VERT Verticalnet (MM)

Merger Agreement

On October 25, 2007, Verticalnet, Inc., a Pennsylvania corporation (“Verticalnet” or the “Company”), BravoSolution S.p.A, a corporation organized under the laws of Italy (“BravoSolution”), and BravoSolution U.S.A., Inc., a Pennsylvania corporation and wholly-owned subsidiary of BravoSolution (“Merger Sub”), entered into an Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which Merger Sub will merge with and into the Company and the Company will become a wholly-owned subsidiary of BravoSolution (the “Merger”). Pursuant to the Merger Agreement, at the effective time of the Merger: (i) all outstanding shares of common stock of the Company will be converted into the right to receive $2.56 per share in cash without interest (the “Common Consideration”); (ii) all outstanding shares of Series B Preferred Stock of the Company will be converted into the right to receive either $0.38750 or $0.26875 per share in cash (in accordance with the Merger Agreement) without interest; and (iii) all outstanding shares of Series C Preferred Stock, par value $0.01 per share, of the Company (the “Preferred Stock”) will be canceled and retired, and no payment or distribution shall be made with respect thereto.

The Merger Agreement also provides for the cancellation of options, warrants, and restricted stock units to purchase shares of the Company’s common stock (other than certain specified securities), to the extent outstanding and unexercised immediately prior to the effective time of the Merger. Holders of such securities will receive from the Company an amount (without interest and subject to any required tax withholding), if any, in cash equal to the number of shares of Company common stock subject to the security multiplied by the excess, if any, of the Common Consideration over the exercise or conversion price per share of Company common stock underlying such security.

The Company will call and hold a special shareholder meeting as soon as reasonably practicable for the purpose of voting on the adoption of the Merger Agreement and the related Plan of Merger, and the approval of the Merger. The Company’s Board of Directors has unanimously approved the Merger Agreement, the related Plan of Merger and the Merger, and recommends that the Company’s shareholders approve the Merger. Consummation of the Merger is subject to customary conditions, including, among other things, approval of the Merger Agreement and the related Plan of Merger by the Company’s shareholders.

Pursuant to the Merger Agreement, the Company will solicit alternative acquisition proposals from third parties through November 19, 2007. After this period, the Company is not permitted to solicit other proposals and may not share information or have discussions regarding alternative proposals, except in certain circumstances. The Company may terminate the Merger Agreement under certain circumstances, including if its Board of Directors determines in good faith that it has received a superior proposal, and otherwise complies with certain terms of the Merger Agreement.

The foregoing description of the Merger Agreement is qualified in its entirety by reference to the full text of the Merger Agreement, which is attached as Exhibit 2.1 to this report and is incorporated in this report by reference. The Merger Agreement has been attached to provide investors with information regarding its items. It is not intended to provide any other factual information about the Company, BravoSolution or Merger Sub. In particular, the assertions embodied in the representations and warranties contained in the Merger Agreement are qualified by information in confidential disclosure schedules provided by the Company to BravoSolution and Merger Sub in connection with the signing of the Merger Agreement. These disclosure schedules contain information that modifies, qualifies and creates exceptions to the representations and warranties set forth in the Merger Agreement. Moreover, certain representations and warranties in the Merger Agreement were used for the purpose of allocating risk between the Company and BravoSolution and Merger Sub, rather than establishing matters as facts. Accordingly, you should not rely on the representations and warranties in the Merger Agreement as characterizations of the actual state of facts about the Company, BravoSolution and Merger Sub.

Voting Agreement

In connection with the execution of the Merger Agreement, BravoSolution, Merger Sub and the Company entered into a Voting Agreement (the “Voting Agreement”) with certain directors, officers and shareholders of the Company. Pursuant to the Voting Agreement, the stockholders agreed to vote their shares of the Company’s capital stock in favor of the Merger. The Voting Agreement shall terminate if the Merger Agreement is terminated in accordance with its terms, which includes as a result of a change in recommendation by the Company’s Board of Directors.

The foregoing description of the Voting Agreement is qualified in its entirety by reference to the full text of the Voting Agreement, which is attached as Exhibit 99.1 to this report and is incorporated in this report by reference.

Series C Preferred Stock Purchase Agreement

In connection with the execution of the Merger Agreement, on October 25, 2007, the Company entered into a Stock Purchase Agreement (“Purchase Agreement”) with Merger Sub. Pursuant to the Purchase Agreement, Merger Sub purchased 322,007 shares of Preferred Stock for a purchase price of $824,337.92. The shares of Preferred Stock were issued at the closing of the transactions contemplated by the Purchase Agreement on October 31, 2007. The foregoing description of the Purchase Agreement is qualified in its entirety by reference to the full text of the Purchase Agreement, which is attached as Exhibit 99.2 to this report and is incorporated in this report by reference.

In accordance with the terms of the Statement of Designation with Respect to the Shares of Series C Preferred Stock filed by the Company on October 26, 2007 with the Secretary of State of the Commonwealth of Pennsylvania (the “Statement of Designation”), the Preferred Stock is convertible into Common Stock on a one-for-one basis, subject to adjustment. The Preferred Stock transaction resulted in net proceeds to the Company of approximately $800,000 after deducting estimated offering costs and fees. The Company intends to use the proceeds from the share issuance for immediate working capital needs. Merger Sub will be entitled to vote on the Merger with respect to these shares of Preferred Stock, subject to certain restrictions set forth in the Statement of Designation. The foregoing description of the Statement of Designation is qualified in its entirety by reference to the full text of the Statement of Designation, which is attached as Exhibit 3.1 to this report and is incorporated in this report by reference.

In addition, the Company entered into a Registration Rights Agreement with Merger Sub (the “Registration Agreement”) whereby the Company granted certain registration rights with respect to the shares of Common Stock issuable upon conversion of the Preferred Stock. The foregoing description of the Registration Agreement is qualified in its entirety by reference to the full text of the Registration Agreement, which is attached as Exhibit 99.3 to this report and is incorporated in this report by reference.

Waiver Agreement

As previously disclosed, on May 15, 2006, the Company issued and sold to an investor (the “Discount Note Holder”) a senior subordinated discounted promissory note, as amended (the “Discount Note”), in the original principal amount of $5.3 million.

In connection with the Purchase Agreement, on October 25, 2007, the Company and the Discount Note Holder entered into a Waiver to the Discount Note (the “Waiver Agreement”), whereby the Discount Note Holder waived any right to a portion of the proceeds received by the Company under the Purchase Agreement with respect to the sale of Preferred Stock. All other terms of the Discount Note remained unchanged.

The terms of the Discount Note were originally disclosed in a current report on Form 8-K filed on May 19, 2006 and a copy of the Discount Note was filed as Exhibit 4.1 thereto. The foregoing description of the Waiver Agreement is qualified in its entirety by reference to the full text of the Waiver Agreement, which is attached as Exhibit 99.4 to this report and is incorporated in this report by reference.