BLUEGATE CORPORATION SUITE 600 HOUSTON, TEXAS 77024 STOCK PURCHASE WARRANT
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
000
XXXXX XXXX XXX XXXX
XXXXX
000
XXXXXXX,
XXXXX 00000
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Warrant
No.: PP(4)-1
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Right
to Purchase: 1,000,000 common shares
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Date:
June 28, 2007
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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:
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(A)
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=
the closing bid price on the trading day preceding the date of
such
election;
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(B)
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=
the Exercise Price of the Warrants, as adjusted;
and
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(X)
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=
the number of shares of Common Stock issuable upon exercise of
the
Warrants in accordance with the terms of this
Warrant.
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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 Xxxxxx 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.
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BLUEGATE
CORPORATION
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ATTEST:
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By:
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/s/ Xxxxxxx X. Xxxxxxx | /s/ Xxxxxxx X. Xxxxxxxxx | |
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Name:
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Xxxxxxx X. Xxxxxxx
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Secretary
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Title:
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President
and Chief Operating Officer
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4
EXHIBIT
EXERCISE
AGREEMENT
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To:
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Bluegate
Corporation
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(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:
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| [HOLDER] | |||||
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By:
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Name:
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Title:
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Dated:
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5
