Document:

Exhibit 4.4

 

 
Exhibit
4.4

 

COMMON STOCK PURCHASE WARRANT

 

BRIDGELINE DIGITAL, INC.

 

	
Warrant Shares:
_______

	
Initial Exercise
Date: October 19, 2018

	
Original Issue
Date: October 19, 2018

	
Date of Exchange:
March __, 2019

 

This Common Stock Purchase Warrant is issued in exchange for a
Common Stock Purchase Warrant issued pursuant to the
Company’s registration statement on Form S-1

(File No. 333-227430)

 

THIS
COMMON STOCK PURCHASE WARRANT (the “Warrant”) certifies that,
for value received, ______________ or its assigns (the
“Holder”) is entitled,
upon the terms and subject to the limitations on exercise and the
conditions hereinafter set forth, at any time on or after October
19, 2018 (the “Initial Exercise Date”)
and on or prior to the close of business on the five (5) year
anniversary of the Initial Exercise Date (the “Termination Date”) but
not thereafter, to subscribe for and purchase from Bridgeline
Digital, Inc., a Delaware corporation (the “Company”), up to
__________ shares (as
subject to adjustment hereunder, the “Warrant Shares”) of
Common Stock. The purchase price of one share of Common Stock under
this Warrant shall be equal to the Exercise Price, as defined in
Section 2(b). This Warrant is issued
pursuant to an Exchange Agreement, dated as of March __, 2019, by
and between the Holder and the Company and is in exchange for and
issued in lieu of a Common Stock Purchase Warrant issued to Holder
to purchase _______ shares
of Common Stock.

 

Section 1. Definitions. In addition to the
terms defined elsewhere in this Warrant, the following terms have
the meanings indicated in this Section 1:

 

“Affiliate” means any
Person that, directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common
control with a Person, as such terms are used in and construed
under Rule 405 under the Securities Act.

 

“Bid Price” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the bid price of the Common Stock for the time in
question (or the nearest preceding date) on the Trading Market on
which the Common Stock is then listed or quoted as reported by
Bloomberg L.P. (based on a Trading Day from 9:30 a.m. (New York
City time) to 4:02 p.m. (New York City time)), (b)  if the
Common Stock is not then listed or quoted for trading on a Trading
Market and if the Common Stock is then quoted on the OTC Pink
Market (or any successor thereto) the most recent bid price per
share of the Common Stock so reported, or (c) in all other
cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by
the Holders of a majority in interest of the Warrants then
outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.

 

“Business Day” means any
day except any Saturday, any Sunday, any day which is a federal
legal holiday in the United States or any day on which banking
institutions in the State of New York are authorized or required by
law or other governmental action to close.

 

“Change of Control” means
any Fundamental Transaction other than (i) any reorganization,
recapitalization or reclassification of the Common Stock in which
holders of the Company's voting power immediately prior to such
reorganization, recapitalization or reclassification continue after
such reorganization, recapitalization or reclassification to hold
publicly traded securities and, directly or indirectly, are, in all
material respect, the holders of the voting power of the surviving
entity (or entities with the authority or voting power to elect the
members of the board of directors (or their equivalent if other
than a corporation) of such entity or entities) after such
reorganization, recapitalization or reclassification, (ii) pursuant
to a migratory merger effected solely for the purpose of changing
the jurisdiction of incorporation of the Company or (iii) a merger
in connection with a bona fide acquisition by the Company of any
Person in which (x) the gross consideration paid, directly or
indirectly, by the Company in such acquisition is not greater than
20% of the Company's market capitalization as calculated on the
date of the consummation of such merger and (y) such merger does
not contemplate a change to the identity of a majority of the board
of directors of the Company. Notwithstanding anything herein to the
contrary, any transaction or series of transaction that, directly
or indirectly, results in the Company or the Successor Entity not
having Common Stock or common stock, as applicable, registered
under the 1934 Act and listed on an Eligible Market shall be deemed
a Change of Control.

 

 

 

 

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“Commission” means the
United States Securities and Exchange Commission.

 

“Common Stock” means the
common stock of the Company, par value $0.001 per share, and any
other class of securities into which such securities may hereafter
be reclassified or changed.

 

“Common Stock Equivalents”
means any securities of the Company or the Subsidiaries which would
entitle the holder thereof to acquire at any time Common Stock,
including, without limitation, any debt, preferred stock, right,
option, warrant or other instrument that is at any time convertible
into or exercisable or exchangeable for, or otherwise entitles the
holder thereof to receive, Common Stock.

 

“Exchange Act” means the
Securities Exchange Act of 1934, as amended, and the rules and
regulations promulgated thereunder.

 

“Parent Entity” of a
Person means an entity that, directly or indirectly, controls the
applicable Person, including such entity whose common stock or
equivalent equity security is quoted or listed on a Trading Market
(or, if so elected by the Holder, any other market, exchange or
quotation system), or, if there is more than one such Person or
such entity, the Person or such entity designated by the Holder or
in the absence of such designation, such Person or entity with the
largest public market capitalization as of the date of consummation
of the Change of Control.

 

“Person” means an
individual or corporation, partnership, trust, incorporated or
unincorporated association, joint venture, limited liability
company, joint stock company, government (or an agency or
subdivision thereof) or other entity of any kind.

 

“Proceeding” means an
action, claim, suit, investigation or proceeding (including,
without limitation, an informal investigation or partial
proceeding, such as a deposition), whether commenced or
threatened.

 

“Registration Statement”
means the Company's registration statement on Form S-1 (File No.
333-227430).

 

“Securities Act” means the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder.

 

“Subsidiaries” means any
of the Company’s direct or indirect
subsidiaries.

 

“Successor Entity” means
one or more Person or Persons (or, if so elected by the Holder, the
Company or Parent Entity) formed by, resulting from or surviving
any Change of Control or one or more Person or Persons (or, if so
elected by the Holder, the Company or the Parent Entity) with which
such Change of Control shall have been entered into.

 

“Trading Day” means a day
on which the Common Stock is traded on a Trading
Market.

 

“Trading Market” means any
of the following markets or exchanges on which the Common Stock is
listed or quoted for trading on the date in question: the Nasdaq
Capital Market, the Nasdaq Global Market, the Nasdaq Global Select
Market, the NYSE American, the New York Stock Exchange, OTCQB or
OTCQX (or any successors to any of the foregoing).

 

“Transfer Agent” means
American Stock Transfer & Trust
Company, LLC, with a mailing address of 6201 15th Avenue,
Brooklyn, NY 11219, and any successor transfer agent of the
Corporation.

 

“Warrants” means this
Warrant and other Common Stock Purchase Warrants issued by the
Company pursuant to the Registration Statement.

 

 

 

 

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Section 2. Exercise.

 

a)
Exercise of the purchase rights represented by this Warrant may be
made, in whole or in part, at any time or times on or after the
Initial Exercise Date and on or before close of business on the
Termination Date by delivery to the Company of a duly executed
facsimile copy (or e-mail attachment) of the Notice of Exercise in
the form annexed hereto (the “Notice of Exercise”).
Within the earlier of (i) two (2) Trading Days and (ii) the number
of Trading Days comprising the Standard Settlement Period (as
defined in Section 2(d)(i) following the date of exercise as
aforesaid, the Holder shall deliver the aggregate Exercise Price
for the shares specified in the applicable Notice of Exercise by
wire transfer or cashier's check drawn on a United States bank
unless the cashless exercise procedure specified in Section 2(c)
below is specified in the applicable Notice of Exercise. No
ink-original Notice of Exercise shall be required, nor shall any
medallion guarantee (or other type of guarantee or notarization) of
any Notice of Exercise form be required. Notwithstanding anything
herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company until the Holder
has purchased all of the Warrant Shares available hereunder and the
Warrant has been exercised in full, in which case, the Holder shall
surrender this Warrant to the Company for cancellation within three
(3) Trading Days of the date the final Notice of Exercise is
delivered to the Company. Partial exercises of this Warrant
resulting in purchases of a portion of the total number of Warrant
Shares available hereunder shall have the effect of lowering the
outstanding number of Warrant Shares purchasable hereunder in an
amount equal to the applicable number of Warrant Shares purchased.
The Holder and the Company shall maintain records showing the
number of Warrant Shares purchased and the date of such purchases.
The Company shall deliver any objection to any Notice of Exercise
within one (1) Trading Day of receipt of such notice. The Holder and any assignee, by acceptance of
this Warrant, acknowledge and agree that, by reason of the
provisions of this paragraph, following the purchase of a portion
of the Warrant Shares hereunder, the number of Warrant Shares
available for purchase hereunder at any given time may be less than
the amount stated on the face hereof.

 

b)
Exercise Price. The
exercise price per share of the Common Stock under this Warrant
shall be $0.18, subject to
adjustment hereunder (the “Exercise
Price”).

 

c)
Cashless Exercise.
If at the time of exercise hereof there is no effective
registration statement registering, or the prospectus contained
therein is not available for the issuance of the Warrant Shares to
the Holder, then this Warrant may also be exercised, in whole or in
part, at such time by means of a “cashless exercise” in
which the Holder shall be entitled to receive a number of Warrant
Shares equal to the quotient obtained by dividing [(A-B) (X)] by
(A), where:

 

(A) =
as applicable: (i) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise if such
Notice of Exercise is (1) both executed and delivered pursuant to
Section 2(a) hereof on a day that is not a Trading Day or (2) both
executed and delivered pursuant to Section 2(a) hereof on a Trading
Day prior to the opening of “regular trading hours” (as
defined in Rule 600(b)(64) of Regulation NMS promulgated under the
federal securities laws) on such Trading Day, (ii) at the option of
the Holder, either (y) the VWAP on the Trading Day immediately
preceding the date of the applicable Notice of Exercise or (z) the
Bid Price of the Common Stock on the principal Trading Market as
reported by Bloomberg L.P. as of the time of the Holder’s
execution of the applicable Notice of Exercise if such Notice of
Exercise is executed during “regular trading hours” on
a Trading Day and is delivered within two (2) hours thereafter
(including until two (2) hours after the close of “regular
trading hours” on a Trading Day) pursuant to Section 2(a)
hereof or (iii) the VWAP on the date of the applicable Notice of
Exercise if the date of such Notice of Exercise is a Trading Day
and such Notice of Exercise is both executed and delivered pursuant
to Section 2(a) hereof after the close of “regular trading
hours” on such Trading Day;

 

(B) = the
Exercise Price of this Warrant, as adjusted hereunder;
and

 

(X) =
the number of Warrant Shares that would be issuable upon exercise
of this Warrant in accordance with the terms of this Warrant if
such exercise were by means of a cash exercise rather than a
cashless exercise.

 

 

 

 

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If Warrant Shares are issued in such a cashless exercise, the
parties acknowledge and agree that in accordance with Section
3(a)(9) of the Securities Act, the Warrant Shares shall take on the
registered characteristics of the Warrants being exercised. The
Company agrees not to take any position contrary to this Section
2(c). Notwithstanding anything herein to the contrary but
without limiting the rights of the Holder to receive Warrant Shares
on a “cashless exercise” and without limiting the
liquidated damages provision in section 2(d)(i) and the Buy-In
provision in Section 2(d)(iv), in the
event there is no effective registration statement
registering, or the prospectus contained therein is not available
for the issuance of the Warrant Shares to the Holder, under no
circumstance will the Company be required to net cash settle the
warrants.

 

“VWAP” means, for any
date, the price determined by the first of the following clauses
that applies: (a) if the Common Stock is then listed or quoted on a
Trading Market, the daily volume weighted average price of the
Common Stock for such date (or the nearest preceding date) on the
Trading Market on which the Common Stock is then listed or quoted
as reported by Bloomberg L.P. (based on a Trading Day from 9:30
a.m. (New York City time) to 4:02 p.m. (New York City time)), (b)
if the Common Stock is not then listed or quoted for trading on a
Trading Market and if the Common Stock is then quoted on the OTC
Pink Market (or any successor thereto), the most recent bid price
per share of the Common Stock so reported, or (c) in all other
cases, the fair market value of a share of Common Stock as
determined by an independent appraiser selected in good faith by
the holders of a majority in interest of the Warrants then
outstanding and reasonably acceptable to the Company, the fees and
expenses of which shall be paid by the Company.

 

Notwithstanding
anything herein to the contrary, on the Termination Date, this
Warrant shall be automatically exercised via cashless exercise
pursuant to this Section 2(c).

 

d)
Mechanics of
Exercise.

 

i.
Delivery of Warrant Shares
Upon Exercise. The Company shall cause the Warrant Shares
purchased hereunder to be transmitted by the Transfer Agent to the
Holder by crediting the account of the Holder’s or its
designee’s balance account with The Depository Trust Company
through its Deposit or Withdrawal at Custodian system
(“DWAC”) if the Company is
then a participant in such system and either (A) there is an
effective registration statement permitting the issuance of the
Warrant Shares to or resale of the Warrant Shares by Holder or (B)
this Warrant is being exercised via cashless exercise, and
otherwise by physical delivery of a certificate, registered in the
Company’s share register in the name of the Holder or its
designee, for the number of Warrant Shares to which the Holder is
entitled pursuant to such exercise to the address specified by the
Holder in the Notice of Exercise by the date that is the earliest
of (i) two (2) Trading Days after the delivery to the Company of
the Notice of Exercise, (ii) one (1) Trading Day after delivery of
the aggregate Exercise Price to the Company and (iii) the number of
Trading Days comprising the Standard Settlement Period after the
delivery to the Company of the Notice of Exercise (such date, the
“Warrant Share
Delivery Date”). Upon delivery of the Notice of
Exercise, the Holder shall be deemed for all corporate purposes to
have become the holder of record of the Warrant Shares with respect
to which this Warrant has been exercised, irrespective of the date
of delivery of the Warrant Shares, provided that payment of the
aggregate Exercise Price (other than in the case of a cashless
exercise) is received within the earlier of (i) two (2) Trading
Days and (ii) the number of Trading Days comprising the Standard
Settlement Period following delivery of the Notice of Exercise. If
the Company fails for any reason to deliver to the Holder the
Warrant Shares subject to a Notice of Exercise by the Warrant Share
Delivery Date, the Company shall pay to the Holder, in cash, as
liquidated damages and not as a penalty, for each $1,000 of Warrant
Shares subject to such exercise (based on the VWAP of the Common
Stock on the date of the applicable Notice of Exercise), $10 per
Trading Day (increasing to $20 per Trading Day on the fifth Trading
Day after such liquidated damages begin to accrue) for each Trading
Day after such Warrant Share Delivery Date until such Warrant
Shares are delivered or Holder rescinds such exercise. The Company
agrees to maintain a transfer agent that is a participant in the
FAST program so long as this Warrant remains outstanding and
exercisable. As used herein, “Standard Settlement
Period” means the standard settlement period,
expressed in a number of Trading Days, on the Company’s
primary Trading Market with respect to the Common Stock as in
effect on the date of delivery of the Notice of
Exercise.

  

 

 

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ii.
Delivery of New Warrants
Upon Exercise. If this Warrant shall have been exercised in
part, the Company shall, at the request of a Holder and upon
surrender of this Warrant certificate, at the time of delivery of
the Warrant Shares, deliver to the Holder a new Warrant evidencing
the rights of the Holder to purchase the unpurchased Warrant Shares
called for by this Warrant, which new Warrant shall in all other
respects be identical with this Warrant.

 

iii.
Rescission Rights.
If the Company fails to cause the Transfer Agent to transmit to the
Holder the Warrant Shares pursuant to Section 2(d)(i) by the
Warrant Share Delivery Date, then the Holder will have the right to
rescind such exercise.

 

iv.
Compensation for Buy-In on
Failure to Timely Deliver Warrant Shares Upon Exercise. In
addition to any other rights available to the Holder, if the
Company fails to cause the Transfer Agent to transmit to the Holder
the Warrant Shares in accordance with the provisions of Section
2(d)(i) above pursuant to an exercise on or before the Warrant
Share Delivery Date, and if after such date the Holder is required
by its broker to purchase (in an open market transaction or
otherwise) or the Holder's brokerage firm otherwise purchases,
shares of Common Stock to deliver in satisfaction of a sale by the
Holder of the Warrant Shares which the Holder anticipated receiving
upon such exercise (a “Buy-In”), then the
Company shall (A) pay in cash to the Holder the amount, if any, by
which (x) the Holder's total purchase price (including brokerage
commissions, if any) for the shares of Common Stock so purchased
exceeds (y) the amount obtained by multiplying (1) the number of
Warrant Shares that the Company was required to deliver to the
Holder in connection with the exercise at issue times (2) the price
at which the sell order giving rise to such purchase obligation was
executed, and (B) at the option of the Holder, either reinstate the
portion of the Warrant and equivalent number of Warrant Shares for
which such exercise was not honored (in which case such exercise
shall be deemed rescinded) or deliver to the Holder the number of
shares of Common Stock that would have been issued had the Company
timely complied with its exercise and delivery obligations
hereunder. For example, if the Holder purchases Common Stock having
a total purchase price of $11,000 to cover a Buy-In with respect to
an attempted exercise of shares of Common Stock with an aggregate
sale price giving rise to such purchase obligation of $10,000,
under clause (A) of the immediately preceding sentence the Company
shall be required to pay the Holder $1,000. The Holder shall
provide the Company written notice indicating the amounts payable
to the Holder in respect of the Buy-In and, upon request of the
Company, evidence of the amount of such loss. Nothing herein shall
limit a Holder's right to pursue any other remedies available to it
hereunder, at law or in equity including, without limitation, a
decree of specific performance and/or injunctive relief with
respect to the Company's failure to timely deliver shares of Common
Stock upon exercise of the Warrant as required pursuant to the
terms hereof.

 

v.
No Fractional Shares or
Scrip. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. As to any
fraction of a share which the Holder would otherwise be entitled to
purchase upon such exercise, the Company shall, at its election,
either pay a cash adjustment in respect of such final fraction in
an amount equal to such fraction multiplied by the Exercise Price
or round up to the next whole share.

 

vi.
Charges, Taxes and
Expenses. Issuance of Warrant Shares shall be made without
charge to the Holder for any issue or transfer tax or other
incidental expense in respect of the issuance of such Warrant
Shares, all of which taxes and expenses shall be paid by the
Company, and such Warrant Shares shall be issued in the name of the
Holder or in such name or names as may be directed by the Holder;
provided,
however, that in
the event Warrant Shares are to be issued in a name other than the
name of the Holder, this Warrant when surrendered for exercise
shall be accompanied by the Assignment Form attached hereto duly
executed by the Holder and the Company may require, as a condition
thereto, the payment of a sum sufficient to reimburse it for any
transfer tax incidental thereto. The Company shall pay all Transfer
Agent fees required for same-day processing of any Notice of
Exercise and all fees to the Depository Trust Company (or another
established clearing corporation performing similar functions)
required for same-day electronic delivery of the Warrant
Shares.

 

vii.
Closing of Books.
The Company will not close its stockholder books or records in any
manner which prevents the timely exercise of this Warrant, pursuant
to the terms hereof.

 

 

 

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e)
Holder's Exercise
Limitations. The Company shall not effect any exercise of
this Warrant, and a Holder shall not have the right to exercise any
portion of this Warrant, pursuant to Section 2 or otherwise, to the
extent that after giving effect to such issuance after exercise as
set forth on the applicable Notice of Exercise, the Holder
(together with the Holder's Affiliates, and any other Persons
acting as a group together with the Holder or any of the Holder's
Affiliates (such Persons, “Attribution Parties”)),
would beneficially own in excess of the Beneficial Ownership
Limitation (as defined below). For purposes of the foregoing
sentence, the number of shares of Common Stock beneficially owned
by the Holder and its Affiliates and Attribution Parties shall
include the number of shares of Common Stock issuable upon exercise
of this Warrant with respect to which such determination is being
made, but shall exclude the number of shares of Common Stock which
would be issuable upon (i) exercise of the remaining, non-exercised
portion of this Warrant beneficially owned by the Holder or any of
its Affiliates or Attribution Parties and (ii) exercise or
conversion of the unexercised or non-converted portion of any other
securities of the Company (including, without limitation, any other
Common Stock Equivalents) subject to a limitation on conversion or
exercise analogous to the limitation contained herein beneficially
owned by the Holder or any of its Affiliates or Attribution
Parties. Except as set forth in the preceding sentence, for
purposes of this Section 2(e), beneficial ownership shall be
calculated in accordance with Section 13(d) of the Exchange Act and
the rules and regulations promulgated thereunder, it being
acknowledged by the Holder that the Company is not representing to
the Holder that such calculation is in compliance with Section
13(d) of the Exchange Act and the Holder is solely responsible for
any schedules required to be filed in accordance therewith. To the
extent that the limitation contained in this Section 2(e) applies,
the determination of whether this Warrant is exercisable (in
relation to other securities owned by the Holder together with any
Affiliates and Attribution Parties) and of which portion of this
Warrant is exercisable shall be in the sole discretion of the
Holder, and the submission of a Notice of Exercise shall be deemed
to be the Holder's determination of whether this Warrant is
exercisable (in relation to other securities owned by the Holder
together with any Affiliates and Attribution Parties) and of which
portion of this Warrant is exercisable, in each case subject to the
Beneficial Ownership Limitation, and the Company shall have no
obligation to verify or confirm the accuracy of such determination.
In addition, a determination as to any group status as contemplated
above shall be determined in accordance with Section 13(d) of the
Exchange Act and the rules and regulations promulgated thereunder.
For purposes of this Section 2(e), in determining the number of
outstanding shares of Common Stock, a Holder may rely on the number
of outstanding shares of Common Stock as reflected in (A) the
Company's most recent periodic or annual report filed with the
Commission, as the case may be, (B) a more recent public
announcement by the Company or (C) a more recent written notice by
the Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding. Upon the written or oral
request of a Holder, the Company shall within two Trading Days
confirm orally and in writing to the Holder the number of shares of
Common Stock then outstanding. In any case, the number of
outstanding shares of Common Stock shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder or its Affiliates or
Attribution Parties since the date as of which such number of
outstanding shares of Common Stock was reported. The
“Beneficial
Ownership Limitation” shall be 4.99% (or, upon
election by a Holder prior to the issuance of any Warrants, 9.99%)
of the number of shares of the Common Stock outstanding immediately
after giving effect to the issuance of shares of Common Stock
issuable upon exercise of this Warrant. The Holder, upon notice to
the Company, may increase or decrease the Beneficial Ownership
Limitation provisions of this Section 2(e), provided that the
Beneficial Ownership Limitation in no event exceeds 9.99% of the
number of shares of the Common Stock outstanding immediately after
giving effect to the issuance of shares of Common Stock upon
exercise of this Warrant held by the Holder and the provisions of
this Section 2(e) shall continue to apply. Any increase in the
Beneficial Ownership Limitation will not be effective until the
61st day after such notice is delivered to the Company. The
provisions of this paragraph shall be construed and implemented in
a manner otherwise than in strict conformity with the terms of this
Section 2(e) to correct this paragraph (or any portion hereof)
which may be defective or inconsistent with the intended Beneficial
Ownership Limitation herein contained or to make changes or
supplements necessary or desirable to properly give effect to such
limitation. The limitations contained in this paragraph shall apply
to a successor holder of this Warrant.

 

 

 

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Section 3. Certain
Adjustments.

 

a)
Stock Dividends and
Splits. If the Company, at any time while this Warrant is
outstanding: (i) pays a stock dividend or otherwise makes a
distribution or distributions on shares of its Common Stock or any
other equity or equity equivalent securities payable in shares of
Common Stock (which, for avoidance of doubt, shall not include any
shares of Common Stock issued by the Company upon exercise of this
Warrant), (ii) subdivides outstanding shares of Common Stock into a
larger number of shares, (iii) combines (including by way of
reverse stock split) outstanding shares of Common Stock into a
smaller number of shares, or (iv) issues by reclassification of
shares of the Common Stock any shares of capital stock of the
Company, then in each case the Exercise Price shall be multiplied
by a fraction of which the numerator shall be the number of shares
of Common Stock (excluding treasury shares, if any) outstanding
immediately before such event and of which the denominator shall be
the number of shares of Common Stock outstanding immediately after
such event, and the number of shares issuable upon exercise of this
Warrant shall be proportionately adjusted such that the aggregate
Exercise Price of this Warrant shall remain unchanged. Any
adjustment made pursuant to this Section 3(a) shall become
effective immediately after the record date for the determination
of stockholders entitled to receive such dividend or distribution
and shall become effective immediately after the effective date in
the case of a subdivision, combination or
re-classification.

 

b)
Subsequent Rights
Offerings. In addition to any adjustments pursuant to
Section 3(a) above, if at any time the Company grants, issues or
sells any Common Stock Equivalents or rights to purchase stock,
warrants, securities or other property pro rata to the record
holders of any class of shares of Common Stock (the
“Purchase
Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon
complete exercise of this Warrant (without regard to any
limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date on
which a record is taken for the grant, issuance or sale of such
Purchase Rights, or, if no such record is taken, the date as of
which the record holders of shares of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights
(provided, however, to the extent that the Holder's right to
participate in any such Purchase Right would result in the Holder
exceeding the Beneficial Ownership Limitation, then the Holder
shall not be entitled to participate in such Purchase Right to such
extent (or beneficial ownership of such shares of Common Stock as a
result of such Purchase Right to such extent) and such Purchase
Right to such extent shall be held in abeyance for the Holder until
such time, if ever, as its right thereto would not result in the
Holder exceeding the Beneficial Ownership Limitation).

 

c)
Pro Rata
Distributions. During such time as this Warrant is
outstanding, if the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of
cash, stock or other securities, property or options by way of a
dividend, spin off, reclassification, corporate rearrangement,
scheme of arrangement or other similar transaction) (a
“Distribution”), at any
time after the issuance of this Warrant, then, in each such case,
the Holder shall be entitled to participate in such Distribution to
the same extent that the Holder would have participated therein if
the Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any
limitations on exercise hereof, including without limitation, the
Beneficial Ownership Limitation) immediately before the date of
which a record is taken for such Distribution, or, if no such
record is taken, the date as of which the record holders of shares
of Common Stock are to be determined for the participation in such
Distribution (provided, however, to the extent that the
Holder's right to participate in any such Distribution would result
in the Holder exceeding the Beneficial Ownership Limitation, then
the Holder shall not be entitled to participate in such
Distribution to such extent (or in the beneficial ownership of any
shares of Common Stock as a result of such Distribution to such
extent) and the portion of such Distribution shall be held in
abeyance for the benefit of the Holder until such time, if ever, as
its right thereto would not result in the Holder exceeding the
Beneficial Ownership Limitation).

 

 

 

-7-

 

 

 

d)
Fundamental
Transaction. If, at any time while this Warrant is
outstanding, (i) the Company, directly or indirectly, in one or
more related transactions effects any merger or consolidation of
the Company with or into another Person, (ii) the Company, directly
or indirectly, effects any sale, lease, license, assignment,
transfer, conveyance or other disposition of all or substantially
all of its assets in one or a series of related transactions, (iii)
any, direct or indirect, purchase offer, tender offer or exchange
offer (whether by the Company or another Person) is completed
pursuant to which holders of Common Stock are permitted to sell,
tender or exchange their shares for other securities, cash or
property and has been accepted by the holders of 50% or more of the
outstanding Common Stock, (iv) the Company, directly or indirectly,
in one or more related transactions effects any reclassification,
reorganization or recapitalization of the Common Stock or any
compulsory share exchange pursuant to which the Common Stock is
effectively converted into or exchanged for other securities, cash
or property, or (v) the Company, directly or indirectly, in one or
more related transactions consummates a stock or share purchase
agreement or other business combination (including, without
limitation, a reorganization, recapitalization, spin-off or scheme
of arrangement) with another Person or group of Persons whereby
such other Person or group acquires more than 50% of the
outstanding shares of Common Stock (not including any shares of
Common Stock held by the other Person or other Persons making or
party to, or associated or affiliated with the other Persons making
or party to, such stock or share purchase agreement or other
business combination) (each a “Fundamental
Transaction”), then, upon any subsequent exercise of
this Warrant, the Holder shall have the right to receive, for each
Warrant Share that would have been issuable upon such exercise
immediately prior to the occurrence of such Fundamental
Transaction, at the option of the Holder (without regard to any
limitation in Section 2(e) on the exercise of this Warrant), the
number of shares of Common Stock of the successor or acquiring
corporation or of the Company, if it is the surviving corporation,
and any additional consideration (the “Alternate Consideration”)
receivable as a result of such Fundamental Transaction by a holder
of the number of shares of Common Stock for which this Warrant is
exercisable immediately prior to such Fundamental Transaction
(without regard to any limitation in Section 2(e) on the exercise
of this Warrant). For purposes of any such exercise, the
determination of the Exercise Price shall be appropriately adjusted
to apply to such Alternate Consideration based on the amount of
Alternate Consideration issuable in respect of one share of Common
Stock in such Fundamental Transaction, and the Company shall
apportion the Exercise Price among the Alternate Consideration in a
reasonable manner reflecting the relative value of any different
components of the Alternate Consideration. If holders of Common
Stock are given any choice as to the securities, cash or property
to be received in a Fundamental Transaction, then the Holder shall
be given the same choice as to the Alternate Consideration it
receives upon any exercise of this Warrant following such
Fundamental Transaction. Notwithstanding anything to the contrary,
in the event of a Fundamental Transaction, the Company or any
Successor Entity (as defined below) shall, at the Holder’s
option, exercisable at any time concurrently with, or within 30
days after, the consummation of the Fundamental Transaction (or, if
later, the date of the public announcement of the applicable
Fundamental Transaction), purchase
this Warrant from the Holder by paying to the Holder an
amount of cash equal to the Black Scholes Value of the remaining
unexercised portion of this Warrant on the date of the consummation
of such Fundamental Transaction; provided, however, that, if the
Fundamental Transaction is not within the Company's control,
including not approved by the Company’s board of directors,
Holder shall only be entitled to receive from the Company or any
Successor Entity, as of the date of consummation of such
Fundamental Transaction, the same type or form of consideration
(and in the same proportion), at the Black Scholes Value (as
defined below) of the unexercised portion of this Warrant, that is
being offered and paid to the holders of Common Stock of the
Company in connection with the Fundamental Transaction, whether
that consideration be in the form of cash, stock or any combination
thereof, or whether the holders of Common Stock are given the
choice to receive from among alternative forms of consideration in
connection with the Fundamental Transaction. 
“Black Scholes
Value” means the value of this Warrant based on the
Black and Scholes Option Pricing Model obtained from the
“OV” function on Bloomberg, L.P. (“Bloomberg”) determined as
of the day of consummation of the applicable Fundamental
Transaction for pricing purposes and reflecting (A) a risk-free
interest rate corresponding to the U.S. Treasury rate for a period
equal to the time between the date of the public announcement of
the applicable Fundamental Transaction and the Termination Date,
(B) an expected volatility equal to the greater of 100% and the 100
day volatility obtained from the HVT function on Bloomberg as of
the Trading Day immediately following the public announcement of
the applicable Fundamental Transaction, (C) the underlying price
per share used in such calculation shall be the greater of (i) the
sum of the price per share being offered in cash, if any, plus the
value of any non-cash consideration, if any, being offered in such
Fundamental Transaction and (ii) the greater of (x) the last VWAP
immediately prior to the public announcement of such Fundamental
Transaction and (y) the last VWAP immediately prior to the
consummation of such Fundamental Transaction and (D) a remaining
option time equal to the time between the date of the public
announcement of the applicable Fundamental Transaction and the
Termination Date, and (E) a zero cost of borrow.  The payment of the Black Scholes Value will be
made by wire transfer of immediately available funds (or such other
consideration) within five Business Days of the Holder’s
election (or, if later, on the effective date of the Fundamental
Transaction).  The
Company shall cause any successor entity in a Fundamental
Transaction in which the Company is not the survivor (the
“Successor
Entity”) to assume in writing all of the obligations
of the Company under this Warrant in accordance with the provisions
of this Section 3(d) pursuant to written agreements in form and
substance reasonably satisfactory to the Holder and approved by the
Holder (without unreasonable delay) prior to such Fundamental
Transaction and shall, at the option of the Holder, deliver to the
Holder in exchange for this Warrant a security of the Successor
Entity evidenced by a written instrument substantially similar in
form and substance to this Warrant which is exercisable for a
corresponding number of shares of capital stock of such Successor
Entity (or its parent entity) equivalent to the shares of Common
Stock acquirable and receivable upon exercise of this Warrant
(without regard to any limitations on the exercise of this Warrant)
prior to such Fundamental Transaction, and with an exercise price
which applies the exercise price hereunder to such shares of
capital stock (but taking into account the relative value of the
shares of Common Stock pursuant to such Fundamental Transaction and
the value of such shares of capital stock, such number of shares of
capital stock and such exercise price being for the purpose of
protecting the economic value of this Warrant immediately prior to
the consummation of such Fundamental Transaction), and which is
reasonably satisfactory in form and substance to the Holder. Upon
the occurrence of any such Fundamental Transaction, the Successor
Entity shall succeed to, and be substituted for (so that from and
after the date of such Fundamental Transaction, the provisions of
this Warrant referring to the “Company” shall refer
instead to the Successor Entity), and may exercise every right and
power of the Company and shall assume all of the obligations of the
Company under this Warrant with the same effect as if such
Successor Entity had been named as the Company herein.

 

 

 

-8-

 

 

 

e)
Reset. On the First
Reset Date, the Second Reset Date, if any, and the Third Reset
Date, if any (as such terms are defined in the Series C Warrants,
dated March __, 2019 (the “Series C Warrants”),
issued to certain investors in connection with the Company’s
offering of Series C convertible preferred stock), the Exercise
Price shall be adjusted to equal the lower of (i) the Exercise
Price then in effect and (ii) 100% of the applicable Reset Price
(as defined in the Series C Warrants) determined as of the
applicable date of determination.

 

f)
Calculations. All
calculations under this Section 3 shall be made to the nearest cent
or the nearest 1/100th of a share, as the case may be. For purposes
of this Section 3, the number of shares of Common Stock deemed to
be issued and outstanding as of a given date shall be the sum of
the number of shares of Common Stock (excluding treasury shares, if
any) issued and outstanding.

 

g)
Notice to
Holder.

 

i.
Adjustment to Exercise
Price. Whenever the Exercise Price is adjusted pursuant to
any provision of this Section 3, the Company shall promptly deliver
to the Holder by facsimile or email a notice setting forth the
Exercise Price after such adjustment and any resulting adjustment
to the number of Warrant Shares and setting forth a brief statement
of the facts requiring such adjustment.

 

             
ii. Notice to Allow
Exercise by Holder. If (A) the Company shall declare a
dividend (or any other distribution in whatever form) on the Common
Stock, (B) the Company shall declare a special nonrecurring cash
dividend on or a redemption of the Common Stock, (C) the Company
shall authorize the granting to all holders of the Common Stock
rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any rights, (D) the approval of
any stockholders of the Company shall be required in connection
with any reclassification of the Common Stock, any consolidation or
merger to which the Company is a party, any sale or transfer of all
or substantially all of the assets of the Company, or any
compulsory share exchange whereby the Common Stock is converted
into other securities, cash or property, or (E) the Company shall
authorize the voluntary or involuntary dissolution, liquidation or
winding up of the affairs of the Company, then, in each case, the
Company shall cause to be delivered by facsimile or email to the
Holder at its last facsimile number or email address as it shall
appear upon the Warrant Register of the Company, at least 20
calendar days prior to the applicable record or effective date
hereinafter specified, a notice stating (x) the date on which a
record is to be taken for the purpose of such dividend,
distribution, redemption, rights or warrants, or if a record is not
to be taken, the date as of which the holders of the Common Stock
of record to be entitled to such dividend, distributions,
redemption, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale,
transfer or share exchange is expected to become effective or
close, and the date as of which it is expected that holders of the
Common Stock of record shall be entitled to exchange their shares
of the Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger,
sale, transfer or share exchange; provided that the failure to
deliver such notice or any defect therein or in the delivery
thereof shall not affect the validity of the corporate action
required to be specified in such notice. To the extent that any
notice provided in this Warrant constitutes, or contains, material,
non-public information regarding the Company or any of the
Subsidiaries, the Company shall simultaneously file such notice
with the Commission pursuant to a Current Report on Form 8-K. The
Holder shall remain entitled to exercise this Warrant during the
period commencing on the date of such notice to the effective date
of the event triggering such notice except as may otherwise be
expressly set forth herein.

 

Section 4. Transfer of
Warrant.

 

a)
Transferability.
This Warrant and all rights hereunder are transferable, in whole or
in part, upon surrender of this Warrant at the principal office of
the Company or its designated agent, together with a written
assignment of this Warrant substantially in the form attached
hereto duly executed by the Holder or its agent or attorney and
funds sufficient to pay any transfer taxes payable upon the making
of such transfer. Upon such surrender and, if required, such
payment, the Company shall execute and deliver a new Warrant or
Warrants in the name of the assignee or assignees, as applicable,
and in the denomination or denominations specified in such
instrument of assignment, and shall issue to the assignor a new
Warrant evidencing the portion of this Warrant not so assigned, and
this Warrant shall promptly be cancelled. Notwithstanding anything
herein to the contrary, the Holder shall not be required to
physically surrender this Warrant to the Company unless the Holder
has assigned this Warrant in full, in which case, the Holder shall
surrender this Warrant to the Company within three (3) Trading Days
of the date the Holder delivers an assignment form to the Company
assigning this Warrant full. The Warrant, if properly assigned in
accordance herewith, may be exercised by a new holder for the
purchase of Warrant Shares without having a new Warrant
issued.

 

 

 

-9-

 

 

 

b)
New Warrants. This
Warrant may be divided or combined with other Warrants upon
presentation hereof at the aforesaid office of the Company,
together with a written notice specifying the names and
denominations in which new Warrants are to be issued, signed by the
Holder or its agent or attorney. Subject to compliance with Section
4(a), as to any transfer which may be involved in such division or
combination, the Company shall execute and deliver a new Warrant or
Warrants in exchange for the Warrant or Warrants to be divided or
combined in accordance with such notice. All Warrants issued on
transfers or exchanges shall be dated the original Initial Exercise
Date of this Warrant and shall be identical with this Warrant
except as to the number of Warrant Shares issuable pursuant
thereto.

  

c)
Warrant Register.
The Company shall register this Warrant, upon records to be
maintained by the Company for that purpose (the “Warrant Register”), in
the name of the record Holder hereof from time to time. The Company
may deem and treat the registered Holder of this Warrant as the
absolute owner hereof for the purpose of any exercise hereof or any
distribution to the Holder, and for all other purposes, absent
actual notice to the contrary.

 

Section 5. Miscellaneous.

 

a)
No Rights as Stockholder
Until Exercise. This Warrant does not entitle the Holder to
any voting rights, dividends or other rights as a stockholder of
the Company prior to the exercise hereof as set forth in Section
2(d)(i), except as expressly set forth in Section 3.

 

b)
Loss, Theft, Destruction
or Mutilation of Warrant. The Company covenants that upon
receipt by the Company of evidence reasonably satisfactory to it of
the loss, theft, destruction or mutilation of this Warrant or any
stock certificate relating to the Warrant Shares, and in case of
loss, theft or destruction, of indemnity or security reasonably
satisfactory to it (which, in the case of the Warrant, shall not
include the posting of any bond), and upon surrender and
cancellation of such Warrant or stock certificate, if mutilated,
the Company will make and deliver a new Warrant or stock
certificate of like tenor and dated as of such cancellation, in
lieu of such Warrant or stock certificate.

 

c)
Saturdays, Sundays,
Holidays, etc. If the last or appointed day for the taking
of any action or the expiration of any right required or granted
herein shall not be a Business Day, then, such action may be taken
or such right may be exercised on the next succeeding Business
Day.

 

d)
Authorized
Shares.

 

The
Company covenants that, during the period the Warrant is
outstanding, it will reserve from its authorized and unissued
Common Stock a sufficient number of shares to provide for the
issuance of the Warrant Shares upon the exercise of any purchase
rights under this Warrant. The Company further covenants that its
issuance of this Warrant shall constitute full authority to its
officers who are charged with the duty of issuing the necessary
Warrant Shares upon the exercise of the purchase rights under this
Warrant. The Company will take all such reasonable action as may be
necessary to assure that such Warrant Shares may be issued as
provided herein without violation of any applicable law or
regulation, or of any requirements of the Trading Market upon which
the Common Stock may be listed. The Company covenants that all
Warrant Shares which may be issued upon the exercise of the
purchase rights represented by this Warrant will, upon exercise of
the purchase rights represented by this Warrant and payment for
such Warrant Shares in accordance herewith, be duly authorized,
validly issued, fully paid and non-assessable and free from all
taxes, liens and charges created by the Company in respect of the
issue thereof (other than taxes in respect of any transfer
occurring contemporaneously with such issue).

 

Except
and to the extent as waived or consented to by the Holder, the
Company shall not by any action, including, without limitation,
amending its certificate of incorporation or through any
reorganization, transfer of assets, consolidation, merger,
dissolution, issue or sale of securities or any other voluntary
action, avoid or seek to avoid the observance or performance of any
of the terms of this Warrant, but will at all times in good faith
assist in the carrying out of all such terms and in the taking of
all such actions as may be necessary or appropriate to protect the
rights of Holder as set forth in this Warrant against impairment.
Without limiting the generality of the foregoing, the Company will
(i) not increase the par value of any Warrant Shares above the
amount payable therefor upon such exercise immediately prior to
such increase in par value, (ii) take all such action as may be
necessary or appropriate in order that the Company may validly and
legally issue fully paid and non-assessable Warrant Shares upon the
exercise of this Warrant and (iii) use commercially reasonable
efforts to obtain all such authorizations, exemptions or consents
from any public regulatory body having jurisdiction thereof, as may
be, necessary to enable the Company to perform its obligations
under this Warrant.

  

 

 

-10-

 

 

 

Before
taking any action which would result in an adjustment in the number
of Warrant Shares for which this Warrant is exercisable or in the
Exercise Price, the Company shall obtain all such authorizations or
exemptions thereof, or consents thereto, as may be necessary from
any public regulatory body or bodies having jurisdiction
thereof.

 

e)
Governing Law. All
questions concerning the construction, validity, enforcement and
interpretation of this Warrant shall be governed by and construed
and enforced in accordance with the internal laws of the State of
New York, without regard to the principles of conflict of laws
thereof. Each party agrees that all legal Proceedings concerning
the interpretation, enforcement and defense of this Warrant shall
be commenced in the state and federal courts sitting in the City of
New York, Borough of Manhattan (the “New York Courts”). Each
party hereto hereby irrevocably submits to the exclusive
jurisdiction of the New York Courts for the adjudication of any
dispute hereunder or in connection herewith or with any transaction
contemplated hereby or discussed herein (including with respect to
the enforcement of any provision hereunder), and hereby irrevocably
waives, and agrees not to assert in any suit, action or Proceeding,
any claim that it is not personally subject to the jurisdiction of
such New York Courts, or such New York Courts are improper or
inconvenient venue for such Proceeding. Each party hereto hereby
irrevocably waives, to the fullest extent permitted by applicable
law, any and all right to trial by jury in any legal Proceeding
arising out of or relating to this Warrant. If any party shall
commence an action or Proceeding to enforce any provisions of this
Warrant, then the prevailing party in such action or Proceeding
shall be reimbursed by the other party for its attorneys' fees and
other costs and expenses incurred in the investigation, preparation
and prosecution of such action or Proceeding.

 

f)
Restrictions. The
Holder acknowledges that the Warrant Shares acquired upon the
exercise of this Warrant, if not registered, and the Holder does
not utilize cashless exercise, will have restrictions upon resale
imposed by state and federal securities laws.

 

g)
Nonwaiver and
Expenses. No course of dealing or any delay or failure to
exercise any right hereunder on the part of Holder shall operate as
a waiver of such right or otherwise prejudice the Holder's rights,
powers or remedies. Without limiting any other provision of this
Warrant, if the Company willfully and knowingly fails to comply
with any provision of this Warrant, which results in any material
damages to the Holder, the Company shall pay to the Holder such
amounts as shall be sufficient to cover any costs and expenses
including, but not limited to, reasonable attorneys' fees,
including those of appellate Proceedings, incurred by the Holder in
collecting any amounts due pursuant hereto or in otherwise
enforcing any of its rights, powers or remedies
hereunder.

 

h)
Notices. Any and
all notices or other communications or deliveries to be provided by
the Holders hereunder including, without limitation, any Notice of
Exercise, shall be in writing and delivered personally, by e-mail,
or sent by a nationally recognized overnight courier service,
addressed to the Company, at 80 Blanchard Road, Burlington, MA
01803, Attention: Chief Executive Officer, email address:
akahn@bridgeline.com, or such other email address or address as the
Company may specify for such purposes by notice to the Holders. Any
and all notices or other communications or deliveries to be
provided by the Company hereunder shall be in writing and delivered
personally, by facsimile, or sent by a nationally recognized
overnight courier service addressed to each Holder at the facsimile
number or address of such Holder appearing on the books of the
Company. Any notice or other communication or deliveries hereunder
shall be deemed given and effective on the earliest of (i) the time
of transmission, if such notice or communication is delivered via
facsimile at the facsimile number or e-mail at the e-mail address
set forth in this Section prior to 5:30 p.m. (New York City time)
on any date, (ii) the next Trading Day after the date of
transmission, if such notice or communication is delivered via
facsimile at the facsimile number or e-mail at the e-mail address
set forth in this Section on a day that is not a Trading Day or
later than 5:30 p.m. (New York City time) on any Trading Day, (iii)
the second Trading Day following the date of mailing, if sent by
U.S. nationally recognized overnight courier service, or (iv) upon
actual receipt by the party to whom such notice is required to be
given.

 

 

 

-11-

 

 

 

i)
Reserved.

j)
Limitation of
Liability. No provision hereof, in the absence of any
affirmative action by the Holder to exercise this Warrant to
purchase Warrant Shares, and no enumeration herein of the rights or
privileges of the Holder, shall give rise to any liability of the
Holder for the purchase price of any Common Stock or as a
stockholder of the Company, whether such liability is asserted by
the Company or by creditors of the Company.

 

k)
Remedies. The
Holder, in addition to being entitled to exercise all rights
granted by law, including recovery of damages, will be entitled to
specific performance of its rights under this Warrant. The Company
agrees that monetary damages would not be adequate compensation for
any loss incurred by reason of a breach by it of the provisions of
this Warrant and hereby agrees to waive and not to assert the
defense in any action for specific performance that a remedy at law
would be adequate.

 

l)
Successors and
Assigns. Subject to applicable securities laws, this Warrant
and the rights and obligations evidenced hereby shall inure to the
benefit of and be binding upon the successors and permitted assigns
of the Company and the successors and permitted assigns of Holder.
The provisions of this Warrant are intended to be for the benefit
of any Holder from time to time of this Warrant and shall be
enforceable by the Holder or holder of Warrant Shares.

 

m)
Amendment. This
Warrant may be modified or amended or the provisions hereof waived
with the written consent of the Company, on the one hand, and the
Holder or the beneficial owner of this Warrant, on the other
hand.

 

n)
Severability.
Wherever possible, each provision of this Warrant shall be
interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Warrant shall be
prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity,
without invalidating the remainder of such provisions or the
remaining provisions of this Warrant.

 

o)
Headings. The
headings used in this Warrant are for the convenience of reference
only and shall not, for any purpose, be deemed a part of this
Warrant.

 

p)
Variable Rate
Transactions. From the date hereof until the Termination
Date and so long as at least twenty-five percent (25%) of the
Warrants remain outstanding, the Company shall be prohibited from
effecting or entering into an agreement to effect any issuance by
the Company or any of its Subsidiaries of Common Stock or Common
Stock Equivalents (or a combination of units thereof) involving a
Variable Rate Transaction. For the purposes hereof,
“Variable Rate
Transaction” means a transaction in which the Company
(i) issues or sells any debt or equity securities that are
convertible into, exchangeable or exercisable for, or include the
right to receive, additional shares of Common Stock either (A) at a
conversion price, exercise price or exchange rate or other price
that is based upon, and/or varies with, the trading prices of or
quotations for the Common Stock at any time after the initial
issuance of such debt or equity securities or (B) with a
conversion, exercise or exchange price that is subject to being
reset at some future date after the initial issuance of such debt
or equity security or upon the occurrence of specified or
contingent events directly or indirectly related to the business of
the Company as currently carried on and as described in the
Registration Statement or the market for the Common Stock or (ii)
enters into any agreement, including, but not limited to, an equity
line of credit, whereby the Company may issue securities at a
future determined price that varies with the market per the terms
of such agreement; provided however that the foregoing does not
apply to any existing agreements or outstanding securities on the
date hereof. The Holder shall be entitled to obtain injunctive
relief against the Company to preclude any such issuance, which
remedy shall be in addition to any right to collect damages.
Notwithstanding the foregoing, this Section 5(p) will may be
amended or waived upon written consent of the holders of at least
eighty percent (80%) of the Warrants then outstanding.

 

********************

 

(Signature Page Follows)

 

 

 

 

 

 

-12-

 

 

 

IN WITNESS WHEREOF, the Company has
caused this Warrant to be executed by its officer thereunto duly
authorized as of the date first above indicated.

 

BRIDGELINE
DIGITAL, INC.

 

By:
__________________________

Name:  Carole
Tyner

Title:    Chief
Financial Officer

 

 

 

 

 

 

 

 

 

-13-

 

 

 

NOTICE OF EXERCISE

 

TO:
BRIDGELINE DIGITAL, INC.

 

(1) The
undersigned hereby elects to purchase ________ Warrant Shares of
the Company pursuant to the terms of the attached Warrant (only if
exercised in full), and tenders herewith payment of the exercise
price in full, together with all applicable transfer taxes, if
any.

 

(2)
Payment shall take the form of (check applicable box):

 

[  
]  in lawful money of the United States; or

 

[ 
 ]  if permitted the cancellation of such number of
Warrant Shares as is necessary, in accordance with the formula set
forth in subsection 2(c), to exercise this Warrant with respect to
the maximum number of Warrant Shares purchasable pursuant to the
cashless exercise procedure set forth in subsection
2(c).

 

(3)
Please issue said Warrant Shares in the name of the undersigned or
in such other name as is specified below:

 

___________________________________

 

The
Warrant Shares shall be delivered to the following DWAC Account
Number:

 

___________________________________                                                                           

 

____________________________________

 

____________________________________

 

 

[SIGNATURE
OF HOLDER]

 

Name of
Investing Entity:
________________________________________________________  

 

Signature of Authorized Signatory of Investing
Entity:__________________________________  

 

Name of
Authorized
Signatory:____________________________________________________ 

 

Title
of Authorized Signatory:
______________________________________________________

 

Date:__________________________________________________________________________

 

 

 

 

 

 

 

 

-14-

 

 

 

ASSIGNMENT
FORM

 

(To assign the foregoing Warrant, execute this form and supply
required information. Do not use this form to purchase
shares.)

 

FOR
VALUE RECEIVED, the foregoing Warrant and all rights evidenced
thereby are hereby assigned to

 

Name:

(Please
Print)

 

 

Address:

(Please
Print)

 

 

Phone
Number:

 

Email
Address:

 

Dated:
_____________________ __, ______

 

Holder's
Signature:

 

Holder's
Address:

 

 

 

 

 

 

 

 

-15-Blueprint

 

  
Exhibit
4.5

FORM OF PLACEMENT AGENT WARRANT

 

NEITHER THE ISSUANCE AND SALE OF THE SECURITIES REPRESENTED BY THIS
CERTIFICATE NOR THE SECURITIES INTO WHICH THESE SECURITIES ARE
EXERCISABLE HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS. THE SECURITIES MAY
NOT BE OFFERED FOR SALE, SOLD, TRANSFERRED OR ASSIGNED (I) IN THE
ABSENCE OF (A) AN EFFECTIVE REGISTRATION STATEMENT FOR THE
SECURITIES UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR (B) AN
OPINION OF COUNSEL SELECTED BY THE HOLDER, IN A GENERALLY
ACCEPTABLE FORM, THAT REGISTRATION IS NOT REQUIRED UNDER SAID ACT
OR (II) UNLESS SOLD PURSUANT TO RULE 144 OR RULE 144A UNDER SAID
ACT. NOTWITHSTANDING THE FOREGOING, THE SECURITIES MAY BE PLEDGED
IN CONNECTION WITH A BONA FIDE MARGIN ACCOUNT OR OTHER LOAN OR
FINANCING ARRANGEMENT SECURED BY THE SECURITIES.

 

BRIDGELINE DIGITAL, INC.

 

WARRANT TO PURCHASE COMMON STOCK

 

Warrant No.:
_______________

Number
of Shares of Common Stock: ________________________

Date of
Issuance: March , 2019 (“Issuance Date”)

 

Bridgeline Digital,
Inc., a Delaware corporation (the “Company”), hereby certifies that,
for good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, [ ], the registered holder hereof or
its permitted assigns (the “Holder”), is entitled, subject to
the terms set forth below, to purchase from the Company, at the
Exercise Price (as defined below) then in effect, at any time or
times on or after the earlier of (i) the date of the Authorized
Share Approval and (ii) six months following the Issuance Date, but
not after 11:59 p.m., New York time, on the Expiration Date, (as
defined below), ______________ (_____________)1 fully paid nonassessable shares of
Common Stock, all subject to adjustment as provided
herein (the
“Warrant
Shares”). Except as otherwise defined herein,
capitalized terms in this Warrant to Purchase Common Stock (this
“Warrant”),
shall have the meanings set forth in Section 17. This Warrant is
one of the Series A Warrants to purchase Common Stock (the
“SPA Warrants”)
issued pursuant to Section 1 of that certain Securities Purchase
Agreement, dated as of March 12, 2019 (the “Subscription Date”), by and among
the Company and the investors (the “Buyers”) referred to therein (the
“Securities Purchase
Agreement”). Capitalized terms used herein and not
otherwise defined shall have the definitions ascribed to such terms
in the Securities Purchase Agreement.

 

1. EXERCISE
OF WARRANT.

 

(a) Mechanics of Exercise. Subject
to the terms and conditions hereof (including, without limitation,
the limitations set forth in Section 1(f) and 1(h)), this Warrant
may be exercised by the Holder at any time or times on or after the
Issuance Date, in whole or in part, by (i) delivery of a
written notice, in the form attached hereto as Exhibit A (the
“Exercise
Notice”), of the Holder's election to exercise this
Warrant and (ii) (A) payment to the Company of an amount equal
to the applicable Exercise Price multiplied by the number of
Warrant Shares as to which this Warrant is being exercised (the
“Aggregate Exercise
Price”) in cash by wire transfer of immediately
available funds or (B) if the provisions of Section 1(d) are
applicable, by notifying the Company that this Warrant is being
exercised pursuant to a Cashless Exercise (as defined in Section
1(d)). The Holder shall not be required to deliver the original
Warrant in order to effect an exercise hereunder. Execution and
delivery of the Exercise Notice with respect to less than all of
the Warrant Shares shall have the same effect as cancellation of
the original Warrant and issuance of a new Warrant evidencing the
right to purchase the remaining number of Warrant Shares. On or
before the first (1st) Trading Day
following the date on which the Company has received the Exercise
Notice, the Company shall transmit by electronic mail an
acknowledgment of confirmation of receipt of the Exercise Notice to
the Holder and the Company's transfer agent (the
“Transfer
Agent”). On or before the earlier of (i) the second
(2nd)
Trading Day and (ii) the number of Trading Days comprising the
Standard Settlement Period, in each case, following the date on
which the Holder delivers the Exercise Notice to the Company, so
long as the Holder delivers the Aggregate Exercise Price (or notice
of a Cashless Exercise) on or prior to the second (2nd) Trading Day
following the date on which the Company has received the Exercise
Notice (the “Share Delivery
Date”) (provided that if the Aggregate Exercise Price
has not been delivered by such date, the Share Delivery Date shall
be two (2) Trading Days after the Aggregate Exercise Price (or
notice of a Cashless Exercise) is delivered), the Company shall (X)
provided that the Transfer Agent is participating in The Depository
Trust Company (“DTC”) Fast Automated Securities
Transfer Program and (A) the Warrant Shares are subject to an
effective resale registration statement in favor of the Holder or
(B) if exercised via Cashless Exercise, at a time when Rule 144
would be available for immediate resale of the Warrant Shares by
the Holder, credit such aggregate number of Warrant Shares to which
the Holder is entitled pursuant to such exercise to the Holder's or
its designee's balance account with DTC through its Deposit /
Withdrawal At Custodian system, or (Y) if the Transfer Agent is not
participating in the DTC Fast Automated Securities Transfer Program
or (A) the Warrant Shares are not subject to an effective resale
registration statement in favor of the Holder and (B) if exercised
via Cashless Exercise, at a time when Rule 144 would not be
available for immediate resale of the Warrant Shares by the Holder,
issue and dispatch by overnight courier to the address as specified
in the Exercise Notice, a certificate, registered in the Company's
share register in the name of the Holder or its designee, for the
number of Warrant Shares to which the Holder is entitled pursuant
to such exercise. The Company shall be responsible for all fees and
expenses of the Transfer Agent and all fees and expenses with
respect to the issuance of Warrant Shares via DTC, if any. Upon
delivery of the Exercise Notice, the Holder shall be deemed for all
corporate purposes to have become the holder of record of the
Warrant Shares with respect to which this Warrant has been
exercised, irrespective of the date such Warrant Shares are
credited to the Holder's DTC account or the date of delivery of the
certificates evidencing such Warrant Shares, as the case may be. If
this Warrant is submitted in connection with any exercise pursuant
to this Section 1(a) and the number of Warrant Shares represented
by this Warrant submitted for exercise is greater than the number
of Warrant Shares being acquired upon an exercise, then the Company
shall as soon as practicable and in no event later than three (3)
Trading Days after any exercise and at its own expense, issue a new
Warrant (in accordance with Section 7(d)) representing the right to
purchase the number of Warrant Shares issuable immediately prior to
such exercise under this Warrant, less the number of Warrant Shares
with respect to which this Warrant is exercised. No fractional
Warrant Shares are to be issued upon the exercise of this Warrant,
but rather the number of Warrant Shares to be issued shall be
rounded up to the nearest whole number. The Company shall pay any
and all taxes which may be payable with respect to the issuance and
delivery of Warrant Shares upon exercise of this Warrant. The
Company's obligations to issue and deliver Warrant Shares in
accordance with the terms and subject to the conditions hereof are
absolute and unconditional, irrespective of any action or inaction
by the Holder to enforce the same, any waiver or consent with
respect to any provision hereof, the recovery of any judgment
against any Person or any action to enforce the same, or any
setoff, counterclaim, recoupment, limitation or
termination.

 

 

1 Insert 5% of the
aggregate number of shares of Common Stock issuable under the
Preferred Shares issued on the Issuance Date.

 

 

-1-

 

 

(b) Exercise Price. For purposes of
this Warrant, “Exercise
Price” means $0.18 per share, subject to adjustment as
provided herein.

 

(c) Company's Failure to Timely Deliver
Securities. If the Company shall fail for any reason or for
no reason to issue to the Holder on or prior to the Share Delivery
Date either (I) if the Transfer Agent is not participating in the
DTC Fast Automated Securities Transfer Program, a certificate for
the number of shares of Common Stock to which the Holder is
entitled and register such shares of Common Stock on the Company's
share register or if the Transfer Agent is participating in the DTC
Fast Automated Securities Transfer Program, to credit the Holder's
balance account with DTC, for such number of shares of Common Stock
to which the Holder is entitled upon the Holder's exercise of this
Warrant or (II) if the Registration Statement covering the resale
of the Warrant Shares that are the subject of the Exercise Notice
(the “Unavailable Warrant
Shares”) is not available for the resale of such
Unavailable Warrant Shares and the Company fails to promptly, but
in no event later than as is required pursuant to the Registration
Rights Agreement (x) so notify the Holder and (y) deliver the
Warrant Shares electronically without any restrictive legend by
crediting such aggregate number of Warrant Shares to which the
Holder is entitled pursuant to such exercise to the Holder's or its
designee's balance account with DTC through its Deposit /
Withdrawal At Custodian system (the event described in the
immediately foregoing clause (II) is hereinafter referred as a
“Notice Failure”
and together with the event described in clause (I) above, an
“Exercise
Failure”), then, in addition to all other remedies
available to the Holder, (X) the Company shall pay in cash to the
Holder on each day after the Share Delivery Date and during such
Exercise Failure an amount equal to 1.0% of the product of (A) the
sum of the number of shares of Common Stock not issued to the
Holder on or prior to the Share Delivery Date and to which the
Holder is entitled, and (B) any trading price of the Common Stock
selected by the Holder in writing as in effect at any time during
the period beginning on the applicable date of delivery of an
Exercise Notice and ending on the applicable Share Delivery Date,
and (Y) the Holder, upon written notice to the Company, may void
its Exercise Notice with respect to, and retain or have returned,
as the case may be, any portion of this Warrant that has not been
exercised pursuant to such Exercise Notice; provided that the
voiding of an Exercise Notice shall not affect the Company's
obligations to make any payments which have accrued prior to the
date of such notice pursuant to this Section 1(c) or otherwise. In
addition to the foregoing, if on or prior to the Share Delivery
Date either (I) if the Transfer Agent is not participating in the
DTC Fast Automated Securities Transfer Program, the Company shall
fail to issue and deliver a certificate to the Holder and register
such shares of Common Stock on the Company's share register or, if
the Transfer Agent is participating in the DTC Fast Automated
Securities Transfer Program, credit the Holder's balance account
with DTC for the number of shares of Common Stock to which the
Holder is entitled upon the Holder's exercise hereunder or pursuant
to the Company's obligation pursuant to clause (ii) below or (II) a
Notice Failure occurs, and if on or after such Trading Day the
Holder purchases (in an open market transaction or otherwise)
shares of Common Stock relating to the applicable Exercise Failure
(a “Buy-In”),
then the Company shall, within five (5) Trading Days after the
Holder's request and in the Holder's discretion, either (i) pay
cash to the Holder in an amount equal to the Holder's total
purchase price (including brokerage commissions and other
out-of-pocket expenses, if any) for the shares of Common Stock so
purchased (the “Buy-In
Price”), at which point the Company's obligation to
deliver such certificate (and to issue such shares of Common Stock)
or credit the Holder's balance account with DTC for such shares of
Common Stock shall terminate, or (ii) promptly honor its obligation
to deliver to the Holder a certificate or certificates representing
such shares of Common Stock or credit the Holder's balance account
with DTC, as applicable, and pay cash to the Holder in an amount
equal to the excess (if any) of the Buy-In Price over the product
of (A) such number of shares of Common Stock, times (B) any trading
price of the Common Stock selected by the Holder in writing as in
effect at any time during the period beginning on the applicable
date of delivery of an Exercise Notice and ending on the applicable
Share Delivery Date. Nothing herein shall limit the Holder's right
to pursue any other remedies available to it hereunder, at law or
in equity, including, without limitation, a decree of specific
performance and/or injunctive relief with respect to the Company's
failure to timely deliver certificates representing shares of
Common Stock (or to electronically deliver such shares of Common
Stock) upon the exercise of this Warrant as required pursuant to
the terms hereof.

 

 

	
 

	
	
 

 

-2-

 

 

(d) Cashless Exercise.  Notwithstanding anything contained
herein to the contrary, if the Registration Statement covering the
resale of the Unavailable Warrant Shares is not available for the
resale of such Unavailable Warrant Shares, the Holder may, in its
sole discretion, exercise this Warrant in whole or in part and, in
lieu of making the cash payment otherwise contemplated to be made
to the Company upon such exercise in payment of the Aggregate
Exercise Price, elect instead to receive upon such exercise the
“Net Number” of shares of Common Stock determined
according to the following formula (a “Cashless Exercise”):

 

Net
Number = (A x B) - (A x
C)

B

 

For
purposes of the foregoing formula:

 

A= the
total number of shares with respect to which this Warrant is then
being exercised.

 

B= as
applicable: (i) the Weighted Average Price of the Common Stock on
the Trading Day immediately preceding the date of the applicable
Exercise Notice if such Exercise Notice is (1) both executed and
delivered pursuant to Section 1(a) hereof on a day that is not a
Trading Day or (2) both executed and delivered pursuant to Section
1(a) hereof on a Trading Day prior to the opening of “regular
trading hours” (as defined in Rule 600(b)(64) of Regulation
NMS promulgated under the federal securities laws) on such Trading
Day, (ii) at the option of the Holder, either (y) the Weighted
Average Price of the Common Stock on the Trading Day immediately
preceding the date of the applicable Exercise Notice or (z) the bid
price of the Common Stock on the principal Trading Market as
reported by Bloomberg as of the time of the Holder's execution of
the applicable Exercise Notice if such Exercise Notice is executed
during “regular trading hours” on a Trading Day and is
delivered within two (2) hours thereafter (including until two (2)
hours after the close of “regular trading hours” on a
Trading Day) pursuant to Section 1(a) hereof or (iii) the Weighted
Average Price of the Common Stock on the date of the applicable
Exercise Notice if the date of such Exercise Notice is a Trading
Day and such Exercise Notice is both executed and delivered
pursuant to Section 1(a) hereof after the close of “regular
trading hours” on such Trading Day;

 

C= the
Exercise Price then in effect for the applicable Warrant Shares at
the time of such exercise.

 

If
shares of Common Stock are issued pursuant to this Section 1(d),
the Company hereby acknowledges and agrees that the Warrant Shares
issued in a Cashless Exercise shall be deemed to have been acquired
by the Holder, and the holding period for the Warrant Shares shall
be deemed to have commenced, on the date this Warrant was
originally issued pursuant to the Securities Purchase Agreement.
The Company agrees not to take any position contrary to this
Section 1(d).

 

(e) Disputes. In the case of a
dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall
promptly issue to the Holder the number of Warrant Shares that are
not disputed and resolve such dispute in accordance with Section
12.

 

 

	
 

	
	
 

 

-3-

 

 

(f) Beneficial Ownership Limitations on
Exercises. Notwithstanding
anything to the contrary contained herein, the Company shall not
effect the exercise of any portion of this Warrant, and the Holder
shall not have the right to exercise any portion of this Warrant,
pursuant to the terms and conditions of this Warrant and any such
exercise shall be null and void and treated as if never made, to
the extent that after giving effect to such exercise, the Holder
together with the other Attribution Parties collectively would
beneficially own in excess of 4.99% (the “Maximum
Percentage”) of the
number of shares of Common Stock outstanding immediately after giving effect to
such exercise. For purposes of the foregoing sentence, the
aggregate number of shares of Common Stock beneficially owned by the Holder and the other
Attribution Parties shall include the number of shares of
Common Stock held by the Holder and
all other Attribution Parties plus the number of shares of
Common Stock issuable upon exercise of
this Warrant with respect to which the determination of such
sentence is being made, but shall exclude the number of
shares of Common Stock which would be
issuable upon (A) exercise of the remaining, unexercised portion of
this Warrant beneficially owned by the Holder or any of the other
Attribution Parties and (B) exercise or conversion of the
unexercised or unconverted portion of any other securities of the
Company (including, without limitation, any convertible notes or
convertible preferred stock or warrants, including
the Series B
Warrants, Series C Warrants and
Preferred Shares (as defined in the Securities Purchase Agreement))
beneficially owned by the Holder or any other Attribution Party
subject to a limitation on conversion or exercise analogous to the
limitation contained in this Section 1(f). For purposes of this
Section 1(f), beneficial ownership shall be calculated in
accordance with Section 13(d) of the Securities Exchange Act of
1934, as amended (the “1934 Act”). For purposes of this Warrant, in
determining the number of outstanding shares of Common Stock
the Holder may acquire upon the
exercise of this Warrant without exceeding the Maximum Percentage,
the Holder may rely on the number of outstanding shares of
Common Stock as reflected in (x) the
Company's most recent Annual Report on Form 10-K, Quarterly Report
on Form 10-Q, Current Report on Form 8-K or other public filing
with the Securities and Exchange Commission (the
“SEC”), as the
case may be, (y) a more recent public announcement by the Company
or (3) any other written notice by the
Company or the Transfer Agent setting forth the number of
shares of Common Stock outstanding (the “Reported Outstanding Share
Number”). If the Company
receives an Exercise Notice from the Holder at a time when the
actual number of outstanding shares of Common Stock
is less than the Reported Outstanding
Share Number, the Company shall (i) notify the Holder in writing of
the number of shares of Common Stock then outstanding and, to the extent that such
Exercise Notice would otherwise cause the Holder's beneficial
ownership, as determined pursuant to this Section 1(f), to exceed
the Maximum Percentage, the Holder must notify the Company of a
reduced number of Warrant Shares to be purchased pursuant to such
Exercise Notice (the number of
shares by which such purchase is reduced, the
“Reduction
Shares”) and (ii) as soon
as reasonably practicable, the Company shall return to the Holder
any exercise price paid by the Holder for the Reduction
Shares. For any reason at any time, upon the written or oral
request of the Holder, the Company
shall within one (1) Trading Day confirm orally and in writing or
by electronic mail to the Holder the number of shares of
Common Stock then outstanding. In any
case, the number of outstanding shares of Common Stock
shall be determined after giving
effect to the conversion or exercise of securities of the Company,
including this Warrant, by the Holder and any other Attribution
Party since the date as of which the Reported Outstanding Share
Number was reported. In the event that the issuance of
shares of Common Stock to the Holder
upon exercise of this Warrant results in the Holder and the other
Attribution Parties being deemed to beneficially own, in the
aggregate, more than the Maximum Percentage of the number of
outstanding shares of Common Stock (as determined under Section 13(d) of the 1934
Act), the number of shares so issued by which the Holder's and the
other Attribution Parties' aggregate beneficial ownership exceeds
the Maximum Percentage (the “Excess
Shares”) shall be deemed
null and void and shall be cancelled ab initio, and the Holder
shall not have the power to vote or to transfer the Excess Shares.
As soon as reasonably practicable after the issuance of the Excess
Shares has been deemed null and void, the Company shall return to
the Holder the exercise price paid by the Holder for the Excess
Shares. Upon delivery of a written notice to the Company,
the Holder may from time to time increase or decrease the Maximum
Percentage to any other percentage not in excess of 9.99% as
specified in such notice; provided that (i) any such increase in
the Maximum Percentage will not be effective until the sixty-first
(61st) day
after such notice is delivered to the Company and (ii) any such
increase or decrease will apply only to the Holder and the other
Attribution Parties and not to any other holder of SPA Warrants
that is not an Attribution Party of the Holder. For purposes of
clarity, the shares of Common Stock issuable pursuant to the terms
of this Warrant in excess of the Maximum Percentage shall not be
deemed to be beneficially owned by the Holder for any purpose
including for purposes of Section 13(d) or Rule 16a-1(a)(1) of the
1934 Act. No prior
inability to exercise this Warrant pursuant to this paragraph shall
have any effect on the applicability of the provisions of this
paragraph with respect to any subsequent determination of
exercisability. The provisions of this
paragraph shall be construed and implemented in a manner otherwise
than in strict conformity with the terms of this Section 1(f) to
the extent necessary to correct this paragraph or any portion of
this paragraph which may be defective or inconsistent with the
intended beneficial ownership limitation contained in this Section
1(f) or to make changes or supplements necessary or desirable to properly give effect to
such limitation. The limitation contained in this paragraph may not
be waived and shall apply to a successor holder of this
Warrant.

 

 

	
 

	
	
 

 

-4-

 

 

(g) Insufficient Authorized Shares.
If at any time after the Company obtains Stockholder Approval, the
Company does not have a sufficient number of authorized and
unreserved shares of Common Stock to satisfy its obligation to
reserve for issuance upon exercise of this Warrant at least a
number of shares of Common Stock equal to 100% of the number of
shares of Common Stock as shall from time to time be necessary to
effect the exercise of all of this Warrant then outstanding without
regard to any limitation on exercise included herein (the
“Required Reserve
Amount” and the failure to have such sufficient number
of authorized and unreserved shares of Common Stock, an
“Authorized Share
Failure”), then the Company shall immediately take all
action necessary to increase the Company's authorized shares of
Common Stock to an amount sufficient to allow the Company to
reserve the Required Reserve Amount for this Warrant then
outstanding either through an increase in the authorized number of
shares of Common Stock or a reverse stock split of the outstanding
shares of Common Stock. Without limiting the generality of the
foregoing sentence, as soon as practicable after the date of the
occurrence of an Authorized Share Failure, but in no event later
than sixty (60) days after the occurrence of such Authorized Share
Failure, the Company shall hold a meeting of its stockholders for
the approval of an increase in the number of authorized shares of
Common Stock or a reverse stock split of the outstanding shares of
Common Stock. In connection with such meeting, the Company shall
provide each stockholder with a proxy statement and shall use its
best efforts to solicit its stockholders' approval of such increase
in authorized shares of Common Stock or a reverse stock split of
the outstanding shares of Common Stock and to cause its board of
directors to recommend to the stockholders that they approve such
proposal. Notwithstanding the foregoing, if any such time of an
Authorized Share Failure, the Company is able to obtain the written
consent of a majority of the shares of its issued and outstanding
shares of Common Stock to approve the increase in the number of
authorized shares of Common Stock or a reverse stock split of the
outstanding shares of Common Stock, the Company may satisfy this
obligation by obtaining such consent and submitting for filing with
the SEC an Information Statement on Schedule 14C. In the event that
upon any exercise of this Warrant following six (6) months
following the Subscription Date, the Company does not have
sufficient authorized shares to deliver in satisfaction of such
exercise, then unless the Holder elects to void such attempted
exercise, in lieu of issuing shares of Common Stock hereunder, the
Company shall pay to the Holder within three (3) Trading Days of
the applicable exercise, cash in an amount equal to the product of
(i) the number of Warrant Shares that the Company is unable to
deliver pursuant to this Section 1(g) and (ii) as applicable, (A)
the Weighted Average Price of the Common Stock on the Trading Day
immediately preceding the date of the applicable Exercise Notice if
such Exercise Notice is (x) both executed and delivered pursuant to
Section 1(a) hereof on a day that is not a Trading Day or (y) both
executed and delivered pursuant to Section 1(a) hereof on a Trading
Day prior to the opening of “regular trading hours” (as
defined in Rule 600(b)(64) of Regulation NMS promulgated under the
federal securities laws) on such Trading Day, (B) at the option of
the Holder, either (x) the Weighted Average Price of the Common
Stock on the Trading Day immediately preceding the date of the
applicable Exercise Notice or (y) the bid price of the Common Stock
on the principal Trading Market as reported by Bloomberg as of the
time of the Holder's execution of the applicable Exercise Notice if
such Exercise Notice is executed during “regular trading
hours” on a Trading Day and is delivered within two (2) hours
thereafter (including until two (2) hours after the close of
“regular trading hours” on a Trading Day) pursuant to
Section 1(a) hereof or (C) the Weighted Average Price of the Common
Stock on the date of the applicable Exercise Notice if the date of
such Exercise Notice is a Trading Day and such Exercise Notice is
both executed and delivered pursuant to Section 1(a) hereof after
the close of “regular trading hours” on such Trading
Day.

 

(h) Issuance Restrictions. The
Company may not issue any shares of Common Stock upon exercise of
this Warrant unless and until such date that the Company has
obtained Stockholder Approval.

 

 

	
 

	
	
 

 

-5-

 

 

2. ADJUSTMENT OF EXERCISE PRICE AND
NUMBER OF WARRANT SHARES. The Exercise Price and the number
of Warrant Shares shall be adjusted from time to time as
follows:

 

(a)           Adjustment
Upon Subdivision or Combination of Common Stock. If the
Company at any time on or after the Subscription Date subdivides
(by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into
a greater number of shares, the Exercise Price in effect
immediately prior to such subdivision will be proportionately
reduced and the number of Warrant Shares will be proportionately
increased. If the Company at any time on or after the Subscription
Date combines (by combination, reverse stock split or otherwise)
one or more classes of its outstanding shares of Common Stock into
a smaller number of shares, the Exercise Price in effect
immediately prior to such combination will be proportionately
increased and the number of Warrant Shares will be proportionately
decreased. Any adjustment under this Section 2(c) shall become
effective at the close of business on the date the subdivision or
combination becomes effective.

 

(b)           Reset.
On the First Reset Date, the Second Reset Date, if any, and the
Third Reset Date, if any (as such terms are defined in the Series C
Warrants), the Exercise Price shall be adjusted to equal the lower
of (i) the Exercise Price then in effect and (ii) 100% of the
applicable Reset Price determined as of the applicable date of
determination. Upon each such reset of the Exercise Price pursuant
to this Section 2(d), the number of Warrant Shares issuable
immediately prior to such reset shall be adjusted to the number of
shares of Common Stock determined by multiplying the Exercise Price
then in effect immediately prior to such reset by the number of
Warrant Shares acquirable upon exercise of this Warrant immediately
prior to such reset and dividing the product thereof by the
Exercise Price resulting from such reset.

 

(c)           Other
Events. If any event occurs of the type contemplated by the
provisions of this Section 2 but not expressly provided for by such
provisions (including, without limitation, the granting of stock
appreciation rights, phantom stock rights or other rights with
equity features), then the Company's Board of Directors will make
an appropriate adjustment in the Exercise Price and the number of
Warrant Shares, as mutually determined by the Company's Board of
Directors and the Required Holders, so as to protect the rights of
the Holder; provided that no such
adjustment pursuant to this Section 2(e) will increase the Exercise
Price or decrease the number of Warrant Shares as otherwise
determined pursuant to this Section 2.

 

(d)
Voluntary Adjustment By
Company. The Company may at any time during the term of this
Warrant, with the prior written consent of the Required Holders,
reduce the then current Exercise Price to any amount and for any
period of time deemed appropriate by the Board of Directors of the
Company.

 

3. RIGHTS UPON DISTRIBUTION OF
ASSETS. If the Company shall declare or make any dividend or
other distribution of its assets (or rights to acquire its assets)
to holders of shares of Common Stock, by way of return of capital
or otherwise (including, without limitation, any distribution of
cash, stock or other securities, property, options, evidence of
indebtedness or any other assets by way of a dividend, spin off,
reclassification, corporate rearrangement, scheme of arrangement or
other similar transaction) (a “Distribution”), at any time after
the issuance of this Warrant, then, in each such case, the Holder
shall be entitled to participate in such Distribution to the same
extent that the Holder would have participated therein if the
Holder had held the number of shares of Common Stock acquirable
upon complete exercise of this Warrant (without regard to any
limitations or restrictions on exercise of this Warrant, including
without limitation, the Maximum Percentage) immediately before the
date of which a record is taken for such Distribution, or, if no
such record is taken, the date as of which the record holders of
shares of Common Stock are to be determined for the participation
in such Distribution (provided, however, that to the extent
that the Holder's right to participate in any such Distribution
would result in the Holder and the other Attribution Parties
exceeding the Maximum Percentage, then the Holder shall not be
entitled to participate in such Distribution to such extent (and
shall not be entitled to beneficial ownership of such shares of
Common Stock as a result of such Distribution (and beneficial
ownership) to such extent) and the portion of such Distribution
shall be held in abeyance for the benefit of the Holder until such
time or times as its right thereto would not result in the Holder
and the other Attribution Parties exceeding the Maximum Percentage,
at which time or times the Holder shall be granted such
Distribution (and any Distributions declared or made on such
initial Distribution or on any subsequent Distribution held
similarly in abeyance) to the same extent as if there had been no
such limitation).

 

 

	
 

	
	
 

 

-6-

 

 

4. PURCHASE RIGHTS; FUNDAMENTAL
TRANSACTIONS.

 

(a) Purchase Rights. In addition to
any adjustments pursuant to Section 2 above, if at any time the
Company grants, issues or sells any Options, Convertible Securities
or rights to purchase stock, warrants, securities or other property
pro rata to the record holders of any class of Common Stock (the
“Purchase
Rights”), then the Holder will be entitled to acquire,
upon the terms applicable to such Purchase Rights, the aggregate
Purchase Rights which the Holder could have acquired if the Holder
had held the number of shares of Common Stock acquirable upon
complete exercise of this Warrant (without regard to any
limitations or restrictions on exercise of this Warrant, including
without limitation, the Maximum Percentage) immediately before the
date on which a record is taken for the grant, issuance or sale of
such Purchase Rights, or, if no such record is taken, the date as
of which the record holders of shares of Common Stock are to be
determined for the grant, issue or sale of such Purchase Rights
(provided,
however, that to
the extent that the Holder's right to participate in any such
Purchase Right would result in the Holder and the other Attribution
Parties exceeding the Maximum Percentage, then the Holder shall not
be entitled to participate in such Purchase Right to such extent
(and shall not be entitled to beneficial ownership of such shares
of Common Stock as a result of such Purchase Right (and beneficial
ownership) to such extent) and such Purchase Right to such extent
shall be held in abeyance for the benefit of the Holder
until such time or times as its right
thereto would not result in the Holder and the other
Attribution Parties exceeding the
Maximum Percentage, at which time or times the Holder shall be
granted such right (and any Purchase Right granted, issued
or sold on such initial Purchase Right or on any subsequent
Purchase Right held similarly in abeyance) to the same extent as if there had been no such
limitation).

 

 

	
 

	
	
 

 

-7-

 

 

(b) Fundamental Transactions. The
Company shall not enter into or be party to a Fundamental
Transaction unless the Successor Entity assumes in writing all of
the obligations of the Company under this Warrant and the other
Transaction Documents in accordance with the provisions of this
Section 4(b) pursuant to written agreements in form and substance
satisfactory to the Required Holders and approved by the Required
Holders prior to such Fundamental Transaction, including agreements
, if so requested by the Holder, to deliver to each holder of the
SPA Warrants in exchange for such SPA Warrants a security of the
Successor Entity evidenced by a written instrument substantially
similar in form and substance to this Warrant, including, without
limitation, an adjusted exercise price equal to the value for the
shares of Common Stock reflected by the terms of such Fundamental
Transaction, and exercisable for a corresponding number of shares
of capital stock equivalent to the shares of Common Stock
acquirable and receivable upon exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant) prior to
such Fundamental Transaction, and satisfactory to the Required
Holders, and with an exercise price which applies the exercise
price hereunder to such shares of capital stock (but taking into
account the relative value of the shares of Common Stock pursuant
to such Fundamental Transaction and the value of such shares of
capital stock, such adjustments to the number of shares of capital
stock and such exercise price being for the purpose of protecting
the economic value of this Warrant immediately prior to the
occurrence or consummation of such Fundamental Transaction). Any
security issuable or potentially issuable to the Holder pursuant to
the terms of this Warrant on the consummation of a Fundamental
Transaction shall be registered and freely tradable by the Holder
without any restriction or limitation or the requirement to be
subject to any holding period pursuant to any applicable securities
laws. No later than (i)
thirty (30) days prior to the occurrence or consummation of any
Fundamental Transaction or (ii) if later, the first Trading Day
following the date the Company first becomes aware of the
occurrence or potential occurrence of a Fundamental Transaction,
the Company shall deliver written notice thereof via facsimile or
electronic mail and overnight courier to the Holder. Upon
the occurrence or consummation of any Fundamental Transaction, and
it shall be a required condition to the occurrence or consummation
of any Fundamental Transaction that, the Company and the Successor
Entity or Successor Entities, jointly and severally, shall succeed
to, and the Company shall cause any Successor Entity or Successor
Entities to jointly and severally succeed to, and be added to the
term “Company” under this Warrant (so that from and
after the date of such Fundamental Transaction, each and every
provision of this Warrant referring to the “Company”
shall refer instead to each of the Company and the Successor Entity
or Successor Entities, jointly and severally), and the Company and
the Successor Entity or Successor Entities, jointly and severally,
may exercise every right and power of the Company prior thereto and
shall assume all of the obligations of the Company prior thereto
under this Warrant with the same effect as if the Company and such
Successor Entity or Successor Entities, jointly and severally, had
been named as the Company in this Warrant, and, solely at the
request of the Holder, if the Successor Entity and/or Successor
Entities is a publicly traded corporation whose common stock is
quoted on or listed for trading on an Eligible Market, shall
deliver (in addition to and without limiting any right under this
Warrant) to the Holder in exchange for this Warrant a security of
the Successor Entity and/or Successor Entities evidenced by a
written instrument substantially similar in form and substance to
this Warrant and exercisable for a corresponding number of shares
of capital stock of the Successor Entity and/or Successor Entities
(the “Successor Capital
Stock”) equivalent to the shares of Common Stock
acquirable and receivable upon exercise of this Warrant (without
regard to any limitations on the exercise of this Warrant) prior to
such Fundamental Transaction (such corresponding number of shares
of Successor Capital Stock to be delivered to the Holder shall be
equal to the greater of (A) the quotient of (i) the aggregate
dollar value of all consideration (including cash consideration and
any consideration other than cash (“Non-Cash Consideration”), in such
Fundamental Transaction, as such values are set forth in any
definitive agreement for the Fundamental Transaction that has been
executed at the time of the first public announcement of the
Fundamental Transaction or, if no such value is determinable from
such definitive agreement, as determined in accordance with Section
12 with the term “Non-Cash
Consideration” being substituted for the term “Exercise
Price”) that the Holder would have been entitled to
receive upon the happening of such Fundamental Transaction or the
record, eligibility or other determination date for the event
resulting in such Fundamental Transaction, had this Warrant been
exercised immediately prior to such Fundamental Transaction or the
record, eligibility or other determination date for the event
resulting in such Fundamental Transaction (without regard to any
limitations on the exercise of this Warrant) (the
“Aggregate
Consideration”) divided by (ii) the per share Closing
Sale Price of such Successor Capital Stock on the Trading Day
immediately prior to the consummation or occurrence of the
Fundamental Transaction and (B) the product of (i) the quotient
obtained by dividing (x) the Aggregate Consideration, by (y) the
Closing Sale Price of the Common Stock on the Trading Day
immediately prior to the consummation or occurrence of the
Fundamental Transaction and (ii) the highest exchange ratio
pursuant to which any stockholder of the Company may exchange
shares of Common Stock for Successor Capital Stock) (provided, however, to the extent that the
Holder's right to receive any such shares of publicly traded common
stock (or their equivalent) of the Successor Entity would result in
the Holder and its other Attribution Parties exceeding the Maximum
Percentage, if applicable, then the Holder shall not be entitled to
receive such shares to such extent (and shall not be entitled to
beneficial ownership of such shares of publicly traded common stock
(or their equivalent) of the Successor Entity as a result of such
consideration to such extent) and the portion of such shares shall
be held in abeyance for the Holder until such time or times, as its
right thereto would not result in the Holder and its other
Attribution Parties exceeding the Maximum Percentage, at which time
or times the Holder shall be delivered such shares to the extent as
if there had been no such limitation), and such security shall be
satisfactory to the Holder, and with an identical exercise price to
the Exercise Price hereunder (such adjustments to the number of
shares of capital stock and such exercise price being for the
purpose of protecting after the consummation or occurrence of such
Fundamental Transaction the economic value of this Warrant that was
in effect immediately prior to the consummation or occurrence of
such Fundamental Transaction, as elected by the Holder solely at
its option). Upon occurrence or consummation of the Fundamental
Transaction, and it shall be a required condition to the occurrence
or consummation of such Fundamental Transaction that, the Company
and the Successor Entity or Successor Entities shall deliver to the
Holder confirmation that there shall be issued upon exercise of
this Warrant at any time after the occurrence or consummation of
the Fundamental Transaction, as elected by the Holder solely at its
option, shares of Common Stock, Successor Capital Stock or, in lieu
of the shares of Common Stock or Successor Capital Stock (or other
securities, cash, assets or other property purchasable upon the
exercise of this Warrant prior to such Fundamental Transaction),
such shares of stock, securities, cash, assets or any other
property whatsoever (including warrants or other purchase or
subscription rights), which for purposes of clarification may
continue to be shares of Common Stock, if any, that the Holder
would have been entitled to receive upon the happening of such
Fundamental Transaction or the record, eligibility or other
determination date for the event resulting in such Fundamental
Transaction, had this Warrant been exercised immediately prior to
such Fundamental Transaction or the record, eligibility or other
determination date for the event resulting in such Fundamental
Transaction (without regard to any limitations on the exercise of
this Warrant), as adjusted in accordance with the provisions of
this Warrant. In addition to and not in substitution for any other
rights hereunder, prior to the occurrence or consummation of any
Fundamental Transaction pursuant to which holders of shares of
Common Stock are entitled to receive securities, cash, assets or
other property with respect to or in exchange for shares of Common
Stock (a “Corporate
Event”), the Company shall make appropriate provision
to ensure that, and any applicable Successor Entity or Successor
Entities shall ensure that, and it shall be a required condition to
the occurrence or consummation of such Corporate Event that, the
Holder will thereafter have the right to receive upon exercise of
this Warrant at any time after the occurrence or consummation of
the Corporate Event, shares of Common Stock or Successor Capital
Stock or, if so elected by the Holder, in lieu of the shares of
Common Stock (or other securities, cash, assets or other property)
purchasable upon the exercise of this Warrant prior to such
Corporate Event (but not in lieu of such items still issuable under
Sections 3 and 4(a), which shall continue to be receivable on the
shares of Common Stock or on the such shares of stock, securities,
cash, assets or any other property otherwise receivable with
respect to or in exchange for shares of Common Stock), such shares
of stock, securities, cash, assets or any other property whatsoever
(including warrants or other purchase or subscription rights and
any shares of Common Stock) which the Holder would have been
entitled to receive upon the occurrence or consummation of such
Corporate Event or the record, eligibility or other determination
date for the event resulting in such Corporate Event, had this
Warrant been exercised immediately prior to such Corporate Event or
the record, eligibility or other determination date for the event
resulting in such Corporate Event (without regard to any
limitations on exercise of this Warrant). Provision made pursuant
to the preceding sentence shall be in a form and substance
reasonably satisfactory to the Holder. The provisions of this
Section 4(b) shall apply similarly and equally to successive
Fundamental Transactions and Corporate Events.

 

 

	
 

	
	
 

 

-8-

 

 

(c) Notwithstanding the
foregoing, in the event of Fundamental Transaction, at the request
of the Holder delivered before the ninetieth (90th) day after the
occurrence or consummation of such Fundamental Transaction,
the Company (or the Successor Entity)
shall purchase this Warrant from the Holder by paying to the
Holder, within five (5) Business Days after such request (or, if
later, on the effective date of the Fundamental
Transaction), cash in an amount equal to the Black Scholes
Value of the remaining unexercised portion of this Warrant on the
date of such Fundamental Transaction; provided, however, that, if such
Fundamental Transaction is not within the Company's control,
including not approved by the Company's Board of Directors, the
Holder shall only be entitled to receive from the Company or any
Successor Entity, as of the date of consummation of such
Fundamental Transaction, the same type or form of consideration
(and in the same proportion), at the Black Scholes Value of the
unexercised portion of this Warrant, that is being offered and paid
to the holders of Common Stock of the Company in connection with
such Fundamental Transaction, whether that consideration be in the
form of cash, stock or any combination thereof, or whether the
holders of Common Stock are given the choice to receive from among
alternative forms of consideration in connection with such
Fundamental Transaction.

 

5. NONCIRCUMVENTION. The Company
hereby covenants and agrees that the Company will not, by amendment
of its Articles of Incorporation or Bylaws, or through any
reorganization, transfer of assets, consolidation, merger, scheme
of arrangement, dissolution, issue or sale of securities, or any
other voluntary action, avoid or seek to avoid the observance or
performance of any of the terms of this Warrant, and will at all
times in good faith carry out all of the provisions of this Warrant
and take all action as may be required to protect the rights of the
Holder. Without limiting the generality of the foregoing, the
Company (i) shall not increase the par value of any shares of
Common Stock receivable upon the exercise of this Warrant above the
Exercise Price then in effect, (ii) shall take all such
actions as may be necessary or appropriate in order that the
Company may validly and legally issue fully paid and nonassessable
shares of Common Stock upon the exercise of this Warrant, and (iii)
shall, so long as any of the SPA Warrants are outstanding, take all
action necessary to reserve and keep available out of its
authorized and unissued shares of Common Stock, solely for the
purpose of effecting the exercise of the SPA Warrants, 100% of the
number of shares of Common Stock as shall from time to time be
necessary to effect the exercise of all Warrants issued pursuant to
the Securities Purchase Agreement then outstanding (without regard
to any limitations on exercise and assuming that the Maximum
Eligibility Number is being determined based on a Reset Price equal
to $0.08 (as adjusted for stock splits, stock dividends,
recapitalizations, reorganizations, reclassification, combinations,
reverse stock splits or other similar events occurring after the
Subscription Date)).

 

6. WARRANT HOLDER NOT DEEMED A
STOCKHOLDER. Except as otherwise specifically provided
herein, the Holder, solely in such Person's capacity as a holder of
this Warrant, shall not be entitled to vote or receive dividends or
be deemed the holder of share capital of the Company for any
purpose, nor shall anything contained in this Warrant be construed
to confer upon the Holder, solely in such Person's capacity as the
Holder of this Warrant, any of the rights of a stockholder of the
Company or any right to vote, give or withhold consent to any
corporate action (whether any reorganization, issue of stock,
reclassification of stock, consolidation, merger, conveyance or
otherwise), receive notice of meetings, receive dividends or
subscription rights, or otherwise, prior to the issuance to the
Holder of the Warrant Shares which such Person is then entitled to
receive upon the due exercise of this Warrant. In addition, nothing
contained in this Warrant shall be construed as imposing any
liabilities on the Holder to purchase any securities (upon exercise
of this Warrant or otherwise) or as a stockholder of the Company,
whether such liabilities are asserted by the Company or by
creditors of the Company. Notwithstanding this Section 6, the
Company shall provide the Holder with copies of the same notices
and other information given to the stockholders of the Company
generally, contemporaneously with the giving thereof to the
stockholders.

 

 

	
 

	
	
 

 

-9-

 

 

7. REISSUANCE OF
WARRANTS.

 

(a) Transfer of Warrant. If this
Warrant is to be transferred, the Holder shall surrender this
Warrant to the Company, whereupon the Company will forthwith issue
and deliver upon the order of the Holder a new Warrant (in
accordance with Section 7(d)), registered as the Holder may
request, representing the right to purchase the number of Warrant
Shares being transferred by the Holder and, if less than the total
number of Warrant Shares then underlying this Warrant is being
transferred, a new Warrant (in accordance with Section 7(d)) to the
Holder representing the right to purchase the number of Warrant
Shares not being transferred.

 

(b) Lost, Stolen or Mutilated
Warrant. Upon receipt by the Company of evidence reasonably
satisfactory to the Company of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or
destruction, of any indemnification undertaking by the Holder to
the Company in customary form and, in the case of mutilation, upon
surrender and cancellation of this Warrant, the Company shall
execute and deliver to the Holder a new Warrant (in accordance with
Section 7(d)) representing the right to purchase the Warrant Shares
then underlying this Warrant.

 

(c) Exchangeable for Multiple
Warrants. This Warrant is exchangeable, upon the surrender
hereof by the Holder at the principal office of the Company, for a
new Warrant or Warrants (in accordance with Section 7(d))
representing in the aggregate the right to purchase the number of
Warrant Shares then underlying this Warrant, and each such new
Warrant will represent the right to purchase such portion of such
Warrant Shares as is designated by the Holder at the time of such
surrender; provided, however, that no SPA Warrants
for fractional Warrant Shares shall be given.

 

(d) Issuance of New Warrants.
Whenever the Company is required to issue a new Warrant pursuant to
the terms of this Warrant, such new Warrant (i) shall be of like
tenor with this Warrant, (ii) shall represent, as indicated on the
face of such new Warrant, the right to purchase the Warrant Shares
then underlying this Warrant (or in the case of a new Warrant being
issued pursuant to Section 7(a) or Section 7(c), the Warrant Shares
designated by the Holder which, when added to the number of shares
of Common Stock underlying the other new Warrants issued in
connection with such issuance, does not exceed the number of
Warrant Shares then underlying this Warrant), (iii) shall have an
issuance date, as indicated on the face of such new Warrant which
is the same as the Issuance Date, and (iv) shall have the same
rights and conditions as this Warrant.

 

8. NOTICES. Whenever notice is
required to be given under this Warrant, unless otherwise provided
herein, such notice shall be given in accordance with Section 9(f)
of the Securities Purchase Agreement. The Company shall provide the
Holder with prompt written notice of all actions taken pursuant to
this Warrant, including in reasonable detail a description of such
action and the reason therefor. Without limiting the generality of
the foregoing, the Company will give written notice to the Holder
(i) immediately upon any adjustment of the Exercise Price, setting
forth in reasonable detail, and certifying, the calculation of such
adjustment and (ii) at least fifteen (15) days prior to the date on
which the Company closes its books or takes a record (A) with
respect to any dividend or distribution upon the shares of Common
Stock, (B) with respect to any grants, issuances or sales of any
Options, Convertible Securities or rights to purchase stock,
warrants, securities or other property to holders of shares of
Common Stock or (C) for determining rights to vote with respect to
any Fundamental Transaction, dissolution or liquidation;
provided in each
case that such information shall be made known to the public prior
to or in conjunction with such notice being provided to the Holder.
It is expressly understood and agreed that the time of exercise
specified by the Holder in each Exercise Notice shall be definitive
and may not be disputed or challenged by the Company.

 

 

	
 

	
	
 

 

-10-

 

 

9. AMENDMENT AND WAIVER. Except as
otherwise provided herein, the provisions of this Warrant may be
amended or waived and the Company may take any action herein
prohibited, or omit to perform any act herein required to be
performed by it, only if the Company has obtained the written
consent of the Holder.

 

10. GOVERNING LAW; JURISDICTION; JURY
TRIAL. This Warrant shall be governed by and construed and
enforced in accordance with, and all questions concerning the
construction, validity, interpretation and performance of this
Warrant shall be governed by, the internal laws of the State of New
York, without giving effect to any choice of law or conflict of law
provision or rule (whether of the State of New York or any other
jurisdictions) that would cause the application of the laws of any
jurisdictions other than the State of New York. The Company hereby
irrevocably submits to the exclusive jurisdiction of the state and
federal courts sitting in The City of New York, Borough of
Manhattan, for the adjudication of any dispute hereunder or in
connection herewith or with any transaction contemplated hereby or
discussed herein, and hereby irrevocably waives, and agrees not to
assert in any suit, action or proceeding, any claim that it is not
personally subject to the jurisdiction of any such court, that such
suit, action or proceeding is brought in an inconvenient forum or
that the venue of such suit, action or proceeding is improper. The
Company hereby irrevocably waives personal service of process and
consents to process being served in any such suit, action or
proceeding by mailing a copy thereof to the Company at the address
set forth in Section 9(f) of the Securities Purchase Agreement and
agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein
shall be deemed to limit in any way any right to serve process in
any manner permitted by law. Nothing contained herein shall be
deemed or operate to preclude the Holder from bringing suit or
taking other legal action against the Company in any other
jurisdiction to collect on the Company's obligations to the Holder,
to realize on any collateral or any other security for such
obligations, or to enforce a judgment or other court ruling in
favor of the Holder. THE COMPANY
HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE, AND AGREES NOT TO
REQUEST, A JURY TRIAL FOR THE ADJUDICATION OF ANY DISPUTE HEREUNDER
OR IN CONNECTION WITH OR ARISING OUT OF THIS WARRANT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

11. CONSTRUCTION; HEADINGS. This
Warrant shall be deemed to be jointly drafted by the Company and
all the Buyers and shall not be construed against any Person as the
drafter hereof. The headings of this Warrant are for convenience of
reference and shall not form part of, or affect the interpretation
of, this Warrant.

 

12. DISPUTE RESOLUTION. In the case
of a dispute as to the determination of the Exercise Price or the
arithmetic calculation of the Warrant Shares, the Company shall
submit the disputed determinations or arithmetic calculations via
facsimile or electronic mail within two (2) Business Days of
receipt of the Exercise Notice giving rise to such dispute, as the
case may be, to the Holder. If the Holder and the Company are
unable to agree upon such determination or calculation of the
Exercise Price or the Warrant Shares within three (3) Business Days
of such disputed determination or arithmetic calculation being
submitted to the Holder, then the Company shall, within two (2)
Business Days submit via facsimile or electronic mail (a) the
disputed determination of the Exercise Price to an independent,
reputable investment bank selected by the Company and approved by
the Holder or (b) the disputed arithmetic calculation of the
Warrant Shares to the Company's independent, outside accountant.
The Company shall cause at its expense the investment bank or the
accountant, as the case may be, to perform the determinations or
calculations and notify the Company and the Holder of the results
no later than ten (10) Business Days from the time it receives the
disputed determinations or calculations. Such investment bank's or
accountant's determination or calculation, as the case may be,
shall be binding upon all parties absent demonstrable
error.

 

 

	
 

	
	
 

 

-11-

 

 

13. REMEDIES, OTHER OBLIGATIONS, BREACHES
AND INJUNCTIVE RELIEF. The remedies provided in this Warrant
shall be cumulative and in addition to all other remedies available
under this Warrant and the other Transaction Documents, at law or
in equity (including a decree of specific performance and/or other
injunctive relief), and nothing herein shall limit the right of the
Holder to pursue actual damages for any failure by the Company to
comply with the terms of this Warrant. The Company acknowledges
that a breach by it of its obligations hereunder will cause
irreparable harm to the Holder and that the remedy at law for any
such breach may be inadequate. The Company therefore agrees that,
in the event of any such breach or threatened breach, the holder of
this Warrant shall be entitled, in addition to all other available
remedies, to an injunction restraining any breach, without the
necessity of showing economic loss and without any bond or other
security being required.

 

14. TRANSFER. This Warrant and the
Warrant Shares may be offered for sale, sold, transferred, pledged
or assigned without the consent of the Company, except as may
otherwise be required by Section 2(f) of the Securities
Purchase Agreement.

 

15. SEVERABILITY. If any provision
of this Warrant is prohibited by law or otherwise determined to be
invalid or unenforceable by a court of competent jurisdiction, the
provision that would otherwise be prohibited, invalid or
unenforceable shall be deemed amended to apply to the broadest
extent that it would be valid and enforceable, and the invalidity
or unenforceability of such provision shall not affect the validity
of the remaining provisions of this Warrant so long as this Warrant
as so modified continues to express, without material change, the
original intentions of the parties as to the subject matter hereof
and the prohibited nature, invalidity or unenforceability of the
provision(s) in question does not substantially impair the
respective expectations or reciprocal obligations of the parties or
the practical realization of the benefits that would otherwise be
conferred upon the parties. The parties will endeavor in good faith
negotiations to replace the prohibited, invalid or unenforceable
provision(s) with a valid provision(s), the effect of which comes
as close as possible to that of the prohibited, invalid or
unenforceable provision(s).

 

16. DISCLOSURE. Upon receipt or
delivery by the Company of any notice in accordance with the terms
of this Warrant, unless the Company has in good faith determined
that the matters relating to such notice do not constitute
material, nonpublic information relating to the Company or its
Subsidiaries (as defined in the Securities Purchase Agreement), the
Company shall contemporaneously with any such receipt or delivery
publicly disclose such material, nonpublic information on a Current
Report on Form 8-K or otherwise. In the event that the Company
believes that a notice contains material, nonpublic information
relating to the Company or its Subsidiaries, the Company so shall
indicate to the Holder contemporaneously with delivery of such
notice, and in the absence of any such indication, the Holder shall
be allowed to presume that all matters relating to such notice do
not constitute material, nonpublic information relating to the
Company or its Subsidiaries.

 

17. CERTAIN DEFINITIONS. For
purposes of this Warrant, the following terms shall have the
following meanings:

 

(a) “1933 Act” means the Securities Act
of 1933, as amended.

 

(b) “Affiliate” shall have the meaning
ascribed to such term in Rule 405 of the 1933 Act.

 

(c) “Approved Stock Plan” means any
employee benefit plan which has been approved by the Board of
Directors of the Company, pursuant to which the Company's
securities may be issued to any employee, officer or director for
services provided to the Company.

 

 

	
 

	
	
 

 

-12-

 

 

(d) “Attribution Parties” means,
collectively, the following Persons and entities: (i) any
investment vehicle, including, any funds, feeder funds or managed
accounts, currently, or from time to time after the Issuance Date,
directly or indirectly managed or advised by the Holder's
investment manager or any of its Affiliates or principals, (ii) any
direct or indirect Affiliates of the Holder or any of the
foregoing, (iii) any Person acting or who could be deemed to be
acting as a Group together with the Holder or any of the foregoing
and (iv) any other Persons whose beneficial ownership of the Common
Stock would or could be aggregated with the Holder's and the other
Attribution Parties for purposes of Section 13(d) of the 1934 Act.
For clarity, the purpose of the foregoing is to subject
collectively the Holder and all other Attribution Parties to the
Maximum Percentage.

 

(e) “Black Scholes Value” means the
value of this Warrant calculated using the Black-Scholes Option
Pricing Model obtained from the “OV” function on
Bloomberg determined as of the day immediately following the public
announcement of the applicable Fundamental Transaction, or, if the
Fundamental Transaction is not publicly announced, the date the
Fundamental Transaction is consummated, for pricing purposes and
reflecting (i) a risk-free interest rate corresponding to the U.S.
Treasury rate for a period equal to the remaining term of this
Warrant as of such date of request, (ii) an expected volatility
equal to the greater of 100% and the 100 day volatility obtained
from the HVT function on Bloomberg as of the Trading Day
immediately following the public announcement of the applicable
Fundamental Transaction, or, if the Fundamental Transaction is not
publicly announced, the date the Fundamental Transaction is
consummated, (iii) the underlying price per share used in such
calculation shall be the greater of (x) the highest Weighted
Average Price of the Common Stock during the period beginning on
the Trading Day prior to the execution of definitive documentation
relating to the applicable Fundamental Transaction and ending on
(A) the Trading Day immediately following the public announcement
of such Fundamental Transaction, if the applicable Fundamental
Transaction is publicly announced or (B) the Trading Day
immediately following the consummation of the applicable
Fundamental Transaction if the applicable Fundamental Transaction
is not publicly announced and (y) the sum of the price per share
being offered in cash, if any, plus the value of any non-cash
consideration, if any, being offered in the Fundamental
Transaction, (iv) a zero cost of borrow and (v) a 360 day
annualization factor.

 

(f) “Bloomberg” means Bloomberg
Financial Markets.

 

(g) “Business Day” means any day other
than Saturday, Sunday or other day on which commercial banks in The
City of New York are authorized or required by law to remain
closed.

 

(h) “Closing Bid Price” and
“Closing Sale
Price” means, for any security as of any date, the
last closing bid price and last closing trade price, respectively,
for such security on the Principal Market, as reported by
Bloomberg, or, if the Principal Market begins to operate on an
extended hours basis and does not designate the closing bid price
or the closing trade price, as the case may be, then the last bid
price or the last trade price, respectively, of such security prior
to 4:00:00 p.m., New York time, as reported by Bloomberg, or, if
the Principal Market is not the principal securities exchange or
trading market for such security, the last closing bid price or
last trade price, respectively, of such security on the principal
securities exchange or trading market where such security is listed
or traded as reported by Bloomberg, or if the foregoing do not
apply, the last closing bid price or last trade price,
respectively, of such security in the over-the-counter market on
the electronic bulletin board for such security as reported by
Bloomberg, or, if no closing bid price or last trade price,
respectively, is reported for such security by Bloomberg, the
average of the bid prices, or the ask prices, respectively, of any
market makers for such security as reported in the OTC Link or
“pink sheets” by OTC Markets Group Inc. (formerly Pink
OTC Markets Inc.). If the Closing Bid Price or the Closing Sale
Price cannot be calculated for a security on a particular date on
any of the foregoing bases, the Closing Bid Price or the Closing
Sale Price, as the case may be, of such security on such date shall
be the fair market value as mutually determined by the Company and
the Holder. If the Company and the Holder are unable to agree upon
the fair market value of such security, then such dispute shall be
resolved pursuant to Section 12. All such determinations to be
appropriately adjusted for any stock dividend, stock split, stock
combination, reclassification or other similar transaction during
the applicable calculation period.

 

 

	
 

	
	
 

 

-13-

 

 

(i) “Common Stock” means (i) the
Company's shares of common stock, par value $0.001 per share, and
(ii) any stock capital into which such Common Stock shall have
been changed or any stock capital resulting from a
reclassification, reorganization or reclassification of such Common
Stock.

 

(j) “Convertible Securities” means any
stock or securities (other than Options) directly or indirectly
convertible into or exercisable or exchangeable for shares of
Common Stock.

 

(k) “Designee” means Empery Asset
Management, LP.

 

(l) “Eligible Market” means the
Principal Market, the NYSE American, The Nasdaq Global Select
Market, The Nasdaq Global Market, The Nasdaq Capital Market, The
New York Stock Exchange, Inc. or the OTC QX.

 

(m) “Excluded Securities” means any
Common Stock issued or issuable or deemed to be issued in
accordance with Section 2(a) hereof by the Company: (i) under any
Approved Stock Plan, (ii) upon exercise of any SPA, Series A
Warrants, any Series B Warrants and any Series C Warrants, in each
case issued pursuant to the Securities Purchase Agreement;
provided, that the
terms of such SPA Warrants Series B Warrants and Series C Warrants
are not amended, modified or changed on or after the Subscription
Date, or (iii) upon conversion, exercise or exchange of any Options
or Convertible Securities which are outstanding on the day
immediately preceding the Subscription Date; provided, that such issuance of
Common Stock upon exercise of such Options or Convertible
Securities is made pursuant to the terms of such Options or
Convertible Securities in effect on the date immediately preceding
the Subscription Date and such Options or Convertible Securities
are not amended, modified or changed on or after the Subscription
Date.

 

(n) “Expiration Date” means the date
that is sixty-six(66) months after the Issuance Date or if such
date falls on a day other than a Business Day or on which trading
does not take place on the Principal Market (a “Holiday”), the next day that is
not a Holiday.

 

(o) Intentionally
omitted.

 

 

	
 

	
	
 

 

-14-

 

 

(p) “Fundamental Transaction” means (A)
that the Company shall, directly or indirectly, including through
Subsidiaries, Affiliates or otherwise, in one or more related
transactions, (i) consolidate or merge with or into (whether or not
the Company is the surviving corporation) another Subject Entity,
or (ii) sell, assign, transfer, convey or otherwise dispose of all
or substantially all of the properties or assets of the Company or
any of its “significant subsidiaries” (as defined in
Rule 1-02 of Regulation S-X) to one or more Subject Entities, or
(iii) make, or allow one or more Subject Entities to make, or allow
the Company to be subject to or have its Common Stock be subject to
or party to one or more Subject Entities making, a purchase, tender
or exchange offer that is accepted by the holders of at least
either (x) 50% of the outstanding shares of Common Stock, (y) 50%
of the outstanding shares of Common Stock calculated as if any
shares of Common Stock held by all Subject Entities making or party
to, or Affiliated with any Subject Entities making or party to,
such purchase, tender or exchange offer were not outstanding; or
(z) such number of shares of Common Stock such that all Subject
Entities making or party to, or Affiliated with any Subject Entity
making or party to, such purchase, tender or exchange offer, become
collectively the beneficial owners (as defined in Rule 13d-3 under
the 1934 Act) of at least 50% of the outstanding shares of Common
Stock, or (iv) consummate a stock purchase agreement or other
business combination (including, without limitation, a
reorganization, recapitalization, spin-off or scheme of
arrangement) with one or more Subject Entities whereby all such
Subject Entities, individually or in the aggregate, acquire, either
(x) at least 50% of the outstanding shares of Common Stock, (y) at
least 50% of the outstanding shares of Common Stock calculated as
if any shares of Common Stock held by all the Subject Entities
making or party to, or Affiliated with any Subject Entity making or
party to, such stock purchase agreement or other business
combination were not outstanding; or (z) such number of shares of
Common Stock such that the Subject Entities become collectively the
beneficial owners (as defined in Rule 13d-3 under the 1934 Act) of
at least 50% of the outstanding shares of Common Stock, or (v)
reorganize, recapitalize or reclassify its Common Stock, (B) that
the Company shall, directly or indirectly, including through
Subsidiaries, Affiliates or otherwise, in one or more related
transactions, allow any Subject Entity individually or the Subject
Entities in the aggregate to be or become the “beneficial
owner” (as defined in Rule 13d-3 under the 1934 Act),
directly or indirectly, whether through acquisition, purchase,
assignment, conveyance, tender, tender offer, exchange, reduction
in outstanding shares of Common Stock, merger, consolidation,
business combination, reorganization, recapitalization, spin-off,
scheme of arrangement, reorganization, recapitalization or
reclassification or otherwise in any manner whatsoever, of either
(x) at least 50% of the aggregate ordinary voting power represented
by issued and outstanding shares of Common Stock, (y) at least 50%
of the aggregate ordinary voting power represented by issued and
outstanding shares of Common Stock not held by all such Subject
Entities as of the Subscription Date calculated as if any shares of
Common Stock held by all such Subject Entities were not
outstanding, or (z) a percentage of the aggregate ordinary voting
power represented by issued and outstanding shares of Common Stock
or other equity securities of the Company sufficient to allow such
Subject Entities to effect a statutory short form merger or other
transaction requiring other stockholders of the Company to
surrender their shares of Common Stock without approval of the
stockholders of the Company or (C) directly or indirectly,
including through Subsidiaries, Affiliates or otherwise, in one or
more related transactions, the issuance of or the entering into any
other instrument or transaction structured in a manner to
circumvent, or that circumvents, the intent of this definition in
which case this definition shall be construed and implemented in a
manner otherwise than in strict conformity with the terms of this
definition to the extent necessary to correct this definition or
any portion of this definition which may be defective or
inconsistent with the intended treatment of such instrument or
transaction.

 

(q) “Group” means a “group”
as that term is used in Section 13(d) of the 1934 Act and as
defined in Rule 13d-5 thereunder.

 

 

	
 

	
	
 

 

-15-

 

 

(r) “Maximum Eligibility Number” shall
have the meaning ascribed to such term in the Series C
Warrants.

 

(s) “Option Value” means the value of
an Option calculated using the Black-Scholes Option Pricing Model
obtained from the “OV” function on Bloomberg determined
as of (A) the Trading Day prior to the public announcement of the
issuance of the applicable Option, if the issuance of such Option
is publicly announced or (B) the Trading Day immediately following
the issuance of the applicable Option if the issuance of such
Option is not publicly announced, for pricing purposes and
reflecting (i) a risk-free interest rate corresponding to the U.S.
Treasury rate for a period equal to the remaining term of the
applicable Option as of the applicable date of determination, (ii)
an expected volatility equal to the greater of 100% and the 100 day
volatility obtained from the HVT function on Bloomberg as of (A)
the Trading Day immediately following the public announcement of
the applicable Option if the issuance of such Option is publicly
announced or (B) the Trading Day immediately following the issuance
of the applicable Option if the issuance of such Option is not
publicly announced, (iii) the underlying price per share used in
such calculation shall be the highest Weighted Average Price of the
Common Stock during the period beginning on the Trading Day prior
to the execution of definitive documentation relating to the
issuance of the applicable Option and ending on (A) the Trading Day
immediately following the public announcement of such issuance, if
the issuance of such Option is publicly announced or (B) the
Trading Day immediately following the issuance of the applicable
Option if the issuance of such Option is not publicly announced,
(iv) a zero cost of borrow and (v) a 360 day annualization
factor.

 

(t) “Options” means any rights,
warrants or options to subscribe for or purchase (i) shares of
Common Stock or (ii) Convertible Securities.

 

(u) “Parent Entity” of a Person means
an entity that, directly or indirectly, controls the applicable
Person, including such entity whose common capital or equivalent
equity security is quoted or listed on an Eligible Market (or, if
so elected by the Required Holders, any other market, exchange or
quotation system), or, if there is more than one such Person or
such entity, the Person or such entity designated by the Required
Holders or in the absence of such designation, such Person or
entity with the largest public market capitalization as of the date
of consummation of the Fundamental Transaction.

 

(v) “Person” means an individual, a
limited liability company, a partnership, a joint venture, a
corporation, a trust, an unincorporated organization, any other
entity and a government or any department or agency
thereof.

 

(w) “Principal Market” means the NASDAQ
Capital Market.

 

(x) Intentionally
omitted.

 

(y) Intentionally
omitted.

 

(z) “Qualified Eligible Market”
means the NYSE American, The Nasdaq Global Select Market, The
Nasdaq Global Market, The Nasdaq Capital Market or The New York
Stock Exchange, Inc.

 

(aa) Intentionally
omitted.

 

(bb) “Registration
Rights Agreement” means that certain Registration
Rights Agreement dated as of the Subscription Date by and among the
Company and the Buyers.

 

 

	
 

	
	
 

 

-16-

 

 

(cc) “Registration
Statement” means that certain Registration Rights
Agreement dated as of the Subscription Date by and among the
Company and the Buyers.

 

(dd) “Required
Holders” means the holders of the SPA Warrants
representing at least a majority of the shares of Common Stock
underlying the SPA Warrants then outstanding and shall include the
Designee so long as the Designee or any of its Affiliates holds any
SPA Warrants, Hudson Bay Capital Management LP so long as Hudson
Bay Capital Management LP or any of its Affiliates holds any SPA
Warrants, and Sabby Management, LLC so long as Sabby Management,
LLC or any of its Affiliates holds any SPA Warrants.

 

(ee) “Reset
Price” shall have the meaning ascribed to such term in
the Series C Warrants.

 

(ff) Intentionally
omitted.

 

(gg) Intentionally
omitted.

 

(ww) “Series
B Warrants” shall have the meaning ascribed to such
term in the Securities Purchase Agreement.

 

(xx) “Series
C Warrants” shall have the meaning ascribed to such
term in the Securities Purchase Agreement.

 

(yy) “Standard
Settlement Period” means the standard settlement
period, expressed in a number of Trading Days, on the Company's
primary Eligible Market with respect to the Common Stock as in
effect on the date of delivery of the applicable Exercise
Notice.

 

(hh) “Subject
Entity” means any Person, Persons or Group or any
Affiliate or associate of any such Person, Persons or
Group.

 

(ii) “Successor
Entity” means one or more Person or Persons (or, if so
elected by the Holder, the Company or Parent Entity) formed by,
resulting from or surviving any Fundamental Transaction or one or
more Person or Persons (or, if so elected by the Holder, the
Company or the Parent Entity) with which such Fundamental
Transaction shall have been entered into.

 

(jj) Intentionally
omitted.

 

(kk) Intentionally
omitted.

 

(ll) “Trading
Day” means any day on which the Common Stock is traded
on the Principal Market, or, if the Principal Market is not the
principal trading market for the Common Stock on such day, then on
the principal securities exchange or securities market on which the
Common Stock is then traded.

 

(mm) “Weighted
Average Price” means, for any security as of any date,
the dollar volume-weighted average price for such security on the
Principal Market during the period beginning at 9:30:01 a.m., New
York time (or such other time as the Principal Market publicly
announces is the official open of trading), and ending at 4:00:00
p.m., New York time (or such other time as the Principal Market
publicly announces is the official close of trading), as reported
by Bloomberg through its “Volume at Price” function or,
if the foregoing does not apply, the dollar volume-weighted average
price of such security in the over-the-counter market on the
electronic bulletin board for such security during the period
beginning at 9:30:01 a.m., New York time (or such other time as
such market publicly announces is the official open of trading),
and ending at 4:00:00 p.m., New York time (or such other time as
such market publicly announces is the official close of trading),
as reported by Bloomberg, or, if no dollar volume-weighted average
price is reported for such security by Bloomberg for such hours,
the average of the highest closing bid price and the lowest closing
ask price of any of the market makers for such security as reported
in the OTC Link or “pink sheets” by OTC Markets Group
Inc. (formerly Pink OTC Markets Inc.). If the Weighted Average
Price cannot be calculated for a security on a particular date on
any of the foregoing bases, the Weighted Average Price of such
security on such date shall be the fair market value as mutually
determined by the Company and the Holder. If the Company and the
Holder are unable to agree upon the fair market value of such
security, then such dispute shall be resolved pursuant to Section
12 with the term “Weighted Average Price” being
substituted for the term “Exercise Price.” All such
determinations shall be appropriately adjusted for any stock
dividend, stock split, stock combination, reclassification or other
similar transaction during the applicable calculation
period.

 

[Signature Page Follows]

	
 

	
	
 

 

-17-

 

IN WITNESS WHEREOF, the Company has
caused this Warrant to Purchase Common Stock to be duly executed as
of the Issuance Date set out above.

 

 

BRIDGELINE
DIGITAL, INC.

 

 

By:
___________________________

Name:

Title:

 

-18-

 

EXHIBIT A

 

EXERCISE NOTICE

TO BE EXECUTED BY THE REGISTERED HOLDER TO EXERCISE
THIS

WARRANT TO PURCHASE COMMON STOCK

 

BRIDGELINE DIGITAL, INC.

The
undersigned holder hereby exercises the right to purchase
_________________ shares of Common Stock (“Warrant Shares”) of Bridgeline
Digital, Inc., a Delaware corporation (the “Company”), evidenced by the
attached Warrant to Purchase Common Stock (the “Warrant”). Capitalized terms used
herein and not otherwise defined shall have the respective meanings
set forth in the Warrant.

 

1. Form
of Exercise Price. The Holder intends that payment of the Exercise
Price shall be made as:

 

____________ a
“Cash
Exercise” with respect to _________________ Warrant
Shares; and/or

 

____________ a
“Cashless
Exercise” with respect to _______________ Warrant
Shares, resulting in a delivery obligation of the Company to the
Holder of __________ shares of Common Stock representing the
applicable Net Number.

 

2.
Payment of Exercise Price. In the event that the holder has elected
a Cash Exercise with respect to some or all of the Warrant Shares
to be issued pursuant hereto, the holder shall pay the Aggregate
Exercise Price in the sum of $___________________ to the Company in
accordance with the terms of the Warrant.

 

3.
Delivery of Warrant Shares. The Company shall deliver to the holder
__________ Warrant Shares in accordance with the terms of the
Warrant.

 

Date:
_______________ __, ______

 

 

 

   Name
of Registered Holder

 

 

By:           

Name:

Title:

 

 

 

-19-

 

ACKNOWLEDGMENT

 

The
Company hereby acknowledges this Exercise Notice and hereby directs
American Stock Transfer & Trust Company, LLC to issue the above
indicated number of shares of Common Stock in accordance with the
Transfer Agent Instructions dated March , 2019 from the Company and
acknowledged and agreed to by American Stock Transfer & Trust
Company, LLC.

 

BRIDGELINE
DIGITAL, INC.

 

 

By:
________________________________

Name:

Title:

 

 

 

-20-

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