<DOCUMENT>
<TYPE>EX-10.12
<SEQUENCE>26
<FILENAME>ex10-12_14663.txt
<DESCRIPTION>BUSINESS COMBINATION SERVICES AGREEMENT 10-01-2005
<TEXT>
                                                                   EXHIBIT 10.12
                                                                   -------------

                     BUSINESS COMBINATION SERVICES AGREEMENT

This Agreement has been entered into and is effective October 1, 2005 by and
between BRIDGELINE Software, Inc., located at Sixth Road, Woburn, MA 01801
("BRIDGELINE") and Joseph Gunnar & Co., LLC, located at Thirty Broad Street, New
York, NY 10004 ("JGUN").

By execution of this document (the "M &A Agreement"), BRIDGELINE agrees to
retain JGUN and JGUN agrees to be retained by BRIDGELINE, pursuant to the
following terms and conditions:

1.       SERVICES.

         JGUN shall devote general advisory/consultative time and attention to
         any presently ongoing and potentially upcoming BRIDGELINE transactional
         business combination matters (the "Services") about which BRIDGELINE
         shall request its services, pursuant to the direction of Thomas L.
         Massie, BRIDGELINE'S Chief Executive Officer, or others designated by
         Thomas L. Massie, as shall be determined reasonable, in scope and time
         required, by JGUN. It is acknowledged by BRIDGELINE and JGUN that
         BRIDGELINE shall not be required to accept nor use any Services
         provided by JGUN. It is further acknowledged by BRIDGELINE and JGUN
         that financial advisory services and capital raising Services are not
         services contemplated by this M & A Agreement.

2.       TERM.

         JGUN's retention shall be for twelve (12) months commencing October 1,
         2005 (the "Term"); automatically renewed yearly ("Renewed Term") unless
         either BRIDGELINE or JGUN notifies the other of its intention to not
         renew at least ninety (90) calendar days prior to the expiration of the
         then applicable term; or if, during any initial or Renewed Term, two
         (2) or more business combinations involving BRIDGELINE (or one of its
         affiliates) is consummated. Notwithstanding anything to the contrary
         contained herein, in the event JGUN fails to exercise good faith in
         processing a bridge acquisition financing or initial public offering
         ("IPO") on behalf of Bridgeline and BRIDGELINE elects not to proceed
         with the bridge acquisition financing or IPO as a result of such
         failure, BRIDGELINE may terminate this M & A Agreement. Notwithstanding
         anything to the contrary contained herein, in the event that during the
         processing of the Bridge Acquisition Financing JGUN and BRIDGELINE are
         unable to agree on the satisfaction of any or all of the Miscellaneous
         Conditions to Financing set forth in the Bridge Acquisition Letter of
         Intent, BRIDGELINE may immediately terminate this M&A Agreement.

3.       COMPENSATION.

               (a)  For BUSINESS COMBINATION TRANSACTIONS (MERGER, ACQUISITION,
                    SALE AND JOINT VENTURE): JGUN shall be entitled to receive,
                    at closing, cash compensation equal to six percent (6%) of
                    the Total Consideration (as hereinafter defined; see Exhibit
                    A) relating to (i) any acquisition of 20% or more of the
                    stock or assets of any company consummated during the Term
                    or, if applicable, any Renewed Term (or agreed to pursuant
                    to term sheet, letter of intent or similar during the Term
                    or, if applicable, any Renewed Term, and thereafter
                    consummated) (ii) any sale of 20% or more of the stock or
                    assets of BRIDGELINE (exclusive of an IPO of its common
                    stock) consummated during the Term or, if applicable, any
                    Renewed Term (or agreed to pursuant to term sheet, letter of
                    intent or similar during the Term or, if applicable, any
                    Renewed Term, and thereafter consummated) and/or (iii) any
                    merger or other business combination, including joint
                    ventures, involving BRIDGELINE, consummated during the Term
                    or, if applicable, any Renewed Term (or agreed to pursuant
                    to term sheet, letter of intent or similar during the Term
                    or, if applicable, any Renewed Term, and thereafter
                    consummated) (compensation for any such transaction set
                    forth in (i) - (iii) during the Term

<PAGE>

                    or Renewed Term(s), if applicable, the "Success Fee"). In no
                    event shall the Success Fee payable be less than $125k or
                    more than $375k for any one Business Combination
                    Transaction, net of any Advance Credits (as will be
                    described in Section 3 (b) following).

               (b)  ADVANCES: During the Term and, if applicable, Renewed
                    Term(s), BRIDGELINE shall remit to JGUN non-refundable cash
                    advances (the "Advance Credits") to be credited against
                    Success Fees earnable, as follows: $7500 monthly commencing
                    October 1, 2005, increasing to $10,000 monthly if and when
                    BRIDGELINE consummates a capital raise of at least
                    $1,000,000, increasing to $15,000 monthly if and when
                    BRIDGELINE consummates an initial public offering of its
                    common stock.

               (c)  EXPENSES: BRIDGELINE shall reimburse JGUN, as and when
                    billed, for out-of-pocket expenses reasonably incurred by
                    JGUN in connection with Services provided or to be provided.
                    Such expenses contemplated may include, but are not limited
                    to, printing, postage, travel, and lodging. It is
                    acknowledged by JGUN that no single such expense in excess
                    of $1000 or monthly aggregate expense in excess of $5000
                    shall be incurred without prior approval by BRIDGELINE.

4.       EXCLUSIVITY.

         BRIDGELINE agrees that JGUN shall have a preferential right during the
         Term and any Renewed Term(s), if applicable, to provide Services to
         BRIDGELINE, and that so long as JGUN stands ready to provide Services
         on a good faith basis, it shall be entitled to the Success Fee
         compensation described in Section 3 (a) above, for any Business
         Combination Transaction described in Section 3 (a) (i) - (iii)
         consummated during the Term or, if applicable, any Renewed Term (or
         agreed to pursuant to term sheet, letter of intent or similar during
         the Term or, if applicable, any Renewed Term, and thereafter
         consummated).

5.       LIABILITY AND INDEMNIFICATION.

               (a)  It is acknowledged by BRIDGELINE that JGUN shall not be
                    subject to liability to BRIDGELINE or to any affiliate,
                    officer, director, employee, shareholder or creditor of
                    BRIDGELINE by virtue of any act or omission in the course of
                    or connected with the rendering or providing Services,
                    except for JGUN acts of bad faith or gross negligence.

               (b)  BRIDGELINE agrees to defend, indemnify and hold harmless
                    JGUN from and against any and all costs, expenses, and
                    liabilities (including reasonable attorney's fees) which may
                    in any way result from Services rendered by JGUN pursuant to
                    or in connection with this Agreement, except for JGUN acts
                    of bad faith or gross negligence.

6.       NOTICES.

         Notices must be sent to BRIDGELINE and JGUN at their respective
         addresses set forth above to the attention of Thomas L. Massie at
         BRIDGELINE and Stephan A. Stein at JGUN. Any Notice must be given by
         registered or certified mail, postage prepaid, and shall be deemed to
         have been given when deposited in the placecountry-regionUnited States
         mail. Either party may designate any other address to which Notice
         shall be given by giving written notice to the other of such change of
         address in the manner described in this section.

7.       GOVERNING LAW.

<PAGE>

         This Agreement has been made in the State of New York and shall be
         construed and governed in accordance with its laws. Any action relating
         to this Agreement shall be brought only in Federal and State courts in
         the City, County and State of New York.

8.       ENTIRE AGREEMENT.

         This Agreement contains the entire Agreement between BRIDGELINE and
         JGUN, and may not be altered or modified, except in writing and signed
         by both.

9.       BINDING EFFECT.

         This Agreement shall be binding upon BRIDGELINE and JGUN and their
         respective heirs, administrators, successors and assigns and may only
         be assigned upon written agreement of BRIDGELINE and JGUN.

The terms and conditions described above are understood and acceptable:

Joseph Gunnar & Co., LLC                     Bridgeline Software, Inc.
                                             (with Board of Directors approval)


By: /S/  STEPHAN A. STEIN                             By: /S/  THOMAS L. MASSIE
    ----------------------                                ---------------------
    Stephan A. Stein, Member                              Thomas L. Massie, CEO




<PAGE>

                                    EXHIBIT A

        TO BUSINESS COMBINATION SERVICES AGREEMENT (THE M & A AGREEMENT)
           DATED SEPTEMBER 30, 2005 BETWEEN BRIDGELINE SOFTWARE, INC.
              ("BRIDGELINE") AND JOSEPH GUNNAR & CO., LLC ("JGUN")

     Definition of Total Consideration:  See Section 3 (b) of M & A Agreement

     For purposes of the M & A Agreement, "Total Consideration" shall mean the
     total value of all cash, securities, or other property paid at the closing
     of a Business Combination Transaction (as defined by Section 3a of the M &
     A Agreement), (or to be paid in the future) either to BRIDGELINE or its
     shareholders with respect to such Business Combination Transactions,
     including, without limitation, consideration paid in respect of (i) the
     assets of the acquired company, (ii) the capital stock of the acquired
     company (and any securities convertible into options, warrants or other
     rights to acquire such capital stock) and (iii) the assumption, directly or
     indirectly (by operation of law or otherwise), of any long-term liabilities
     of the acquired company or repayment of indebtedness, including without
     limitation, indebtedness secured by the assets of the acquired company. In
     the event a Business Combination Transaction is consummated in one or more
     steps, including without limitation, any additional consideration paid or
     to be paid in any subsequent step as set forth above, such additional
     consideration shall be included in the definition of "Total Consideration".

     If all or portion of the Total Consideration paid in the Business
     Combination Transaction is other than cash or negotiable securities, then
     the value of such non-cash consideration shall be the fair market value
     thereof on the date the global sale transaction to Business Combination
     Transaction is consummated as mutually agreed upon in good faith by
     BRIDGELINE and JGUN. If such non-cash consideration consists of common
     stock, options, warrants or rights for which a public trading market
     existed prior to consummation of the Business Combination Transaction, then
     the value of such securities shall be determined by the closing or last
     sales price thereof on the date of the consummation of the Business
     Combination Transaction; provided, however, that if any of such non-cash
     consideration consists of newly-issued, publicly traded common stock,
     options, warrants or rights for which no public trading markets existed
     prior to the consummation of the Business Combination Transaction, then the
     value thereof shall be the average of the closing prices for the 20 trading
     days subsequent to the fifth trading day after the consummation of the
     Business Combination Transaction. In such event, the fee payable to JGUN
     with respect to such securities shall be paid on the 30th trading day
     subsequent to consummation of the Business Combination Transaction. If no
     public market exists for the common stock, options, warrants or rights
     issued in the Business Combination Transactions, then the value of such
     securities shall be as mutually agreed upon in good faith by BRIDGELINE'S
     board of directors and JGUN. If such non-cash consideration consists of
     preferred stock or debt securities (regardless of whether a public trading
     market existed for such preferred stock or debt securities prior to the
     consummation of the Business Combination Transaction or exists thereafter),
     the value thereof shall be the fair market value of such non-cash
     consideration. Any amounts payable to or by BRIDGELINE, or any affiliate of
     BRIDGELINE or any shareholder of BRIDGELINE in connection with a
     non-competition agreement or any employment, consulting, licensing, supply
     or other agreement, to the extent that such amounts payable are greater
     than what would customarily be paid on arms-length basis to an employee,
     consultant, licensee or supplier, shall be deemed to be part of the
     consideration paid in the Business Combination Transaction includes future
     payments, then BRIDGELINE shall pay JGUN any additional cash fee,
     determined in accordance with this definition, when, and if, such payments
     are paid.
</TEXT>
</DOCUMENT>
