EXHIBIT 10.1
 
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EMPLOYMENT AGREEMENT

Bridgeline Digital, Inc., a Delaware Corporation (“Employer”) and Erez Katz
(“Employee”), in consideration of the mutual promises made herein, agree as
follows:

ARTICLE 1
TERM OF EMPLOYMENT

Section 1.1                      Specified Period.  Employer hereby employs
Employee, and Employee hereby accepts employment with Employer for the term of
twelve (12) months, with the period beginning on October 1, 2010 (the
“Commencement Date”), and terminating on September 30, 2011 (“Initial Term”).

Section 1.2                      Succeeding Term.  At the end of the Initial
Term, or any succeeding one year term, this Employment Agreement shall renew for
successive periods of one (1) year each (a “Succeeding Term”) only if Employer
gives written notice of renewal to Employee not less than sixty (60) days prior
to the end of the Initial Term or any Succeeding Term, as applicable.  If such
notice of renewal is not provided to Employee by Employer this Employment
Agreement will terminate, except the provisions of Sections 2.3, 2.4, 2.5 and
2.6 shall continue in force so long as Employee remains employed by Employer or
any Affiliate of Employer, whether under this Agreement or not, and whether as a
consultant or not, and shall survive any termination of employment under this
Agreement for the periods specified therein, all as is more specifically
provided in Section 7.10. Once this Employment Agreement terminates then
Employee shall become an employee at will at the end of the Initial Term or
Succeeding Term.

Section 1.3                      Employment Term Defined. As used herein, the
phrase “employment term” refers to the entire period of employment of Employee
by Employer hereunder, whether such employment is during the Initial Term,
Succeeding Term or, following the end of the Succeeding Term, as an employee at
will.

ARTICLE 2
DUTIES AND OBLIGATIONS OF EMPLOYEE

Section 2.1                      General Duties.  Employee shall serve as
Executive Vice President and Chief Operating Officer of the Employer.  In such
capacity, Employee shall do and perform all services, acts or things consistent
within the scope of his employment and with Employee’s skill and expertise in
accordance with the instructions of and policies set by Employer’s Chief
Executive Officer, or his designee.  Employee shall perform such services at,
5555 Triangle Parkway, Suite 250, Norcross, Georgia  30092 or at such other
location within a thirty (30) mile radius of said address as may be designated
by Employer.  Employee shall be available to make business trips both
domestically and internationally for the purpose of meeting with and consulting
with other Employer management, customers, prospects, strategic alliances,
vendors, shareholders, potential investors, and analysts.

Section 2.2                      Devotion to Employer’s Business.

(a)           Employee shall devote his entire productive time, ability and
attention to diligently promote and improve the business of Employer during the
Term.

(b)           Employee shall not engage in any other business duties or pursuits
whatsoever, or directly or indirectly render any services of a business,
commercial or professional nature to any other person or organization, whether
for compensation or otherwise, without the prior written consent of Employer’s
Chief Executive Officer .  This Agreement shall not be interpreted to prohibit
Employee from making passive personal investments or conducting private business
affairs if those private business affairs do not materially interfere with the
services required under this Agreement.
 

          Employee   Bridgeline

       

 
 

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Section 2.3                      Confidential Information; Tangible Property;
Competitive Activities.

(a)           Employee shall hold in confidence and not use or disclose to any
person or entity without the express written authorization of Employer, either
during the term of employment or any time thereafter, secret or confidential
information of Employer, as well as secret or confidential information and
materials received in confidence from third parties by Employee or Employer.  If
any confidential information described below is sought by legal process,
Employee will promptly notify Employer and will cooperate with Employer in
preserving its confidentiality in connection with any legal proceeding.

The parties hereto hereby stipulate that, to the extent it is not known
publicly, the information described in this Section (herein referred to as
“Confidential Information”) is important, material and has independent economic
value (actual or potential) from not being generally known to others and that
any breach of any terms of this Section 2.3 is a material breach of this
Agreement:  (i) the names, buying habits and practices of Employer’s customers
or prospective customers; (ii) Employer’s sales and marketing strategy and
methods and related data; (iii) the names of Employer’s vendors and suppliers;
(iv) cost of materials/services; (v) the prices Employer obtains or has obtained
or for which it sells or has sold its products or services; (vi) development
costs; (vii) compensation paid to employees or other terms of employment; (viii)
Employer's past and projected sales volumes; (ix) confidential information
relating to actual products, proposed products or enhancements of existing
products, including, but not limited to, source code, programming instructions,
engineering methods and techniques, logic diagrams, algorithms, development
environment, software methodologies, and technical specifications for Employer’s
web design and content management software.  Employee Confidential Information
shall also include all information which Employee should reasonably understand
is secret or confidential information, if Employee has participated in or
otherwise been involved with the development, analysis, invention or origination
of such Confidential Information belonging to Employer, including, without
limitation, methods, know-how, formula, customer and supplier lists, personnel
and financial data, business plans, as well as product information, product
plans and product strategies. Notwithstanding the foregoing, “Confidential
Information” does not include any information which (A) is now available to the
public or which becomes available to the public, (B) is or becomes available to
Employee from a source other than Employer and such disclosure is not a breach
of a confidentiality agreement with Employer, or (C) is required to be disclosed
by any government agency or in connection with a court proceeding.
 
All Confidential Information, as well as all software code, methodologies,
models, samples, tools, machinery, equipment, notes, books, correspondence,
drawings and other written, graphical or electromagnetic records relating to any
of the products of Employer or relating to any of the Confidential Information
of Employer which Employee shall prepare, use, construct, observe, possess, or
control shall be and shall remain the sole property of Employer and shall be
returned by Employee upon termination of employment.

(b)        During his employment and for twelve (12) months after the
termination of his employment for any reason whatsoever, Employee shall not,
directly or indirectly, without the written consent of Employer:  (i) invest
(except for the ownership of less than 1% of the capital stock of a publicly
held company), or hold a directorship or other position of authority in any of
the Employer's Direct Competitors (“Direct Competitors” defined as: any person
or entity, or a department or division of an entity, whereby more than 25% of
the person’s or entity’s total revenues are derived from the Competitive
Services or Products (“Competitive Services or Products” defined as the design
and development for third parties of: Internet/Intranet/Extranet Web sites and
Web applications, content management software, web analytics software, eCommerce
software, eMarketing software, search engine optimizaiton, search engine
marketing services, or Web hosting services),  (ii) undertake preparation of or
planning for an organization or offering of Competitive Services or Products,
(iii) combine or collaborate with other employees or representatives of Employer
or any third party for the purpose of organizing, engaging in, or offering
Competitive Services or Products, or (iv) be employed by, serve as a consultant
to or otherwise provide services to (whether as principal, partner, shareholder,
member, officer, director, stockholder, agent, joint venturer, creditor,
investor or in any other capacity), or participate in the management of a
 

          Employee   Bridgeline

       
 
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Direct Competitor or participate in any other business that Employer may be
engaged or is planning to undertake in at the date of the termination of this
Agreement. 

(c)           During his employment and for twelve (12) months after the
termination of such employment for any reason whatsoever, Employee shall not
become employed by, associated with, or engaged by, in any capacity whatsoever,
any customer, client or account (as defined below) of Employer whereby Employee
provides services to such customer, client or account similar to those provided
by Employer to the customer, client or account during Employee’s
employment.  Employee acknowledges and understands that Employer’s customers,
clients and accounts have executed or will execute agreements pursuant to which
the customer, client or account agrees not to hire Employer’s employees.

(d)           During his employment and for twelve (12) months after the
termination of such employment for any reason whatsoever, Employee shall not,
directly or indirectly, without the consent of Employer:  contact, recruit,
solicit, induce or employ, or attempt to contact, recruit, solicit, induce or
employ, any employee, consultant, agent, director or officer of Employer to
terminate his/her employment with, or otherwise cease any relationship with,
Employer; or contact, solicit, divert, take away or accept business from, or
attempt to contact, solicit, divert or take away, any clients, customers or
accounts, or prospective clients, customers or accounts, of Employer, or any of
Employer’s business with such clients, customers or accounts which were,
directly or indirectly, contacted, solicited or served by Employee, or were
directly or indirectly under his responsibility, while Employee was employed by
the Employer, or the identity of which Employee became aware during the term of
his employment.

As used in this agreement the term "client," "customer," or "accounts" shall
include: (i) any person or entity that is a client, customer or account of
Employer on the date hereof or becomes a client, customer or account of Employer
during Employee’s employment; (ii) any person or entity that was a client,
customer or account of Employer at anytime during the two-year period preceding
the date of Employee’s termination; and (iii) any prospective client, customer
or account to whom Employer has made a presentation (or similar offering of
services) within a period of 180 days preceding the date of the termination of
Employee’s employment.

  (e)           The covenants of this Section 2.3 shall be construed as separate
covenants covering their subject matter in each of the separate counties and
states in the United States in which Employer (or its Affiliates) transacts its
business.  If at any time the foregoing provisions shall be deemed to be invalid
or unenforceable or are prohibited by the laws of the state or place where they
are to be enforced, by reason of being vague or unreasonable as to duration or
place of performance, this Section shall be considered divisible and shall
become and be immediately amended to include only such time and such area as
shall be determined to be reasonable and enforceable by the court or other body
having jurisdiction over this Agreement; and Employer and Employee expressly
agree that this Section, as so amended, shall be valid and binding as though any
invalid or unenforceable provision had not been included herein.

(f)           Employee represents and warrants that Employee is free to enter
into this Agreement and to perform each of the terms and covenants contained
herein, and that doing so will not violate the terms or conditions of any
agreement between Employee and any third party.

Section 2.4                      Inventions and Original Works.
 
(a)           Subject to Section 2.4(b) below, Employee agrees that he will
promptly make full written disclosure to Employer, will hold in trust for the
sole right and benefit of Employer, and hereby irrevocably assigns to Employer
without any additional compensation all of his right, title and interest in and
to any and all inventions (and patent rights with respect thereto), original
works of authorship (including all copyrights with respect thereto),
developments, improvements or trade secrets which Employee may solely or jointly
conceive or develop or reduce to practice, or cause to be conceived or developed
or reduced to practice, relating to or concerning the business of Employer,
whether or not conceived, developed or reduced to practice: (i) during working
hours, (ii) while on Employer premises, (iii) with use of Employer equipment,
materials or facilities, or (iv) while performing his duties under this
Agreement (“Employer Intellectual Property”).
 

          Employee   Bridgeline

       

 
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Employee acknowledges that all original works of authorship relating to the
business of Employer which are made by him (solely or jointly with others)
within the scope of his duties under this Agreement and which are protectable by
copyrights are “works made for hire” as that term is defined in the United
States Copyright Act (17 U.S.C.A., Section 101), and that Employee is an
employee as defined under that Act. Employee further agrees from time to time to
execute written transfers to Employer of ownership or specific original works or
authorship (and all copyrights therein) made by Employee (solely or jointly with
others) which may, despite the preceding sentence, be deemed by a court of law
not to be “works made for hire” in such form as is acceptable to Employer in its
reasonable discretion. Employee hereby waives in favor of Employer and its
assigns and licensees any and all artist’s or moral rights Employee  may have in
respect of any Invention pursuant to any local, state or federal laws or
statutes of the United States and all similar rights under the laws of all
jurisdictions.

(b)           The parties agree that the “business of Employer” for the purposes
of this Section 2.4 is acting as “a designer or developer for third parties to
create Internet/Intranet/Extranet Web sites and Web applications, content
management software, web analytics software, eCommerce software, eMarketing
software, search engine optimizaiton, search engine marketing services, or Web
hosting services”. Employee shall provide to Employer, and attach hereto as
Exhibit 2.4(b), a list identifying and describing in reasonable detail all
inventions (and patent rights with respect thereto), original works of
authorship (including all copyrights with respect thereto), developments,
improvements, concepts or trade secrets which Employee has solely or jointly
conceived or developed or reduced to practice, or caused to be conceived or
developed or reduced to practice to date, and other intellectual property of
Employee.  For the avoidance of doubt, Employee will identify on Exhibit 2.4(b)
with sufficient detail any intellectual property belonging to Employee prior to
the date hereof, including that related to the business of Employer
(collectively the “Employee's Personal Intellectual Property”).  Employer
acknowledges and agrees that the provisions of Section 2.4(a) shall not apply to
Employee’s Personal Intellectual Property or to any inventions (and patent
rights with respect thereto), original works of authorship (including all
copyrights with respect thereto), developments, improvements, concepts or trade
secrets conceived of or developed by Employee during the term of this Agreement
that is not Employer Intellectual Property.

Section 2.5                      Maintenance of Records.  Except with respect to
the Intellectual Property for which Employer has no rights, Employee agrees to
keep and maintain reasonable written records of all inventions, original works
of authorship, trade secrets developed or made by him (solely or jointly with
others) during the employment term.  Employee also agrees to make and maintain
adequate and reasonable written records customarily maintained by corporate
managers, including, without limitation, lists and telephone numbers of persons
and companies he has contacted during his engagement by Employer.  Immediately
upon Employer’s request and promptly upon termination of Employee’s engagement
with Employer, Employee shall deliver to Employer all written records as
described in this Section, together with all memoranda, notes, records, reports,
photographs, drawings, plans, papers, computer storage media, Confidential
Information or other documents made or compiled by Employee or made available to
Employee during the course of his engagement by Employer, and any copies or
abstracts thereof, whether or not of a secret or confidential nature, and all of
such records, memoranda or other documents shall, during and after
the engagement of Employee by Employer, be and shall be deemed to be the
property of Employer.

Section 2.6                      Obtaining Letters Patent and Copyright
Registration.  During the employment term hereunder, Employee agrees to assist
Employer, at Employer’s expense, to obtain United States or foreign letters
patent, and copyright registrations (as well as any transfers of ownership
thereof) covering inventions and original works of authorship assigned hereunder
to Employer. Such obligation shall continue beyond the termination of this
Agreement for a reasonable period of time not to exceed one (1) year subject to
Employer’s obligation to compensate Employee at such rates as may be mutually
agreed upon by Employer and Employee at the time, but not exceeding the
annualized rate provided for in Section 3.1 of this Agreement, and reimbursement
to Employee of all expenses incurred.

If Employer is unable for any reason whatsoever, including Employee’s mental or
physical incapacity to secure Employee’s signature to apply for or to pursue any
application for any
 

          Employee   Bridgeline

       
 
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United States of foreign letters, patent or copyright registrations (or any
document transferring ownership thereof) covering inventions or original works
or authorship assigned to Employer under this Agreement, Employee hereby
irrevocably designates and appoints Employer and its duly authorized officers
and agents as Employee's agent and attorney-in-fact to act for and in his behalf
and stead to execute and file any such applications and documents and to do all
other lawfully permitted acts to further the prosecution and issuance of letters
patent or copyright registrations or transfers thereof with the same legal force
and effect as if executed by Employee.  This appointment is coupled with an
interest in and to the inventions and works of authorship and shall survive
Employee's death or disability.  Employee hereby waives and quitclaims to
Employer any and all claims of any nature whatsoever which Employee now or may
hereafter have against third parties for infringement of any patents or
copyrights resulting from or relating to any such application for letters,
patent or copyright registrations assigned hereunder to Employer.

 
ARTICLE 3
 
COMPENSATION OF EMPLOYEE

Section 3.1                      Annual Salary.  As compensation for his
services hereunder, Employee shall be paid a salary at the rate of $9,375 semi
monthly (the equivalent of Two Hundred Twenty Five Thousand 00/100 Dollars
($225,000) per year (“Salary”) from the Commencement Date.  Salary shall be paid
in equal installments not less frequently than twice each month.

Section 3.2                      Quarterly Bonus.  The Employee shall be
eligible to be paid a quarterly bonus earned in accordance with the terms set
forth on Exhibit 3.2.

Section 3.3                      Tax Withholding.  Employer shall have the right
to deduct or withhold from the compensation due to Employee hereunder any and
all sums required for federal income and social security taxes and all state or
local taxes now applicable or that may be enacted and become applicable in the
future, for which withholding is required by law.

Section 3.4                      Stock Options.  Employer may, at Employer’s
sole discretion, issue Stock Options to Employee.  All stock options granted
Employee shall be subject to a stock option agreement, a stock option plan and
such other restrictions as are generally applicable to stock options issued to
employees of Employer, as each may be amended from time to time.   Additionally,
shortly after the start of the fiscal year you will be granted options to
purchase 50,000 shares of common stock of the Company pursuant to terms approved
by the Board of Directors of the Company.

ARTICLE 4
EMPLOYEE BENEFITS

Section 4.1                      Annual Vacation.  Employee shall be entitled to
twenty (20) business days of paid vacation during each calendar year of this
Agreement, on a pro-rated basis. Employee may be absent from his employment for
vacation at such times as are pre-approved by Employer’s CEO. Unused vacation
shall not be carried over into the next year, and will not be paid in the
form of cash.

Section 4.2                      Benefits. Employee shall be eligible to
participate in benefit plans provided by Employer, such as health insurance
coverage should Employer elect to participate in any such plans.

Section 4.3                      Business Expenses.  Employer shall reimburse
Employee for all appropriate expenses for travel and entertainment by Employee
for legitimate business purposes, provided that they are approved in writing by
the Employer’s Chief Executive Officer or his designee, and provided that
Employee furnishes to Employer adequate records and documentary evidence for the
substantiation of each such expenditure, as required by the Internal Revenue
Code of 1986, as amended (the “Code”).  Per the Employer’s policies, expense
reports must be submitted each month to ensure reimbursement.
 

          Employee   Bridgeline

       

 
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ARTICLE 5
 
TERMINATION OF EMPLOYMENT

Section 5.1                      Termination. Employee’s employment hereunder
may be terminated by Employee or Employer as herein provided, without further
obligation or liability, except as expressly provided in this Agreement.

Section 5.2                                Resignation, Retirement, Death or
Disability.   Employee’s employment hereunder shall be terminated at any time by
Employee’s resignation, or by Employee’s retirement, death, or his inability to
perform the essential functions of his position under this Agreement, with or
without reasonable accommodation, for a total of ninety (90) days or more in any
continuous two hundred (200) day period because of a substantial physical or
mental impairment (“Disability”).  Employer shall not be liable for payment of
base or bonus compensation during any period of disability, though benefits
shall continue to accrue.

Section 5.3                      Termination for Cause.  Employee’s employment
hereunder may be terminated for Cause.  "Cause" is conduct, as determined by the
Chief Executive Officer, or his designee, involving one or more of the
following: (i) gross misconduct by Employee; or (ii) the willful disregard of
the rules or policies of the Employer, provided that the Employer must provide
Employee with written notice from the Employer of such willful disregard of the
rules or polies of the Employer and Employee fails to cure (if curable) such
willful disregard of the rules or policies of the Employer within five (5)
business days of such notice; or (iii) the violation of any noncompetition or
nonsolicitation covenant with, or assignment of inventions obligation to, the
Employer; or (iv) the formal charge of Employee of a felony; or (v) the
commission of an act of embezzlement, fraud or breach of fiduciary duty against
the Employer  (vi) engagement in a specific act or pattern of behavior which, in
the reasonable opinion of the Employer, impugns the reputation of the Employer
or which creates an environment materially non-conducive to the growth and
development of the Employer, (vii) the failure of Employee to perform in a
material respect his employment obligations as set forth in this Agreement
without proper cause and the continuation thereof after delivery to Employee of
written notice from Employer specifying in reasonable detail the nature of such
failure and Employee fails to cure such failure within fifteen (15) business
days of such notice.   For purposes of this Section, no act, or failure to act,
on Employee’s part shall be considered “willful” unless done, or omitted to be
done, by him not in good faith and without reasonable belief that his action or
omission was in the best interest of Employer.

Section 5.4                      Termination Without Cause; Termination for Good
Reason.  Employee’s employment hereunder may be terminated without Cause upon
ten (10) business days’ notice for any reason. Employee's employment may be
terminated by Employee at any time for Good Reason.   For purposes of this
Agreement, “Good Reason” shall mean:

(a) failure of the Employer to continue Employee in the position of Executive
Vice President and Chief Operating Officer of the Employer;  (b) material
diminution in the nature or scope of the Employee’s responsibilities, duties or
authority (provided, however, any general diminution of the business of the
Employer, shall not constitute “Good Reason”); or (c) material failure of the
Employer to provide the Employee the compensation and benefits in accordance
with the terms of Articles 3 and 4 hereof, other than a reduction in
compensation or benefits that is generally applicable to all other similarly
situated employees of the Company, (e) the requirement by Employer that Employee
relocate his principal place of employment to a location more than thirty (30)
miles from Employer’s Norcross, Georgia office referenced in Section 2.1.

Section 5.5                      Expiration.  Employee's employment hereunder
shall be terminated upon expiration of the Term of Employment as provided in
Sections 1.1 and 1.2, unless the parties agree that Employee's employment shall
become “at will.”
 

          Employee   Bridgeline

       

 
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Section 5.6                      Notice of Termination.  Any termination of
Employee’s employment by Employer or by Employee (other than termination by
reason of resignation, retirement, or death), shall be communicated by written
Notice of Termination to the other party hereto.  For purposes of this
Agreement, a “Notice of Termination” shall mean a notice which shall include the
specific termination provision in this Agreement relied upon, and shall set
forth in reasonable detail the facts and circumstances claimed to provide a
basis for termination of Employee's employment under the provision so indicated.

Section 5.7                      Date of Termination.  The “Date of Termination”
shall be:  (a) if Employee’s employment is terminated by his death, the date of
his death; (b) if Employee’s employment is terminated by reason of Employee’s
disability, thirty (30) days after Notice of Termination is given; (c) if
Employee's employment is terminated for Cause, the date the Notice of
Termination is given or after if so specified in such Notice of
Termination;  (d) if Employee's employment is terminated for any other reason,
the date on which a Notice of Termination is given.
 
 
ARTICLE 6
PAYMENTS TO EMPLOYEE UPON TERMINATION

Section 6.1                      Death, Disability or Retirement. In the event
of Employee’s Retirement, Death or Disability, all benefits generally available
to Employer's employees as of the date of such an event shall be payable to
Employee or Employee's estate, in accordance with the terms of any plan,
contract, understanding or arrangement forming the basis for such
payment.  Neither Employer nor any affiliate shall have any further obligation
to Employee under this Agreement or otherwise, except for payment to Employee of
any and all accrued salary and bonuses, provision of the opportunity to elect
COBRA health care continuation and otherwise as may be expressly required by
law.
 
Section 6.2                      Termination for Cause or Resignation.  In the
event Employee is terminated by Employer for Cause or Employee resigns (other
than a Termination by Employee for Good Reason), neither Employer nor any
affiliate shall have any further obligation to Employee under this Agreement or
otherwise, except for payment to Employee of any and all accrued salary and
bonuses, provision of the opportunity to elect COBRA health care continuation
and otherwise as may be expressly required by law.

Section 6.3                      Termination Without Cause; Termination for Good
Reason.  Subject to other provisions in this Article 6 to the contrary and
during the Initial Term and any Succeeding Term only, upon the occurrence of a
termination without Cause by Employer or a Termination for Good Reason by
Employee, Employer shall:
 
 
(a)   Pay to Employee any and all accrued salary, bonuses and vacation;
 
 
(b)  Pay to Employee, or in the event of Employee's subsequent death, to
Employee's surviving spouse, or if none, to Employee's estate, as severance pay
or liquidated damages, or both, a sum equal to (i) the monthly rate of Salary
payable under this Agreement for a period of three (3), and (ii) an amount equal
to the quarterly bonus paid to Employee for the preceding quarter immediately
prior to Employee's termination;

(c)  Cause any stock options issued to Employee which have not lapsed and which
are not otherwise exercisable to be accelerated so as to be vested and
immediately exercisable by Employee;

(d)  Pay Employer’s portion of the COBRA health insurance continuation premium
in the same amount Employer contributed for Employee’s health insurance as of
the date of Employee’s termination for a period of three (3), and thereafter
provide Employee the opportunity to continue COBRA health care coverage at
Employee’s cost (provided that Employee makes the required premium
contributions); provided, however, that Employer's obligation to contribute its
portion of the COBRA insurance premium
 

          Employee   Bridgeline

       
 
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during this three month period  will cease immediately in the event Employee
becomes employed following termination.  Employee agrees to notify Employer
immediately regarding such new employment; and

(e)  Provide to Employee such other payments or benefits as may be expressly
required by law.

It is intended that each payment under Section 6.3(b) shall be treated as a
separate “payment” for purposes of Section 409A of the Code.  Neither the
Employer nor Employee shall have the right to accelerate or defer the delivery
of any such payment or benefit except to the extent specifically permitted or
required by Section 409A.  Any payment to Employee under this Agreement that
constitutes nonqualified deferred compensation under Section 409A payable as a
result of a termination of employment may only be paid upon a “separation from
service” under Section 409A(a)(2)(A)(i) of the Code.  For purposes of
clarification, the foregoing sentence shall not cause any forfeiture of benefits
on the part of Employee, but shall only act as a delay until such time as a
“separation from service” occurs.  Notwithstanding the foregoing, if any amount
to be paid to Employee pursuant to this Agreement as a result of his termination
of employment is subject to Section 409A, and if Employee is a “Specified
Employee” under Section 409A as of the date of his termination of employment
hereunder, then, to the extent necessary to avoid the imposition of excise taxes
or other penalties under Section 409A, the payment of benefits, if any,
scheduled to be paid by the Company to Employee hereunder during the first six
(6) month period following the date of a termination of employment hereunder
shall be paid on the date which is the first business day following the
six-month anniversary of Employee’s termination of employment for any reason
other than death.  Any deferred compensation payment delayed in accordance with
the terms of this paragraph shall be paid in a lump sum when paid and shall be
adjusted for earnings in accordance with the applicable short term rate under
Section 1274(d) of the Code.

ARTICLE 7
GENERAL PROVISIONS

Section 7.1                                Notices.  Any notices to be given
hereunder by either party to the other shall be in writing and may be
transmitted by personal delivery or by mail, first class, postage prepaid, or by
electronic facsimile or email transmission (with verification of
receipt).  Mailed notices shall be addressed to the parties at their respective
addresses set forth herein.  Each party may change that address by written
notice in accordance with this section. Notices delivered personally shall be
deemed communicated as of the date of actual receipt. Mailed notices shall be
deemed communicated as of one day after the date of mailing.

Section 7.2                      Governing Law; Jurisdiction.  This Agreement
shall be governed by, construed and interpreted in accordance with the laws of
the Commonwealth of Massachusetts, without regard to its principles of conflicts
of laws.  Any action or proceeding seeking to enforce any provision of, or based
on any right arising out of, this Agreement or any of the transactions
contemplated hereby, shall be brought against any of the parties in the courts
of the Commonwealth of Massachusetts, and each of the parties irrevocably
submits to the exclusive jurisdiction of such courts (and of the appropriate
appellate courts) in any such action or proceeding, waives any objection to
venue laid therein, agrees that all claims in respect of any action or
proceeding shall be heard and determined only in any such court and agrees not
to bring any action or proceeding arising out of or relating to this Agreement
or any transaction contemplated hereby in any other court.  Process in any
action or proceeding referred to in the preceding sentence may be served on any
party anywhere in the world.

Section 7.3                      Attorney’s Fees and Costs.  If Employer or
Employee commences any action at law or in equity against the other to enforce
the terms of this Agreement and prevails in such action, the losing party shall
reimburse the prevailing party its reasonable attorneys’ fees, costs and
necessary disbursements in addition to any other relief to which such prevailing
party may be entitled.  This provision shall be construed as applicable to the
entire contract.
 

          Employee   Bridgeline

       

 
8

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Section 7.4                      Entire Agreement.  This Agreement supersedes
any and all other agreements, either oral or in writing, between the parties
hereto with respect to the subject matter contained herein and contains all of
the covenants and agreements between the parties with respect to that subject
matter, including without limitation, any prior Employment Agreement between
Employer and Employee. Each party to this Agreement acknowledges that no
representations, inducements, promises or agreements, orally or otherwise, have
been made by any party, or anyone acting on behalf of any party, which are not
embodied herein, and that no other agreement, statement or promise not contained
in this Agreement shall be valid or binding on either party.
 
Section 7.5                      Modification.  Any modification of this
Agreement will be effective only if it is in writing and signed by Employee and
properly authorized by Employer's Board of Directors and signed by the Chief
Executive Officer of Employer.

Section 7.6                      Effect of Waiver.  The failure of either party
to insist on strict compliance with any of the terms, covenants or conditions of
this Agreement by the other party shall not be deemed a waiver of that term,
covenant or condition, nor shall any waiver or relinquishment of any right or
power at any one time or times be deemed a waiver or relinquishment of that
right or power for all or any other times.

Section 7.7                      Partial Invalidity.  If any provision in this
Agreement is held by a court of competent jurisdiction to be invalid, void or
unenforceable, the remaining provisions shall nevertheless continue in full
force without being impaired or invalidated in any way.

Section 7.8                      Assignment.  The rights and obligations of the
parties hereto shall inure to the benefit of, and shall be binding upon, the
successors and assigns of each of them; provided, however, that Employee shall
not, during the continuance of this Agreement, assign this Agreement without the
previous written consent of Employer, and provided, further, that nothing
contained in this Agreement shall restrict or limit Employer in any manner
whatsoever from assigning any or all of its rights, benefits or obligations
under this Agreement to any successor corporation or entity or to any affiliate
of Employer without the necessity of obtaining the consent of Employee.
“Affiliate” as used throughout this Agreement means any person or entity which
directly or indirectly controls, or is controlled by, or is under common control
with, Employer.

Section 7.9                      Specific Performance. If there is any violation
of Employee's obligations herein contained, Employer, or any of its Affiliates,
shall have the right to specific performance in addition to any other remedy
which may be available at law or at equity.

Section 7.10                    Survival of Sections.  The provisions of
Sections 2.3, 2.4, 2.5 and 2.6 shall continue in force so long as Employee
remains employed by Employer or any Affiliate of Employer, whether under this
Agreement or not, and whether as a consultant or not, and shall survive any
termination of employment under this Agreement for the periods specified
therein. Notwithstanding the foregoing, the provision of Sections 2.5 shall
survive for only three years following any termination of employment.

Section 7.11                    Injunctive Relief/Acknowledgement. Employee
understands and acknowledges that Employer's Proprietary Information, Inventions
and good will are of a special, unique, unusual, extraordinary character which
gives them a peculiar value, the loss of which cannot be reasonably compensated
by damages in an action at law.  Employee understands and acknowledges that, in
addition to any and all other rights or remedies that Employer may possess,
Employer shall be entitled to injunctive and other equitable relief, without
posting a bond, to prevent a breach or threatened breach of this Agreement
(and/or any provision thereof) by Employee . In the event that a court of
appropriate jurisdiction awards the Employer injunctive or other equitable
relief due to Employee’s breach of the terms of this Agreement, Employee agrees
that the time periods provided in Article 2.3 of this Agreement shall be tolled
for the period during which Employee is in breach of the Agreement, and shall
resume once Employee complies with such injunctive or other equitable relief.
 

          Employee   Bridgeline

   
 
9

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IN WITNESS WHEREOF, the parties have executed this Agreement by their duly
authorized officers as an instrument under seal at Woburn, Massachusetts on this
29 day of October, 2010.

 

Employer:     Employee:             Bridgeline Digital, Inc.                    
       
/s/ Thomas L. Massie
   
/s/ Erez Katz
 
Thomas L. Massie
   
Erez Katz
 
President & CEO
   
 
 

 
 
 
 
 
 

 

          Employee   Bridgeline

       
 
10

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EXHIBIT 2.4(b)

Employee’s Personal Intellectual Property
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

          Employee   Bridgeline

       
 
11

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EXHIBIT 3.2

 
Erez Katz 2011 Incentive Bonus:  You will have the opportunity to earn a
quarterly incentive bonus based on the achievement of the Atlanta Business
Unit’s Operating Income goals, the Company’s Operating Income goals and the
Company’s annual revenue goal.  If an acquisition is made in Fiscal 2011 the
stated goals below will be adjusted.
 

A)  
Atlanta Operating Income Goal:   For fiscal year 2011, you will be entitled to
earn a quarterly incentive bonus of $9,375 when the Atlanta Business Unit
minimally acheives the following quarterly Operating Income objectives:

           Operating Income                Bonus
 
    Q111                         $244,171                       $9,375
Q211                         $250,364                       $9,375
Q311                         $278,054                       $9,375
Q411                         $281,267                       $9,375
 

 
B)  
Bridgeline Digital Company Operating Income Goal:   For fiscal year 2011, you
will be entitled to earn a quarterly incentive bonus of $9,375 when the Company
minimally acheives the following quarterly Operating Income objectives:

 
           Operating Income                Bonus
 
                  
 Q111                       $198,078                         $9,375
Q211                       $447,808                         $9,375
Q311                       $639,740                         $9,375
Q411                       $909,931                         $9,375

C)  
Revenue Attainment Bonus:   For fiscal year 2011, you will be entitled to earn a
additional $25,000 bonus when Bridgeline Digital minimally achieves $31,400,000
in annual revenue.

 
 
 
 
All earned bonuses shall be paid on the 30th/31st payroll of the month following
the calendar quarter end provided that the employee is still employed by
Bridgeline at that time.

 

Employer:     Employee:             Bridgeline Digital, Inc.                    
       
/s/ Thomas L. Massie
   
/s/ Erez Katz
 
Thomas L. Massie
   
Erez Katz
 
President & CEO
   
 
 

 
 
 
 

          Employee   Bridgeline

       
 
12

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