Document:

EXHIBIT 10.17
                                                                   -------------

THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR ANY STATE SECURITIES LAWS AND THIS NOTE AND ANY INTEREST HEREIN MAY NOT BE
OFFERED, SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO
AN EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT OR SUCH LAWS OR AN EXEMPTION
FROM REGISTRATION UNDER SUCH ACT AND SUCH LAWS, WHICH, IN THE OPINION OF COUNSEL
FOR THE HOLDER, WHICH COUNSEL AND OPINION ARE REASONABLY SATISFACTORY TO THE
BORROWER, IS AVAILABLE.

                            BRIDGELINE SOFTWARE, INC.
                              CONVERTIBLE TERM NOTE

***$112,000.00***                                        Woburn, Massachusetts
                                                         September 3, 2002

         For value received, the undersigned, BRIDGELINE Software Inc., a
Delaware corporation (referred to herein as the "Borrower"), the principal
executive offices of which are located at 130 New Boston Street, Woburn,
Massachusetts, hereby unconditionally promises to pay to the order of Thomas
Massie (the "Lender"), at such address as the Lender shall specify in writing
from time to time, the principal sum of ***$112,000.00*** (the "Loan"), together
with interest thereon at ***10%*** per annum payable as set forth herein. This
Note will mature and become due and payable in full on September 7, 2006 (the
"Maturity Date").

         1.    Terms of Repayment. Principal of and interest upon this Note will
be paid by the Borrower as follows:

               (a)   Principal and Interest. . Principal and Interest on the
Note, in the amount of $2,840.61 per month for forty-eight (48) months shall be
payable on the seventh (7th) day of each calendar month, beginning on October 7,
2002 until this Note has been paid in full in accordance with the payment
schedule attached as Exhibit A. If payment of any amount owing on this Note
shall be payable on a day that is not a business day in Boston, Massachusetts,
then payment will be made by the Borrower by the next succeeding business day.

               (b)   Optional Prepayments. The Borrower may prepay this Note at
any time or from time to time, in whole or in part, upon five days' prior
written notice to the Lender.

               (c)   Change in Control. This Note shall be prepaid in full
simultaneously with the occurrence of a Change in Control, as defined below.

               (d)   Maturity. On the Maturity Date, payment of the entire
unpaid principal of, interest on and all other sums due under this Note will
become due and payable.
<PAGE>

               (e)   Order of Payments. Except as specifically set forth
otherwise herein, all payments will be applied first to any late charges due
hereunder, then to accrued interest, and then to principal.

               (f)   Change in Control. For purposes of this Note, "Change in
Control" shall mean (A) any sale, lease, exchange or other transfer (in one
transaction or series of transactions) of all or substantially all of the assets
of the Borrower; (ii) any consolidation or merger of the Borrower with any other
entity (including, without limitation, a triangular merger) where the
stockholders of the Borrower, immediately prior to the consolidation or merger,
would not, immediately after the consolidation or merger, beneficially own,
directly or indirectly, shares representing a majority of the combined voting
power of all of the outstanding securities of the entity issuing cash or
securities in the consolidation or merger (or its ultimate parent corporation,
if any); (iv) a person or entity (other than the Lender) becomes the owner,
directly or indirectly, of securities of the Borrower representing forty percent
(40%) or more of the total voting power represented by the Borrower's then
outstanding voting securities.

         2.    Conversion.

               (a)   The Lender shall have the option, at any time or from time
to time until this Note shall have been paid in full to convert the outstanding
principal and accrued interest of this Note into fully-paid and nonassessable
shares of the Borrower's voting common stock (the "Shares") at the rate of one
(1) Share for every One Dollar ($1.00) of such indebtedness then outstanding.

               (b)   As promptly as practicable after the surrender of this Note
by the Lender, the Borrower shall deliver or cause to be delivered to the
holder, certificates for the full number of Shares issuable upon conversion of
this Note, in accordance with the provisions hereof. Such conversion shall be
deemed to have been made at the time that this Note was surrendered for
conversion and the notice specified herein shall have been received by the
Borrower.

               (c)   The number of Shares issuable upon conversion of this Note
or repayment by the Borrower in Shares shall be proportionately adjusted if the
Borrower shall declare a dividend of capital stock on its capital stock, or
subdivide its outstanding capital stock into a larger number of Shares by
reclassification, stock split or otherwise, which adjustment shall be made
effective immediately after the record date in the case of a dividend, and
immediately after the effective date in the case of a subdivision. The number of
Shares issuable upon conversion of this Note or any part thereof shall be
proportionately adjusted in the amount of securities for which the Shares has
been changed or exchanged in another transaction for other stock or securities,
cash and/or any other property pursuant to a merger, consolidation or other
combination. The Borrower shall promptly provide the holder of this Note with
notice of any events mandating an adjustment to the conversion ratio, or for any
planned merger, consolidation, Share exchange or sale of the Borrower.

         3.    Events of Default. Each and any of the following will constitute
a default and, after expiration of a grace period, if any, will constitute an
"Event of Default" hereunder:

                                       2
<PAGE>

               (a)   failure to pay any amount as herein set forth, which
default is not cured within five (5) days after notice of default is given in
writing;

               (b)   default in the performance of any other obligation of the
Borrower to the Lender under this Note, which default is not cured within thirty
(30) days after notice of default is given in writing;

               (c)   insolvency (however evidenced) or the commission of any act
of insolvency;

               (d)   the making of a general assignment for the benefit of
creditors;

               (e)   the filing of any petition or the commencement of any
proceeding by the Borrower for any relief under any bankruptcy or insolvency
laws, or any laws relating to the relief of debtors, readjustment of
indebtedness, reorganizations, compositions, or extensions; or

               (f)   the filing of any petition or the commencement of any
proceeding against the Borrower for any relief under any bankruptcy or
insolvency laws, or any laws relating to the relief of debtors, readjustment of
indebtedness, reorganizations, compositions, or extensions, which proceeding is
not dismissed within sixty (60) days.

         4.    Lender's Rights Upon Default. Upon the occurrence of any Event of
Default, the Lender may, at its sole and exclusive option, but subject to the
provisions of Section 2, (a) accelerate the maturity of this Note and demand
immediate payment in full, whereupon the outstanding principal amount of this
Note and all obligations of the Borrower to Lender, together with accrued
interest thereon and accrued charges and costs, will become immediately due and
payable without presentment, demand, protest or further notice of any kind, all
of which are hereby expressly waived and (b) exercise all legally available
rights and privileges.

         5.    Default Interest Rate. Upon an Event of Default, without any
further action on the part of the Lender, interest will thereafter accrue on the
unpaid principal balance (and on any accrued but unpaid interest) at a default
rate equal to the stated interest rate hereof plus five percentage points (5%)
per annum (the "Default Rate"), until all outstanding principal, interest and
fees under this Note are repaid in full by the Borrower.

         6.    Usury. In no event will the amount of interest paid or agreed to
be paid hereunder exceed the highest lawful rate permissible under applicable
law. Any excess amount of deemed interest will be null and void and will not
interfere with or affect the Borrower's obligation to repay the principal of and
interest on this Note.

         7.    Covenant. Until payment in full on this Note, the Borrower will
provide to the Lender: (i) as soon as available and, in any event, within
forty-five (45) days after the end of each of the first three quarters of each
fiscal year of the Borrower, a consolidated balance sheet of the Borrower as of
the end of such quarter and the related consolidated statements of income and
stockholders' equity and of cash flows of the Borrower for the period commencing
at the end of the previous fiscal year and ending with the end of such quarter,
setting forth in each case in comparative form the corresponding figures for the
corresponding period of the preceding fiscal

                                       3
<PAGE>

year, all in reasonable detail and prepared in accordance with generally
accepted accounting principles consistently applied, and duly certified (subject
to year-end audit adjustments) by the chief financial officer of the Borrower;
and (ii) as soon as available and, in any event, within sixty (60) days after
the end of each fiscal year of the Borrower, a copy of the annual audit report
for such year for the Borrower, including therein a consolidated balance sheet
of the Borrower as of the end of such fiscal year and consolidated statements of
income and stockholders' equity and of cash flows of the Borrower for such
fiscal year, setting forth in each case in comparative form the corresponding
figures for the preceding fiscal year, all duly certified by independent public
accountants of recognized national standing;

         8.    Costs of Enforcement. The Borrower hereby covenants and agrees to
indemnify, defend and hold the Lender harmless from and against all costs and
expenses, including reasonable attorneys' fees and their costs, together with
interest thereon at the annual prime rate of interest (the "Prime Rate") (as
published in the Wall Street Journal), incurred by the Lender in enforcing its
rights under this Note; or if the Lender is made a party as a defendant in any
action or proceeding arising out of or in connection with its status as a
lender, or if the Lender is requested to respond to any subpoena or other legal
process issued in connection with this Note; or the Lender's reasonable
disbursements arising out of any costs and expenses, including reasonable
attorneys' fees and their costs incurred in any bankruptcy case involving the
Borrower; or for any legal or appraisal reviews, advice or counsel performed for
the Lender following a request by the Borrower for waiver, modification or
amendment of this Note.

         9.    Governing Law. This Note will be governed by and
construed in accordance with the laws of the Commonwealth of Massachusetts
without regard to conflicts of law principles. The Lender and the Borrower
consent and agree to the exclusive jurisdiction of the federal and state courts
located in Boston, Massachusetts in connection with any matter arising
hereunder, including the collection and enforcement hereof. The Borrower hereby
waives any and all right to trial by jury in any civil action arising out of, or
based upon, this Note.

         10.   Miscellaneous.

               (a)   The Borrower hereby waives protest, notice of protest,
presentment, dishonor, and demand.

               (b)   Time is of the essence for each of the Borrower's covenants
under this Note.

               (c)   The rights and privileges of the Lender under this Note
will inure to the benefit of its corporate successors. All obligations of the
Borrower in connection with this Note will bind the Borrower's successors and
assigns.

               (d)   If any provision of this Note will for any reason be held
to be invalid or unenforceable, such invalidity or unenforceability will not
affect any other provision hereof, but this Note will be construed as if such
invalid or unenforceable provision had never been contained herein.

               (e)   The waiver of any Event of Default or the failure of the
Lender to exercise any right or remedy to which it may be entitled will not be
deemed a waiver of any subsequent Event

                                       4
<PAGE>

of Default or the Lender's right to exercise that or any other right or remedy
to which the Lender is entitled. No delay or omission by the Lender in
exercising, or failure by the Lender to exercise on any one or more occasions,
any rights hereunder will be construed as a waiver or novation of this Note or
prevent the subsequent exercise of any or all such rights.

               (f)   This Note may not be waived, changed, modified, or
discharged orally, but only in writing.

         IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first set forth above.

SIGNATURE OF LENDER:                   SIGNATURE OF BORROWER:
--------------------                   ----------------------

THOMAS L. MASSIE                       BRIDGELINE SOFTWARE INC.

By: /S/ THOMAS L. MASSIE               By: /S/ GARY M. CEBULA
   -------------------------------        -------------------------------
Date: 9-3-02                           Its: Sr. V.P. & CFO
     -----------------------------         ------------------------------
                                       Date: 9-3-02
                                            -----------------------------

                                       *Not Personally Guaranteed

                                       5
<PAGE>

                                    EXHIBIT A

LOAN DATA
--------------------------------------------------------------------------------
     Loan amount:               | $112,000.00
     Annual interest rate:      | 10.000%
     Term in years:             | 4
     Payments per year:         | 12
     Principal & Interest Pmt.  | $2,840.61
     First payment due:         | 10/07/2002
TABLE
--------------------------------------------------------------------------------
<TABLE><CAPTION>
-----------------------------------------------------------------------------------------------------------------------
               PAYMENT                BEGINNING                                           ENDING        CUMULATIVE
 NO.             DATE                  BALANCE            INTEREST        PRINCIPAL       BALANCE        INTEREST
-----------------------------------------------------------------------------------------------------------------------
<S>            <C>                    <C>                  <C>            <C>           <C>               <C>
  1            10/07/02               112,000.00           933.33         1,907.28      110,092.72        933.33
  2            11/07/02               110,092.72           917.44         1,923.17      108,169.55       1,850.77
  3            12/07/02               108,169.55           901.41         1,939.20      106,230.35       2,752.18
-----------------------------------------------------------------------------------------------------------------------
  4            01/07/03               106,230.35           885.25         1,955.36      104,274.99       3,637.43
  5            03/02/03               104,274.99           868.96         1,971.65      102,303.34       4,506.39
  6            03/07/03               102,303.34           852.53         1,988.08      100,315.26       5,358.92
-----------------------------------------------------------------------------------------------------------------------
  7            04/07/03               100,315.26           835.96         2,004.65       98,310.61       6,194.88
  8            05/07/03               98,310.61            819.26         2,021.35       96,289.26       7,014.14
  9            06/07/03               96,289.26            802.41         2,038.20       94,251.06       7,816.55
-----------------------------------------------------------------------------------------------------------------------
 10            07/07/03               94,251.06            785.43         2,055.18       92,195.88       8,601.98
 11            08/07/03               92,195.88            768.30         2,072.31       90,123.57       9,370.28
 12            09/07/03               90,123.57            751.03         2,089.58       88,033.99       10,121.31
-----------------------------------------------------------------------------------------------------------------------
 13            10/07/03               88,033.99            733.62         2,106.99       85,927.00       10,854.93
 14            11/07/03               85,927.00            716.06         2,124.55       83,802.45       11,570.99
 15            12/07/03               83,802.45            698.35         2,142.26       81,660.19       12,269.34
-----------------------------------------------------------------------------------------------------------------------
 16            01/07/04               81,660.19            680.50         2,160.11       79,500.08       12,949.84
 17            03/01/04               79,500.08            662.50         2,178.11       77,321.97       13,612.34
 18            03/07/04               77,321.97            644.35         2,196.26       75,125.71       14,256.69
-----------------------------------------------------------------------------------------------------------------------
 19            04/07/04               75,125.71            626.05         2,214.56       72,911.15       14,882.74
 20            05/07/04               72,911.15            607.59         2,233.02       70,678.13       15,490.33
 21            06/07/04               70,678.13            588.98         2,251.63       68,426.50       16,079.31
-----------------------------------------------------------------------------------------------------------------------
 22            07/07/04               68,426.50            570.22         2,270.39       66,156.11       16,649.53
 23            08/07/04               66,156.11            551.30         2,289.31       63,866.80       17,200.83
 24            09/07/04               63,866.80            532.22         2,308.39       61,558.41       17,733.05
-----------------------------------------------------------------------------------------------------------------------
 25            10/07/04               61,558.41            512.99         2,327.62       59,230.79       18,246.04
 26            11/07/04               59,230.79            493.59         2,347.02       56,883.77       18,739.63
 27            12/07/04               56,883.77            474.03         2,366.58       54,517.19       19,213.66
-----------------------------------------------------------------------------------------------------------------------
 28            01/07/05               54,517.19            454.31         2,386.30       52,130.89       19,667.97
 29            03/02/05               52,130.89            434.42         2,406.19       49,724.70       20,102.39
 30            03/07/05               49,724.70            414.37         2,426.24       47,298.46       20,516.76
-----------------------------------------------------------------------------------------------------------------------
 31            04/07/05               47,298.46            394.15         2,446.46       44,852.00       20,910.91
 32            05/07/05               44,852.00            373.77         2,466.84       42,385.16       21,284.68
</TABLE>

                                       6
<PAGE>
<TABLE><CAPTION>
                                                         EXHIBIT A
                                                        (CONTINUED)

-----------------------------------------------------------------------------------------------------------------------
               PAYMENT                BEGINNING                                           ENDING        CUMULATIVE
 NO.             DATE                  BALANCE            INTEREST        PRINCIPAL       BALANCE        INTEREST
-----------------------------------------------------------------------------------------------------------------------
<S>            <C>                    <C>                  <C>            <C>           <C>               <C>
 33            06/07/05               42,385.16            353.21         2,487.40       39,897.76       21,637.89
-----------------------------------------------------------------------------------------------------------------------
 34            07/07/05               39,897.76            332.48         2,508.13       37,389.63       21,970.37
 35            08/07/05               37,389.63            311.58         2,529.03       34,860.60       22,281.95
 36            09/07/05               34,860.60            290.51         2,550.10       32,310.50       22,572.46
-----------------------------------------------------------------------------------------------------------------------
 37            10/07/05               32,310.50            269.25         2,571.36       29,739.14       22,841.71
 38            11/07/05               29,739.14            247.83         2,592.78       27,146.36       23,089.54
 39            12/07/05               27,146.36            226.22         2,614.39       24,531.97       23,315.76
-----------------------------------------------------------------------------------------------------------------------
 40            01/07/06               24,531.97            204.43         2,636.18       21,895.79       23,520.19
 41            03/02/06               21,895.79            182.46         2,658.15       19,237.64       23,702.65
 42            03/07/06               19,237.64            160.31         2,680.30       16,557.34       23,862.96
-----------------------------------------------------------------------------------------------------------------------
 43            04/07/06               16,557.34            137.98         2,702.63       13,854.71       24,000.94
 44            05/07/06               13,854.71            115.46         2,725.15       11,129.56       24,116.40
 45            06/07/06               11,129.56            92.75          2,747.86       8,381.70        24,209.15
-----------------------------------------------------------------------------------------------------------------------
 46            07/07/06                8,381.70            69.85          2,770.76       5,610.94        24,279.00
 47            08/07/06                5,610.94            46.76          2,793.85       2,817.09        24,325.76
 48            09/07/06                2,817.09            23.48          2,817.09         0.00          24,349.24
-----------------------------------------------------------------------------------------------------------------------
</TABLE>

                                       7EXHIBIT 10.18
                                                                   -------------

                               SECURITY AGREEMENT

         SECURITY AGREEMENT, dated as of September 3, 2002 made by BRIDGELINE
Software Inc., a Delaware corporation (the "Borrower"), in favor of Thomas
Massie (the "Lender").

         The parties agree as follows:

         1. Defined Terms. Unless otherwise defined herein, terms which are
defined in the Note (as defined below) or as defined in the Code (as defined
below) are used herein as therein defined, and the following terms shall have
the following meanings:

                  "Code" means the Uniform Commercial Code as from time to time
in effect in the Commonwealth of Massachusetts.

                  "Collateral" shall have the meaning assigned to it in Section
2 of this Security Agreement.

                  "Obligations" means the unpaid principal amount of, and
interest on, the Note, whether direct or indirect, absolute or contingent, due
or to become due, or now existing or hereafter incurred, arising under, out of,
or in connection with the Note or this Security Agreement or otherwise.

                  "Note" means the convertible promissory note of even date
herewith made by the Borrower in favor of the Lender in the original principal
amount of up to $200,000.00 and all instruments issued in exchange or
replacement therefor or which otherwise represent the debt represented by the
original Note.

                  "Security Agreement" means this Security Agreement, as amended
or restated from time to time.

         2. Grant of Security Interest. As collateral security for the prompt
and complete payment and performance when due (whether at the stated maturity,
by acceleration or otherwise) of the Obligations, the Borrower hereby grants to
the Lender a security interest in all right, title and interest of the Borrower
in all of the following property, whether now owned or hereafter acquired: (i)
Accounts; (ii) Notes; (iii) Chattel Paper; (iv) Commercial Tort Claims; (v)
Deposit Accounts; (vi) Documents; (vii) Equipment; (viii) Fixtures; (ix) General
Intangibles (including, but not limited to patents, copyrights, trademarks,
service marks and trade names and any applications therefor or registrations
thereof, including without limitation those set forth on Schedule A hereto,
payment intangibles and all software, library code an tools, (including in both
source code and object code); (x) Goods; (xi) Instruments; (xii) Inventory;
(xiii) Investment Property and Financial Assets; (xiv) Letter-of-Credit Rights
and letters of credit; (xv) Money; (xvi) Supporting Obligations; (xvii)
insurance claims and proceeds; (xviii) books, records, computer programs,
databases and other materials pertaining to any of the foregoing; and (xix)
Proceeds and products of any of the foregoing (collectively, the "Collateral").

<PAGE>

         3. Rights of Lender; Limitations on Lender's Obligations.

                  (a) Borrower Remains Liable under Accounts. Anything herein to
the contrary notwithstanding, the Borrower shall remain liable under each of the
Accounts to observe and perform all the conditions and obligations to be
observed and performed by it thereunder, all in accordance with the terms of any
agreement giving rise to each such Account. The Lender shall not have any
obligation or liability under any Account (or any agreement giving rise thereto)
by reason of or arising out of this Security Agreement or the receipt by the
Lender of any payment relating to such Account pursuant hereto, nor shall the
Lender be obligated in any manner to perform any of the obligations of the
Borrower under or pursuant to any Account (or any agreement giving rise
thereto), to make any payment, to make any inquiry as to the nature or the
sufficiency of any payment received by it or as to the sufficiency of any
performance by any party under any Account (or any agreement giving rise
thereto), to present or file any claim, to take any action to enforce any
performance or to collect the payment of any amounts which may have been
assigned to it or to which it may be entitled at any time or times.

                  (b) Notice to Account Debtors. Upon the request of the Lender
at any time after the occurrence and during the continuance of an Event of
Default, the Borrower shall notify account debtors on the Accounts that the
Accounts have been assigned to the Lender and that payments in respect thereof
shall be made directly to the Lender. The Lender may in its own name or in the
name of others communicate with account debtors on the Accounts to verify with
them to its satisfaction the existence, amount and terms of any Accounts.

                  (c) Collections on Accounts. The Lender hereby authorizes the
Borrower to collect the Accounts, and the Lender may curtail or terminate said
authority at any time after the occurrence and during the continuance of an
Event of Default. If required by the Lender at any time after the occurrence and
during the continuance of an Event of Default, any payments of Accounts, when
collected by the Borrower, shall be forthwith (and, in any event, within two
business days) deposited by the Borrower in the exact form received, duly
endorsed by the Borrower to the Lender if required, in a special collateral
account maintained by the Lender, subject to withdrawal by the Lender only, as
hereinafter provided, and, until so turned over, shall be held by the Borrower
in trust for the Lender, segregated from other funds of the Borrower. All
Proceeds constituting collections of Accounts while held by the Lender (or by
the Borrower in trust for the Lender) shall continue to be collateral security
for all of the Obligations and shall not constitute payment thereof until
applied thereto by the Lender, or by the Borrower with the Lender's consent. If
an Event of Default shall have occurred and be continuing, at any time at the
Lender's election, the Lender shall apply all or any part of the funds on
deposit in said special collateral account on account of the Obligations in such
order as the Lender may elect, and any part of such funds which the Lender
elects not so to apply and deems not required as collateral security for the
Obligations shall be paid over from time to time by the Lender to the Borrower
or to whomsoever may be lawfully entitled to receive the same. At the Lender's
request, the Borrower shall deliver to the Lender all original and other
documents evidencing, and relating to, the agreements and transactions which
gave rise to the accounts, including, without limitation, all original orders,
invoices and shipping receipts.

                                        2
<PAGE>

                  (d) Trust Account. Upon the occurrence and during the
continuance of an Event of Default, the Lender may, in its sole discretion,
elect to require the Borrower to establish with the Lender a trust account and
to deal with all of its Receivables subject to the provisions of this Section.
Following such election, the Borrower will collect its Receivables as the
Lender's collection agent, hold such collections in trust for the Lender without
commingling the same with other funds of the Borrower and will promptly, on the
day of receipt thereof, transmit such collections to the Lender in the identical
form in which they were received by the Borrower, with such endorsements as may
be appropriate, accompanied by a report, in form approved by the Lender, showing
the amount of such collections and the cash discounts applicable thereto.

                  (e) Title to Collateral. The Borrower represents and warrants
to the Lender that it has good title to all of the Collateral, free and clear of
all liens, security interests and adverse interests, other than the Permitted
Liens, in favor of any person or entity other than the Lender.

         4. Covenants. The Borrower covenants and agrees with the Lender that,
from and after the date of this Security Agreement until the Obligations are
paid in full:

                  (a) Further Documentation; Pledge of Instruments and Chattel
Paper. At any time and from time to time, upon the written request of the
Lender, and at the sole expense of the Borrower, the Borrower will promptly and
duly execute and deliver such further instruments and documents and take such
further action as the Lender may reasonably request for the purpose of obtaining
or preserving the full benefits of this Security Agreement and of the rights and
powers herein granted, including, without limitation, the filing of any
financing or continuation statements under the Uniform Commercial Code in effect
in any jurisdiction with respect to the security interests and liens created
hereby. The Borrower also hereby authorizes the Lender to file any such
financing or continuation statement without the signature of the Borrower to the
extent permitted by applicable law. A carbon, photographic or other reproduction
of this Security Agreement shall be sufficient as a financing statement for
filing in any jurisdiction. If any amount payable under or in connection with
any of the Collateral shall be or become evidenced by any Instrument or Chattel
Paper, such Instrument or Chattel Paper shall be immediately delivered to the
Lender, duly endorsed in a manner satisfactory to the Lender, to be held as
Collateral pursuant to this Security Agreement.

                  (b) Indemnification. The Borrower agrees to pay, and to save
the Lender harmless from, any and all liabilities, reasonable costs and expenses
(including, without limitation, legal fees and expenses) (i) with respect to, or
resulting from, any delay in paying, any and all excise, sales or other taxes
which may be payable or determined to be payable with respect to any of the
Collateral, (ii) with respect to, or resulting from, any delay in complying with
any law, rule, regulation or order of any court, arbitrator or governmental
entity, jurisdiction or authority applicable to any of the Collateral or (iii)
in connection with any of the transactions contemplated by this Security
Agreement. In any suit, proceeding or action brought by the Lender under any
Account for any sum owing thereunder, or to enforce any provisions of any
Account, the Borrower will save, indemnify and keep the Lender harmless from and
against all expense, loss or damage suffered by reason of any defense, setoff,
counterclaim, recoupment or reduction or liability whatsoever of the account
debtor or obligor thereunder, arising out of a

                                        3
<PAGE>
breach by the Borrower of any obligation thereunder or arising out of any other
agreement, indebtedness or liability at any time owing to or in favor of such
account debtor or obligor or its successors from the Borrower. The foregoing
indemnification shall not apply to any liabilities, costs or expenses resulting
directly from the gross negligence, actual willful misconduct or bad faith of
the Lender.

                  (c) Maintenance of Records. The Borrower will keep and
maintain at its own cost and expense satisfactory and complete records of the
Collateral, including without limitation, a record of all payments received and
all credits granted with respect to the Accounts. For the Lender's further
security, the Borrower hereby grants to the Lender a security interest in all of
the Borrower's books and records pertaining to the Collateral, and upon the
occurrence and during the continuance of an Event of Default, the Borrower shall
turn over any such books and records to the Lender or to its representatives
during normal business hours at the request of the Lender.

                  (d) Right of Inspection. The Lender shall at all times have
full and free access during normal business hours, and upon reasonable prior
notice, to all the books of record and account of the Borrower, and the Lender
or its representatives may examine the same, take extracts therefrom and make
photocopies thereof, and the Borrower agrees to render to the Lender, at the
Borrower's cost and expense, such clerical and other assistance as may be
reasonably requested with regard thereto. The Lender and its representatives
shall at all times also have the right during normal business hours, and upon
reasonable prior notice, to enter into and upon any premises where any of the
Inventory or Equipment is located for the purpose of inspecting the same or
otherwise protecting its interests therein.

                  (e) Compliance with Laws, etc. The Borrower will comply in all
material respects with all laws, rules, regulations and orders of any court,
arbitrator or governmental entity, jurisdiction or authority applicable to the
Collateral or any part thereof or to the operation of the Borrower's business;
provided, however, that the Borrower may contest any such law, rule, regulation
or order in any reasonable manner which shall not, in the reasonable opinion of
the Lender, adversely affect the Lender's rights or the priority of its liens on
the Collateral.

                  (f) Payment of Obligations. The Borrower will pay promptly
when due all taxes, assessments and governmental charges or levies imposed upon
the Collateral or in respect of its income or profits therefrom, as well as all
claims of any kind (including, without limitation, claims for labor, materials
and supplies) against or with respect to the Collateral, except that no such
charge need be paid if (i) the validity thereof is being contested in good faith
by appropriate proceedings, (ii) such proceedings do not involve any material
danger of the sale, forfeiture or loss of any of the Collateral or any interest
therein and (iii) such charge is adequately reserved against on the Borrower's
books in accordance with generally accepted accounting principles.

                  (g) Limitation on Liens on Collateral. The Borrower will not
create, incur or permit to exist, will defend the Collateral against, and will
take such other action as is necessary to remove, any lien, security interest,
pledge, mortgage, deed of trust, levy, attachment, claim or other charge or
encumbrance on or to the Collateral, and will defend the right, title and
interest of the Lender in and to any of the Collateral against the claims and
demands of all persons or entities whatsoever.

                                        4
<PAGE>
                  (h) Limitations on Dispositions of Collateral. The Borrower
will not sell, transfer, lease or otherwise dispose of any of the Collateral, or
attempt, offer or contract to do so, except for sales of Collateral for value in
the ordinary course of business.

                  (i) Limitations on Discounts, Compromises, Extensions of
Accounts. Other than in the ordinary course of business as generally conducted
by the Borrower, the Borrower will not grant any extension of the time of
payment of any of the Accounts, compromise, compound or settle the same for less
than the full amount thereof, release, wholly or partially, any person or entity
liable for the payment thereof, or allow any credit or discount whatsoever
thereon.

                  (j) Maintenance of Equipment. The Borrower will maintain each
item of Equipment in good operating condition, ordinary wear and tear and
immaterial impairments of value and damage by the elements excepted, and will
provide all maintenance, service and repairs necessary for such purpose.

                  (k) Maintenance of Insurance. The Borrower will maintain, with
financially sound and reputable companies, insurance policies (i) insuring the
Inventory, Equipment and Vehicles against loss by fire, explosion, theft and
such other casualties as may be reasonably satisfactory to the Lender and (ii)
insuring the Borrower and the Lender against liability for personal injury and
property damage relating to such Inventory, Equipment and Vehicles, such
policies to be in such form and amounts and having such coverage as may be
reasonably satisfactory to the Lender, with losses payable to the Borrower and
the Lender as their respective interests may appear. All such insurance shall
(i) provide that no termination, cancellation, material reduction in amount or
material change in coverage thereof shall be effective until at least 30 days
after receipt by the Lender of written notice thereof, (ii) name the Lender as
an insured and (iii) be reasonably satisfactory in all other respect to the
Lender. From time to time upon the request of the Lender, the Borrower shall
deliver to the Lender insurance policies, certificates or binders as the Lender
may from time to time reasonably request.

                  (l) Further Identification of Collateral. The Borrower will
furnish to the Lender from time to time statements and schedules further
identifying and describing the Collateral and such other reports in connection
with the Collateral as the Lender may reasonably request, all in reasonable
detail.

         5. Lender's Appointment as Attorney-in-Fact.

                  (a) Powers. The Borrower hereby irrevocably constitutes and
appoints the Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the place and stead of the Borrower and in the name of
the Borrower or in its own name, from time to time in the Lender's discretion,
for the purpose of carrying out the terms of this Security Agreement, to take
any and all appropriate action and to execute any and all instruments which may
be necessary or desirable to accomplish the purposes of this Security Agreement,
and, without limiting the generality of the foregoing, the Borrower hereby gives
the Lender the power and right, on behalf of the Borrower, without notice to or
assent by the Borrower, to do the following:

                                        5
<PAGE>
          (i)  in the case of any Account, at any time when the authority of the
               Borrower to collect the Accounts has been curtailed or terminated
               pursuant to the first sentence of Section 3(c) hereof, or in the
               case of any other Collateral, at any time when any Event of
               Default shall have occurred and is continuing, in the name of the
               Borrower or its own name, or otherwise, to take possession of and
               endorse and collect any checks, drafts, notes, acceptances or
               other instruments for the payment of moneys due under any
               Account, Instrument or with respect to any other action or
               proceeding in any court of law or equity or otherwise deemed
               appropriate by the Lender for the purpose of collecting any and
               all such moneys due under any Account, Instrument or with respect
               to any other collateral whenever payable;

          (ii) to pay or discharge taxes and liens levied or placed on or
               threatened against the Collateral, to effect any repairs or any
               insurance called for the terms of this Security Agreement and to
               pay all or any part of the premiums therefor and the costs
               thereof; and

          (iii) Upon the occurrence and during the continuance of any Event of
               Default, (A) to direct any party liable for any payment under any
               of the Collateral to make payment of any and all moneys due or to
               become due thereunder directly to the Lender or as the Lender
               shall direct; (B) to ask or demand for, collect, receive payment
               of and receipt for, any and all moneys, claims and other amounts
               due or to become due at any time in respect of or arising out of
               any Collateral; (C) to sign and endorse any invoices, freight or
               express bills, bills of lading, storage or warehouse receipts,
               drafts against debtors, assignments, verifications, notices and
               other documents in connection with any of the collateral; (D) to
               commence and prosecute any suits, actions or proceedings at law
               or in equity in any court of competent jurisdiction to collect
               the Collateral or any thereof and to enforce any other right in
               respect of any Collateral; (E) to defend any suit, action or
               proceeding brought against the Borrower with respect to any
               Collateral; (F) to settle, compromise or adjust any suit, action
               or proceeding described in clause (E) above and, in connection
               therewith, to give such discharges or releases as the Lender may
               deem appropriate; and (G) generally, to sell, transfer, pledge
               and make any agreement with respect to or otherwise deal with any
               of the Collateral as fully and completely as though the Lender
               were the absolute owner thereof for all purposes, and to do, at
               the Lender's option and the Borrower's expense, at any time, or
               from time to time, all acts and things which the Lender deems
               necessary to protect, preserve or realize upon the Collateral and
               the Lender's liens thereon and to effect the intent of this
               Security Agreement, all as fully and effectively as the Borrower
               might do.

At the reasonable request of the Lender, the Borrower shall deliver to the
Lender, one or more further documents ratifying any and all actions that said
attorneys shall lawfully take or do or

                                        6
<PAGE>
cause to be taken or done by virtue hereof. This power of attorney is a power
coupled with an interest and shall be irrevocable.

                  (b) Other Powers. The Borrower also authorizes the Lender, at
any time and from time to time, to execute, in connection with the sales
provided for in Section 7 hereof, any endorsements, assignments or other
instruments of conveyance or transfer with respect to the Collateral.

                  (c) No Duty on Lender's Part. The powers conferred on the
Lender hereunder are solely to protect the Lender's interests in the Collateral
and shall not impose any duty upon it to exercise any such powers. The Lender
shall be accountable only for amounts that it actually receives as a result of
the exercise of such powers, and neither it nor any of its officers, directors,
employees or agents shall be responsible to the Borrower for any act or failure
to act hereunder, except for its own gross negligence or willful misconduct.

         6. Performance by Lender of Borrower's Obligations. If the Borrower
fails to perform or comply with any of its agreements contained herein and the
Lender, as provided for by the terms of this Security Agreement, shall itself
perform or comply, or otherwise cause performance or compliance, with such
agreement, the expenses of the Lender incurred in connection with such
performance or compliance, together with interest thereon at a rate per annum
equal to the Prime Rate plus 5%, shall be payable by the Borrower to the Lender
on demand and shall constitute Obligations secured hereby.

         7. Remedies. If an Event of Default shall occur and be continuing, the
Lender may exercise, in addition to all other rights and remedies granted to it
in this Security Agreement and in any other instrument or agreement securing,
evidencing or relating to the Obligations, all rights and remedies of a secured
party under the Code. Without limiting the generality of the foregoing, the
Lender, without demand of performance or other demand, presentment, protest, or
notice of any kind (except any notice required by law referred to below) to or
upon the Borrower or any other person or entity (all and each of which are
hereby waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase, or otherwise
dispose of and deliver the Collateral or any part thereof (or contract to do any
of the foregoing), in one or more parcels at public or private sale or sales, at
any exchange, broker's board or office of the Lender or elsewhere upon such
terms and conditions as it may deem advisable and at such prices as it may deem
best, for cash or on credit or for future delivery without assumption of any
credit risk. The Lender shall have the right upon any such public sale or sales,
and, to the extent permitted by law, upon any such private sale or sales, to
purchase the whole or any part of the Collateral so sold, free of any right or
equity or redemption in the Borrower, which right or equity is hereby waived or
released. The Borrower further agrees, at the Lender's request, to assemble the
Collateral and make it available to the Lender at places which the Lender shall
reasonably select, whether at the Borrower's premises or elsewhere. The Lender
shall apply the net proceeds of any such collection, recovery, receipt,
appropriation, realization or sale, after deducting all reasonable costs and
expenses of every kind incurred therein or incidental to the care or safekeeping
of any of the Collateral or in any way relating to the Collateral or the rights
of the Lender hereunder, including, without limitation, reasonable attorneys'
fees and

                                        7
<PAGE>
disbursements, to the payment in whole or in part of the Obligations, in such
order as the Lender may elect, and only after such application and after the
payment by the Lender of any other amount required by any provision of law,
including, without limitation, Section 9-615 of the Code, need the Lender
account for the surplus, if any, to the Borrower. To the extent permitted by
applicable law, the Borrower waives all claims, damages and demands it may
acquire against the Lender arising out of the exercise by the Lender of any of
its rights hereunder, provided that such release shall not apply to any claim,
damage or demand resulting directly from the gross negligence, actual willful
misconduct or bad faith of the Lender. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall be deemed
reasonable and proper if given at least ten days before such sale or other
disposition. The Borrower shall remain liable for any deficiency if the proceeds
of any sale or other disposition of the Collateral are insufficient to pay the
Obligations and the fees and disbursements of any attorneys employed by the
Lender to collect such deficiency.

         8. Limitation on Duties Regarding Preservation of Collateral. The
Lender's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the Lender
deals with similar property for its own account. Neither the Lender nor any of
its directors, officers, employees or agents shall be liable for failure to
demand, collect or realize upon all or any part of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Borrower or otherwise.

         9. Powers Coupled with an Interest. All authorizations and agencies
herein contained with respect to the Collateral are irrevocable and powers
coupled with an interest.

         10. Severability. Any provision of this Security Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.

         11. Paragraph Headings. The paragraph headings used in this Security
Agreement are for convenience of reference only and are not to affect the
construction hereof or be taken into consideration in the interpretation hereof.

         12. No Waiver; Cumulative Remedies. The Lender shall not by any act
(except by a written instrument pursuant to Section 13 hereof), delay,
indulgence, omission or otherwise be deemed to have waived any right or remedy
hereunder or to have acquiesced in any Default or Event of Default or in any
breach of any of the terms and conditions hereof. No failure to exercise, nor
any delay in exercising, on the part of the Lender, any right, power or
privilege hereunder shall operate as a waiver thereof. No single or partial
exercise of any right, power or privilege hereunder shall preclude any other or
further exercise thereof or the exercise of any other right, power or privilege.
A waiver by the Lender of any right or remedy hereunder on any one occasion
shall not be construed as a bar to any right or remedy which the Lender would
otherwise have on any future occasion. The rights and remedies herein provided
are cumulative,

                                        8
<PAGE>
may be exercised singly or concurrently and are not exclusive of any rights or
remedies provided by law.

         13. Waivers and Amendments; Successors and Assigns. None of the terms
or provisions of this Security Agreement may be waived, amended, supplemented or
otherwise modified except by a written instrument executed by the Borrower and
the Lender, provided that any provision of this Security Agreement may be waived
by the Lender in a written letter or agreement executed by the Lender or by
telex or facsimile transmission from the Lender. This Security Agreement shall
be binding upon the successors and assigns of the Borrower and shall inure to
the benefit of the Lender and its successors and assigns.

         14. Governing Law. This Security Agreement shall be governed by, and
construed and interpreted in accordance with, the laws of the Commonwealth of
Massachusetts.

         15. Counterparts. This Security Agreement may be executed in several
counterparts, each of which shall constitute an original, but all of which, when
taken together, shall constitute but one agreement.

         16. Notices. All notices, requests, demands and other communications
required or permitted to be given hereunder by any party hereto shall be in
writing and shall be deemed to have been duly given (i) when received if
delivered personally, or (ii) on the business day following the business day
sent if sent by prepaid domestically recognized overnight receipted courier if
sent domestically, or (iii) on the third business day following the day sent if
sent by prepaid internationally recognized overnight receipted courier if sent
internationally, or (iv) when receipt is telephonically acknowledged if sent by
telecopier transmission on a business day or, if not a business day, on the next
following business day, or to the parties at the following addresses (or at such
other addresses as shall be specified by the parties):

         If to the Borrower, to:

         BRIDGELINE  Software, Inc.
         130 New Boston Street
         Woburn, MA 01801

         If to the Lender, to:

         Mr. Thomas Massie

and in any case at such other address as the addressee shall have specified by
written notice. All periods of notice shall be measured from the date of
delivery thereof.

                                        9
<PAGE>

        IN WITNESS WHEREOF, the Borrower has caused this Security Agreement to
be duly executed and delivered in favor of the Lender as of the date first above
written.

BORROWER:                                           LENDER:
BRIDGELINE Software Inc.

By: /S/ GARY M. CEBULA                              /S/ THOMAS L. MASSIE
    ---------------------------                     ----------------------------
Name: Gary M. Cebula                                Thomas Massie
      -------------------------
Title: Sr. V.P. & CFO
       ------------------------

                                       10

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