Shares received by the Depositary that are not validly tendered and as to which the defects or irregularities have not been cured or waived will be returned by the Depositary to the tendering holders promptly following the Expiration Date. Our interpretation of the terms and conditions of the Offer, including the instructions in the Letter of Transmittal, will be final and binding on all parties, subject to the rights of holders to challenge our interpretation in a court of competent jurisdiction.

        Tendering Shareholder's Representations and Warranties; Our Acceptance Constitutes Agreement.    It is a violation of Rule 14e-4 promulgated under the Exchange Act for a person acting alone or in concert with others, directly or indirectly, to tender Shares for such person's own account unless at the time of tender and at the Expiration Date such person has a "net long position" in:

•

the Shares that is equal to or greater than the amount tendered and will deliver or cause to be delivered such Shares for the purpose of tendering to us within the period specified in the Offer; or



•

other securities immediately convertible into, exercisable for or exchangeable into Shares ("Equivalent Securities") that are equal to or greater than the amount tendered and, upon the acceptance of such tender, will acquire such Shares by conversion, exchange or exercise of such Equivalent Securities to the extent required by the terms of the Offer and will deliver or cause to be delivered such Shares so acquired for the purpose of tender to us within the period specified in the Offer.

Rule 14e-4 also provides a similar restriction applicable to the tender or guarantee of a tender on behalf of another person. A tender of Shares made pursuant to any method of delivery set forth herein will constitute the tendering shareholder's acceptance of the terms and conditions of the Offer, as well as the tendering shareholder's representation and warranty to us that:

•

such shareholder has a "net long position" in Shares or Equivalent Securities at least equal to the Shares being tendered within the meaning of Rule 14e-4; and



•

such tender of Shares complies with Rule 14e-4.

        A tender of Shares made pursuant to any method of delivery set forth herein will also constitute a representation and warranty to us that the tendering shareholder has full power and authority to tender, sell, assign and transfer the Shares tendered, and that, when the same are accepted for purchase by us, we will acquire good, marketable and unencumbered title thereto, free and clear of all security interests, liens, restrictions, claims, encumbrances and other obligations relating to the sale or transfer of the Shares, and the same will not be subject to any adverse claim or right. Any such tendering shareholder will, on request by the Depositary or us, execute and deliver any additional documents deemed by the Depositary or us to be necessary or desirable to complete the sale, assignment and transfer of the Shares tendered, all in accordance with the terms of the Offer.

        All authority conferred or agreed to be conferred by delivery of the Letter of Transmittal shall be binding on the successors, assigns, heirs, personal representatives, executors, administrators and other legal representatives of the tendering shareholder and shall not be affected.

        Our acceptance for payment of Shares tendered pursuant to the Offer will constitute a binding agreement between the tendering shareholder and us upon the terms and conditions of the Offer.

18

---

        Lost or Destroyed Certificates.    Shareholders whose Share certificates for part or all of their Shares has been lost, stolen, misplaced or destroyed should promptly contact BNY Mellon Shareowner Services, the transfer agent for our Shares, at (877) 296-3711 (toll-free) for instructions as to obtaining a replacement Share certificate and/or an affidavit of loss. That Share certificate or affidavit of loss will then be required to be submitted together with the Letter of Transmittal in order to receive payment for Shares that are tendered and accepted for payment. The shareholder may be required to post a bond to secure against the risk that the original Share certificate may subsequently emerge. We urge shareholders to contact BNY Mellon Shareowner Services immediately in order to permit timely processing of this documentation and determination of whether you will need to post a bond.

4.     Withdrawal Rights.

        For a withdrawal to be effective, the Depositary must timely receive a written or facsimile transmission notice of withdrawal at the Depositary's address set forth on the back cover page of this Offer to Purchase. Any such notice of withdrawal must specify the name of the tendering shareholder, the number of Shares to be withdrawn and the name of the registered holder of the Shares to be withdrawn, if different from the person who tendered the Shares. A shareholder who has tendered Shares at more than one price must complete a separate notice of withdrawal for Shares tendered at each price. If the Share certificates to be withdrawn have been delivered or otherwise identified to the Depositary, then, before the release of the Share certificates, the serial numbers shown on the Share certificates must be submitted to the Depositary and the signature(s) on the notice of withdrawal must be guaranteed by an Eligible Institution, unless the Shares have been tendered for the account of an Eligible Institution. If a shareholder has tendered Shares under the procedure for book-entry transfer set forth in Section 3, any notice of withdrawal also must specify the name and the number of the account at DTC to be credited with the withdrawn Shares and must otherwise comply with DTC's procedures.

        We will determine all questions as to the form and validity (including the time of receipt) of any notice of withdrawal, in our sole discretion, and such determination will be final and binding on all parties, subject to the rights of holders to challenge our determination in a court of competent jurisdiction. We reserve the absolute right to waive any defect or irregularity in the notice of withdrawal or method of withdrawal of Shares by any shareholder, whether or not we waive similar defects or irregularities in the case of any other shareholder. None of us, the Depositary, the Information Agent or any other person will be under any duty to give notification of any defects or irregularities in any notice of withdrawal or incur any liability for failure to give this notification.

        A shareholder may not rescind a withdrawal, and we will deem any Shares that a shareholder properly withdraws not properly tendered for purposes of the Offer, unless the shareholder properly re-tenders the withdrawn Shares before the Expiration Date by following one of the procedures described in Section 3.

        If we extend the Offer, are delayed in our purchase of Shares, or are unable to purchase Shares pursuant to the Offer for any reason, then, without prejudice to our rights pursuant to the Offer, the Depositary may, subject to applicable law, retain tendered Shares on our behalf, and such Shares may not be withdrawn, except to the extent tendering shareholders are entitled to withdrawal rights as described in this Section 4. Our reservation of the right to delay payment for Shares which we have accepted for payment is limited by Rule 13e-4(f)(5) promulgated under the Exchange Act, which requires that we must pay the consideration offered or return the Shares tendered promptly after termination or withdrawal of a tender offer.

19

---

5.     Purchase of Shares and Payment of Purchase Price.

        Upon the terms and subject to the conditions of the Offer, promptly following the Expiration Date, we:

•

will determine the Purchase Price we will pay for Shares properly tendered and not properly withdrawn before the Expiration Date, taking into account the number of Shares so tendered and the prices specified by tendering shareholders; and



•

will accept for payment and pay for, and thereby purchase, $15,000,000 in value of Shares, based on the Purchase Price, properly tendered at prices at or below the Purchase Price and not properly withdrawn prior to the Expiration Date, subject to the "odd lot" priority and proration provisions of the Offer, or such lesser value of Shares as is properly tendered and not properly withdrawn.

        For purposes of the Offer, we will be deemed to have accepted for payment, and therefore purchased, Shares that are properly tendered at or below the Purchase Price and are not properly withdrawn, subject to the "odd lot" priority and proration provisions of the Offer, only when, as and if we give oral or written notice to the Depositary of our acceptance of the Shares for payment pursuant to the Offer.

        In all cases, payment for Shares tendered and accepted for payment pursuant to the Offer will be made promptly, taking into account any time necessary to determine any proration, but only after timely receipt by the Depositary of:

•

certificates for Shares, or a timely book-entry confirmation of the deposit of Shares into the Depositary's account at DTC;



•

a properly completed and duly executed Letter of Transmittal (or manually signed facsimile of the Letter of Transmittal) including any required signature guarantees, or, in the case of a book-entry transfer, an Agent's Message; and



•

any other required documents.

        We will pay for Shares that we purchase pursuant to the Offer by depositing the aggregate purchase price for these Shares with the Depositary, which will act as agent for tendering shareholders for the purpose of receiving payment from us and transmitting payment to the tendering shareholders.

        In the event of proration, we will determine the proration factor and pay for those tendered Shares accepted for payment promptly after the Expiration Date. Shares tendered and not purchased, including all Shares tendered at prices greater than the Purchase Price and Shares that we do not accept for purchase due to proration, will be returned to the tendering shareholder, or, in the case of Shares tendered by book-entry transfer, will be credited to the account maintained with DTC by the participant therein who so delivered the Shares, at our expense, promptly after the Expiration Date, without expense to the tendering shareholders.

        Under no circumstances will we pay interest on the Purchase Price regardless of any delay in making the payment. If certain events occur, we may not be obligated to purchase Shares pursuant to the Offer. See Section 6.

        We will pay all stock transfer taxes, if any, payable on the transfer to us of Shares purchased pursuant to the Offer. If, however,

•

payment of the Purchase Price is to be made to any person other than the registered holder;

20

---

•

certificate(s) for Shares not properly tendered or tendered but not purchased are to be returned in the name of and to any person other than the registered holder(s) of such Shares; or



•

tendered certificates are registered in the name of any person other than the person signing the Letter of Transmittal;

then the amount of all stock transfer taxes, if any (whether imposed on the registered holder or the other person), payable on account of the transfer to the person will be deducted from the Purchase Price unless satisfactory evidence of the payment of the stock transfer taxes, or exemption therefrom, is submitted to the Depositary. See Instruction 7 of the Letter of Transmittal.

6.     Conditions of the Offer.

        Notwithstanding any other provision of the Offer, we will not be required to accept for payment, purchase or pay for any Shares tendered, and may terminate or amend the Offer or may postpone the acceptance for payment of, or the purchase of and the payment for Shares tendered, subject to Rule 13e-4(f) under the Exchange Act, if, at any time on or after the commencement of the Offer and prior to the Expiration Date, any of the following events shall have occurred (or shall have been reasonably determined by us to have occurred) and, in our reasonable judgment, such event or events make it inadvisable to proceed with the Offer or with acceptance for payment:

•

there shall have been threatened in writing or instituted or there shall be pending any action, suit, proceeding or application by any government or governmental, regulatory or administrative agency, authority or tribunal or by any other person, domestic, foreign or supranational, before any court, authority, agency or other tribunal or arbitrator or arbitration panel that directly or indirectly:



•

challenges or seeks to challenge, restrain, prohibit, delay or otherwise affect the making of the Offer, the acquisition by us of some or all of the Shares pursuant to the Offer or otherwise relates in any manner to the Offer or seeks to obtain material damages in respect of the Offer; or



•

in our reasonable judgment, could materially and adversely affect the business, financial condition, assets, income, operations or prospects of us or any of our subsidiaries, or otherwise materially impair the contemplated future conduct of the business of us or any of our subsidiaries, taken as a whole, or the value of or trading in the Shares;



•

there shall have been any action taken, or approval withheld, or any statute, rule, regulation, judgment, order or injunction (preliminary, permanent or otherwise) proposed, sought, promulgated, enacted, entered, amended, enforced or deemed to be applicable to the Offer or us or any of our subsidiaries, by any court or any authority, agency or body, domestic, foreign or supranational, that, in our reasonable judgment, would or might, directly or indirectly:



•

indicate that any approval or other action of any such court, agency, authority or body may be required in connection with the Offer or the purchase of Shares thereunder;



•

make the acceptance for payment of, or payment for, some or all of the Shares illegal or otherwise restrict or prohibit completion of the Offer;



•

delay or restrict the ability of us, or render us unable, to accept for payment or pay for some or all of the Shares; or



•

materially impair our ability to consummate the Offer;



•

any general suspension of trading in, or limitation on prices for, securities on any national securities exchange or in the over-the-counter market in the United States;

21

---

•

the declaration of a banking moratorium or any suspension of payments in respect of banks in the United States, whether or not mandatory;



•

a material change in United States or any other currency exchange rates or a suspension of or limitation on the markets therefor;



•

the commencement of a war, armed hostilities or other international or national calamity directly or indirectly involving the United States, or in the case of any of the foregoing existing at the time of the commencement of the Offer, in our reasonable judgment, a material acceleration or worsening thereof;



•

any limitation (whether or not mandatory) by any governmental, regulatory or administrative agency or authority on, or any event, or any disruption or adverse change in the financial or capital markets generally that, in our reasonable judgment, might affect the extension of credit by banks or other lending institutions in the United States;



•

any change in the general political, market, economic, financial or industry conditions in the United States or abroad that could, in our reasonable judgment, have a material adverse effect on our business, financial condition, assets, liabilities, capitalization, shareholders' equity, results of operations, income, operations or prospects or any of our subsidiaries, on the value of or trading in the Shares, or on our ability to consummate the Offer, or otherwise materially impair the contemplated future conduct of our business or any of our subsidiaries;



•

any decline in the market price of the Shares or any of the Dow Jones Industrial Average, New York Stock Exchange Index, NASDAQ Composite Index, Standard and Poor's 500 Composite Index by an amount greater than 10% from the close of trading on November 17, 2010;



•

a tender or exchange offer for any or all of the Shares (other than this Offer), or any merger, acquisition, business combination or other similar transaction with or involving us or any of our subsidiaries or affiliates, shall have been proposed, announced or made by any person or shall have been publicly disclosed or we shall have entered into a definitive agreement or agreement in principle with any person with respect to any merger, acquisition, business combination or other similar transaction;



•

any change or combination of changes shall have occurred or been threatened in our business, financial condition, assets, liabilities, capitalization, shareholders' equity, results of operations, income, operations, prospects or stock ownership or any of our subsidiaries, that in our reasonable judgment is or may reasonably be likely to be material and adverse to us or any of our subsidiaries or that otherwise materially impairs the contemplated future conduct of our business or any of our subsidiaries, the value of or trading in the Shares, or our ability to consummate the Offer;



•

we shall have learned that any entity, "group" (as that term is used in Section 13(d)(3) of the Exchange Act) or person (i) has acquired or proposes to acquire beneficial ownership of more than 5% of our outstanding Shares, whether through the acquisition of stock, the formation of a group, the grant of any option or right (options for and other rights to acquire Shares that are acquired or proposed to be acquired being deemed to be immediately exercisable or convertible for purposes of this clause), or otherwise (other than anyone who publicly disclosed such ownership in a filing with the SEC on or before November 17, 2010), (ii) who has filed a Schedule 13D or Schedule 13G with the SEC on or before November 17, 2010 has acquired or proposes to acquire, whether through the acquisition of Shares, the formation of a group, the grant of any option or right (options for and other rights that are acquired or proposed to be acquired being deemed to be immediately exercisable or convertible for purposes of this clause), or otherwise (other than by virtue of consummation of the Offer), beneficial ownership of an additional 2% or more of our outstanding Shares or (iii) shall have filed a Notification and

22

---

Report Form under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, reflecting an intent to acquire us or any of our subsidiaries or any of our or their respective assets or securities; or

•

we reasonably determine that the completion of the Offer and the purchase of the Shares is reasonably likely to:



•

cause the Shares to be held of record by fewer than 400 persons;



•

cause the Shares to cease to be traded on or otherwise to be delisted from NASDAQ; or



•

cause the Shares to be eligible for deregistration under the Exchange Act.

        All conditions to the Offer must be satisfied or waived by us on or prior to the Expiration Date. The foregoing conditions are for our sole benefit, and we may assert them with respect to the Offer, regardless of the circumstances that may give rise to them, so long as such conditions are not triggered by our action or inaction. Other than the last condition listed above, we may waive these conditions, in whole or in part, at any time and from time to time prior to the Expiration Date, in our sole discretion, whether or not we waive any other conditions to the Offer. Our failure at any time to exercise any of these rights will not be deemed a waiver of such rights, but will be deemed a waiver of our ability to assert the condition that was triggered with respect to the particular circumstances under which we failed to exercise our rights. The waiver of any of these rights with respect to particular facts and circumstances will not be deemed to be a waiver with respect to any other facts and circumstances. Security holders may challenge any determination we make concerning the events described in this Section 6 in a court of competent jurisdiction.

        In addition, we expressly reserve the right to amend or terminate the Offer, and to reject any Shares not previously accepted for payment, upon the occurrence of any of the conditions to the Offer specified above. We will promptly give oral or written notice (with any oral notice to be promptly confirmed in writing) of any amendment, non-acceptance, termination or waiver to the Depositary, followed by a timely press release. If we materially change the terms of the Offer or the information concerning the Offer, or if we waive a material condition to the Offer, we will disseminate additional information and extend the Offer to the extent required by law.

7.     Price Range of Shares; Dividends.

        The Shares are listed on NASDAQ under the symbol "TREE." The following table sets forth the high and low sales prices per Share as reported by NASDAQ for each of the periods presented. Trading in Tree.com common stock began on August 21, 2008 following our spin-off from IAC/InterActiveCorp ("IAC").

 

23

---