Summary of VERTICALNET INC

Entry into a Material Definitive Agreement, Creation of a Direct Financial Obliga

Item 1.01 Entry into a Material Definitive Agreement.

On May 15, 2006, Verticalnet, Inc. (the "Company") entered into a Note Purchase Agreement ("Purchase Agreement") with an institutional investor (the "Investor"). Under the terms of the Purchase Agreement, the Investor agreed to loan the Company $4.0 million and the Company agreed to issue to the Investor a senior subordinated discounted promissory note in the principal amount of $5.3 million (the "Discount Note").

Pursuant to the Purchase Agreement, the Company agreed to use commercially reasonable efforts to obtain the consent of the holders of the Company's senior secured convertible promissory notes issued in August, 2005 (the "Senior Notes"), to permit the Company to grant a subordinated lien and security interest in all of the Company's and its subsidiaries' assets to the Investor (the "Consent").

The Company issued the Discount Note on May 18, 2006. Interest on the principal amount of the Discount Note accrues at 6.00% per annum payable quarterly in arrears, beginning July 2006 until the maturity date. The principal amount of the Discount Note will become due on the earlier of: (i) 18 months from the date of issuance; (ii) January 31, 2007, if the Company is unable to obtain the Consent; or (iii) the date on which the Company consummates a fundamental transaction, which is defined to include a transaction involving the sale of substantially all of its asset or any merger, consolidation or similar transaction involving the transfer of greater than 50% of the Company's outstanding voting securities. Also, in the event that that Company is unable to obtain the Consent prior to June 17, 2006, the interest rate will increase to 12.00% per annum.

Furthermore, the Discount Note provides that upon the occurrence of certain events, including the failure to make a timely payment or the failure to maintain the listing of the Company's stock on a satisfactory exchange or market including the OTC Bulletin Board, the interest rate will increase to 14.00% per annum.

The transaction resulted in net proceeds to the Company of approximately $3.7 million, after deducting the estimated offering costs and fees. The Company intends to use these proceeds for working capital and general corporate purposes, subject to certain exceptions and limitations set forth in the Purchase Agreement.

The foregoing is only a summary of the Purchase Agreement and the Discount Note. You are urged to read each of the agreements attached to this report as Exhibit 10.1 and 4.1 in its entirety for a more complete description of the terms and conditions of such agreement.

The information regarding the Purchase Agreement and the Discount Note set forth above does not purport to be complete and is qualified in its entirety by reference to the full text of the Purchase Agreement and the Discount Note, copies of which are filed as Exhibits 10.1 and 4.1, respectively, to this current report, and are incorporated herein by reference.