BLUEGATE CORPORATION SUITE 600 HOUSTON, TEXAS 77024 STOCK PURCHASE WARRANT
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.
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XXXXX XXXX XXX XXXX
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| 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:
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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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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.
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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.
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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
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Name:
Xxxxxxx X. Xxxxxxx
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Secretary
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Title: Chief
Financial Officer
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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:
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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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