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): December 31, 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 600, 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 3.02 Unregistered Sales of Equity Securities.

Effective December 31, 2006, Stephen Sperco was appointed as our Chief Operating Officer. We granted Mr. Sperco 1,200,000 options to purchase common stock at an exercise price of $0.95 per share expiring on December 31, 2011. 600,000 of these options are immediately exercisable and the remaining 600,000 options vest at the rate of 25,000 options per month beginning January 1, 2007. These options have piggy-back registration rights.

Item 5.02 Appointment of Principal Officers.

Effective December 31, 2006, Stephen Sperco was appointed as our Chief Operating Officer. Mr. Sperco is the founder and President of Sperco Associates, Inc. and Sperco Technology Group, L.L.C. Sperco Associates was founded in 1986 and is headquartered in Chicago, Illinois. Both organizations are privately held consulting firms that focus in the areas of Telecommunications and Information Technology (IT) systems. The organizations provide independent, third party consulting, planning, and facilities management services. The consulting personnel provide services in the area of Telecommunications to support the voice, data, and image requirements of clients. Support in the area of IT systems is provided for the Desktop Computing, Local Area Network (LAN), and Wide Area Network (WAN) requirements of clients. The organizations also provide Management Support, Staff Augmentation, Quality Assurance, and operational functions related to Facilities Management and Outsourcing engagements. The firm has conducted consulting engagements in North America, the United Kingdom, and Europe. The industry focus of Sperco Associates has been in the Private Sector with Financial Services, Insurance, Health Care, and Fortune 1000 organizations. The focus of Sperco Technology Group has been in the Public Sector with Education and Health Care organizations. For IT Infrastructure, Telecommunications, and IT Physical Infrastructure the firms have developed significant expertise in Strategic Planning, Optimization, Design, Procurement, Contract Negotiations, Quality Assurance, and Implementation Project Management. In the areas of Facilities Management and Outsourcing, the firms have developed significant expertise in Organization Management and Planning, Project Management, Strategic Planning, Contract Negotiations, and the management of day-to-day department operations. The firms have extensive experience in the specialty areas of Financial Trading Floors, Call Center Applications, Structured Wiring Systems, Voice Recording/Logging Applications, Interactive Voice Response (IVR) applications, IP Telephony, and Network Optimization. Mr. Sperco is responsible for both the executive management of the consulting firms and the direction of consulting engagements. Mr. Sperco has been a consultant since 1975 and in this capacity has extensive experience with the planning and management of complex engagements. Before founding Sperco Associates, Inc., Mr. Sperco was a principal and Regional Vice President for Marketing and Systems Development Corporation. Marketing and Systems Development Corporation was a telecommunications consulting firm that was subsequently purchased by EDS. Mr. Sperco was with Marketing and Systems Development Corporation for ten years. Mr. Sperco earned a Bachelor of Arts degree in Economics from Middlebury College, Middlebury, Vermont in 1975. Mr. Sperco’s employment agreement has a term of two years at an annual cash salary of $150,000. We also granted Mr. Sperco 1,200,000 options to purchase common stock at an exercise price of $0.95 per share expiring on December 31, 2011. 600,000 of these options are immediately exercisable and the remaining 600,000 options vest at the rate of 25,000 options per month beginning January 1, 2007. These options have piggy-back registration rights. Sperco Associates also invoiced us for $40,000 in consulting services during 2006.

Item 9.01 Exhibits.

Exhibit 4.1 Option Agreement of Stephen Sperco

Exhibit 10.1 Employment Agreement of Stephen Sperco

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: January 29, 2007	/s/ Charles Leibold
	Charles Leibold
	Chief Financial Officer

EX-4.1

THIS OPTION AND THE SECURITIES ISSUABLE UPON THE EXERCISE HEREOF HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED, HYPOTHECATED, OR OTHERWISE TRANSFERRED EXCEPT PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933, OR AN OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT REGISTRATION IS NOT REQUIRED UNDER SUCH ACT OR UNLESS SOLD PURSUANT TO RULE 144 UNDER SUCH ACT.

BLUEGATE CORPORATION	No. E-06-44
STOCK OPTION AGREEMENT

Date of Grant: December 31, 2006

THIS GRANT, dated as of the date of grant first stated above (the "Date of Grant"), is delivered by Bluegate Corporation (the "Company") to Stephen J. Sperco (the "Grantee"), who is an employee, consultant or director of the Company or one of its subsidiaries (the Company is sometimes referred to herein as the "Employer").

WHEREAS, the Board of Directors of the Company (the "Board") approved the Company's grant to Grantee the right to purchase shares of the Common Stock of the Company, par value $0.001 per share (the "Stock"), in accordance with the terms and provisions hereof.

NOW, THEREFORE, the parties hereto, intending to be legally bound hereby, agree as follows:

1. Grant of Option.

Subject to the terms and conditions hereinafter set forth, the Company, with the approval and at the direction of the Board, hereby grants to the Grantee, as of the Date of Grant, an option to purchase up to 1,200,000 shares of Stock at a price of $0.95 per share. Such option is hereinafter referred to as the "Option" and the shares of stock purchasable upon exercise of the Option are hereinafter sometimes referred to as the "Option Shares." The Option Shares to be issued pursuant to this Stock Option Agreement shall be restricted securities.

2. Vesting.

This Option shall vest according to the schedule below:

Option Shares	Vesting Date
600,000	December 31, 2006
25,000	January 1, 2007
25,000	February 1,2007
25,000	March 1, 2007
25,000	April 1, 2007
25,000	May 1, 2007
25,000	June 1, 2007
25,000	July 1, 2007
25,000	August 1, 2007

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25,000	September 1, 2007
25,000	October 1, 2007
25,000	November 1,2007
25,000	December 1, 2007
25,000	January 1, 2008
25,000	February 1, 2008
25,000	March 1, 2008
25,000	April 1, 2008
25,000	May 1, 2008
25,000	June 1, 2008
25,000	July 1, 2008
25,000	August 1, 2008
25,000	September 1,2008
25,000	October 1,2008
25,000	November 1, 2008
25,000	December 1,2008

3. Termination of Option.

(a) The Option and all rights hereunder with respect thereto, to the extent suchOption has vested, shall terminate and become null and void after theexpiration of five (5) years from the Date of Grant (the "Option Term").To the extent that the Option has not vested in accordance with Section 2above, then the non-vested portion of the Option shall terminate andbecome null and void upon the termination of the Grantee as an employee,officer or director of the Company.

(b) In the event of the death of the Grantee, the Option may be exercised bythe Grantee's legal representative(s), but only to the extent that the Optionwould otherwise have been exercisable by the Grantee.

(c) In the event the Board (or Committee, if any) finds by a majority vote after full consideration of the facts that Grantee, before or after termination of his employment with the Company or an Affiliate for any reason (i) committed or engaged in fraud, embezzlement, theft, commission of a felony, or proven dishonesty in the course of his employment by the Company or any subsidiary or affiliate of the Company, which conduct damaged the Company or subsidiary or affiliate, or disclosed trade secrets of the Company its subsidiary or its affiliate, or (ii) participated, engaged in or had a material, financial or other interest, whether as an employee, officer, director, consultant, contractor, shareholder, owner, or otherwise, in any commercial endeavor anywhere which is competitive with the business of the Company or a subsidiary or Affiliate without the written consent of the Company, the Grantee shall forfeit all outstanding Options. Clause (ii) shall not be deemed to have been violated solely by reason of the Grantee's ownership of stock or securities of any publicly owned corporation, if that ownership does not result in effective control of the corporation.

The decision of the Board (or Committee, if any) as to the cause of the Grantee's discharge, the damage done to the Company or a subsidiary or an affiliate, and the extent of the Grantee's competitive activity shall be final. No decision of the Board (or Committee, if any) however, shall affect the finality of the discharge of the Grantee by the Company.

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4. Exercise of Options.

(a) The Grantee may exercise the Option with respect to all or any part of the number of Option Shares then exercisable hereunder by giving the Secretary of the Company written notice of intent to exercise. The notice of exercise shall specify the number of Option Shares as to which the Option is to be exercised and the date of exercise thereof, which date shall be at least five days after the giving of such notice unless an earlier time shall have been mutually agreed upon. Notwithstanding the foregoing, an Option granted under this Agreement may be exercised in increments of not less than 10% of the full number of Shares as to which it can be exercised. A partial exercise of an Option will not affect the Grantee's right to exercise the Option from time to time in accordance with this Agreement as to the remaining Shares subject to the Option.

(b) Full payment (in U.S. dollars) by the Grantee of the option price for the Option Shares purchased shall be made on or before the exercise date specified in the notice of exercise in cash, or certified or cashier's check or money order, or, with the prior written consent of the Board, in whole or in part through the surrender of previously acquired shares of Stock at their fair market value on the exercise date.

On the exercise date specified in the Grantee's notice or as soon thereafter as is practicable, but not to exceed ten (10) business days, the Company shall cause to be delivered to the Grantee, a certificate or certificates for the Option Shares then being purchased (out of theretofore unissued Stock or reacquired Stock, as the Company may elect) upon full payment for such Option Shares. If the Grantee fails to pay for any of the Option Shares specified in such notice, the Grantee's right to purchase such Option Shares may be terminated by the Company. The date specified in the Grantee's notice as the date of exercise shall be deemed the date of exercise of the Option, provided that payment in full for the Option Shares to be purchased upon such exercise shall have been received by such date.

(c) Notwithstanding any of the other provisions hereof. Grantee agrees that he will not exercise this Option and that the Company will not be obligated to issue any Option Shares pursuant to this Stock Option Agreement, if the exercise of the Option or the issuance of such Option Shares would constitute a violation by the Grantee or by the Company of any provision of any law or regulation of any governmental authority or national securities exchanges. Upon the acquisition of any Option Shares pursuant to the exercise of the Option herein granted, Grantee will enter into such written representations, warranties and agreements as the Company may reasonably request in order to comply with applicable securities laws with this Stock Option Agreement.

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5. Piggyback Registration Rights.

If the Company at any time proposes to register any of its Common Stock under the Securities Act (other than a registration on Form S-8 or S-4 or any successor or similar forms) whether or not for sale for the Company's account, the Company shall use its best efforts to include in such registration (and any related qualifications under blue sky laws or other compliance) all the Option Shares specified in a written request or requests, made by the Grantee and received by the Company within 15 days after the Grantee's receipt of written notice from the Company regarding the proposed registration, which written request may specify the inclusion of all or a part of Grantee's Option Shares.

6. Adjustment of and Changes in Stock of the Company.

In the event of a reorganization, recapitalization, change of shares, stock split, spin-off, stock dividend, reclassification, subdivision or combination of shares, merger, consolidation, rights offering, or any other change in the corporate structure or shares of capital stock of the Company, the Board shall make such adjustment in the number and kind of shares of Stock subject to the Option and in the option price; provided, however, that no such adjustment shall give the Grantee any additional benefits under the Option.

7. Fair Market Value.

As used herein, the "fair market value" of a share of Stock shall be the closing price per share of Stock on the PINK SHEETS, OTCBB, NASDAQ, the NYSE, the Amex, the composite tape or other recognized market source, as determine by the Board, on the applicable date of reference hereunder, or if there is no sale on such date, then the closing price on the last previous day on which a sale is reported.

8. No Rights of Stockholders.

Neither the Grantee nor any personal representative shall be, or shall have any of the rights and privileges of, a stockholder of the Company with respect to any shares of Stock purchasable or issuable upon the exercise of the Option, in whole or in part, prior to the date of exercise of the Option.

9. Non-Transferability of Option.

During the Grantee's lifetime, the Option hereunder shall be exercisable only by the Grantee or any guardian or legal representative of the Grantee, and the Option shall not be transferable except, (i) in case of the death of the Grantee, by will or the laws of descent and distribution, and (ii) to a child, grandchild or stepchild of the Grantee or to a trust or partnership created by the Grantee, who, in each case, will be subject to all of the provisions hereof, nor shall the Option be subject to attachment, execution or other similar process. In the event of (a) any attempt by the Grantee to alienate, assign, pledge, hypothecate or otherwise dispose of the Option, except as provided for herein, or (b) the levy of any attachment, execution or similar process upon the rights or interest hereby conferred, the Company may terminate the Option by notice to the Grantee and it shall thereupon become null and void and of no value to any such party.

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10. Disputes.

As a condition of the granting of this Option, the Grantee and his heirs and successors agree that any dispute or disagreement which may arise hereunder shall be determined by the Board (or Committee, if any) in its sole discretion and judgment, and that any such determination and any interpretation by the Board (or Committee, if any) of the terms of this Option shall be final and shall be binding and conclusive, for all purposes upon the Company, the Grantee, his heirs and successors.

11. Notice.

Any notice to the Company provided for in this instrument shall be addressed to it in care of its Secretary at its executive offices at Bluegate Corporation, and any notice to the Grantee shall be addressed to the Grantee at the current address shown on the records of the Company. Any notice shall be deemed to be duly given if and when properly addressed and posted by registered or certified mail, postage prepaid.

12. Governing Law.

The validity, construction, interpretation and effect of this instrument shall exclusively be governed by and determined in accordance with the law of the State of Texas, except to the extent preempted by federal law, which shall to the extent govern.

IN WITNESS WHEREOF, the Company has caused its duly authorized officers to execute and attest to this Stock Option Agreement, and to apply the corporate seal hereto, and the Grantee has placed his or her signature hereon, effective as of the Date of Grant.

Bluegate Corporation

By:  /s/ Manfred Sternberg

Manfred Sternberg

Grantee:

/s/ Stephen J. Sperco

Stephen J. Sperco

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EX-10.1

EMPLOYMENT AGREEMENT

BETWEEN BLUEGATE CORPORATION AND STEPHEN J. SPERCO

This Employment agreement (the “Agreement”) is made effective as of the 31^st day of December 2006, by and between Bluegate Corporation, a Nevada corporation (“Bluegate”), and Stephen J. Sperco (the “Executive”).

WHEREAS, The Executive is willing to be employed by Bluegate from and after the effective date on the basis and the 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. of this Agreement and upon the other terms and conditions herein provided.

2. Position and Duties.

During the Employment Period the Executive agrees to serve as Chief Operating Officer (“COO”) of Bluegate. In his capacity of COO, 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. The Executive shall have no responsibility for payroll or for the filing of any payroll tax return, or for the payment of any tax of any kind that may be due or payable by Bluegate or any of its divisions.

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.

4. Compensation.

a. Salary.

In consideration of such service, Bluegate agrees to pay the Executive as compensation an annual salary in accordance with Bluegate's regular payroll practices in effect from time to time. For the term of the Agreement, the amount of the annual salary paid to the COO shall be equal to salary paid to the President of Bluegate at the commencement date of this Agreement ($150,000.00/year) and be modified from time to time in conjunction with any positive adjustments made to the salary of the Bluegate President.

b. Stock Options.

In addition to the compensation set forth above, the Executive shall be entitled to receive options to purchase the following number of Bluegate shares of common stock, par value $.001 per share, (“Option Shares”) pursuant to a Stock Option Agreement on the date and at the option price set out below: 

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DATE OF GRANT	OPTION SHARES	OPTION PRICE
December 31, 2006	1,200,000 shares	$0.95 per share

The Option Shares to be issued pursuant to this Agreement shall be restricted securities with piggy back registration rights, and shall terminate becoming invalid after the expiration of five (5) years from the date of grant. Additionally, 600,000 of the Option Shares shall vest immediately as of the Date of Grant, and the remaining 600,000 Option Shares shall vest 25,000 each month, beginning January 1, 2007 through and including December 1, 2008.

c. 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 or milestones (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.

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:

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

(2) 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;

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

(4) 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, losses 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.

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8. Termination.

This Agreement and the employment relationship created hereby will terminate (1) with cause under Section 8.a.; or (2) upon the voluntary termination of employment by Executive under Section 8.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.

c. 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.

d. Survivorship.

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.

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11. Covenant Not to Compete.

a. So long as the Executive is employed by the Company and for a period of eighteen (18) months after either: (1) the voluntary termination of employment by Executive, or (2) the termination of the Executive by the Company for cause, as set forth in Section 8.a. 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 or a Sperco Company in existence at the time and date of the beginning of the agreement (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. For the purpose of this Agreement, a "Sperco Company" shall be any company owned or operated by the Executive, including any successor or assigns of those companies.

b. Executive's Acknowledgments and Agreements.

The Executive acknowledges and agrees that:

i. 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;

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

iii. This Agreement is not an invalid or unreasonable restraint of trade;

iv. A breach of these covenants by the Executive would cause irreparable damage to the Company;

v. These covenants will not preclude the Executive from becoming gainfully employed following termination of employment with the Company;

vi. 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;

vii. The signing of this Agreement is necessary for the Executive's employment; and

viii. 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.

c. 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.

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12. Benefits Insurance.

a. 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.

b. 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.

c. 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 the Company may provide for its executive officers in the future.

13. Vacation and Sick Leave.

a. 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.

b. 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: (1) $750 per month transportation allowance, and (2) up to a $1,000 per month discretionary expense account.

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.

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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:

Stephen J. Sperco

Two Prudential Plaza, Suite 700

180 North Stetson Avenue

Chicago, Illinois 60601

If to Bluegate:

Bluegate Corp.

Attn: Chairman of the Board of Directors

701 N. Post Oak Road, Suite 600

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 CORPORATION:	EXECUTIVE:
/s/ Manfred Sternberg	/s/ Stephen J. Sperco
Manfred Sternberg	Stephen J. Sperco
CEO

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