<DOCUMENT>
<TYPE>EX-10.20
<SEQUENCE>34
<FILENAME>ex10-20_14663.txt
<DESCRIPTION>GENERAL SECURITY AGREEMENT DATED 04-21-2006
<TEXT>
                                                                   EXHIBIT 10.20
                                                                   -------------

                           GENERAL SECURITY AGREEMENT

     SECURITY AGREEMENT, dated as of April 21, 2006, between Bridgeline
Software, Inc., a Delaware corporation with offices at 10 Sixth Road, Woburn, MA
01801 (the "Debtor") and the undersigned Individual Investor (or his, her or its
duly authorized agent) (the "Purchaser") .

                              W I T N E S S E T H :
                              ---------------------

     WHEREAS, the Debtor and certain investors (individually, a "Note Holder",
and, collectively, the "Note Holders") are parties to secured promissory notes
issued by the Debtor in the aggregate principal amount of up to $2,250,000 with
an option to issue an additional $550,000 in secured promissory notes (herein,
as at any time amended, extended, restated, renewed or modified, the "Notes");

     WHEREAS, it is a condition to the willingness of the Note Holder to accept
the Notes and make the loan evidenced thereby that the Debtor enter into this
Agreement and grant to each individual Purchaser the security interest provided
for herein; and

     WHEREAS, the Debtor has a certain existing credit line with Sand Hill
Finance, LLC under a Financing Agreement dated, March 29, 2005, as amended (the
"Senior Agreement"), pursuant to which Sand Hill Finance, LLC has a first
priority lien on all of Debtor's assets so long as any obligations are
outstanding under the Senior Agreement.

     NOW, THEREFORE, FOR VALUE RECEIVED, IT IS AGREED:

     Section 1. Terms. Unless otherwise defined herein, capitalized terms used
in this Agreement shall have the meaning specified therefor in the Note. As used
herein the following terms shall have the meanings specified and shall include
in the singular number the plural and in the plural number the singular:

     "Assigned Agreements" shall mean all contracts and agreements of the
Debtor.

     "Collateral" means all of the Debtor's right, title and interest in and
under or arising out of each and all of the following:

          All personal property and fixtures of the Debtor of any type or
     description, wherever located and now existing or hereafter arising or
     acquired, including but not limited to the following:

          (i)     all of the Debtor's goods including, without limitation:

                  (a) all inventory, including without limitation, equipment
                  held for lease, whether raw materials, in process or finished,
                  all material or equipment usable in processing the same and
                  all documents of title
<PAGE>

                  covering any inventory (all of the foregoing, "Inventory"),
                  including without limitation that located at the locations
                  listed on Schedule 1 annexed hereto;

                  (b) all equipment (the "Equipment") employed in connection
                  with the Debtor's business, together with all present and
                  future additions, attachments and accessions thereto and all
                  substitutions therefor and replacements thereof, including
                  without limitation that located at the locations listed on
                  Schedule 1 annexed hereto;

          (ii)    all of the Debtor's present and future accounts, accounts
                  receivable, general intangibles, contracts and contract rights
                  (herein sometimes referred to as "Receivables"), including but
                  not limited to the Debtor's rights (including rights to
                  payment) under all Assigned Agreements, together with

                  (a) all claims, rights, powers or privileges and remedies of
                  the Debtor relating thereto or arising in connection therewith
                  including, without limitation, all rights of the Debtor to
                  make determinations, to exercise any election (including, but
                  not limited to, election of remedies) or option or to give or
                  receive any notice, consent, waiver or approval, together with
                  full power and authority to demand, receive, enforce, collect
                  or receipt for any of the foregoing or any property which is
                  the subject of the Assigned Agreements, to enforce or execute
                  any checks, or other instruments or orders, to file any claims
                  and to take any action which (in the opinion of the Secured
                  Party Representative, as defined herein) may be necessary or
                  advisable in connection with any of the foregoing,

                  (b) all liens, security, guaranties, endorsements, warranties
                  and indemnities and all insurance and claims for insurance
                  relating thereto or arising in connection therewith,

                  (c) all rights to property forming the subject matter of the
                  Receivables including, without limitation, rights to stoppage
                  in transit and rights to returned or repossessed property,

                  (d) all writings relating thereto or arising in connection
                  therewith including without limitation, all notes, contracts,
                  security agreements, guaranties, chattel paper and other
                  evidence of indebtedness or security, all powers-of-attorney,
                  all books, records, ledger cards and invoices, all credit
                  information, reports or memoranda and all evidence of filings
                  or registrations relating thereto,

                                       2
<PAGE>


                  (e) all catalogs, computer and automatic machinery software
                  and programs, and the like pertaining to operations by the
                  Debtor in, on or about any of its plants or warehouses, all
                  sales data and other information relating to sales or service
                  of products now or hereafter manufactured on or about any of
                  its plants, and all accounting information pertaining to
                  operations in, on or about any of its plants, and all media in
                  which or on which any of the information or knowledge or data
                  is stored or contained, and all computer programs used for the
                  compilation or printout of such information, knowledge,
                  records or data, and

                  (f) all accounts, contract rights, general intangibles and
                  other property rights of any nature whatsoever arising out of
                  or in connection with the foregoing, including without
                  limitation, payments due and to become due, whether as
                  repayments, reimbursements, contractual obligations,
                  indemnities, damages or otherwise;

          (iii)   patents, patent applications, copyrights and intellectual
                  property of all description;

          (iv)    all other personal property of the Debtor of any nature
                  whatsoever, including, without limitation, all accounts, bank
                  accounts, deposits, credit balances, contract rights,
                  inventory, general intangibles, goods, equipment, instruments,
                  chattel paper, machinery, furniture, furnishings, fixtures,
                  tools, supplies, appliances, plans and drawings, together with
                  all customer and supplier lists and records of the business,
                  and all property from time to time described in any financing
                  statement (UCC-1) signed by the Debtor naming the Secured
                  Party Representative as secured party; and

          (v)     all additions, accessions, replacements, substitutions or
                  improvements and all products and proceeds including, without
                  limitation, proceeds of insurance, of any and all of the
                  Collateral described in clauses (i) through (iii) above.

     "Instrument" shall have the meaning specified in Article 3 of the Uniform
Commercial Code, as in effect from time to time in the State of New York and
shall also include any other writing which evidences a right to the payment of
money and is not itself a security agreement or lease and is of a type which is
in the ordinary course of business transferred by delivery with any necessary
endorsement or assignment.

     "Lien" means any mortgage, pledge, hypothecation, assignment, security
interest, deposit arrangement, encumbrance (including any easement, right of
way, zoning restriction and the like), lien (statutory or other) or preference,
priority or other security agreement or preferential

                                       3
<PAGE>

arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement, any financing lease involving substantially the
same economic effect as any of the foregoing and the filing of any financing
statement under the Uniform Commercial Code or comparable law of any
jurisdiction).

     "Permitted Liens" means:

          (a) Liens for taxes, assessments or other governmental charges or
     levies not at the time delinquent or thereafter payable without penalty or
     being contested in good faith by appropriate proceedings and for which
     adequate reserves in accordance with generally accepted accounting
     principles shall have been set aside on its books;

          (b) Liens of carriers, warehousemen, mechanics, materialmen and
     landlords incurred in the ordinary course of business for sums not overdue
     or being contested in good faith by appropriate proceedings and for which
     adequate reserves shall have been set aside on its books;

          (c) Liens (other than Liens arising under the Employee Retirement
     Income Security Act of 1974, as amended, or Section 412(n) of the Internal
     Revenue Code of 1986, as amended) incurred in the ordinary course of
     business in connection with workers' compensation, unemployment insurance
     or other forms of governmental insurance or benefits, or to secure
     performance of tenders, statutory obligations, leases and contracts (other
     than for borrowed money) entered into in the ordinary course of business or
     to secure obligations on surety or appeal bonds;

          (d) judgment Liens in existence less than 30 days after the entry
     thereof or with respect to which execution has been stayed;

          (e) ground leases in respect of real property on which facilities
     owned or leased by the Debtor or any of its subsidiaries are located;

          (f) easements, rights-of-way, restrictions, minor defects or
     irregularities in title and other similar charges or encumbrances not
     interfering in any material respect with the business of the Debtor and its
     subsidiaries taken as a whole;

          (g) any interest or title of a lessor secured by a lessor's interest
     under any lease of real property on which facilities owned or leased by the
     Debtor or any of its subsidiaries are located;

          (h) leases or subleases granted to others not interfering in any
     material respect with the business of the Debtor and its subsidiaries taken
     as a whole;

                                       4
<PAGE>


          (i) a Lien on any asset securing indebtedness (including capitalized
     lease obligations) incurred or assumed for the purpose of financing the
     purchase price (including capitalized lease payments in the nature thereof)
     of such asset, provided that such Lien attaches only to the asset acquired
     with the proceeds of such indebtedness and attaches concurrently with or
     within ten (10) days following the acquisition thereof;

          (j) any liens set forth on Schedule 2; and

          (k) any liens securing indebtedness or obligations, which liens,
     indebtedness or obligations are approved by the Note Holder in writing.

     "Person" means any natural person, corporation, firm, association,
partnership, joint venture, limited liability company, joint-stock company,
trust, unincorporated organization, government, governmental agency or
subdivision, or any other entity, whether acting in an individual, fiduciary or
other capacity.

     "Receivables" has the meaning specified therefor in clause (ii) of the
definition of Collateral.

     "Secured Obligations" means all obligations of the Debtor, whether for
fees, expenses or otherwise, now existing or hereafter arising under this
Agreement and the Notes.

     Section 2. Security Interests. As security for the payment and performance
of all Secured Obligations the Debtor does hereby grant and assign to each Note
Holder, a continuing security interest in all of the Collateral, whether now
existing or hereafter arising or acquired and wherever located, subject to the
priority, if any, of Permitted Liens.

     Section 3. General Representations, Warranties and Covenants. The Debtor
represents, warrants and covenants, which representations, warranties and
covenants shall survive execution and delivery of this Agreement, as follows:

     (a) This Agreement is made with full recourse to the Debtor and pursuant to
and upon all the warranties, representations, covenants, and agreements on the
part of the Debtor contained herein, in the Note and otherwise made in writing
in connection herewith or therewith.

     (b) Except for the security interest of the Note Holder therein, the Debtor
is, and as to Collateral acquired from time to time after the date hereof the
Debtor will be, the owner of all the Collateral free from any lien, security
interest, encumbrance or other right, title or interest of any Person (other
than Permitted Liens) and the Debtor shall defend the Collateral against all
claims and demands of all Persons at any time claiming the same or any interest
therein adverse to the Note Holder.

                                       5
<PAGE>


     (c) There is no financing statement (or similar statement or instrument of
registration under the law of any jurisdiction) now on file or registered in any
public office covering any interest of any kind in the Collateral, or intended
to cover any such interest, which has not been terminated or released by the
secured party named therein and so long as the Notes remain outstanding or any
of the Secured Obligations of the Debtor remain unpaid, the Debtor will not
execute and there will not be on file in any public office any financing
statement (or similar statement or instrument of registration under the law of
any jurisdiction) or statements relating to the Collateral, except (i) financing
statements filed or to be filed in respect of and covering the security interest
of the Note Holders hereby granted and provided for and (ii) with respect to
Permitted Liens.

     (d) The chief executive office and chief place of business of the Debtor is
located at the address of the Debtor listed on the signature page hereof, and
the Debtor will not move its chief executive office and chief place of business
except to such new location as the Debtor may establish in accordance with the
last sentence of this Section 3(d). The originals of all Assigned Agreements and
all documents (as well as all duplicates thereof) evidencing all Receivables and
all other contract rights or accounts and other property of the Debtor and the
only original books of account and records of the Debtor relating thereto are,
and will continue to be, kept at such chief executive office, or at such new
location as the Debtor may establish in accordance with the last sentence of
this Section 3(d). The Debtor shall establish no such new location until (i) it
shall have given to the Note Holders not less than 30 days' prior written notice
of its intention to do so, clearly describing such new location and providing
such other information in connection therewith as the Note Holders may
reasonably request, and (ii) with respect to such new location, it shall have
taken such action, satisfactory to the Note Holders (including, without
limitation, all action required by Section 7 hereof), to maintain the security
interest of the Note Holders in the Receivables intended to be granted at all
times fully perfected and in full force and effect.

     (e) The Debtor has no Collateral located outside of locations set forth on
Schedule 1 annexed hereto.

     (f) The name of the Debtor is as set forth on the signature page hereto and
the Debtor shall not change such name, conduct its business in any other name or
take title to the Collateral in any other name while this Agreement remains in
effect, without providing the Note Holders no less than 20 days' notice and
making such filings as the Note Holders shall reasonably request. The Debtor has
never had any name, or conducted business under any name in any jurisdiction,
other than its name set forth on the signature page hereto, during the past six
years other than as set forth in Schedule 2 annexed hereto.

     (g) At the Debtor's own expense, the Debtor will: (i) without limiting the
provisions of the Notes, keep the Collateral fully insured at all times with
financially sound and responsible insurance carriers against loss or damage by
fire and other risks, casualties and contingencies and in such manner and to the
same extent that like properties are customarily so insured by other entities
engaged in the same or similar businesses similarly situated and keep

                                       6
<PAGE>

adequate insurance at all times against liability on account of damage to
persons and properties and under all applicable workers' compensation laws, by
insurers and in amounts approved by the Note Holders, for the benefit of the
Debtor and the Note Holders, (ii) upon request by the Note Holders, promptly
deliver the insurance policies or certificates thereof to the Note Holders, and
(iii) keep the Collateral in good condition at all times (normal wear and tear
excepted) and maintain same in accordance with all manufacturer's specifications
and requirements. Upon any failure of the Debtor to comply with its obligations
pursuant to this Section 3(g), each Note Holder may at its option, and without
affecting any of its other rights or remedies provided herein or as a secured
party under the Uniform Commercial Code, procure the insurance protection it
deems necessary and/or cause repairs or modifications to be made to the
Collateral and the cost of either or both of which shall be a lien against the
Collateral added to the amount of the indebtedness secured hereby and payable on
demand with interest at a rate per annum equal to 18%.

     (h) The Debtor hereby assigns to the Note Holders all of Debtor's right,
title and interest in and to any and all moneys which may become due and payable
with respect to the Collateral under any policy insuring the Collateral (except
proceeds relating to tangible personal property which are applied to restoration
or replacement), including return of unearned premium, and shall cause any such
insurance company to make payment directly to the Note Holder for application to
amounts outstanding under the Notes in accordance with the terms of the Notes
and, to the extent not provided therein, in such order as the Note Holders shall
determine.

     (i) The Debtor will not use the Collateral in violation of any statute or
ordinance or applicable insurance policy and will promptly pay all taxes and
assessments levied against the Collateral.

     (j) The Debtor will not sell, transfer, change the registration, if any,
dispose of, attempt to dispose of, substantially modify or abandon the
Collateral or any part thereof other than sales of Inventory in the ordinary
course of business and the disposition of obsolete or worn-out Equipment in the
ordinary course of business.

     (k) The Debtor will not assert against the Note Holders or any Note Holder
any claim or defense which the Debtor may have against any seller of the
Collateral or any part thereof or against any other Person with respect to the
Collateral or any part thereof.

     (l) The Debtor will indemnify and hold the Note Holders and any Note Holder
harmless from and against any loss, liability, damage, costs and expenses
whatsoever arising from the Debtor's use, operation, ownership or possession of
the Collateral or any part thereof.

     (m) The Debtor will maintain the confidentiality of all customer lists and
not sell or otherwise dispose of such lists except that the Debtor shall deliver
copies thereof to each Note Holder upon its request, which may be made at any
time and from time to time after an Event of Default.

                                       7
<PAGE>

     (n) The Debtor will not enter into any agreement that is inconsistent with
the Debtor's obligations under this Agreement, without the prior written consent
of the Note Holders.

     (o) If the Debtor transfer any assets to any subsidiary or affiliate now
existing or hereafter formed, before so doing, it shall cause such person to
sign a guaranty and security agreement covering the secured obligations.

     Section 4. Special Provisions Concerning Assigned Agreements. The Debtor
represents, warrants and agrees as follows:

     (a) The Assigned Agreements constitute the legal, valid and binding
obligations of the Debtor and, to the best of its knowledge, the other parties
thereto, enforceable in accordance with their respective terms.

     (b) The Debtor will use its best efforts to faithfully abide by, perform
and discharge each and every material obligation, covenant and agreement to be
performed by the Debtor under the Assigned Agreements.

     (c) At the request of the Note Holders, and at the sole cost and expense of
the Debtor, the Debtor will enforce or secure the performance of each and every
material obligation, covenant, condition and agreement contained in the Assigned
Agreements to be performed by the other parties thereto.

     (d) The Debtor will not modify, amend or agree to vary any of the Assigned
Agreements in any material respect other than in the ordinary course of
business, or otherwise act or fail to act in a manner likely (directly or
indirectly) to entitle any party thereto to claim that the Debtor is in default
under the terms thereof.

     (e) The Debtor will not terminate or permit the termination of any Assigned
Agreement, except in accordance with its terms, other than in the ordinary
course of business.

     (f) Without the prior written consent of the Note Holders, the Debtor will
not, other than in the ordinary course of business, waive or in any manner
release or discharge any party to any Assigned Agreement from any of the
material obligations, covenants, conditions and agreements to be performed by it
under such Assigned Agreement including, without limitation, the obligation to
make all payments in the manner and at the time and places specified.

     (g) If a Note Holder so requests after the occurrence of an Event of
Default, the Debtor will hold any payments received by it which are assigned and
set over to the Note Holder by this Agreement for and on behalf of such Note
Holder and turn them promptly over to such Note Holder forthwith in the same
form in which they are received (together with any necessary endorsement) for
application to amounts outstanding under the Notes in accordance with the terms

                                       8
<PAGE>

of the Notes and, to the extent not provided therein, in such order as such Note
Holder shall determine.

     (h) The Debtor will appear in and defend every action or proceeding arising
under, growing out of or in any manner connected with the Assigned Agreements or
the obligations, duties or liabilities of the Debtor and any assignee
thereunder.

     (i) Should the Debtor fail to make any payment or to do any act as herein
provided after 15 days' notice by the Note Holders, the Note Holders may (but
without obligation on the Note Holders' part to do so and without notice to or
demand on the Debtor and without releasing the Debtor from any obligation
hereunder) make or do the same in such manner and to such extent as the Note
Holders may deem necessary to protect the security interests provided hereby,
including specifically, without limiting the general powers, the right to appear
in and defend any action or proceeding purporting to affect the security
interests provided hereby and the Debtor, and the Note Holders may also perform
and discharge each and every obligation, covenant and agreement of the Debtor
contained in any Assigned Agreement and, in exercising any such powers, pay
necessary costs and expenses, employ counsel and incur and pay reasonable
attorneys' fees.

     (j) Upon the request of the Note Holders, the Debtor will send to the Note
Holders copies of all notices, documents and other papers furnished or received
by it with respect to any of the Assigned Agreements.

     Section 5. Special Provisions Concerning Receivables. (a) As of the time
when each Receivable arises, the Debtor shall be deemed to have warranted as to
each such Receivable that such Receivable and all papers and documents relating
thereto are genuine and in all respects what they purport to be, and that all
papers and documents relating thereto:

          (i) will be signed by the account debtor named therein (or such
     account debtor's duly authorized agent) or otherwise be binding on the
     account debtor;

          (ii) will represent the genuine, legal, valid and binding obligation
     of the account debtor evidencing indebtedness unpaid and owed by such
     account debtor arising out of the performance of labor or services or the
     sale and delivery of merchandise or both;

          (iii) to the extent evidenced by writings, will be the only original
     writings evidencing and embodying such obligation of the account debtor
     named therein; and

          (iv) will be in compliance and will conform with all applicable
     federal, state and local laws (including applicable usury laws) and
     applicable laws of any relevant foreign jurisdiction.

                                       9
<PAGE>

     (b) The Debtor will keep and maintain at the Debtor's own cost and expense
satisfactory and complete records of the Receivables, including, but not limited
to, records of all payments received, all credits granted thereon, all
merchandise returned and all other dealings therewith, and the Debtor will make
the same available to the Note Holders, at the Debtor's own cost and expense, at
any and all reasonable times upon demand of the Note Holders. The Debtor shall,
at the Debtor's own cost and expense, deliver the Receivables (including,
without limitation, all documents evidencing the Receivables) and such books and
records to each Note Holder or to its representatives upon its demand at any
time after the occurrence of an Event of Default and, if prior to the Maturity
Date, Acceleration shall exist. If the Note Holder shall so request, the Debtor
shall legend, in form and manner satisfactory to the Note Holder, the
Receivables and other books, records and documents of the Debtor evidencing or
pertaining to the Receivables with an appropriate reference to the fact that the
Receivables have been assigned to the Note Holders and that the Note Holders
have a security interest therein.

     (c) Except in the ordinary course of business prior to an Event of Default
and, if prior to the Maturity Date, Acceleration shall exist, the Debtor will
not rescind or cancel any indebtedness evidenced by any Receivable or modify any
term thereof or make any adjustment with respect thereto, or extend or renew the
same, or compromise or settle any dispute, claim, suit or legal proceeding
relating thereto, or sell any Receivable or interest therein, without the prior
written consent of the Note Holders, except that the Debtor may grant discounts
in connection with the prepayment of any Receivable in an amount which is
customary in the line of business in which the Debtor is engaged and consistent
with the Debtor's past practices.

     (d) The Debtor will duly fulfill all obligations on its part to be
fulfilled under or in connection with the Receivables and will do nothing to
impair the rights of the Note Holders in the Receivables.

     (e) The Debtor shall endeavor to collect or cause to be collected from the
account debtor named in each Receivable, as and when due (including, without
limitation, Receivables which are delinquent, such Receivables to be collected
in accordance with generally accepted lawful collection procedures) any and all
amounts owing under or on account of such Receivable, and credit forthwith (on a
daily basis) upon receipt thereof all such amounts as are so collected to the
outstanding balance of such Receivable. The costs and expenses (including
attorney's fees) of collection, whether incurred by the Debtor or the Note
Holders, shall be borne by the Debtor.

     (f) If any of the Receivables becomes evidenced by an Instrument (other
than a check received in payment of a Receivable and deposited in the ordinary
course of business), the Debtor will notify the Note Holders thereof, and, upon
request by the Note Holders, promptly deliver such Instrument to the Note
Holders appropriately endorsed to the order of the Note Holders as further
security for the satisfaction in full of the Secured Obligations.

                                       10
<PAGE>

     (g) Upon request of the Note Holders, at any time when an Event of Default
and, if prior to the Maturity Date, Acceleration shall exist, the Debtor shall
promptly notify (in manner, form and substance satisfactory to the Note Holders)
all Persons who are at any time obligated under any Receivable that the Note
Holders possess a security interest in such Receivable and that all payments in
respect thereof are to be made to such account as the Note Holders direct.

     Section 6. Special Provisions Concerning Equipment. The Debtor will do
nothing to impair the rights of the Note Holders in the Equipment. The Debtor
shall cause the Equipment to at all times constitute and remain personal
property. The Debtor will at all times keep all Equipment insured with
financially responsible insurance companies in favor of the Note Holders, at the
expense of the Debtor, against such perils and in such amounts as are customary
for Persons in the same general line of business as the Debtor and operating in
similar geographic locations and markets. If the Debtor shall fail to insure the
Equipment to the Note Holders' reasonable satisfaction, or if the Debtor shall
fail so to endorse and deposit all policies or certificates with respect
thereto, the Note Holders shall have the right (but shall be under no
obligation) for and on behalf of the Note Holders to procure such insurance and
the Debtor agrees to reimburse the Note Holders for all costs and expenses of
procuring such insurance, together with interest at a rate per annum equal to
18%. The Note Holders may apply any proceeds of such insurance when received by
it pursuant to the terms of this Section 6 or Section 3(h) hereof toward the
payment of any of the Secured Obligations, whether or not the same shall then be
due. The Debtor retains all liability and responsibility in connection with the
Equipment and the liability of the Debtor to pay the Secured Obligations shall
in no way be affected or diminished by reason of the fact that such Equipment
may be lost, destroyed, stolen, damaged or for any reason whatsoever unavailable
to the Debtor.

     Section 7. Financing Statements; Documentary Stamp Taxes. (a) The Debtor
will, at its own expense, make, execute, endorse, acknowledge, file and/or
deliver to the Note Holders from time to time such lists, descriptions and
designations of Inventory, warehouse receipts, bills of lading, documents of
title, vouchers, invoices, schedules, confirmatory assignments, conveyances,
financing statements, transfer endorsements, powers of attorney, certificates,
reports and other assurances or instruments and take such further steps relating
to the Collateral and other property or rights covered by the security interest
hereby granted, which the Note Holders deem appropriate or advisable to perfect,
preserve or protect its security interest in the Collateral. The Debtor hereby
constitutes the Note Holders as its attorney-in-fact to execute and file in the
name and on behalf of the Debtor such additional financing statements and other
documents as the Note Holders may reasonably request, such acts of such attorney
being hereby ratified and confirmed; such power, being coupled with an interest,
is irrevocable until the Secured Obligations are paid in full. Further, to the
extent permitted by applicable law, the Debtor authorizes the Note Holders to
file any such financing statements and other documents without the signature of
the Debtor or to execute the same on behalf of the Debtor. The Debtor will pay
all applicable filing fees and related expenses in connection with any such
financing statements.

     (b) The Debtor agrees to procure, pay for, affix to any and all documents
and cancel any documentary tax stamps required by and in accordance with,
applicable law and the

                                       11
<PAGE>

Debtor will indemnify and hold the Note Holders and any Note Holders harmless
against any liability (including interest and penalties) in respect of such
documentary stamp taxes.

     Section 8. Special Provisions Concerning Remedies and Sale. In addition to
any rights and remedies now or hereafter granted under applicable law and not by
way of limitation of any such rights and remedies, upon the occurrence of an
Event of Default the Note Holders shall have all of the rights and remedies of a
secured party under the Uniform Commercial Code as enacted in any applicable
jurisdiction in addition to the rights and remedies provided herein, in the Note
and in any other agreement executed in connection with the Note whereby the
Debtor has granted any Lien to the Note Holders. Without in any way limiting the
foregoing, upon the giving of notice to the Debtor of the Note Holders' intent
to pursue any one or all of the following or any other remedies (it being
understood that the Note Holders will take the same actions under this Security
Agreement):

     (a) Upon the occurrence of an Event of Default, the Note Holders shall have
all of the rights and remedies of a secured party under the Uniform Commercial
Code as enacted in any applicable jurisdiction in addition to the rights and
remedies provided herein, in the Note and any other document whereby the Debtor
has granted any Lien to the Note Holders. The Note Holders shall have the right,
without further notice to, or assent by, the Debtor, in the name of the Debtor
or in the name of the Note Holders or otherwise:

          (i) to ask for, demand, collect, receive, compound and give
     acquittance for the Receivables or any part thereof;

          (ii) to extend the time of payment of, compromise or settle for cash,
     credit or otherwise, and upon any terms and conditions, any of the
     Receivables;

          (iii) to endorse the name of the Debtor on any checks, drafts or other
     orders or instruments for the payment of moneys payable to the Debtor which
     shall be issued in respect of any Receivable;

          (iv) to file any claims, commence, maintain or discontinue any
     actions, suits or other proceedings deemed by the Note Holders necessary or
     advisable for the purpose of collecting or enforcing payment of any
     Receivable;

          (v) to make test verifications of the Receivables or any portion
     thereof;

          (vi) to notify any or all account debtors under any or all of the
     Receivables to make payment thereof directly to the Note Holders for the
     account of the Note Holders and to require the Debtor to forthwith give
     similar notice to the account debtors;

                                       12
<PAGE>

          (vii) to require the Debtor forthwith to account for and transmit to
     the Note Holders in the same form as received all proceeds (other than
     physical property) of collection of Receivables received by the Debtor and,
     until so transmitted, to hold the same in trust for the Note Holders and
     not commingle such proceeds with any other funds of the Debtor;

          (viii) to take possession of any or all of the Collateral and, for
     that purpose, to enter, upon reasonable notice, with the aid and assistance
     of any Person or Persons and with or without legal process, any premises
     where the Collateral, or any part thereof, are, or may be, placed or
     assembled, and to remove any of such Collateral;

          (ix) to execute any instrument and do all other things necessary and
     proper to protect and preserve and realize upon the Collateral and the
     other rights contemplated hereby;

          (x) upon reasonable notice to such effect, to require the Debtor to
     deliver, at the Debtor's expense, any or all Collateral to the Note Holders
     at a place designated by the Note Holders; and

          (xi) without obligation to resort to other security, at any time and
     from time to time, to sell, re-sell, assign and deliver all or any of the
     Collateral, in one or more parcels at the same or different times, and all
     right, title and interest, claim and demand therein and right of redemption
     thereof, at public or private sale, for cash, upon credit or for future
     delivery, and at such price or prices and on such terms as the Note Holders
     may determine, with the amounts realized from any such sale to be applied
     to the Secured Obligations in the manner determined by the Note Holders.

The Debtor hereby agrees that all of the foregoing may be effected without
demand, advertisement or notice (except as otherwise provided herein or as may
be required by law), all of which (except as otherwise provided) are hereby
expressly waived, to the extent permitted by law. The Note Holders shall not be
obligated to do any of the acts hereinabove authorized, but in the event that
the Note Holder elects to do any such act, the Note Holder shall not be
responsible to the Debtor except for their gross negligence or willful
misconduct.

     (b) the Note Holders may take legal proceedings for the appointment of a
receiver or receivers (to which the Note Holders shall be entitled as a matter
of right) to take possession of the Collateral pending the sale thereof pursuant
either to the powers of sale granted by this Agreement or to a judgment, order
or decree made in any judicial proceeding for the foreclosure or involving the
enforcement of this Agreement. If, after the exercise of any or all of such
rights and remedies, any of the Secured Obligations shall remain unpaid, the
Debtor shall remain liable for any deficiency. After the indefeasible payment in
full of the Secured Obligations, any proceeds of the Collateral received or held
by the Note Holders shall be turned over to the

                                       13
<PAGE>

Debtor and the Collateral shall be reassigned to the Debtor by the Note Holders
without recourse to the Note Holders and without any representations, warranties
or agreements of any kind.

     (c) Upon any sale of any of the Collateral, whether made under the power of
sale hereby given or under judgment, order or decree in any judicial proceeding
for the foreclosure or involving the enforcement of this Agreement:

          (i) the Note Holders may, to the extent permitted by law, bid for and
     purchase the property being sold, and upon compliance with the terms of
     sale may hold, retain and possess and dispose of such property in its own
     absolute right without further accountability, and may, in paying the
     purchase money therefor, deliver any Note or claims for interest thereon
     and any other instruments evidencing the Secured Obligations or agree to
     the satisfaction of all or a portion of the Secured Obligations in lieu of
     cash in payment of the amount which shall be payable thereon, and the Note
     and such instruments, in case the amounts so payable thereon shall be less
     than the amount due thereon, shall be returned to the Note Holders after
     being appropriately stamped to show partial payment;

          (ii) the Note Holders may make and deliver to the purchaser or
     purchasers a good and sufficient deed, bill of sale and instrument of
     assignment and transfer of the property sold;

          (iii) the Note Holders are hereby irrevocably appointed the true and
     lawful attorney-in-fact of the Debtor in its name and stead, to make all
     necessary deeds, bills of sale and instruments of assignment and transfer
     of the property thus sold and for such other purposes as are necessary or
     desirable to effectuate the provisions (including, without limitation, this
     Section 8) of this Agreement, and for that purpose they may execute and
     deliver all necessary deeds, bills of sale and instruments of assignment
     and transfer, and may substitute one or more Persons with like power, the
     Debtor hereby ratifying and confirming all that its said attorney, or such
     substitute or substitutes, shall lawfully do by virtue hereof; but if so
     requested by the Note Holderss or by any purchaser, the Debtor shall ratify
     and confirm any such sale or transfer by executing and delivering to the
     Note Holderss or to such purchaser all property, deeds, bills of sale,
     instruments or assignment and transfer and releases as may be designated in
     any such request;

          (iv) all right, title, interest, claim and demand whatsoever, either
     at law or in equity or otherwise, of the Debtor of, in and to the property
     so sold shall be divested; such sale shall be a perpetual bar both at law
     and in equity against the Debtor, its successors and assigns, and against
     any and all Persons claiming or who may claim the property sold or any part
     thereof from, through or under the Debtor, its successors or assigns;

                                       14
<PAGE>

          (v) the receipt of the Note Holders or of the officer thereof making
     such sale shall be a sufficient discharge to the purchaser or purchasers at
     such sale for his or their purchase money, and such purchaser or
     purchasers, and his or their assigns or personal representatives, shall
     not, after paying such purchase money and receiving such receipt of the
     Note Holders or of such officer therefor, be obliged to see to the
     application of such purchase money or be in any way answerable for any
     loss, misapplication or non-application thereof; and

          (vi) to the extent that it may lawfully do so, and subject to any
     legal requirement that the Note Holders act in a commercially reasonable
     manner, the Debtor agrees that it will not at any time insist upon, or
     plead, or in any manner whatsoever claim or take the benefit or advantage
     of, any appraisement, valuation, stay, extension or redemption laws, or any
     law permitting it to direct the order in which the Collateral or any part
     thereof shall be sold, now or at any time hereafter in force, which may
     delay, prevent or otherwise affect the performance or enforcement of this
     Agreement, the Note or any other agreement executed in connection with the
     Note whereby the Debtor has granted any Lien to the Note Holders, and the
     Debtor hereby expressly waives all benefit or advantage of any such laws
     and covenants that it will not hinder, delay or impede the execution of any
     power granted or delegated to the Note Holders in this Agreement, but will
     suffer and permit the execution of every such power as though no such laws
     were in force. In the event of any sale of Collateral pursuant to this
     Section, the Note Holders shall, at least 10 days before such sale, give
     the Debtor written, telecopied or telex notice of its intention to sell.

     Section 9. Application of Moneys. (a) Except as otherwise provided herein
or in the Note, all moneys which the Note Holders shall receive, in accordance
with the provisions hereof, shall be applied (to the extent thereof) in the
following manner: First, to the payment of all costs and expenses reasonably
incurred in connection with the administration and enforcement of, or the
preservation of any rights under, this Agreement or any of the reasonable
expenses and disbursements of the Note Holders (including, without limitation,
the reasonable fees and disbursements of its counsel and agents); Second, to the
payment of all Secured Obligations arising out of the Notes and, if not therein
provided, in such order as the Note Holders may determine; and Third, to the
payment of all other Secured Obligations in such order as the Note Holders may
determine.

     (b) If after applying any amounts which the Note Holders have received in
respect of the Collateral any of the Secured Obligations remain unpaid, the
Debtor shall continue to be liable for any deficiency, together with interest.

     Section 10. Fees and Expenses, etc. Any and all fees, costs and expenses of
whatever kind or nature, including but not limited to the reasonable attorneys'
fees and legal expenses incurred by the Note Holders in connection with the
enforcement of this Agreement, the filing or recording of any documents
(including all taxes in connection therewith) in public offices,

                                       15
<PAGE>

the payment or discharge of any taxes, counsel fees, maintenance fees, fees and
other costs relating to the encumbrances or otherwise protecting, maintaining,
preserving the Collateral, or in defending or prosecuting any actions or
proceedings arising out of or related to the Collateral, shall be borne and paid
by the Debtor on written demand by the Note Holders setting forth in reasonable
detail the nature of such expenses and until so paid shall be added to the
principal amount of the Secured Obligations and shall bear interest at a rate
per annum equal to 18%. In addition, the Debtor will pay, and indemnify and hold
the Note Holders and any Note Holder harmless from and against, any and all
liabilities, obligations, losses, damages penalties, actions, judgments, suits,
costs, expenses or disbursements of any kind or nature whatsoever with respect
to the Collateral, including (without limitation) claims of patent or trademark
infringement and any claim of unfair competition or anti-trust violation.

     Section 11. Subordination to Senior Agreement. The Debtor and the Purchaser
hereby understand and agree that the obligations of the Debtor to pay the
principal and accrued interest on the Notes are expressly made subordinate and
junior in right of payment to the obligations of the Debtor owing to Sand Hill
Finance, LLC under the Senior Agreement. Debtor will not make, and Purchaser
will not accept, any payment on account of the Notes, at any time that an Event
of Default has occurred and is continuing. The Security Interest granted under
this Agreement is junior to the security interest granted under the Senior
Agreement so long as any obligations are outstanding under the Senior Agreement.
This paragraph may not be amended or waived as long as any obligations are
outstanding under the Senior Agreement.

     Section 12. Miscellaneous. All notices, communications and distributions
hereunder shall be in writing (including telecopied communication) and mailed by
certified mail, telecopied, personally delivered or delivered by Federal Express
or other reputable overnight courier service, if to the Debtor addressed to it
at its address set forth opposite its signature below, if to the Note Holders,
addressed to it at its address set forth opposite its signature below, or as to
either party at such other address as shall be designated by such party in a
written notice to such other party complying as to delivery with the terms of
this Section. All such notices and other communications shall be effective (i)
if mailed by certified mail, three days after the date of deposit thereof with
the U.S. Postal Service, properly addressed with postage prepaid, (ii) if
telecopied, upon receipt by the addressee, (iii) if personally delivered, upon
such delivery and (iv) if delivered by overnight courier service, on the
business day following delivery thereof to such courier service in time for
next-business-day delivery.

     (b) No delay on the part of the Note Holders in exercising any of its
rights, remedies, powers and privileges hereunder or partial or single exercise
thereof, shall constitute a waiver thereof, except if, and in such case only to
the extent which, such failure prejudices or damages the Debtor. None of the
terms and conditions of this Agreement may be changed, waived, modified or
varied in any manner whatsoever unless in writing duly signed by the Debtor and
the Note Holders. No notice to or demand on the Debtor in any case shall entitle
the Debtor to any other or further notice or demand in similar or other
circumstances or constitute a waiver of any of

                                       16
<PAGE>

the rights of the Note Holders to any other or further action in any
circumstances without notice or demand.

     (c) The obligations of the Debtor hereunder shall remain in full force and
effect without regard to, and shall not be impaired by, (i) any bankruptcy,
insolvency, reorganization, arrangement, readjustment, composition, liquidation
or the like of the Debtor; (ii) any exercise or non-exercise, or any waiver of,
any right, remedy, power or privilege under or in respect of the Note, this
Agreement or any other agreement executed in connection with the Note whereby
the Debtor has granted any Lien to the Note Holders or any other agreement
executed in connection with any of the foregoing, the Secured Obligations or any
security for any of the Secured Obligations; or (iii) any amendment to or
modification of any of the foregoing; whether or not the Debtor shall have
notice or knowledge of any of the foregoing. The rights and remedies of the Note
Holders herein provided are cumulative and not exclusive of any rights or
remedies which the Note Holders would otherwise have.

     (d) This Agreement shall be binding upon the Debtor and its successors and
assigns and shall inure to the benefit of the Note Holders and their successors
and assigns, except that the Debtor may not transfer or assign any of its
obligations, rights or interest hereunder without the prior written consent of
the Note Holders, and any such purported assignment by the Debtor shall be void.
All agreements, representations and warranties made herein shall survive the
execution and delivery of this Agreement.

     (e) The descriptive headings of the several sections of this Agreement are
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.

     (f) Any provision of this 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.

     (g) All rights, remedies and powers provided by this Agreement may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and the provisions hereof are intended to be
subject to all applicable mandatory provisions of law that may be controlling
and to be limited to the extent necessary so that they will not render this
Agreement invalid, unenforceable in whole or in part or not entitled to be
recorded, registered or filed under the provisions of any applicable law.

     (h) Except to the extent that matters of title, or creation, perfection and
priority of the security interests created hereby, or procedural issues of
foreclosure are required to be governed by the laws of the state in which the
Collateral, or part thereof, is located, this Agreement shall be governed by and
construed in all respects under the laws of the State of New York, without

                                       17
<PAGE>

reference to its conflict of laws rules or principles. Any suit, action,
proceeding or litigation arising out of or relating to this Agreement shall be
brought and prosecuted only in federal and state courts in the City, County and
State of New York. The parties hereby irrevocably and unconditionally consent to
the jurisdiction of each such court or courts located within the State of New
York and to service of process by registered or certified mail, return receipt
requested, or by any other manner provided by applicable law, and hereby
irrevocably and unconditionally waive any right to claim that any suit, action,
proceeding or litigation so commenced has been commenced in an inconvenient
forum. EACH PARTY HERETO KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY AND
ALL RIGHTS IT MAY HAVE TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING,
COUNTERCLAIM OR OTHER LITIGATION BASED ON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AGREEMENT, THE NOTES OR ANY FINANCING DOCUMENT, OR ANY
COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR
ACTIONS OF ANY SUCH PARTY. THIS PROVISION IS A MATERIAL INDUCEMENT FOR THE
SECURED PARTIES' ENTERING INTO THIS AGREEMENT.

     (i) It is expressly agreed, anything herein, in the Note or in any other
agreement or instrument executed in connection with the Note to the contrary
notwithstanding, that the Debtor shall remain liable to perform all of the
obligations, if any, assumed by it with respect to the Collateral and the Note
Holders shall not have any obligations or liabilities with respect to any
Collateral by reason of or arising out of this Agreement, nor shall the Note
Holder be required or obligated in any manner to perform or fulfill any of the
obligations of the Debtor under or pursuant to any or in respect of any
Collateral.

     (j) This Agreement may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which counterparts taken
together shall be deemed to constitute one and the same instrument.













                                       18
<PAGE>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered by their duly authorized officers as of the date first
above written.

Addresses                              BRIDGELINE SOFTWARE, INC.
---------                              as Debtor
10 Sixth Rd.
Woburn, MA 01801                       By: /S/ THOMAS MASSIE
                                          -------------------------------------
                                          Name:  Thomas Massie
                                          Title: President, Chief Executive
                                                 Officer


                                       NOTEHOLDERS


                                       By: /S/ STEPHAN A. STEIN
                                          -------------------------------------
                                          Name: Stephan A. Stein,
                                          Title: Member, Joseph Gunnar & Co.,
                                                 LLC, on behalf of Noteholders
















                                       19
<PAGE>

SCHEDULE 1.
LOCATION OF CERTAIN INVENTORY AND EQUIPMENT COLLATERAL
------------------------------------------------------

Bridgeline has two (2) Capital Lease Master Agreements with Bank of America
Leasing and Fidelity Capital Leasing.

The lease lines are both active as of April 6, 2006. The leases are used to
finance computer and telephone equipment as well as some office furniture. The
leasing companies have filed UCC-l's on all equipment financed under the
Agreements. The lease terms are either three (3) or five (5) years with a $1.00
buy out.

A summary of the Lease balances is below:

As of April 6, 2006                Master Lease           Leases Outstanding
--------------------------------------------------------------------------------

Capital Lease-Bank of America        100,000                   41,385

Capital Lease-Fidelity Capital       250,000                   125,902
--------------------------------------------------------------------------------

SCHEDULE 2.
EXISTING FINANCING STATEMENTS
-----------------------------
[LIST ALL FINANCING STATEMENTS
------------------------------

Pursuant to the Financing Agreement between the Company and Sand Hill Finance,
Inc., dated March 29, 2005, Sand Hill Finance has a first priority lien on all
of the assets of the Company.





















                                       20
</TEXT>
</DOCUMENT>
