BRIDGELINE DIGITAL, INC.
10-Ks and 10-Qs
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UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14A
Proxy
Statement Pursuant to Section 14(a) of
the
Securities Exchange Act of 1934 (Amendment
No. )
Filed by
the Registrant ý
Filed by
a Party other than the Registrant o
Check the
appropriate box:
o Preliminary
Proxy Statement
o Confidential,
for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
ý Definitive
Proxy Statement
o Definitive
Additional Materials
o Soliciting
Material Pursuant to Rule 240.14a-12
BRIDGELINE
SOFTWARE, INC.
(Name
of Registrant as Specified in Its Charter)
Not
Applicable
(Name of
Person(s) Filing Proxy Statement if Other Than the Registrant)
Payment
of Filing Fee (Check the appropriate box):
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x
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No
fee required
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o
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Fee
computed on table below per Exchange Act Rules 14a- 6(i)(1) and
0-11.
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(1)Title
of each class of securities to which transaction
applies:
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(2)Aggregate
number of securities to which transaction applies:
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(3)Per
unit price or other underlying value of transaction computed pursuant to
Exchange Act Rule 0-11 (Set forth the amount on which the filing fee is
calculated and state how it was determined):
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(4)Proposed
maximum aggregate value of transaction:
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(5)Total
fee paid:
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o
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Fee
paid previously with preliminary materials.
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o
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Check
box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
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(1)
Amount Previously Paid:
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(2)
Form, Schedule or Registration Statement No.:
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(3)
Filing Party:
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(4)
Date Filed:
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| February 24, 2010 |
Dear
Stockholder:
I am
pleased to invite you to attend Bridgeline Software, Inc.’s Annual Meeting
of Stockholders to be held on March 19, 2010. The meeting will begin promptly at
10:00 a.m. Eastern Time at the Burlington Marriott Hotel located at One
Burlington Mall Road, Burlington, Massachusetts 01803.
This
booklet includes the formal notice of the meeting and the proxy statement. The
proxy statement tells you about the agenda and procedures for the meeting. It
also describes how the board of directors operates and provides information
about our director candidates.
I look
forward to sharing more information with you about Bridgeline Software at the
Annual Meeting. Whether or not you plan to attend, I encourage you to vote your
proxy as soon as possible so that your shares will be represented at the
meeting.
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Sincerely,
 Thomas
L. Massie
President
and Chief Executive Officer
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NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
To
Be Held at 10:00 A.M. on March 19, 2010
To the
Stockholders of Bridgeline Software, Inc.:
NOTICE IS
HEREBY GIVEN that the Annual Meeting of Stockholders (the “Meeting”) of BRIDGELINE
SOFTWARE, INC. (the “Company”) will be held on March 19, 2010 at 10:00 A.M. at
the Burlington Marriott Hotel located at One Burlington Mall Road, Burlington,
Massachusetts, to consider and vote on the following matters described under the
corresponding numbers in the attached Proxy Statement:
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1.
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To
elect two directors;
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2.
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To
amend the Bridgeline Software, Inc. Amended and Restated Stock Incentive
Plan to increase the number of shares of Common Stock available for
issuance upon exercise of options granted under the Plan from 2,000,000
shares to 2,400,000 shares;
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3.
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To
ratify the appointment of UHY LLP as the Company’s
independent registered public accounting firm for its fiscal year ending
September 30, 2010; and
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4.
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To
transact such other business as may properly come before the
Meeting.
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The Board
of Directors has fixed the close of business on February 17, 2010 as the record
date for the determination of stockholders entitled to vote at the Meeting, and
only holders of shares of Common Stock of record at the close of business on
that day will be entitled to vote. The stock transfer books of the Company will
not be closed.
A
complete list of stockholders entitled to vote at the Meeting shall be available
for examination by any stockholder, for any purpose germane to the Meeting,
during ordinary business hours from February 19, 2010 until the Meeting at the
principal executive offices of the Company. The list will also be available at
the Meeting.
Whether
or not you expect to be present at the Meeting, please fill in, date, sign, and
return the enclosed Proxy, which is solicited by management. The Proxy is
revocable and will not affect your vote in person in the event you attend the
Meeting.
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By
Order of the Board of Directors
 Assistant
Secretary
February
24, 2010
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Requests
for additional copies of the proxy materials and the Company’s Annual Report for
its fiscal year ended September 30, 2009 should be addressed to Shareholder
Relations, Bridgeline Software, Inc., 10 Sixth Road, Woburn, Massachusetts
01801. This material will be furnished without charge to any stockholder
requesting it.
Important
Notice Regarding the Availability of Proxy Materials for the Shareholder Meeting
to be Held on March 19, 2010: The Proxy Statement for the Annual Meeting and the
Annual Report to Shareholders for the year ended September 30, 2009 are
available at https://
www.bridgelinesw.com
Proxy
Statement
Annual
Meeting of Stockholders
March
19, 2010
The
enclosed proxy is solicited by the management of Bridgeline Software, Inc. in
connection with the Annual Meeting of Stockholders to be held on March 19, 2010
at 10:00 A.M. at the Burlington Marriott Hotel located at One Burlington Mall
Road, Burlington, Massachusetts and any adjournment thereof. The Board of
Directors of the Company (the “Board of Directors”) has set the close of
business on February 17, 2010 as the record date for the determination of
stockholders entitled to vote at the Meeting. A stockholder executing and
returning a proxy has the power to revoke it at any time before it is exercised
by filing a later-dated proxy with, or other communication to, the Secretary of
the Company or by attending the Meeting and voting in person.
The proxy
will be voted in accordance with your directions to:
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1.
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Consider
and act upon a motion to elect two
directors;
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2.
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Consider
and act upon a motion to amend the Bridgeline Software, Inc. Amended and
Restated Stock Incentive Plan to increase the number of shares of Common
Stock available for issuance upon exercise of options granted under the
Plan from 2,000,000 shares to 2,400,000
shares;
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3.
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Consider
and act upon a motion to ratify the appointment of UHY LLP as the
Company’s independent registered public accounting firm for its fiscal
year ending September 30, 2010; and
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4.
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Transact
such other business as may properly come before the Meeting. In the
absence of direction, the proxy will be voted in favor of management’s
proposals.
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The Proxy
Statement, the attached Notice of Meeting, the enclosed form of proxy and the
Annual Report are being mailed to stockholders on or about February 24, 2010.
The Company’s principal executive offices are located at 10 Sixth Road, Woburn,
Massachusetts, 01801 and its telephone number at that location is (781)
376-5555.
The
entire cost of soliciting proxies will be borne by the Company. The costs of
solicitation will include the costs of supplying necessary additional copies of
the solicitation materials and the Company’s Annual Report to Stockholders for
its fiscal year ended September 30, 2009 (the “Annual Report”) to beneficial
owners of shares held of record by brokers, dealers, banks, trustees, and their
nominees, including the reasonable expenses of such record holders for
completing the mailing of such materials and Annual Reports to such beneficial
owners. Solicitation of proxies may also include solicitation by
telephone, fax, electronic mail, or personal solicitations by Directors,
officers, or employees of the Company. No additional compensation will be paid
for any such services. The Company may engage a professional proxy solicitation
firm to assist in the proxy solicitation and, if so, will pay such solicitation
firm customary fees plus expenses.
Only
stockholders of record of the Company’s 11,184,542 shares of Common Stock (the
“Common Stock”) outstanding at the close of business on February 17, 2010 will
be entitled to vote at the Meeting.
Each
share of Common Stock is entitled to one vote. A majority of the outstanding
shares of the Common Stock represented in person or by proxy at the Meeting will
constitute a quorum at the Meeting. All shares of the Common Stock represented
in person or by proxy (including shares which abstain or do not vote for any
reason with respect to one or more of the matters presented for stockholder
approval) will be counted for purposes of determining whether a quorum is
present at the Meeting. Abstentions will be treated as shares that are present
and entitled to vote for purposes of determining the number of shares present
and entitled to vote with respect to any particular matter, but will not be
counted as a vote in favor of such matter. Accordingly, an abstention from
voting on a matter has the same legal effect as a vote against the matter. If a
broker or nominee holding stock in “street name” indicates on the proxy that it
does not have discretionary authority to vote as to a particular matter (“broker
non-votes”), those shares will be counted for purposes of determining whether a
quorum is present at the Meeting but will not be considered as present and
entitled to vote with respect to such matter. Accordingly, a broker non-vote on
a matter has no effect on the voting on such matter.
The
Directors will be elected by a plurality of the votes properly cast at the
Meeting. Abstentions and broker non-votes as to this election do not count as
votes for or against such election. The approval of the proposals to amend the
Company’s Amended and Restated Stock Incentive Plan and to approve the Company’s
independent auditors will require the affirmative vote of a majority of the
shares of Common Stock properly cast at the Meeting.
Abstentions
as to these proposals will count as being present and represented at the Meeting
and entitled to vote, and will be included in calculating the number of votes
cast on this proposal (and thus will have the effect of “no” votes). Broker
non-votes will not be included in calculating the number of votes cast on this
proposal.
- 2
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PROPOSAL
1
ELECTION
OF DIRECTORS
Two
directors are to be elected by a plurality of the shares present in person or
represented by proxy at the Meeting and entitled to vote thereon, to hold office
for a three year term expiring in 2013. The persons named in the accompanying
proxy have advised management that it is their intention to vote for the
election of the following nominees as director unless authority is
withheld:
(1) Kenneth
Galaznik
(2) Scott
Landers
Management
has no reason to believe that either nominee will be unable to serve. In the
event that either nominee becomes unavailable, the proxies may be voted for the
election of such person or persons who may be designated by the Board of
Directors.
The
following table sets forth certain information as to our current
directors:
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Name
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Age
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Position
with the Company
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Director
Since
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Nominees
for Director for Terms Expiring in 2013
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||||
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Kenneth
Galaznik*
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58
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Director,
Chair of the Audit Committee
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2006
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Scott
Landers*
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39
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Director
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2010
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Directors
with Terms Expiring in 2012
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William
Coldrick*
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67
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Director,
Chair of the Nominating and Corporate Governance Committee, Member of the
Compensation Committee and Audit Committee
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2000
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Thomas
Massie
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48
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Chairman
of the Board of Directors, President and Chief Executive
Officer
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2000
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Directors
with Terms Expiring in 2011
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Robert
Hegarty*
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46
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Director,
Chair of the Compensation Committee, Member of the Nominating and
Corporate Governance Committee
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2006
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John
Cavalier*
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70
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Director,
Member of the Audit Committee, the Compensation Committee and the
Nominating and Corporate Governance Committee
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2007
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*Independent
director as defined under the rules of the Nasdaq Stock Market
- 3
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Thomas Massie has served as
our Chairman of the Board, President and Chief Executive Officer since our
inception. Prior to founding Bridgeline Software, Mr. Massie founded and took
public two technology companies. From 1991 to 2000, Mr. Massie was the founder,
Chairman of the Board and Chief Executive Officer of Focus Enhancements, a
publicly-held developer of proprietary video conversion ASIC chip technology
that had technology alliances with companies such as Intel, Microsoft, Apple
Computer, Thompson, Philips, SONY, Nokia, and Zenith. Mr. Massie led Focus
Enhancements from concept to a public market capitalization of $230 million.
From 1986 to 1991, Mr. Massie was the founder and Chairman of the Board of Mass
Microsystems, a publicly-held developer of proprietary multimedia products. Mr.
Massie led Mass Microsystems from inception to a public market capitalization in
excess of $75 million. From 2002 to 2007, Mr. Massie was a member of the Board
of Directors of MapInfo Corporation, a publicly-held developer of location
intelligence software. Mr. Massie was the Chairman of MapInfo’s Corporate
Governance Committee and a member of its Audit and Compensation Committees. In
April 2007, MapInfo was acquired by Pitney-Bowes for $480 million. In addition,
Mr. Massie is a member of the National Association of Directors and was a
non-Commissioned Officer in the United States Army, 101st Airborne
Division.
John Cavalier has been a
member of our Board of Directors since 2007. Mr. Cavalier is a member of the
Company’s Audit Committee, Compensation Committee, and Nominating and Corporate
Governance Committee. From 2001 to 2007, Mr. Cavalier was the Chairman of the
Board of MapInfo Corporation, a publicly-held developer of location intelligence
software. From 1996 to 2001, Mr. Cavalier was the president, CEO and a director
of MapInfo. During Mr. Cavalier’s tenure at MapInfo, he successfully helped lead
the growth of MapInfo from approximately $40 million in annual sales to over
$160 million in annual sales. In April 2007, MapInfo was acquired by Pitney
Bowes for $480 million. Prior to joining MapInfo, Mr. Cavalier held executive
management positions with The Antares Alliance Group (a joint venture between
Amdahl and EDS), Amdahl, Atari, and Apple Computer. Mr. Cavalier is an active
board member of various privately-held technology companies. In 2006, Mr.
Cavalier was inducted into New York State’s Tech Valley’s Business Hall of Fame
recognizing him for outstanding business leadership. In 2007, Mr. Cavalier was
given the Explore, Discover, & Imagine Award by New York’s Children’s Museum
of Science & Technology recognizing his leadership in promoting technology
to children. Mr. Cavalier earned his undergraduate degree from the University of
Notre Dame and his MBA from Michigan State University.
William Coldrick has been a
member of our Board of Directors since our inception. Mr. Coldrick is the
Chairman of the Nominating and Corporate Governance Committee, a member of the
Audit Committee, and a member of the Compensation Committee. From 1993 to 2008,
Mr. Coldrick served as Vice Chairman of the Board of Focus
Enhancements. From 1996 to 1998, he was Vice President and General
Manager of Worldwide Channel Operations for the Computer Systems Division of
Unisys Corp. From 1982 to 1991, Mr. Coldrick held several senior management
positions at Apple Computer. In his last position at Apple as Senior Vice
President of U.S. Sales, he was responsible for managing all sales, support,
service, distribution and channel activities for the United States. During Mr.
Coldrick’s tenure at Apple, his sales leadership assisted in the growth of Apple
from $80 million a year to over $6 billion a year in annual sales. Before
joining Apple, Mr. Coldrick spent fourteen years with Honeywell Information
Systems, where he held several positions, including Director of Marketing. He
holds a B.A. degree from Iona College in New Rochelle, New York.
- 4
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Kenneth Galaznik has been a
member of our Board of Directors and Chairman of the Audit Committee since 2006.
Since 2005, Mr. Galaznik has been the Senior Vice President, Chief Financial
Officer and Treasurer of American Science and Engineering, Inc., a publicly held
supplier of X-ray inspection and screening systems with a public market cap of
over $700 million. From August 2002 to February 2005, Mr. Galaznik was Vice
President of Finance of American Science and Engineering, Inc. From November
2001 to August 2002, Mr. Galaznik was self-employed as a consultant. From March
1999 to September 2001, he served as Vice President of Finance at Spectro
Analytical Instruments, Inc. and has more than 30 years of experience in
accounting and finance positions. Mr. Galaznik holds a B.B.A. degree in
accounting from The University of Houston.
Robert Hegarty has been a
member of our Board of Directors since 2006. Mr Hegarty is also Chairman of the
Compensation Committee and a member of the Nominating and Corporate Governance
Committee. Since March 2009, Mr. Hegarty has been Managing Director, Market
Structure of The Depository Trust & Clearing Corporation. From
1999 to March 2009, Mr. Hegarty was Managing Director of TowerGroup Securities
& Investments Group, a capital markets and investment and wealth management
research subsidiary of MasterCard International. Before joining TowerGroup in
1999, Mr. Hegarty was vice president of trading systems at Putnam Investments in
Boston, Massachusetts and, prior to that, was employed by Fidelity Investments
in Boston for eight years, during which he served as vice president of
technology of the institutional broker-dealer arm of Fidelity Investments. Mr.
Hegarty holds an M.B.A. degree in finance and marketing from Babson College and
a B.S. degree in computer science from North Adams State College.
Scott Landers has been a
member of our Board of Directors since 2010. Since July 2008, Mr.
Landers has been the Senior Vice President, Chief Financial Officer and
Treasurer for Monotype Imaging Holdings Inc., a global developer of text imaging
solutions. Monotype is a publicly-held company with a market
cap over $250 million. Prior to joining Monotype, from September 2007
until July 2008, Mr. Landers was the Vice President of Global Finance at Pitney
Bowes Software, a $450 million division of Pitney Bowes, a leading global
provider of location intelligence solutions. From 1997 until September 2007, Mr.
Landers held several senior finance positions, including Vice President of
Finance and Administration, at MapInfo, a publicly-held company which was
acquired by Pitney Bowes in April 2007. Earlier in his career, Mr.
Landers was a Business Assurance Manager with Coopers &
Lybrand. Mr. Landers is a certified public accountant and holds a
bachelor’s degree in accounting from Le Moyne College in Syracuse, N.Y. and a
master’s degree in business administration from The College of Saint Rose in
Albany, N.Y.
- 5
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Other
Executive Officers
The following table sets forth certain
information as to our executive officers who are not also
directors:
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Name
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Age
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Position
with the Company
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Ronald
M. Levenson
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54
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Executive
Vice President and Chief Financial Officer
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Brett
Zucker
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37
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Executive
Vice President and Chief Technology
Officer
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Ronald M. Levenson has been
our Executive Vice President, Chief Financial Officer and Treasurer since
2009. From 2005 to 2008, Mr. Levenson served as Executive Vice
President and Chief Financial Officer for Virgin HealthMiles, Inc., a Virgin
Group company where he was responsible for finance, legal and human
resources. From 2004 to 2005, Mr. Levenson served as Chief Financial
Officer of MedAptus, Inc. Mr. Levenson has also served as a strategic financial
advisor to a number of public and private software and service companies, as
Senior Vice President, Chief Financial Officer and Treasurer of American Dental
Partners, Inc. (NASDAQ: ADPI) and as Senior Vice President, Chief Accounting
Officer and Treasurer of American Medical Response, Inc. Prior to
American Medical Response, Mr. Levenson was a Senior Manager with KPMG LLP,
where he was employed for more than ten years. Mr. Levenson is a
graduate of Northeastern University and a certified public
accountant.
Brett Zucker has been a senior
executive at Bridgeline since 2002. Since 2006, Mr. Zucker has been
our Executive Vice President and Chief Technical Officer. From 2002 to 2006, Mr.
Zucker was a senior executive of the Company’s New York business unit. Prior to
joining Bridgeline Software, Mr. Zucker was the Director of Development and
Delivery for Lead Dog Digital, Inc., a custom Web application development
company Bridgeline acquired in 2002. Prior to joining Lead Dog Digital in
September 2000, Mr. Zucker served in management positions with AppNet and
Agency.com. Mr. Zucker is a member of the Board of Directors of
Content Management Professionals, an independent national organization with over
12,000 members. Mr. Zucker holds a B.S. degree in Electrical Engineering from
Cornell University and an M.B.A. degree from Harvard Business
School.
The
Board of Directors recommends a vote FOR the approval of Proposal No. 1, the
election of directors.
Certain
Relationships and Related Transactions
Item
404(d) of Regulation S-K requires the Company to disclose any transaction or
proposed transaction in which the amount involved exceeds the lesser of $120,000
or one percent (1%) of the average of the Company’s total assets as of the end
of the last two completed fiscal years in which the Company is a participant and
in which any related person has or will have a direct or indirect material
interest. A related person is any executive officer, director, nominee for
director, or holder of 5% or more of the Company’s common stock, or an immediate
family member of any of those persons.
Since
October 1, 2007, the Company has not been a participant in any transaction that
is reportable under Item 404(d) of Regulation S-K. The Company knows
of no proposed transaction in which it will be a participant that would be
reportable under Item 404(d) of Regulation S-K.
- 6
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In
accordance with our Audit Committee charter, our Audit Committee is responsible
for reviewing and approving the terms of any related party transactions.
Therefore, any material financial transaction between the Company and any
related person would need to be approved by our Audit Committee prior to the
Company entering into such transaction.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Beneficial
ownership is determined in accordance with Rule 13d-3 under the Securities
Exchange Act of 1934, as amended. In computing the number of shares beneficially
owned by a person or a group and the percentage ownership of that person or
group, shares of our common stock subject to options or warrants currently
exercisable or exercisable within 60 days after January 15, 2010 are deemed
outstanding, but are not deemed outstanding for the purpose of computing the
percentage ownership of any other person. Unless otherwise indicated, the
address of each individual named below is our address, 10 Sixth Road, Woburn,
Massachusetts 01801.
The
following table sets forth as of January 15, 2010, the beneficial ownership of
our common stock by (i) each person or group of persons known to us to
beneficially own more than 5% of the outstanding shares of our common stock,
(ii) each of our directors and named executive officers, (iii) certain members
of senior management who beneficially own more than 1% of the outstanding shares
of our common stock and (iv) all of our executive officers, directors and senior
management who beneficially own more than 1% of the outstanding common stock as
a group. At the close of business on January 15, 2010, there were issued and
outstanding 11,184,542 shares of our Common Stock entitled to cast 11,184,542
votes. On January 15, 2010, the closing price of our Common Stock as reported on
the Nasdaq Capital Market was $1.27 per share.
Except as
indicated in the footnotes to the table below, each shareholder named in the
table has sole voting and investment power with respect to the shares shown as
beneficially owned by such shareholder.
This
information is based upon information received from or on behalf of the
individuals named herein.
- 7
-
|
Name
and Address
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Number
of Shares Owned
|
Percent
of Shares Outstanding
|
|
|
P.A.W.
Capital Corp
Peter
A. Wright
4
Greenwich Office Park, 3rd Floor
Greenwich,
CT 06831
|
630,000
|
(1)
|
5.63%
|
|
Erez
Katz
|
1,077,422
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(2)
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9.62%
|
|
Thomas
Massie
|
903,111
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(3)
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8.03%
|
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Tim
Higgins
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266,449
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2.38%
|
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Tony
Pietrocola
|
236,956
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(4)
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2.12%
|
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Michael
Matteo
|
168,673
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(5)
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1.50%
|
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Brett
Zucker
|
146,631
|
(6)
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1.30%
|
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William
Matteson
|
137,000
|
(7)
|
1.22%
|
|
John
Cavalier
|
99,999
|
(8)
|
*
|
|
William
Coldrick
|
85,888
|
(9)
|
*
|
|
Robert
Hegarty
|
26,999
|
(10)
|
*
|
|
Kenneth
Galaznik
|
14,999
|
(11)
|
*
|
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Scott
Landers
|
—
|
—
|
|
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Ronald
M. Levenson
|
—
|
—
|
|
|
All
current executive officers, directors and certain members of senior
management who beneficially own more than 1% of the outstanding shares of
common stock as a group (13 persons)
|
3,164,127
|
(12)
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27.72%
|
*less
than 1%
|
(1)
|
Based
on the Schedule 13G filed by the holder on January 15,
2010.
|
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(2)
|
Includes
9,999 shares of common stock subject to currently exercisable options
(includes options that will become exercisable within 60 days of January
15, 2010).
|
|
(3)
|
Includes
49,444 shares of common stock subject to currently exercisable options
(includes options that will become exercisable within 60 days of January
15, 2010). Also includes 10,000 shares of common stock issuable upon
exercise of a warrant.
|
|
(4)
|
Includes
5,000 shares of common stock subject to currently exercisable options
(includes options that will become exercisable within 60 days of January
15, 2010).
|
|
(5)
|
Includes
34,015 shares of common stock subject to currently exercisable options
(includes options that will become exercisable within 60 days of January
15, 2010).
|
|
(6)
|
Includes
67,128 shares of common stock subject to currently exercisable options
(includes options that will become exercisable within 60 days of January
15, 2010).
|
|
(7)
|
Includes
6,000 shares of common stock subject to currently exercisable options
(includes options that will become exercisable within 60 days of January
15, 2010).
|
|
(8)
|
Includes
6,666 shares of common stock subject to currently exercisable options
(includes options that will become exercisable within 60 days of January
15, 2010).
|
|
(9)
|
Includes
12,221 shares of common stock subject to currently exercisable options
(includes options that will become exercisable within 60 days of January
15, 2010).
|
|
(10)
|
Includes
2,000 shares of common stock beneficially owned by Mr. Hegarty’s
spouse. Includes 14,999 shares of common stock subject to currently
exercisable options (includes options that will become exercisable within
60 days of January 15, 2010).
|
|
(11)
|
Includes
14,999 shares of common stock subject to currently exercisable options
(includes options that will become exercisable within 60 days of January
15, 2010).
|
|
(12)
|
Includes
220,471 shares of common stock subject to currently exercisable options
(includes options that will become exercisable within 60 days of January
15, 2010). Also includes 10,000 shares of common stock issuable upon
exercise of a warrant.
|
- 8
-
EXECUTIVE
COMPENSATION
Summary
Compensation Table
The
following Summary Compensation Table sets forth the total compensation paid or
accrued for the fiscal years ended September 30, 2009 and September 30, 2008 for
our principal executive officer and our other two most highly compensated
executive officers who were serving as executive officers on September 30, 2009.
We refer to these officers as our named executive officers.
|
Name
and Principal Position
|
Fiscal
Year
End
|
Salary
|
Bonus
|
Option
Awards (1)
|
All
Other
Compensation
|
Total
|
|
Thomas
Massie
|
2009
|
$325,000
|
$51,563
|
$73,676
|
$24,242
(2)
|
$474,481
|
|
Chief
Executive Officer and Director
|
2008
|
$225,000
|
$38,750
|
$161,800
|
$24,242
(2)
|
$449,792
|
|
Ronald
M. Levenson
|
2009
|
$105,721
|
$25,000
|
$17,409
|
—
|
$148,130
|
|
Executive
Vice President and Chief Financial Officer
|
2008
|
—
|
—
|
—
|
—
|
—
|
|
Brett
Zucker
|
2009
|
$178,745
|
$29,250
|
$64,576
|
—
|
$274,571
|
|
Executive
Vice President and Chief Technology Officer
|
2008
|
$175,000
|
$46,300
|
$77,200
|
—
|
$298,500
|
|
(1)
|
Amounts
in the Option Awards column do not reflect compensation actually paid to
or realized by the named executive officer. Such amounts reflect
compensation cost for fiscal years ended September 30, 2009 and 2008
calculated in accordance with SFAS 123(R), which includes the ratable
amount of expense in such years for options granted in prior
years. The assumptions used to value stock options can be found
in Note 10 to our Consolidated Financial Statements for the year ended
September 30, 2009 contained in our annual report on Form
10-K. The calculations above, however, exclude assumptions with
respect to forfeitures. A forfeiture rate was used in the
expense calculation in the consolidated financial
statements.
|
|
(2)
|
Represents
life insurance premiums.
|
- 9
-
Employment
Agreements
Thomas
Massie
We have
entered into an employment agreement with Thomas Massie, our Chief Executive
Officer, to provide executive management services. The agreement had an initial
term of three years commencing on October 1, 2001 and was renewed in 2004 and
again in 2007 each for three-year terms. The term of the agreement is
automatically extended so that it always has an effective period of three years.
Both the annual salary and bonus are subject to periodic review and adjustment
by our Board of Directors. For all services rendered to the Company for the
fiscal year ended September 30, 2009, Mr. Massie was compensated in the form of
initial base salary in the amount of $325,000 and an earned bonus of $51,563,
payable based upon goals mutually agreed upon by Mr. Massie and our Board of
Directors. This agreement may be terminated by (i) us, in the event of Mr.
Massie’s death, resignation, retirement or disability, or for or without cause,
or (ii) Mr. Massie for good reason. In the event that Mr. Massie is terminated
by us without cause or Mr. Massie resigns for good reason, he is entitled to
receive severance payments equal to the greater of: (a) three years’ total
compensation, including bonus amounts, or (b) $1 million.
Named
Executive Officers
On April
13, 2009, we entered into an employment agreement with Ronald M. Levenson for an
initial term of eighteen months, ending on September 30, 2010. The
agreement was amended on May 13, 2009. The agreement sets forth Mr.
Levenson’s initial base salary and annual contingent bonus. The
agreement provides that in the event Mr. Levenson’s employment is terminated by
us without cause or if Mr. Levenson terminates his employment for good reason,
he is entitled to receive severance benefits. The severance benefits
include continuation of salary and health insurance coverage for a period of
twelve months if his employment is terminated on or before September 30, 2010,
or a period of six months if his employment is terminated after September 30,
2010, and a one time payment equal to the quarterly bonus paid to Mr. Levenson
for the quarter immediately prior to his termination.
On
October 1, 2009, we entered into an employment agreement with Brett Zucker for
an initial term of one year. The agreement sets forth Mr. Zucker’s initial base
salary and annual contingent bonus. The agreement may be terminated
by (i) us, in the event of the officer’s death, resignation, retirement, or
disability, or for or without cause, or (ii) by the officer for good reason. In
the event that Mr. Zucker is terminated by us without cause or if Mr. Zucker
terminates his employment for good reason, he is entitled to receive severance
payments equal to three months’ salary plus the quarterly bonus paid to him in
the preceding quarter immediately prior to the termination.
The
employment agreements described above also contain non-competition,
confidentiality, indemnification and other terms and provisions customary for
agreements of this nature.
- 10
-
Outstanding
Equity Awards at Fiscal Year-End
The
following table sets forth information concerning outstanding stock options for
each named executive officer as of September 30, 2009.
|
Option
Awards
|
||||
|
Name
|
Number
of Securities
Underlying
Unexercised
Options
(#) Exercisable
|
Number
of Securities
Underlying
Unexercised
Options
(#) Unexercisable
|
Option
Exercise Price
|
Option
Expiration Date
|
|
Thomas
Massie (1)
|
6,667
|
$0.003
|
09/30/12
|
|
|
33,333
|
$0.900
|
10/09/18
|
||
|
75,000
|
$0.900
|
10/09/18
|
||
|
20,000
|
$0.900
|
10/09/18
|
||
|
Ronald
M. Levenson (2)
|
—
|
100,000
|
$1.060
|
04/13/19
|
|
Brett
Zucker (3)
|
1,820
|
$0.357
|
02/27/12
|
|
|
25,130
|
$0.900
|
10/09/18
|
||
|
25,000
|
$0.900
|
10/09/18
|
||
|
100,000
|
$0.900
|
10/09/18
|
||
|
30,000
|
$0.900
|
10/09/18
|
||
|
20,000
|
$0.900
|
10/09/18
|
||
|
(1)
|
Grants
dated: 09/30/02 for 6,667 shares; and 10/09/08 for 33,333, 75,000 and
20,000 shares. Shares vest in equal installments upon the anniversary date
of the grant over three years. All options, with the exception
of the option dated 09/30/02, were issued as part of the Company’s
repricing plan in October 2008.
|
|
(2)
|
Grant
dated 04/13/09 for 100,000 shares. Shares vest in equal
installments upon the anniversary date of the grant over three
years.
|
|
(3)
|
Grants
dated: 02/27/2002 for 1,820 shares; and 10/09/08 for 25,130, 25,000,
100,000, 30,000 and 20,000 shares. Shares vest in equal
installments upon the anniversary date of the grant over three
years. All options, with the exception of the option dated
02/27/02, were issued as part of the Company’s repricing plan in October
2008.
|
- 11
-
COMPENSATION
OF DIRECTORS
Director
Compensation
The
following table sets forth information concerning the compensation of our
Directors who are not named executive officers for the fiscal year ended
September 30, 2009.
|
Name
|
Fees
Earned or Paid in Cash
|
Option
Awards
(1)(2)
|
All
Other
Compensation
|
Total
|
|
John
Cavalier
|
$18,000
|
$13,440
|
—
|
$31,440
|
|
William
Coldrick
|
$23,000
|
$16,580
|
—
|
$39,580
|
|
Kenneth
Galaznik
|
$26,000
|
$17,494
|
—
|
$43,494
|
|
Robert
Hegarty
|
$23,000
|
$17,494
|
—
|
$40,494
|
|
Scott
Landers (3)
|
—
|
—
|
—
|
—
|
|
(1)
|
Amounts
in the Option Awards column do not reflect compensation actually paid to
or realized by the Directors. Such amounts reflect compensation cost for
fiscal year ended September 30, 2009 calculated in accordance with SFAS
123(R), which includes the ratable amount of expense in such years for
options granted in prior years. The assumptions used to value
stock options can be found in Note 10 to our Consolidated Financial
Statements for the year ended September 30, 2009 contained in our annual
report on Form 10-K. The calculations above, however, exclude
assumptions with respect to forfeitures. A forfeiture rate was
used in the expense calculation in the consolidated financial
statements.
|
|
(2)
|
Stock
options to purchase 10,000 shares were granted on
10/27/08.
|
As of
September 30, 2009, each non-employee director holds the following aggregate
number of shares under outstanding stock options.
|
Name
|
Number of Shares
Underlying
Outstanding
Stock Options
|
|
|
John
Cavalier
|
20,000
|
|
|
William
Coldrick
|
36,667
|
|
|
Kenneth
Galaznik
|
45,000
|
|
|
Robert
Hegarty
|
45,000
|
|
|
Scott
Landers
|
—
|
(3) Mr.
Landers joined the Board of Directors in January 2010.
The
non-employee members of the Company’s Board of Directors are compensated as
follows:
|
·
|
Option Grants. Outside
directors each receive annual grants of options to purchase 10,000 shares
of our common stock at an exercise price equal to the fair market value of
the shares on the date of grant. The options shall vest over three years
in equal installments on the anniversary of grant. New directors receive
options to purchase 25,000 shares of our common stock at the then current
fair market value upon election to the
Board.
|
|
·
|
Cash Compensation. Each
outside director receives an annual retainer of $12,000 and is compensated
$1,500 for each meeting such director attends in
person.
|
- 12
-
|
·
|
Committee Chair Bonus.
The Chair of our Audit Committee receives an additional annual fee
of $8,000. The Chairs of our Compensation Committee and Nominating and
Corporate Governance Committee each receive an additional annual fee of
$5,000. These fees are payable in lump sums in advance. Other directors
who serve on our standing committees do not receive additional
compensation for their committee
services.
|
|
·
|
Travel Expenses. All
directors are reimbursed for their reasonable out of pocket expenses
associated with attending meetings. For domestic travel, only coach
airfare will be reimbursed; for international travel we reimburse for
business class.
|
OTHER
INFORMATION CONCERNING THE COMPANY AND THE BOARD OF DIRECTORS
Meetings
of the Board of Directors
During
the Company’s fiscal year ended September 30, 2009 (“Fiscal 2009”), the Board of
Directors held six (6) meetings and acted twice by unanimous written consent.
During Fiscal 2009, each director attended each meeting, with the exception that
one member missed one meeting. The Chairman was present at all meetings. All
members of the Board of Directors attended last year’s annual meeting, and the
Company expects that all of the Board members will attend this year’s Annual
Meeting.
COMMITTEES
OF THE BOARD OF DIRECTORS
The
Company has an Audit Committee, a Compensation Committee and a Nominating and
Corporate Governance Committee.
Audit
Committee
The Audit
Committee assists the Board in the oversight of the audit of our consolidated
financial statements and the quality and integrity of our accounting, auditing
and financial reporting processes. The Audit Committee is responsible for making
recommendations to the Board concerning the selection and engagement of
independent registered public accountants and for reviewing the scope of the
annual audit, audit fees, results of the audit and auditor independence. The
Audit Committee also reviews and discusses with management and the Board such
matters as accounting policies, internal accounting controls and procedures for
preparation of financial statements. Our Audit Committee is comprised of Messrs.
Galaznik (Chair), Cavalier and Coldrick. Our Board has determined that each of
the members of the Audit Committee meet the criteria for independence under the
standards provided by the Nasdaq Stock Market. The Board of Directors has
adopted a written charter for the Audit Committee. A copy of such charter is
available on the Company’s website, www.bridgelinesw.com. The Company’s
website is not part of this proxy statement. During Fiscal 2009, the Audit
Committee met twice. Each member of the Audit Committee attended each such
meeting. The Chairman of the Audit Committee was present at all
meetings.
Audit Committee Financial Expert.
Our Board has also determined that each of Mr. Galaznik and Mr. Cavalier
qualifies as an “audit committee financial expert” as defined under Item
407(d)(5) of Regulation S-K.
- 13
-
Compensation
Committee
The
Compensation Committee evaluates the performance of our senior executives,
considers the design and competitiveness of our compensation plans, reviews and
approves senior executive compensation and administers our equity compensation
plans. In addition, the Committee also conducts reviews of executive
compensation to ensure compliance with Section 162(m) of the Internal Revenue
Code of 1986, as amended. Our Compensation Committee is comprised of Messrs.
Hegarty (Chair), Cavalier and Coldrick, all of whom are independent directors.
The Board of Directors has adopted a written charter for the Compensation
Committee. A copy of such charter is available on the Company’s website, www.bridgelinesw.com. During Fiscal 2009,
the Compensation Committee held no formal meetings and acted twice by unanimous
written consent.
Nominating
and Corporate Governance Committee
The
Nominating and Governance Committee identifies candidates for future Board
membership and proposes criteria for Board candidates and candidates to fill
Board vacancies, as well as a slate of directors for election by the
shareholders at each annual meeting. The Nominating and Governance Committee
also annually assesses and reports to the Board on Board and Board Committee
performance and effectiveness and reviews and makes recommendations to the Board
concerning the composition, size and structure of the Board and its committees.
Messrs. Coldrick (Chair), Cavalier and Hegarty, all of whom are independent
directors, are the members of the Nominating and Governance
Committee.
The
Nominating and Corporate Governance Committee may consider candidates
recommended by stockholders as well as from other sources such as other
directors or officers, third party search firms or other appropriate sources.
For all potential candidates, the Nominating and Corporate Governance Committee
may consider all factors it deems relevant, such as a candidate’s personal
integrity and sound judgment, business and professional skills and experience,
independence, possible conflicts of interest, diversity, the extent to which the
candidate would fill a present need on the Board, and concern for the long-term
interests of the stockholders. The Nominating and Corporate Governance Committee
does not assign specific weights to particular criteria and no particular
criterion is a prerequisite for each prospective nominee. The Nominating and
Corporate Governance Committee believes that the backgrounds and qualifications
of its directors, considered as a group, should provide a composite mix of
experience, knowledge and abilities that will allow the Board of Directors to
fulfill its responsibilities. In general, persons recommended by stockholders
will be considered on the same basis as candidates from other sources. If a
stockholder wishes to recommend a candidate for director for election at the
2011 Annual Meeting of Stockholders, it must follow the procedures described in
“Stockholder Proposals and Recommendations for Director.”
The Board
of Directors has adopted a written charter for the Nominating and Corporate
Governance Committee. A copy of such charter is available on the Company’s
website, www.bridgelinesw.com.
During Fiscal 2009, the Nominating and Corporate Governance Committee did not
hold a formal meeting.
- 14
-
Communications
with the Board of Directors
The
Company encourages stockholder communications with the Board of Directors.
Interested persons may directly contact any individual member of the Board of
Directors by contacting Shareholder Relations, Bridgeline Software, Inc., 10
Sixth Road, Woburn, Massachusetts 01801.
Audit
Committee Report
The Audit
Committee consists of three independent directors, all of whom are “independent
directors” within the meaning of the applicable rules of the Securities and
Exchange Commission and the Nasdaq Stock Market, Inc. The Audit Committee’s
responsibilities are as described in a written charter adopted by the Board, a
copy of which is available on the Company’s website at www.bridgelinesw.com.
The Audit
Committee has reviewed and discussed the Company’s audited financial statements
for Fiscal 2009 with management and with the Company’s independent registered
public accounting firm, UHY LLP. The Audit Committee has discussed with UHY LLP
the matters required to be discussed by the Statement on Auditing Standards No.
61, as amended, relating to the conduct of the audit. The Audit Committee has
received the written disclosures and the letter from UHY LLP required by
Independence Standards Board Standard No. 1, Independence Discussions with Audit
Committees, and has discussed with UHY LLP its independence.
Based on
the Audit Committee’s review of the audited financial statements and the review
and discussions described in the foregoing paragraph, the Audit Committee
recommended to the Board that the audited financial statements for Fiscal 2009
be included in the Company’s Annual Report on Form 10-K for Fiscal 2009 for
filing with the Securities and Exchange Commission.
|
Submitted
by the members of the Audit Committee:
Kenneth
Galaznik, Chairman
John
Cavalier
William
Coldrick
|
INDEPENDENT
AUDITORS
The firm
of UHY LLP acts as our principal independent registered public accounting firm.
They have served as our independent auditors since 2005. UHY LLP leases all its
personnel, who work under the control of UHY LLP partners, from wholly-owned
subsidiaries of UHY Advisors, Inc. in an alternative practice structure. A
representative of UHY LLP is expected to attend this year’s Annual
Meeting.
- 15
-
Audit
Fees
The table
below shows the aggregate fees that the Company paid or accrued for the audit
and other services provided by UHY LLP for the fiscal years ended September 30,
2009 and September 30, 2008. The
Company did not seek advice from its independent registered public accounting
firm regarding financial information systems design and implementation during
the fiscal year ended September 30, 2009. The Company did not engage its
independent registered public accounting firm during the fiscal year ended
September 30, 2009 for any other non-audit services.
|
Type
of Service
|
Amount
of Fee for Fiscal Year Ended
|
|
|
September
30, 2009
|
September
30, 2008
|
|
|
Audit
Fees
|
$
205,663
|
$
224,277
|
|
Audit-Related
Fees
|
—
|
58,609
|
|
Tax
Fees
|
—
|
—
|
|
Total
|
$
205,663
|
$
282,886
|
Audit Fees. This category
includes fees for the audits of the Company’s annual financial statements,
review of financial statements included in the Company’s Form 10-Q Quarterly
Reports and services that are normally provided by the independent auditors in
connection with statutory and regulatory filings or engagements for the relevant
fiscal years.
Audit-Related Fees. This
category consists of audits performed in connection with certain
acquisitions.
Tax Fees. This category
consists of professional services rendered for tax compliance, tax planning and
tax advice. The services for the fees disclosed under this category include tax
return preparation, research and technical tax advice.
There
were no other fees paid or accrued to UHY LLP in the fiscal years ended
September 30, 2009 or September 30, 2008.
Audit
Committee Pre-Approval Policies and Procedures.
Before an
independent public accounting firm is engaged by the Company to render audit or
non-audit services, the engagement is approved by the Audit Committee. Our Audit
Committee has the sole authority to approve the scope of the audit and any
audit-related services as well as all audit fees and terms. Our Audit Committee
must pre-approve any audit and non-audit related services by our independent
registered public accounting firm. During our fiscal year ended September 30,
2009, no services were provided to us by our
- 16
-
independent
registered public accounting firm other than in accordance with the pre-approval
procedures described herein.
Code
of Conduct and Ethics
The
Company’s Board of Directors has adopted a Code of Ethics within the meaning of
Item 406(b) of Regulation S-K of the Securities Act that applies to all of the
Company’s officers and employees, including its principal executive officer,
principal financial officer, principal accounting officer or controller, or
persons performing similar functions. The Code of Ethics codifies the business
and ethical principles that govern the Company’s business. A copy of the Code of
Ethics is available on the Company’s website www.bridgelinesw.com. The Company intends
to post amendments to or waivers from its Code of Ethics (to the extent
applicable to its principal executive officer, principal financial officer or
principal accounting officer) on its website. The Company’s website is not part
of this proxy statement.
- 17
-
PROPOSAL
2
AMENDMENT
OF THE BRIDGELINE SOFTWARE, INC.
AMENDED
AND RESTATED STOCK INCENTIVE PLAN
The Board
of Directors believes that the future success of Bridgeline Software depends, in
large part, upon the ability of the Company to attract, retain and motivate key
employees and that the granting of stock options serves as an important factor
in retaining key employees. In addition, the Board of Directors believes it is
important to have a pool of options available for issuance as the Company
considers potential acquisitions. On January 27, 2010, Bridgeline Software’s
Board of Directors approved, subject to stockholder approval, an amendment to
the Bridgeline Software, Inc. Amended and Restated Stock Incentive Plan, as
amended (the “Stock Incentive Plan”), to increase the number of shares reserved
for issuance under the Stock Incentive Plan from 2,000,000 to 2,400,000 shares.
As of January 15, 2010, there were 42,212 shares remaining available for
issuance under the Stock Incentive Plan.
The Board
of Directors believes that the increase in the number of shares available for
issuance under the Stock Incentive Plan is in the best interests of the Company
and recommends a vote for this proposal.
Purpose
of Stock Incentive Plan
The
purpose of the Stock Incentive Plan is to advance the interests of Bridgeline
Software by encouraging equity participation in Bridgeline Software by
directors, officers and employees of Bridgeline Software through the acquisition
of shares of Common Stock upon the exercise of options granted under the Stock
Incentive Plan.
General
Provisions
The
following summary of the Stock Incentive Plan is qualified in its entirety by
reference to the Stock Incentive Plan, as proposed to be amended, a copy of
which is attached as Appendix B to this Proxy Statement.
Our Stock
Incentive Plan, originally adopted in 2000, amended and restated in August 2006
and further amended in April 2008, allows us to grant options and other forms of
stock-based compensation to our officers, directors, employees and outside
consultants and advisors. We have developed this Stock Incentive Plan to align
the interests of (i) employees, (ii) non-employee Board members, and (iii)
consultants and key advisors with the interests of our shareholders and to
provide incentives for these persons to exert maximum efforts for our success
and to encourage them to contribute materially to our growth. As of
January 15, 2010, there were approximately 141 persons eligible to participate
in the Stock Incentive Plan.
The Stock
Incentive Plan is not subject to the provisions of the Employment Retirement
Income Security Act, as amended (“ERISA”), and is not a “qualified plan” within
the meaning of Section 401 of the Internal Revenue Code, as amended (the
“Code”). The Stock Incentive Plan is administered by our Compensation Committee
which has discretion to select the participants who will receive awards under
the Stock Incentive Plan and to determine the type, size and terms of each
award. The Compensation Committee has delegated limited authority to
grant a limited
- 18
-
number of
stock options to a committee comprised of the Company’s Chief Executive Officer
and other officers of the Company.
Shares Subject to the Stock
Incentive Plan. Currently, we may issue up to 2,000,000 shares under the
Stock Incentive Plan, subject to adjustment to prevent dilution from stock
dividends, stock splits, recapitalization or similar
transactions.
Administration of the Stock
Incentive Plan. The Stock Incentive Plan is administered by the
Compensation Committee. Except for certain non-discretionary option grants to
certain of our directors described below, the Compensation Committee selects the
individuals to whom options and awards are granted and determines the option
exercise price and other terms of each award, subject to the provisions of the
Stock Incentive Plan.
Awards under the Stock Incentive
Plan. Under the Stock Incentive Plan, the Compensation Committee may
grant awards in the form of incentive stock options, as defined in Section 422
of the Code, options which do not so qualify, stock awards, performance share
awards and stock appreciation rights.
Options. The duration of any
option shall be within the sole discretion of the Compensation Committee;
provided, however, that any incentive stock option granted to a 10% or less
stockholder or any nonqualified stock option shall, by its terms, be exercised
within 10 years after the date the option is granted and any incentive stock
option granted to a greater than 10% stockholder shall, by its terms, be
exercised within five years after the date the option is granted. The exercise
price of all options will be determined by the Compensation Committee; provided,
however, that the exercise price of an option (including incentive stock options
or nonqualified stock options) will be equal to, or greater than, the fair
market value of a share of our stock on the date the option is granted and
further provided that incentive stock options may not be granted to an employee
who, at the time of grant, owns stock possessing more than 10% of the total
combined voting power of all classes of our stock or any parent or subsidiary,
as defined in section 424 of the Code, unless the price per share is not less
than 110% of the fair market value of our stock on the date of
grant.
The Stock
Incentive Plan provides that each director who is not an employee of Bridgeline
Software, on the date of each annual meeting or special meeting in lieu thereof,
shall automatically receive a grant of a non-statutory option for the purchase
of 10,000 shares of Common Stock. Such option shall vest over three years on the
anniversary of the date of grant at a rate of 33.33% per year until fully
vested.
Termination of Employment.
Unless the Compensation Committee provides otherwise in the terms of an option
agreement, if the employment or service of a participant is terminated, options
granted to such participant prior to August 18, 2006 will immediately cease to
be exercisable and any options granted after that date will cease to be
exercisable (i) immediately if the participant’s employment or service is
terminated for cause or (ii) up to three (3) months after the participant’s
employment or service is terminated without cause.
Termination or Amendment of the
Stock Incentive Plan. Our Board of Directors may at any time terminate
the Stock Incentive Plan or make such amendments thereto as it deems
- 19
-
advisable,
without action on the part of our shareholders unless their approval is required
under the law. However, no termination or amendment will, without the consent of
the individual to whom any option has been granted, affect or impair the rights
of such individual. Under Section 422(b)(2) of the Code, no incentive stock
option may be granted under the Stock Incentive Plan more than ten years from
the date the Stock Incentive Plan was amended and restated or the date such
amendment and restatement was approved by our shareholders, whichever is
earlier.
New
Plan Benefits
We are
unable to determine the dollar value and number of stock awards that may be
received by or allocated to (i) any of our named executive officers, (ii) our
current executive officers, as a group, (iii) our employees who are not
executive officers, as a group, and (iv) our non-executive directors, as a group
as a result of the approval of the amendment to the Stock Incentive Plan because
at this time we are unable to determine whether any of the current non-executive
directors will meet the requirements to receive any automatic grants of options
under the Stock Incentive Plan and all other stock awards granted to such
persons are granted by the Compensation Committee on a discretionary
basis.
Federal
Income Tax Consequences
The following summarizes the U.S.
federal income tax consequences that generally will arise with respect to awards
granted under the Stock Incentive Plan. This summary is based on the tax laws in
effect as of the date of this proxy statement. This summary assumes that all
awards granted under the Stock Incentive Plan are exempt from, or comply with,
the rules under Section 409A of the Internal Revenue Code related to
nonqualified deferred compensation. Changes to these laws could alter the tax
consequences described below. This discussion is not intended to be a
complete discussion of all of the federal income tax consequences of the Stock
Incentive Plan or of all of the requirements that must be met in order to
qualify for the tax treatment described herein. In addition, because tax
consequences may vary, and certain exceptions to the general rules discussed
herein may be applicable, depending upon the personal circumstances of
individual holders of securities, each participant should consider his personal
situation and consult with his own tax advisor with respect to the specific tax
consequences applicable to him. No information is provided as to state tax laws.
The Stock Incentive Plan is not qualified under Section 401 of the Code, nor is
it subject to the provisions of the Employee Retirement Income Security Act of
1974, as amended.
Incentive Stock
Options. A participant will not have income upon
the grant of an incentive stock option. Also, except as described below, a
participant will not have income upon exercise of an incentive stock option if
the participant has been employed by the Company at all times beginning with the
option grant date and ending three months before the date the participant
exercises the option. If the participant has not been so employed during that
time, then the participant will be taxed as described below under “Nonstatutory
Stock Options.” The exercise of an incentive stock option may subject the
participant to the alternative minimum tax.
A
participant will have income upon the sale of the stock acquired under an
incentive stock option at a profit (if sales proceeds exceed the exercise
price). The type of income will depend on when the participant sells the stock.
If a participant sells the stock more than two years after the option was
granted and more than one year after the option was exercised, then all of the
profit
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will be
long-term capital gain. If a participant sells the stock prior to satisfying
these waiting periods, then the participant will have engaged in a disqualifying
disposition and a portion of the profit will be ordinary income and a portion
may be capital gain. This capital gain will be long-term if the participant has
held the stock for more than one year and otherwise will be short-term. If a
participant sells the stock at a loss (sales proceeds are less than the exercise
price), then the loss will be a capital loss. This capital loss will be
long-term if the participant held the stock for more than one year and otherwise
will be short-term.
Nonstatutory Stock
Options. A participant will not have income upon
the grant of a nonstatutory stock option. A participant will have compensation
income upon the exercise of a nonstatutory stock option equal to the value of
the stock on the day the participant exercised the option less the exercise
price. Upon sale of the stock, the participant will have capital gain or loss
equal to the difference between the sales proceeds and the value of the stock on
the day the option was exercised. This capital gain or loss will be long-term if
the participant has held the stock for more than one year and otherwise will be
short-term.
Other Stock-Based
Awards. The tax consequences associated with other
stock-based awards granted under the Stock Incentive Plan will vary depending on
the specific terms of such award. Among the relevant factors are whether or not
the award has a readily ascertainable fair market value, whether or not the
award is subject to forfeiture provisions or restrictions on transfer, the
nature of the property to be received by the participant under the award and the
participant’s holding period and tax basis for the award or underlying common
stock.
Tax Consequences to the
Company. There will be no tax consequences to the
Company except that the Company will be entitled to a deduction when a
participant has compensation income. Any such deduction will be subject to the
limitations of Section 162(m) of the Code.
The
Board of Directors recommends a vote FOR the approval of Proposal No. 2, the
amendment to the Bridgeline Software, Inc. Stock Incentive Plan.
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PROPOSAL
3
RAFTIFICATION
OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Upon the
recommendation of the Audit Committee, the Board of Directors has reappointed
UHY LLP to audit the consolidated financial statements of the Company for the
fiscal year ending September 30, 2010. UHY LLP has served as the Company’s
independent registered public accounting firm since prior to the Company’s
initial public offering. A representative from UHY LLP is expected to be present
at the meeting with the opportunity to make a statement if he or she desires to
do so and to be available to respond to appropriate questions.
Although
stockholder ratification of the appointment is not required by law, the Company
desires to solicit such ratification. If the appointment of UHY LLP is not
approved by a majority of the shares represented at the Meeting, the Company
will consider the appointment of other independent registered public accounting
firms.
The
Board recommends a vote FOR the approval of Proposal No. 3, the ratification of
the appointment of UHY LLP as the Company’s independent auditors for the fiscal
year ending September 30, 2010.
Other
Matters
The Board
of Directors has no knowledge of any other matters which may come before the
Meeting and does not intend to present any other matters. However, if any other
matters shall properly come before the Meeting or any adjournment thereof, the
persons named as proxies will have discretionary authority to vote the shares of
Common Stock represented by the accompanying proxy in accordance with their best
judgment.
Section
16(a) Beneficial Ownership Reporting Compliance
Section
16(a) of Securities Exchange Act of 1934 requires the Company’s executive
officers, directors, and persons who own more than ten percent of a registered
class of the Company’s equity securities to file reports of ownership and
changes in ownership with the Securities and Exchange Commission. Based solely
on its review of the copies of such forms and amendments thereto received by it,
the Company believes that during Fiscal 2009 all executive officers, directors
and owners of ten percent of the outstanding shares of Common Stock complied
with all applicable filing requirements except that Mr. William Coldrick failed
to file two Forms 4 on a timely basis to report two purchase
transactions.
Stockholder
Proposals and Recommendations for Director
Any
stockholder of the Company who wishes to present a proposal to be considered at
the next annual meeting of stockholders of the Company and who wishes to have
such proposal presented in the Company’s Proxy Statement for such meeting must
deliver such
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proposal
in writing to the Company at 10 Sixth Road, Woburn, Massachusetts 01801 on or
before October 28, 2010.
Stockholders
may recommend individuals to the Board of Directors for consideration as
potential director candidates by following the requirements under Article I,
Section 10 of the Bylaws. In order to be eligible to nominate a person for
election to our Board of Directors a stockholder must (i) comply with the notice
procedures set forth in the Bylaws and (ii) be a stockholder of record on the
date of giving such notice of a nomination as well as on the record date for
determining the stockholders entitled to vote at the meeting at which directors
will be elected.
To be
timely, a stockholder’s notice must be in writing and received by our corporate
secretary at our principal executive offices as follows: (A) in the case of an
election of directors at an annual meeting of stockholders, not less than 90
days nor more than 120 days prior to the first anniversary of the preceding
year’s annual meeting; provided, however, that in the event that the date of the
annual meeting is advanced by more than 20 days, or delayed by more than 60
days, from the first anniversary of the preceding year’s annual meeting, a
stockholder’s notice must be so received not earlier than the 120th day prior to
such annual meeting and not later than the close of business on the later of (x)
the 90th day prior to such annual meeting and (y) the tenth day following the
day on which notice of the date of such annual meeting was mailed or public
disclosure of the date of such annual meeting was made, whichever first occurs;
or (B) in the case of an election of directors at a special meeting of
stockholders, provided that the board of directors has determined that directors
shall be elected at such meeting, not earlier than the 120th day prior to such
special meeting and not later than the close of business on the later of (1) the
90th day prior to such special meeting and (2) the tenth day following the day
on which notice of the date of such special meeting was mailed or public
disclosure of the date of such special meeting was made, whichever first
occurs.
In
addition, a stockholder’s notice must contain the information specified in
Article I, Section 10 of the Bylaws and must be accompanied by the written
consent of the proposed nominee to serve as a director if elected. The
stockholder making a nomination must personally appear at the annual or special
meeting of stockholders to present the nomination, otherwise the nomination will
be disregarded
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Stockholders
interested in making a nomination should refer to the complete requirements set
forth in our Bylaws filed as an exhibit to our Current Report on Form 8-K filed
with the Securities and Exchange Commission on October 30, 2007. Provided that
the date of next year’s annual meeting of stockholders is not advanced by more
than 20 days, or delayed by more than 60 days, from the first anniversary of the
2010 annual meeting, any stockholder who wishes to make a nomination to be
considered for the next annual meeting must deliver the notice specified by our
Bylaws between November 20, 2010 and December 20, 2010. The By-Laws contain a
number of substantive and procedural requirements which should be reviewed by
any interested stockholder. Any notice should be mailed to: Secretary,
Bridgeline Software, Inc., 10 Sixth Road, Woburn, Massachusetts
01801.
|
By
Order of the Board of Directors
Ronald
M. Levenson
Assistant
Secretary
February
24, 2010
|
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Appendix
A
PROXY
BRIDGELINE
SOFTWARE, INC.
10
Sixth Road
Woburn,
Massachusetts 01801
The
undersigned, revoking all proxies, hereby appoints Thomas Massie and Ronald M.
Levenson and each of them, proxies with power of substitution to each, for and
in the name of the undersigned to vote all shares of Common Stock of Bridgeline
Software, Inc. (the “Company”) which the undersigned would be entitled to vote
if present at the Annual Meeting of Stockholders of the Company to be held on
March 19, 2010, at 10:00 A.M. at the Burlington Marriott Hotel located at One
Burlington Mall Road, Burlington, Massachusetts and any adjournments thereof,
upon the matters set forth in the Notice of Annual Meeting.
The
undersigned acknowledges receipt of the Notice of Annual Meeting, Proxy
Statement and the Company’s Annual Report.
|
A.
|
To
elect the following nominees as
directors.
|
| For | Withhold | ||
| 1. Kenneth Galaznik | r | r | |
| 2. Scott Landers | r | r |
|
B.
|
To
approve the amendment to the Bridgeline Software, Inc. Amended and
Restated Stock Incentive Plan to increase the number of shares of Common
Stock available for issuance upon exercise of options granted under the
Plan from 2,000,000 shares to 2,400,000
shares.
|
q
For q
Against q Abstain
|
C.
|
To
ratify the appointment of UHY LLP as the Company’s independent auditors
for the Company’s fiscal year ending September 30,
2010.
|
q
For q
Against q Abstain
|
D.
|
In
their discretion, on such other matters as may properly come before the
meeting.
|
q
For q
Against q Abstain
Please
Sign on the Reverse Side and Return this Proxy Promptly in the Enclosed
Envelope.
This
Proxy is solicited on behalf of the Board of Directors, and when properly
executed will he voted as directed herein. If no direction is given, this Proxy
will he voted FOR all Proposals.
Date: ,
2010
(Signature,
if held jointly)
Where
stock is registered in the names of two or more persons ALL should sign.
Signature(s) should correspond exactly with the name(s) as shown above. Please
sign, date and return promptly in the enclosed envelope. No postage need be
affixed if mailed in the United States.
Requests
for copies of proxy materials, the Company’s Annual Report for its fiscal year
ended September 30, 2009 on Form 10-K should be addressed to Shareholder
Relations, Bridgeline Software, Inc., 10 Sixth Road, Woburn, Massachusetts
01801. This material will be furnished without charge to any stockholder
requesting it. The Proxy Statement and the Annual Report to Shareholders for the
year ended September 30, 2009 are also available at https://www.bridgelinesw.com.
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