Exhibit 10.26
THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS EVIDENCED HEREBY ARE SUBORDINATE IN THE MANNER AND TO
THE EXTENT SET FORTH IN THAT CERTAIN SUBORDINATION AND
INTERCREDITOR AGREEMENT (THE “SUBORDINATION
AGREEMENT” ) DATED AS OF DECEMBER 19, 2006 AMONG
VERTICALNET, INC., THE SENIOR NOTEHOLDERS PARTY THERETO (THE
“SENIOR CREDITORS” ) AND RADCLIFFE SPC, LTD. FOR
AND ON BEHALF OF THE CLASS A CONVERTIBLE CROSSOVER SEGREGATED
PORTFOLIO; AND RADCLIFFE SPC, LTD. FOR AND ON BEHALF OF THE CLASS A
CONVERTIBLE CROSSOVER SEGREGATED PORTFOLIO, BY ITS ACCEPTANCE
HEREOF, IRREVOCABLY AGREES TO BE BOUND BY THE PROVISIONS OF THE
SUBORDINATION AGREEMENT.
SECURITY AGREEMENT
THIS 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 December 19, 2006, made by VERTICALNET, INC., a
Pennsylvania corporation (the “Company” ) and
each of its domestic Subsidiaries now or hereafter a party hereto
(individually and collectively with the Company,
“Grantor” ), in favor of RADCLIFFE SPC, LTD. FOR
AND ON BEHALF OF THE CLASS A CONVERTIBLE CROSSOVER SEGREGATED
PORTFOLIO (the “Secured Party” ).
WHEREAS, the Company has issued a
promissory note to the Secured Party (the “Note”
) pursuant to a Note Purchase Agreement, dated as of May 15,
2006 (the “ Purchase Agreement ”), by and among
the Company and the Secured Party;
WHEREAS, Section 14(g) of the
Note provides that if the Company does not obtain the consent of
the Senior Creditors to permit the Company to grant subordinated
Liens and security interests to the Secured Party in all assets of
the Company and of its Subsidiaries on or before January 31,
2007, the Secured Party may declare the outstanding Principal of,
and all accrued Interest on, and any other amounts due under the
Note immediately due and payable;
WHEREAS, the Company has obtained
the consent of the Senior Creditors to the execution and delivery
of this Agreement;
WHEREAS, the Secured Party and the
Company agree that each Grantor execute and deliver to the Secured
Party this Agreement providing for the grant to the Secured Party
of a continuing security interest in all personal property and
assets of each Grantor, all in substantially the form hereof to
secure all Obligations (hereinafter defined); and
WHEREAS, the Company, each Grantor
and the Secured Party agree that the execution and delivery of this
Agreement fully satisfies the Company’s obligations pursuant
to Section 14(g) of the Note and as a result the Secured Party
cannot declare the Note and any other amounts due under the Note
due and payable pursuant to the terms of Section 14(g) of the
Note.
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 Note, 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 each Grantor and all personal and
fixture property of each Grantor 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 such 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 such
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.
Notwithstanding any of the foregoing, “Collateral”
shall not include Excluded Collateral.
“ 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 Note.
“Excluded
Collateral ” means
any of the following: (i) all of the Company’s rights,
title and interest in, to and under that certain Directors, Officer
and Corporate Liability Insurance Policy No. 14-MGU-04-A3710,
effective February 11, 2004 through February 11, 2005,
12:01 AM (the “ Policy ”) issued by U.S.
Specialty Insurance Company (the “ Insurer ”);
(ii) all claims and causes of action resulting from that
certain action filed against the Company by Jodek Charitable Trust,
R.A. (docketed at No. 04-CV-04455 in the United States
District Court for the Eastern District of Pennsylvania) (the
“ Action ”) and resulting from and arising
under, out of or relating to, in any fashion, the Policy, including
but not limited to the Insurer’s actions and inactions under
the Policy; the Insurer’s denial of coverage, disclaiming of
coverage or limitation
or coverage under the Policy for the claims
asserted in the Action; the Insurer’s refusal to cover and
pay any amount that may be agreed upon by the parties to the Action
in the settlement thereof (the “ Settlement Amount
”), and the Insurer’s refusal to contribute to the
Settlement Amount, as well as claims against the Insurer for bad
faith, including but not limited to claims under 42 Pa.C.S.
Section 8371 (all of the foregoing, the “ Insurance
Claims ”); and (iii) all proceeds and products of
the foregoing.
“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.
“ Note ” 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 Company and each other Grantor to the Secured Party
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 the Note.
“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
Commonwealth of Pennsylvania.
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, each Grantor
hereby conveys, assigns, sets over, mortgages, pledges,
hypothecates and transfers to the Secured Party, and hereby grants
to the Secured Party, its 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 Party to, or in
any way alter or modify, any obligation or liability of each
Grantor with respect to or arising out of the
Collateral.
ARTICLE III.
Representations and
Warranties
Each Grantor represents and warrants
to the Secured Party that:
Section 3.1. Title and
Authority . Each 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 Party 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 Party for filing in the appropriate office
in the jurisdiction specified in Schedule 3.2 , 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 Party 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 a Grantor’s name, location,
identity or corporate structure. Each Grantor’s name is
listed on Schedule 3.2 attached hereto identically to how it
appears on such Grantor’s 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 the Permitted Liens (as such term is defined in the
Note), 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 Permitted Lien on any of the
Collateral.
Section 3.4. Absence of
Other Liens . Each Grantor’s Collateral is owned by
such Grantor free and clear of any Lien other than Permitted Liens.
Without limiting the foregoing and except as set forth on
Schedule 3.4 to this Agreement, no Grantor has filed or
consented to any filing described in Schedule A in favor of
any Person other than the Secured Party, 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 Party.
Section 3.5. Valid and
Binding Obligation . This Agreement constitutes the legal,
valid and binding obligation of each Grantor, enforceable against
such 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) Each Grantor shall notify the
Secured Party 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, each 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 Party to continue at all
times following such change to have a valid, legal and perfected
security interest in all the Collateral.
(b) Without limiting
Section 4.1(a) , without the prior written consent of
the Secured Party in each instance, no Grantor shall 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 . Each 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 such 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 Party may reasonably request, promptly
to prepare and deliver to the Secured Party a duly certified
schedule or schedules in form and detail satisfactory to the
Secured Party showing the identity, amount and location of any and
all Collateral.
Section 4.3. 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, each Grantor shall immediately notify the Secured Party
in writing of such change (this notice requirement shall be in
extension of and shall not limit or relieve any Grantor of any
other covenants hereunder).
Section 4.4. Protection
of Security . Each 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 Party in the Collateral and the priority thereof
against any Lien other than the Permitted Liens.
Section 4.5. Inspection
and Verification . The Secured Party and such persons as
the Secured Party 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 each Grantor’s
affairs with the officers of such 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
Party shall be (a) the obligations of each Grantor with
respect to any inspection after the Secured Party’ demand
payment of the Note or (b) the obligation of the Secured Party
in any other case.
Section 4.6. Taxes;
Encumbrances . At their option, the Secured Party may
discharge, Liens other than Permitted Liens at any time levied or
placed on the Collateral and may pay for the maintenance and
preservation of the Collateral to the extent any Grantor fails to
do so and each Grantor shall reimburse the Secured Party on demand
for any payment made or any expense incurred by the Secured Party
pursuant to the foregoing authorization; provided, however, that
nothing in this Section shall be interpreted as excusing any
Grantor from the performance of, or imposing any obligation on the
Secured Party to cure or perform, any covenants or other obligation
of any Grantor with respect to any Lien or maintenance or
preservation of Collateral as set forth herein.
Section 4.7. Use and
Disposition of Collateral . No Grantor shall 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 Party. No Grantor shall
make or permit to be made any transfer of any Collateral, other
than the licensing of software in the ordinary course of business
and the sale of obsolete or unnecessary equipment, and each Grantor
shall remain at all times in possession of the Collateral owned by
it, other than with respect to Permitted Liens and other liens
approved by the Secured Party.
Section 4.8.
Insurance/Notice of Loss . Within a reasonable period
of time following the date of this Agreement, each 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 Party, be payable to the Secured Party as
loss payee under a “standard” loss payee clause, and
the Secured Party shall be listed as an “additional
insured” on such 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 Party at least 30 days
prior written notice. Each Grantor irrevocably makes, constitutes
and appoints the Secured Party (and all officers, employees or
agents designated by the Secured Party) as its true and lawful
agent and attorney-in-fact for the purpose, at any time following
the Secured Party’s demand for payment of the Note, of
making, settling and adjusting claims in respect of Collateral
under policies of insurance, endorsing the name of such 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 a Grantor at any
time or times shall fail to obtain or maintain any of the policies
of insurance required hereby
