8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant To Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): June 1, 2006

BLUEGATE CORPORATION

Exact name of registrant as specified in its Charter)

Nevada	000-22711	76-0640970
(State or other jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

701 North Post Oak, Road, Suite 630, Houston, Texas	77024
(Address of principal executive offices)	(Zip Code)

Registrant's telephone number,

Including Area Code: (713) 686-1100

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 5.02 Departure of Directors or Principal Officers; Election of Directors; Appointment of Principal Officers

1. Expiration of Chief Financial Officer employment contract: The CFO employment contract of Steven Plumb has expired and he is no longer our CFO effective June 1, 2006.

2. Appointment of new CFO: Effective June 1 ,2006, we appointed Charlie Leibold as our new CFO. Mr. Leibold, age 56, began his career with the Big Four accounting firm of Deloitte and Touche. Subsequently, he became Director of International and Domestic Field Audit for the Avis Rent a Car System and Vice President of Finance and Treasurer of AIM Group, Inc., the holding company for Budget Rent a Car franchises. From January 1998 through May 1999, as Manager of AquaSource Inc., he was aggressively involved in the development of a start-up venture experiencing rapid growth through acquisitions. Specifically he was responsible for the successful transition of all of the seller’s business into AquaSource. From June 1999 through May 2003, as Vice President and Director of Acquisition Partners, Inc., he directed the strategic planning and staffing of a start-up venture providing acquisitions and divestiture services to its clients. From June 2003 through mid-January 2006, Mr. Leibold provided consulting, accounting and tax services to clients in a wide variety of industries. In January 2006, Mr. Leibold became Bluegate’s Controller. In addition to having served in key financial management roles for both large and small companies, Mr. Leibold is a Certified Public Accountant and a Member of the Institute of Certified Public Accountants and Texas State Board of Public Accountancy. Mr. Leibold graduated from Pace University with a BBA in Accounting.

Compensation of Charles Leibold: Effective June 1, 2006, we entered into a written, two year employment agreement with Charles Leibold. Mr. Leibold's annual compensation is $140,000.00. Effective on January 1, 2007, the annual salary will increase to $147,000.00. In addition, we have granted Mr. Leibold options to purchase up to 600,000 shares of Bluegate common stock at an exercise price of $0.75 per share, with 50,000 options vesting as of June 1, 2006, and vesting as to 25,000 options per each 30 days thereafter. The shares underlying the options have piggy back registration rights. The options expire five years from the date of grant. Mr. Leibold will also be entitled to receive bonuses, in amounts to be determined, in connection with major transactions that we may enter into in the future. Mr. Leibold will also receive a deferred signing bonus of $20,000 to be paid $5,000.00 on the last day of September, October, November and December 2006. This bonus can be converted to Bluegate shares at the rate of $0.75 per share at Mr. Leibold’s discretion. Mr. Leibold is also entitled to receive fringe benefits, such as medical insurance, as any other company executive.

Item 9.01 Financial Statements and Exhibits.

Exhibits

Number Title

10.1 Employment Agreement of Charles Leibold

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		BLUEGATE CORPORATION
	(signed) ________________________
Date: June 1, 2006		/s/ Manfred Sternberg
		Manfred Sternberg
		Chief Executive Officer

EX-10.1

Exhibit 10.1Employment Agreement of Charles Leibold

EMPLOYMENT AGREEMENT

BETWEEN BLUEGATE CORPORATION AND

CHARLES E. LEIBOLD

This Employment agreement (the "Agreement") is made effective as of the 1st day of June 2006, by and between Bluegate Corporation, a Nevada corporation ("Bluegate"), and Charles E. Leibold (the "Executive").

WHEREAS, The Executive is willing to be employed by Bluegate from and after the effective date on the basis and terms and conditions set forth in this Agreement.

THEREFORE, upon the mutual promises and covenants of the parties, and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound, the parties agree as follows:

1. Employment.

Bluegate hereby employs the Executive, and the Executive hereby accepts such employment, for the period stated in section (3) below and upon the other terms and conditions herein provided.

2. Position and Duties.

During the Employment Period the Executive agrees to serve as Chief Financial Officer ("CFO") of Bluegate. In his capacity of CFO, the Executive will perform such duties and responsibilities for Bluegate as may from time to time be assigned to him by the Board of Directors of Bluegate.

3. Term.

By this Agreement, Bluegate employs the Executive, and the Executive accepts employment with Bluegate, for a period consisting of two (2) years, commencing on the date of this Agreement and will cover the period from June 1, 2006 through May 31, 2008.

4. Compensation.

In consideration of such service, Bluegate agrees to pay the Executive as compensation an annual salary of $140,000.00, in accordance with Bluegate's regular payroll practices in effect from time to time. Effective on January 1, 2007, the annual salary will increase by 5.0%, to $147,000.00.

Stock Options. In addition to the compensation set forth above, the Executive shall be entitled to receive options to purchase 600,000 shares of Bluegate shares of common stock, par value $.001 per share, ("Option Shares"), at the per-share option price of $0.75 pursuant to a Stock Option Agreement being entered into in connection herewith. This option shall become vested and exercisable with respect to 50,000 Option Shares on June 1, 2006 (upon the execution and delivery of the related Stock Option Agreement), and this option shall become vested and exercisable with respect to 25,000 Option Shares every 30 days thereafter until this option becomes fully vested.

The Option Shares to be issued pursuant to this Agreement shall be restricted securities with piggy back registration rights, and shall terminate and become null and void after the expiration of five (5) years from the date of grant.

Bonus. In addition to the compensation set forth above, Executive and Bluegate agree to enter into good faith negotiations with a view to reaching an agreement on the payment of one or more bonuses (the "Bonuses") in such amounts as are mutually agreed upon by Executive and Bluegate, if major transactions (such as acquisitions and financings) agreed mutually upon by them shall be achieved.  The Bonuses shall be payable at such time as is mutually agreed upon by Executive and Bluegate. The Executive and Bluegate agree that they intend for these good faith negotiations (i.e., to mutually define the bonus-triggering transactions, milestones, and/or achievements, as well as the associated pay-out metrics) to be completed by no later than 30 days from start date.

Deferred Signing Bonus. In addition to the compensation set forth above, a deferred signing bonus of $20,000.00 will be paid to Executive and included in his bi-monthly payroll as follows: $5,000.00 on the last day of September, October, November and December 2006. This bonus can be converted to Bluegate shares at the rate of $0.75 per share at the sole option of Executive.

5. (Intentionally Left Blank)

6. Confidentiality. 

In the course of the performance of Executive's duties hereunder, Executive recognizes and acknowledges that Executive may have access to certain confidential and proprietary information of Company or any of its affiliates.  Without  the prior written consent of Company, Executive shall not  disclose  any such confidential or proprietary information to any person or firm,  corporation,  association,  or  other  entity  for  any reason or purpose whatsoever,  and  shall  not  use  such information, directly or indirectly, for Executive's  own  behalf  or on behalf of any other party.  Executive agrees and affirms that  all  such information is the sole property of Company and that at the  termination  and/or  expiration  of  this  Agreement,  at Company's written request, Executive shall promptly return to Company any and all such information so  requested  by  Company.

The provisions of this Section shall not, however, prohibit Executive from disclosing to others or using in any manner information that:

(a)        has been  published  or  has become part of the public domain other than by acts, omissions or fault of  Executive;

(b)        has been furnished or made known to Executive by third parties (other than those acting directly or indirectly for or on behalf of Executive) as a matter of legal right without restriction on its use or disclosure;

(c)        was in the possession of Executive prior to obtaining such information from Company in connection with the performance of this Agreement; or

(d)        is required to be disclosed by law.

7. Indemnification.

The Company shall to the full extent permitted by  law  or  as set forth in the Articles of Incorporation and the Bylaws of the Company,  indemnify, defend and hold harmless Executive from and against any and all  claims,  demands,  liabilities,  damages,  loses  and  expenses  (including reasonable  attorney's  fees,  court costs and disbursements) arising out of the performance  by  him  of  his duties hereunder except in the case of his willful misconduct.

8. Termination.

This Agreement and the employment relationship created hereby will terminate (i) with cause under Section 8(a); or (ii) upon the voluntary termination of employment by Executive under Section8 (b).

(a)        With Cause.  The Company may terminate this Agreement at any time because of (i) the determination by the Board of Directors in the exercise of its reasonable judgment that Executive has committed an act or acts constituting a felony or other crime involving moral turpitude, dishonesty or theft or fraud; or (ii) Executive's willful misconduct  in the performance of his duties hereunder, provided, in each case, however, that the Company shall not terminate this Agreement pursuant to this Section unless the Company shall first have delivered  to  the Executive, a notice which specifically identifies such breach or misconduct and the executive shall not have cured the same within fifteen (15) days after receipt of such notice.

(b)        Voluntary Termination.  The Executive may terminate his employment voluntarily.

Obligations of Company Upon Termination.  In the event of the termination of Executive's employment pursuant to Section 8 (a) or (b), Executive will be entitled only to the compensation earned by him hereunder as of the date of such termination (plus any life insurance benefits).  In the event of the termination of Executive's employment for any reason other than Section 8 (a) or (b) as described immediately above, all compensation of every nature described in this Agreement shall immediately vest and become due and owing to Executive.

In the event of the Death of the Executive prior to the end of the Term of this Agreement, Executive’s spouse shall be entitled to receive Compensation pursuant to this Agreement through the end of its Term as it accrues.

9. Waiver of Breach.

The waiver by any party hereto of a breach of any provision of this Agreement will not operate or be construed as a waiver of any subsequent breach by any party.

10. Arbitration.

If a dispute should arise regarding this Agreement the parties agree that all claims, disputes, controversies, differences or other matters in question arising out of this relationship shall be settled finally, completely and conclusively by arbitration in Houston, Texas in accordance with the Commercial Arbitration Rules of the American Arbitration Association (the "Rules").  The governing law of this Agreement shall be the substantive law of the State of Texas, without giving effect to conflict of laws.  A decision of the arbitrator shall be final, conclusive and binding on the Company and Executive.

11. Covenant Not to Compete.

So long as the Executive is employed by the Company and for a period of eighteen (18) months after either (i) the voluntary termination of employment by Executive or (ii) the termination of the Executive by the Company for cause, as set forth in Section 8(b) hereof, the Executive specifically agrees that he will not, for himself, on behalf of, or in conjunction with any person, firm, corporation or entity, other than the Company (either as principal, employee, shareholder, member, director, partner, consultant, owner or part-owner of any corporation, partnership or any type of business entity) anywhere in any county in which the Company is doing business at the time of termination, directly or indirectly, own, manage, operate, control, be employed by, participate in, or be connected in any manner with the ownership, management, operation, or control of any business similar to the type of business conducted by the Company at the time of termination of the Executive's employment.

Executive's Acknowledgments and Agreements.  The Executive acknowledges and agrees that:

(1)        Due to the nature of the Company's business, the foregoing covenants place no greater restraint upon the Executive than is reasonably necessary to protect the business and goodwill of the Company; 

(2)        These covenants protect a legitimate interest of the Company and do not serve solely to limit the Company's future competition;

(3)        This Agreement is not an invalid or unreasonable restraint of trade;

(4)        A breach of these covenants by the Executive would cause irreparable damage to the Company;

(5)        These covenants will not preclude the Executive from becoming gainfully employed following termination of employment with the Company;

(6)        These covenants are reasonable in scope and are reasonably necessary to protect the Company's business and goodwill and valuable and extensive trade which the Company has established through its own expense and effort;

(7)        The signing of this Agreement is necessary for the Executive's employment; and 

(8)        He has carefully read and considered all provisions of this Agreement and that all of the restrictions set forth are fair and reasonable and are reasonably required for the protection of the interests of the Company.

Remedies, Injunction.  In the event of the Executive's actual or threatened breach of any provisions of this Agreement, the Executive agrees that the Company shall be entitled to a temporary restraining order, preliminary injunction and/or permanent injunction restraining and enjoining the Executive from violating the provisions herein.  Nothing in this Agreement shall be construed to prohibit the Company from pursuing any other available remedies for such breach or threatened breach, including the recovery of damages from the Executive.  The Executive further agrees that for the purpose of any such injunction proceeding, it shall be presumed that the Company's legal remedies would be inadequate and that the Company would suffer irreparable harm as a result of the Executive's violation of the provisions of this Agreement.  In any proceeding brought by the Company to enforce the provisions of this Agreement, no other matter relating to the terms of any claim or cause of action of the Executive against the Company will be defense thereto.  The foregoing remedy provisions are subject to the provisions of §15.51 of the Texas Business and Commerce Code, as amended (the "Code"), which Code provisions shall control in the event of any conflict between the provisions hereof and the Code or any other law in effect relevant and applicable hereto.

12. Benefits Insurance.

(i)Medical, Dental and Vision Benefits.  During this Agreement, Executive and his dependents will be entitled to receive such group medical, dental and vision benefits as Company may provide to its other executives, provided such coverage is reasonably available, or be reimbursed if Executive is carrying his own similar insurance.

(ii)Benefit  Plans.  The Executive will be entitled to participate in any benefit plan or program of the Company which may currently be in place or implemented in the future.

(iii)Other Benefits.  During the Term, Executive will be entitled to receive, in addition to and not in lieu of base salary, bonus or other compensation, such other benefits and normal perquisites as Company currently provides or such additional benefits as Company may provide for its executive officers in the future.

13. Vacation and Sick Leave.

Vacation Pay. The Executive shall be entitled to an annual vacation leave of four (4) weeks at full pay.  Executive is specifically permitted to work from home or other remote location in his discretion, which time shall not be considered as vacation leave.

Sick Pay. The Executive shall be entitled to sick leave as needed.

14. Reimbursement of Expenses.

Upon submission of a detailed statement and reasonable documentation, Company will reimburse Executive in the same manner as other executive officers for all reasonable and necessary or appropriate out-of-pocket travel and other expenses incurred by Executive in rendering services required under this Agreement.  Executive shall be entitled to a $750.00 per month car allowance.

15. Withholding of Taxes.

Bluegate may withhold from any payments under this Agreement all applicable taxes, as shall be required pursuant to any law or governmental regulation or ruling.

16. Entire Understanding.

This Agreement sets forth the entire understanding between the parties with respect to the subject matter hereof and cancels and supersedes all prior oral and written agreements between the parties with respect to the subject matter hereof.

17. Severability.

If for any reason any provision of this Agreement shall be held invalid, such invalidity shall not affect any other provision of this Agreement not held so invalid.

18. Governing Law.

This Agreement has been executed and delivered in the State of Texas and its validity, interpretation, performance and enforcement shall be governed by and construed in accordance with the laws thereof applicable to contracts executed and to be wholly performed in Texas.

19. Notices.

All notices shall be in writing and shall have been duly given if delivered by hand or mailed, certified or registered mail, return receipt requested to the following address or to such other address as either party may designate by like notice:

If to Executive:

Charles E. Leibold

22526 Vobe Court

Katy, Texas 77449

If to Bluegate:

Bluegate Corp.

Attn: Chairman of the Board of Directors

701 N. Post Oak Road, Suite 630

Houston, Texas 77024

Bluegate has caused this Agreement to be executed by its officer and the Executive has signed this Agreement.

20. Successors, Binding Agreement.

This Agreement is binding upon Bluegate’s successors.  Bluegate will require any successor (whether direct or indirect, by purchase, merger, consolidation, or otherwise) to all or substantially all of the business and/or assets of Bluegate to expressly assume and agree to perform this Agreement in the same manner and to the same extent that Bluegate would be required to perform it as if no such succession had taken place.  Failure of Bluegate to obtain such assumption and agreement prior to the effectiveness of any such succession shall constitute a breach of this Agreement.

This Agreement shall inure to the benefit of both Bluegate and its successors and assigns and the Executive and his personal or legal representatives, executors, administrators, heirs, distributes, successors and assigns.

Bluegate:	Executive:
/s/ William E. Koehler	/s/ CHARLES E. LEIBOLD
William E. Koehler	CHARLES E. LEIBOLD
President and COO