Document:

dsof.htm

    INTERMEC, INC.

    2002
DIRECTOR STOCK OPTION AND FEE PLAN

    

    As
Amended Effective November 13, 2007

     

    1.      Purpose.
 The
Intermec, Inc. 2002 Director Stock Option and Fee Plan (the "Plan”) is intended to provide
an incentive to members of the board of directors of Intermec, Inc., a
Delaware corporation (the "Company”), who are neither
officers nor employees of the Company, to remain in the service of the Company
and increase their efforts for the success of the Company and to encourage such
directors to own shares of the Company's stock, thereby aligning their interests
more closely with the interests of the Company's shareholders. The Plan is also
intended to assist the Company in attracting experienced and qualified
candidates to become members of the Board.

    

    2.      Definitions.

     

    "1997 Plan" means the
UNOVA, Inc. Director Stock Option and Fee Plan, adopted September 24,
1997, and amended July 27, 1999.

     

    "Adverse Tax Consequences under
Section 409A" means the accelerated inclusion, 20 percent additional tax
rate, and associated interest charge that will apply to any deferred
compensation included in taxable income of a Director under Section
409A(a)(1)(B) of the Code.

     

    "Annual Grant" means the
annual grant of Options, if any, made to Directors under Section 7(a) of the
Plan.

     

    "Average Quarterly Price"
means the average of the Fair Market Value of Common Stock on each
trading date of a calendar quarter.

     

    "Board" means the Board of
Directors of the Company.

     

    "Cash Account" means the
bookkeeping account established by the Company for the deferral of Fees by
Directors which will be credited with interest pursuant to Section 6(d)
hereof.

     

    "Code" means the Internal
Revenue Code of 1986, as amended.

     

    "Common Stock" means the
common stock, par value $.01 per share, of the Company.

     

    "Deferral Election" means an
election pursuant to Section 6 hereof to defer receipt of Fees into a Share
Account or Cash Account.

     

    "Deferred Amounts" mean the
amounts credited to a Director's Share Account or Cash Account pursuant to a
Deferral Election or otherwise pursuant to Section 6(h).

     

    "Director" means a member of
the Board who is neither an officer nor an employee of the Company. A director
of the Company shall not be deemed to be an employee of the Company solely by
reason of the existence of a consulting contract between such director and the
Company or any subsidiary thereof pursuant to which the director agrees to
provide consulting services as an independent consultant to the Company or its
subsidiaries on a regular or occasional basis for a stated consideration. The
term "Director" as used in this Plan shall include any person who may hereafter
become an advisory director of the Company, as that term is used in the
Company's By-Laws.

     

    "Effective Date" means
January 1, 2002, subject to approval by the Company's shareholders as
provided in Section 12 hereof.

    
 

    "Exchange Act" means the
Securities Exchange Act of 1934, as amended.

     

    "Fair Market Value" means, as
of any given date, the average of the highest and lowest reported sales price of
the Common Stock on the New York Stock Exchange Composite Tape or, if not listed
on such exchange, on any other national securities exchange on which the Common
Stock is listed or on NASDAQ. If there is no regular public trading market for
such Common Stock, the Fair Market Value of the Common Stock shall be determined
by the Board in good faith.

     

    "Fees" means Retainer Fees and
Meeting Fees.

     

    "Meeting Fees" means fees
scheduled to be paid to a Director for attendance at Board or committee
meetings.

     

    "Options" means the options to
purchase Common Stock granted to a Director under Section 7(a) as an Annual
Grant.

     

    "Retainer Fees" means the
annual retainer scheduled to be paid to a Director for the calendar year and
additional annual fees scheduled to be paid to a Director for serving as
Chairman of the Board or as Chair of a Board committee.

     

    "Share Account" means the
bookkeeping account established by the Company for the deferrals of Fees by
Directors, which will be credited with Share Units pursuant to Section 6(a)
hereof.

     

    "Share Election" means the
election by a Director to receive shares of Common Stock in lieu of Fees as set
forth in Section 5(b) hereof.

     

    "Share Unit" means a share of
Common Stock credited as a bookkeeping entry to a Director's Share Account. Each
Share Unit shall represent the right to receive one share of Common
Stock.

     

    3.      Administration of
the Plan.  Subject to the
express provisions of the Plan, the Board will have complete authority to
interpret the Plan; to prescribe, amend, and rescind rules and regulations
relating to the Plan; to determine the terms and provisions of the respective
option agreements (which need not be identical); and to make all other
determinations necessary or advisable for the administration of the Plan. The
Board shall have the right to delegate its authority to administer the Plan to
the Governance and Nominating Committee or another Board committee consisting
solely of independent Directors.  The Board's or such committee’s
determination on the matters referred to in this Section 3 shall be
conclusive.

     

    4.      Stock Reserved
for the Plan.  The number of shares of Common Stock authorized
for issuance under this Plan is 500,000 plus (i) the number of shares
reserved and available for issuance
under the 1997 Plan on the Effective Date of this Plan and (ii) any shares
subject to grants made under the 1997 Plan, but which subsequently expire or are
canceled, forfeited, or terminated. The number of shares of Common Stock
issuable under this Plan shall be subject to adjustment pursuant to
Section 10 hereof. Shares of Common Stock delivered hereunder may be either
authorized but unissued shares or previously issued shares reacquired and held
by the Company as treasury shares.

     

    5.           Terms and Conditions of Payment of
Fees.

    

    (a)  Fees.

     

    (i)  Retainer Fees.  Unless a
Director makes a Share Election in accordance with Section 5(b) hereof, each
Director shall receive Retainer Fees to be paid in the form of cash, after the
end of the quarter in which earned; provided, however, that the payment of
Retainer Fees to a Director with respect to his or her service as Chairman of
the Board shall be paid in the form of Common Stock and shall be conditioned
upon a mandatory Deferral Election under Section 6 with respect to such
shares.

     

    (ii) Meeting Fees.  Unless
a Director makes a Share Election in accordance with Section 5(b) hereof,
each Director shall receive Meeting Fees to be paid in the form of cash, after
the end of the quarter in which earned.

     

    (iii)  Fee Amounts.  The
amount of Retainer Fees shall be set from time-to-time by the
Board.  The amount of Meeting Fees shall be set from time-to-time by
the Board, in any manner reasonably intended to  reflect and compensate the Directors’
duty to attend meetings of the Board and its committees. If at a time other than
at the beginning of the year (A) any person becomes a Director, (B) a Director
ceases to be a Director, (C) a Director joins or leaves a committee of the
Board, or (D) a Director is appointed or ceases to be Chairman of the Board or
Chair of a Board committee, an adjustment shall be made to the calculation of
the applicable Retainer Fee and Meeting Fee, as the case may be, based upon the
time remaining in such year.

     

    (b)  Share Election.
Each Director may make an annual election (the "Share Election") to receive
in the form of Common Stock (subject to a Deferral Election) all of his or her
Fees earned in each calendar year. The shares of Common Stock (and cash in lieu
of fractional shares) issuable pursuant to a Share Election shall be issued
quarterly in accordance with Section 5(c) hereof. The Share Election must
be in writing and delivered to the Secretary of the Company on or prior to
December 31 of the calendar year preceding the calendar year in which the
applicable Fees are to be earned; provided, however, that any Director
who commences service on the Board on or subsequent to January 1 of a
calendar year may make a Share Election during the thirty-day period immediately
following the commencement of his or her directorship. A Share Election, once
made, shall be irrevocable for the calendar year with respect to which it is
made and shall remain in effect for future calendar years unless revoked in
writing or modified by a subsequent Share Election with respect to future
calendar years on or prior to December 31 of the calendar year preceding the
calendar year in which such revocation shall take effect and in accordance with
the provisions hereof.

    

    (c)  Issuance of
Shares.  Shares of Common Stock issuable to a Director pursuant
to Sections 5(a) and 5(b) shall be issued to such Director on the first business
day following the end of each calendar quarter. The total number of shares of
Common Stock to be so issued shall be determined by dividing (x) the dollar
amount of any Fees for the preceding calendar quarter to which a Share Election
applies by (y) the Average Quarterly Price for the preceding quarter. In no
event shall the Company be required to issue fractional shares. In the event
that a fractional share of Common Stock would otherwise be required to be
issued, an amount in lieu thereof shall be paid in cash based upon the Fair
Market Value of such fractional share on the last business day of the preceding
calendar quarter.

     

    6.      Terms and Conditions of Deferral
Elections.

     

    (a)  In
General.  Each Director may irrevocably elect annually to defer
receiving all or a portion of (i) the shares of Common Stock that would
otherwise be issued upon a Share Election, or (ii) such Director's Fees in
respect of a calendar year that are not subject to a Share Election (a "Deferral Election"). A
Director who has made a Deferral Election with respect to shares of Common Stock
shall have the number of shares of Common Stock that are the subject of the
Deferral Election credited to a Share Account in the form of Share Units. A
Director who has made a Deferral Election with respect to Fees that are not
subject to a Share Election shall have the amount of deferred fees credited to a
Cash Account.

     

    (b)  Timing of
Deferral Election.  The Deferral Election shall be in writing
and delivered to the Secretary of the Company on or prior to December 31 of the
calendar year preceding the calendar year in which the applicable Fees are to be
earned; provided, however, that a Director who
commences service on the Board on or subsequent to January 1 of a calendar
year may make a prospective Deferral Election during the thirty-day period
immediately following the commencement of his or her directorship, and,
accordingly, such Deferral Election shall apply only with respect to
compensation paid for services to be performed subsequent to the Deferral
Election. A Deferral Election, once made, shall be irrevocable for the calendar
year with respect to which it is made and shall remain in effect for future
calendar years unless revoked or modified by a subsequent Deferral Election with
respect to future calendar years on or prior to December 31 of the calendar year
preceding the calendar year in which such revocation shall take effect and in
accordance with the provisions hereof.  No subsequent Deferral
Election may be made with respect to Fees earned during the current calendar
year or prior calendar years.

    
(c)  Share
Accounts.  Each Share Account shall be deemed to be invested in
shares of Common Stock. Whenever regular cash dividends are paid by the Company
on outstanding Common Stock, there shall be credited to the Director's Share
Account additional Share Units equal to (i) the aggregate dividend that
would be payable on outstanding shares of Common Stock equal to the number of
Share Units in such Share Account on the record date for the dividend, divided
by (ii) the Fair Market Value of the Common Stock on the payment date of
the dividend.

     

    (d)  Cash
Accounts.  Each Director's Cash Account shall be credited with
interest on the last day of each calendar quarter calculated on the basis of the
average daily balance in the Cash Account during the calendar quarter. The
interest rate for any calendar quarter shall be the prime rate of interest as
reported in the Wall Street
Journal as the prevailing prime rate of interest on the first business
day of the calendar quarter.

     

    (e)  Commencement of
Payment.  Except as otherwise provided in Section 6(g)
hereof, a Director's Deferred Amounts shall become payable in the January
following the year in which the Director terminates service as a Director.
Payments from a Share Account shall be made by converting Share Units into
Common Stock on a one-for-one basis, with payment of fractional shares to be
made in cash based upon the Fair Market Value of such fractional share on the
last business day of the preceding calendar quarter.

     

    (f)  Timing of
Payments.  Subject to Section 6(g) hereof, each Director shall
elect in his or her Deferral Election to receive payment of his or her Deferred
Amounts either in a lump sum or in two to fifteen substantially equal annual
installments.

     

    (g)  Distributions
Upon Death, Disability or Unforeseeable Emergency.  In the
event of a Director's death, payment of the remaining portion of the Director's
Deferred Amounts will be made to the Director's beneficiary (or, if no
beneficiary has been designated, to the Director's estate or other legal
representative) in a lump sum. Payment shall be made to a Director in a lump sum
in the event of disability (as defined in Section 409A(a)(2)(C) of the Code and
the Treasury Regulations thereunder) or upon the occurrence of an unforeseeable
emergency (as defined in Section 409A(a)(2)(B)(ii) of the Code and the Treasury
Regulations, and subject to the limitations therein).  If a Director
desires to receive a payment as a result of a disability or the occurrence of an
unforeseeable emergency, the Director (or his or her personal representative, as
applicable) shall submit such request in writing to the Secretary of the
Corporation and shall specify date of the occurrence of such disability or
unforeseeable emergency and the amount of the payment
requested.  Payment under this Section 6(g) shall be made on or before
the 90th day
immediately following the event that triggers such payment.

     

    (h)  No Account
Transfers.  A Director may not transfer or convert a Share
Account to a Cash Account, or vice versa.

     

    (i)  Status of
Accounts.  The Share and Cash Accounts shall not be funded, and
all Deferred Amounts shall be held in the general assets of the Company and be
subject to the general creditors of the Company.

    

    7.      Annual Grants of Stock
Options.

     

    (a)  Annual
Grants.  Commencing in 2005, Options to purchase 10,000 shares
of Common Stock shall be granted to each Director automatically on the first
business day of January in each year; provided that no such grants shall be made
under the Plan on or after January 1, 2008.  In addition, the Board
shall have the right to make an automatic annual grant of additional Options to
purchase Common Stock effective on the first business day of January in each
year to a Director for serving as Chairman of the Board or as Chair of a Board
committee.  Any person who becomes a Director, Chairman of the Board,
or Chair of a Board committee at any other time of the year shall receive a
pro-rata portion of the Annual Grant, based upon the time remaining in such
year, such grant to be effective on the date he or she becomes a Director,
Chairman of the Board, or Chair of a Board committee, as applicable. The Board
shall have the right to increase or decrease the number of shares of Common
Stock subject to the Annual Grant as the Board may determine is necessary or
appropriate to attract and retain persons to serve as members of the Board,
Chairman of the Board, or Chairs of Board committees, it being understood that
all such grants and changes in the number of Options granted shall comply with
Section 16 of the Exchange Act and the rules promulgated thereunder and the
Code.

     

    (b)  Option Price Per
Share.  Options granted pursuant to this Section 7 shall
be exercisable at a price per share equal to the Fair Market Value of the Common
Stock on the date of the grant of the Option.

     

    (c)  Period of
Option.  

     

    (i)  Options
granted on the first business day of January pursuant to this Section 7
shall vest and become exercisable in four equal installments (subject to
adjustment for fractional shares) on the first business day of each fiscal
quarter of the Company, beginning on the date of grant, and shall remain
exercisable until the tenth anniversary of the date of grant, at which time they
shall expire.

     

    (ii)
Options granted on a day other than the first business day of January pursuant
to this Section 7 shall vest and become exercisable in equal installments
(subject to adjustment for fractional shares) on the date of grant and the first
business day of each fiscal quarter of the Company remaining in the year of
grant, and shall remain exercisable until the tenth anniversary of the date of
grant, at which time they shall expire.

     

    (d)  Exercise of
Options.  Options may be exercised only by written notice to
the Company at its corporate office accompanied by payment of the full
consideration for the shares as to which they are exercised. The purchase price
is to be paid in full to the Company upon the exercise of the option (i) by
cash, including a personal check payable to the order of the Company, or
(ii) by delivering Common Stock already owned by the optionee for a period
of at least six months (valued at Fair Market Value as of the date of delivery),
or (iii) any combination of cash and Common Stock so valued.

     

    (e)  Nonstatutory
Options.  No option granted hereunder shall constitute an
"incentive stock option" as that term is defined in the Code.

     

    8.      Modification,
Extension, and Renewal of Options.  The Board shall have the
power to modify, extend, or renew outstanding options and authorize the grant of
new options in substitution therefor, provided that such power may not be
exercised in a manner which would (i) alter or impair any rights or
obligations of any option previously granted without the written consent of the
optionee, (ii) adversely affect the qualification of the Plan or any other
stock-related plan of the Company under Rule 16b-3 under the Exchange Act,
(iii) lower the exercise price of existing options, (iv) substitute
new options for previously granted options having a higher exercise price, or
(v) cause an option to become subject to Section 409A of the Code.

    

    9.      Limitation of
Rights.

     

    (a)  No Right to
Continue as a Director.  Neither the Plan, nor the granting of
an option or the making of a Share Election or Deferral Election, or any other
action taken pursuant to the Plan, shall constitute or be evidence of any
agreement or understanding, express or implied, that the Company will retain a
Director for any period of time, or at any particular rate of
compensation.

     

    (b)  No Shareholder's
Rights.  An optionee or a Director who has made a Share
Election or Deferral Election (or his or her representative) shall have no
rights as a shareholder with respect to the shares covered by his or her Options
or Share Election or to any Share Units with respect to a Deferral Election
until the date of the actual issuance to him or her (or such representative) of
shares of Common Stock (either through the Company's Direct Registration System
or by certification) and, subject to Sections 6(c) and
10 hereof, no adjustment will be made for dividends or other rights for which
the record date is prior to the date such shares are issued.

     

    10.           Effect of Certain
Changes in Capitalization.  In the event of any change in
corporate capitalization (such as a stock split), any corporate transaction
(such as any merger, consolidation or separation (including a spinoff)), any
other distribution of stock or property of the Company, any reorganization
(whether or not such reorganization comes within the definition of such term in
Section 368 of the Code) or any partial or complete liquidation of the
Company, the Board shall equitably adjust the Share Account to reflect any such
transaction and shall make such substitution or adjustments in the aggregate
number and kind of shares reserved for issuance under the Plan, in the number,
kind and option price of shares subject to outstanding Options, in the number
and kind of shares subject to Annual Grants pursuant to Section 7 and/or
such other equitable substitution or adjustments in the terms of Options as it
may determine to be appropriate in its sole discretion; provided, however, that the number of
shares subject to any Option shall always be a whole number.

    

    11.           Change in
Control.

     

    (a)  Definition.  For
purposes of the Plan, a "Change
in Control" shall mean a change in the ownership or effective control of
the Company, or in the ownership of a substantial portion of the assets of the
Company as provided in Section 409A(2)(A)(v) of the Code and the regulations
thereunder and interpretations thereof, as the same may be applicable from time
to time.

     

    (b) Consequences of Change in Control.
  Notwithstanding anything in the Plan to the contrary, upon
the occurrence of a Change in Control:

     

    (i)  all
Share Units credited to a Share Account shall be converted into Common Stock and
together with all Deferred Amounts credited to a Cash Account shall be
transferred as soon as practicable to each Director;

     

    (ii)  Fees
earned in respect of the calendar quarter in which the Change in Control occurs
shall be paid in cash as soon as practicable; and

     

    (iii)  all Options shall
immediately vest and become exercisable in full.

     

    (c)  Definition Modified to Extent
Required by Section 409A of the Code.  Notwithstanding the
foregoing, to the extent necessary to comply with Section 409A of the Code, in
the case of any payment hereunder that in the determination of the Company would
be considered “nonqualified deferred compensation” subject to Section 409A and
as to which, in the determination of the Company, the requirements of Section
409A(a)(2)(A)(v) of the Code would apply, an event or occurrence described above
shall be considered a “Change of Control” only if it also constitutes a change
of ownership or effective control of the Company, or a change in ownership of
the Company’s assets, described in Section 409A(a)(2)(A)(v) of the
Code.

     

    12.           Term of
Plan.  This Plan shall be effective as of the Effective Date,
subject to approval of the Plan by the shareholders of the Company at the first
annual meeting of shareholders after the Effective Date. The Plan shall
terminate on December 31, 2011, unless earlier terminated by the Board.
Notwithstanding the Plan's termination, amounts shall be delivered pursuant to
any Deferral Election made prior to the Plan's termination in accordance with
such election. Options may be granted under the Plan at any time prior to the
termination of the Plan. Deferral Elections and Share Elections may not be made
for any Fees which would be paid following the date of the termination of the
Plan. If the shareholders of the Company do not approve this Plan, then this
Plan shall be void, all Share Elections and Deferral Elections made with respect
to this Plan shall be deemed to be Share Elections and Deferral Elections under
the 1997 Plan, and all shares of Common Stock issued, Share Units credited to a
Director's Share Account, and Fees credited to a Director's Cash Account under
this Plan shall be deemed to have been issued and credited under the 1997
Plan.

     

    13.           Amendment;
Termination.  The Board may at any time and from time to time
alter, amend, suspend, or terminate the Plan in whole or in part; provided, however, that no amendment
which is required by any regulation, law or stock exchange rule to be approved
by shareholders shall be effective unless it is approved by the shareholders of
the Company entitled to vote thereon. Notwithstanding the foregoing, no
amendment shall affect adversely any of the rights of any Director, under any
option or under any election theretofore in effect under the Plan, or with
respect to Deferred Amounts, without such Director's consent.

     

    14.           Nontransferability.  No
Option, or right or interest of any Director in Deferred Amounts, shall be
transferable by a Director other than (i) by will or by the laws of descent
and distribution, (ii) pursuant to a qualified domestic relations order (as
defined in the Code or Title I of the Employee Retirement Income Security Act of
1974, as amended), or (iii) in the case of an Option, as otherwise
expressly permitted under the applicable option agreement including, if so
permitted, pursuant to a gift to such optionee's family, whether directly or
indirectly or by means of a trust or partnership or otherwise. All Options or
rights with respect to Deferred Amounts shall be exercisable, during the
Director's lifetime, only by the Director or by the guardian or legal
representative of the Director or an alternate payee pursuant to a qualified
domestic relations order or, in the case of an Option, by any person to whom
such Option is transferred pursuant to the preceding sentence. Under the Plan,
it is understood that the term "optionee" includes the guardian and legal
representative of the Director named in the option agreement and any person to
whom an Option is transferred by will or the laws of descent and distribution,
pursuant to a qualified domestic relations order or as otherwise described
above.

     

    15.           Beneficiaries.  The
Board shall establish such procedures as it deems appropriate for a Director to
designate a beneficiary to whom any amounts payable in the event of a Director's
death are to be paid or by whom any Options held by a Director may be exercised
following his or her death. Directors shall make a beneficiary election with
respect to Deferred Amounts at the same time that a Deferral Election is
made.

     

    16.           Compliance with
Law, Etc.   Notwithstanding any other provision of the Plan or
agreements made pursuant hereto, the Company shall not be required to issue or
deliver any certificate or
certificates for shares of Common Stock under the Plan prior to fulfillment of
all of the following conditions:

     

    (a)  the listing, or approval for
listing upon notice of issuance, of such shares on the New York Stock Exchange
or such other securities exchange or NASDAQ as may at the time be the principal
market for Common Stock;

     

    (b)  any registration or other
qualification of such shares of the Company under any state or federal law or
regulation, or the maintaining in effect of any such registration or other
qualification which the Board shall, in its absolute discretion upon the advice
of counsel, deem necessary or advisable; and

     

    (c)  the obtaining of any other
consent, approval, or permit from any state or federal governmental agency,
which the Board shall, in its absolute discretion after receiving the advice of
counsel, determine to be necessary or advisable.

     

    17.           Notice.  Any
written notice to the Company required by any of the provisions of the Plan
shall be addressed to the Secretary of the Company and shall become effective
when it is received.

    
18.           Governing
Law.  The Plan and all determinations made and actions taken
pursuant hereto shall be governed by the laws of the State of Delaware, without
reference to principles of conflict of laws, and shall be construed
accordingly.

     

    19.           Headings.  The
headings of sections and subsections herein are included solely for convenience
of reference and shall not affect the meaning of any of the provisions of the
Plan.

     

    20.           Termination of
the 1997 Plan.  If the shareholders of the Company approve this
Plan as provided in Section 12 hereof, the 1997 Plan shall terminate in
accordance with Section 12 thereof as of the date of such approval. In that
case, Share Accounts and Cash Accounts maintained under the 1997 Plan shall be
converted to and maintained as Share Accounts and Cash Accounts under this Plan.
If the shareholders of the Company do not approve this Plan, then the 1997 Plan
shall continue in full force and effect until terminated in accordance with the
provisions thereof, all grants of options made pursuant to Sections 5(d) and
5(e) shall be null and void, and all Share Elections and Deferral Elections made
under this Plan shall be deemed to have been made under the 1997
Plan.

     

    21.           Savings
Clause.  This Plan is intended to comply in all respects with
Section 409A of the Code and will be administered and interpreted consistent
with that intent.ex4_1.htm

    
      

    

    Exhibit 4.1

     

    
      
        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.:
      W-08-01  	
                   Right to
      Purchase:  1,000,000

                

        

        Date:
February 28, 2008

      

      
        

         

        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 February 28, 2008 until 5:00 p.m. (EST) on February 28, 2013,
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 $0.0333334 per share, as
adjusted.

      

      
         

        1.           The
Company is issuing this Warrant to the Holder as partial consideration for SAI
Corporation's agreement to lend up to $700,000 to the Company pursuant to that
certain Promissory Note and Security Agreement by and between SAI Corporation
and the Company on or about February 28, 2008.

      

      
         

        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

          
            

          

        

        
           

        

      

      
         

        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/ Charles E. Leibold

              	 
      	 
      
	
                Name:
      Charles E. Leibold

              	 
      	
                Secretary

              
	
                Title:    Chief
      Financial 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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