EX-10.3






Exhibit 10.3




EXECUTION VERSION




SECURITY AGREEMENT




SECURITY AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time
in accordance herewith and including all attachments, exhibits and schedules hereto, the
“Agreement”), dated as of August 16, 2005, made by VERTICALNET, INC., a Pennsylvania corporation
(the “Grantor”), in favor of the secured parties listed on Exhibit A to this Agreement
(collectively, the “Secured Parties”).



WHEREAS, the Grantor has issued or will issue separate promissory notes to the Secured Parties
(the “Notes”) pursuant to a Note and Warrant Purchase Agreement, dated as of August 16, 2005 (the
“Purchase Agreement”), by and among the Grantor and the Secured Parties; and



WHEREAS, the Secured Parties and the Grantor agree that the Grantor execute and deliver to the
Secured Parties a security agreement providing for the grant to the Secured Parties of a continuing
security interest in all personal property and assets of the Grantor, all in substantially the form
hereof to secure all Obligations (hereinafter defined).



	 	 	 
	NOW, THEREFORE, the parties agree as follows:

	 
	 	 
	ARTICLE I.

	 	Definitions






Section 1.1. Definition of Terms Used Herein. All capitalized terms used herein and
not defined herein have the respective meanings provided therefor in the Purchase Agreement or the
Notes, as applicable. All terms defined in the Uniform Commercial Code (hereinafter defined) as in
effect from time to time and used herein and not otherwise defined herein (whether or not such
terms are capitalized) have the same definitions herein as specified therein.



Section 1.2. Definition of Certain Terms Used Herein. As used herein, the following
terms have the following meanings:



"Collateral” means all accounts receivable of the Grantor and all personal and fixture
property of every kind and nature, including, without limitation, all furniture, fixtures,
equipment, raw materials, inventory, or other goods, accounts, contract rights, rights to the
payment of money, insurance refund claims and all other insurance claims and proceeds, tort claims,
chattel paper, documents, instruments, securities and other investment property, deposit accounts,
rights to proceeds of letters of credit and all general intangibles including, without limitation,
all tax refund claims, license fees, patents, patent licenses, patent applications, trademarks,
trademark licenses, trademark applications, trade names, copyrights, copyright licenses, copyright
applications, rights to sue and recover for past infringement of patents, trademarks and
copyrights, computer programs, computer software, engineering drawings, service marks, customer
lists, goodwill, and all licenses, permits, agreements of any kind or nature pursuant to which the
Grantor possesses, uses or has authority to possess or use property (whether tangible or
intangible) of others or others possess, use or have authority to possess or use property (whether
tangible or intangible) of the Grantor, and all recorded data of any kind or nature, regardless of
the medium of recording including, without limitation, all books and records, software, writings,
plans, specifications and schematics; and all proceeds and products of each of the foregoing.



“Default” means any event or circumstance which, with the giving of notice, the lapse
of time, or both, would (if not cured, waived, or otherwise remedied during such time) constitute
an Event of Default.



“Event of Default” has the meaning specified in the Notes.



“Indemnitees” has the meaning specified in Section 7.5(b).



“Lien” means: (i) any interest in property securing an obligation owed to, or a claim
by, a Person other than the owner of the property, whether such interest is based on the common
law, statute, or contract, and including a security interest, charge, claim, or lien arising from a
mortgage, deed of trust, encumbrance, pledge, hypothecation, assignment, deposit arrangement,
agreement, security agreement, conditional sale or trust receipt or a lease, consignment or
bailment for security purposes; (ii) to the extent not included under clause (i), any
reservation, exception, encroachment, easement, right-of-way, covenant, condition, restriction,
lease or other title exception or encumbrance affecting property; and (iii) any contingent or other
agreement to provide any of the foregoing.



"Notes” has the meaning assigned to such term in the first recital of this Agreement.



"Obligations” means all indebtedness, liabilities, obligations, covenants and duties
of the Grantor to the Secured Parties of every kind, nature and description, direct or indirect,
absolute or contingent, due or not due, contractual or tortious, liquidated or unliquidated,
arising by operation of law or otherwise, now existing or hereafter arising under or in connection
with the Notes, this Agreement or the other Transaction Documents.



“Registered Organization” means an entity formed by filing a registration document
with a United States Governmental Authority, such as a corporation, limited partnership or limited
liability company.



"Security Interest” has the meaning specified in Section 2.1 of this Agreement.



“Uniform Commercial Code” means the Uniform Commercial Code from time to time in
effect in the State of New York.



ARTICLE II. Security Interest




Section 2.1. Security Interest. As security for the payment and performance, in full
of the Obligations, and any extensions, renewals, modifications or refinancings of the Obligations,
the Grantor hereby conveys, assigns, sets over, mortgages, pledges, hypothecates and transfers to
the Secured Parties, and hereby grants to the Secured Parties, their successors and assigns, a
security interest in, all of such Grantor’s right, title and interest in, to and under the
Collateral (the "Security Interest").



Section 2.2. No Assumption of Liability. The Security Interest is granted as security
only and shall not subject the Secured Parties to, or in any way alter or modify, any obligation or
liability of the Grantor with respect to or arising out of the Collateral.



ARTICLE III. Representations and Warranties




The Grantor represents and warrants to the Secured Parties that:



Section 3.1. Title and Authority. The Grantor has good and valid rights in and title
to the Collateral with respect to which it has purported to grant a security interest hereunder and
has full power and authority to grant to the Secured Parties the Security Interest and to execute,
deliver and perform its obligations in accordance with the terms of this Agreement, without the
consent or approval of any other Person other than any consent or approval which has been obtained.



Section 3.2. Filings; Actions to Achieve Perfection. Fully executed Uniform
Commercial Code financing statements (including fixture filings, as applicable) or other
appropriate filings, recordings or registrations containing a description of the Collateral have
been delivered to the Secured Parties for filing in each United States governmental, municipal or
other office specified in Schedule A, which are all the filings, recordings and
registrations that are necessary to publish notice of and protect the validity of and to establish
a legal, valid and perfected security interest in favor of the Secured Parties in respect of all
Collateral in which the Security Interest may be perfected by filing, recording or registration in
the United States (or any political subdivision thereof) and its territories and possessions, and
no further or subsequent filing, refiling, recording, rerecording, registration or reregistration
is necessary in any such jurisdiction, except as provided under applicable law with respect to the
filing of continuation statements or with respect to the filing of amendments or new filings to
reflect the change of the Grantor’s name, location, identity or corporate structure. The Grantor’s
name is listed in the preamble of this Agreement identically to how it appears on its articles of
incorporation or other organizational documents.



Section 3.3. Validity and Priority of Security Interest. The Security Interest
constitutes (a) a legal and valid security interest in all the Collateral securing the payment and
performance of the Obligations, (b) subject only to the filings described in Section 3.2 above and
other previously perfected security interests in the Collateral listed on Schedule 3.3 to
this Agreement (“Existing Liens”), a perfected security interest in all Collateral in which
a security interest may be perfected by filing, recording or registration in the United States
pursuant to the Uniform Commercial Code or other applicable law in the United States (or any
political subdivision thereof) and its territories and possessions or any other country, state or
nation (or any political subdivision thereof). The Security Interest is and shall be subordinate
to any other Existing Lien on any of the Collateral.



Section 3.4. Absence of Other Liens. The Grantor’s Collateral is owned by the Grantor
free and clear of any Lien other than Existing Liens. Without limiting the foregoing and except as
set forth on Schedule 3.4 to this Agreement, the Grantor has not filed or consented to any
filing described in Schedule A in favor of any Person other than the Secured Parties, nor
permitted the granting or assignment of a security interest or permitted perfection of any security
interest in the Collateral in favor of any Person other than the Secured Parties. The Grantor’s
having possession of all instruments and cash constituting Collateral from time to time and the
filing of financing statements in the offices referred to in Schedule A hereto results in
the perfection of such security interest. Such security interest is, or in the case of Collateral
in which the Grantor obtain rights after the date hereof, will be, a perfected, first priority
security interest. Such notices, filings and all other action necessary or desirable to perfect
and protect such security interest have been duly taken.



Section 3.5. Valid and Binding Obligation. This Agreement constitutes the legal,
valid and binding obligation of the Grantor, enforceable against the Grantor in accordance with its
terms, except (i) as limited by applicable bankruptcy, insolvency, reorganization, moratorium, and
other laws of general application affecting enforcement of creditors’ rights generally, (ii) as
limited by laws relating to the availability of specific performance, injunctive relief, or other
equitable remedies, and (iii) to the extent the indemnification provisions contained in this
Agreement may be limited by applicable federal or state securities laws.



ARTICLE IV. Covenants




Section 4.1. Change of Name; Location of Collateral; Place of Business, State of Formation
or Organization.




(a) The Grantor shall notify the Secured Parties in writing promptly of any change (i)
in its corporate name or in any trade name used to identify it in the conduct of its
business or in the ownership of its properties, (ii) in the location of its chief executive
office, its principal place of business, any office in which it maintains books or records
relating to Collateral owned by it (including the establishment of any such new office or
facility), (iii) in its identity or corporate structure such that a filed filing made under
the Uniform Commercial Code becomes misleading or (iv) in its Federal Taxpayer
Identification Number. In extension of the foregoing, the Grantor shall not effect or
permit any change referred to in the preceding sentence unless all filings have been made
under the Uniform Commercial Code or otherwise that are required in order for the Secured
Parties to continue at all times following such change to have a valid, legal and perfected
first priority security interest in all the Collateral.




(b) Without limiting Section 4.1(a), without the prior written consent of the Secured
Parties in each instance, the Grantor shall not change its (i) principal residence, if it is
an individual, (ii) place of business, if it has only one place of business and is not a
Registered Organization, (iii) principal place of business, if it has more than one place of
business and is not a Registered Organization, or (iv) state of incorporation, formation or
organization, if it is a Registered Organization.



Section 4.2. Records. The Grantor shall maintain, at its own cost and expense, such
complete and accurate records with respect to the Collateral owned by it as is consistent with its
current practices and in accordance with such prudent and standard practices used in industries
that are the same as or similar to those in which the Grantor is engaged, but in any event to
include complete accounting records indicating all payments and proceeds received with respect to
any part of the Collateral, and, at such time or times as the Secured Parties may reasonably
request, promptly to prepare and deliver to the Secured Parties a duly certified schedule or
schedules in form and detail satisfactory to the Secured Parties showing the identity, amount and
location of any and all Collateral.



Section 4.3. Periodic Certification; Notice of Changes. In the event there should at
any time be any change in the information represented and warranted herein or in the documents and
instruments executed and delivered in connection herewith, the Grantor shall immediately notify the
Secured Parties in writing of such change (this notice requirement shall be in extension of and
shall not limit or relieve the Grantor of any other covenants hereunder).



Section 4.4. Protection of Security. The Grantor shall, at its own cost and expense,
take any and all actions necessary to defend title to the Collateral against all persons and to
defend the Security Interest of the Secured Parties in the Collateral and the priority thereof
against any Lien.



Section 4.5. Inspection and Verification. The Secured Parties and such persons as the
Secured Parties may reasonably designate shall have the right to inspect the Collateral, all
records related thereto (and to make extracts and copies from such records) and the premises upon
which any of the Collateral is located, to discuss the Grantor’s affairs with the officers of the
Grantor and its independent accountants and to verify under reasonable procedures the validity,
amount, quality, quantity, value, condition and status of, or any other matter relating to, the
Collateral, including, in the case of collateral in the possession of any third Person, by
contacting any account debtor or third Person possessing such Collateral for the purpose of making
such a verification. Out-of-pocket expenses in connection with any inspections by representatives
of the Secured Parties shall be (a) the obligations of the Grantor with respect to any inspection
after the Secured Parties’ demand payment of the Notes or (b) the obligation of the Secured Parties
in any other case.



Section 4.6. Taxes; Encumbrances. At their option, the Secured Parties may discharge,
Liens other than Existing Liens at any time levied or placed on the Collateral and may pay for the
maintenance and preservation of the Collateral to the extent the Grantor fails to do so and the
Grantor shall reimburse the Secured Parties on demand for any payment made or any expense incurred
by the Secured Parties pursuant to the foregoing authorization; provided, however, that nothing in
this Section shall be interpreted as excusing the Grantor from the performance of, or imposing any
obligation on the Secured Parties to cure or perform, any covenants or other obligation of the
Grantor with respect to any Lien or maintenance or preservation of Collateral as set forth herein.



Section 4.7. Use and Disposition of Collateral. The Grantor shall not make or permit
to be made an assignment, pledge or hypothecation of any Collateral or shall grant any other Lien
in respect of the Collateral without the prior written consent of the Secured Parties. The Grantor
shall not make or permit to be made any transfer of any Collateral, other than the sale of
inventory in the ordinary course of business and the sale of obsolete or unnecessary equipment,
and the Grantor shall remain at all times in possession of the Collateral owned by it, other than
with respect to Existing Liens and other liens approved by the Secured Parties.



Section 4.8. Insurance/Notice of Loss. Within a reasonable period of time following
the date of this Agreement, Grantor, at its own expense, shall maintain or cause to be maintained
insurance covering physical loss or damage to the Collateral. In extension of the foregoing and
without limitation, such insurance shall, if requested by the Secured Parties, be payable to the
Secured Parties as loss payee under a “standard” loss payee clause, and the Secured Parties shall
be listed as an “additional insured” on Grantor’s general liability insurance. Such insurance
shall not be terminated, cancelled or not renewed for any reason, including non-payment of
insurance premiums, unless the insurer shall have provided the Secured Parties at least 30 days
prior written notice. Grantor irrevocably makes, constitutes and appoints the Secured Parties (and
all officers, employees or agents designated by the Secured Parties) as its true and lawful agent
and attorney-in-fact for the purpose, at any time following the Secured Parties’ demand for payment
of the Notes, of making, settling and adjusting claims in respect of Collateral under policies of
insurance, endorsing the name of Grantor on any check, draft, instrument or other item of payment
for the proceeds of such policies of insurance and for making all determinations and decisions with
respect thereto. In the event that Grantor at any time or times shall fail to obtain or maintain
any of the policies of insurance required hereby or to pay any premium in whole or part relating
thereto, the Secured Parties may, without waiving or releasing any obligation or liability of
Grantor hereunder, in their sole discretion, obtain and maintain such policies of insurance and pay
such premium and take any other actions with respect thereto as the Secured Parties deem advisable.
All sums disbursed by the Secured Parties in connection and in accordance with this Section,
including reasonable attorneys’ fees, court costs, expenses and other charges relating thereto,
shall be payable upon demand, by Grantor to the Secured Parties and shall be additional Obligations
secured hereby. Grantor shall promptly notify the Secured Parties if any material portion of the
Collateral owned or held by Grantor is damaged or destroyed. The proceeds of any casualty
insurance in respect of any casualty loss of any of the Collateral shall (i) so long as the Secured
Parties have not demanded payment of the Notes, be disbursed to Grantor for direct application by
Grantor solely to the repair or replacement of Grantor’s property so damaged or destroyed, and (ii)
in all other circumstances, be held by the Secured Parties as cash collateral for the Obligations.
The Secured Parties may, at their sole option, disburse from time to time all or any part of such
proceeds so held as cash collateral, upon such terms and conditions as the Secured Parties may
reasonably prescribe, for direct application by the Secured Parties solely to the repair or
replacement of Grantor’s property so damaged or destroyed, or Grantor may apply all or any part of
such proceeds to the Obligations.



Section 4.9. Legend. Grantor shall legend, in form and manner satisfactory to the
Secured Parties, its accounts and its books, records and documents evidencing or pertaining thereto
with an appropriate reference to the fact that such accounts have been assigned to the Secured
Parties and that the Secured Parties have a security interest therein.



ARTICLE V. Further Assurances; Power of Attorney




Section 5.1. Further Assurances. Grantor shall, at its own expense, execute,
acknowledge, deliver and cause to be duly filed all such further instruments and documents and take
all such actions as the Secured Parties may from time to time reasonably request to better assure,
preserve, protect and perfect the Security Interest and the rights and remedies created hereby,
including the payment of any fees and taxes required in connection with the execution and delivery
of this Agreement, the granting of the Security Interest and the filing of any financing statements
(including fixture filings) or other documents in connection herewith or therewith. If any amount
payable under or in connection with any of the Collateral shall be or become evidenced by any
promissory note or other instrument, such note or instrument shall be immediately pledged and
delivered to the Secured Parties, duly endorsed in a manner satisfactory to the Secured Parties.



Section 5.2. Power of Attorney. 



(a) Grantor hereby irrevocably (as a power coupled with an interest) constitutes and appoints
the Secured Parties (and all officers, employees or agents designated by the Secured Parties), its
attorney-in-fact with full power of substitution, for the benefit of the Secured Parties,




(i) to take all appropriate action and to execute all documents and instruments that
may be necessary or desirable to accomplish the purposes of this Agreement, and without
limiting the generality of the foregoing, Grantor hereby grants the power to file one or
more financing statements (including fixture filings), continuation statements, filings with
the United States Patent and Trademark Office or United States Copyright Office (or any
successor office or any similar office in any other country) or other documents for the
purpose of perfecting, confirming, continuing, enforcing or protecting the Security Interest
granted by Grantor, without the signature of Grantor, and naming Grantor as debtor and the
Secured Parties as secured party; and




(ii) at any time following the Secured Parties’ demand for payment of the Notes (i) to
receive, endorse, assign and/or deliver any and all notes, acceptances, checks, drafts,
money orders or other evidences of payment relating to the Collateral or any part thereof;
(ii) to demand, collect, receive payment of, give receipt for and give discharges and
releases of all or any of the Collateral; (iii) to sign the name of Grantor on any invoice
or bill of lading relating to any of the Collateral; (iv) to send verifications of accounts
to any account debtor or any other Person liable for an account; (v) to commence and
prosecute any and all suits, actions or proceedings at law or in equity in any court of
competent jurisdiction to collect or otherwise realize on all or any of the Collateral or to
enforce any rights in respect of any Collateral; (vi) to settle, compromise, compound,
adjust or defend any actions, suits or proceeding relating to all or any of the Collateral;
and (vii) to use, sell, assign, transfer, pledge, make any agreement with respect to or
otherwise deal with all or any of the Collateral, and to do all other acts and things
necessary to carry out the purposes of this Agreement, as fully and completely as though the
Secured Parties were the absolute owner of the Collateral for all purposes; provided,
however, that nothing herein contained shall be construed as requiring or obligating the
Secured Parties to make any commitment or to make any inquiry as to the nature or
sufficiency of any payment received by the Secured Parties, or to present or file any claim
or notice, or to take any action with respect to the Collateral or any part thereof or the
moneys due or to become due in respect thereof or any property covered thereby, and no
action taken or omitted to be taken by the Secured Parties with respect to the Collateral or
any part thereof shall give rise to any defense, counterclaim or offset in favor of Grantor
or to any claim or action against the Secured Parties.



(b) The provisions of this Article shall in no event relieve Grantor of any of its obligations
hereunder with respect to the Collateral or any part thereof or impose any obligation on the
Secured Parties to proceed in any particular manner with respect to the Collateral or any part
thereof, or in any way limit the exercise by the Secured Parties of any other or further right
which it may have on the date of this Agreement or hereafter, whether hereunder, by law or
otherwise.



	 	 	 
	ARTICLE VI.

Section 6.1.

	 	Remedies

Remedies upon Default.
	
 
	 	 







(a) Upon the occurrence and during the continuance of an Event of Default, Grantor
agrees to deliver each item of its Collateral to the Secured Parties on demand, and it is
agreed that the Secured Parties shall have the right to take any of or all the following
actions at the same or different times (but at all times subject to any Existing Liens):
with or without legal process and with or without prior notice or demand for performance, to
take possession of the Collateral and without liability for trespass to enter any premises
where the Collateral may be located for the purpose of taking possession of or removing the
Collateral, exercise Grantor’s right to bill and receive payment for completed work and,
generally, to exercise any and all rights afforded to a secured party under the Uniform
Commercial Code or other applicable law. Without limiting the generality of the foregoing,
Grantor agrees that the Secured Parties shall have the right, subject to the mandatory
requirements of applicable law, to sell or otherwise dispose of all or any part of the
Collateral, at public or private sale or at any broker’s board or on any securities
exchange, for cash, upon credit or for future delivery as the Secured Parties shall deem
appropriate. The Secured Parties shall be authorized at any such sale (if it deems it
advisable to do so) to restrict the prospective bidders or purchasers to persons who will
represent and agree that they are purchasing the Collateral for their own account for
investment and not with a view to the distribution or sale thereof, and upon consummation of
any such sale the Secured Parties shall have the right to assign, transfer and deliver to
the purchaser or purchasers thereof the Collateral so sold. Each such purchaser at any such
sale shall hold the property sold absolutely, free from any claim or right on the part of
Grantor, and Grantor hereby waives (to the extent permitted by law) all rights of
redemption, stay and appraisal which Grantor now has or may at any time in the future have
under any rule of law or statute now existing or hereafter enacted.




(b) The Secured Parties shall give Grantor ten (10) days’ written notice (which Grantor
agrees is reasonable notice within the meaning of Section 9-504(3) of the Uniform Commercial
Code) of the Secured Parties’ intention to make any sale of Collateral. Such notice, in the
case of a public sale, shall state the time and place for such sale and, in the case of a
sale at a broker’s board or on a securities exchange, shall state the board or exchange at
which such sale is to be made and the day on which the Collateral, or portion thereof, will
first be offered for sale at such board or exchange. Any such public sale shall be held at
such time or times within ordinary business hours and at such place or places as the Secured
Parties may fix and state in the notice (if any) of such sale. At any such sale, the
Collateral, or portion thereof, to be sold may be sold in one lot as an entirety or in
separate parcels, as the Secured Parties may (in their sole and absolute discretion)
determine. The Secured Parties shall not be obligated to make any sale of any Collateral if
it shall determine not to do so, regardless of the fact that notice of sale of such
Collateral shall have been given. The Secured Parties may, without notice or publication,
adjourn any public or private sale or cause the same to be adjourned from time to time by
announcement at the time and place fixed for sale, and such sale may, without further
notice, be made at the time and place to which the same was so adjourned. In case any sale
of all or any part of the Collateral is made on credit or for future delivery, the
Collateral so sold may be retained by the Secured Parties until the sale price is paid by
the purchaser or purchasers thereof, but the Secured Parties shall not incur any liability
in case any such purchaser or purchasers shall fail to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may be sold again upon like notice.
At any public (or, to the extent permitted by law, private) sale made pursuant to this
Section, the Secured Parties may bid for or purchase, free (to the extent permitted by law)
from any right of redemption, stay, valuation or appraisal on the part of Grantor (all said
rights being also hereby waived and released to the extent permitted by law), the Collateral
or any part thereof offered for sale and may make payment on account thereof by using any
claim then due and payable to the Secured Parties from Grantor as a credit against the
purchase price, and the Secured Parties may, upon compliance with the terms of sale, hold,
retain and dispose of such property without further accountability to Grantor therefor. For
purposes hereof, a written agreement to purchase the Collateral or any portion thereof shall
be treated as a sale thereof; the Secured Parties shall be free to carry out such sale
pursuant to such agreement and Grantor shall not be entitled to the return of the Collateral
or any portion thereof subject thereto, notwithstanding the fact that after the Secured
Parties shall have entered into such an agreement all Obligations have been paid in full.
As an alternative to exercising the power of sale herein conferred upon it, the Secured
Parties may proceed by a suit or suits at law or in equity to foreclose this Agreement and
to sell the Collateral or any portion thereof pursuant to a judgment or decree of a court or
courts having competent jurisdiction or pursuant to a proceeding by a court-appointed
receiver.



Section 6.2. Application of Proceeds. The Secured Parties shall apply the proceeds of
any collection or sale of the Collateral, as well as any Collateral consisting of cash, as follows:



(a) FIRST, to the payment of all costs and expenses incurred by the Secured Parties in
connection with such collection or sale or otherwise in connection with this Agreement or any of
the Obligations, including all court costs and the fees and expenses of its agents and legal
counsel, and any other costs or expenses incurred in connection with the exercise of any right or
remedy hereunder, under the Purchase Agreement, the Notes and the other Transaction Documents;



(b) SECOND, to the payment in full of the Obligations; and



(c) THIRD, to Grantor, its successors or assigns, or to whomsoever may be lawfully entitled to
receive the same, or as a court of competent jurisdiction may otherwise direct.



Subject to the foregoing, the Secured Parties shall have absolute discretion as to the time of
application of such proceeds, moneys or balances in accordance with this Agreement. Upon any sale
of the Collateral by the Secured Parties (including pursuant to a power of sale granted by statute
or under a judicial proceeding), the receipt of any such proceeds, moneys or balances by the
Secured Parties or of the officer making the sale shall be a sufficient discharge to the purchaser
or purchasers of the Collateral so sold and such purchaser or purchasers shall not be obligated to
see to the application of any part of the purchase money paid over to the Secured Parties or such
officer or be answerable in any way for the misapplication thereof.



Section 6.3. Grant of License to Use Intellectual Property. For the purpose of
enabling the Secured Parties to exercise rights and remedies under this Article at such time as the
Secured Parties shall be lawfully entitled to exercise such rights and remedies, Grantor hereby
grants to the Secured Parties an irrevocable, non-exclusive license (exercisable without payment of
royalty or other compensation to Grantor) to use, license or sub-license any of the Collateral
consisting of intellectual property now owned or hereafter acquired by Grantor, and wherever the
same may be located, and including in such license reasonable access to all media in which any of
the licensed items may be recorded or stored and to all computer software and programs used for the
compilation or printout thereof. The use of such license by the Secured Parties may be exercised,
at the option of the Secured Parties, only following the Secured Parties’ demand for payment of the
Notes.



ARTICLE VII. Miscellaneous




Section 7.1. Notices. All communications and notices hereunder to the Grantor and to
the Secured Parties shall (except as otherwise expressly permitted herein) be in writing and
delivered to the Grantor or the Secured Parties, as the case may be, as provided in the Purchase
Agreement.



Section 7.2. Security Interest Absolute. All rights of the Secured Parties hereunder,
the Security Interest and all obligations of Grantor hereunder shall be absolute and unconditional
irrespective of (a) any lack of validity or enforceability of the Purchase Agreement, the Notes,
any Transaction Document or any agreement with respect to any of the Obligations or any other
agreement or instrument relating to any of the foregoing, (b) any change in the time, manner or
place of payment of, or in any other term of, all or any of the Obligations, or any other amendment
or waiver of or any consent to any departure from the Purchase Agreement, the Notes, any
Transaction Document or any other agreement or instrument, (c) any exchange, release or
non-perfection of any Lien on other collateral, or any release or amendment or waiver of or consent
under or departure from any guarantee, securing or guaranteeing all or any of the Obligations, or
(d) any other circumstance that might otherwise constitute a defense available to, or a discharge
of, Grantor in respect of the Obligations or this Agreement.



Section 7.3. Survival of Agreement. All covenants, agreements, representations and
warranties made by Grantor herein and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement shall be considered to have been relied
upon by the Secured Parties and shall survive the making of the loan and the execution and delivery
to the Secured Parties of the Notes, regardless of any investigation made by the Secured Parties or
on their behalf; and shall continue in full force and effect until this Agreement shall terminate.



Section 7.4. Binding Effect; Several Agreement; Successors and Assigns. This
Agreement shall become effective as to Grantor when a counterpart hereof executed on behalf of
Grantor shall have been delivered to the Secured Parties and a counterpart hereof shall have been
executed on behalf of the Secured Parties, and thereafter shall be binding upon Grantor and the
Secured Parties and their respective successors and assigns, and shall inure to the benefit of
Grantor, the Secured Parties and their respective successors and assigns, except that Grantor shall
not have the right to assign or transfer its rights or obligations hereunder or any interest herein
or in the Collateral (and any such assignment or transfer shall be void) except as expressly
contemplated by this Agreement, the Purchase Agreement, the Notes or the other Transaction
Documents.



Section 7.5. Secured Parties’ Fees and Expense; Indemnification.




(a) Grantor agrees to pay upon demand to the Secured Parties the amount of any and all
reasonable expenses, including all reasonable fees, disbursements and other charges of its
counsel and of any experts or agents, which the Secured Parties may incur in connection with
(i) the administration of this Agreement (including the customary fees and charges of the
Secured Parties for any audits conducted by them or on their behalf with respect to the
accounts inventory), (ii) the custody or preservation of, or the sale of, collection from or
other realization upon any of the Collateral, (iii) the exercise, enforcement or protection
of any of the rights of the Secured Parties hereunder or (iv) the failure of Grantor to
perform or observe any of the provisions hereof.




(b) Grantor agrees to indemnify the Secured Parties and the agent, contractors and
employees of the Secured Parties (collectively, the “Indemnitees”) against, and hold
each of them harmless from, any and all losses, claims, damages, liabilities and related
expenses, including reasonable fees, disbursements and other charges of counsel, incurred by
or asserted against any of them arising out of, in any way connected with, or as a result
of, the execution, delivery, or performance of this Agreement or any agreement or instrument
contemplated hereby or any claim, litigation, investigation or proceeding relating hereto or
to the Collateral, whether or not any Indemnitee is a party thereto; provided that such
indemnity shall not, as to any Indemnitee, be available to the extent that such losses,
claims, damages, liabilities or related expenses are determined by a court of competent
jurisdiction by final and nonappealable judgment to have resulted from the gross negligence
or willful misconduct of such Indemnitee.




(c) Any such amounts payable as provided hereunder shall be additional Obligations
secured hereby. The provisions of this Section shall remain operative and in full force and
effect regardless of the termination of this Agreement, the Purchase Agreement, the Notes or
the other Transaction Documents, the consummation of the transactions contemplated hereby,
the repayment of any of the Obligations, the invalidity or unenforceability of any term or
provision of this Agreement, the Purchase Agreement, the Notes or the other Transaction
Documents, or any investigation made by or on behalf of the Secured Parties. All amounts
due under this Section shall be payable on written demand therefor.



Section 7.6. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING EFFECT TO ANY OF THE
CONFLICTS OF LAW PRINCIPLES WHICH WOULD RESULT IN THE APPLICATION OF THE SUBSTANTIVE LAW OF ANOTHER
JURISDICTION. THIS AGREEMENT SHALL NOT BE INTERPRETED OR CONSTRUED WITH ANY PRESUMPTION AGAINST
THE PARTY CAUSING THIS AGREEMENT TO BE DRAFTED.



Section 7.7. Waivers; Amendment. 



(a) No failure or delay of the Secured Parties in exercising any power or right hereunder
shall operate as a waiver thereof, nor shall any single or partial exercise of any such right or
power, or any abandonment or discontinuance of steps to enforce such a right or power, preclude any
other or further exercise thereof or the exercise of any other right or power. The rights and
remedies of the Secured Parties hereunder and under the Purchase Agreement are cumulative and are
not exclusive of any rights or remedies that they would otherwise have. No waiver of any
provisions of this Agreement, the Purchase Agreement, the Notes or the other Transaction Documents
or consent to any departure by Grantor therefrom shall in any event be effective unless the same
shall be permitted by paragraph (b) below, and then such waiver or consent shall be effective only
in the specific instance and for the purpose for which given. No notice to or demand on Grantor in
any case shall entitle Grantor to any other or further notice or demand in similar or other
circumstances.



(b) Neither this Agreement nor any provision hereof may be waived, amended or modified except
pursuant to an agreement or agreements, in writing entered into by the Secured Parties and Grantor.



Section 7.8. WAIVER OF JURY TRIAL. EACH PARTY HERETO HEREBY WAIVES, TO THE FULLEST
EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS AGREEMENT, THE
PURCHASE AGREEMENT OR THE NOTES. EACH PARTY HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR
ATTORNEY OF ANY OTHER PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B) ACKNOWLEDGES THAT IT
AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE PURCHASE AGREEMENT
AND THE NOTES, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS
SECTION.



Section 7.9. Severability. In the event any one or more of the provisions contained
in this Agreement should be held invalid, illegal or unenforceable in any respect, the validity,
legality and enforceability of the remaining provisions contained herein shall not in any way be
affected or impaired thereby (it being understood that the invalidity of a particular provision in
a particular jurisdiction shall not in and of itself affect the validity of such provision in any
other jurisdiction). The parties shall endeavor in good-faith negotiations to replace the invalid,
illegal or unenforceable provisions with valid provisions the economic effect of which comes as
close as possible to that of the invalid, illegal or unenforceable provisions.



Section 7.10. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall constitute an original but all of which when taken together shall
constitute but one contract. Each party shall be entitled to rely on a facsimile signature of any
other party hereunder as if it were an original.



Section 7.11. Jurisdiction; Consent to Service of Process. 




(a) Grantor hereby irrevocably and unconditionally submits, for itself and its
property, to the nonexclusive jurisdiction of any New York State court or Federal court of
the United States of America sitting in New York City, and any appellate court from any
thereof, in any action or proceeding arising out of or relating to this Agreement, the
Purchase Agreement or the Notes, or for recognition or enforcement of any judgment, and each
of the parties hereto hereby irrevocably and unconditionally agrees that all claims in
respect of any such action or proceeding may be heard and determined in such New York State
or, to the extent permitted by law, in such Federal court. Each of the parties hereto
agrees that a final judgment in any such action or proceeding shall be conclusive and may be
enforced in other jurisdictions by suit on the judgment or in any other manner provided by
law. Nothing in this Agreement shall affect any right that the Secured Parties may
otherwise have to bring any action or proceeding relating to this Agreement, the Purchase
Agreement, the Notes or the other Transaction Documents against Grantor or its properties in
the courts of any jurisdiction.




(b) Grantor hereby irrevocably and unconditionally waives, to the fullest extent it may
legally and effectively do so, any objection which it may now or hereafter have to the
laying of venue of any suit, action or proceeding arising out of or relating to this
Agreement, the Purchase Agreement, the Notes or the other Transaction Documents in any New
York State or Federal court. Each of the parties hereto hereby irrevocably waives, to the
fullest extent permitted by law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.




(c) Each party to this Agreement irrevocably consents to service of process in the
manner provided for notices in Section 7.1. Nothing in this Agreement will affect the right
of any party to this Agreement to process in any other manner permitted by law.



Section 7.12. Termination. This Agreement and the Security Interest shall terminate
when all the Obligations have been paid in full, at which time the Secured Parties shall execute
and deliver to Grantor, at Grantor’s expense, all Uniform Commercial Code termination statements
and similar documents which Grantor shall reasonably request to evidence such termination. Any
execution and delivery of termination statements or documents pursuant to this Section shall be
without recourse to or warranty by the Secured Parties.



Section 7.13. Prejudgment Remedy Waiver. Grantor acknowledges that this Agreement,
the Purchase Agreement, the Notes and the other Transaction Documents evidence a commercial
transaction and that it could, under certain circumstances have the right, to notice of and hearing
on the right of the Secured Parties to obtain a prejudgment remedy, such as attachment, garnishment
and/or replevin, upon commencing any litigation against Grantor. Notwithstanding, Grantor hereby
waives all rights to notice, judicial hearing or prior court order to which it might otherwise have
the right under any state or federal statute or constitution in connection with the obtaining by
the Secured Parties of any prejudgment remedy by reason of this Agreement, the Purchase Agreement,
the Notes, the other Transaction Documents or by reason of the Obligations or any renewals or
extensions of the same. Grantor also waives any and all objection which it might otherwise assert,
now or in the future, to the exercise or use by the Secured Parties of any right of setoff,
repossession or self help as may presently exist under statute or common law.



1




IN WITNESS WHEREOF, the parties have duly executed this Security Agreement as of the
day and year first written above.



VERTICALNET, INC.



By: /s/ Gene S. Godick     

Name: Gene S. Godick

Title: Executive Vice President and Chief Financial Officer




2



Secured Party: Alpha Capital AG     



Please print Secured Party name




By: /s/ Konrad Ackerman     



Name: Konrad Ackermann

Title: Director



Secured Party: JGB Capital L.P.      Please print Secured Party name



By:     /s/ Brett Cohen      Name: Brett Cohen

Title: President, JGB Management Inc., as General Partner




3



Secured Party: Harborview Master Fund LP     



Please print Secured Party name



By:     /s/ Jonno Elliott      Name: Navigator Management Ltd.



Title: Authorized Signatory



4



Secured Party: Portside Growth and Opportunity Fund_



Please print Secured Party name



By:     /s/ Jeffrey Smith      Name: Jeffrey Smith



Title: Authorized Signatory



5



	 
	 

	Secured Party:Iroquois Master Fund, Ltd._

	 

	Please print Secured Party name







By:     /s/ Richard Abbe      Name: Richard Abbe



Title: Authorized Signatory



6



Secured Party: Smithfield Fiduciary LLC_



Please print Secured Party name



By:     /s/ Adam J. Chill       Name: Adam J. Chill



Title: Authorized Signatory



7



Secured Party: Bristol Investment Fund, Ltd.



Please print Secured Party name



By:     /s/ Paul Kessler       Name: Paul Kessler



Title: Director



8



Secured Party: Nite Capital LP_



Please print Secured Party name



By:     /s/ Keith A. Goodman      Name: Keith A. Goodman



Title: Manager of the General Partner



9



Secured Party: Castle Creek Technology Partners LLC_



Please print Secured Party name



By:     /s/ Stephen D. Friend      Name: Stephen D. Friend



Title: Managing Director of the Investment Manager



10



Secured Party: DKR Soundshore Oasis Holding Fund Ltd. Please print Secured Party name



By:     /s/ Brad Caswell      Name: Brad Caswell



Title: Director



11



Secured Party: CAMOFI Master LDC      Please print Secured Party name



By:     /s/ Richard Smithline      Name: Richard Smithline



Title: Director



12



Secured Party: Whalehaven Capital Fund Limited      Please print Secured Party name



By:     /s/ Evan Schemenauer      Name: Evan Schemenauer



Title: Director



13



Secured Party: Platinum Long term Growth I, LLC      Please print Secured Party name



By:     /s/ Mark Nordlicht     Name: Mark Nordlicht



Title: Managing Member



14




EXHIBIT A

Secured Parties








15






SCHEDULE A

Places of Business; Chief Executive Office; Filing Locations





16