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                                                                   EXHIBIT 10.37


                                  STOCK OPTION


        THIS CERTIFIES THAT, FOR VALUE RECEIVED, SmartGate, Inc., a Nevada
corporation ("SmartGate, Inc." or the "Company") pursuant to and under the
SmartGate, Inc. 2000 EMPLOYEE, DIRECTOR, CONSULTANT AND ADVISOR STOCK
COMPENSATION PLAN ("Plan"), a copy of which is attached hereto, has on May 17,
2001, granted to JOHN E. SCATES ("Holder") the right and option until May 17,
2008 to purchase 10,000 shares of Common Stock of SmartGate, Inc., at a purchase
price of $4.27 per share. The shares, which may be purchased under this Option,
are subject to vesting as follows: (i) one-third of the shares eligible for
purchase hereunder shall be deemed vested on May 17, 2002 provided Holder has
remained a Consultant to the Company through that date; (ii) another one-third
of the shares eligible to be purchased hereunder shall be deemed vested on May
17, 2003 provided that Holder has remained a Consultant to the Company through
that date; and (iii) the final one-third of the shares eligible for purchase
hereunder shall vest on May 17, 2004 provided that Holder has remained a
Consultant to the Company through that date. The Holder acknowledges and agrees
that only shares which are vested may be purchased under this Option.

        In the event of a stock dividend, stock split, or capital reorganization
resulting in the number of outstanding shares of Common Stock of the Company
being changed, the applicable exercise price and number of shares provided in
this Option shall be proportionately adjusted. Further, if there shall be any
consolidation or merger or share exchange or business combination involving the
Company, or any sale of all or substantially all of the assets or shares of the
Company, all of the shares under this Option shall be deemed fully vested and
shall convert into an equivalent number of shares of the surviving entity or in
the event of liquidation of the Company, the consideration which would be
received by the equivalent number of shares.

        The grant of this Option is made without registration under the
Securities Act of 1933 by reason of a specific exemption. The Holder agrees that
the Company's obligation to issue shares under this Option shall be contingent
upon the Company receiving an opinion from securities counsel for the Company
that there exists a suitable exemption from registration under the Securities
Act of 1933 and the appropriate state securities law for the issuance of shares
which may be purchased by Holder hereunder ("Exemption"). If the Company
determines a suitable Exemption exists, the Holder agrees that the Company may
impose any conditions on the


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exercise of the Option as it deems necessary to satisfy the Exemption including
but not limited to: (i) requiring the Holder, prior to each and every purchase
of shares under this Option, to execute and fully abide by the provisions of the
Letter of Investment Intent which is attached hereto; and (ii) requiring the
Holder, if requested by the Company, to engage an investor representative to
assist the Holder in evaluating the investment in the Company prior to the
purchase of any shares hereunder.

        The Holder acknowledges and agrees that the representations and
agreements Holder makes in the Letter of Investment Intent referenced above
shall survive each closing of share purchases and issuance transactions between
the Holder and the Company.

        If the Company is a "Reporting Company" under the Securities Act of 1934
at the time the Holder wishes to exercise and purchase shares hereunder, the
Company, in its sole discretion, may elect to register the shares the Holder
wishes to purchase so that the shares, when purchased under this Option, are
freely tradable. If the Company elects to register the shares, such registration
shall be at the Company's expense; however, the Holder acknowledges and agrees
that the Company shall be under no obligation to undertake such registration.

        The purchase price for the shares purchased under this Option may be
paid in cash or by Promissory Note, issued by Holder with a term of not more
than three years, bearing interest at the Applicable Federal Rate and
collateralized by the shares so purchased.

        This Option may not be transferred by the Holder other than by Will or
the laws of descent and distribution. This Option may not be exercised by anyone
other than the Holder or, in the case of the Holder's death, by the person to
whom the rights of the Holder shall have passed by Will or the laws of descent
and distribution.

        Neither the Holder nor any person to whom the rights of the Holder shall
have passed by Will or the laws of descent and distribution shall have any of
the rights of a shareholder with respect to any shares of the Company's common
stock until the purchase price for the shares has been paid to the Company.

        The Holder represents and warrants that he has been provided with the
Plan which is attached hereto and has read and understands the Letter of
Investment Intent which the Holder will be required to sign prior to the
purchase of shares hereunder which is attached hereto, and


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that he has been advised or has had the opportunity to be advised by his own
legal counsel as to the meaning and effect of this Stock Option Agreement, the
Plan, and the Letter of Investment Intent, and of the rights and
responsibilities in connection therewith, and of the consequences of any
exercise of this Option.

        The Company has caused this Option Agreement to be executed in the name
of the Company, by its corporate officers having been duly authorized and the
Holder has hereunto set Holder's hand and seal as of the date and year first
above written.

SMARTGATE, INC.
a Nevada corporation


By:  /s/ STEPHEN A. MICHAEL
     ------------------------------
Its: President


AGREED TO AND ACCEPTED BY HOLDER:



/s/ JOHN E. SCATES
-----------------------------------