Document:

Exhibit 10.3

 

  
Exhibit
10.3

  

VOTING AGREEMENT

 

VOTING
AGREEMENT, dated as of March , 2019 (this “Agreement”), by and among
Bridgeline Digital, Inc., a Delaware corporation (the
“Company”), and
the shareholder listed on the signature page hereto under the
heading “Shareholder” (the
“Shareholder”).

 

WHEREAS, as
contemplated by the attached Term Sheet (the “Term Sheet”), the Company and
certain investors (each, an “ Investor ”, and collectively, the
“ Investors ”)
intend to enter into a Securities Purchase Agreement (the “
Securities Purchase
Agreement ”), pursuant to which, among other things,
the Company will agree to issue and sell to the Investors and the
Investors will agree to purchase, (i) shares of Series C
convertible preferred stock, par value $0.001 per share (the
“Preferred
Stock”), of the Company and (iii) three (3) series of
warrants (the “Warrants”) which will be
exercisable to purchase shares of common stock, par value $0.001
per share, of the Company (the “Common Stock”);

 

WHEREAS, as of the
date hereof, the Shareholder owns collectively [ ] shares of Common
Stock, which represent in the aggregate approximately [ ]% of the
total issued and outstanding capital stock of the Company;
and

 

WHEREAS, as a
condition to the willingness of the Investors to enter into the
Securities Purchase Agreement and to consummate the transactions
contemplated thereby (collectively, the “Transaction”), the Investors have
required that each Shareholder agrees, and in order to induce the
Investors to enter into the Securities Purchase Agreement, each
Shareholder has agreed, to enter into this Agreement with respect
to all the Common Stock now owned and which may hereafter be
acquired by the Shareholder and any other securities, if any, which
such Shareholder is currently entitled to vote, or after the date
hereof, becomes entitled to vote, at any meeting of shareholders of
the Company (the “Other
Securities”).

 

NOW,
THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements contained herein, and intending to be
legally bound hereby, the parties hereto hereby agree as
follows:

 

ARTICLE I

 

VOTING AGREEMENT OF THE SHAREHOLDER

 

SECTION
1.01. Voting
Agreement. Subject to the last sentence of this Section
1.01, each Shareholder hereby agrees that at any meeting of the
shareholders of the Company, however called, and in any action by
written consent of the Company’s shareholders, the
Shareholder shall vote the Common Stock and the Other Securities:
(a) in favor of increasing the authorized number of shares of
Common Stock (or effecting a reverse stock split of the Common
Stock) up to the maximum amount recommended by the Company’s
Board of Directors to permit the issuance
in full of Common Stock upon conversion of the Preferred Stock and
exercise of the Warrants, respectively, without giving effect to
any limitations on conversion of the Preferred Stock or exercise of
the Warrants thereunder or under the Securities Purchase Agreement;
(b) in favor of the Transaction and the issuance of the shares of
Common Stock which may be issued under the terms of the Securities
Purchase Agreement in order for the Company to be able to issue the
shares of Common Stock issuable upon conversion of the Preferred
Stock and upon exercise of the Warrants, without giving effect to
any limitations on conversion of the Preferred Stock or exercise of
the Warrants thereunder or under the Securities Purchase Agreement;
and (c) against any proposal or any other corporate action or
agreement that would result in a breach of any covenant,
representation or warranty or any other obligation or agreement of
the Company under the Securities Purchase Agreement or which could
result in any of the conditions to the Company’s obligations
under the Securities Purchase Agreement not being fulfilled
(together, “Shareholder
Approval”). Each Shareholder acknowledges receipt and
review of a copy of the Securities Purchase Agreement and the other
Transaction Documents (as defined in the Securities Purchase
Agreement). The obligations of the Shareholder under this Section
1.01 shall terminate immediately following the occurrence of the
Shareholder Approval.

 

 

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ARTICLE II

 

REPRESENTATIONS AND WARRANTIES OF THE SHAREHOLDER

 

Each
Shareholder hereby represents and warrants, severally but not
jointly, to each of the Investors as follows:

 

SECTION
2.01. Authority Relative
to This Agreement. Each Shareholder has all necessary legal
capacity, power and authority to execute and deliver this
Agreement, to perform his or its obligations hereunder and to
consummate the transactions contemplated hereby. This Agreement has
been duly executed and delivered by such Shareholder and
constitutes a legal, valid and binding obligation of such
Shareholder, enforceable against such Shareholder in accordance
with its terms, except (a) as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or similar laws now or hereafter in effect
relating to, or affecting generally the enforcement of
creditors’ and other obligees’ rights, (b) where the
remedy of specific performance or other forms of equitable relief
may be subject to certain equitable defenses and principles and to
the discretion of the court before which the proceeding may be
brought, and (c) where rights to indemnity and contribution
thereunder may be limited by applicable law and public
policy.

 

SECTION
2.02. No Conflict.
(a) The execution and delivery of this Agreement by such
Shareholder does not, and the performance of this Agreement by such
Shareholder shall not, (i) conflict with or violate any federal,
state or local law, statute, ordinance, rule, regulation, order,
judgment or decree applicable to such Shareholder or by which the
Common Stock or the Other Securities owned by such Shareholder are
bound or affected or (ii) result in any breach of or constitute a
default (or an event that with notice or lapse of time or both
would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result
in the creation of a lien or encumbrance on any of the Common Stock
or the Other Securities owned by such Shareholder pursuant to, any
note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to
which such Shareholder is a party or by which such Shareholder or
the Common Stock or Other Securities owned by such Shareholder are
bound.

 

(b) The
execution and delivery of this Agreement by such Shareholder does
not, and the performance of this Agreement by such Shareholder
shall not, require any consent, approval, authorization or permit
of, or filing with or notification to, any governmental entity by
such Shareholder.

 

SECTION
2.03. Title to the
Stock. As of the date hereof, each Shareholder is the owner
of the number of shares of Common Stock set forth opposite its name
on Appendix A
attached hereto, entitled to vote, without restriction, on all
matters brought before holders of capital stock of the Company,
which Common Stock represent on the date hereof the percentage of
the outstanding stock and voting power of the Company set forth on
such Appendix. Such Common Stock are all the securities of the
Company owned, either of record or beneficially, by such
Shareholder. Such Common Stock are owned free and clear of all
security interests, liens, claims, pledges, options, rights of
first refusal, agreements, limitations on such Shareholder’s
voting rights, charges and other encumbrances of any nature
whatsoever. No Shareholder has appointed or granted any proxy,
which appointment or grant is still effective, with respect to the
Common Stock or Other Securities owned by such shareholder.

 

 

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ARTICLE III

 

COVENANTS

 

SECTION
3.01. No Disposition or
Encumbrance of Stock. Notwithstanding anything herein to the
contrary, each Shareholder hereby covenants and agrees that until
the date the Shareholder Approval has been obtained, except as
contemplated by this Agreement, such Shareholder shall not offer or
agree to sell, transfer, tender, assign, hypothecate or otherwise
dispose of, grant a proxy or power of attorney with respect to, or
create or permit to exist any security interest, lien, claim,
pledge, option, right of first refusal, agreement, limitation on
such Shareholder’s voting rights, charge or other encumbrance
of any nature whatsoever (“Encumbrance”) with respect to the
Common Stock or Other Securities, directly or indirectly, initiate,
solicit or encourage any person to take actions which could
reasonably be expected to lead to the occurrence of any of the
foregoing; provided, however , that any such
Shareholder may assign, sell or transfer any Common Stock or Other
Securities provided that any such recipient of the Common Stock or
Other Securities has delivered to the Company and each Investor a
written agreement in a form reasonably satisfactory to the
Investors that the recipient shall be bound by, and the Common
Stock and/or Other Securities so transferred, assigned or sold
shall remain subject to this Agreement.

 

SECTION
3.02. Company
Cooperation. The Company hereby covenants and agrees that it
will not, and such Shareholder irrevocably and unconditionally
acknowledges and agrees that the Company will not (and waives any
rights against the Company in relation thereto), recognize any
Encumbrance or agreement on any of the Common Stock or Other
Securities subject to this Agreement unless the provisions of
Section 3.01 have been complied with. The Company agrees to use its
reasonable best efforts to ensure that at any time in which any
Shareholder Approval is required pursuant to Section 4(p) of the
Securities Purchase Agreement, it will cause holders of Common
Stock or Other Securities representing the percentage of
outstanding capital stock required to vote in favor of the
Transaction in order for the Company to comply with its obligations
under Section 4(p) of the Securities Purchase Agreement to become
party to and bound by the terms and conditions of this Agreement
and the Common Stock and Other Securities held by such holders to
be subject to the terms and conditions of this
Agreement.

 

ARTICLE IV

 

MISCELLANEOUS

 

SECTION
4.01. Further
Assurances. Each Shareholder will execute and deliver such
further documents and instruments and take all further action as
may be reasonably necessary in order to consummate the transactions
contemplated hereby.

 

SECTION
4.02. Specific
Performance. The parties hereto agree that irreparable
damage would occur in the event any provision of this Agreement was
not performed in accordance with the terms hereof and that any
Investor (without being joined by any other Investor) shall be
entitled to specific performance of the terms hereof, in addition
to any other remedy at law or in equity. Any Investor shall be
entitled to its reasonable attorneys’ fees in any action
brought to enforce this Agreement in which it is the prevailing
party.

SECTION
4.03. Entire
Agreement. This Agreement constitutes the entire agreement
among the Company and the Shareholder with respect to the subject
matter hereof and supersedes all prior agreements and
understandings, both written and oral, among the Company and the
Shareholder with respect to the subject matter hereof.

 

SECTION
4.04. Amendment.
The provisions of this Agreement may not be amended or waived, nor
may this Agreement be terminated by the Company other than pursuant
to the provisions of Section 4.07.

 

 

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SECTION
4.05. Severability.
If any provision of this Agreement 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 Agreement so long as this Agreement 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).

 

SECTION
4.06. Governing
Law. All questions concerning the construction, validity,
enforcement and interpretation of this Agreement 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 parties hereby agree that all
actions or proceedings arising directly or indirectly from or in
connection with this Agreement shall be litigated only in the
Supreme Court of the State of New York or the United States
District Court for the Southern District of New York located in New
York County, New York. The parties consent to the jurisdiction and
venue of the foregoing courts and consent that any process or
notice of motion or other application to any of said courts or a
judge thereof may be served inside or outside the State of New York
or the Southern District of New York by registered mail, return
receipt requested, directed to the party being served at its
address set forth on the signature ages to this Agreement (and
service so made shall be deemed complete three (3) days after the
same has been posted as aforesaid) or by personal service or in
such other manner as may be permissible under the rules of said
courts. Each of the Company and each Shareholder irrevocably
waives, to the fullest extent permitted by law, any objection which
it may now or hereafter have to the laying of the venue of any such
suit, action, or proceeding brought in such a court and any claim
that suit, action, or proceeding has been brought in an
inconvenient forum. EACH PARTY
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 AGREEMENT OR ANY
TRANSACTION CONTEMPLATED HEREBY.

 

SECTION
4.07. Termination.
Except as set forth in Section 3.01 with respect to the
Shareholder’s obligations set forth in Section 3.01, this
Agreement shall terminate immediately following the occurrence of
the Shareholder Approval.

 

[Signature Page Follows]

 

 

 

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IN WITNESS WHEREOF, each Shareholder and the Company has
duly executed this Agreement.

 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

THE COMPANY:

	
 

	
 

	
 

	
 

	

BRIDGELINE DIGITAL, INC.

 

 

	
 

	
 

	
 

	
 

	
 

	

By:

	
 

	
 

	
 

	
 

	

            Name:
Roger Kahn

	
 

	
 

	

            Title:
Chief Executive Officer

	
 

	
 

	
 

	

Dated:
March , 2019

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Address:

	
 

	

100
Summit Road, Suite 916

Burlington,
Massachusetts 01803

 

 

 

 

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SHAREHOLDER:

 

[                  
            ]

	
 

	
 

	
 

	
 

	
 

	
 

	
 

	

Dated:
March , 2019

	
 

	
 

	
 

	
 

	
 

	
 

	

Address:

 

 

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APPENDIX A

 

	

 
Shareholder

 

	
 
Common Stock
Owned

 

	
 
Percentage of Stock
Outstanding

 

	
 
Voting Percentage of
Stock Outstanding

 

	
 
 

 

	
 
 

 

	
 
 

 

	
 
 

 

	
  [          
  ] 

	
  [] 

	
  []%

	
  []%

 

 

 

-7-Blueprint

 

       
Exhibit
10.4

 

REGISTRATION RIGHTS AGREEMENT

 

REGISTRATION RIGHTS AGREEMENT (this
“Agreement”),
dated as of March __, 2019, by and among Bridgeline Digital, Inc.,
a Delaware corporation, with headquarters located at 80 Blanchard
Road, Burlington, Massachusetts 01803 (the “Company”), and the investors
listed on the Schedule of Buyers attached hereto (each, a
“Buyer” and
collectively, the “Buyers”).

 

RECITALS

 

A.           In
connection with the Securities Purchase Agreement by and among the
parties hereto of even date herewith (the “Securities Purchase Agreement”),
the Company has agreed, upon the terms and subject to the
conditions of the Securities Purchase Agreement, to issue and sell
to each Buyer (i) shares (the “Preferred Shares”) of the
Company’s Series C Convertible Preferred Stock (the
“Preferred
Stock”) which will be convertible into shares of the
Company's common stock, par value $0.001 per share (as converted
collectively the “Conversion
Shares”), and (ii) three (3) series of warrants (the
“Warrants”)
which will be exercisable to purchase shares of Common Stock (as
exercised, collectively, the “Warrant Shares”) in accordance
with the terms of the Warrants.

 

B.           In
accordance with the terms of the Securities Purchase Agreement, the
Company has agreed to provide certain registration rights under the
Securities Act of 1933, as amended, and the rules and regulations
thereunder, or any similar successor statute (collectively, the
“1933 Act”), and
applicable state securities laws.

 

NOW, THEREFORE, in consideration of the
premises and the mutual covenants contained herein and other good
and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the Company and each of the Buyers hereby
agree as follows:

 

1. Definitions.

 

Capitalized terms
used herein and not otherwise defined herein shall have the
respective meanings set forth in the Securities Purchase Agreement.
As used in this Agreement, the following terms shall have the
following meanings:

 

(a) “Additional Effective Date” means
the date the Additional Registration Statement is declared
effective by the SEC.

 

(b) “Additional Effectiveness Deadline”
means the date which is the earlier of
(i) in the event that the Additional Registration Statement (x) is
not subject to a full review by the SEC, the date which is sixty
(60) calendar days after the earlier of the Additional Filing Date
and the Additional Filing Deadline or (y) is subject to a full
review by the SEC, the date which is ninety (90) calendar days
after the earlier of the Additional Filing Date and the Additional
Filing Deadline and (ii) the fifth (5th) Business Day after the
date the Company is notified (orally or in writing, whichever is
earlier) by the SEC that such Additional Registration Statement
will not be reviewed or will not be subject to further review;
provided, however, that if the Additional Effectiveness Deadline
falls on a Saturday, Sunday or other day that the SEC is closed for
business, the Additional Effectiveness Deadline shall be extended
to the next Business Day on which the SEC is open for
business.

 

(c) “Additional Filing Date” means the
date on which the Additional Registration Statement is filed with
the SEC.

 

 

 

-1-

 

 

(d) “Additional Filing Deadline” means
if Cutback Shares are required to be included in any Additional
Registration Statement, the later of (i) the date sixty (60) days
after the date substantially all of the Registrable Securities
registered under the immediately preceding Registration Statement
are sold and (ii) the date six (6) months from the Initial
Effective Date or the most recent Additional Effective Date, as
applicable.

 

(e) “Additional Registrable Securities”
means, (i) any Cutback Shares not previously included on a
Registration Statement, and (ii) any capital stock of the Company
issued or issuable with respect to the Preferred Shares, the
Conversion Shares, the Warrants, the Warrant Shares or the Cutback
Shares, as applicable, as a result of any stock split, stock
dividend, recapitalization, exchange or similar event or otherwise,
without regard to any limitations on exercise of the Warrants or
conversion of the Preferred Shares.

 

(f) “Additional Registration Statement”
means a registration statement or registration statements of the
Company filed under the 1933 Act covering the resale any Additional
Registrable Securities.

 

(g) “Additional Required Registration
Amount” means any Cutback Shares not previously
included on a Registration Statement, all subject to adjustment as
provided in Section 2(f), without regard to any limitations on the
exercise of the Warrants or conversion of the Preferred Shares
..

 

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

 

(i) “Closing Date” shall have the
meaning set forth in the Securities Purchase
Agreement.

 

(j) “Cutback
Shares” means any of the Initial Required Registration
Amount or the Additional Required Registration Amount of
Registrable Securities not included in all Registration Statements
previously declared effective hereunder as a result of a limitation
on the maximum number of shares of Common Stock of the Company
permitted to be registered by the staff of the SEC pursuant to Rule
415. For the purpose of determining
the Cutback Shares, in order to determine any applicable Required
Registration Amount, unless an Investor gives written notice to the
Company to the contrary with respect to the allocation of its
Cutback Shares, first the Warrant Shares shall be excluded on a pro
rata basis among the Investors until all of the Warrant Shares have
been excluded and second the Conversion Shares shall be excluded on
a pro rata basis among the Investors until all of the Conversion
Shares have been excluded.

 

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

 

(l) “effective” and “effectiveness” refer to a
Registration Statement that has been declared effective by the SEC
and is available for the resale of the Registrable Securities
required to be covered thereby.

 

(m) “Effective Date” means the Initial
Effective Date and the Additional Effective Date, as
applicable.

 

 

 

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(n) “Effectiveness Deadline” means the
Initial Effectiveness Deadline and the Additional Effectiveness
Deadline, as applicable.

 

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

 

(p) “Filing Deadline” means the Initial
Filing Deadline and the Additional Filing Deadline, as
applicable.

 

(q) “Initial Effective Date” means the
date that the Initial Registration Statement has been declared
effective by the SEC.

 

(r) “Initial
Effectiveness Deadline” means the date which is the
earlier of (x) (i) in the event that the Initial Registration
Statement is not subject to a full review by the SEC, ninety (90)
calendar days after the Closing Date or (ii) in the event that the
Initial Registration Statement is subject to a full review by the
SEC, one hundred twenty (120) calendar days after the Closing Date
and (y) the fifth (5th) Business Day after the date the Company is
notified (orally or in writing, whichever is earlier) by the SEC
that such Initial Registration Statement will not be reviewed or
will not be subject to further review; provided, however, that if
the Initial Effectiveness Deadline falls on a Saturday, Sunday or
other day that the SEC is closed for business, the Initial
Effectiveness Deadline shall be extended to the next Business Day
on which the SEC is open for business.

 

(s) “Initial Filing Date” means the
date on which the Initial Registration Statement is filed with the
SEC.

 

(t) “Initial Filing Deadline” means the
date which is thirty (30) calendar days after the Closing
Date.

 

(u) “Initial Registrable Securities”
means (i) the Conversion Shares issued or issuable upon conversion
of the Preferred Shares, (ii) the Warrant Shares issued or issuable
upon exercise of the Warrants and (iii) any capital stock of the
Company issued or issuable with respect to the Preferred Shares,
the Conversion Shares, the Warrant Shares or the Warrants, in each
case as a result of any stock split, stock dividend,
recapitalization, exchange or similar event or otherwise, without
regard to any limitations on the exercise of the Warrants or
conversion of the Preferred Shares.

 

(v) “Initial Registration Statement”
means a registration statement or registration statements of the
Company filed under the 1933 Act covering the resale of Initial
Registrable Securities.

 

(w) “Initial Required Registration
Amount” means the sum of
(i) the maximum number of Conversion Shares issued and
issuable upon conversion of the Preferred Shares and (ii) the
maximum number of Warrant Shares issued and issuable pursuant to
the Warrants without giving effect to any limitation on exercise
set forth therein and assuming that the Maximum Eligibility Number
is 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 date hereof),
each as of the Trading Day immediately preceding the applicable
date of determination and all subject to adjustment as provided in
Section 2(f), without regard to any limitations on the exercise of
the Warrants or conversion of the Preferred Shares.

 

 

 

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(x) “Investor” means a Buyer or any
transferee or assignee thereof to whom a Buyer assigns its rights
under this Agreement and who agrees to become bound by the
provisions of this Agreement in accordance with Section 9 and any
transferee or assignee thereof to whom a transferee or assignee
assigns its rights under this Agreement and who agrees to become
bound by the provisions of this Agreement in accordance with
Section 9.

 

(y) “Maximum Eligibility Number” shall
have the meaning set forth in the Series C Warrants.

 

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

 

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

 

(bb) “register,”
“registered,”
and “registration” refer to a
registration effected by preparing and filing one or more
Registration Statements (as defined below) in compliance with the
1933 Act and pursuant to Rule 415, and the declaration or ordering
of effectiveness of such Registration Statement(s) by the
SEC.

 

(cc) “Registrable
Securities” means the Initial Registrable Securities
and the Additional Registrable Securities.

 

(dd) “Registration
Statement” means the Initial Registration Statement
and the Additional Registration Statement, as
applicable.

 

(ee) “Required
Holders” means the holders of at least a majority of
the Registrable Securities and shall include the Designee so long
as the Designee or any of its affiliates holds any Registrable
Securities, Hudson Bay Capital Management LP so long as Hudson Bay
Capital Management LP or any of its affiliates holds any
Registrable Securities, and Sabby Management, LLC so long as Sabby
Management, LLC or any of its affiliates holds any Registrable
Securities.

 

(ff) “Required
Registration Amount” means either the Initial Required
Registration Amount or the Additional Required Registration Amount,
as applicable.

 

(gg) “Reset
Price” shall have the meaning set forth in the Series
C Warrants.

 

(hh) “Rule
415” means Rule 415 promulgated under the 1933 Act or
any successor rule providing for offering securities on a
continuous or delayed basis.

 

(ii) “SEC”
means the United States Securities and Exchange
Commission.

 

(jj) “Series
C Warrants” shall have the meaning set forth in the
Securities Purchase Agreement.

 

(kk) “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.

 

 

 

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2. Registration.

 

(a) Initial Mandatory Registration.
The Company shall prepare, and, as soon as practicable but in no
event later than the Initial Filing Deadline, file with the SEC the
Initial Registration Statement on Form S-1 covering the resale of
all of the Initial Registrable Securities. The Initial Registration
Statement prepared pursuant hereto shall register for resale at
least the number of shares of Common Stock equal to the Initial
Required Registration Amount determined as of the date the Initial
Registration Statement is initially filed with the SEC, subject to
adjustment as provided in Section 2(f). The Initial Registration
Statement shall contain (except if otherwise directed by the
Required Holders) the “Plan of Distribution” and
“Selling
Stockholders” sections in substantially the form
attached hereto as Exhibit
B. The Company shall use its best efforts to have the
Initial Registration Statement declared effective by the SEC as
soon as practicable, but in no event later than the Initial
Effectiveness Deadline. By 9:30 a.m. New York time on the Business
Day following the Initial Effective Date, the Company shall file
with the SEC in accordance with Rule 424 under the 1933 Act the
final prospectus to be used in connection with sales pursuant to
such Initial Registration Statement.

 

(b) Additional Mandatory
Registrations. The Company shall prepare, and, as soon as
practicable but in no event later than the Additional Filing
Deadline, file with the SEC an Additional Registration Statement on
Form S-1 covering the resale of all of the Additional Registrable
Securities not previously registered on an Additional Registration
Statement hereunder. To the extent the staff of the SEC does not
permit the Additional Required Registration Amount to be registered
on an Additional Registration Statement, the Company shall file
Additional Registration Statements successively trying to register
on each such Additional Registration Statement the maximum number
of remaining Additional Registrable Securities until the Additional
Required Registration Amount has been registered with the SEC. In
the event that Form S-1 is unavailable for such a registration, the
Company shall use such other form as is available for such a
registration on another appropriate form reasonably acceptable to
the Required Holders, subject to the provisions of Section 2(e).
Each Additional Registration Statement prepared pursuant hereto
shall register for resale at least that number of shares of Common
Stock equal to the Additional Required Registration Amount
determined as of the date such Additional Registration Statement is
initially filed with the SEC, subject to adjustment as provided in
Section 2(f). Each Additional Registration Statement shall contain
(except if otherwise directed by the Required Holders) the
“Plan of
Distribution” and “Selling Stockholders”
sections in substantially the form attached hereto as Exhibit B. The Company shall
use its best efforts to have each Additional Registration Statement
declared effective by the SEC as soon as practicable, but in no
event later than the Additional Effectiveness Deadline. By 9:30
a.m. New York time on the Business Day following the Additional
Effective Date, the Company shall file with the SEC in accordance
with Rule 424 under the 1933 Act the final prospectus to be used in
connection with sales pursuant to such Additional Registration
Statement.

 

(c) Allocation of Registrable
Securities. The initial number of Registrable Securities
included in any Registration Statement and any increase or decrease
in the number of Registrable Securities included therein shall be
allocated pro rata among the Investors based on the number of
Registrable Securities held by each Investor at the time the
Registration Statement covering such initial number of Registrable
Securities or increase or decrease thereof is declared effective by
the SEC. In the event that an Investor sells or otherwise transfers
any of such Investor's Registrable Securities, each transferee
shall be allocated a pro rata portion of the then remaining number
of Registrable Securities included in such Registration Statement
for such transferor. Any shares of Common Stock included in a
Registration Statement and which remain allocated to any Person
which ceases to hold any Registrable Securities covered by such
Registration Statement shall be allocated to the remaining
Investors, pro rata based on the number of Registrable Securities
then held by such Investors which are covered by such Registration
Statement. In no event shall the Company include any securities
other than Registrable Securities on any Registration Statement
without the prior written consent of the Required
Holders.

 

 

 

-5-

 

 

(d) Legal Counsel. Subject to
Section 5 hereof, the Designee shall have the right to select one
legal counsel to review and oversee any registration pursuant to
this Section 2 (“Legal
Counsel”), which shall be Schulte Roth & Zabel,
LLP or such other counsel as thereafter designated by the Designee.
The Company and Legal Counsel shall reasonably cooperate with each
other in performing the Company's obligations under this
Agreement.

 

(e) Ineligibility for Form S-3. The
Company shall (i) register the resale of the Registrable Securities
on Form S-1 and (ii) undertake to register the Registrable
Securities on Form S-3 as soon as such form is available, provided
that the Company shall maintain the effectiveness of the
Registration Statement then in effect until such time as a
Registration Statement on Form S-3 covering the Registrable
Securities has been declared effective by the SEC.

 

(f) Sufficient Number of Shares
Registered. In the event the number of shares available
under a Registration Statement filed pursuant to Section 2(a) or
Section 2(b) is insufficient to cover the Required Registration
Amount of Registrable Securities required to be covered by such
Registration Statement or an Investor's allocated portion of the
Registrable Securities pursuant to Section 2(c), the Company shall
amend the applicable Registration Statement, or file a new
Registration Statement (on the short form available therefor, if
applicable), or both, so as to cover at least the Required
Registration Amount as of the Trading Day immediately preceding the
date of the filing of such amendment or new Registration Statement,
in each case, as soon as practicable, but in any event not later
than thirty (30) days after the necessity therefor arises. The
Company shall use its best efforts to cause such amendment and/or
new Registration Statement to become effective as soon as
practicable following the filing thereof. For purposes of the
foregoing provision, the number of shares available under a
Registration Statement shall be deemed “insufficient to cover
all of the Registrable Securities” if at any time the number
of shares of Common Stock available for resale under the
Registration Statement is less than the product determined by
multiplying (i) the Required Registration Amount as of such time by
(ii) 0.90. The calculation set forth in the foregoing sentence
shall be made without regard to any limitations on conversion of
the Preferred Shares or on the exercise of the Warrants, and such
calculation shall assume that (i) the Preferred Shares are then
convertible in all into shares of Common Stock without regard to
any limitation on conversion set forth in the COD; and (ii) the
Warrants are then exercisable in full into shares of Common Stock
without regard to any limitation on exercise set forth therein, 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 date hereof).

 

 

 

-6-

 

 

(g) Effect of Failure to File and Obtain
and Maintain Effectiveness of Registration Statement. If (i)
the Initial Registration Statement when declared effective fails to
register the Initial Required Registration Amount of Initial
Registrable Securities (a “Registration Failure”), (ii) a
Registration Statement covering all of the Registrable Securities
required to be covered thereby and required to be filed by the
Company pursuant to this Agreement is (A) not filed with the SEC on
or before the applicable Filing Deadline (a “Filing Failure”) or (B) not
declared effective by the SEC on or before the applicable
Effectiveness Deadline, (an “Effectiveness Failure”) or (iii)
on any day after the applicable Effective Date sales of all of the
Registrable Securities required to be included on such Registration
Statement cannot be made (other than during an Allowable Grace
Period (as defined in Section 3(r)) pursuant to such Registration
Statement or otherwise (including, without limitation, because of
the suspension of trading or any other limitation imposed by an
Eligible Market, a failure to keep such Registration Statement
effective, a failure to disclose such information as is necessary
for sales to be made pursuant to such Registration Statement, a
failure to register a sufficient number of shares of Common Stock
or a failure to maintain the listing of the Common Stock) (a
“Maintenance
Failure”) then, as partial relief for the damages to
any holder by reason of any such delay in or reduction of its
ability to sell the underlying shares of Common Stock (which remedy
shall not be exclusive of any other remedies available at law or in
equity, including, without limitation, specific performance or the
additional obligation of the Company to register any Cutback
Shares), the Company shall pay to each holder of Registrable
Securities relating to such Registration Statement an amount in
cash equal to four percent (4.0%) of the aggregate Purchase Price
(as such term is defined in the Securities Purchase Agreement) of
such Investor's Registrable Securities whether or not included in
such Registration Statement on each of the following dates: (i) the
day of a Registration Failure, (ii) the day of a Filing Failure;
(iii) the day of an Effectiveness Failure; (iv) the initial day of
a Maintenance Failure; (v) on the thirtieth day after the date of a
Registration Failure and every thirtieth day thereafter (pro-rated
for periods totaling less than thirty days) until such Registration
Failure is cured, (vi) on the thirtieth day after the date of a
Filing Failure and every thirtieth day thereafter (pro-rated for
periods totaling less than thirty days) until such Filing Failure
is cured; (vii) on the thirtieth day after the date of an
Effectiveness Failure and every thirtieth day thereafter (pro-rated
for periods totaling less than thirty days) until such
Effectiveness Failure is cured; and (viii) on the thirtieth day
after the initial date of a Maintenance Failure and every thirtieth
day thereafter (pro-rated for periods totaling less than thirty
days) until such Maintenance Failure is cured. The payments to
which a holder shall be entitled pursuant to this Section 2(g) are
referred to herein as “Registration Delay Payments.” In
no event shall the aggregate amount of all Registration Delay
Payments payable to an Investor exceed 20% of the aggregate
Purchase Price of such Investor's Registrable Securities.
Registration Delay Payments shall be paid on the earlier of (I) the
dates set forth above and (II) the third Business Day after the
event or failure giving rise to the Registration Delay Payments is
cured. In the event the Company fails to make Registration Delay
Payments in a timely manner, such Registration Delay Payments shall
bear interest at the rate of three percent (3.0%) per month
(prorated for partial months) until paid in full.

 

3. Related
Obligations.

 

At such
time as the Company is obligated to file a Registration Statement
with the SEC pursuant to Section 2(a), 2(b), 2(e) or 2(f), the
Company will use its best efforts to effect the registration of the
Registrable Securities in accordance with the intended method of
disposition thereof and, pursuant thereto, the Company shall have
the following obligations:

 

 

 

-7-

 

 

(a) The Company shall
promptly prepare and file with the SEC a Registration Statement
with respect to the Registrable Securities and use its best efforts
to cause such Registration Statement relating to the Registrable
Securities to become effective as soon as practicable after such
filing (but in no event later than the Effectiveness Deadline). The
Company shall keep each Registration Statement effective pursuant
to Rule 415 at all times until the earlier of (i) the date as of
which the Investors may sell all of the Registrable Securities
covered by such Registration Statement without restriction or
limitation pursuant to Rule 144 and without the requirement to be
in compliance with Rule 144(c)(1) (or any successor thereto)
promulgated under the 1933 Act or (ii) the date on which the
Investors shall have sold all of the Registrable Securities covered
by such Registration Statement (the “Registration Period”). The Company
shall ensure that each Registration Statement (including any
amendments or supplements thereto and prospectuses contained
therein) shall not contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein, or
necessary to make the statements therein (in the case of
prospectuses, in the light of the circumstances in which they were
made) not misleading. The term “best efforts” shall
mean, among other things, that the Company shall submit to the SEC,
within two (2) Business Days after the later of the date that (i)
the Company learns that no review of a particular Registration
Statement will be made by the staff of the SEC or that the staff
has no further comments on a particular Registration Statement, as
the case may be, and (ii) the approval of Legal Counsel (which
approval is immediately sought), a request for acceleration of
effectiveness of such Registration Statement to a time and date not
later than two (2) Business Days after the submission of such
request. The Company shall respond in writing to comments made by
the SEC in respect of a Registration Statement as soon as
practicable, but in no event later than fifteen (15) days after the
receipt of comments by or notice from the SEC that an amendment is
required in order for a Registration Statement to be declared
effective.

 

(b) The Company shall
prepare and file with the SEC such amendments (including
post-effective amendments) and supplements to a Registration
Statement and the prospectus used in connection with such
Registration Statement, which prospectus is to be filed pursuant to
Rule 424 promulgated under the 1933 Act, as may be necessary to
keep such Registration Statement effective at all times during the
Registration Period, and, during such period, comply with the
provisions of the 1933 Act with respect to the disposition of all
Registrable Securities of the Company covered by such Registration
Statement until such time as all of such Registrable Securities
shall have been disposed of in accordance with the intended methods
of disposition by the seller or sellers thereof as set forth in
such Registration Statement. In the case of amendments and
supplements to a Registration Statement which are required to be
filed pursuant to this Agreement (including pursuant to this
Section 3(b)) by reason of the Company filing a report on Form
10-K, Form 10-Q or Form 8-K or any analogous report under the
Securities Exchange Act of 1934, as amended (the
“1934 Act”), the
Company shall have incorporated such report by reference into such
Registration Statement, if applicable, or shall file such
amendments or supplements with the SEC on the same day on which the
1934 Act report is filed which created the requirement for the
Company to amend or supplement such Registration
Statement.

 

(c) The Company shall
(A) permit Legal Counsel and the Registration Consultant to review
and comment upon (i) a Registration Statement at least five (5)
Business Days prior to its filing with the SEC and (ii) all
amendments and supplements to all Registration Statements (except
for Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q,
Current Reports on Form 8-K, and any similar or successor reports)
within a reasonable number of days prior to their filing with the
SEC, and (B) not file any Registration Statement or amendment or
supplement thereto in a form to which Legal Counsel or the
Registration Consultant reasonably objects. The Company shall not
submit a request for acceleration of the effectiveness of a
Registration Statement or any amendment or supplement thereto
without the prior approval of Legal Counsel and the Registration
Consultant, which consent shall not be unreasonably withheld. The
Company shall furnish to Legal Counsel and the Registration
Consultant, without charge, (i) copies of any correspondence from
the SEC or the staff of the SEC to the Company or its
representatives relating to any Registration Statement, (ii)
promptly after the same is prepared and filed with the SEC, one
copy of any Registration Statement and any amendment(s) thereto,
including financial statements and schedules, all documents
incorporated therein by reference, if requested by an Investor, and
all exhibits and (iii) upon the effectiveness of any Registration
Statement, one copy of the prospectus included in such Registration
Statement and all amendments and supplements thereto. The Company
shall reasonably cooperate with Legal Counsel and the Registration
Consultant in performing the Company's obligations pursuant to this
Section 3.

 

 

 

-8-

 

 

(d) The Company shall
furnish to each Investor whose Registrable Securities are included
in any Registration Statement, without charge, (i) promptly after
the same is prepared and filed with the SEC, at least one copy of
such Registration Statement and any amendment(s) thereto, including
financial statements and schedules, all documents incorporated
therein by reference, if requested by an Investor, all exhibits and
each preliminary prospectus, (ii) upon the effectiveness of any
Registration Statement, ten (10) copies of the prospectus included
in such Registration Statement and all amendments and supplements
thereto (or such other number of copies as such Investor may
reasonably request) and (iii) such other documents, including
copies of any preliminary or final prospectus, as such Investor may
reasonably request from time to time in order to facilitate the
disposition of the Registrable Securities owned by such
Investor.

 

(e) The Company shall
use its best efforts to (i) register and qualify, unless an
exemption from registration and qualification applies, the resale
by Investors of the Registrable Securities covered by a
Registration Statement under such other securities or “blue
sky” laws of all applicable jurisdictions in the United
States, (ii) prepare and file in those jurisdictions such
amendments (including post-effective amendments) and supplements to
such registrations and qualifications as may be necessary to
maintain the effectiveness thereof during the Registration Period,
(iii) take such other actions as may be necessary to maintain such
registrations and qualifications in effect at all times during the
Registration Period, and (iv) take all other actions reasonably
necessary or advisable to qualify the Registrable Securities for
sale in such jurisdictions; provided, however, that the Company
shall not be required in connection therewith or as a condition
thereto to (x) qualify to do business in any jurisdiction where it
would not otherwise be required to qualify but for this Section
3(e), (y) subject itself to general taxation in any such
jurisdiction, or (z) file a general consent to service of process
in any such jurisdiction. The Company shall promptly notify Legal
Counsel and each Investor who holds Registrable Securities of the
receipt by the Company of any notification with respect to the
suspension of the registration or qualification of any of the
Registrable Securities for sale under the securities or “blue
sky” laws of any jurisdiction in the United States or its
receipt of actual notice of the initiation or threatening of any
proceeding for such purpose.

 

(f) The Company shall
notify Legal Counsel and each Investor in writing of the happening
of any event, as promptly as practicable after becoming aware of
such event but in any event on the same Trading Day as such event,
as a result of which the prospectus included in a Registration
Statement, as then in effect, includes an untrue statement of a
material fact or omission to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading (provided that in no event shall such notice contain any
material, nonpublic information), and, subject to Section 3(r),
promptly prepare a supplement or amendment to such Registration
Statement to correct such untrue statement or omission, and deliver
ten (10) copies of such supplement or amendment to Legal Counsel
and each Investor (or such other number of copies as Legal Counsel
or such Investor may reasonably request). The Company shall also
promptly notify Legal Counsel and each Investor in writing (i) when
a prospectus or any prospectus supplement or post-effective
amendment has been filed, and when a Registration Statement or any
post-effective amendment has become effective (notification of such
effectiveness shall be delivered to Legal Counsel and each Investor
by facsimile or email on the same day of such effectiveness and by
overnight mail), (ii) of any request by the SEC for amendments or
supplements to a Registration Statement or related prospectus or
related information and (iii) of the Company's reasonable
determination that a post-effective amendment to a Registration
Statement would be appropriate. By 9:30 a.m. New York City time on
the date following the date any post-effective amendment has become
effective, the Company shall file with the SEC in accordance with
Rule 424 under the 1933 Act the final prospectus to be used in
connection with sales pursuant to such Registration
Statement.

 

 

 

-9-

 

 

(g) The Company shall
use its best efforts to prevent the issuance of any stop order or
other suspension of effectiveness of a Registration Statement, or
the suspension of the qualification of any of the Registrable
Securities for sale in any jurisdiction and, if such an order or
suspension is issued, to obtain the withdrawal of such order or
suspension at the earliest possible moment and to notify Legal
Counsel and each Investor who holds Registrable Securities being
sold of the issuance of such order and the resolution thereof or
its receipt of actual notice of the initiation or threat of any
proceeding for such purpose.

 

(h) If any Investor is
required under applicable securities laws to be described in the
Registration Statement as an underwriter or an Investor believes
that it could reasonably be deemed to be an underwriter of
Registrable Securities, at the reasonable request of such Investor,
the Company shall furnish to such Investor, on the date of the
effectiveness of the Registration Statement and thereafter from
time to time on such dates as an Investor may reasonably request
(i) a letter, dated such date, from the Company's independent
certified public accountants in form and substance as is
customarily given by independent certified public accountants to
underwriters in an underwritten public offering, addressed to the
Investors, and (ii) an opinion, dated as of such date, of counsel
representing the Company for purposes of such Registration
Statement, in form, scope and substance as is customarily given in
an underwritten public offering, addressed to the
Investors.

 

(i) If any Investor is
required under applicable securities laws to be described in the
Registration Statement as an underwriter or an Investor believes
that it could reasonably be deemed to be an underwriter of
Registrable Securities, the Company shall make available for
inspection by (i) such Investor, (ii) Legal Counsel and (iii) one
firm of accountants or other agents retained by the Investors
(collectively, the “Inspectors”), all pertinent
financial and other records, and pertinent corporate documents and
properties of the Company (collectively, the “Records”), as shall be reasonably
deemed necessary by each Inspector, and cause the Company's
officers, directors and employees to supply all information which
any Inspector may reasonably request; provided, however, that each
Inspector shall agree to hold in strict confidence and shall not
make any disclosure (except to an Investor) or use of any Record or
other information which the Company determines in good faith to be
confidential, and of which determination the Inspectors are so
notified, unless (a) the disclosure of such Records is necessary to
avoid or correct a misstatement or omission in any Registration
Statement or is otherwise required under the 1933 Act, (b) the
release of such Records is ordered pursuant to a final,
non-appealable subpoena or order from a court or government body of
competent jurisdiction, or (c) the information in such Records has
been made generally available to the public other than by
disclosure in violation of this Agreement. Each Investor agrees
that it shall, upon learning that disclosure of such Records is
sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt notice to the
Company and allow the Company, at its expense, to undertake
appropriate action to prevent disclosure of, or to obtain a
protective order for, the Records deemed confidential. Nothing
herein (or in any other confidentiality agreement between the
Company and any Investor) shall be deemed to limit the Investors'
ability to sell Registrable Securities in a manner which is
otherwise consistent with applicable laws and
regulations.

 

(j) The Company shall
hold in confidence and not make any disclosure of information
concerning an Investor provided to the Company unless (i)
disclosure of such information is necessary to comply with federal
or state securities laws, (ii) the disclosure of such information
is necessary to avoid or correct a misstatement or omission in any
Registration Statement, (iii) the release of such information is
ordered pursuant to a subpoena or other final, non-appealable order
from a court or governmental body of competent jurisdiction, or
(iv) such information has been made generally available to the
public other than by disclosure in violation of this Agreement or
any other agreement. The Company agrees that it shall, upon
learning that disclosure of such information concerning an Investor
is sought in or by a court or governmental body of competent
jurisdiction or through other means, give prompt written notice to
such Investor and allow such Investor, at the Investor's expense,
to undertake appropriate action to prevent disclosure of, or to
obtain a protective order for, such information.

 

 

 

-10-

 

 

(k) The Company shall
use its best efforts either to (i) cause all of the Registrable
Securities covered by a Registration Statement to be listed on each
securities exchange on which securities of the same class or series
issued by the Company are then listed, if any, if the listing of
such Registrable Securities is then permitted under the rules of
such exchange or (ii) secure the inclusion for quotation of all of
the Registrable Securities on the Principal Market or (iii) if,
despite the Company's best efforts, the Company is unsuccessful in
satisfying the preceding clauses (i) and (ii), to secure the
inclusion for quotation on an Eligible Market for such Registrable
Securities and, without limiting the generality of the foregoing,
to use its best efforts to arrange for at least two market makers
to register with the Financial Industry Regulatory Authority, Inc.
(“FINRA”) as
such with respect to such Registrable Securities. The Company shall
pay all fees and expenses in connection with satisfying its
obligation under this Section 3(k).

 

(l) The Company shall
cooperate with the Investors who hold Registrable Securities being
offered and, to the extent applicable, facilitate the timely
preparation and delivery of certificates (not bearing any
restrictive legend) representing the Registrable Securities to be
offered pursuant to a Registration Statement and enable such
certificates to be in such denominations or amounts, as the case
may be, as the Investors may reasonably request and registered in
such names as the Investors may request.

 

(m) If requested by an
Investor, the Company shall as soon as practicable (i) incorporate
in a prospectus supplement or post-effective amendment such
information as an Investor reasonably requests to be included
therein relating to the sale and distribution of Registrable
Securities, including, without limitation, information with respect
to the number of Registrable Securities being offered or sold, the
purchase price being paid therefor and any other terms of the
offering of the Registrable Securities to be sold in such offering;
(ii) make all required filings of such prospectus supplement or
post-effective amendment after being notified of the matters to be
incorporated in such prospectus supplement or post-effective
amendment; and (iii) supplement or make amendments to any
Registration Statement if reasonably requested by an Investor
holding any Registrable Securities.

 

(n) The Company shall
use its best efforts to cause the Registrable Securities covered by
a Registration Statement to be registered with or approved by such
other governmental agencies or authorities as may be necessary to
consummate the disposition of such Registrable
Securities.

 

(o) The Company shall
make generally available to its security holders as soon as
practical, but not later than ninety (90) days after the close of
the period covered thereby, an earnings statement (in form
complying with, and in the manner provided by, the provisions of
Rule 158 under the 1933 Act) covering a twelve-month period
beginning not later than the first day of the Company's fiscal
quarter next following the applicable Effective Date of a
Registration Statement.

 

(p) The Company shall
otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC in connection with any registration
hereunder.

 

(q) Within two (2)
Business Days after a Registration Statement which covers
Registrable Securities is declared effective by the SEC, the
Company shall deliver, and shall cause legal counsel for the
Company to deliver, to the transfer agent for such Registrable
Securities (with copies to the Investors whose Registrable
Securities are included in such Registration Statement)
confirmation that such Registration Statement has been declared
effective by the SEC in the form attached hereto as Exhibit A.

 

 

 

-11-

 

 

(r) Notwithstanding
anything to the contrary herein, at any time after the Effective
Date, the Company may delay the disclosure of material, non-public
information concerning the Company the disclosure of which at the
time is not, in the good faith opinion of the Board of Directors of
the Company and its counsel, in the best interest of the Company
and, in the opinion of counsel to the Company, otherwise required
(a “Grace
Period”); provided, that the Company shall promptly
(i) notify the Investors in writing of the existence of material,
non-public information giving rise to a Grace Period (provided that
in each notice the Company will not disclose the content of such
material, non-public information to the Investors) and the date on
which the Grace Period will begin, and (ii) notify the Investors in
writing of the date on which the Grace Period ends; and, provided
further, that no Grace Period shall exceed five (5) consecutive
days and during any three hundred sixty five (365) day period such
Grace Periods shall not exceed an aggregate of twenty (20) days and
the first day of any Grace Period must be at least five (5) Trading
Days after the last day of any prior Grace Period (each, an
“Allowable Grace
Period”). For purposes of determining the length of a
Grace Period above, the Grace Period shall begin on and include the
date the Investors receive the notice referred to in clause (i) and
shall end on and include the later of the date the Investors
receive the notice referred to in clause (ii) and the date referred
to in such notice. The provisions of Section 3(g) hereof shall not
be applicable during the period of any Allowable Grace Period. Upon
expiration of the Grace Period, the Company shall again be bound by
the first sentence of Section 3(f) with respect to the information
giving rise thereto unless such material, non-public information is
no longer applicable. Notwithstanding anything to the contrary, the
Company shall cause its transfer agent to deliver unlegended shares
of Common Stock to a transferee of an Investor in accordance with
the terms of the Securities Purchase Agreement in connection with
any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale, prior to the
Investor's receipt of the notice of a Grace Period and for which
the Investor has not yet settled.

 

(s) Neither the Company
nor any Subsidiary or affiliate thereof shall identify any Investor
as an underwriter in any public disclosure or filing with the SEC,
the Principal Market or
any Eligible Market and any Investor being deemed an underwriter by
the SEC shall not relieve the Company of any obligations it has
under this Agreement or any other Transaction Document (as defined in the Securities Purchase Agreement);
provided, however, that the foregoing shall not prohibit the
Company from including the disclosure found in the “Plan of
Distribution” section attached hereto as Exhibit B
in the Registration
Statement.

 

(t) Neither the Company
nor any of its Subsidiaries has entered, as of the date hereof, nor
shall the Company or any of its Subsidiaries, on or after the date
of this Agreement, enter into any agreement with respect to its
securities, that would have the effect of impairing the rights
granted to the Buyers in this Agreement or otherwise conflicts with
the provisions hereof.

 

4. Obligations of the
Investors.

 

(a) At least five (5)
Business Days prior to the first anticipated Filing Date of a
Registration Statement, the Company shall notify each Investor in
writing of the information the Company requires from each such
Investor if such Investor elects to have any of such Investor's
Registrable Securities included in such Registration Statement. It
shall be a condition precedent to the obligations of the Company to
complete any registration pursuant to this Agreement with respect
to the Registrable Securities of a particular Investor that such
Investor shall furnish to the Company such information regarding
itself, the Registrable Securities held by it and the intended
method of disposition of the Registrable Securities held by it as
shall be reasonably required to effect and maintain the
effectiveness of the registration of such Registrable Securities
and shall execute such documents in connection with such
registration as the Company may reasonably request.

 

 

 

-12-

 

 

(b) Each Investor, by
such Investor's acceptance of the Registrable Securities, agrees to
cooperate with the Company as reasonably requested by the Company
in connection with the preparation and filing of any Registration
Statement hereunder, unless such Investor has notified the Company
in writing of such Investor's election to exclude all of such
Investor's Registrable Securities from such Registration
Statement.

 

(c) Each Investor
agrees that, upon receipt of any notice from the Company of the
happening of any event of the kind described in Section 3(g) or the
first sentence of Section 3(f), such Investor will immediately
discontinue disposition of Registrable Securities pursuant to any
Registration Statement(s) covering such Registrable Securities
until such Investor's receipt of copies of the supplemented or
amended prospectus as contemplated by Section 3(g) or the first
sentence of Section 3(f) or receipt of notice that no supplement or
amendment is required. Notwithstanding anything to the contrary,
the Company shall cause its transfer agent to deliver unlegended
shares of Common Stock to a transferee of an Investor in accordance
with the terms of the Securities Purchase Agreement in connection
with any sale of Registrable Securities with respect to which an
Investor has entered into a contract for sale prior to the
Investor's receipt of a notice from the Company of the happening of
any event of the kind described in Section 3(g) or the first
sentence of Section 3(f) and for which the Investor has not yet
settled.

 

(d) Each Investor
covenants and agrees that it will comply with the prospectus
delivery requirements of the 1933 Act as applicable to it or an
exemption therefrom in connection with sales of Registrable
Securities pursuant to the Registration Statement.

 

5. Expenses of
Registration.

 

All
reasonable expenses, other than underwriting discounts and
commissions, if applicable, incurred in connection with
registrations, filings or qualifications pursuant to Sections 2 and
3, including, without limitation, all registration, listing and
qualifications fees, printers and accounting fees, and fees and
disbursements of counsel for the Company shall be paid by the
Company. The Company shall engage counsel mutually acceptable to
the Company and the Designee in connection with the registration,
filing or qualification pursuant to Sections 2 and 3 of this
Agreement to act as a registration consultant (the
“Registration
Consultant”) and shall pay such Registration
Consultant's reasonable fees and expenses, which amount shall be
limited to $25,000 for each such registration, filing or
qualification without the prior consent of the
Company.

 

6. Indemnification.

 

In the
event any Registrable Securities are included in a Registration
Statement under this Agreement:

 

 

 

-13-

 

 

(a) To the fullest
extent permitted by law, the Company will, and hereby does,
indemnify, hold harmless and defend each Investor, the directors,
officers, partners, members, employees, agents, representatives of,
and each Person, if any, who controls any Investor within the
meaning of the 1933 Act or the 1934 Act (each, an
“Indemnified
Person”), against any losses, claims, damages,
liabilities, judgments, fines, penalties, charges, costs,
reasonable attorneys' fees, amounts paid in settlement or expenses,
joint or several (collectively, “Claims”), incurred in
investigating, preparing or defending any action, claim, suit,
inquiry, proceeding, investigation or appeal taken from the
foregoing by or before any court or governmental, administrative or
other regulatory agency, body or the SEC, whether pending or
threatened, whether or not an indemnified party is or may be a
party thereto (“Indemnified
Damages”), to which any of them may become subject
insofar as such Claims (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are
based upon: (i) any untrue statement or alleged untrue statement of
a material fact in a Registration Statement or any post-effective
amendment thereto or in any filing made in connection with the
qualification of the offering under the securities or other
“blue sky” laws of any jurisdiction in which
Registrable Securities are offered (“Blue Sky Filing”), or the omission
or alleged omission to state a material fact required to be stated
therein or necessary to make the statements therein not misleading,
(ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary prospectus if used prior to the
effective date of such Registration Statement, or contained in the
final prospectus (as amended or supplemented, if the Company files
any amendment thereof or supplement thereto with the SEC) or the
omission or alleged omission to state therein any material fact
necessary to make the statements made therein, in light of the
circumstances under which the statements therein were made, not
misleading, (iii) any violation or alleged violation by the Company
of the 1933 Act, the 1934 Act, any other law, including, without
limitation, any state securities law, or any rule or regulation
thereunder relating to the offer or sale of the Registrable
Securities pursuant to a Registration Statement or (iv) any
violation of this Agreement (the matters in the foregoing clauses
(i) through (iv) being, collectively, “Violations”). Subject to Section
6(c), the Company shall reimburse the Indemnified Persons, promptly
as such expenses are incurred and are due and payable, for any
legal fees or other reasonable expenses incurred by them in
connection with investigating or defending any such Claim.
Notwithstanding anything to the contrary contained herein, the
indemnification agreement contained in this Section 6(a): (i) shall
not apply to a Claim by an Indemnified Person arising out of or
based upon a Violation which occurs in reliance upon and in
conformity with information furnished in writing to the Company by
such Indemnified Person for such Indemnified Person expressly for
use in connection with the preparation of the Registration
Statement or any such amendment thereof or supplement thereto, if
such prospectus was timely made available by the Company pursuant
to Section 3(d); and (ii) shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the
prior written consent of the Company, which consent shall not be
unreasonably withheld or delayed. Such indemnity shall remain in
full force and effect regardless of any investigation made by or on
behalf of the Indemnified Person and shall survive the transfer of
the Registrable Securities by the Investors pursuant to Section
9.

 

(b) In connection with
any Registration Statement in which an Investor is participating,
each such Investor agrees to severally and not jointly indemnify,
hold harmless and defend, to the same extent and in the same manner
as is set forth in Section 6(a), the Company, each of its
directors, each of its officers who signs the Registration
Statement and each Person, if any, who controls the Company within
the meaning of the 1933 Act or the 1934 Act (each, an
“Indemnified
Party”), against any Claim or Indemnified Damages to
which any of them may become subject, under the 1933 Act, the 1934
Act or otherwise, insofar as such Claim or Indemnified Damages
arise out of or are based upon any Violation, in each case to the
extent, and only to the extent, that such Violation occurs in
reliance upon and in conformity with written information furnished
to the Company by such Investor expressly for use in connection
with such Registration Statement; and, subject to Section 6(c),
such Investor shall reimburse the Indemnified Party for any legal
or other expenses reasonably incurred by an Indemnified Party in
connection with investigating or defending any such Claim;
provided, however, that the indemnity agreement contained in this
Section 6(b) and the agreement with respect to contribution
contained in Section 7 shall not apply to amounts paid in
settlement of any Claim if such settlement is effected without the
prior written consent of such Investor, which consent shall not be
unreasonably withheld or delayed; provided, further, however, that
the Investor shall be liable under this Section 6(b) for only that
amount of a Claim or Indemnified Damages as does not exceed the net
proceeds to such Investor as a result of the sale of Registrable
Securities pursuant to such Registration Statement. Such indemnity
shall remain in full force and effect regardless of any
investigation made by or on behalf of such Indemnified Party and
shall survive the transfer of the Registrable Securities by the
Investors pursuant to Section 9.

 

 

 

-14-

 

 

(c) Promptly after
receipt by an Indemnified Person or Indemnified Party under this
Section 6 of notice of the commencement of any action or proceeding
(including any governmental action or proceeding) involving a
Claim, such Indemnified Person or Indemnified Party shall, if a
Claim in respect thereof is to be made against any indemnifying
party under this Section 6, deliver to the indemnifying party a
written notice of the commencement thereof, and the indemnifying
party shall have the right to participate in, and, to the extent
the indemnifying party so desires, jointly with any other
indemnifying party similarly noticed, to assume control of the
defense thereof with counsel mutually satisfactory to the
indemnifying party and the Indemnified Person or the Indemnified
Party, as the case may be; provided, however, that an Indemnified
Person or Indemnified Party shall have the right to retain its own
counsel with the fees and expenses of not more than one counsel for
all such Indemnified Person or Indemnified Party to be paid by the
indemnifying party, if, in the reasonable opinion of counsel
retained by the Indemnified Person or Indemnified Party, as
applicable, the representation by such counsel of the Indemnified
Person or Indemnified Party, as the case may be, and the
indemnifying party would be inappropriate due to actual or
potential differing interests between such Indemnified Person or
Indemnified Party and any other party represented by such counsel
in such proceeding. In the case of an Indemnified Person, legal
counsel referred to in the immediately preceding sentence shall be
selected by the Investors holding at least a majority in interest
of the Registrable Securities included in the Registration
Statement to which the Claim relates. The Indemnified Party or
Indemnified Person shall reasonably cooperate with the indemnifying
party in connection with any negotiation or defense of any such
action or Claim by the indemnifying party and shall furnish to the
indemnifying party all information reasonably available to the
Indemnified Party or Indemnified Person which relates to such
action or Claim. The indemnifying party shall keep the Indemnified
Party or Indemnified Person fully apprised at all times as to the
status of the defense or any settlement negotiations with respect
thereto. No indemnifying party shall be liable for any settlement
of any action, claim or proceeding effected without its prior
written consent, provided, however, that the indemnifying party
shall not unreasonably withhold, delay or condition its consent. No
indemnifying party shall, without the prior written consent of the
Indemnified Party or Indemnified Person, consent to entry of any
judgment or enter into any settlement or other compromise which
does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such Indemnified Party or Indemnified
Person of a release from all liability in respect to such Claim or
litigation and such settlement shall not include any admission as
to fault on the part of the Indemnified Party. Following
indemnification as provided for hereunder, the indemnifying party
shall be subrogated to all rights of the Indemnified Party or
Indemnified Person with respect to all third parties, firms or
corporations relating to the matter for which indemnification has
been made. The failure to deliver written notice to the
indemnifying party within a reasonable time of the commencement of
any such action shall not relieve such indemnifying party of any
liability to the Indemnified Person or Indemnified Party under this
Section 6, except to the extent that the indemnifying party is
prejudiced in its ability to defend such action.

 

(d) The indemnification
required by this Section 6 shall be made by periodic payments of
the amount thereof during the course of the investigation or
defense, as and when bills are received or Indemnified Damages are
incurred.

 

(e) The indemnity
agreements contained herein shall be in addition to (i) any cause
of action or similar right of the Indemnified Party or Indemnified
Person against the indemnifying party or others, and (ii) any
liabilities the indemnifying party may be subject to pursuant to
the law.

 

 

 

-15-

 

 

7. Contribution.

 

To the
extent any indemnification by an indemnifying party is prohibited
or limited by law, the indemnifying party agrees to make the
maximum contribution with respect to any amounts for which it would
otherwise be liable under Section 6 to the fullest extent permitted
by law; provided, however, that: (i) no Person involved in the sale
of Registrable Securities which Person is guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the 1933
Act) in connection with such sale shall be entitled to contribution
from any Person involved in such sale of Registrable Securities who
was not guilty of fraudulent misrepresentation; and (ii)
contribution by any seller of Registrable Securities shall be
limited in amount to the amount of net proceeds received by such
seller from the sale of such Registrable Securities pursuant to
such Registration Statement.

 

8. Reports Under the 1934
Act.

 

With a
view to making available to the Investors the benefits of Rule 144
promulgated under the 1933 Act or any other similar rule or
regulation of the SEC that may at any time permit the Investors to
sell securities of the Company to the public without registration
(“Rule 144”),
the Company agrees to:

 

(a) make and keep
public information available, as those terms are understood and
defined in Rule 144;

 

(b) file with the SEC
in a timely manner all reports and other documents required of the
Company under the 1933 Act and the 1934 Act so long as the Company
remains subject to such requirements and the filing of such reports
and other documents is required for the applicable provisions of
Rule 144; and

 

(c) furnish to each
Investor so long as such Investor owns Registrable Securities,
promptly upon request, (i) a written statement by the Company, if
true, that it has complied with the reporting requirements of Rule
144, the 1933 Act and the 1934 Act, (ii) a copy of the most recent
annual or quarterly report of the Company and such other reports
and documents so filed by the Company and (iii) such other
information as may be reasonably requested to permit the Investors
to sell such securities pursuant to Rule 144 without
registration.

 

9. Assignment of Registration
Rights.

 

The
rights under this Agreement shall be automatically assignable by
the Investors to any transferee of all or any portion of such
Investor's Registrable Securities if: (i) the Investor agrees in
writing with the transferee or assignee to assign such rights, and
a copy of such agreement is furnished to the Company within a
reasonable time after such assignment; (ii) the Company is, within
a reasonable time after such transfer or assignment, furnished with
written notice of (a) the name and address of such transferee or
assignee, and (b) the securities with respect to which such
registration rights are being transferred or assigned; (iii)
immediately following such transfer or assignment the further
disposition of such securities by the transferee or assignee is
restricted under the 1933 Act or applicable state securities laws;
(iv) at or before the time the Company receives the written notice
contemplated by clause (ii) of this sentence the transferee or
assignee agrees in writing with the Company to be bound by all of
the provisions contained herein; and (v) such transfer shall have
been made in accordance with the applicable requirements of the
Securities Purchase Agreement.

 

 

 

-16-

 

 

10. Amendment of Registration
Rights.

 

Provisions of this
Agreement may be amended and the observance thereof may be waived
(either generally or in a particular instance and either
retroactively or prospectively), only with the written consent of
the Company and the Required Holders; provided that any such
amendment or waiver that complies with the foregoing but that
disproportionately, materially and adversely affects the rights and
obligations of any Investor relative to the comparable rights and
obligations of the other Investors shall require the prior written
consent of such adversely affected Investor. Any amendment or
waiver effected in accordance with this Section 10 shall be binding
upon each Investor and the Company. No such amendment shall be
effective to the extent that it applies to less than all of the
holders of the Registrable Securities. No consideration shall be
offered or paid to any Person to amend or consent to a waiver or
modification of any provision of this Agreement unless the same
consideration (other than the reimbursement of legal fees) also is
offered to all of the parties to this Agreement.

 

11. Miscellaneous.

 

(a) A Person is deemed
to be a holder of Registrable Securities whenever such Person owns
or is deemed to own of record such Registrable Securities. If the
Company receives conflicting instructions, notices or elections
from two or more Persons with respect to the same Registrable
Securities, the Company shall act upon the basis of instructions,
notice or election received from such record owner of such
Registrable Securities.

 

 

 

-17-

 

 

(b) Any notices,
consents, waivers or other communications required or permitted to
be given under the terms of this Agreement must be in writing and
will be deemed to have been delivered: (i) upon receipt, when
delivered personally; (ii) upon delivery, when sent by facsimile
(provided confirmation of transmission is mechanically or
electronically generated and kept on file by the sending party),
(iii) upon delivery, when sent by electronic mail (provided that
the sending party does not receive an automated rejection notice);
or (iv) one Business Day after deposit with a nationally recognized
overnight delivery service, in each case properly addressed to the
party to receive the same. The addresses, facsimile numbers and
e-mail addresses for such communications shall be:

 

 

If to
the Company:

 

Bridgeline Digital,
Inc.

100
Summit Drive Burlington, MA 01803

Telephone: (781)
376-5555

Facsimile:

Email:
akahn@bridgeline.com

Attention: Roger
Kahn

President and Chief
Executive Officer

 

 

With a
copy (for informational purposes only) to:

 

Disclosure Law
Group, a Professional Corporation

600
West Broadway, Suite 700

San
Diego, CA 92101

Telephone: (619)
272-7050

Facsimile: (619)
330-2101

Attention: Daniel
W. Rumsey, Esq.

 

If to
the Transfer Agent:

 

American Stock
Transfer Company

6201
15th Avenue

Brooklyn, NY
11219

Telephone:
(800)
937-5449

Facsimile:

Attention:

Email:

 

 

If to
Legal Counsel:

 

Schulte
Roth & Zabel

919
Third Avenue

New
York, NY 10022

Telephone: (212)
756-2000

Facsimile: (212)
593-5955

Attention: Eleazer
Klein, Esq.

Email:
eleazer.klein@srz.com

 

 

 

-18-

 

 

If to a
Buyer, to its address, facsimile number or email address set forth
on the Schedule of Buyers attached hereto, with copies to such
Buyer's representatives as set forth on the Schedule of Buyers, or
to such other address, facsimile number and/or email address to the
attention of such other Person as the recipient party has specified
by written notice given to each other party five (5) days prior to
the effectiveness of such change. Written confirmation of receipt
(A) given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the
sender's facsimile machine or e-mail transmission containing the
time, date, recipient facsimile number or e-mail address and an
image of the first page of such transmission or (C) provided by a
courier or overnight courier service shall be rebuttable evidence
of personal service, receipt by facsimile or receipt from a
nationally recognized overnight delivery service in accordance with
clause (i), (ii) or (iii) above, respectively.

 

(c) Failure of any
party to exercise any right or remedy under this Agreement or
otherwise, or delay by a party in exercising such right or remedy,
shall not operate as a waiver thereof.

 

(d) All questions
concerning the construction, validity, enforcement and
interpretation of this Agreement 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. Each party 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. Each party 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
such party at the address for such notices to it under this
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. EACH PARTY 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 HEREWITH OR
ARISING OUT OF THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED
HEREBY.

 

(e) If any provision of
this Agreement 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 Agreement so long as this
Agreement 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).

 

 

 

-19-

 

 

(f) This Agreement, the
other Transaction Documents (as defined in the Securities Purchase
Agreement) and the instruments referenced herein and therein
constitute the entire agreement among the parties hereto with
respect to the subject matter hereof and thereof. There are no
restrictions, promises, warranties or undertakings, other than
those set forth or referred to herein and therein. This Agreement,
the other Transaction Documents and the instruments referenced
herein and therein supersede all prior agreements and
understandings among the parties hereto with respect to the subject
matter hereof and thereof.

 

(g) Subject to the
requirements of Section 9, this Agreement shall inure to the
benefit of and be binding upon the permitted successors and assigns
of each of the parties hereto.

 

(h) The headings in
this Agreement are for convenience of reference only and shall not
limit or otherwise affect the meaning hereof.

 

(i) This Agreement may
be executed in identical counterparts, each of which shall be
deemed an original but all of which shall constitute one and the
same agreement. This Agreement, once executed by a party, may be
delivered to the other party hereto by facsimile transmission of a
copy of this Agreement bearing the signature of the party so
delivering this Agreement.

 

(j) Each party shall do
and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other
agreements, certificates, instruments and documents, as any other
party may reasonably request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of
the transactions contemplated hereby.

 

(k) All consents and
other determinations required to be made by the Investors pursuant
to this Agreement shall be made, unless otherwise specified in this
Agreement, by the Required Holders, determined as if all of the
Warrants held by Investors then outstanding have been exercised for
Registrable Securities without regard to any limitations on
exercise of the Warrants.

 

(l) The language used
in this Agreement will be deemed to be the language chosen by the
parties to express their mutual intent and no rules of strict
construction will be applied against any party.

 

(m) This Agreement is
intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of,
nor may any provision hereof be enforced by, any other
Person.

 

(n) The obligations of
each Investor hereunder are several and not joint with the
obligations of any other Investor, and no provision of this
Agreement is intended to confer any obligations on any Investor
vis-à-vis any other Investor. Nothing contained herein, and no
action taken by any Investor pursuant hereto, shall be deemed to
constitute the Investors as a partnership, an association, a joint
venture or any other kind of entity, or create a presumption that
the Investors are in any way acting in concert or as a group with
respect to such obligations or the transactions contemplated
herein.

 

 

* * * *
* *

 

[Signature Page Follows]

 

-20-

 

IN WITNESS WHEREOF, each Buyer and the
Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date
first written above.

 

 

	
 

	

COMPANY:

 

	
 

	

BRIDGELINE DIGITAL, INC.

 

_________________________________

By:  Name:
Roger
Kahn

Title:
Chief Executive Officer

 

	
 

	
 

 

 

	
	
 

	
 

-21-

 

 

IN WITNESS WHEREOF, each Buyer and the
Company have caused their respective signature page to this
Registration Rights Agreement to be duly executed as of the date
first written above.

 

 

	
 

	

BUYER:

 

	
 

	

 

________________________________

Name of
Buyer

 

 

By:
_____________________________ 

Signature        

Name:

Title,
if an entity:

 

 

 

By:
_____________________________  

Signature, if
Joint

Name:

 

	
 

	
 

	
 

	
 

	
 

[Signature
Page to Registration Rights Agreement]

-22-

 

 

SCHEDULE OF BUYERS

 

 

 

 

 

 

-23-

 

EXHIBIT A

 

FORM OF NOTICE OF EFFECTIVENESS

 

OF REGISTRATION STATEMENT

 

 

American
Stock Transfer & Trust Company, LLC

6201
15th
Avenue

Brooklyn,
New York 11219

 

 Re:            

Bridgeline Digital, Inc.

 

Ladies
and Gentlemen:

 

We are
counsel to Bridgeline Digital, Inc., a Delaware corporation (the
“Company”), and
have represented the Company in connection with that certain
Securities Purchase Agreement, dated as of March , 2019 (the
“Securities
Purchase Agreement”),
entered into by and among the Company and the buyers named therein
(collectively, the “Holders”) pursuant to which the
Company issued to the Holders (i) shares (the “Preferred Shares”) of the
Company's Series C Convertible Preferred Stock (the
“Preferred
Stock”) which are convertible into shares of the
Company’s common stock, par value $0.001 per share (as
converted collectively the “Conversion Shares”) and (ii) three
series of warrants exercisable for shares of Common Stock (the
“Warrants”).
Pursuant to the Securities Purchase Agreement, the Company also has
entered into a Registration Rights Agreement with the Holders (the
“Registration Rights
Agreement”) pursuant to which the Company agreed,
among other things, to register the resale of the Registrable
Securities (as defined in the Registration Rights Agreement),
including the Common Shares and the shares of Common Stock issuable
upon exercise of the Warrants under the Securities Act of 1933, as
amended (the “1933
Act”). In connection with the Company's obligations
under the Registration Rights Agreement, on ____________ ___, 2019,
the Company filed a Registration Statement on Form S-1 (File No.
333-_____________) (the “Registration Statement”) with the
Securities and Exchange Commission (the “SEC”) relating to the Registrable
Securities which names each of the Holders as a selling stockholder
thereunder.

 

In
connection with the foregoing, we advise you that a member of the
SEC's staff has advised us by telephone that the SEC has entered an
order declaring the Registration Statement effective under the 1933
Act at [ENTER TIME OF
EFFECTIVENESS] on
[ENTER DATE OF
EFFECTIVENESS] and we have
no knowledge, after telephonic inquiry of a member of the SEC's
staff, that any stop order suspending its effectiveness has been
issued or that any proceedings for that purpose are pending before,
or threatened by, the SEC and the Registrable Securities are
available for resale under the 1933 Act pursuant to the
Registration Statement.

 

This
letter shall serve as our standing instruction to you that the
shares of Common Stock are freely transferable by the Holders
pursuant to the Registration Statement. You need not require
further letters from us to effect any future legend-free issuance
or reissuance of shares of Common Stock to the Holders as
contemplated by the Company's Irrevocable Transfer Agent
Instructions dated March , 2019.

 

	
 

	
	
 

 

A-1

 

 

 

 

 

 

Very
truly yours,

 

DISCLOSURE
LAW GROUP

 

 

 

By:_____________________

 

CC:            

LIST NAMES OF
HOLDERS

	
 

	
	
 

 

A-2

 

EXHIBIT B

SELLING STOCKHOLDERS

 

The
shares of common stock being offered by the selling stockholders
are those previously issued to the selling stockholders, and those
issuable to the selling stockholders, upon conversion of the
Preferred Shares and the exercise of the Warrants. For additional
information regarding the issuances of those shares of common
stock, the Preferred Shares and the warrants, see “Private
Placement of Preferred Shares and Warrants” above. We are
registering the common stock in order to permit the selling
stockholders to offer the shares for resale from time to time.
Except for the ownership of the shares of common stock, Preferred
Shares and the Warrants, the selling stockholders have not had any
material relationship with us within the past three
years.

 

The
table below lists the selling stockholders and other information
regarding the beneficial ownership of the shares of common stock by
each of the selling stockholders. The second column lists the
number of shares of common stock beneficially owned by each selling
stockholder, based on its ownership of the shares of common stock,
the Preferred Shares and the Warrants, as of ________, 2019,
assuming conversion of the Preferred Shares and exercise of the
Warrants held by the selling stockholders on that date, without
regard to any limitations on conversions or exercises.

 

The
third column lists the shares of common stock being offered by this
prospectus by the selling stockholders.

 

In
accordance with the terms of a registration rights agreement with
the selling stockholders, this prospectus generally covers the
resale of at least the sum of (i) the maximum number of shares of
common stock issued and (ii) the maximum number of shares of common
stock issuable upon conversion of the Preferred Shares and exercise
of the related Warrants, determined as if the outstanding Preferred
Shares and Warrants were converted or exercised in full as of the
trading day immediately preceding the date this registration
statement was initially filed with the SEC, each as of the trading
day immediately preceding the applicable date of determination and
all subject to adjustment as provided in the registration right
agreement, without regard to any limitations on the conversion of
the Preferred Shares or exercise of the Warrants. The fourth column assumes the sale
of all of the shares offered by the selling stockholders pursuant
to this prospectus.

 

Under
the terms of the Preferred Shares and the Warrants, a selling
stockholder may not convert the Preferred Shares or exercise the
Warrants to the extent such exercise would cause such selling
stockholder, together with its affiliates, to beneficially own a
number of shares of common stock which would exceed 4.99% of our
then outstanding common stock following such exercise, excluding
for purposes of such determination common stock issuable upon
exercise of the warrants which have not been exercised. The number
of shares in the second column does not reflect this limitation.
The selling stockholders may sell all, some or none of their shares
in this offering. See “Plan of
Distribution.”

 

	
 

	
	
 

 

B-1

 

 

 

	

Name
of Selling Stockholder

 

	

Number
of Shares of Common Stock Owned Prior to
Offering

 

	

Maximum
Number of Shares of Common Stock to be Sold Pursuant to this
Prospectus

 

	

Number
of Shares of Common Stock Owned After Offering

 

 

 

 

 

 

	
 

	
	
 

 

B-2

 

PLAN
OF DISTRIBUTION

 

We are
registering the shares of common stock previously issued and
issuable upon conversion of the Preferred Shares and exercise of
the Warrants to permit the resale of these shares of common stock
by the holders thereof and holders of the common stock warrants
from time to time after the date of this prospectus. We will not
receive any of the proceeds from the sale by the selling
stockholders of the shares of common stock. We will bear all fees
and expenses incident to our obligation to register the shares of
common stock.

 

The
selling stockholders may sell all or a portion of the shares of
common stock beneficially owned by them and offered hereby from
time to time directly or through one or more underwriters,
broker-dealers or agents. If the shares of common stock are sold
through underwriters or broker-dealers, the selling stockholders
will be responsible for underwriting discounts or commissions or
agent's commissions. The shares of common stock may be sold in one
or more transactions at fixed prices, at prevailing market prices
at the time of the sale, at varying prices determined at the time
of sale, or at negotiated prices. These sales may be effected in
transactions, which may involve crosses or block
transactions,

 

●

on any national
securities exchange or quotation service on which the securities
may be listed or quoted at the time of sale;

 

●

in the
over-the-counter market;

 

●

in transactions
otherwise than on these exchanges or systems or in the
over-the-counter market;

 

●

through the writing
of options, whether such options are listed on an options exchange
or otherwise;

 

●

ordinary
brokerage transactions and transactions in which the broker-dealer
solicits purchasers;

 

●

block
trades in which the broker-dealer will attempt to sell the shares
as agent but may position and resell a portion of the block as
principal to facilitate the transaction;

 

●

purchases
by a broker-dealer as principal and resale by the broker-dealer for
its account;

 

●

an
exchange distribution in accordance with the rules of the
applicable exchange;

 

●

privately
negotiated transactions;

 

●

short
sales;

 

●

sales
pursuant to Rule 144;

 

●

broker-dealers
may agree with the selling securityholders to sell a specified
number of such shares at a stipulated price per share;

 

●

a
combination of any such methods of sale; and

 

●

any
other method permitted pursuant to applicable law.

 

 

	
 

	
	
 

 

B-3

 

 

If the
selling stockholders effect such transactions by selling shares of
common stock to or through underwriters, broker-dealers or agents,
such underwriters, broker-dealers or agents may receive commissions
in the form of discounts, concessions or commissions from the
selling stockholders or commissions from purchasers of the shares
of common stock for whom they may act as agent or to whom they may
sell as principal (which discounts, concessions or commissions as
to particular underwriters, broker-dealers or agents may be in
excess of those customary in the types of transactions involved).
In connection with sales of the shares of common stock or
otherwise, the selling stockholders may enter into hedging
transactions with broker-dealers, which may in turn engage in short
sales of the shares of common stock in the course of hedging in
positions they assume. The selling stockholders may also sell
shares of common stock short and deliver shares of common stock
covered by this prospectus to close out short positions and to
return borrowed shares in connection with such short sales. The
selling stockholders may also loan or pledge shares of common stock
to broker-dealers that in turn may sell such shares.

 

The
selling stockholders may pledge or grant a security interest in
some or all of the warrants or shares of common stock owned by them
and, if they default in the performance of their secured
obligations, the pledgees or secured parties may offer and sell the
shares of common stock from time to time pursuant to this
prospectus or any amendment to this prospectus under Rule 424(b)(3)
or other applicable provision of the Securities Act of 1933, as
amended, amending, if necessary, the list of selling stockholders
to include the pledgee, transferee or other successors in interest
as selling stockholders under this prospectus. The selling
stockholders also may transfer and donate the shares of common
stock in other circumstances in which case the transferees, donees,
pledgees or other successors in interest will be the selling
beneficial owners for purposes of this prospectus.

 

The
selling stockholders and any broker-dealer participating in the
distribution of the shares of common stock may be deemed to be
“underwriters” within the meaning of the Securities
Act, and any commission paid, or any discounts or concessions
allowed to, any such broker-dealer may be deemed to be underwriting
commissions or discounts under the Securities Act. At the time a
particular offering of the shares of common stock is made, a
prospectus supplement, if required, will be distributed which will
set forth the aggregate amount of shares of common stock being
offered and the terms of the offering, including the name or names
of any broker-dealers or agents, any discounts, commissions and
other terms constituting compensation from the selling stockholders
and any discounts, commissions or concessions allowed or reallowed
or paid to broker-dealers.

 

Under
the securities laws of some states, the shares of common stock may
be sold in such states only through registered or licensed brokers
or dealers. In addition, in some states the shares of common stock
may not be sold unless such shares have been registered or
qualified for sale in such state or an exemption from registration
or qualification is available and is complied with.

 

There
can be no assurance that any selling stockholder will sell any or
all of the shares of common stock registered pursuant to the
registration statement, of which this prospectus forms a
part.

 

The
selling stockholders and any other person participating in such
distribution will be subject to applicable provisions of the
Securities Exchange Act of 1934, as amended, and the rules and
regulations thereunder, including, without limitation, Regulation M
of the Exchange Act, which may limit the timing of purchases and
sales of any of the shares of common stock by the selling
stockholders and any other participating person. Regulation M may
also restrict the ability of any person engaged in the distribution
of the shares of common stock to engage in market-making activities
with respect to the shares of common stock. All of the foregoing
may affect the marketability of the shares of common stock and the
ability of any person or entity to engage in market-making
activities with respect to the shares of common stock.

 

We will
pay all expenses of the registration of the shares of common stock
pursuant to the registration rights agreement, estimated to be
$[     ] in total, including, without
limitation, Securities and Exchange Commission filing fees and
expenses of compliance with state securities or “blue
sky” laws; provided, however, that a selling stockholder will
pay all underwriting discounts and selling commissions, if any. We
will indemnify the selling stockholders against liabilities,
including some liabilities under the Securities Act, in accordance
with the registration rights agreements, or the selling
stockholders will be entitled to contribution. We may be
indemnified by the selling stockholders against civil liabilities,
including liabilities under the Securities Act, that may arise from
any written information furnished to us by the selling stockholder
specifically for use in this prospectus, in accordance with the
related registration rights agreement, or we may be entitled to
contribution.

 

Once
sold under the registration statement, of which this prospectus
forms a part, the shares of common stock will be freely tradable in
the hands of persons other than our affiliates.

 

 

 

	
 

	
	
 

 

B-4

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