Document:

Unassociated Document

    
      

    

    
       

      THIS
        WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
        BEEN
        REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS WARRANT
        NOR ANY OF SUCH SHARES MAY BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE
        OF AN
        EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SUCH ACT OR, AN
        OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO
        COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
        UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.

    

    
      
         

        
          

        

         

      

    

    
      BLUEGATE
        CORPORATION

    

    
       

      701
        NORTH POST OAK ROAD

    

    
      SUITE
        600 

      HOUSTON,
        TEXAS 77024

    

    
       

      STOCK
        PURCHASE WARRANT

    

    
      

    

    
      

    

    
      	
              Warrant
                No.: PP(4)-1

            	 	
              Right
                to Purchase: 1,000,000 common shares

            
	
              Date:
                June 28, 2007

            	 	 

    

    
       

      THIS
        CERTIFIES THAT, for value received, SAI Corporation (the
        "Holder"), is entitled to purchase from BLUEGATE
        CORPORATION, a Nevada corporation (the
        "Company"), at any time from June 28, 2007 until 5:00 p.m.
        (EST) on June 28, 2012, 1,000,000 fully paid and non-assessable shares of
        the
        Company's common stock, par value $0.001 per share ("Common
        Stock"), at an exercise price of $0.17 per share, as
        adjusted.

    

    
       

      1.            
        The Company is issuing this Warrant to the Holder pursuant to a private
        placement and Subscription Agreement dated June 28, 2007. This Warrant
        constitutes part of a unit subscribed to by the Holder in the Subscription
        Agreement.

    

    
       

      2.            
        (a)           To exercise
        this Warrant or any part of this Warrant, the Holder must deliver to the
        Company
        (collectively, the "Exercise Documentation"): (i) a completed
        exercise agreement a form of which is attached; (ii) this Warrant; and (iii)
        a
        check payable to the Company in an amount equal to the product of the exercise
        price and the number of shares the Holder desires to purchase.  The
        Company will, without charge, issue certificates for shares of Common Stock
        purchased upon exercise of this Warrant within five days after receipt of
        the
        Exercise Documentation.   Unless this Warrant has expired, or all
        of the purchase rights represented by this Warrant have been exercised, the
        Company will also prepare a new Warrant, substantially identical to this
        Warrant, representing the rights formerly represented by this Warrant which
        have
        not expired or been exercised.

    

    
       

      (b)           If,
        but only if, at any time after one year from the date of issuance of this
        Warrant there is no effective registration statement registering the resale
        of
        the Common Stock underlying this Warrant by the Holder, this Warrant may
        also be
        exercised, in whole or in part, at such time by means of a "cashless exercise"
        in which the Holder shall be entitled to receive a certificate for the number
        of
        shares of Common Stock equal to the quotient obtained by dividing [(A-B)
        (X)] by
        (A), where:

    

    
       

      
        	 	
                (A)

              	
                =
                  the closing bid price on the trading day preceding the date of
                  such
                  election;

              

      

    

    
       

      
        	
              	
                (B)

              	
                =
                  the Exercise Price of the Warrants, as adjusted;
                  and

              

      

    

    
       

      
        	
              	
                (X)

              	
                =
                  the number of shares of Common Stock issuable upon exercise of
                  the
                  Warrants in accordance with the terms of this
                  Warrant.

              

      

    

    
       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      3.            
        The Company will at all times reserve and keep available for issuance upon
        the
        exercise of this Warrant such number of its authorized but un-issued shares
        of
        Common Stock as will be sufficient to permit the exercise in full of this
        Warrant, and upon such issuance such shares of Common Stock will be validly
        issued, fully paid and non-assessable.

    

    
       

      4.            
        This Warrant does not and will not entitle the Holder to any voting rights
        or
        other rights as a stockholder of the Company.

    

    
       

      5.            
        Certain Adjustments.

    

     

    (a)           Stock
      Splits, etc. The number and kind of securities purchasable upon the exercise
      of this Warrant and the exercise price shall be subject to adjustment from
      time
      to time upon the happening of any of the following.   In case the
      Company shall (i) pay a dividend in shares of Common Stock or make a
      distribution in shares of Common Stock to holders of its outstanding Common
      Stock, (ii) subdivide its outstanding shares of Common Stock into a greater
      number of shares, (iii) combine its outstanding shares of Common Stock into
      a
      smaller number of shares of Common Stock, or (iv) issue any shares of its
      capital stock in a reclassification of the Common Stock, then the number of
      shares purchasable upon exercise of this Warrant immediately prior thereto
      shall
      be adjusted so that the Holder shall be entitled to receive the kind and number
      of shares or other securities of the Company which it would have owned or have
      been entitled to receive had such Warrant been exercised in advance thereof.
      Upon each such adjustment of the kind and number of shares or other securities
      of the Company which are purchasable hereunder, the Holder shall thereafter
      be
      entitled to purchase the number of shares or other securities resulting from
      such adjustment at an exercise price per share or other security obtained by
      multiplying the exercise price in effect immediately prior to such adjustment
      by
      the number of shares purchasable pursuant hereto immediately prior to such
      adjustment and dividing by the number of shares or other securities of the
      Company resulting from such adjustment.  An adjustment made pursuant
      to this paragraph shall become effective immediately after the effective date
      of
      such event retroactive to the record date, if any, for such event.

    
       

      (b)           Pro
        Rata Distributions. If the Company, at any time prior to the termination
        date of this Warrant, shall distribute to all holders of Common Stock (and
        not
        to Holders of the Warrants) evidences of its indebtedness or assets or rights
        or
        warrants to subscribe for or purchase any security other than the Common
        Stock
        (which shall be subject to the above section), then in each such case the
        exercise price of this Warrant shall be adjusted by multiplying the exercise
        price in effect immediately prior to the record date fixed for determination
        of
        stockholders entitled to receive such distribution by a fraction of which
        the
        denominator shall be the closing bid price determined as of the record date
        mentioned above, and of which the numerator shall be such closing bid price
        on
        such record date less the then per share fair market value at such record
        date
        of the portion of such assets or evidence of indebtedness so distributed
        applicable to one outstanding share of the Common Stock as determined by
        the
        Board of Directors in good faith.  In either case the adjustments
        shall be described in a statement provided to the Holders of the portion
        of
        assets or evidences of indebtedness so distributed or such subscription rights
        applicable to one share of Common Stock.  Such adjustment shall be
        made whenever any such distribution is made and shall become effective
        immediately after the record date mentioned above.

    

    
       

      (c)           Reorganization.
        Reclassification, Merger, Consolidation or Disposition of
        Assets.   In case the Company shall reorganize its capital,
        reclassify its capital stock, consolidate or merge with or into another
        corporation (where the Company is not the surviving corporation or where
        there
        is a change in or distribution with respect to the Common Stock of the Company),
        or sell, transfer or otherwise dispose of all or substantially all its property,
        assets or business to another corporation and, pursuant to the terms of such
        reorganization, reclassification, merger, consolidation or disposition of
        assets, shares of common stock of the successor or acquiring corporation,
        or any
        cash, shares of stock or other securities or property of any nature whatsoever
        (including warrants or other subscription or purchase rights) in addition
        to or
        in lieu of common stock of the successor or acquiring corporation ("Other
        Property"), are to be received by or distributed to the holders of Common
        Stock
        of the Company, then the Holder shall have the right thereafter to receive
        upon
        exercise of this Warrant, the number of shares of Common Stock of the successor
        or acquiring corporation or of the Company, if it is the surviving corporation,
        and Other Property receivable upon or as a result of such reorganization,
        reclassification, merger, consolidation or disposition of assets by a holder
        of
        the number of shares of Common Stock for which this Warrant is exercisable
        immediately prior to such event. In case of any such reorganization,
        reclassification, merger, consolidation or disposition of assets, the successor
        or acquiring corporation (if other than the Company) shall expressly assume
        the
        due and punctual observance and performance of each and every covenant and
        condition of this Warrant to be performed and observed by the Company and
        all
        the obligations and liabilities hereunder, subject to such modifications
        as may
        be deemed appropriate (as determined in good faith by resolution of the Board
        of
        Directors of the Company) in order to provide for adjustments of shares for
        which this Warrant is exercisable which shall be as nearly equivalent as
        practicable to the adjustments provided for in this Section. For purposes
        of
        this Section, "common stock of the successor or acquiring corporation" shall
        include stock of such corporation of any class which is not preferred as
        to
        dividends or assets over any other class of stock of such corporation and
        which
        is not subject to redemption and shall also include any evidences of
        indebtedness, shares of stock or other securities which are convertible into
        or
        exchangeable for any such stock, either immediately or upon the arrival of
        a
        specified date or the happening of a specified event and any warrants or
        other
        rights to subscribe for or purchase any such stock. The foregoing provisions
        of
        this Section shall similarly apply to successive reorganizations,
        reclassifications, mergers, consolidations or disposition of
        assets.

    

    
      

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

    
       

      (d)           Dilutive
        Issuances. If and whenever the Company issues or sells any shares of Common
        Stock (or any Common Stock equivalents such as convertible securities or
        warrants or options) for an effective consideration per share on a weighted
        average basis of less then the Common Stock Exercise Price or for no
        consideration (such lower price, the "Base Share Price" and such issuances
        collectively, a "Dilutive Issuance"), then, the Common Stock Exercise Price
        shall be reduced to equal the Base Share Price, provided, that for purposes
        hereof, all shares of Common Stock that are issuable upon conversion, exercise
        or exchange of Common Stock equivalents shall be deemed outstanding immediately
        after the issuance of such Common Stock equivalents. Such adjustment shall
        be
        made whenever such shares of Common Stock or Capital Share Equivalents are
        issued.

    

    
       

      6.            
        Whenever the number of shares or number or kind of securities or other property
        purchasable upon the exercise of this Warrant or the exercise price is adjusted,
        as herein provided, the Company shall give notice thereof to the Holder,
        which
        notice shall state the number of shares (and other securities or property)
        purchasable upon the exercise of this Warrant and the exercise price of such
        shares (and other securities or property) after such adjustment, setting
        forth a
        brief statement of the facts requiring such adjustment and setting forth
        the
        computation by which such adjustment was made.

    

    
       

      7.            
        Notice of Corporate Action. If at any time:

    

     

    
      (a)           the
        Company shall take a record of the holders of its Common Stock for the purpose
        of entitling them to receive a dividend or other distribution, or any right
        to
        subscribe for or purchase any evidences of its indebtedness, any shares of
        stock
        of any class or any other securities or property, or to receive any other
        right,
        or

    

    
       

      (b)           there
        shall be any capital reorganization of the Company, any reclassification
        or
        recapitalization of the capital stock of the Company or any consolidation
        or
        merger of the Company with, or any sale, transfer or other disposition of
        all or
        substantially all the property, assets or business of the Company to, another
        corporation or,

    

    
       

      (c)           there
        shall be a voluntary or
        involuntary dissolution, liquidation or winding up of the Company; then, in
        any one or more of
        such cases, the Company shall give to Holder (i) at least 20 days' prior
        written
        notice of the date on which a record date shall be selected for such dividend,
        distribution or right or for determining rights to vote in respect of any
        such reorganization, reclassification, merger, consolidation, sale, transfer,
        disposition, liquidation or winding up, and (ii) in the case of any such
        reorganization, reclassification, merger, consolidation, sale, transfer,
        disposition, dissolution, liquidation or winding up, at least 20 days' prior
        written notice of the date when the same shall take place. Such notice in
        accordance with the foregoing clause also shall specify (i) the date on which
        any such record is to be taken for the purpose of such dividend, distribution
        or
        right, the date on which the holders of Common Stock shall be entitled to
        any
        such dividend, distribution or right, and the amount and character thereof,
        and
        (ii) the date on which any such reorganization, reclassification, merger,
        consolidation, sale, transfer, disposition, dissolution, liquidation or winding
        up is to take place and the time, if any such time is to be fixed, as of
        which
        the holders of Common Stock shall be entitled to exchange their shares for
        securities or other property deliverable upon such disposition, dissolution,
        liquidation or winding up. Each such written notice shall be sufficiently
        given
        if addressed to Holder at the last address of Holder appearing on the books
        of
        the Company and delivered in accordance with Section 7.

    

    
       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      8.            
        The construction, validity and interpretation of this Warrant will be governed
        by the laws of the State of Texas and the Holder 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).

    

    
       

      IN
        WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested
        by its duly authorized officers under its corporate seal.

    

    
      

    

    
      	
              BLUEGATE
                CORPORATION 

            	 	
              ATTEST:

            
	 	 	 	 
	
              By:

            	/s/
              William E. Koehler	 	/s/
              Barbara C. Fullerton
	
              Name: 
                

            	
              William E. Koehler

            	 	
              Secretary

            
	
              Title:

            	
              President
                and Chief Operating Officer

            	 	 

    

    
       

      
        
          
          

        

        
          4

          
            

          

        

        
          
          

        

      

      
        
           

          EXHIBIT

        

        
          

        

        
          EXERCISE
            AGREEMENT

        

        
          

        

        
          
            	
                    To:

                  	
                    Bluegate
                      Corporation

                  

          

        

        
          

        

        
          (1)           The
            undersigned hereby elects to purchase _____ shares of Bluegate Corporation.
pursuant
            to the terms of the attached Warrant (only if exercised in full), and
            tenders
            herewith payment of the exercise price in full, together with all applicable
            transfer taxes, if any.

        

        
          

        

        
          (2)           Payment
            shall take the form of (check applicable box):

        

        
          

        

        
          o
            in lawful money of the
            United States; or

        

        
          

        

        
          o the
            cancellation
            of such number of shares as is necessary, in accordance with the formula
            set
            forth in subsection 2(b), to exercise this Warrant with respect to the
            maximum
            number of Warrant Shares purchasable pursuant to the cashless exercise
            procedure
            set forth in subsection 2(b).

        

        
          

        

        
          (3)           Please
            issue a certificate or certificates representing said shares in the name
            of the
            undersigned or in such other name as is specified below:

        

        
          

        

        
          	  
                  	 

        

        
          

        

        
          The
            shares shall be delivered to the following:

        

        
          

        

        
          	  
                  	 
	
                    
                    

                   

                	 
	
                    
                    

                   

                	 

        

        
          

        

        
          	 	 	[HOLDER] 	 
	 	 	 	 	 	 
	 	 	
                  By:

                	    
                  	 
	 	 	 	
                  Name:

                	 	 
	 	 	 	
                  Title:

                	 	 
	 	 	 	 	 	 
	 	 	
                  Dated:

                	     
                  	 

        

        
           

           

          5Unassociated Document

    
      

    

    
       

      THIS
        WARRANT AND THE SHARES ISSUABLE UPON THE EXERCISE OF THIS WARRANT HAVE NOT
        BEEN
        REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED. NEITHER THIS WARRANT
        NOR ANY OF SUCH SHARES MAY BE SOLD, TRANSFERRED OR ASSIGNED IN THE ABSENCE
        OF AN
        EFFECTIVE REGISTRATION STATEMENT FOR SUCH SECURITIES UNDER SUCH ACT OR, AN
        OPINION OF COUNSEL IN FORM, SUBSTANCE AND SCOPE REASONABLY SATISFACTORY TO
        COUNSEL TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR
        UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.

    

    
      

    

    
      
        
          

        

    

    
      BLUEGATE
        CORPORATION

    

    
      

    

    
      701
        NORTH POST OAK ROAD

    

    
      SUITE
        600

    

    
      HOUSTON,
        TEXAS 77024

    

    
      

    

    
      STOCK
        PURCHASE WARRANT

    

    
      

    

    
      	
              Warrant
                No.: PP(4)-2

            	
              Right
                to Purchase: 5,000,000 common
                shares

            

    

    
      Date:
        June 28, 2007

    

    
       

      THIS
        CERTIFIES THAT, for value received, Stephen J. Sperco (the "Holder"),
        is entitled to purchase from BLUEGATE CORPORATION, a
        Nevada corporation (the "Company"), at any tune from
        June 28, 2007 until 5:00 p.m. (EST) on June 28, 2012, 5,000,000 fully
        paid and non-assessable shares of the Company's common stock, par value $0.001
        per share ("Common Stock"), at an exercise price of $0.17 per
        share, as adjusted.

    

    
       

      1.           
        The Company is issuing this Warrant to the Holder pursuant to a private
        placement and Subscription Agreement dated June 28, 2007. This Warrant
        constitutes part of a unit subscribed to by the Holder in the Subscription
        Agreement.

    

    
       

      2.            
        (a)           To exercise
        this Warrant or any part of this Warrant, the Holder must deliver to the
        Company
        (collectively, the "Exercise Documentation"): (i) a completed exercise agreement
        a form of which is attached; (ii) this Warrant; and (iii) a check payable
        to the
        Company in an amount equal to the product of the exercise price and the number
        of shares the Holder desires to purchase.  The Company will, without
        charge, issue certificates for shares of Common Stock purchased upon exercise
        of
        this Warrant within five days after receipt of the Exercise
        Documentation.  Unless this Warrant has expired, or all of the
        purchase rights represented by this Warrant have been exercised, the Company
        will also prepare a new Warrant, substantially identical to this Warrant,
        representing the rights formerly represented by this Warrant which have not
        expired or been exercised.

    

    
       

      (b)           If,
        but only if, at any time after one year from the date of issuance of this
        Warrant there is no effective registration statement registering the resale
        of
        the Common Stock underlying this Warrant by the Holder, this Warrant may
        also be
        exercised, in whole or in part, at such time by means of a "cashless exercise"
        in which the Holder shall be entitled to receive a certificate for the number
        of
        shares of Common Stock equal to the quotient obtained by dividing [(A-B)
        (X)] by
        (A), where:

    

    
       

      
        	
              	
                (A)

              	
                =
                  the closing bid price on the trading day preceding the date of
                  such
                  election;

              

      

    

    
       

      
        	
              	
                (B)

              	
                =
                  the Exercise Price of the Warrants, as adjusted;
                  and

              

      

    

    
       

      
        	
              	
                (X)

              	
                =
                  the number of shares of Common Stock issuable upon exercise of
                  the
                  Warrants in accordance with the terms of this
                  Warrant.

              

      

    

    
       

      
        
          
          

        

        
          1

          
            

          

        

        
          
          

        

      

       

      3.            
        The Company will at all times reserve and keep available for issuance upon
        the
        exercise of this Warrant such number of its authorized but un-issued shares
        of
        Common Stock as will be sufficient to permit the exercise in full of this
        Warrant, and upon such issuance such shares of Common Stock will be validly
        issued, fully paid and non-assessable.

    

    
       

      4.            
        This Warrant does not and will not entitle the Holder to any voting rights
        or
        other rights as a stockholder of the Company.

    

    
       

      5.            
        Certain Adjustments.

    

    
       

      (a)           Stock
        Splits, etc. The number and kind of securities purchasable upon the exercise
        of this Warrant and the exercise price shall be subject to adjustment from
        time
        to tune upon the happening of any of the following. In case the Company shall
        (i) pay a dividend in shares of Common Stock or make a distribution in shares
        of
        Common Stock to holders of its outstanding Common Stock, (ii) subdivide its
        outstanding shares of Common Stock into a greater number of shares, (iii)
        combine its outstanding shares of Common Stock into a smaller number of shares
        of Common Stock, or (iv) issue any shares of its capital stock in a
        reclassification of the Common Stock, then the number of shares purchasable
        upon
        exercise of this Warrant immediately prior thereto shall be adjusted so that
        the
        Holder shall be entitled to receive the kind and number of shares or other
        securities of the Company which it would have owned or have been entitled
        to
        receive had such Warrant been exercised in advance thereof. Upon each such
        adjustment of the kind and number of shares or other securities of the Company
        which are purchasable hereunder, the Holder shall thereafter be entitled
        to
        purchase the number of shares or other securities resulting from such adjustment
        at an exercise price per share or other security obtained by multiplying
        the
        exercise price in effect immediately prior to such adjustment by the number
        of
        shares purchasable pursuant hereto immediately prior to such adjustment and
        dividing by the number of shares or other securities of the Company resulting
        from such adjustment. An adjustment made pursuant to this paragraph shall
        become
        effective immediately after the effective date of such event retroactive
        to the
        record date, if any, for such event.

    

    
       

      (b)           Pro
        Rata Distributions. If the Company, at any time prior to the termination
        date of this Warrant, shall distribute to all holders of Common Stock (and
        not
        to Holders of the Warrants) evidences of its indebtedness or assets or rights
        or
        warrants to subscribe for or purchase any security other than the Common
        Stock
        (which shall be subject to the above section), then in each such case the
        exercise price of this Warrant shall be adjusted by multiplying the exercise
        price in effect immediately prior to the record date fixed for determination
        of
        stockholders entitled to receive such distribution by a fraction of which
        the
        denominator shall be the closing bid price determined as of the record date
        mentioned above, and of which the numerator shall be such closing bid price
        on
        such record date less the then per share fair market value at such record
        date
        of the portion of such assets or evidence of indebtedness so distributed
        applicable to one outstanding share of the Common Stock as determined by
        the
        Board of Directors in good faith.  In either case the adjustments
        shall be described in a statement provided to the Holders of the portion
        of
        assets or evidences of indebtedness so distributed or such subscription rights
        applicable to one share of Common Stock.  Such adjustment shall be
        made whenever any such distribution is made and shall become effective
        immediately after the record date mentioned above.

    

    
       

      (c)           Reorganization,
        Reclassification, Merger, Consolidation or Disposition of
        Assets.   In case the Company shall reorganize its capital,
        reclassify its capital stock, consolidate or merge with or into another
        corporation (where the Company is not the surviving corporation or where
        there
        is a change in or distribution with respect to the Common Stock of the Company),
        or sell, transfer or otherwise dispose of all or substantially all its property,
        assets or business to another corporation and, pursuant to the terms of such
        reorganization, reclassification, merger, consolidation or disposition of
        assets, shares of common stock of the successor or acquiring corporation,
        or any
        cash, shares of stock or other securities or property of any nature whatsoever
        (including warrants or other subscription or purchase rights) in addition
        to or
        in lieu of common stock of the successor or acquiring corporation ("Other
        Property"), are to be received by or distributed to the holders of Common
        Stock of the Company, then the Holder shall have the right thereafter to
        receive
        upon exercise of this Warrant, the number of shares of Common Stock of the
        successor or acquiring corporation or of the Company, if it is the surviving
        corporation, and Other Property receivable upon or as a result of such
        reorganization, reclassification, merger, consolidation or disposition of
        assets
        by a holder of the number of shares of Common Stock for which this Warrant
        is
        exercisable immediately prior to such event. In case of any such reorganization,
        reclassification, merger, consolidation or disposition of assets, the successor
        or acquiring corporation (if other than the Company) shall expressly assume
        the
        due and punctual observance and performance of each and every covenant and
        condition of this Warrant to be performed and observed by the Company and
        all
        the obligations and liabilities hereunder, subject to such modifications
        as may
        be deemed appropriate (as determined in good faith by resolution of the Board
        of
        Directors of the Company) in order to provide for adjustments of shares for
        which this Warrant is exercisable which shall be as nearly equivalent as
        practicable to the adjustments provided for in this Section. For purposes
        of
        this Section, "common stock of the successor or acquiring corporation" shall
        include stock of such corporation of any class which is not preferred as
        to
        dividends or assets over any other class of stock of such corporation and
        which
        is not subject to redemption and shall also include any evidences of
        indebtedness, shares of stock or other securities which are convertible into
        or
        exchangeable for any such stock, either immediately or upon the arrival of
        a
        specified date or the happening of a specified event and any warrants or
        other
        rights to subscribe for or purchase any such stock. The foregoing provisions
        of
        this Section shall similarly apply to successive reorganizations,
        reclassifications, mergers, consolidations or disposition of
        assets.

    

    
       

      
        
          
          

        

        
          2

          
            

          

        

        
          
          

        

      

    

    
       

      (d)           Dilutive
        Issuances. If and whenever the Company issues or sells any shares of Common
        Stock (or any Common Stock equivalents such as convertible securities or
        warrants or options) for an effective consideration per share on a weighted
        average basis of less then the Common Stock Exercise Price or for no
        consideration (such lower price, the "Base Share Price" and such issuances
        collectively, a "Dilutive Issuance"), then, the Common Stock Exercise Price
        shall be reduced to equal the Base Share Price, provided, that for purposes
        hereof, all shares of Common Stock that are issuable upon conversion, exercise
        or exchange of Common Stock equivalents shall be deemed outstanding immediately
        after the issuance of such Common Stock equivalents. Such adjustment shall
        be
        made whenever such shares of Common Stock or Capital Share Equivalents are
        issued.

    

    
       

      6.           Whenever
        the number of shares or number or kind of securities or other property
        purchasable upon the exercise of this Warrant or the exercise price is adjusted,
        as herein provided, the Company shall give notice thereof to the Holder,
        which
        notice shall state the number of shares (and other securities or property)
        purchasable upon the exercise of this Warrant and the exercise price of such
        shares (and other securities or property) after such adjustment, setting
        forth a
        brief statement of the facts requiring such adjustment and setting forth
        the
        computation by which such adjustment was made.

    

    
       

      7.           Notice
        of Corporate Action. If at any time:

    

     

    
      (a)           the
        Company shall take a record of the holders of its Common Stock for the purpose
        of entitling them to receive a dividend or other distribution, or any right
        to
        subscribe for or purchase any evidences of its indebtedness, any shares of
        stock
        of any class or any other securities or property, or to receive any other
        right,
        or

    

    
       

      (b)           there
        shall be any capital reorganization of the Company, any reclassification
        or
        recapitalization of the capital stock of the Company or any consolidation
        or
        merger of the Company with, or any sale, transfer or other disposition of
        all or
        substantially all the property, assets or business of the Company to, another
        corporation or,

    

    
       

      (c)           there
        shall be a voluntary or involuntary dissolution, liquidation or winding up
        of
        the Company; then, in any one or more of such cases, the Company shall give
        to
        Holder (i) at least 20 days' prior written notice of the date on which a
        record
        date shall be selected for such dividend, distribution or right or for
        determining rights to vote in respect of any such reorganization,
        reclassification, merger, consolidation, sale, transfer, disposition,
        liquidation or winding up, and (ii) in the case of any such reorganization,
        reclassification, merger, consolidation, sale, transfer, disposition,
        dissolution, liquidation or winding up, at least 20 days' prior written notice
        of the date when the same shall take place. Such notice in accordance with
        the
        foregoing clause also shall specify (i) the date on which any such record
        is to
        be taken for the purpose of such dividend, distribution or right, the date
        on
        which the holders of Common Stock shall be entitled to any such dividend,
        distribution or right, and the amount and character thereof, and (ii) the
        date
        on which any such reorganization, reclassification, merger, consolidation,
        sale,
        transfer, disposition, dissolution, liquidation or winding up is to take
        place
        and the time, if any such time is to be fixed, as of which the holders of
        Common
        Stock shall be entitled to exchange their shares for securities or other
        property deliverable upon such disposition, dissolution, liquidation or winding
        up. Each such written notice shall be sufficiently given if addressed to
        Holder
        at the last address of Holder appearing on the books of the Company and
        delivered in accordance with Section 7.

    

    
       

      
        
          
          

        

        
          3

          
            

          

        

        
          
          

        

      

       

      8.           The
        construction, validity and interpretation of this Warrant will be governed
        by
        the laws of the State
        of
        Texas and the Holder 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).

    

    
       

      IN
        WITNESS WHEREOF, the Company has caused this Warrant to be signed and attested
        by its duly authorized officers under its corporate seal.

    

    
      

    

    
      	
              BLUEGATE
                CORPORATION 

            	 	 
	 	 	 	 
	By:	/s/
              William E. Koehler	 	/s/
              Barbara C. Fullerton
	
              Name:

            	
              William E. Koehler

            	 	
              Secretary

            
	
              Title:

            	
              President
                and Chief Operating Officer

            	 	 

    

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

    
       

      EXHIBIT

    

    
       

      EXERCISE
        AGREEMENT

    

    
       

      
        	
                To:

              	
                Bluegate
                  Corporation

              

      

    

    
       

      (1)           The
        undersigned hereby elects to purchase ______ shares of Bluegate
        Corporation. pursuant to the terms of the attached Warrant (only if exercised
        in
        full), and tenders herewith payment of the exercise price in full, together
        with
        all applicable transfer taxes, if any.

    

    
       

      (2)           Payment
        shall take the form of (check applicable box):

    

    
       

       ̈
        in lawful money of the
        United States; or

    

    
       

       ̈ the
        cancellation
        of such number of shares as is necessary, in accordance with the formula
        set
        forth in subsection 2(b), to exercise this Warrant with respect to the maximum
        number of Warrant Shares purchasable pursuant to the cashless exercise procedure
        set forth in subsection 2(b).

    

    
       

      (3)           Please
        issue a certificate or certificates representing said shares in the name
        of the
        undersigned or in such other name as is specified below:

    

    
      

    

    
      	  
              	 

    

    
      

    

    
      The
        shares shall be delivered to the following:

    

    
      

    

    
      	  
              	 
	 	 
	  
              	 
	   	 
	  
              	 

    

    
      

    

    
      	 	 	[HOLDER]	 
	 	 	 	 	 
	 	 	
              By:

            	  
              	 
	 	 	 	
              Name:

            	 
	 	 	 	
              Title:

            	 
	 	 	 	 	 
	 	 	
              Dated:

            	  
              	 

    

    
       

       

      5

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