EXHIBIT 10.37
 
OPTION AGREEMENT
TERMS AND CONDITIONS
 
1.           Grant of Option.  The Company hereby grants to the Optionee named
on the Notice of Stock Option Grant (“Optionee”), under the Plan, stock options
to purchase from the Company (the “Options”), on the terms and on conditions set
forth in this agreement (this “Agreement”), the number of shares indicated on
the Notice of Stock Option Grant of the Company’s $0.001 par value common stock,
at the exercise price per share set forth on the Notice of Stock Option
Grant.  Capitalized terms used herein and not otherwise defined shall have the
meanings assigned to such terms in the Plan.
 
2.           Vesting of Options.  The Option shall vest (become exercisable) in
accordance with the schedule shown on the Notice of Stock Option
Grant.  Notwithstanding the foregoing vesting schedule, upon Optionee’s death or
Disability during his or her Continuous Status as a Participant, or upon a
Change in Control, all Options shall become fully vested and exercisable.
 
3.           Term of Options and Limitations on Right to Exercise.  The term of
the Options will be for a period of 10 years, expiring at 5:00 p.m., Pacific
Time, on the tenth anniversary of the Grant Date (the “Expiration Date”).  To
the extent not previously exercised, the Options will lapse prior to the
Expiration Date upon the earliest to occur of the following circumstances:
 
(a)           Thirty (30) days after the termination of Optionee’s Continuous
Status as a Participant for any reason other than by reason of Optionee’s death
or Disability.
 
(b)           Twelve (12) months after termination of Optionee’s Continuous
Status as Participant by reason of Disability.
 
(c)           Twelve (12) months after the date of Optionee’s death, if Optionee
dies while employed or during the thirty day period described in subsection (a)
above or during the twelve-month period described in subsection (b) above and
before the Options otherwise lapse.  Upon Optionee’s death, the Options may be
exercised by Optionee’s beneficiary designated pursuant to the Plan.
 
The Committee may, prior to the lapse of the Options under the circumstances
described in paragraphs (a), (b) or (c) above, extend the time to exercise the
Options as determined by the Committee in writing, but in no event beyond the
Expiration Date.  If Optionee returns to service with the Company during the
designated post-termination exercise period, then Optionee shall be restored to
the status Optionee held prior to such termination but no vesting credit will be
earned for any period Optionee was not in Continuous Status as a
Participant.  If Optionee or his or her beneficiary exercises an Option after
termination of service, the Options may be exercised only with respect to the
Shares that were otherwise vested on Optionee’s termination of service.

 
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EXHIBIT 10.37

4.           Exercise of Option.  The Options shall be exercised by (a) written
notice delivered to the Chief Financial Officer of the Company or his or her
designee at the address and in the form specified by the Company from time to
time and (b) payment to the Company in full for the Shares subject to such
exercise (unless the exercise is a broker-assisted cashless exercise, as
described below).  If the person exercising an Option is not Optionee, such
person shall also deliver with the notice of exercise appropriate proof of his
or her right to exercise the Option. Payment for such Shares may be, in (a)
cash, (b) Shares previously acquired by the purchaser, (c) withholding of Shares
from the Option, or (d) any combination thereof, for the number of Shares
specified in such written notice. The value of surrendered or withheld Shares
for this purpose shall be the Fair Market Value as of the last trading day
immediately prior to the exercise date. To the extent permitted under Regulation
T of the Federal Reserve Board, and subject to applicable securities laws and
any limitations as may be applied from time to time by the Committee (which need
not be uniform), the Options may be exercised through a broker in a so-called
“cashless exercise” whereby the broker sells the Option Shares on behalf of
Optionee and delivers cash sales proceeds to the Company in payment of the
exercise price.  In such case, the date of exercise shall be deemed to be the
date on which notice of exercise is received by the Company and the exercise
price shall be delivered to the Company by the settlement date.
 
5.           Beneficiary Designation.  Optionee may, in the manner determined by
the Committee, designate a beneficiary to exercise the rights of Optionee
hereunder and to receive any distribution with respect to the Options upon
Optionee’s death.  A beneficiary, legal guardian, legal representative, or other
person claiming any rights hereunder is subject to all terms and conditions of
this Agreement and the Plan, and to any additional restrictions deemed necessary
or appropriate by the Committee.  If no beneficiary has been designated or
survives Optionee, the Options may be exercised by the legal representative of
Optionee’s estate, and payment shall be made to Optionee’s estate.  Subject to
the foregoing, a beneficiary designation may be changed or revoked by Optionee
at any time provided the change or revocation is filed with the Company.
 
6.           Withholding.  The Company or any employer Affiliate has the
authority and the right to deduct or withhold, or require Optionee to remit to
the employer, an amount sufficient to satisfy federal, state, and local taxes
(including Optionee’s FICA obligation) required by law to be withheld with
respect to any taxable event arising as a result of the exercise of the Options.
The withholding requirement may be satisfied, in whole or in part, at the
election of the Company, by withholding from the Options Shares having a Fair
Market Value on the date of withholding equal to the minimum amount (and not any
greater amount) required to be withheld for tax purposes, all in accordance with
such procedures as the Company establishes.
 
7.           Limitation of Rights.  The Options do not confer to Optionee or
Optionee’s beneficiary designated pursuant to Paragraph 5 any rights of a
shareholder of the Company unless and until Shares are in fact issued to such
person in connection with the exercise of the Options.  Nothing in this
Agreement shall interfere with or limit in any way the right of the Company or
any Affiliate to terminate Optionee’s service at any time, nor confer upon
Optionee any right to continue in the service of the Company or any Affiliate.
 
8.           Restrictions on Transfer and Pledge.  No right or interest of
Optionee in the Options may be pledged, encumbered, or hypothecated to or in
favor of any party other than the Company or an Affiliate, or shall be subject
to any lien, obligation, or liability of Optionee to any other party other than
the Company or an Affiliate.  The Options are not assignable or transferable by
Optionee other than by will or the laws of descent and distribution or pursuant
to a domestic relations order that would satisfy Section 414(p)(1)(A) of the
Code if such Section applied to an Option under the Plan; provided, however,
that the Committee may (but need not) permit other transfers.  The Options may
be exercised during the lifetime of Optionee only by Optionee or any permitted
transferee.

 
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EXHIBIT 10.37
 
9.           Restrictions on Issuance of Shares.  If at any time the Committee
shall determine in its discretion, that registration, listing or qualification
of the Shares covered by the Options upon any Exchange or under any foreign,
federal, or local law or practice, or the consent or approval of any
governmental regulatory body, is necessary or desirable as a condition to the
exercise of the Options, the Options may not be exercised in whole or in part
unless and until such registration, listing, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Committee.
 
10.        Amendment.  The Committee may amend, modify or terminate the Award,
Notice of Stock Option Grant and this Agreement without approval of Optionee;
provided, however, that such amendment, modification or termination shall not,
without Optionee’s consent, reduce or diminish the value of this award
determined as if it had been fully vested and exercised on the date of such
amendment or termination (with the per-share value being calculated as the
excess, if any, of the Fair Market Value over the exercise price of the
Options).
 
11.        Plan Controls.  The terms and conditions contained in the Plan are
incorporated into and made a part of the Notice of Stock Option Grant and this
Agreement, and the Notice of Stock Option Grant and this Agreement shall be
governed by and construed in accordance with the Plan.  In the event of any
actual or alleged conflict between the provisions of the Plan and the provisions
of the Notice of Stock Option Grant or this Agreement, the provisions of the
Plan shall be controlling and determinative.
 
12.        Successors.  This Agreement shall be binding upon any successor of
the Company, in accordance with the terms of this Agreement and the Plan.
 
13.        Severability.  If any one or more of the provisions contained in the
Notice of Stock Option Grant or this Agreement is invalid, illegal or
unenforceable, the other provisions of Notice of Stock Option Grant and this
Agreement will be construed and enforced as if the invalid, illegal or
unenforceable provision had never been included.
 
14.        Notice.  Notices and communications under the Notice of Stock Option
Grant and this Agreement must be in writing and either personally delivered or
sent by registered or certified United States mail, return receipt requested,
postage prepaid.  Notices to the Company must be addressed to: Notify Technology
Corporation, 1054 S. De Anza Boulevard, Suite 105, San Jose, CA 95129, Attn:
Secretary, or any other address designated by the Company in a written notice to
Optionee.  Notices to Optionee will be directed to the address of Optionee then
currently on file with the Company, or at any other address given by Optionee in
a written notice to the Company.

 
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