EXHIBIT 10.1
 
BRIDGELINE DIGITAL, INC.
 
SECURITIES PURCHASE AGREEMENT
 
This SECURITIES PURCHASE AGREEMENT (this “Agreement”) is made and entered into
as of October _29, 2010, by and between Bridgeline Digital, Inc., a Delaware
corporation (the “Company”), and the investors set forth on the signature pages
affixed hereto (each, an “Investor” and, collectively, the “Investors”).
 
WHEREAS, the Investors wish to purchase from the Company, and the Company wishes
to sell and issue to the Investors, upon the terms and conditions stated in this
Agreement, an aggregate of up to 1,000,000 shares (the “Shares”) of the
Company’s Common Stock, par value $0.001 per share (the “Common Stock”), at
purchase price of $1.00 per share, upon the terms and conditions set forth in
this Agreement; and
 
WHEREAS, in connection with the Investors’ purchase of the Shares, the Investors
will receive certain rights to participate in public offerings of shares of the
Company’s capital stock, and will be subject to certain restrictions on the
transfer of the Shares, all as more fully set forth in this Agreement.
 
NOW, THEREFORE, in consideration of the mutual terms, conditions and other
agreements set forth herein and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, and intending to be
legally bound hereby, the parties hereto hereby agree to the sale and purchase
of the Shares as set forth herein.
 
1.
Definitions.

 
For purposes of this Agreement, the terms set forth below shall have the
corresponding meanings provided below.
 
“Affiliate” shall mean, with respect to any specified Person (as defined below),
(i) if such Person is an individual, the spouse, heirs, executors, or legal
representatives of such individual, or any trusts for the benefit of such
individual or such individual’s spouse and/or lineal descendants, or (ii)
otherwise, another Person that directly, or indirectly through one or more
intermediaries, controls, is controlled by, or is under common control with, the
Person specified.  As used in this definition, “control” shall mean the
possession, directly or indirectly, of the sole and unilateral power to cause
the direction of the management and policies of a Person, whether through the
ownership of voting securities or by contract or other written instrument.
 
“Blue Sky Application” as defined in Section 5.4 hereof.
 
“Business Day” shall mean any day on which banks located in New York City are
not required or authorized by law to remain closed.
 
“Closing” and “Closing Date” as defined in Section 2.2 (c) hereof.
 
“Common Stock” as defined in the recitals above.
 
“Company Financial Statements” as defined in Section 4.5 hereof.
 
“Company’s Knowledge” means the actual knowledge of the executive officers (as
defined in Rule 405 under the Securities Act) of the Company, after due inquiry.
 
 
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“Exchange Act” means the Securities Exchange Act of 1934, as amended.
 
“First Closing” and “First Closing Date” as defined in Section 2.2(a) hereof.
 
“Liens” means any mortgage, lien, title claim, assignment, encumbrance, security
interest, adverse claim, contract of sale, restriction on use or transfer or
other defect of title of any kind.
 
“Material Adverse Effect” means a material adverse effect on (i) the assets,
liabilities, results of operations, condition (financial or otherwise),
business, or prospects of the Company and its Subsidiaries taken as a whole, or
(ii) the ability of the Company to perform its obligations under the Transaction
Documents (as defined below).
 
“Person” shall mean an individual, entity, corporation, partnership,
association, limited liability company, limited liability partnership,
joint-stock company, trust or unincorporated organization.
 
“Piggyback Registration” as defined in Section 5.1 hereof.
 
“Placement Agency Agreement” means that certain agreement, dated October 1,
2010, by and between the Placement Agent and the Company.
 
“Placement Agent” means Joseph Gunnar & Co., LLC.
 
“Private Placement Term Sheet” means the Company’s Private Placement Term Sheet
dated October 1, 2010, and any amendments or supplements thereto.
 
“Purchase Price” shall mean up to $1,000,000.
 
“Registrable Securities” shall mean the Shares and any shares issuable upon
exercise of any warrants issued to the Placement Agent and other registered
broker-dealers and their affiliates as compensation in connection with the
transactions contemplated hereby; provided, that a security shall cease to be a
Registrable Security upon (A) sale pursuant to a Registration Statement or Rule
144 under the Securities Act, or (B) such security becoming eligible for sale by
the Investors without any restriction pursuant to Rule 144.
 
“Registration Statement” shall mean any registration statement of the Company
filed under the Securities Act that covers the resale of any of the Registrable
Securities pursuant to the provisions of this Agreement, amendments and
supplements to such Registration Statement, including post-effective amendments,
all exhibits and all material incorporated by reference in such Registration
Statement.
 
“Regulation D” as defined in Section 3.7 hereof.
 
“Regulation S” as defined in Section 6.1(i)(E) hereof.
 
“Rule 144” as defined in Section 6.1(i)(C) hereof.
 
“SEC” means the U.S. Securities and Exchange Commission.
 
“SEC Documents” as defined in Section 4.5 hereof.
 
“SEC Restrictions” as defined in Section 5.1(b) hereof.
 
 
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“Securities Act” means the Securities Act of 1933, as amended.
 
“Shares” as defined in the recitals above.
 
“Subsequent Closing” and “Subsequent Closing Date” as defined in Section 2.2(b)
hereof.
 
“Subsidiaries” shall mean any corporation or other entity or organization,
whether incorporated or unincorporated, in which the Company owns, directly or
indirectly, any equity or other ownership interest or otherwise controls through
contract or otherwise.
 
“Transaction Documents” shall mean this Agreement.
 
“Transfer” shall mean any sale, transfer, assignment, conveyance, charge,
pledge, mortgage, encumbrance, hypothecation, security interest or other
disposition, or to make or effect any of the above.
 
“Underwriter” as defined in Section 5.2 hereto.
 
“Underwriting Documents” shall mean an underwriting agreement in customary form
and all other agreements and other documents reasonably requested by an
underwriter in connection with an underwritten public offering of equity
securities (including, without limitation, questionnaires, powers of attorney,
indemnities, custody agreements and lock-up agreements).
 
2.
Sale and Purchase of Shares.

 
2.1.           Subscription for Shares by Investors.  Subject to the terms and
conditions of this Agreement, on the Closing Date (as hereinafter defined) each
of the Investors shall severally, and not jointly, purchase, and the Company
shall sell and issue to the Investors, the Shares, in the respective amounts set
forth on the signature pages attached hereto in exchange for the Purchase Price.
 
2.2           Closings.
 
(a)           First Closing.  Subject to the terms and conditions set forth in
this Agreement, the Company shall issue and sell to each Investor, and each
Investor shall, severally and not jointly, purchase from the Company on the
First Closing Date, such number of Shares set forth on the signature pages
attached hereto, which will be reflected opposite such Investor’s name on
Exhibit A-1 (the “First Closing”).  The date of the First Closing is hereinafter
referred to as the “First Closing Date.”
 
(b)           Subsequent Closing(s).  The Company agrees to issue and sell to
each Investor listed on the Subsequent Closing Schedule of Investors, and each
Investor agrees, severally and not jointly, to purchase from the Company on such
Subsequent Closing Date such number of Shares set forth on the signature pages
attached hereto, which will be reflected opposite such Investor’s name on
Exhibit A-2 (a “Subsequent Closing”).   There may be more than one Subsequent
Closing; provided, however, that the final Subsequent Closing shall take place
within the time periods set forth in the Private Placement Term Sheet. The date
of any Subsequent Closing is hereinafter referred to as a “Subsequent Closing
Date.”  Notwithstanding the foregoing, the maximum number of Shares to be sold
at the First Closing and all Subsequent Closings shall be 1,000,000.
 
(c)           Closing.  The First Closing and any applicable Subsequent Closings
are each referred to in this Agreement as a “Closing.”  The First Closing Date
and any Subsequent Closing Dates are sometimes referred to herein as a “Closing
Date.”  All Closings shall occur within the time periods set forth in the
Private Placement Term Sheet at the offices of Greenberg Traurig, LLP, counsel
to the Placement Agent, at The MetLife Building, 200 Park Avenue, 14th Floor,
New York, New York 10166, or remotely via the exchange of documents and
signatures.
 
 
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2.3.           Closing Deliveries.  At each Closing, the Company shall deliver
to the Investors, against delivery by the Investor of the Purchase Price (as
provided below), duly issued certificates representing the Shares.  At each
Closing, each Investor shall deliver or cause to be delivered to the Company the
Purchase Price set forth in its counterpart signature page annexed hereto by
paying United States dollars via bank, certified or personal check which has
cleared prior to the applicable Closing Date or in immediately available funds,
by wire transfer to the following escrow account:
 
Account Name:                        U.S. Bank National Association - Bridgeline
Digital, Inc. Escrow Account
ABA Number:                          091000022
Account Number:                    173103321050
 
3.
Representations, Warranties and Acknowledgments of the Investors.

 
Each Investor severally and not jointly represents and warrants to the Company
solely as to such Investor that:
 
3.1           Authorization.  The execution, delivery and performance by such
Investor of the Transaction Documents to which such Investor is a party have
been duly authorized and will each constitute the valid and legally binding
obligation of such Investor, enforceable against such Investor in accordance
with their respective terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability,
relating to or affecting creditors’ rights generally.
 
3.2           Purchase Entirely for Own Account.  The Shares to be received by
such Investor hereunder will be acquired for such Investor’s own account, not as
nominee or agent, and not with a view to the resale or distribution of any part
thereof in violation of the Securities Act, and such Investor has no present
intention of selling, granting any participation in, or otherwise distributing
the same in violation of the Securities Act, without prejudice, however, to such
Investor’s right at all times to sell or otherwise dispose of all or any part of
such Shares in compliance with applicable federal and state securities
laws.  Nothing contained herein shall be deemed a representation or warranty by
such Investor to hold the Shares for any period of time.  Such Investor is not a
broker-dealer registered with the SEC under the Exchange Act or an entity
engaged in a business that would require it to be so registered.
 
3.3.           Investment Experience.  Such Investor acknowledges that the
purchase of the Shares is a highly speculative investment and that it can bear
the economic risk and complete loss of its investment in the Shares and has such
knowledge and experience in financial or business matters such that it is
capable of evaluating the merits and risks of the investment contemplated
hereby.
 
3.4           Disclosure of Information.  Such Investor has had an opportunity
to receive all information related to the Company and the Shares requested by it
and to ask questions of and receive answers from the Company regarding the
Company, its business and the terms and conditions of the offering of the
Shares.  Neither such inquiries nor any other due diligence investigation
conducted by such Investor shall modify, amend or affect such Investor’s right
to rely on the Company’s representations and warranties contained in this
Agreement.  Such Investor acknowledges that it has received and reviewed the
Private Placement Term Sheet describing the offering of the Shares and the
Information Sheet describing the Company, as well as copies of the Company’s
most recent SEC Filings.
 
3.5           Restricted Securities.  Such Investor understands that the Shares
are characterized as “restricted securities” under the U.S. federal securities
laws since they are being acquired from the Company in a transaction not
involving a public offering and that under such laws and applicable regulations
such securities may be resold without registration under the Securities Act only
in certain limited circumstances.
 
 
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3.6           Legends.  It is understood that, except as provided below,
certificates evidencing the Shares may bear the following or any similar legend:
 
(a)           “The securities represented hereby may not be transferred unless
(i) such securities have been registered for sale pursuant to the Securities Act
of 1933, as amended, (ii) such securities may be sold pursuant to Rule 144, or
(iii) the Company has received an opinion of counsel reasonably satisfactory to
it that such transfer may lawfully be made without registration under the
Securities Act of 1933 or qualification under applicable state securities laws.”
 
(b)           If required by the authorities of any state in connection with the
issuance of sale of the Shares, the legend required by such state authority.
 
3.7           Accredited Investor.  Such Investor is an accredited investor as
defined in Rule 501(a) of Regulation D, as amended, under the Securities Act
(“Regulation D”).
 
3.8           No General Solicitation.  Such Investor did not learn of the
investment in the Shares as a result of any public advertising or general
solicitation.
 
3.9           Brokers and Finders.  No Investor will have, as a result of the
transactions contemplated by the Transaction Documents, any valid right,
interest or claim against or upon the Company, any Subsidiary or any other
Investor, for any commission, fee or other compensation pursuant to any
agreement, arrangement or understanding entered into by or on behalf of such
Investor.
 
4.
Representations and Warranties of the Company.

 
The Company represents, warrants and covenants to the Investors that:
 
4.1.           Organization; Execution, Delivery and Performance.
 
(a)           The Company and each of its Subsidiaries, if any, is a corporation
or other entity duly organized, validly existing and in good standing under the
laws of the jurisdiction in which it is incorporated or organized, with full
power and authority (corporate and other) to own, lease, use and operate its
properties and to carry on its business as and where now owned, leased, used,
operated and conducted.  The Company is duly qualified as a foreign corporation
to do business and is in good standing in every jurisdiction in which its
ownership or use of property or the nature of the business conducted by it makes
such qualification necessary except where the failure to be so qualified or in
good standing would not have a Material Adverse Effect.
 
(b)           (i) The Company has all requisite corporate power and authority to
enter into and perform the Transaction Documents and to consummate the
transactions contemplated hereby and thereby and to issue the Shares, in
accordance with the terms hereof and thereof, (ii) the execution and delivery of
the Transaction Documents by the Company and the consummation by the Company of
the transactions contemplated hereby and thereby (including without limitation,
the issuance of the Shares) have been duly authorized by the Company’s Board of
Directors and no further consent or authorization of the Company, its Board of
Directors, or its stockholders, is required, (iii) each of the Transaction
Documents has been duly executed and delivered by the Company by its authorized
 
 
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representative, and such authorized representative is a true and official
representative with authority to sign each such document and the other documents
or certificates executed in connection herewith and bind the Company
accordingly, and (iv) each of the Transaction Documents constitutes, and upon
execution and delivery thereof by the Company will constitute, a legal, valid
and binding obligation of the Company enforceable against the Company in
accordance with its terms, except to the extent limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws of general
application affecting enforcement of creditors’ rights and general principles of
equity that restrict the availability of equitable or legal remedies.
 
4.2.           Shares Duly Authorized.  The Shares to be issued to each such
Investor pursuant to this Agreement, when issued and delivered in accordance
with the terms of this Agreement, will be duly and validly issued and will be
fully paid and nonassessable and free from all taxes or Liens with respect to
the issue thereof and shall not be subject to preemptive rights or other similar
rights of stockholders of the Company.
 
4.3           No Conflicts.  The execution, delivery and performance of the
Transaction Documents by the Company and the consummation by the Company of the
transactions contemplated hereby and thereby will not: (i) conflict with or
result in a violation of any provision of the Certificate of Incorporation or
By-laws or (ii) violate or conflict with, or result in a breach of any provision
of, or constitute a default (or an event which with notice or lapse of time or
both could become a default) under, or give to others any rights of termination,
amendment, acceleration or cancellation of, any agreement, indenture, patent,
patent license or instrument to which the Company or any of its Subsidiaries is
a party, except for possible violations, conflicts or defaults as would not,
individually or in the aggregate, have a Material Adverse Effect, or (iii)
result in a violation of any law, rule, regulation, order, judgment or decree
(including federal and state securities laws and regulations and regulations of
any self-regulatory organizations to which the Company or its securities are
subject) applicable to the Company or any of its Subsidiaries or by which any
property or asset of the Company or any of its Subsidiaries is bound or
affected. Neither the Company nor any of its Subsidiaries is in violation of its
Certificate of Incorporation, By-laws or other organizational documents. Neither
the Company nor any of its Subsidiaries is in default (and no event has occurred
which with notice or lapse of time or both could put the Company or any of its
Subsidiaries in default) under, and neither the Company nor any of its
Subsidiaries has taken any action or failed to take any action that would give
to others any rights of termination, amendment, acceleration or cancellation of,
any agreement, indenture or instrument to which the Company or any of its
Subsidiaries is a party or by which any property or assets of the Company or any
of its Subsidiaries is bound or affected, except as set forth in the SEC
Documents (as such term is defined below), or for possible defaults as would
not, individually or in the aggregate, have a Material Adverse Effect. The
businesses of the Company and its Subsidiaries are not being conducted in
violation of any law, rule ordinance or regulation of any governmental entity,
except for possible violations which would not, individually or in the
aggregate, have a Material Adverse Effect. Except as required under the
Securities Act, the Exchange Act, the rules and regulations of the Nasdaq Stock
Market and any applicable state securities laws, the Company is not required to
obtain any consent, authorization or order of, or make any filing or
registration with, any court, governmental agency, regulatory agency, self
regulatory organization or stock market or any third party in order for it to
execute, deliver or perform any of its obligations under this Agreement or to
issue and sell the Shares in accordance with the terms hereof. All consents,
authorizations, orders, filings and registrations which the Company is required
to obtain pursuant to the preceding sentence have been obtained or effected on
or prior to the date hereof or will be obtained or effected in a timely manner
following the Closing Date.
 
4.4.           Capitalization.  As of October 29, 2010, the authorized capital
stock of the Company consists of (i) 20,000,000 shares of Common Stock, of which
11,188,208 shares  are issued and outstanding, 2,387,208 shares are reserved for
issuance pursuant to stock options granted under the Company’s equity
compensation plans, and 302,000 shares are reserved for issuance pursuant to
warrants
 
 
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to purchase Common Stock, and (ii) 1,000,000 shares of preferred stock, par
value $0.001 per share, of which no shares are issued and outstanding.  Except
as described above and in Schedule 4.4 hereto, in the Private Placement Term
Sheet or in the SEC Documents, (i) there are no outstanding options, warrants,
scrip, rights to subscribe for, puts, calls, rights of first refusal,
agreements, understandings, claims or other commitments or rights of any
character whatsoever relating to, or securities or rights convertible into or
exchangeable for any shares of capital stock of the Company or any of its
Subsidiaries, or arrangements by which the Company or any of its Subsidiaries is
or may become bound to issue additional shares of capital stock of the Company
or any of its Subsidiaries, (ii) there are no agreements or arrangements under
which the Company or any of its Subsidiaries is obligated to register the sale
of any of its or their securities under the Securities Act (except for the
registration rights provisions contained herein) and (iii) there are no
anti-dilution or price adjustment provisions contained in any security issued by
the Company (or in any agreement providing rights to security holders) that will
be triggered by the issuance of the Shares.  All of such outstanding shares of
capital stock are, or upon issuance will be, duly authorized, validly issued,
fully paid and nonassessable.  No shares of capital stock of the Company are
subject to preemptive rights or any other similar rights of the stockholders of
the Company or any Lien imposed through the actions or failure to act of the
Company.
 
4.5.           SEC Information.
 
(a)           The Company has timely filed all reports, schedules, forms,
statements and other documents required to be filed by it with the SEC pursuant
to the reporting requirements of the Exchange Act (all of the foregoing and all
other documents filed with the SEC prior to the date hereof and all exhibits
included therein and financial statements and schedules thereto and documents
incorporated by reference therein, being hereinafter referred to herein as the
“SEC Documents”). The SEC Documents have been made available to the Investors
via the SEC’s EDGAR system. As of their respective dates, the SEC Documents
complied in all material respects with the requirements of the Exchange Act and
the rules and regulations of the SEC promulgated thereunder applicable to the
SEC Documents, and none of the SEC Documents, at the time they were filed with
the SEC, contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. As of their respective dates, the financial statements of the
Company included in the SEC Documents (“Company Financial Statements”) complied
as to form in all material respects with applicable accounting requirements and
the published rules and regulations of the SEC with respect thereto. The Company
Financial Statements have been prepared in accordance with United States
generally accepted accounting principles, consistently applied, during the
periods involved (except (i) as may be otherwise indicated in such financial
statements or the notes thereto, or (ii) in the case of unaudited interim
statements, to the extent they may not include footnotes or may be condensed or
summary statements) and fairly present in all material respects the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of their operations and cash flows
for the periods then ended (subject, in the case of unaudited statements, to
normal year-end audit adjustments). Except as set forth in the Company Financial
Statements, the Company has no liabilities, contingent or otherwise, other than:
(i) liabilities incurred in the ordinary course of business subsequent to June
30, 2010 (the fiscal period end of the Company’s most recently-filed periodic
report), and (ii) obligations under contracts and commitments incurred in the
ordinary course of business and not required under generally accepted accounting
principles to be reflected in such financial statements, which, individually or
in the aggregate, are not material to the financial condition or operating
results of the Company.
 
(b)           The shares of Common Stock are currently traded on the Nasdaq
Capital Market.  The Company has not  received notice (written or oral) from
Nasdaq to the effect that the Company is not in compliance with the continued
listing and maintenance requirements of such exchange.  The Company is, and has
no reason to believe that it will not in the foreseeable future continue to be,
in compliance with all such listing and maintenance requirements.
 
 
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4.6           Permits; Compliance. The Company and each of its Subsidiaries is
in possession of all franchises, grants, authorizations, licenses, permits,
easements, variances, exemptions, consents, certificates, approvals and orders
necessary to own, lease and operate its properties and to carry on its business
as it is now being conducted (collectively, the “Company Permits”), and there is
no action pending or, to the knowledge of the Company, threatened regarding
suspension or cancellation of any of the Company Permits. Neither the Company
nor any of its Subsidiaries is in conflict with, or in default or violation of,
any of the Company Permits, except for any such conflicts, defaults or
violations which, individually or in the aggregate, would not reasonably be
expected to have a Material Adverse Effect. Since June 30, 2010, neither the
Company nor any of its Subsidiaries has received any notification with respect
to possible conflicts, defaults or violations of applicable laws, except for
notices relating to possible conflicts, defaults or violations, which conflicts,
defaults or violations would not have a Material Adverse Effect.
 
4.7           Litigation. Except as set forth in the SEC Documents, there is no
action, suit, claim, proceeding, inquiry or investigation before or by any
court, public board, government agency, self-regulatory organization or body
pending or, to the knowledge of the Company or any of its Subsidiaries,
threatened against or affecting the Company or any of its Subsidiaries, or their
respective businesses, properties or assets or their officers or directors in
their capacity as such, that would have a Material Adverse Effect. The Company
is unaware of any facts or circumstances which might give rise to any of the
foregoing.
 
4.8           No Material Changes.
 
(a)           Since June 30, 2010, except as set forth in the SEC Documents,
there has not been:
 
(i)           Any material adverse change in the financial condition, operations
or business of the Company from that shown on the Company Financial Statements,
or any material transaction or commitment effected or entered into by the
Company outside of the ordinary course of business;
 
(ii)           Any effect, change or circumstance which has had, or could
reasonably be expected to have, a Material Adverse Effect; or
 
(iii)           Any incurrence of any material liability outside of the ordinary
course of business.
 
4.9           No General Solicitation. Neither the Company nor any person
participating on the Company’s behalf in the transactions contemplated hereby
has conducted any “general solicitation,” as such term is defined in Regulation
D promulgated under the Securities Act, with respect to any of the Shares being
offered hereby.
 
4.10           No Integrated Offering. Neither the Company, nor any of its
affiliates, nor any person acting on its or their behalf, has directly or
indirectly made any offers or sales in any security or solicited any offers to
buy any security under circumstances that would require registration under the
Securities Act of the issuance of the Shares to the Investors. The issuance of
the Shares to the Investors will not be integrated with any other issuance of
the Company’s securities (past, current or future) for purposes of any
stockholder approval provisions applicable to the Company or its securities.
 
 
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4.11           No Brokers. Except as set forth in Section 9.1, the Company has
taken no action which would give rise to any claim by any person for brokerage
commissions, transaction fees or similar payments relating to this Agreement or
the transactions contemplated hereby.
 
4.12           Internal Controls.  The Company is in material compliance with
the provisions of the Sarbanes-Oxley Act of 2002 currently applicable to the
Company.  The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with GAAP and to maintain
asset accountability, (iii) access to assets is permitted only in accordance
with management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any differences. The
Company has established disclosure controls and procedures (as defined in
Exchange Act Rules 13a-14 and 15d-14) for the Company and designed such
disclosure controls and procedures to ensure that material information relating
to the Company, including the Subsidiaries, is made known to the certifying
officers by others within those entities, particularly during the period in
which the Company’s most recently filed period report under the Exchange Act, as
the case may be, is being prepared.  The Company's certifying officers have
evaluated the effectiveness of the Company's controls and procedures as of the
end of the period covered by the most recently filed periodic report under the
Exchange Act (such date, the “Evaluation Date”).  The Company presented in its
most recently filed periodic report under the Exchange Act the conclusions of
the certifying officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the Evaluation Date.  Since the
Evaluation Date, there have been no significant changes in the Company's
internal controls (as such term is defined in Item 308 of Regulation S-K) or, to
the Company's Knowledge, in other factors that could significantly affect the
Company's internal controls.  The Company maintains and will continue to
maintain a standard system of accounting established and administered in
accordance with GAAP and the applicable requirements of the Exchange Act.
 
4.13           Form D; Blue Sky Laws. The Company agrees to file a Form D with
respect to the Shares as required under Regulation D and to provide a copy
thereof to the Placement Agent promptly after such filing. The Company shall, on
or before the Closing Date, take such action as the Company shall reasonably
determine is necessary to qualify the Shares for sale to the Investors at the
applicable Closing pursuant to this Agreement under applicable securities or
“blue sky” laws of the states of the United States (or to obtain an exemption
from such qualification), and shall provide evidence of any such action so taken
to the Placement Agent on or prior to the Closing Date.
 
4.14           Disclosure. All information relating to or concerning the Company
or any of its Subsidiaries, officers, directors, employees, customers or clients
(including, without limitation, all information regarding the Company’s internal
financial accounting controls and procedures): (i) set forth in this Agreement
and/or (ii) as disclosed in any SEC Document or exhibit or certification thereto
and/or is true and correct in all material respects and the Company has not
omitted to state any material fact necessary in order to make the statements
made herein or therein, in light of the circumstances under which they were
made, not misleading.
 
5.           Registration Rights.
 
5.1.           Participation in Registrations.  Whenever the Company proposes to
register any of its securities under the Securities Act, whether for its own
account or for the account of another stockholder (except for the registration
of securities (A) to be offered pursuant to an employee benefit plan on Form S-8
or (B) pursuant to a registration made on Form S-4, or any successor forms then
in effect) at any time and the registration form to be used may be used for the
registration of the Registrable Securities (a “Piggyback Registration”), it will
so notify in writing all holders of Registrable Securities no
 
 
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later than the earlier to occur of (i) the tenth (10th) day following the
Company’s receipt of notice of exercise of other demand registration rights, or
(ii) thirty (30) days prior to the anticipated filing date.  Subject to the
provisions of this Agreement, the Company will include in the Piggyback
Registration all Registrable Securities, on a pro rata basis based upon the
total number of Registrable Securities with respect to which the Company has
received written requests for inclusion within ten (10) business days after the
applicable holder’s receipt of the Company’s notice.
 
5.2.           Expenses.  All fees and expenses incident to the performance of
or compliance with this Agreement by the Company shall be borne by the Company,
whether or not any Registrable Securities are sold pursuant to the Registration
Statement.  The fees and expenses referred to in the foregoing sentence shall
include, without limitation, (i) all registration and filing fees (including,
without limitation, fees and expenses (A) with respect to filings required to be
made with the trading market on which the Common Stock is then listed for
trading, and (B) in compliance with applicable state securities or Blue Sky
laws, (ii) processing expenses of the Placement Agent, not to exceed $5,000
without the Company’s approval, including, but not limited to, printing
expenses, messenger, telephone and delivery expenses and customary marketing
expenses, (iii) fees and disbursements of counsel and independent public
accountants for the Company, (iv) fees and disbursements of one counsel to the
Placement Agent not to exceed $15,000, and (v) filing fees and counsel fees of
the Placement Agent if a determination is made that a FINRA Rule 5110 filing is
required to be made with respect to the Registration Statement.
 
5.3.           Indemnification.
 
(a)           Indemnification by the Company.  The Company will indemnify and
hold harmless each Investor and its officers, directors, members, employees and
agents, successors and assigns, and each other person, if any, who controls such
Investor within the meaning of the Securities Act, against any losses, claims,
damages or liabilities, joint or several, to which they may become subject under
the Securities Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon: (i)
any untrue statement or alleged untrue statement of any material fact contained
in any Registration Statement, any preliminary prospectus or final prospectus
contained therein, or any amendment or supplement thereof; (ii) any blue sky
application or other document executed by the Company specifically for that
purpose or based upon written information furnished by the Company filed in any
state or other jurisdiction in order to qualify any or all of the Registrable
Securities under the securities laws thereof (any such application, document or
information herein called a “Blue Sky Application”); (iii) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading; (iv) any violation
by the Company or its agents of any rule or regulation promulgated under the
Securities Act applicable to the Company or its agents and relating to action or
inaction required of the Company in connection with such registration; or (v)
any failure to register or qualify the Registrable Securities included in any
such Registration in any state where the Company or its agents has affirmatively
undertaken or agreed in writing that the Company will undertake such
registration or qualification on an Investor’s behalf and will reimburse such
Investor, and each such officer, director or member and each such controlling
person for any legal or other expenses reasonably incurred by them in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the Company will not be liable in any such case
if and to the extent that any such loss, claim, damage or liability arises out
of or is based upon an untrue statement or alleged untrue statement or omission
or alleged omission so made in conformity with information furnished by such
Investor or any such controlling person in writing specifically for use in such
Registration Statement or Prospectus.
 
(b)           Indemnification by the Investors.  Each Investor agrees, severally
but not jointly, to indemnify and hold harmless, to the fullest extent permitted
by law, the Company, its directors, officers, employees, stockholders and each
person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expense (including
reasonable attorney
 
 
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fees) resulting from any untrue statement of a material fact or any omission of
a material fact required to be stated in the Registration Statement or
Prospectus or preliminary prospectus or amendment or supplement thereto or
necessary to make the statements therein not misleading, to the extent, but only
to the extent that such untrue statement or omission is contained in any
information furnished in writing by such Investor to the Company specifically
for inclusion in such Registration Statement or Prospectus or amendment or
supplement thereto.  In no event shall the liability of an Investor be greater
in amount than the dollar amount of the proceeds (net of all expense paid by
such Investor in connection with any claim relating to this Section 5.3 and the
amount of any damages such Investor has otherwise been required to pay by reason
of such untrue statement or omission) received by such Investor upon the sale of
the Registrable Securities included in the Registration Statement giving rise to
such indemnification obligation.
 
(c)           Conduct of Indemnification Proceedings.  Any person entitled to
indemnification hereunder shall (i) give prompt notice to the indemnifying party
of any claim with respect to which it seeks indemnification and (ii) permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party; provided that any person entitled to
indemnification hereunder shall have the right to employ separate counsel and to
participate in the defense of such claim, but the fees and expenses of such
counsel shall be at the expense of such person unless (a) the indemnifying party
has agreed to pay such fees or expenses, or (b) the indemnifying party shall
have failed to assume the defense of such claim and employ counsel reasonably
satisfactory to such person or (c) in the reasonable judgment of any such
person, based upon written advice of its counsel, a conflict of interest exists
between such person and the indemnifying party with respect to such claims (in
which case, if the person notifies the indemnifying party in writing that such
person elects to employ separate counsel at the expense of the indemnifying
party, the indemnifying party shall not have the right to assume the defense of
such claim on behalf of such person); and provided, further, that the failure of
any indemnified party to give notice as provided herein shall not relieve the
indemnifying party of its obligations hereunder, except to the extent that such
failure to give notice shall materially adversely affect the indemnifying party
in the defense of any such claim or litigation.  It is understood that the
indemnifying party shall not, in connection with any proceeding in the same
jurisdiction, be liable for fees or expenses of more than one separate firm of
attorneys at any time for all such indemnified parties.  No indemnifying party
will, except with the consent of the indemnified party, consent to entry of any
judgment or enter into any settlement that does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such indemnified party
of a release from all liability in respect of such claim or litigation.
 
(d)           Contribution.  If for any reason the indemnification provided for
in the preceding paragraphs (a) and (b) is unavailable to an indemnified party
or insufficient to hold it harmless, other than as expressly specified therein,
then the indemnifying party shall contribute to the amount paid or payable by
the indemnified party as a result of such loss, claim, damage or liability in
such proportion as is appropriate to reflect the relative fault of the
indemnified party and the indemnifying party, as well as any other relevant
equitable considerations.  No person guilty of fraudulent misrepresentation
within the meaning of Section 11(f) of the Securities Act shall be entitled to
contribution from any person not guilty of such fraudulent
misrepresentation.  In no event shall the contribution obligation of a holder of
Registrable Securities be greater in amount than the dollar amount of the
proceeds (net of all expenses paid by such holder in connection with any claim
relating to this Section 5.3 and the amount of any damages such holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission) received by it upon the sale of the
Registrable Securities giving rise to such contribution obligation.
 
5.4.           Cooperation by Investor.  Each Investor shall furnish to the
Company or the Underwriter, as applicable, such information regarding the
Investor and the distribution proposed by it as the Company may reasonably
request in connection with any registration or offering referred to in this
 
 
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Section 5.  Each Investor shall cooperate as reasonably requested by the Company
in connection with the preparation of the registration statement with respect to
such registration, and for so long as the Company is obligated to file and keep
effective such registration statement, shall provide to the Company, in writing,
for use in the registration statement, all such information regarding the
Investor and its plan of distribution of the Shares included in such
registration as may be reasonably necessary to enable the Company to prepare
such registration statement, to maintain the currency and effectiveness thereof
and otherwise to comply with all applicable requirements of law in connection
therewith.
 
6.           Transfer Restrictions.
 
6.1.           Transfer or Resale. Each Investor understands that:
 
(i)           Except as provided in the registration rights provisions set forth
above,  the sale or resale of all or any portion of the Shares has not been and
is not being registered under the Securities Act or any applicable state
securities laws, and all or any portion of the Shares may not be transferred
unless:
 
(A)           the Shares are sold pursuant to an effective registration
statement under the Securities Act;
 
(B)           the Investor shall have delivered to the Company,  at the cost of
the Company, a customary opinion of counsel that shall be in form, substance and
scope reasonably acceptable to the Company, to the effect that the Shares to be
sold or transferred may be sold or transferred pursuant to an exemption from
such registration;
 
(C)           the Shares are sold or transferred to an “affiliate” (as defined
in Rule 144 promulgated under the Securities Act (or a successor rule) (“Rule
144”)) of the Investor who agrees to sell or otherwise transfer the Shares only
in accordance with this Section 6.1 and who is an Accredited Investor;
 
(D)           the Shares are sold pursuant to Rule 144; or
 
(E)           the Shares are sold pursuant to Regulation S under the Securities
Act (or a successor rule) (“Regulation S”);
 
and, in each case, the Investor shall have delivered to the Company, at the cost
of the Company, a customary opinion of counsel, in form, substance and scope
reasonably acceptable to the Company.  Notwithstanding the foregoing or anything
else contained herein to the contrary, the Shares may be pledged as collateral
in connection with a bona fide margin account or other lending arrangement.
 
6.2           Transfer Agent Instructions.  If an Investor provides the Company
with a customary opinion of counsel, that shall be in form, substance and scope
reasonably acceptable to such counsel, to the effect that a public sale or
transfer of such Shares may be made without registration under the Securities
Act and such sale or transfer is effected, the Company shall permit the transfer
and promptly instruct its transfer agent to issue one or more certificates, free
from restrictive legend, in such name and in such denominations as specified by
such Investor. The Company acknowledges that a breach by it of its obligations
hereunder will cause irreparable harm to the Investors, by vitiating the intent
and purpose of the transactions contemplated hereby. Accordingly, the Company
acknowledges that the remedy at law for a breach of its obligations under this
Section 6.2 may be inadequate and agrees, in the event of a breach or threatened
breach by the Company of the provisions of this Section, that the Investors
shall be entitled, in addition to all other available remedies, to an injunction
restraining any breach and requiring immediate transfer, without the necessity
of showing economic loss and without any bond or other security being required.
 
 
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7.           Conditions to Closing of the Investors.
 
The obligation of each Investor to purchase the Shares at the Closing is subject
to the fulfillment to the Placement Agent’s satisfaction, on or prior to the
Closing Date, of the closing conditions set forth in the Placement Agency
Agreement, which may be waived in certain cases by the Placement Agent, in its
sole discretion.
 
8.           Conditions to Closing of the Company.
 
The obligations of the Company to effect the transactions contemplated by this
Agreement are subject to the fulfillment at or prior to each Closing Date of the
conditions listed below.
 
8.1.           Representations and Warranties.  The representations and
warranties made by the Investor in Section 3 shall be true and correct in all
material respects at the time of Closing as if made on and as of such date.
 
8.2.           Corporate Proceedings.  All corporate and other proceedings
required to be undertaken by the Investor in connection with the transactions
contemplated hereby shall have occurred and all documents and instruments
incident to such proceedings shall be reasonably satisfactory in substance and
form to the Company.
 
9.           Miscellaneous.
 
9.1.           Compensation of Placement Agent.  The Investor acknowledges that
it is aware that the Placement Agent will receive from the Company, in
consideration for its services as financial advisor and placement agent in
respect of the transactions contemplated hereby, (a) a commission success fee
equal to 10% of the Purchase Price of the Shares sold at each closing, payable
in cash, (b) an expense allowance not to exceed $5,000 without the Company’s
approval, payable in cash, and (c) four-year warrants to purchase 64,000 shares
of Common Stock, at an exercise price equal to the closing bid price on the
final Closing Date.  The Placement Agent is also entitled to reimbursment of up
to a maximum of $15,000 of its legal expenses incurred in connection with the
transactions contemplated hereby.
 
9.2.           Notices.  All notices, requests, demands and other communications
provided in connection with this Agreement shall be in writing and shall be
deemed to have been duly given at the time when hand delivered, delivered by
express courier, or sent by facsimile (with receipt confirmed by the sender’s
transmitting device) in accordance with the contact information provided below
or such other contact information as the parties may have duly provided by
notice.
 
The Company:
 
Bridgeline Digital, Inc.
10 Sixth Road
Woburn, Massachusetts 01801
Telephone:    (781) 376-5555
Facsimile:       (781) 376-5033
Attention:      Mr. Thomas L. Massie,
                        President and Chief Executive Officer
With a copy to:
Morse, Barnes-Brown & Pendleton, P.C.
Reservoir Place
1601 Trapelo Road, Suite 205
Waltham, Massachusetts 02451
Telephone:    (781) 622-5930
Facsimile:       (781) 622-5933
Attention:      Joseph C. Marrow, Esq.

 
 
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The Investors:
 
As per the contact information provided on the signature pages hereof.
 
Joseph Gunnar & Co., LLC:
 
Joseph Gunnar & Co., LLC
30 Broad Street, 11th Floor
New York, New York 10004
Telephone:     (212) 440-9650
Facsimile:        (212) 440-9668
Attention:       Mr. Stephan A. Stein, President
With a copy to:
Greenberg Traurig, LLP
The MetLife Building
200 Park Avenue, 14th Floor
New York, New York 10166
Telephone:    (212) 801-9200
Facsimile:       (212) 801-6400
Attention:      Spencer G. Feldman, Esq.

 
9.3           Survival of Representations and Warranties.  Each party hereto
covenants and agrees that the representations and warranties of such party
contained in this Agreement shall survive the Closing.
 
9.4           Indemnification.
 
(a)           The Company agrees to indemnify and hold harmless each Investor
and its Affiliates and their respective directors, officers, employees and
agents from and against any and all losses, claims, damages, liabilities and
expenses (including without limitation reasonable attorney fees and
disbursements and other expenses incurred in connection with investigating,
preparing or defending any action, claim or proceeding, pending or threatened
and the costs of enforcement thereof) (collectively, “Losses”) to which such
Person may become subject as a result of any breach of representation, warranty,
covenant or agreement made by or to be performed on the part of the Company
under the Transaction Documents, and will reimburse any such Person for all such
amounts as they are incurred by such Person.
 
(b)           Promptly after receipt by any Investor (the “Indemnified Person”)
of notice of any demand, claim or circumstances which would or might give rise
to a claim or the commencement of any action, proceeding or investigation in
respect of which indemnity may be sought pursuant to Section 9.4, such
Indemnified Person shall promptly notify the Company in writing and the Company
shall assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Indemnified Person, and shall assume the payment of all
fees and expenses; provided, however, that the failure of any Indemnified Person
so to notify the Company shall not relieve the Company of its obligations
hereunder except to the extent that the Company is materially prejudiced by such
failure to notify.  In any such proceeding, any Indemnified Person shall have
the right to retain its own counsel, but the fees and expenses of such counsel
shall be at the expense of such Indemnified Person unless: (i) the Company and
the Indemnified Person shall have mutually agreed to the retention of such
counsel; or (ii) in the reasonable judgment of counsel to such Indemnified
Person representation of both parties by the same counsel would be inappropriate
due to actual or potential differing interests between them.  The Company shall
not be liable for any settlement of any proceeding effected without its written
consent, which consent shall not be unreasonably withheld, but if settled with
such consent, or if there be a final judgment for the plaintiff, the Company
shall indemnify and hold harmless such Indemnified Person from and against any
loss or liability (to the extent stated above) by reason of such settlement or
judgment.  Without the prior written consent of the Indemnified Person, which
consent shall not be unreasonably withheld, the Company shall not effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Person is or could have been a party and indemnity could have been
sought hereunder by such Indemnified Party, unless such settlement includes an
unconditional release of such Indemnified Person from all liability arising out
of such proceeding.
 
 
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9.5.           Entire Agreement. This Agreement contains the entire agreement
between the parties hereto in respect of the subject matter contained herein and
supersedes all prior agreements and understandings of the parties, oral and
written, with respect to the subject matter contained herein.
 
9.6           Third Party Beneficiaries. This Agreement is intended for the
benefit of the parties hereto and their respective permitted successors and
assigns, and, except for the Placement Agent and other registered
broker-dealers, if any, who are specifically agreed to be and acknowledged by
each party as third party beneficiaries hereof, is not for the benefit of, nor
may any provision hereof be enforced by, any other person.
 
9.7.           Successors and Assigns.  This Agreement shall be binding upon and
inure to the benefit of the parties and their successors and assigns. Neither
the Company nor any Investor shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other.
Notwithstanding the foregoing, but subject to the provisions of Section 6.1
hereof, any Investor may, without the consent of the Company, assign its rights
hereunder to any person that purchases Shares in a private transaction from an
Investor or to any of its “affiliates,” as that term is defined under the 1934
Act.
 
9.8.           Publicity. The Company and the Placement Agent shall have the
right to review a reasonable period of time before issuance of any press
releases or SEC or other regulatory filings, or any other public statements with
respect to the transactions contemplated hereby; provided, however, that the
Company shall be entitled, without the prior approval of the Placement Agent or
the Investors, to make any press release or SEC or other regulatory filings with
respect to such transactions as is required by applicable law and regulations
(although the Placement Agent shall be consulted by the Company in connection
with any such press release prior to its release and shall be provided with a
copy thereof and be given an opportunity to comment thereon).
 
9.9.           Binding Effect; Benefits.  This Agreement and all the provisions
hereof shall be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns; nothing in this Agreement,
expressed or implied, is intended to confer on any persons other than the
parties hereto or their respective successors and permitted assigns, any rights,
remedies, obligations or liabilities under or by reason of this Agreement.
 
9.10.           Amendment; Waivers.  All modifications, amendments or waivers to
this Agreement shall require the written consent of both the Company and a
majority-in-interest of the Investors (based on the number of Shares purchased
hereunder).
 
9.11.           Applicable Law; Disputes.  This Agreement shall be governed by
and construed in accordance with the laws of the State of New York without
giving effect to the conflict of law provisions thereof, and the parties hereto
irrevocably submit to the exclusive jurisdiction of the United States District
Court for the Southern District of New York, or, if jurisdiction in such court
is lacking, the Supreme Court of the State of New York, New York County, in
respect of any dispute or matter arising out of or connected with this Agreement
 
9.12.           Further Assurances.  Each party hereto shall do and perform or
cause to be done and performed all such further acts and shall execute and
deliver all such other agreements, certificates, instruments and documents as
any other party hereto reasonably may request in order to carry out the intent
and accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
 
9.13.           Counterparts.  This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original and all of which
taken together shall constitute one and the same instrument.  This Agreement may
also be executed via facsimile, which shall be deemed an original.
 
 
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9.14           Independent Nature of Investors.  The obligations of each
Investor under this Agreement or other transaction document are several and not
joint with the obligations of any other Investor, and no Investor shall be
responsible in any way for the performance of the obligations of any other
Investor under this Agreement or any other transaction document.  Each Investor
shall be responsible only for its own representations, warranties, agreements
and covenants hereunder.  The decision of each Investor to purchase Shares
pursuant to this Agreement has been made by such Investor independently of any
other Investor and independently of any information, materials, statements or
opinions as to the business, affairs, operations, assets, properties,
liabilities, results of operations, condition (financial or otherwise) or
prospects of the Company which may have been made or given by any other Investor
or by any agent or employee of any other Investor, and no Investor or any of its
agents or employees shall have any liability to any other Investor (or any other
person) relating to or arising from any such information, materials, statements
or opinions.  Nothing contained herein or in any other transaction document, and
no action taken by any Investor pursuant hereto or thereto, shall be deemed to
constitute the Investors as a partnership, an association, a joint venture or
any other kind of entity, or create a presumption that the Investors are in any
way acting in concert or as a group with respect to such obligations or the
transactions contemplated by this Agreement.  Except as otherwise provided in
this Agreement or any other transaction document, each Investor shall be
entitled to independently protect and enforce its rights arising out of this
Agreement or out of the other transaction documents, and it shall not be
necessary for any other Investor to be joined as an additional party in any
proceeding for such purpose.  Each Investor has been represented by its own
separate legal counsel in connection with the transactions contemplated hereby
and acknowledge and understand that Greenberg Traurig, LLP has served as counsel
to the Placement Agent only.
 

 
[SIGNATURE PAGES IMMEDIATELY FOLLOW]
 
 
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IN WITNESS WHEREOF, the undersigned Investors and the Company have caused this
Securities Purchase Agreement to be duly executed as of the date first above
written.
 
 
 

 
BRIDGELINE DIGITAL, INC.
           
By:
/s/ Thomas L. Massie       Thomas L. Massie      
President and Chief Executive Officer
             
 
 
   
INVESTORS:
           
The Investors executing the Signature Page in the form attached hereto as Annex
A and delivering the same to the Company or its agents shall be deemed to have
executed this Agreement and agreed to the terms hereof.
                 

 

 
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Schedule 4.4
 
Capitalization

Certain stockholder that acquired shares of the Company’s Common Stock in
connection with the sale of their businesses to the Company were granted
“piggyback” registration rights such that if the Company registers any
securities for public sale for the benefit of any member of the Company’s
management team or any stockholder that acquired their shares through the sale
of their business to the Company, such stockholders will have the right to
include their shares in a registration statement.

On or about April 27, 2006, the Company issued Warrants to Purchase Common Stock
exercisable for up to 112,000 shares of Common Stock.  The Warrants to Purchase
Common Stock terminate on or about April 27, 2011.  As of the Closing, Warrants
to Purchase Common Stock exercisable for 40,769 shares remain outstanding and
unexercised.  The Warrants to Purchase Common Stock were granted at an exercise
price of $5.00 per share.  In connection with the Offering, the exercise price
(but not the number of shares exercisable thereunder) of Warrants to Purchase
Common Stock shall be adjusted downward in accordance with the anti-dilution
provision of the Warrants to Purchase Common Stock.

On or about July 5, 2007, the Company issued Warrants to Purchase Common Stock
exercisable for up to 150,000 shares of Common Stock.  The Warrants to Purchase
Common Stock terminate on or about July 5, 2012.  As of the Closing, Warrants to
Purchase Common Stock exercisable for 93,000 shares remain outstanding and
unexercised.  The Warrants to Purchase Common Stock were granted at an exercise
price of $7.50 per share.  In connection with the Offering, the exercise price
(but not the number of shares exercisable thereunder) of Warrants to Purchase
Common Stock shall be adjusted downward in accordance with the anti-dilution
provision of the Warrants to Purchase Common Stock.
 
 
 
 
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Annex A
Securities Purchase Agreement
Investor Counterpart Signature Page

The undersigned, desiring to: (i) enter into this Securities Purchase Agreement
dated as of October 29, 2010 (the “Agreement”), with the undersigned, Bridgeline
Digital, Inc., a Delaware corporation (the “Company”), in or substantially in
the form furnished to the undersigned and (ii) purchase the shares of Common
Stock of the Company as set forth below, hereby agrees to purchase such shares
from the Company as of the Closing and further agrees to join the Agreement as a
party thereto, with all the rights and privileges appertaining thereto, and to
be bound in all respects by the terms and conditions thereof.  The undersigned
specifically acknowledges having read the representations in the Agreement
section entitled “Representations, Warranties and Acknowledgments of the
Investors,” and hereby represents that the statements contained therein are
complete and accurate with respect to the undersigned as an Investor.
 

 
Name of Investor:
 
If an entity:
 
Print Name of Entity:
 

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By:

--------------------------------------------------------------------------------

       Name:
       Title:

If an individual:

Print Name:

--------------------------------------------------------------------------------

 

Signature:

--------------------------------------------------------------------------------

 
If joint individuals:

Print Name:

--------------------------------------------------------------------------------

Signature:

--------------------------------------------------------------------------------

 
All Investors:

Address:

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

Telephone No.:

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Facsimile No.:

--------------------------------------------------------------------------------

Email Address:

--------------------------------------------------------------------------------

 
The Investor hereby elects to purchase ____________ Shares (to be completed by
Investor) at a purchase price of $1.00 per Share under the Securities Purchase
Agreement at a total Purchase Price of $__________ (to be completed by
Investor).

 
 
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Exhibit A-1

First Closing held on October      , 2010

Schedule of Investors

Investor
Shares
Purchase Price
                                                                 
FIRST CLOSING TOTAL
   

 
 

 

 
 
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Exhibit A-2

Subsequent Closing held on October      , 2010
 
Schedule of Investors

Investor
Shares
Purchase Price
                                                                 
SUBSEQUENT CLOSING
TOTAL
   

 
 
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BRIDGELINE DIGITAL, INC.
 
QUESTIONNAIRE FOR INDIVIDUAL INVESTORS
 
If the investor is an individual, a married couple or an IRA account of an
individual investor, please complete, date and sign this Certificate.
 
CERTIFICATE
 
The undersigned certifies that the representations and responses below are true
and accurate:
 
(a)  
The investor has full power and authority to invest in the Company.  If the
investment is to be held jointly, each investor must execute and deliver the
Securities Purchase Agreement and initial their investor status as requested in
section (c) below.

 
(b)  
Indicate the form of ownership intended:

 
____  Individual
____  IRA
____ Joint Tenants (if you check this box, please note both joint tenants must
sign this certificate and Investor Signature Page on page 2).
 
 
____Tenants in Common
____Tenants in the Entirety
____Community Property
____Grantor of a Revocable Trust (identify each grantor and indicate under what
circumstances the trust is revocable by the grantor):____________

(c)           In order for the Company to offer and sell the Shares in
conformance with state and federal securities laws, the following information
must be obtained regarding your investor status.  Please initial each category
applicable to you as an investor.

 _____
1.
I certify that I have a net worth (excluding my primary residence1, but
including other homes, furnishings and automobiles) in excess of $1.0 million
either individually or through aggregating my individual holdings and those in
which I have a joint, community property or other similar shared ownership
interest with my spouse.

_____
2.
I certify that I have had an annual gross income for the past two years of at
least $200,000 (or $300,000 jointly with my spouse) and expect my income (or
joint income, as appropriate) to reach the same level in the current year.

_____
3.
I certify that I am a director or executive officer of Bridgeline Digital, Inc.

Note: Please verify that this section corresponds properly with the information
on the following page
 
_____________
1      Notwithstanding such exclusion, if the debt securing your primary
residence is in excess of the value of your primary residence, such excess
amount should be considered a liability and deducted in the determination of
your net worth.
 
22

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 Please provide the following profile information if investing as an
individual*:

Legal
Name:                                                                                                                                          

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Social Security
Number:                                                                                                                                

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Driver’s License State: _______________          Driver’s License I.D.
Number: ________________
 
Date of Birth:   ________________                      Marital
Status:  ___________________________
 
                                                                                     
Investment Experience (Years):_______________
 
Annual Income*: ______________ à     *Please carefully review that disclosure
                 in this section is consistent with section (c)
Liquid Net Worth*: ___________ _ à       on the previous page.
 
Net Worth*: __________________ à
 
Home Street
Address:                                                                                                                                          

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Home City, State & Zip Code:  

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Home Phone: _______________________       Home Fax: _______________
 
Home Email: ________________________
 
Employer:                                                                                                                                

--------------------------------------------------------------------------------

Employer Street
Address:                                                                                                                                

--------------------------------------------------------------------------------

Employer City, State & Zip Code:            

--------------------------------------------------------------------------------

Bus. Phone: _________________________     Bus. Fax: ________________
 
Bus. Email: __________________________
 
Type of
Business:                                                                                                                                

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Dated:  __________, 2010
 
 
_________________________________________
Print Name of Individual Investor

 
__________________________________________
Signature
 
*       If making a joint investment, both indivuals must complete this profile
information form.

 
23

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BRIDGELINE DIGITAL, INC.
 
QUESTIONNAIRE FOR ENTITY INVESTORS

If the investor is a corporation, partnership, limited liability company, trust,
pension plan, foundation, joint investor (other than a married couple) or other
entity, an authorized officer, partner, or trustee must complete, date and sign
this Certificate.
 
CERTIFICATE

The undersigned certifies that the representations and responses below are true
and accurate:
 
(a)           The investor has been duly formed and is validly existing and has
full power and authority to invest in the Company.  The person signing on behalf
of the undersigned has the authority to execute and deliver the Securities
Purchase Agreement on behalf of the investor and to take other actions with
respect thereto.
 

(b)           Indicate the form of entity* of the undersigned:
____           Limited Partnership                    *Must correspond to the
actual
____           General Partnership                     documentation submitted
and
____           Limited Liability Company         to section (d) following.
____           Corporation
____           Revocable Trust (identify each grantor, indicate under what
circumstances the trust is revocable by the grantor and have each grantor
complete and deliver a Certificate for Individual Investors for each grantor):
_________________________________________________________
 (Continue on a separate piece of paper, if necessary.)

____           Other type of Trust (indicate type of trust and, for trusts other
than pension trusts, name the grantors and beneficiaries):

--------------------------------------------------------------------------------

(Continue on a separate piece of paper, if necessary.)

____           Other form of organization (indicate form of organization
(________________________________________________________________________________________ ).

(c)           Indicate the approximate date the undersigned entity was formed: .

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24

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(d)           In order for the Company to offer and sell the Shares in
conformance with state and federal securities laws, the following information
must be obtained regarding your investor status.  Please initial each category
applicable to you as an investor.

 
_____
1.
A bank as defined in Section 3(a)(2) of the Securities Act, or any savings and
loan association or other institution as defined in Section 3(a)(5)(A) of the
Securities Act whether acting in its individual or fiduciary capacity;

 
_____
2.
A broker or dealer registered pursuant to Section 15 of the Securities Exchange
Act of 1934;

 
_____
3.
An insurance company as defined in Section 2(13) of the Securities Act;

 
_____
4.
An investment company registered under the Investment Company Act of 1940 or a
business development company as defined in Section  2(a)(48) of that Act;

 
_____
5.
A Small Business Investment Company licensed by the U.S.  Small Business
Administration under Section 301(c) or (d) of the Small Business Investment Act
of 1958;

 
_____
6.
A plan established and maintained by a state, its political subdivisions, or any
agency or instrumentality of a state or its political subdivisions, for the
benefit of its employees, if such plan has total assets in excess of $5,000,000;

 
_____
7.
An employee benefit plan within the meaning of the Employee Retirement Income
Security Act of 1974, if the investment decision is made by a plan fiduciary, as
defined in Section 3(21) of such Act, which is either a bank, savings and loan
association, insurance company, or registered investment advisor, or if the
employee benefit plan has total assets in excess of $5,000,000 or, if a
self-directed plan, with investment decisions made solely by persons that are
accredited investors;

 
_____
8.
A private business development company as defined in Section 202(a)(22) of the
Investment Advisers Act of 1940;

 
_____
9.
Any partnership or corporation or any organization described in Section
501(c)(3) of the Internal Revenue Code or similar business trust, not formed for
the specific purpose of acquiring the Shares, with total assets in excess of
$5,000,000;

 
_____
10.
A trust, with total assets in excess of $5,000,000, not formed for the specific
purpose of acquiring the Shares, whose purchase is directed by a sophisticated
person as described in Rule  506(b)(2)(ii) of the Securities Act;

 
_____
11.
An entity in which all of the equity owners qualify under any of the above
subparagraphs.  If the undersigned belongs to this investor category only, list
the equity owners of the undersigned, and have each equity owner complete and
deliver a Certificate for Individual Investors:
 

(Continue on a separate piece of paper, if necessary.)

 
25

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Please set forth in the space provided below the (i) states, if any, in the
United States in which you maintained your principal office during the past two
years and the dates during which you maintained your office in each state, (ii)
state(s), if any, in which you are incorporated or otherwise organized and (iii)
state(s), if any, in which you pay income taxes.

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

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Dated: October ___, 2010
 
Print Name of Entity
Investor:                                                                                                
 
By (signature):        ______________________________________
      Name:            _________________________________________
      Title:              _________________________________________
(Signature and title of authorized officer, partner or trustee)
 

 
 
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Please provide the following profile information if investing as an entity*:

Entity Investor Representative’s Legal
Name:  _____________________________________
 
Social Security Number/Federal I.D.
Number:   _____________________________________

Driver’s License State: _______________             Driver’s License I.D.
Number:  __________
 
Date of Birth:    ________________
 
Home Street
Address:                                                                                                                                          

--------------------------------------------------------------------------------

Home City, State & Zip Code: 

--------------------------------------------------------------------------------

Home Phone: ________________________ Home Fax:________________________
Home Email: ________________________
 
Employer:                                                                                                                                

--------------------------------------------------------------------------------

Employer Street
Address:                                                                                                                                

--------------------------------------------------------------------------------

Employer City, State & Zip Code:  

--------------------------------------------------------------------------------

Bus. Phone: __________________________ Bus. Fax:
Bus. Email: __________________________
Type of
Business:                                                                                                                                

--------------------------------------------------------------------------------

 
Dated:  __________, 2010
 
 
_________________________________________
Print Name of Entity Investor Representative

 
__________________________________________
Signature
 
 
*
Corporate resolution or similar documentation evidencing that the entity
representative executing the Securities Purchase Agreement has the authority to
do so must be submitted.

 
 
 
27

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