EIGHTH LOAN MODIFICATION AGREEMENT

Exhibit 10.4

This Eighth Loan Modification Agreement (this “Loan Modification Agreement”) is entered into as of July 31, 2013 (the “Eighth Loan Modification Effective Date”), by and between (i) SILICON VALLEY BANK, a California corporation, with its principal place of business at 0000 Xxxxxx Xxxxx, Xxxxx Xxxxx, Xxxxxxxxxx 00000 and with a loan production office located at 000 Xxxxx Xxxxxx, Xxxxx 0-000, Xxxxxx, Xxxxxxxxxxxxx 00000 (“Bank”) and (ii) BRIDGELINE DIGITAL, INC., a Delaware corporation with its chief executive office located at 00 Xxxxxxxxx Xxxx, Xxxxxxxxxx, Xxxxxxxxxxxxx 00000 (“Bridgeline”) and BRIDGELINE INTELLIGENCE GROUP, INC., a Delaware corporation, with offices located at 0000 Xxxxxxxx Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000 (“Intelligence Group”).

1. DESCRIPTION OF EXISTING INDEBTEDNESS AND OBLIGATIONS. Among other indebtedness and obligations which may be owing by Borrower to Bank, Borrower is indebted to Bank pursuant to a certain Amended and Restated Loan and Security Agreement dated as of March 31, 2010, as amended by a certain First Loan Modification Agreement, dated as of June 22, 2010, as further amended by a certain Second Loan Modification Agreement, dated as of July 7, 2010, as further amended by a certain Joinder, Waiver and Third Loan Modification Agreement, dated as of November 5, 2010, as further amended by a certain Fourth Loan Modification Agreement, dated as of May 6, 2011, as further amended by a certain Joinder, Fifth Loan Modification and Waiver Agreement, dated as of December 16, 2011, as further amended by a certain Sixth Loan Modification Agreement, dated as of May 11, 2012 and as further amended by a certain Seventh Loan Modification Agreement, dated as of February 11, 2013 (as amended, the “Loan Agreement”). Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Agreement.

2. DESCRIPTION OF COLLATERAL. Repayment of the Obligations is secured by the Collateral as described in the Loan Agreement and in a certain Amended and Restated Intellectual Property Security Agreement, dated as of March 31, 2010 between Bank and Bridgeline and a certain Intellectual Property Security Agreement dated as of December 16, 2011 between Bank and Intelligence Group (together, the “IP Agreement”, and together with any other collateral security granted to Bank, the “Security Documents”). Hereinafter, the Security Documents, together with all other documents evidencing or securing the Obligations shall be referred to as the “Existing Loan Documents”.

3. DESCRIPTION OF CHANGES IN TERMS.

A.	Modifications to Loan Agreement.


	1.	The Loan Agreement shall be amended by deleting the following text appearing as Section 2.1.5(c) and Section 2.1.5(d) thereof:

“(c) Repayment. (i) On or before July 2, 2012, Bank shall have received the Permitted Term Loan Prepayment Amount. Such Permitted Term Loan Prepayment Amount shall be in addition to regularly scheduled principal payments described below, and shall be applied to the principal amount of each remaining Term Loan Payment described below on a pro rata basis. The Permitted Term Loan Prepayment Amount shall be exempt from the applicable prepayment fee described in Section 2.1.5(d) hereof.

(ii) Borrower shall continue repaying the outstanding amount of the Term Loan in accordance with the existing thirty-six (36) month amortization period, in (i) consecutive equal monthly installments of principal, plus (ii) monthly payments of interest, in arrears, (each such payment of principal and interest being a “Term Loan Payment”), at the rate set forth in Section 2.3(a)(ii). Notwithstanding the foregoing, all unpaid principal and interest on the Term Loan shall be due on the Term Loan Maturity Date. Once repaid, no amount of the Term Loan may be reborrowed.

(d) Prepayment. The Term Loan may be prepaid by Borrower prior to the Term Loan Maturity Date, effective three (3) Business Days after written notice of prepayment is given to Bank. Notwithstanding any such prepayment, Bank’s lien and security interest in the Collateral shall continue until Borrower fully satisfies its Obligations. If such prepayment is at Borrower’s election or at Bank’s election due to the occurrence and continuance of an Event of Default, Borrower shall pay to Bank, in addition to the payment of any other expenses or fees then-owing, a prepayment fee in an amount equal to (i) if such prepayment occurs on or after the Sixth Loan Modification Effective Date but on or prior to March 31, 2013, Forty Thousand Dollars ($40,000) and (ii) if such prepayment occurs on or after April 1, 2013 but on or prior to March 31, 2014, Twenty Thousand Dollars ($20,000); provided that no prepayment fee shall be charged (i) on or after April 1, 2014 or (ii) if the Term Loan is replaced with a new facility from another division of Silicon Valley Bank.”

and inserting in lieu thereof the following:

“(c) Repayment. (i) Bank has previously received the Permitted Term Loan Prepayment Amount, which was applied to reduce the outstanding principal balance of the Term Loan.

(ii) As of the Eighth Loan Modification Effective Date, the outstanding principal balance of the two notes issued under the Term Loan is: (A) Note 1 in an amount equal to $277,777.76 (“Note 1”) and (B) Note 2 in an amount equal to $333,333.28 (“Note 2”), for a total outstanding principal balance under the Term Loan of $611,111.04. On the Eighth Loan Modification Effective Date, Note 1 and Note 2 will be consolidated for repayment, as one consolidated Term Loan with a total outstanding principal balance of $611,111.04, as follows:

(1) Contemporaneously with the execution of the Eighth Loan Modification Agreement, Borrower shall pay to Bank the Initial 2013 Required Term Loan Prepayment Amount to be applied toward the repayment of the consolidated Term Loan. Such payment shall be in addition to other payments described herein and shall be exempt from the applicable prepayment fee described in Section 2.1.5(d) hereof.

(2) On or before August 15, 2013, Borrower shall pay to Bank the Subsequent 2013 Required Term Loan Prepayment Amount to be applied toward the repayment of the consolidated Term Loan. Such payment shall be in addition to other payments described herein and shall be exempt from the applicable prepayment fee described in Section 2.1.5(d) hereof.

(3) Commencing on September 1, 2013, Borrower shall repay the consolidated outstanding principal balance of the remaining consolidated Term Loan, based on an eight (8) month amortization schedule, in (i) consecutive equal monthly installments of principal, each in an amount of $38,888.88 plus (ii) monthly payments of interest, in arrears, (each such payment of principal and interest being a “Term Loan Payment”), at the rate set forth in Section 2.3(a)(ii). Notwithstanding the foregoing, all unpaid principal and interest on the consolidated Term Loan shall be due on the Term Loan Maturity Date. Once repaid, no amount of the Term Loan may be reborrowed. For the avoidance of doubt, on August 1, 2013, Borrower shall pay all accrued and unpaid interest on the consolidated outstanding principal amount of the Term Loan at the rate set forth in Section 2.3(a)(ii).

(d) Prepayment. The Term Loan may be prepaid by Borrower prior to the Term Loan Maturity Date, effective three (3) Business Days after written notice of prepayment is given to Bank. Notwithstanding any such prepayment, Bank’s lien and security interest in the Collateral shall continue until Borrower fully satisfies its Obligations. If such prepayment is at Borrower’s election or at Bank’s election due to the occurrence and continuance of an Event of Default, Borrower shall pay to Bank, in addition to the payment of any other expenses or fees then-owing, a prepayment fee in an amount equal to Twenty Thousand Dollars ($20,000); provided that no prepayment fee shall be charged if the Term Loan is replaced with a new facility from another division of Silicon Valley Bank.”

2. The Loan Agreement shall be amended by deleting the following text appearing as Section 2.3(a) thereof:

“(a) Interest Rate.

(i) Advances. Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate plus one and one-quarter percentage points (1.25%), which interest shall be payable monthly, in arrears, in accordance with Section 2.3(f) below.

(ii) Term Loan. Subject to Section 2.3(b), the principal amount outstanding under the Term Loan shall accrue interest at a floating per annum rate equal to the Prime Rate plus one and three-quarters percent (1.75%), which interest shall be payable monthly, in arrears, in accordance with Section 2.1.5.”

and inserting in lieu thereof the following:

“(a) Interest Rate.

(i) Advances. Subject to Section 2.3(b), the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate plus two and one-quarter percent (2.25%); provided, that from and after the occurrence of the EBITDA Event, the principal amount outstanding under the Revolving Line shall accrue interest at a floating per annum rate equal to the Prime Rate plus one and one-quarter percent (1.25%). Such interest shall in any event be payable monthly, in arrears, in accordance with Section 2.3(f) below.

(ii) Term Loan. Subject to Section 2.3(b), the principal amount outstanding under the Term Loan shall accrue interest at a floating per annum rate equal to the Prime Rate plus two and three-quarters percent (2.75%); provided that from and after the occurrence of the EBITDA Event, the principal amount outstanding under the Term Loan shall accrue interest at a floating per annum rate equal to the Prime Rate plus one and three-quarters percent (1.75%). Such interest shall in any event be payable monthly, in arrears, in accordance with Section 2.1.5.”

The Loan Agreement shall be amended by deleting the following text appearing as Section 6.9(a) thereof:

“(a) EBITDA. EBITDA, measured quarterly on a trailing three-month basis as of the last day of each fiscal quarter listed below, of no less than the corresponding amounts listed below:

Quarterly Period Ending	Minimum EBITDA

December 31, 2012	$1.00

March 31, 2013	$1.00

June 30, 2013	$50,000

September 30, 2013	$125,000

December 31, 2013	$175,000

March 31, 2014, and as of the last day of each quarterly period ending thereafter	$250,000

and inserting in lieu thereof the following:

“(a) EBITDA. EBITDA, measured monthly, on a trailing three-month basis (unless otherwise indicated) as of the last day of each monthly period listed below, of no less than the corresponding amounts listed below:

Monthly Period Ending	Minimum EBITDA

Trailing one-month ending July 31, 2013	($160,000)

Trailing two-months ending August 31, 2013	($200,000)

September 30, 2013, October 31, 2013 and November 31, 2013	$100,000

December 31, 2013, January 31, 2014 and February 28, 2014	$200,000

March 31, 2014, April 30, 2014 and May 31, 2014	$300,000

June 30, 2014, July 31, 2014 and August 31, 2014	$400,000

September 30, 2014, and each monthly period (each on a trailing three-month basis) ending thereafter	$500,000

The Loan Agreement shall be amended by deleting the following text appearing as Section 6.9(b) thereof:

“(b) Minimum Liquidity. Unrestricted cash at Bank (excluding drawn Non-formula Advances held at Bank) plus the unused Availability Amount (excluding any undrawn availability with respect to Non-formula Advances) of not less than (i) prior to receipt by Bank of the Permitted Term Loan Prepayment Amount, One Million Dollars ($1,000,000); and (ii) commencing on the date that Bank applies the Permitted Term Loan Prepayment Amount to the outstanding principal balance of the Term Loan, and at all times thereafter, One Million Two Hundred Fifty Thousand Dollars ($1,250,000).”

and inserting in lieu thereof the following:

“(b) Minimum Liquidity. From the Eighth Loan Modification Effective Date until the consolidated Term Loan has been repaid in full, maintain unrestricted cash at Bank (excluding drawn Non-formula Advances held at Bank) plus the unused Availability Amount (excluding any undrawn availability with respect to Non-formula Advances) of not less than Three Hundred Fifty Thousand Dollars ($350,000).”

The Loan Agreement shall be amended by deleting the following definitions appearing in Section 13.1 thereof:

“Borrowing Base” is (a) eighty percent (80%) of Eligible Accounts plus (b) the lesser of (i) eighty percent (80%) of Eligible Foreign Accounts or (ii) Fifty Thousand Dollars ($50,000), in each case as determined by Bank from Borrower’s most recent Borrowing Base Certificate; provided, however, that Bank may decrease the foregoing percentage in its good faith business judgment based on events, conditions, contingencies, or risks which, as determined by Bank, may adversely affect the Collateral.

“Term Loan Maturity Date” is the earliest of (a) April 1, 2015 or (b) the occurrence of an Event of Default.”

and inserting in lieu thereof the following:

“Borrowing Base” is (a) eighty-five percent (85%) of Eligible Accounts plus (b) the lesser of (i) eighty-five percent (85%) of Eligible Foreign Accounts or (ii) Fifty Thousand Dollars ($50,000), in each case as determined by Bank from Borrower’s most recent Borrowing Base Certificate; provided, however, that Bank may decrease the foregoing percentage in its good faith business judgment based on events, conditions, contingencies, or risks which, as determined by Bank, may adversely affect the Collateral.

“Term Loan Maturity Date” is the earliest of (a) April 1, 2014 or (b) the occurrence of an Event of Default.”

The Loan Agreement shall be amended by inserting the following new definitions in Section 13.1 thereof, each in its appropriate alphabetical order:

“EBITDA Event” is evidence satisfactory to Bank, in its reasonable discretion, that Borrow has achieved EBITDA, measured on a trailing three month basis (i) as of September 30, 2013 of at least One Hundred Twenty Five Thousand Dollars ($125,000) or (ii) as of December 31, 2013 of at least One Hundred Seventy Five Thousand Dollars ($175,000).

“Eighth Loan Modification Effective Date” is July 31, 2013.

“Initial 2013 Required Term Loan Prepayment Amount” is One Hundred Fifty Thousand Dollars ($150,000), to be applied to reduce the outstanding principal balance of the consolidated Term Loan.

“Subsequent 2013 Required Term Loan Prepayment Amount” is One Hundred Fifty Thousand Dollars ($150,000), to be applied to reduce the outstanding principal balance of the consolidated Term Loan.

The Compliance Certificate attached as Exhibit B to the Loan Agreement is hereby deleted and replaced with Exhibit B attached hereto.

Acknowledgment of Default; Waivers. Borrower acknowledges that it is in violation of the Loan Agreement for (i) the anticipated failure to comply with (i) the minimum EBITDA financial covenant in Section 6.9(a) for the quarterly compliance period ended June 30, 2013, and (ii) the failure to comply with the minimum Liquidity financial covenant contained in Section 6.9(b) of the Loan Agreement at various times during the compliance periods ended April 30, 2013 and May 31, 2013 (the “Existing Defaults”). Bank hereby waives Borrower’s Existing Defaults for the compliance periods indicated above. Bank’s waiver of Borrower’s compliance with said Existing Defaults shall apply only to the foregoing specific periods. The Borrower hereby acknowledges and agrees that except as specifically provided herein, nothing in this Section or anywhere in this Loan Modification Agreement shall be deemed or otherwise construed as a waiver by the Bank of any of its rights and remedies pursuant to the Existing Loan Documents, applicable law or otherwise.

4. CONSENT TO ACQUISITION. Notwithstanding the terms and conditions of Section 7.3, Bank hereby consents to the acquisition by Borrower (the “Element Acquisition”) of Transformational Technologies, Inc. (d/b/a Element Local), a California corporation (the “Target”), so long as promptly following such Element Acquisition, and in any event on or before August 15, 2013, Target is administratively dissolved with the State of California, with all assets of Target transferred to Borrower. Failure to comply with this Section 4 will be deemed to be an immediate Event of Default under the Loan Agreement for which no cure or grace period shall apply.

5. CONDITIONS PRECEDENT. As a condition precedent to the effectiveness of this Loan Modification Agreement and the Bank’s obligation to make further Credit Extensions, the Bank shall have received the following documents or payments prior to or concurrently with this Agreement, each in form and substance satisfactory to the Bank:

copies, certified by a duly authorized officer of each Borrower, to be true and complete as of the date hereof, of each of (i) the governing documents of each Borrower, respectively, as in effect on the date hereof (but only to the extent modified since last delivered to the Bank), (ii) the resolutions of each Borrower, respectively, authorizing the execution and delivery of this Loan Modification Agreement, the other documents executed in connection herewith and each Borrower’s respective performance of all of the transactions contemplated hereby (but only to the extent required since last delivered to Bank), and (iii) an incumbency certificate giving the name and bearing a specimen signature of each individual who shall be so authorized (but only to the extent any signatories have changed since such incumbency certificate was last delivered to Bank);

a certificate of the Secretary of State (or similar entity) of the applicable jurisdiction of organization of a recent date as to each Borrower’s respective existence and good standing; and

such other documents as Bank may reasonably request.

6. CONDITION SUBSEQUENT. Promptly when available, Borrower shall provide Bank (i) evidence satisfactory to Bank that Target has been administratively dissolved; and (ii) final copies of the Element Acquisition documents.

7. FEES. Borrower shall pay to Bank a fully earned, non-refundable modification fee equal to Fifteen Thousand Dollars ($15,000), which fee shall be due and payable on or prior to the Eighth Loan Modification Effective Date. In addition, Borrower shall also pay to Bank an annual renewal fee equal to Twenty Five Thousand Dollars ($25,000), which fee shall be due and payable on January 29, 2014 and shall be deemed fully earned as of that date. Borrower shall also reimburse Bank for all legal fees and expenses incurred in connection with the Existing Loan Documents and this Loan Modification Agreement.

8. RATIFICATION OF PERFECTION CERTIFICATE. Bridgeline hereby ratifies, confirms and reaffirms, all and singular, the terms and disclosures contained in a certain Perfection Certificate dated as of March 31, 2010, as amended as of the date hereof and acknowledges, confirms and agrees that, except as amended, the disclosures and information Bridgeline provided to Bank in the Perfection Certificate, as supplemented through the date hereof, have not changed. In addition, Intelligence Group hereby ratifies, confirms and reaffirms all and singular, the terms and disclosures contained in a certain Perfection Certificate dated as of the date hereof, as supplemented through the date hereof. Each Borrower acknowledges, confirms and agrees the disclosures and information provided to Bank in such Perfection Certificates, as supplemented through the date hereof, have not changed.

9. CONSISTENT CHANGES. The Existing Loan Documents are hereby amended wherever necessary to reflect the changes described above.

10. RATIFICATION OF LOAN DOCUMENTS. Borrower hereby ratifies, confirms, and reaffirms all terms and conditions of the Existing Loan Documents and of all security or other collateral granted to the Bank, and confirms that the indebtedness secured thereby includes, without limitation, the Obligations.

11. NO DEFENSES OF BORROWER. Borrower hereby acknowledges and agrees that Borrower has no offsets, defenses, claims, or counterclaims against Bank with respect to the Obligations, or otherwise, and that if Borrower now has, or ever did have, any offsets, defenses, claims, or counterclaims against Bank, whether known or unknown, at law or in equity, all of them are hereby expressly WAIVED and Borrower hereby RELEASES Bank from any liability thereunder.

12. CONTINUING VALIDITY. Borrower understands and agrees that in modifying the existing Obligations, Bank is relying upon Borrower’s representations, warranties, and agreements, as set forth in the Existing Loan Documents. Except as expressly modified pursuant to this Loan Modification Agreement, the terms of the Existing Loan Documents remain unchanged and in full force and effect. Bank’s agreement to modifications to the existing Obligations pursuant to this Loan Modification Agreement in no way shall obligate Bank to make any future modifications to the Obligations. Nothing in this Loan Modification Agreement shall constitute a satisfaction of the Obligations. It is the intention of Bank and Borrower to retain as liable parties all makers of Existing Loan Documents, unless the party is expressly released by Bank in writing. No maker will be released by virtue of this Loan Modification Agreement.

13. RIGHT OF SET OFF. Borrower hereby grants to Bank, a lien, security interest and right of set off as security for all Obligations to Bank, whether now existing or hereafter arising upon and against all deposits, credits, collateral and property, now or hereafter in the possession, custody, safekeeping or control of Bank or any entity under the control of Bank (including a Bank subsidiary) or in transit to any of them. At any time after the occurrence and during the continuance of an Event of Default, without demand or notice, Bank may set off the same or any part thereof and apply the same to any liability or obligation of Borrower even though unmatured and regardless of the adequacy of any other collateral securing the Obligations. ANY AND ALL RIGHTS TO REQUIRE BANK TO EXERCISE ITS RIGHTS OR REMEDIES WITH RESPECT TO ANY OTHER COLLATERAL WHICH SECURES THE OBLIGATIONS, PRIOR TO EXERCISING ITS RIGHT OF SETOFF WITH RESPECT TO SUCH DEPOSITS, CREDITS OR OTHER PROPERTY OF BORROWER ARE HEREBY KNOWINGLY, VOLUNTARILY AND IRREVOCABLY WAIVED.

14. CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER. Section 11 of the Loan Agreement is hereby incorporated by reference.

15. COUNTERSIGNATURE. This Loan Modification Agreement shall become effective only when it shall have been executed by Borrower and Bank.

[The remainder of this page is intentionally left blank]

This Loan Modification Agreement is executed as a sealed instrument under the laws of the Commonwealth of Massachusetts, as of the Eighth Loan Modification Effective Date.

BORROWER:

BANK:

BRIDGELINE DIGITAL, INC.

By: _/s/ Xxxxxxx X. Prinn___
Name: Xxxxxxx X. Xxxxx
Title: Chief Financial Officer

SILICON VALLEY BANK

By: _/s/ Xxxxx Lyons_
Name:_ Xxxxx Lyons_____
Title: __Vice President_______

BRIDGELINE INTELLIGENCE GROUP, INC.

By: _/s/ Xxxxxxx X. Prinn___
Name: Xxxxxxx X. Xxxxx
Title: Treasurer

[Eighth Loan Modification Agreement Signature Page]

EXHIBIT A- COMPLIANCE CERTIFICATE

TO:	SILICON VALLEY BANK	Date:
FROM:	BRIDGELINE DIGITAL, INC.
	BRIDGELINE INTELLIGENCE GROUP, INC.

The undersigned authorized officer of Bridgeline Digital, Inc. and Bridgeline Intelligence Group, Inc. (individually and collectively, jointly and severally, the “Borrower”) certifies that under the terms and conditions of the Amended and Restated Loan and Security Agreement between Borrower and Bank (as amended, the “Agreement”), (1) Borrower is in complete compliance for the period ending _______________ with all required covenants except as noted below, (2) there are no Events of Default, (3) all representations and warranties in the Agreement are true and correct in all material respects on this date except as noted below; provided, however, that such materiality qualifier shall not be applicable to any representations and warranties that already are qualified or modified by materiality in the text thereof; and provided, further that those representations and warranties expressly referring to a specific date shall be true, accurate and complete in all material respects as of such date, (4) Borrower, and each of its Subsidiaries, has timely filed all required tax returns and reports, and Borrower has timely paid all foreign, federal, state and local taxes, assessments, deposits and contributions owed by Borrower except as otherwise permitted pursuant to the terms of Section 5.9 of the Agreement, and (5) no Liens have been levied or claims made against Borrower or any of its Subsidiaries relating to unpaid employee payroll or benefits of which Borrower has not previously provided written notification to Bank. Attached are the required documents supporting the certification. The undersigned certifies that these are prepared in accordance with GAAP consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The undersigned acknowledges that no borrowings may be requested at any time or date of determination that Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. Capitalized terms used but not otherwise defined herein shall have the meanings given them in the Agreement.

Please indicate compliance status by circling Yes/No under “Complies” column.

Reporting Covenant	Required	Complies

Monthly financial statements with Compliance Certificate	Monthly within 30 days	Yes No
Annual financial statement (CPA Audited)	FYE within 150 days	Yes No
10-Q, 10-K and 8-K	Within 5 days after filing with SEC	Yes No
A/R & A/P Agings and Deferred Revenue reports	Monthly within 30 days	Yes No
Board-approved projections	Annually, w/in 45 days of approval and as amended	Yes No
Transaction Reports	Monthly within 30 days and with each request for a Credit Extension	Yes No

Financial Covenant	Required	Actual	Complies

Maintain at all times:
Minimum EBITDA (tested monthly, on a trailing three-month basis unless otherwise indicated)	*		Yes No
Trailing one-month ending July 31, 2013	($160.000)	$______________	Yes No
Trailing two-months ending August 31, 2013	($200,000)	$______________	Yes No
September 30, 2013, October 31, 2013 and November 31, 2013	$100.000	$______________	Yes No
December 31, 2013, January 31, 2014 and February 28, 2014	$200,000	$______________	Yes No
March 31, 2014, April 30, 2014 and May 31, 2014	$300,000	$______________	Yes No
June 30, 2014, July 31, 2014 and August 31, 2014	$400,000	$______________	Yes No
September 30, 2014, and each monthly period (each on a trailing three-month basis) ending thereafter	$500,000	$______________	Yes No
Minimum Liquidity (certified monthly)	**	$______________	Yes No

* See Section 6.9(a) of the Loan Agreement

** See Section 6.9(b) of the Loan Agreement

The following Intellectual Property was registered after the Effective Date (if no registrations, state “None”):

____________________________________________________________________________.

There were no held checks as of the end of such month there except as follows (if no held checks, state “None”):

____________________________________________________________________________.

The following financial covenant analyses and information set forth in Schedule 1 attached hereto are true and accurate as of the date of this Certificate.

The following are the exceptions with respect to the certification above: (If no exceptions exist, state “No exceptions to note.”)

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BRIDGELINE DIGITAL, INC.

BRIDGELINE INTELLIGENCE GROUP, INC.

By: _____________________________

Name: ___________________________

Title: ____________________________

BANK USE ONLY

Received by: _____________________

AUTHORIZED SIGNER

Date: ___________________________

Verified: _________________________

AUTHORIZED SIGNER

Date: ___________________________

Compliance Status: Yes No

Schedule 1 to Compliance Certificate

Financial Covenants of Borrower

In the event of a conflict between this Schedule and the Loan Agreement, the terms of the Loan Agreement shall govern.

Dated: ____________________

I. Minimum EBITDA (Section 6.9(a))

Required: EBITDA, measured monthly, on a trailing three-month basis (unless otherwise indicated) as of the last day of each monthly period listed below, of no less than the corresponding amounts listed below:

Monthly Period Ending	Minimum EBITDA

Trailing one-month ending July 31, 2013	($160,000)

Trailing two-months ending August 31, 2013	($200,000)

September 30, 2013, October 31, 2013 and November 31, 2013	$100,000

December 31, 2013, January 31, 2014 and February 28, 2014	$200,000

March 31, 2014, April 30, 2014 and May 31, 2014	$300,000

June 30, 2014, July 31, 2014 and August 31, 2014	$400,000

September 30, 2014, and each monthly period (each on a trailing three-month basis) ending thereafter	$500,000

Actual: All amounts measured on a trailing three month basis, unless otherwise indicated above:

A.	Net Income	$ __________

B.	Interest Expense	$ __________

C.	To the extent deducted from the calculation of Net Income, non-cash stock compensation expense, depreciation expense and amortization expense (including, without limitation, goodwill)	$ __________

D.	Other one-time non-cash expenses approved by Bank, on a case-by-case basis, in its sole discretion	$ __________

E.	EBITDA (line A plus line B plus line C plus line D)	$ __________

Is line E equal to or greater than $[ ]?

No, not in compliance

Yes, in compliance

II. Minimum Liquidity (Section 6.9(b))

Required: From the Eighth Loan Modification Effective Date until the consolidated Term Loan is repaid in full, maintain unrestricted cash at Bank (excluding drawn Non-formula Advances held at Bank) plus the unused Availability Amount (excluding any undrawn availability with respect to Non-formula Advances) of not less than Three Hundred Fifty Thousand Dollars ($350,000).

Actual:

A.	Unrestricted Cash at Bank (excluding drawn Non-formula Advances held at Bank)	$ __________

B.	unused Availability Amount (but excluding any undrawn availability with respect to Non-formula Advances)	$ __________

C.	Liquidity (line A plus line B)	$ __________

Is line C equal to or greater than $350,000?

No, not in compliance

Yes, in compliance

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EIGHTH LOAN MODIFICATION AGREEMENT

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