Document:

Unassociated Document

    
      

    

    
      THIS
        OPTION AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN
        REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED
        FOR
        SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO
        AN
        EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN
        OPINION
        OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED
        UNDER
        SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH
        ACT.

    

    
      

    

    
      	 	
              BLUEGATE
                CORPORATION

            	
              No.
                E-07-07

            
	 	
              STOCK
                OPTION AGREEMENT

            	 

    

    
      

    

    
      Date
        of
        Grant: June 25, 2007

    

    
      

    

    
      THIS
        GRANT, dated as of the date of grant first stated above (the "Date of
        Grant"), is delivered by Bluegate Corporation (the "Company") to Gilbert
        Gertner
        (the "Grantee"), who is an employee, consultant or director of the Company
        or
        one of its subsidiaries (the Company is sometimes referred to herein as the
        "Employer").

    

    
      

    

    
      WHEREAS,
        the Board of Directors of the Company (the "Board") approved the Company's
        grant
        to Grantee the right to purchase shares of the Common Stock of the Company,
        par
        value $0.001 per share (the "Stock"), in accordance with the terms and
        provisions hereof.

    

    
      

    

    
      NOW,
        THEREFORE, the parties hereto, intending to be legally bound hereby,
        agree as follows:

    

    
      

    

    
      
        	
                1.

              	
                Grant
                  of Option.

              

      

    

    
      

    

    
      Subject
        to the terms and conditions hereinafter set forth, the Company, with the
        approval and at the direction of the Board, hereby grants to the Grantee,
        as of
        the Date of Grant, an option to purchase up to 150,000 shares
        of Stock at a price of $0.50 per share. Such option is
        hereinafter referred to as the "Option" and the shares of stock purchasable
        upon
        exercise of the Option are hereinafter sometimes referred to as the "Option
        Shares." The Option Shares to be issued pursuant to this Stock Option Agreement
        shall be restricted securities.

    

    
      

    

    
      
        	
                2.

              	
                Vesting.

              

      

    

    
      

    

    
      This
        Option shall vest immediately upon the Date of Grant.

    

    
      

    

    
      
        	
                3.

              	
                Termination
                  of Option.

              

      

    

    
      

    

    
      
        	
              	
                (a)

              	
                The
                  Option and all rights hereunder with respect thereto, to the extent
                  such
                  Option has vested, shall terminate and become null and void after
                  the
                  expiration of five (5) years from the Date of Grant (the "Option
                  Term").
                  To the extent that the Option has not vested in accordance with
                  Section 2
                  above, then the non-vested portion of the Option shall terminate
                  and
                  become null and void upon the termination of the Grantee as an
                  employee,
                  officer or director of the Company.

              

      

       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

         

      

    

    
      
        	
              	
                (b)

              	
                In
                  the event of the death of the Grantee, the Option may be exercised
                  by the
                  Grantee's legal representative(s), but only to the extent that
                  the Option
                  would otherwise have been exercisable by the
                  Grantee.

              

      

    

    
      

    

    
      
        	
              	
                (c)

              	
                In
                  the event the Board (or Committee, if any) finds by a majority
                  vote after
                  full consideration of the facts that Grantee, before or after termination
                  of his employment with the Company or an Affiliate for any reason
                  (i)
                  committed or engaged in fraud, embezzlement, theft, commission
                  of a
                  felony, or proven dishonesty in the course of his employment by
                  the
                  Company or any subsidiary or affiliate of the Company, which conduct
                  damaged the Company or subsidiary or affiliate, or disclosed trade
                  secrets
                  of the Company its subsidiary or its affiliate, or (ii) participated,
                  engaged in or had a material, financial or other interest, whether
                  as an
                  employee, officer, director, consultant, contractor, shareholder,
                  owner,
                  or otherwise, in any commercial endeavor anywhere which is competitive
                  with the business of the Company or a subsidiary or Affiliate without
                  the
                  written consent of the Company, the Grantee shall forfeit all outstanding
                  Options. Clause (ii) shall not be deemed to have been violated
                  solely by
                  reason of the Grantee's ownership of stock or securities of any
                  publicly
                  owned corporation, if that ownership does not result in effective
                  control
                  of the corporation.

              

      

    

    
      

    

    
      The
        decision of the Board (or Committee, if any) as to the cause of the Grantee's
        discharge, the damage done to the Company or a subsidiary or an affiliate,
        and
        the extent of the Grantee's competitive activity shall be final. No decision
        of
        the Board (or Committee, if any) however, shall affect the finality of the
        discharge of the Grantee by the Company.

    

    
      

    

    
      
        	
                4.

              	
                Exercise
                  of
                  Options.

              

      

    

    
       

    

    
      
        	
              	
                (a)

              	
                The
                  Grantee may exercise the Option with respect to all or any part
                  of the
                  number of Option Shares then exercisable hereunder by giving the
                  Secretary
                  of the Company written notice of intent to exercise. The notice
                  of
                  exercise shall specify the number of Option Shares as to which
                  the Option
                  is to be exercised and the date of exercise thereof, which date
                  shall be
                  at least five days after the giving of such notice unless an earlier
                  time
                  shall have been mutually agreed upon. Notwithstanding the foregoing,
                  an
                  Option granted under this Agreement may be exercised in increments
                  of not
                  less than 10% of the full number of Shares as to which it can be
                  exercised. A partial exercise of an Option will not affect the
                  Grantee's
                  right to exercise the Option from time to time in accordance with
                  this
                  Agreement as to the remaining Shares subject to the
                  Option.

              

      

    

    
       

    

    
      
        	
              	
                (b)

              	
                Full
                  payment (in U.S. dollars) by the Grantee of the option price for
                  the
                  Option Shares purchased shall be made on or before the exercise
                  date
                  specified in the notice of exercise in cash, or certified or cashier's
                  check or money order, or, with the prior written consent of the
                  Board, in
                  whole or in part through the surrender of previously acquired shares
                  of
                  Stock at their fair market value on the exercise
                  date.

              

      

    

    
      

    

    
      On
        the
        exercise date specified in the Grantee's notice or as soon thereafter as
        is
        practicable, but not to exceed ten (10) business days, the Company shall
        cause
        to be delivered to the Grantee, a certificate or certificates for the
        Option Shares then being purchased (out of theretofore unissued Stock or
        reacquired Stock, as the Company may elect) upon full payment for such Option
        Shares. If the Grantee fails to pay for any of the Option Shares specified
        in
        such notice, the Grantee's right to purchase such Option Shares may be
        terminated by the Company. The date specified in the Grantee's notice as
        the
        date of exercise shall be deemed the date of exercise of the Option, provided
        that payment in full for the Option Shares to be purchased upon such exercise
        shall have been received by such date.

       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

         

      

    

    
      
        	
              	
                (c)

              	
                Notwithstanding
                  any of the other provisions hereof, Grantee agrees that he will
                  not
                  exercise this Option and that the Company will not be obligated
                  to issue
                  any Option Shares pursuant to this Stock Option Agreement, if the
                  exercise
                  of the Option or the issuance of such Option Shares would constitute
                  a
                  violation by the Grantee or by the Company of any provision of
                  any law or
                  regulation of any governmental authority or national securities
                  exchanges.
                  Upon the acquisition of any Option Shares pursuant to the exercise
                  of the
                  Option herein granted, Grantee will enter into such written
                  representations, warranties and agreements as the Company may reasonably
                  request in order to comply with applicable securities laws with
                  this Stock
                  Option Agreement.

              

      

    

    
      

    

    
      
        	
                5.

              	
                Piggyback
                  Registration Rights.

              

      

    

    
      

    

    
      If
        the
        Company at any time proposes to register any of its Common Stock under the
        Securities Act (other than a registration on Form S-8 or S-4 or any successor
        or
        similar forms) whether or not for sale for the Company's account, the Company
        shall use its best efforts to include in such registration (and any related
        qualifications under blue sky laws or other compliance) all the Option Shares
        specified in a written request or requests, made by the Grantee and received
        by
        the Company within 15 days after the Grantee's receipt of written notice
        from
        the Company regarding the proposed registration, which written request may
        specify the inclusion of all or a part of Grantee's Option
        Shares.

    

    
      

    

    
      
        	
                6.

              	
                Adjustment
                  of and Changes in Stock of the
                  Company.

              

      

    

    
      

    

    
      In
        the
        event of a reorganization, recapitalization, change of shares, stock split,
        spin-off, stock dividend, reclassification. subdivision or combination of
        shares, merger, consolidation, rights offering, or any other change in the
        corporate structure or shares of capital stock of the Company, the Board
        shall
        make such adjustment in the number and kind of shares of Stock subject to
        the
        Option and in the option price; provided, however, that no such adjustment
        shall
        give the Grantee any additional benefits under the Option.

    

    
      

    

    
      
        	
                7.

              	
                Fair
                  Market Value.

              

      

    

    
      

    

    
      As
        used
        herein, the "fair market value" of a share of Stock shall be the closing
        price
        per share of Stock on the PINK SHEETS, OTCBB, NASDAQ, the NYSE, the Amex,
        the
        composite tape or other recognized market source, as determine by the Board,
        on
        the applicable date of reference hereunder, or if there is no sale on such
        date, then the closing price on the last previous day on which a sale is
        reported.

    

    
      

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

         

      

    

    
      
        	
                 

              	
                8.

              	
                No
                  Rights of
                  Stockholders.

              

      

    

    
      

    

    
      Neither
        the Grantee nor any personal representative shall be, or shall have any of
        the
        rights and privileges of, a stockholder of the Company with respect to any
        shares of Stock purchasable or issuable upon the exercise of the Option,
        in
        whole or in part, prior to the date of exercise of the
        Option.

    

    
      

    

    
      
        	
                 

              	
                9.

              	
                Non-Transferability
                  of Option.

              

      

    

    
      

    

    
      During
        the Grantee's lifetime, the Option hereunder shall be exercisable only by
        the
        Grantee or any guardian or legal representative of the Grantee, and the Option
        shall not be transferable except, (i) in case of the death of the Grantee,
        by
        will or the laws of descent and distribution, and (ii) to a child, grandchild
        or
        stepchild of the Grantee or to a trust or partnership created by the Grantee,
        who, in each case, will be subject to all of the provisions hereof, nor shall
        the Option be subject to attachment, execution or other similar process.
        In the
        event of (a) any attempt by the Grantee to alienate, assign, pledge, hypothecate
        or otherwise dispose of the Option, except as provided for herein, or (b)
        the
        levy of any attachment, execution or similar process upon the rights or interest
        hereby conferred, the Company may terminate the Option by notice to the Grantee
        and it shall thereupon become null and void and of no value to any such
        party.

    

    
      

    

    
      
        	
                10.

              	
                Disputes.

              

      

    

    
      

    

    
      As
        a
        condition of the granting of this Option, the Grantee and his heirs and
        successors agree that any dispute or disagreement which may arise hereunder
        shall be determined by the Board (or Committee, if any) in its sole discretion
        and judgment, and that any such determination and any interpretation by the
        Board (or Committee, if any) of the terms of this Option shall be final and
        shall be binding and conclusive, for all purposes upon the Company, the Grantee,
        his heirs and successors.

    

    
      

    

    
      
        	
                11.

              	
                Notice.

              

      

    

    
      

    

    
      Any
        notice to the Company provided for in this instrument shall be addressed
        to it
        in care of its Secretary at its executive offices at Bluegate Corporation,
        and
        any notice to the Grantee shall be addressed to the Grantee at the current
        address shown on the records of the Company. Any notice shall be deemed to
        be
        duly given if and when properly addressed and posted by registered or certified
        mail, postage prepaid.

    

    
      

    

    
      
        	
                12.

              	
                Governing
                  Law.

              

      

    

    
      

    

    
      The
        validity, construction, interpretation and effect of this instrument shall
        exclusively be governed by and determined in accordance with the law of the
        State of Texas, except to the extent preempted by federal law, which shall
        to
        the extent govern.

       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

    

    
       

      IN
        WITNESS WHEREOF, the Company has caused its duly authorized officers to execute
        and attest to this Stock Option Agreement, and to apply the corporate seal
        hereto, and the Grantee has placed his or her signature hereon, effective
        as of
        the Date of Grant.

    

    
      

    

    
      	 	
              Bluegate
                Corporation

            
	 	 
	 	By:
	 	
              /s/
                William E. Koehler

            
	 	William
              E. Koehler
	 	President
              and COO
	 	 
	 	  
	 	
              Grantee:

            
	 	  
	 	/s/
              Gilbert Gertner
	 	
              Gilbert
                Gertner

            

    

     

     

    5Exhibit 4.5

    
      

    

    

      SUBSCRIPTION
        AGREEMENT

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      
        SUBSCRIPTION
          AGREEMENT

      

      
        

      

      
        
          June
            27,
            2007

        

        
          

        

        
          Bluegate
            Corporation

        

        
          701
            North
            Post Oak Road, Suite 600

        

        
          Houston,
            Texas 77024

        

        
          

        

        
          Ladies
            and Gentlemen:

        

        
          

        

        
          
            	
                  	
                    1.

                  	
                    Private
                      Placement

                  

          

        

        
          

        

        
          The
            undersigned (the “Investor”) is writing to advise you of the following terms and
            conditions under which the Investor hereby offers to subscribe (the “Offer”) for
            the securities of this offering which are offered by Bluegate Corporation,
            a
            Nevada corporation (the “Company”). There is no placement agent for the offering
            as it is being offered directly by management. The Company is issuing
            securities
            consisting of its Series C Convertible Non-Redeemable Preferred Stock,
            par value
            $.001 (“Series C Preferred Stock”) with warrants to acquire shares of the
            Company's Common Stock, par value $.001(“Warrants”) (collectively, the
“Securities”) at $12,500 per Security. Each Security contains one (1) share of
            Series C Preferred Stock and a warrant to purchase 125,000 shares of
            Common
            Stock at $0.17 per share. The undersigned understands that the Securities
            are
            being issued pursuant to the exemption from registration requirements
            of the
            Securities Act of 1933, as amended (the “Act”), provided by Section 4(2) of the
            Act. As such, the Series C Preferred, Stock, the Warrants, and the underlying
            shares of Common Stock into which the Series C Preferred Stock and Warrants
            may
            be converted (the “Underlying Shares”) are “restricted
            securities.”

        

        
          

        

        
          All
            proceeds received from subscribers for the Securities in the offering
            will be
            paid directly to the Company against delivery by the Company of certificates
            representing the Series C Preferred Stock and Warrants.

        

        
          

        

        
          
            	
                  	
                    2.

                  	
                    Subscription.

                  

          

        

        
          

        

        
          Subject
            to the terms and conditions hereinafter set forth in this Subscription
            Agreement, the undersigned hereby offers to purchase the Securities as
            set forth
            in the Investor Signature Page attached hereto.

        

        
          

        

        
          If
            the
            Offer is accepted by the Company, the Securities shall be paid for by
            the
            delivery of such amount by wire transfer, check, or money order payable
            to the
            order of Bluegate Corporation Series C Preferred Stock Purchase, which
            is being
            delivered contemporaneously herewith.

        

        
          

        

        
          Certificates
            of Series C Preferred Stock and Warrants will be delivered as directed
            by the
            undersigned.

        

        
          

        

        
          
            	
                  	
                    3.

                  	
                    Conditions
                      to Offer.

                  

          

        

        
          

        

        
          The
            undersigned acknowledges that the Company may accept or reject the Offer,
            in
            whole or in part, for any reason whatsoever. Acceptance of this Offer
            shall be
            deemed given by the countersigning of this Subscription Agreement on
            behalf of
            the Company.

        

        
          

        

        
          
            	
                  	
                    4.

                  	
                    Representations
                      and Warranties of the
                      Investor.

                  

          

        

        
          

        

        
          The
            undersigned, in order to induce the Company to accept this Offer, hereby
            warrants and represents as follows:

        

        
          

        

        
          (A)           The
            undersigned has sufficient liquid assets to sustain a loss of the undersigned's
            entire investment.

        

        
          

        

        
          (B)           The
            undersigned represents that he (she or it) is an Accredited Investor
            as that
            term is defined in Regulation D promulgated under the Securities Act of
            1933, as amended (the “Act”). In general, an “Accredited Investor” is
            deemed to be an institution with assets in excess of $5,000,000 or
            individuals with net worth in excess of $1,000,000 or annual income
            exceeding $200,000 or $300,000 jointly with
            their spouse.

        

        
          
            
            

          

          
            2

            
              

            

          

          
            
            

          

        

        
          (C)           The
            Company has not made any other representations or warranties to the Investor
            with respect to the Company except as contained herein. The Company has not
            rendered any investment advice to the Investor with respect to the
            Company.

        

        
          

        

        
          (D)           The
            undersigned has not authorized any person or institution to act as his
            Purchaser Representative (as that term is defined in Regulation D of the
            General Rules and Regulations under the Act) in connection with this
            transaction. The undersigned has such knowledge and experience in
            financial, investment and business matters that he is capable of evaluating
            the merits and risks of the prospective investment in the Securities. The
            undersigned has consulted with such independent legal counsel or
            other advisers as he has deemed appropriate to assist the undersigned in
            evaluating his proposed investment in the Securities.

        

        
          

        

        
          (E)           The
            undersigned understands that the Securities involve a high degree of
            risk
            and represents that he (i) has adequate means of providing for his current
            financial needs and possible personal contingencies, and has no need for
            liquidity of investment in the Securities; (ii) can afford (a) to
            hold unregistered securities for an indefinite period of time as required
            and (b) sustain a complete loss of the entire amount of the subscription;
            and (iii) has not made an overall commitment to investments which are not
            readily marketable which is disproportionate so as to cause such overall
            commitment to become excessive.

        

        
          

        

        
          (F)           The
            undersigned has also been afforded the opportunity to ask questions of,
            and
            receive answers from, the officers and/or directors of the Company
            concerning the terms and conditions of the offering and to obtain any
            additional information, to the extent that the Company possesses
            such information or can acquire it without unreasonable effort or expense,
            necessary to verily the accuracy of the information furnished; and has
            availed
            himself of such opportunity to the extent he considers appropriate in order
            to permit him to evaluate the merits and risks of an investment in the
            Securities. It is understood that all documents, records and books
            pertaining to this investment have been made available for inspection, and
            that the books and records of the Company will be available upon reasonable
            notice for inspection by investors during reasonable business hours at its
            principal place of business.

        

        
          

        

        
          (G)           The
            undersigned acknowledges that the Securities including Underlying Shares
            have
            not been registered under the Act in reliance on an exemption for
            transactions by an issuer not involving a public offering, and further
            understands that the Investor is purchasing the Securities without
            being furnished any prospectus setting forth all of the information that
            would be required to be furnished under the Act.

        

        
          

        

        
          (H)           The
            undersigned further acknowledges that this offering has not been passed
            upon or
            the merits thereof endorsed or approved by any state or federal
            authorities.

        

        
          

        

        
          (I)           The
            Securities being subscribed for are being acquired solely for the account
            of the
            undersigned and not with a view to, or for resale in connection with,
            any
            distribution in any jurisdiction where such sale or distribution would
            be
            precluded. By such representation, the Investor means that no other person
            has a
            beneficial interest in the Securities (or Underlying Shares) subscribed
            for
            hereunder, and that no other person has furnished or will furnish directly
            or
            indirectly, any part of or guarantee the payment of any part of the
            consideration to be paid to the Company in connection therewith. The
            undersigned
            does not intend to dispose of all or any part of the Securities (or Warrant
            or
            Common Stock issuable upon any exercise of the Warrant) except in compliance
            with the provisions of the Act and applicable state securities laws and
            understands that the Securities are being offered pursuant to a specific
            exemption under the provisions of the Act, which exemption(s) depends,
            among
            other things, upon compliance with the provisions of the Act.

        

        
          

        

        
          (J)           The
            undersigned further represents and agrees that the undersigned will not
            sell,
            transfer, pledge or otherwise dispose of or encumber the Securities (including
            the Underlying Shares) prior to registration, or the undersigned will,
            if
            requested, furnish the Company and its transfer agent with an opinion
            of counsel
            satisfactory to the Company in form and substance that registration under
            the
            Act or applicable state securities laws is not required.

        

        
          

        

        
          (K)           The
            undersigned hereby agrees that the Company may insert the following or
            similar
            legend on the face of the certificates evidencing the Securities and
            the
            Underlying Shares, if required in compliance with federal and state securities
            laws:

        

        
          
            
            

          

          
            3

            
              

            

          

          
            
            

          

        

        
          “These
            securities have not been registered under Act or under the securities
            laws of
            any state. They may not be sold, offered for sale, pledged, or hypothecated
            in
            the absence of a registration statement in effect with respect to the
            securities
            under such act or an opinion of counsel reasonably satisfactory to the
            company
            that such registration is not required pursuant to a valid exemption
            under the
            Act.”

        

        
          

        

        
          (L)           Neither
            the Company nor any person acting on its behalf has offered or sold the
            undersigned the Securities by means of any form of general solicitation
            or
            general advertising and the Securities were not offered or sold to the
            Investor
            by means of publicly disseminated advertisements or sales
            literature.

        

        
          

        

        
          (M)           The
            undersigned represents that during the 30 days prior to the date hereof,
            the
            undersigned has not, directly or indirectly, made any short sales of,
            or granted
            any option for the purchase of or entered into any hedging or similar
            transaction with the same economic effect as a net short sale, in the
            Common
            Stock.

        

        
          

        

        
          The
            undersigned certifies that each of the foregoing representations and
            warranties
            set forth in subsection (A) through (M) inclusive of this Section 4 are
            true as
            of the date hereof and shall survive such date.

        

        
          

        

        
          
            	
                  	
                    5.

                  	
                    Representations
                      and Warranties of the
                      Company.

                  

          

        

        
          

        

        
          The
            Company hereby makes the following representations and warranties to
            the
            Investor:

        

        
          

        

        
          (A)           Subsidiaries. The
            Company has no direct or indirect subsidiaries (each a “Subsidiary,” and
            collectively, “Subsidiaries”) except as described in SEC Reports. All the issued
            and outstanding shares of capital stock of each Subsidiary are validly
            issued and are fully paid, non-assessable, and free of preemptive and
            similar rights, and the Company owns all of the issued and outstanding
            shares of
            capital stock of each Subsidiary, except as described in such the SEC
            Reports.

        

        
          

        

        
          (B)           Organization
            and Qualification. Each of the Company and the Subsidiaries is an
            entity duly incorporated or otherwise organized, validly existing and in
            good standing under the laws of the jurisdiction of its incorporation or
            organization (as applicable), with the requisite power and authority
            to own
            and use its properties and assets and to carry on its business as currently
            conducted. Neither the Company nor any Subsidiary is in violation of any of
            the provisions of its respective certificate or articles of incorporation,
            bylaws or other organizational or charter documents.

        

        
          

        

        
          (C)           Authorization;
            Enforcement. The Company has the requisite corporate power
            and authority to enter into and to consummate the offering. The execution
            and delivery of this Subscription Agreement by the Company and the
            consummation by it of the transactions contemplated hereby have been duly
            authorized by all necessary action on the part of the Company and no
            further
            consent or action is required by the Company, other than the Required
            Approvals   (as defined below). This Subscription Agreement,
            when executed and delivered in accordance with the terms hereof, will
            constitute
            the valid and binding obligation of the Company enforceable against the
            Company in accordance with its terms, subject to applicable bankruptcy,
            insolvency, fraudulent conveyance, reorganization, moratorium and similar
            laws
            affecting creditors' rights and remedies generally and general principles
            of
            equity.

        

        
          

        

        
          (D)           No
            Conflicts. The execution, delivery and performance of this Subscription
            Agreement by the Company and the consummation by the Company of the
            offering do not and will not: (i) conflict with or violate any provision of
            the Company's or any Subsidiary's certificate or articles of
            incorporation, bylaws or other organizational or charter documents, or (ii)
            subject to obtaining the Required Approvals, conflict with, or constitute a
            default (or an event that with notice or lapse of time or both would
            become
            a default) under, or give to others any rights of termination, amendment,
            acceleration or cancellation (with or without notice, lapse of time or
            both) of, any agreement, credit facility, debt or other
            instrument (evidencing a Company or Subsidiary debt or otherwise) or other
            understanding to which the Company or any Subsidiary is a party or by
            which any
            property or asset of the Company or any Subsidiary is bound or affected, or
            (iii) result in a violation of any law, rule, regulation, order, judgment,
            injunction, decree or other restriction of any court or governmental
            authority as currently in effect to which the Company or a Subsidiary is
            subject (including federal and state securities laws and regulations),
            or by
            which any property or asset of the Company or a Subsidiary is bound or
            affected; except in the case of each of clauses (ii) and (iii), such as
            could not, individually or in the aggregate (a) adversely affect the
            legality,
            validity or enforceability of the offering, (b) have or result in or be
            reasonably likely to have or result in a material adverse effect on the
            results of operations, assets, prospects, business or condition (financial
            or
            otherwise) of the Company and the Subsidiaries, taken as a whole, or
            (c)
            adversely impair the Company's ability to perform fully on a timely basis
            its
            obligations under this Subscription Agreement (any of (a), (b) or (c),
            a
“Material Adverse Effect”).

        

        
          
            
            

          

          
            4

            
              

            

          

          
            
            

          

        

        
          (E)           Filings,
            Consents and Approvals. Neither the Company nor any Subsidiary is required
            to obtain any consent, waiver, authorization or order of, give any notice
            to, or
            make any filing or registration with, any court or other federal, state,
            local or other governmental authority or other Person in connection with
            the
            execution, delivery and performance by the Company of this Subscription
            Agreement, other than (i) the filing with the SEC of a Form D pursuant
            to SEC
            Regulation D and (ii) applicable Blue Sky filings (collectively, the
“Required
            Approvals”).  Such “Person” means an individual or corporation,
            partnership, trust, incorporated or unincorporated association, joint
            venture, limited liability company, joint stock company, government (or
            agency or subdivision thereof) or other entity of any kind.

        

        
          

        

        
          (F)           Issuance
            of the Securities. The Securities are duly authorized and, when issued and
            paid for in accordance with this Subscription Agreement, will be duly and
            validly issued, fully paid and nonassessable, free and clear of all
            liens.  The Company has reserved from its duly authorized capital
            stock a number of shares of Common Stock for issuance upon conversion
            of the
            Series C Preferred Stock and for the issuance of the shares of Common
            Stock upon
            exercise of the Warrants. The issuance and sale of the Securities hereunder
            does not contravene the SEC rules and regulations.

        

        
          

        

        
          (G)           Capitalization.
            The number of shares and type of all authorized, issued, and
            outstanding capital stock of the Company is as set forth in the SEC
            Reports. No Person has any right of first refusal, preemptive right, right
            of participation, or any similar right to participate in the offering.
            Except as
            a result of the purchase and sale of the Securities which may be issued in
            connection with this offering and except for (1) options for capital stock
            issued or issuable under the Company's option plans set forth in the
            SEC Reports and (2) warrants issued by the Company as set forth in the SEC
            Reports, there are no outstanding options, warrants, script rights to
            subscribe
            to, calls or commitments of any character whatsoever relating to, or
            securities, rights or obligations convertible into or exchangeable for,
            or
            giving any Person any right to subscribe for or acquire, any shares of
            Common Stock, or contracts, commitments, understandings or arrangements
            by which
            the Company or any Subsidiary is or may become bound to issue additional
            shares
            of Common Stock, or securities or rights convertible or exchangeable
            into shares
            of Common Stock

        

        
          

        

        
          (H)           SEC
            Reports; Financial Statements. The Company has filed all reports required to
            be filed by it under the Act and the Securities Exchange Act of 1934
            (the
“Exchange Act”), including pursuant to Section 13(a) of 15(d) thereof, for the
            two years preceding the date hereof (or such shorter period as the Company
            was
            required by law to file such material) (the foregoing materials being
            collectively referred to herein as the “SEC Reports”). The SEC Reports, when
            filed, complied in all material respects with the requirements of the
            Act and
            the Exchange Act and the rules and regulations of the Commission promulgated
            thereunder, and none of the SEC Reports, when filed, contained any untrue
            statement of a material fact or omitted to state a material fact required
            to be
            stated therein or necessary in order to make the statements therein,
            in light of
            the circumstances under which they were made, not misleading. The financial
            statements of the Company that have been included in the SEC Reports
            comply in
            all material respects with applicable accounting requirements and the
            rules and
            regulations of the SEC with respect thereto as in effect at the time
            of filing.
            Such financial statements have been prepared in accordance with generally
            accepted accounting principles applied on a consistent basis during the
            periods
            involved (“GAAP”), except as may be otherwise specified in such financial
            statements or the notes thereto, and fairly present in all material respects
            the
            financial position of the Company and its consolidated subsidiaries as
            of and
            for the dates thereof and the results of operations and cash flows for
            the
            periods then ended, subject, in the case of unaudited statements, to
            normal,
            immaterial, year-end audit adjustments.

        

        
          

        

        
          (I)           Material
            Changes. Since the date of the latest audited financial statement
            dated December 31, 2006 and subsequent quarterly 10Q filings included
            within the SEC Reports: (i) there has been no event, occurrence or development
            that has had a Material Adverse Effect, (ii) the Company has not incurred
            any
            liabilities (contingent or otherwise) other than (A) trade payables and
            accrued
            expenses incurred in the ordinary course of business consistent with
            past
            practice and (B) liabilities not required to be reflected in the Company's
            financial statements pursuant to GAAP or required to be disclosed in
            filings
            made with the SEC, (iii) the Company has not altered its method of accounting
            or
            the identity of its auditors, (iv) the Company has not declared or made
            any
            dividend or distribution of cash or other property to its stockholders
            except in
            the ordinary course of business consistent with prior practice, or purchased,
            redeemed or made any agreements to purchase or redeem any shares of its
            capital
            stock except consistent with prior practice or pursuant to existing Company
            stock option or similar plans.

        

        
          
            
            

          

          
            5

            
              

            

          

          
            
            

          

        

        
          (J)           Litigation.
            As set forth in the SEC Reports and Company financial statements for
            March 31,
            2007, there is no action, suit, inquiry, notice of violation, proceeding
            or
            investigation pending or, to the knowledge of the Company, threatened
            against or
            affecting the Company, any Subsidiary or any of their respective properties
            before or by any court, arbitrator, governmental or administrative agency
            or
            regulatory authority (federal, state, county, local or foreign) (collectively,
            an “Action”) which: (i) adversely affects or challenges the legality, validity
            or enforceability of this Subscription Agreement or the Securities or
            (ii)
            would, if there were an unfavorable decision, individually or in the
            aggregate,
            have or reasonably be expected to result in a Material Adverse Effect.
            Neither
            the Company nor any Subsidiary is or has been the subject of any Action
            involving a claim of violation of or liability under federal or state
            securities
            laws. The Company does not have pending before the SEC any request for
            confidential treatment of information. There has not been, and to the
            knowledge
            of the Company, there is not pending or contemplated, any investigation
            by the
            SEC involving the Company. The SEC has not issued any stop order or other
            order
            suspending the effectiveness of any registration statement filed by the
            Company
            or any Subsidiary under the Exchange Act or the Securities
            Act.

        

        
          

        

        
          (K)           Compliance.
            Neither the Company nor any Subsidiary: (i) is in default under or in
            violation
            of (and no event has occurred that has not been waived that, with notice
            or
            lapse of time or both, would result in a default by the Company or any
            Subsidiary under), nor has the Company or any Subsidiary received notice
            of a
            claim that it is in default under or that it is in violation of, any
            material
            indenture, loan or credit agreement or any other material agreement or
            instrument to which it is a party or by which it or any of its properties
            is
            bound (whether or not such default or violation has been waived), which
            default
            or violation would have or result in a Material Adverse Effect, (ii)
            is in
            violation of any order of any court, arbitrator or governmental body,
            or (iii)
            is in violation of any statute, rule or regulation of any governmental
            authority, except in each case as would not, individually or in the aggregate,
            have or result in a Material Adverse Effect.

        

        
          

        

        
          (L)           Regulatory
            Permits. The Company and the Subsidiaries possess all certificates,
            authorizations and permits issued by the appropriate federal, state,
            local or
            foreign regulatory authorities necessary to conduct their respective
            businesses
            as described in the SEC Reports, except where the failure to possess
            such
            permits would not, individually or in the aggregate, have or reasonably
            be
            expected to result in a Material Adverse Effect (“Material Permits”), and
            neither the Company nor any Subsidiary has received any notice of proceedings
            relating to the revocation or modification of any Material
            Permit.

        

        
          

        

        
          (M)           Listing
            and Maintenance Requirements. The Company is currently quoted on the OTC
            Bulletin Board under the symbol “BGAT”. The Company is, and has no reason to
            believe that it will not in the foreseeable future to be in compliance
            with all
            requirements to be quoted on the OTC Bulletin Board.

        

        
          

        

        
          (N)           Internal
            Accounting Controls. The Company and the Subsidiaries maintain a system of
            internal accounting controls sufficient to provide reasonable assurance
            that (i)
            transactions are executed in accordance with management's general or
            specific
            authorizations, (ii) transactions are recorded as necessary to permit
            preparation of financial statements in conformity with generally accepted
            accounting principles and to maintain asset accountability, (iii) access
            to
            assets is permitted only in accordance with management's general or specific
            authorization, and (iv) the recorded accountability for assets is compared
            with
            the existing assets at reasonable intervals and appropriate action is
            taken with
            respect to any differences. The Company has established disclosure controls
            and
            procedures (as defined in Exchange Act Rules 13a-14 and 15d-14) for the
            Company
            and designed such disclosures controls and procedures to ensure that
            material
            information relating to the Company, including its Subsidiaries, is made
            known
            to the certifying officers by others within those entities. The Company's
            certifying officers have evaluated the effectiveness of the Company's
            disclosure
            controls and procedures as of the date immediately prior to the filing
            of the
            Company's most recent periodic report under the Exchange Act (such date,
            the
“Evaluation Date”). The Company presented in such report the conclusions
            of the certifying officers about the effectiveness of the disclosure
            controls
            and procedures based on their evaluations as of the Evaluation Date.
            Since the
            Evaluation Date, there have been no significant changes in the Company's
            internal controls (as such term is defined in Item 307(b) of Regulation
            S-K
            under the Exchange Act).

        

        
          

        

        
          (O)           Disclosure.
            The disclosure provided to the Investor regarding the Company, its business
            and
            the transactions contemplated hereby, furnished by or on behalf of the
            Company,
            including all of the SEC Reports, does not contain any untrue statement
            of a
            material fact or omit to state any material fact necessary in order to
            make the
            statements made therein, in light of the circumstances under which they
            were
            made, not misleading. The Company acknowledges and agrees that the Investor
            makes or has made no representations or warranties with respect to the
            transactions contemplated hereby other than those specifically set forth
            in this
            Subscription Agreement.

        

        
          
            
            

          

          
            6

            
              

            

          

          
            
            

          

        

        
          
            	
                  	
                    6.

                  	
                    Covenants
                      of the Company.

                  

          

        

        
          

        

        
          (A)           Registration
            Rights. The Company grants to the Investor registration rights relating
            to the Underlying Shares under the following terms and
            conditions:

        

        
          

        

        
          (1)           The
            Company will prepare and file, at its own expense, within 90 days from
            its Final Closing a registration statement under the Act (the “Registration
            Statement”) with the SEC sufficient to permit the non-underwritten public
            offering and resale of the Underlying Shares (the “Registrable Securities”)
            through the facilities of all appropriate securities exchanges, if any,
            on which the Common Stock is being sold or on the over-the-counter market
            if the Common Stock is traded thereon.

        

        
          

        

        
          (2)           The
            Company will use its reasonable best efforts to cause such
            Registration Statement to become effective within one hundred and fifty
            (150) days from its filing or, if earlier, within twenty (20) business
            days of  Commission  clearance to request acceleration
            of effectiveness. The number of shares designated in the Registration
            Statement to be registered shall include all of the Registrable Securities
            and
            shall include appropriate language regarding reliance upon Rule 416 to the
            extent permitted by the SEC. The Company will notify the Investors of the
            effectiveness of the Registration Statement within five (5) business
            days of
            such event.

        

        
          

        

        
          (3)           Except
            as otherwise provided in Section 6(C) below, the Company will use
            its reasonable best efforts to maintain effectiveness under the Act of the
            Registration Statement or any post-effective amendment thereto filed under
            the terms of this Agreement until the earlier of (i) the date that none
            of the
            Registrable Securities covered by such Registration Statement are or
            may become
            issued and outstanding, (ii) the date that all of the Registrable Securities
            have been sold pursuant to such Registration Statement, (iii) the date that
            all Registrable Securities have been otherwise transferred to persons who
            may trade such shares without restriction under the Securities Act, and the
            Company has delivered a new certificate or other evidence of ownership
            for such
            securities not bearing a restrictive legend, or (iv) the date that all
            Registrable Securities may be sold at any time, without volume or manner of
            sale limitations, pursuant to Rule 144(k) or any similar provision then in
            effect under the Securities Act in the opinion of counsel to the Company,
            which counsel shall be reasonably acceptable to the Investor.

        

        
          

        

        
          (4)           If,
            at any time during which the Registration Statement required by Section
            6(A)(1)
            and 6(A)(2) above is not effective, the Company shall determine to proceed
            with
            the preparation and filing of a separate registration statement pursuant
            to the
            Act in connection with the proposed offer and sale of any securities
            by it or
            any of its securities holders (other than a registration statement on
            Form S-4,
            S-8, or other limited purpose Form), the Company will give written notice
            of its
            determination to do so to the Investor. Upon receipt of a written request
            from
            Investor, within twenty (20) days after receipt of any such notice from
            the
            Company, the Company will cause all such Registrable Securities requested
            by the
            Investor to be included in such registration statement, all to the extent
            required to permit the sale or other disposition by the Investor of such
            shares.
            The obligation of the Company under this Section 6(A) (4) shall be unlimited
            as
            to the number of registration statements to which it applies, unless
            the
            Effectiveness Period has ended. Notwithstanding the foregoing, the Company
            shall
            have the right to postpone or withdraw any registration effect pursuant
            to this
            Section 6(A) (4) without obligation to the Investor. In addition, if
            any
            registration effected pursuant to this Section 6(A)(4) is a registered
            public
            offering involving an underwriting, the Company shall so advise the Investor
            as
            a part of the written notice given pursuant to this Section 6(A)(4).
            In such
            event, the right of the Investor to include Registrable Securities in
            such
            registration pursuant to this Section 6(A)(4) shall be conditioned upon
            Investor's execution of an underwriting agreement upon customary terms
            with the
            underwriter or underwriters selected for the underwriting by the Company.
            If the
            managing underwriter advises the Company in writing that marketing factors
            require a limitation in the number of shares held by selling stockholders
            to be
            underwritten, the number of Registrable Securities that may be included
            in such
            Registration Statement and underwriting shall be allocated among all
            investors,
            including the Investor, requesting registration in proportion, as nearly
            as
            practicable, to the respective number of shares of Registrable Securities
            held
            by them on the date the Company gives the notice specified in this Section
            6(A)(4).

        

        
          
            
            

          

          
            7

            
              

            

          

          
            
            

          

        

        
          (5)           All
            fees, disbursements and out-of-pocket expenses and costs incurred by
            the Company in connection with the preparation and filing of the
            Registration Statement and in complying with applicable federal securities
            and Blue Sky laws (including, without limitation, all attorneys' fees of
            the Company) shall be borne by the Company.   The Investor and
            the other investors in the offering shall bear the cost of underwriting
            and/or brokerage discounts, fees and commissions, if any, applicable to the
            Registrable Securities being registered and the fees and expenses of their
            counsel. The Company shall use its reasonable best efforts to qualify
            any of
            the Securities for sale in such states as any Investor reasonably
            designates. However, the Company shall not be required to qualify in any
            state which will require an escrow or other restriction relating to the
            Company and/or the sellers, or which will require the Company to qualify
            to
            do business in such state or require the Company to file therein any
            general consent to service of process. If NASDR Rule 2710 requires any
            broker-dealer to make a filing prior to executing a sale by a Purchaser of
            the Securities, make an issuer filing with the NASDR, Inc.
            Corporate Financing Department pursuant to NASDR Rule 2710(b) (10) (A) (i)
            and respond within five (5) Trading Days to any comments received from
            NASDR in connection therewith, and pay the filing fee required in
            connection therewith. The Company, at its expense, will supply the Investor
            with copies of the applicable Registration Statement and any prospectus
            included therein, and other related documents in such quantities as may be
            reasonably requested by the Investor.

        

        
          

        

        
          (6)           In
            the event that (i) the Registration Statement to be filed by the
            Company pursuant to Section 6(A)(2) is not declared effective by the SEC
            within the earlier of one hundred and fifty (150) days from its filing or
            twenty (20) days of clearance by the SEC to request effectiveness, (ii)
            such Registration Statement is not maintained as effective by the Company
            for the period set forth in Section 6(A)(2) above (each a “Registration
            Default”) then the Company will pay Investor (pro rated on a daily basis),
            as partial compensation for such failure and not as a penalty, in the form
            of Common Stock, one and one-half percent (1.5%) of the purchase price
            of the
            Registrable Securities purchased from the Company and held by the Investor
            for
            each month (or portion thereof) until such Registration Statement has been
            filed or declared effective or lapsed effectiveness (in the case of clause
            (ii) above), one and one-half percent (1.5%) of the purchase price of the
            Registrable Securities purchased from the Company and held by the Investor
            each month (or portion thereof) (regardless of whether one or more such
            Registration Defaults are then in existence,  but without
            duplication of such partial compensatory payments) until such Registration
            Statement has been declared effective. Such compensatory payments shall
            be made
            to the Investor in cash, within thirty (30) calendar days of demand,
            provided, however, that the payment of such amounts shall not relieve the
            Company from its obligations to register the Securities pursuant to this
            Section. For purposes of this calculation, the value of the common stock
            will be computed using the average of the closing price for the five
            preceding
            trading days.

        

        
          

        

        
          If
            the
            Company does not remit the payment to the Investor as set forth above,
            the
            Company will pay the Investor reasonable costs of collection, including
            attorneys' fees, in addition to the liquidated damages. The registration
            of the
            Securities pursuant to this provision or payment of such compensatory
            amounts
            shall not affect or limit the Investor's other rights or remedies as
            set forth
            in this Agreement or at law.

        

        
          

        

        
          (B)           The
            Company shall be entitled to suspend the availability of any Registration
            Statement, by providing notice thereof to the Investors, without incurring
            or
            accruing any obligation to pay liquidated damages pursuant to Section
            6(A)(4),
            no more than one (1) time in any three month period or three (3) times
            in any
            twelve month period, and any such period during which the availability
            of the
            Registration Statement is suspended (the “Deferral Period”) shall, without
            incurring any obligation to pay liquidated damages pursuant to Section
            6(A)(4),
            not exceed 30 days; provided that the aggregate duration of any
            Deferral Periods shall not exceed 15 days in any three month period or
            40 days
            in any twelve (12) month period; provided that in the case of a
            Material Event relating to an acquisition or a probable acquisition or
            financing, recapitalization, business combination or other similar transaction,
            the Company may, without incurring any obligation to pay liquidated damages
            pursuant to Section 6(A)(4), deliver to the Holders a second notice to
            the
            effect set forth above, which shall have the effect of extending the
            Deferral
            Period by up to an additional 30 days, or such shorter period of time
            as is
            specified in such second notice. As used herein, “Material Event” shall mean the
            occurrence of any event or the existence of any fact as a result of which
            any
            Registration Statement shall contain any untrue statement of a material
            fact or
            omit to state any material fact required to be stated therein or necessary
            to
            make the statements therein not misleading.

        

        
          
            
            

          

          
            8

            
              

            

          

          
            
            

          

        

        
          (C)           In
            the case of each registration affected by the Company pursuant to any
            section
            herein, the Company will keep each shareholder advised in writing as to the
            initiation of each registration and as to the completion thereof. At its
            expense, the Company will:

        

        
          

        

        
          (1)           Keep
            such registration effective at least until such time as the Underlying
            Shares are eligible to have the restrictive legend removed pursuant to SEC
            Rule 144(k);

        

        
          

        

        
          (2)           Prepare
            and file with the SEC such amendments and supplements to such registration
            statement and the prospectus used in connection with such registration
            statement
            as may be necessary to comply with the provisions of the Securities Act
            with respect to a disposition of all securities covered by such registration
            statement;

        

        
          

        

        
          (3)           Notify
            the shareholders at any time when a prospectus relating thereto is required
            to be delivered under the Act, of the happening of any event as a result
            of
            which the prospectus included in such registration statement, as then in
            effect, includes an untrue statement of a material fact or omits to state a
            material fact required to be stated therein or necessary to make the
            statements
            therein not misleading or incomplete in light of the circumstances then
            existing, and at the request of the shareholders, prepare and furnish to
            them a reasonable number of copies of a supplement to or an amendment
            of such
            prospectus as may be necessary so that, as thereafter delivered to the
            shareholders, such prospectus shall not include an untrue statement of
            a
            material fact or omit to state a material fact required to be stated
            therein or necessary to make the statements therein not misleading or
            incomplete in light of the circumstances then existing;

        

        
          

        

        
          (4)           Use
            its commercially reasonable best efforts to prevent the issuance of any
            stop order or other suspension of effectiveness of a registration
            statement, and, if such an order is issued, to obtain the withdrawal of
            such order at the earliest possible moment and to notify Investor (and, in
            the event of an underwritten offering, the managing underwriter) of the
            issuance
            of such order and the resolution thereof;

        

        

        
          (5)           Cause
            all shares which are registered in accordance with the provisions
            herein, to be listed or included for quotation on each exchange on which
            the shares of Common Stock are then listed or included for
            quotation;

        

        
          

        

        
          (6)           Provide
            a transfer agent and registrar for all such shares and CUSIP number for
            all such
            shares of Common Stock in each case not later than the effective date
            of such
            registration statement; and

        

        
          

        

        
          (7)           Otherwise
            use its commercially reasonable best efforts to comply with all applicable
            rules and regulations of the SEC.

        

        
          

        

        
          (D)           To
            the extent Investor includes any Underlying Shares in a Registration
            Statement pursuant to the terms hereof, Investor will indemnify and hold
            harmless the Company, its directors and officers and any controlling person
            from and against, and will reimburse the Company, its directors and officers
            and
            any controlling person with respect to, any and all loss, damage, liability,
            cost or expense to which the Company, its directors and officers or such
            controlling person may become subject under the Act or otherwise, insofar
            as such losses, damages, liabilities, costs or expenses are caused by
            any
            untrue statement or alleged untrue statement of any material fact contained
            in such registration statement, any prospectus contained therein or any
            amendment or supplement thereto, or arise out of or are based upon
            the omission or alleged omission to state therein a material fact required
            to be stated therein or necessary to make the statements therein, in light
            of the circumstances in which they were made, not misleading, in each case
            to the extent, but only to the extent, that such untrue statement or
            alleged
            untrue statement or omission or alleged omission was so made in reliance
            upon
            and in conformity with written information furnished by or on behalf of the
            Investor specifically for use in the preparation thereof and provided
            further,
            that the maximum amount that may be recovered from Investor shall be
            limited to the amount of proceeds received by Investor from the sale
            of such
            shares of Common Stock.

        

        
          

        

        
          (E)           To
            the extent any indemnification by an indemnifying party is prohibited
            or limited
            by law, the indemnifying party agrees to make the maximum contribution with
            respect to any amounts for which it would otherwise be liable hereunder to
            the extent permitted by law, provided that (i) no contribution shall be
            made under circumstances where the indemnifying party would not have
            been
            liable for indemnification pursuant to the provisions hereof, (ii) no
            seller of securities guilty of fraudulent misrepresentation (within the
            meaning of Section ll(f) of the Act) shall be entitled to contribution
            from any
            seller of securities who was not guilty of such fraudulent misrepresentation,
            and (iii) the amount of the contribution together with any other payments
            made
            in respect of such loss, damage, liability or expense, by any seller
            of
            securities shall be limited to the net amount of proceeds received by
            such
            seller from the sale of such securities.

        

        
          
            
            

          

          
            9

            
              

            

          

          
            
            

          

        

        
          (F)           The
            Investor will cooperate with the Company in connection with this
            Subscription Agreement, including timely supplying all information
            reasonably requested by the Company (which shall include all information
            regarding the Investor and proposed manner of sale of securities required
            to
            be disclosed in any registration statement filed in accordance with this
            Section 6 and executing and returning all documents reasonably requested in
            connection with the registration and sale of any securities
            being registered hereunder and entering into and performing their
            obligations under any underwriting agreement, if the offering is an underwritten
            offering, in usual and customary form, with the managing underwriter
            or
            underwriters of such underwritten offering.

        

        
          

        

        
          (G)           Transfer
            Restrictions.

        

        
          

        

        
          (1)           The
            Securities may only be disposed of in compliance with state and
            federal securities laws.  In connection with any transfer of
            Securities other than pursuant to an effective registration statement or
            Rule 144, to the Company or to an affiliate of an Investor or in connection
            with a pledge as contemplated in Section 6(H)(2), the Company may require
            the transferor thereof to provide to the Company an opinion of counsel
            selected by the transferor and reasonably acceptable to the Company, the
            form and substance of which opinion shall be reasonably satisfactory to the
            Company, to the effect that such transfer does not require registration of
            such transferred Securities under the Act.   As a condition of
            transfer, any such transferee shall agree in writing to be bound by the
            terms of this Subscription Agreement and shall have the rights of an
            Investor under this Subscription Agreement.

        

        
          

        

        
          (2)           The
            Investors agree to the imprinting, so long as is required by this Section
            6(H)
            (2) of a legend on any of the Securities in the following
            form:

        

        
          

        

        
          THIS
            [PREFERRED STOCK] [WARRANT] AND THE SHARES ISSUABLE UPON [CONVERSION
            OF THE
            [PREFERRED STOCK] [EXERCISE OF THE [WARRANT] HAVE NOT BEEN REGISTERED
            UNDER THE
            SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), NOR UNDER ANY STATE SECURITIES
            LAW AND MAY NOT BE SOLD, ASSIGNED, HYPOTHECATED OR OTHERWISE TRANSFERRED
            UNTIL
            (1) A REGISTRATION STATEMENT WITH RESPECT THERETO IS EFFECTIVE UNDER
            THE ACT AND
            ANY APPLICABLE STATE SECURITIES LAW OR (2) THE COMPANY RECEIVES AN OPINION
            OF
            COUNSEL REASONABLY SATISFACTORY TO THE COMPANY THAT SUCH PREFERRED STOCK
            MAY BE
            SOLD, ASSIGNED, HYPOTHECATED OR TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION
            STATEMENT UNDER THE ACT OR APPLICABLE STATE SECURITIES LAWS.

        

        
          

        

        
          (3)           Certificates
            evidencing the Underlying Shares shall not contain any legend (including
            the legend set forth in Section 6(H)(2) hereof): (i) while a registration
            statement (including the Registration Statement) covering the resale of
            such security is effective under the Act, or (ii) following any sale of
            such Underlying Shares pursuant to Rule 144, or (iii) if such Underlying
            Shares are eligible for sale under Rule 144(k), or (iv) if such legend
            is not
            required under applicable requirements of the Act (including judicial
            interpretations and pronouncements issued by the staff of the SEC);
provided, however, in connection with the issuance of the Underlying
            Shares, each Investor, severally and not jointly with the other Investors,
            hereby agrees to adhere to and abide by all prospectus delivery
            requirements under the Act and rules and regulations of the SEC. The
            Company shall cause its counsel to issue a legal opinion to the Company's
            transfer agent promptly after the Effective Date if required by the Company's
            transfer agent to effect the removal of the legend hereunder. If all or any
            portion of Warrant is exercised at a time when there is an effective
            registration statement to cover the resale of the Underlying Shares, or if
            such Underlying Shares may be sold under Rule 144(k) or if such legend
            is
            not otherwise required under applicable requirements of the Act (including
            judicial interpretations thereof) then such Underlying Shares shall be
            issued free of all legends. The Company agrees that following the Effective
            Date or at such time as such legend is no longer required under
            this Section 6(H)(3), it will, no later than ten (10) days following the
            delivery by an Investor to the Company or the Company's transfer agent of a
            certificate representing Underlying Shares, as applicable, issued with a
            restrictive legend (such third (3rd)
            day, the “Legend
            Removal Date”), deliver or cause to be delivered to such Investor a
            certificate representing such shares that is freefrom all restrictive
            and other
            legends. The Company may not make any notation on its records or give
            instructions to any transfer agent of the Company that enlarge the restrictions
            on transfer set forth in this Section.

        

        
          
            
            

          

          
            10

            
              

            

          

          
            
            

          

        

        
          (4)           Each
            Investor, severally and not jointly with the other Investors, agrees
            that the
            removal of the restrictive legend from certificates representing Securities
            as
            set forth in this Section 6(H) is predicated upon the Company's reliance
            that
            the Investor will sell any Securities pursuant to either the registration
            requirements of the Act, including any applicable prospectus delivery
            requirements, or an exemption there from.

        

        
          

        

        
          (I)           Material
            Non-Public Information. The Company covenants and agrees that neither it nor
            any other person or entity acting on its behalf will provide the Investor
            or its
            agents or counsel with any information that the Company believes constitutes
            material non-public information, unless prior thereto such Investor shall
            have
            executed a written agreement regarding confidentiality and use of such
            information. The Company understands and confirms that the investor shall
            be
            relying on the foregoing representations in effecting transactions in
            securities
            of the Company.

        

        
          

        

        
          
            	
                  	
                    7.

                  	
                    No
                      Waiver.

                  

          

        

        
          

        

        
          Notwithstanding
            any of the representations, warranties, acknowledgments, or agreements
            made
            herein by the Investor, the Investor does not thereby, or in any manner,
            waive
            any rights granted to the Investor under federal or state securities
            laws.

        

        
          

        

        
          
            	
                  	
                    8.

                  	
                    Revocation.

                  

          

        

        
          

        

        
          The
            Investor agrees that he shall not cancel, terminate, or revoke this Subscription
            Agreement or any agreement of the Investor made hereunder other than
            as set
            forth herein, and that this Subscription Agreement shall survive the
            death or
            disability of the Investor.

        

        
          

        

        
          
            	
                  	
                    9.

                  	
                    Termination
                      of Subscription
                      Agreement.

                  

          

        

        
          

        

        
          If
            prior
            to the Company's issuance of the Securities, the Company elects to cancel
            this
            Subscription Agreement, provided that it returns to the Investor, without
            interest and without deduction, all sums paid by the Investor, this Offer
            shall
            be null and void and of no further force and effect, and no party shall
            have any
            rights against any other party hereunder.

        

        
          

        

        
          
            	
                  	
                    10.

                  	
                    Miscellaneous.

                  

          

        

        
          

        

        
          (A)           All
            notices or other communications given or made hereunder shall be in writing
            and shall be mailed by registered or certified mail, return receipt
            requested, postage prepaid, or by overnight courier service to the Investor
            at his address set forth below and to the Company at the addresses set
            forth
            herein.

        

        
          

        

        
          (B)           This
            Subscription Agreement constitutes the entire agreement among the parties
            hereto with respect to the subject matter hereof and may be amended only by
            a writing executed by all parties.

        

        
          

        

        
          (C)           The
            provisions of this Subscription Agreement shall survive the execution
            thereof.

        

        
          

        

        
          (D)           The
            Subscription Agreement shall be governed by the laws of the State of
            Texas and
            the Investor consents to the exclusive jurisdiction of, and venue in, the
            state courts in  Harris County in the State of Texas (or in the
            event of exclusive federal jurisdiction, the courts of the Southern District
            of
            Texas).

        

        
          

        

        
          
            	
                  	
                    11.

                  	
                    Certification.

                  

          

        

        
          

        

        
          The
            Investor certifies that he has read this entire Subscription Agreement
            and that
            every statement on the part of the Investor made and set forth herein
            is true
            and complete.

        

        
          
            
            

          

          
            11

            
              

            

          

          
            
            

          

        

        
          INVESTOR
            SIGNATURE PAGE FOR BLUEGATE CORPORATION SUBSCRIPTION
            AGREEMENT

        

        
          Please
            print or type, Use ink only. (All Parties Must Sign)

        

        
          

        

        
          The
            undersigned investor hereby certifies that he: (i) agrees to all the
            terms and
            conditions of this Subscription Agreement, (ii) meets the suitability
            standards
            set forth herein and (iii) is a resident of the state or foreign jurisdiction
            indicated below.

        

        
          

        

        
          Dollar
            Amount of Securities Subscribed for: $100,000

        

        
          

        

        
          	
                  SAI
                    Corporation

                	 	If
                  other than individual check one and 
	
                  Name
                    of Investor (Print)

                	 	indicate
                  capacity of signatory under the signature: 
	 	 	
                  £

                	
                  Trust 

                
	 	 	
                  £

                	
                  Estate 

                
	
                  Name
                    of Joint Investor (if any) (Print)

                	 	
                  £

                	
                  Uniform
                    Gifts to Minors Act, State of

                	 
	 	 	
                  £

                	
                  Attorney-in-fact 

                
	
                  /s/
                    Stephen J. Sperco

                	 	
                  S

                	
                  Corporation 

                
	
                  Signature
                    of Investor

                	 	
                  £

                	
                  Other 

                
	 	 	 	 	 
	 	 	If
                  Joint Ownership, Check one: 
	 	 	
                  £

                	
                  Joint
                    Tenants with Right of Survivorship 

                
	 	 	
                  £

                	
                  Tenants
                    in Common 

                
	
                  Signature
                    of Joint Investor (if any)

                	 	
                  £

                	
                  Tenants
                    by the Entirety 

                
	 	 	
                  £

                	
                  Community
                    by Property 

                
	
                  President

                	 	 	 	 
	
                  Capacity
                    of Signatory (if applicable)

                	 	Backup
                  Withholding Statement: 
	 	 	
                  £

                	
                  Please
                    check this box only if the investor is subject to backup
                    withholding 

                
	
                   

                	 	 	  
	
                  Social
                    Security or Taxpayer Identification Number

                	 	 	  
	 	 	Foreign
                  Person: 
	
                  Investor
                    Mail Address:

                	 	
                  £

                	
                  Please
                    check this box only if the investor is a 

                
	
                  SAI
                    Corporation

                	 	 	
                  nonresident
                    alien, foreign corporation, foreign 

                
	
                  180
                    North Stetson Avenue. Suite 700

                	 	 	
                  partnership,
                    foreign trust or foreign estate 

                
	
                  Street
                    Address

                	 	 	 	 

        

        
          

        

        
          	
                  Chicago,

                	
                  IL

                	
                  60601

                	 	
                  Share
                    and Warrant Registration Name(s) and Amounts:

                
	
                  
                    City

                  

                	
                  State

                	
                  Zip
                    Code

                	 	 

        

        
          

        

        
          	
                  Telephone:
                    (312) 602-7000

                	
                  Fax:
                    (      )

                	 	
                  Name

                	
                  Amount

                

        

        
          	 	
                  1.
                    SAI Corporation

                	 	
                  100%

                

        

        
           

        

        
          	
                  Email:

                	 	 	
                  2.

                	 	 	 

        

        
          

        

        
          	 	
                  3.

                	 	 	 

        

        
          Address
            for Delivery of Shares (if different from above):

        

        
          	 	
                  4.

                	 	 	 

        

        
          	 	 	 	 
	 	 	 	 
	
                  City

                	
                  State

                	
                  Zip
                    Code

                	 

        

        

        
          	
                  Customer
                    Account No.

                	 	 	 

        

        
          

        

        
          Broker:

        

        
          

        

        
          	
                   £
                    NASD Firm Reg. Rep.

                	 	 	
                  No.

                	 	 	
                  £
Other
                    Investor Representative

                	 

        

        
          

        

        
          The
            investor agrees to the terms of this Agreement and, as required by the
            Regulations pursuant to the Internal Revenue Code, certifies under penalty
            of
            perjury that (1) the Social Security Number or Taxpayer Identification
            Number
            and address provided above is correct, (2) the investor is not subject
            to backup
            withholding (unless the Backup Withholding Statement box is checked)
            either
            because he has not been notified that he is subject to backup withholding
            as a
            result of a failure to report all interest or dividends or because the
            Internal
            Revenue Service has notified him that he is no longer subject to backup
            withholding and (3) the investor (unless, the Foreign Person box above
            is
            checked) is not a nonresident alien, foreign partnership, foreign trust
            or
            foreign estate.

        

        
          

        

        
          THE
            SUBSCRIPTION FOR SECURITIES OF BLUEGATE CORPORATION. BY THE ABOVE NAMED
            INVESTOR(S) IS ACCEPTED THIS 28th DAY
            OF JUNE
            2007.

        

        
           

          BLUEGATE
            CORPORATION

        

        
          

        

        
          	
                  By:

                	
                  /s/
                    Charles E. Leibold

                	 
	
                  Name:

                	
                  CHARLES
                    E. LEIBOLD

                	 
	
                  Title:

                	
                  CFO

                	 

        

         

        
12

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