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EXHIBIT 10.1

1997 STOCK OPTION PLAN

A. PURPOSE.

         The purpose of the Stock Option Plan (the "Plan") is to provide a means
whereby the Corporation may, through the grant of options to purchase common
shares of the Corporation ("common shares") to officers, directors, employees,
service providers, consultants and contractors of the Corporation, and of any
affiliate or subsidiary of the Corporation, motivate officers, directors,
employees and other service providers, consultants and contractors (including
officers and directors who are not employees) to exert their best efforts on
behalf of the Corporation, and any affiliate or subsidiary, and closely align
the personal interests of such officers, directors, employees, service
providers, consultants and contractors with those of the shareholders. Options
may be granted by the Corporation from time to time to officers, directors, key
employees, service providers, consultants and contractors or to a personal
holding corporation controlled by such optionees or to a registered retirement
savings plan established by such optionees of the Corporation, or of any
affiliate or subsidiary of the Corporation, to purchase common shares (such
persons, corporations and plans shall be considered to be the class of eligible
optionees hereunder).

B. NUMBER OF SHARES AVAILABLE UNDER PLAN.

         Common shares to be issued upon exercise of an option granted under the
Plan shall be reserved on the date of the grant of an option for issuance upon
exercise of such option. (1) Maximum Number. Subject to adjustment as provided
in Subparagraph D(8) below, the aggregate number of common shares which may be
reserved for issuance under the Plan shall not exceed 1,000,000 common shares.
(2) Insiders. Notwithstanding anything else herein contained: (a) the number of
common shares which may be reserved for issuance under the Plan and under any
other employee stock option plans or other share compensation arrangements of
the Corporation to insiders (as defined in the Securities Act (Ontario)) of the
Corporation, and of any affiliate or subsidiary of the Corporation, shall not
exceed 10% of the outstanding issue (as hereinafter defined); (b) the number of
common shares which may be issued within a one- year period pursuant to the Plan
and under any other employee stock option plans or other share compensation
arrangements of the Corporation to insiders of the Corporation, shall not exceed
10% of the outstanding issue; and (c) the number of common shares which may be
issued within a one-year period pursuant to the Plan and under any other
employee stock option plans or other share compensation arrangements of the
Corporation to any one insider of the Corporation, and such insider's associates
shall not exceed 5% of the outstanding issue. For the purposes of Subparagraph
B(2)(a), "outstanding issue" means the number of common shares outstanding on a
non-diluted basis, subject to applicable adjustments as provided for in the
by-laws and rules of any stock exchange having jurisdiction. For the purposes of
subparagraph B(2)(b) and (c), "outstanding issue" is determined on the basis of
the number of common shares that are outstanding immediately prior to the share
issuance in question, excluding common shares issued pursuant to share
compensation arrangements over the preceding one-year period. For the purposes
of Paragraph B(2), an entitlement granted prior to the grantee becoming an
insider may be excluded in determining the number of shares issuable to
insiders. (3) Individual. The aggregate number of common shares which may be
reserved for issuance to any one person under the Plan shall not exceed the
number of common shares remaining after: i) the aggregate number of common
shares reserved for issuance under the Plan and under any other employee stock
option plus or other share compensation arrangements of the Corporation held by
such person on the date of the grant of any option; is subtracted from ii) 5% of
the aggregate number of common shares issued and outstanding (on a non-diluted
basis) on the date of the grant of such option. (4) Termination Expiry, etc. If
any option granted under the Plan shall terminate, expire or, with the consent

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of the optionee, be cancelled as to any common shares, new options may
thereafter be granted covering such common shares, subject to applicable
regulatory requirements.

C. ADMINISTRATION.

         (1) Supervision by Board. The Plan shall be administered under the
supervision of the board of directors of the Corporation or by the compensation
committee of the board of directors which is charged with the responsibility of
administering the Plan (both of which are referred to hereinafter as the
"Board"). (2) Powers of Board. Subject to the provisions of the Plan, the Board
shall have the power to: (a) determine and designate from time to time those
officers, directors, employees, service providers, consultants and contractors
of the Corporation, or of any affiliate or subsidiary of the Corporation, to
whom options are to be granted and the number of common shares to be optioned to
each officer, director, employee, service provider, consultant or contractor;
and (b) determine the time or times when, and the manner in which, each option
shall be exercisable and the duration of the exercise period for each proposed
option. (3) Other Options and Purchase Plans. An officer, director, employee,
service provider, consultant or contractor who has been granted an option may,
if the person is otherwise eligible, be granted an additional option or options
under this Plan or any other option or purchase plans of the Corporation if the
Board shall so determine. (4) Interpretation: Rules and Regulations. The Board
may interpret the Plan, prescribe, amend and rescind any rules and regulations
necessary or appropriate for the administration of the Plan, and make such other
determinations and take such other actions as it deems necessary or advisable.
Without limiting the generality of the foregoing, the Board may, in its
discretion, treat all or any portion of any period during which an optionee is
on an approved leave of absence from the Corporation, or an affiliate or
subsidiary of the Corporation, as a period of employment of such optionee by the
Corporation, or such affiliate or subsidiary, as the case may be, for the
purpose of accrual of the optionee's rights under the optionee's option. Any
interpretation, determination or other action made or taken by the Board shall
be final, binding and conclusive.

D. TERMS AND CONDITIONS.

         Each option granted under the Plan shall be evidenced by an agreement,
in a form approved by the Board, which shall be subject to the following express
terms and conditions and to such other terms and conditions as the Board may
deem appropriate: (1) Option Period. Each option agreement shall specify the
period for which the option thereunder is exercisable (which in no event shall
exceed 5 years from the date of grant) and shall provide that the option shall
expire at the end of such period. (2) Option Price. The option price per common
share shall be determined by the Board at the time any option is granted but in
no event shall such price be lower than the Market Price (as hereinafter
defined) at the time of the grant. ""Market Price" means: (a) at any time during
which the common shares are listed and posted for trading or are quoted on any
stock exchange, the closing sale price for board lots of common shares on such
exchange on the last business day on which a trade occurred immediately prior to
the date of the grant; and (b) at any other time, the fair market value of the
common shares, as determined by the Board, with due regard being had to any
over-the-counter sale prices, asked and bid prices, volume quotations, value of
assets and liabilities of the Corporation, income and prospects of the
Corporation, and such other considerations as the Board shall in its sole
discretion determine to be relevant. (3) Exercise of Options. At the time of the
grant of each option, the Board shall determine when the option shall become
exercisable, the conditions, if any for the vesting of the option and the period
of time over which the option may be exercised, all within applicable regulatory
limits. The Board may determine whether the options shall be exercisable in
instalments, and may impose such other restrictions as it shall deem
appropriate. (4) Payment of Purchase Price Upon Exercise. The purchase price of
the shares for which an option shall be exercised shall be paid in cash or by
certified cheque to the Corporation at the time of exercise. (5) Exercise in the
Event of Death or Termination of Employment. (a) With respect to an optionee

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who is an employee, officer, service provider, consultant or contractor of the
Corporation or an affiliate or subsidiary of the Corporation, if any such
optionee's (or, if the optionee is a personal holding company controlled by, or
a registered retirement savings plan established by, an officer, employee,
service provider, consultant or contractor then if such person's) employment,
office with or services to the Corporation, or an affiliate or subsidiary of the
Corporation, shall terminate for any reason, including the optionee's death,
permanent disability or termination of employment with or without cause, the
optionee may exercise the optionee's option, to the extent that the optionee may
be entitled to do so at the date of the termination of the optionee's
employment, office or services, at any time or from time to time, within 30 days
of the date of termination of the optionee's employment, office or services, but
in no event later than the expiration date specified in accordance with
Subparagraph D(1) above. (b) With respect to any optionee who is a director of
the Corporation or an affiliate or subsidiary of the Corporation, if any such
optionee's (or, if the optionee is a personal holding company controlled by, or
a registered retirement savings plan established by a director, then if such
person's) directorship with the Corporation, or an affiliate or subsidiary of
the Corporation, shall be terminated for any reason, including the optionee's
death, permanent disability or termination with or without cause, the optionee
may exercise the optionee's option, to the extent that the optionee would be
entitled to do so at the date of the termination of the optionee's directorship,
at any time or from time to time, within 60 days of the date of termination of
the optionee's directorship, but in no event later than the expiration date
specified in accordance with Subparagraph D(1) above. (6) Non-transferability.
No option granted under the Plan shall be transferable or assignable other than
by will or by the laws of descent and distribution. During the lifetime of the
optionee, an option shall be exercisable only by such optionee. (7) Investment
Representation, Listing and Regulation. (a) Each option shall be subject to the
requirement that if at any time the Board shall determine, in its discretion,
that the registration, qualification or other approval of or in connection with
the Plan or the common shares covered thereby is necessary or desirable under
any governmental or regulatory authority, then such option may not be exercised,
in whole or in part, unless and until such registration, qualification or
approval shall have been obtained free of any condition not acceptable to the
Board. The optionee shall, to the extent applicable, cooperate with the
Corporation in relation thereto and shall have no claim or cause of action
against the Corporation or any of its officers, directors or shareholders as the
result of any failure by the Corporation to take any steps to obtain any such
registration, qualification or approval. (b) The granting of options and the
issuance of common shares under the Plan shall be carried out in compliance with
applicable statutes and with regulations of governmental authorities and
applicable stock exchanges. (8) Adjustments in Event of Change of Common Shares.
Subject to any required approvals of applicable regulatory authorities and stock
exchanges, in the event of any change in the common shares by reason of any
stock dividend, recapitalization, merger, consolidation, split-up, combination
or exchange of shares, or rights offering to purchase common shares at a price
substantially below fair market value, or of any similar change affecting the
common shares, the number and kind of shares which thereafter may be optioned
and sold under the Plan and the number and kind of shares subject to option in
outstanding option agreements and the purchase price per share thereof shall be
appropriately adjusted consistent with such change in such manner as the Board
may deem equitable to prevent substantial dilution or enlargement of the rights
granted to, or available for, participants in the Plan. (9) Liquidation. In the
event the Board shall adopt a plan of complete liquidation, all options shall
become immediately exercisable in full, notwithstanding that they may have been
initially granted on an instalment basis. (10) No Rights as Shareholder. No
optionee shall have any rights as a shareholder with respect to any common
shares subject to the optionee's option prior to the date of issuance to such
optionee of a certificate or certificates for such shares. (11) No Rights to
Continued Employment. The Plan and any option granted under the Plan shall not
confer upon any optionee any right with respect to or service provider to the
Corporation, or any affiliate or subsidiary of the Corporation, nor shall they
interfere in any way with the right of the Corporation, or any affiliate or
subsidiary of the Corporation, by which an optionee is employed or of which the
optionee is a director, consultant, contractor or service provider to terminate
the optionee's employment or directorship or services at any time in accordance
with applicable law.

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E. AMENDMENT AND DISCONTINUANCE.

         Subject to applicable regulatory requirements, the Board may from time
to tome amend, suspend, terminate or discontinue the Plan provided, however,
that subject to the provisions of Subparagraph D(8) above, no action of the
Board may: (1) Increase Limits. Increase the number of common shares reserved
for options pursuant to Paragraph B above; (2) Change Eligibility. Change the
class of eligible employees, officers, directors or service providers to whom
options may be granted; (3) Lengthen Term. Permit the granting of options which
expire beyond the period provided for in Subparagraph D(1) above; or (4) Reduce
Price. Permit the granting of any option at an option price less than that
determined in accordance with Subparagraph D(2) above; unless the Plan is
required to be amended in order to otherwise comply with changes in applicable
laws.

F. PROCEEDS FROM SALES OF SHARES.

         Any cash proceeds from the sale of shares issued upon exercise of the
options shall be added to the general funds of the Corporation.

G. TERM OF PLAN.

         Options may be granted only within 5 years from the date the Plan has
been adopted by the Board.

H. SHAREHOLDER APPROVAL.

         The Plan shall be presented to the Corporation's shareholders within 12
months or its adoption by the Board for approval by such shareholders. Options
may be granted prior to such approval, but such options shall be contingent upon
such approval being obtained any may not be exercised prior to such approval.

                                       4EXHIBIT 10.2

NEITHER THE SECURITIES REPRESENTED BY THIS CERTIFICATE NOR THE SHARES ISSUABLE
UPON EXERCISE HEREOF HAVE BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 (THE
"1933 ACT") OR THE SECURITIES LAWS OF ANY STATE. NEITHER THE SECURITIES
REPRESENTED HEREBY MAY BE SOLD, TRANSFERRED, PLEDGED OR OTHERWISE DISPOSED NOR
MAY THE SHARES BE ISSUED UPON EXERCISE UNLESS SUCH SECURITIES AND SHARES ARE
REGISTERED UNDER THE 1933 ACT AND APPLICABLE STATE SECURITIES LAWS OR THE
COMPANY RECEIVES AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY THAT SUCH SALE,
TRANSFER, PLEDGE OR ISSUANCE IS EXEMPT FROM REGISTRATION.

                          MED-EMERG INTERNATIONAL, INC.

                             STOCK OPTION AGREEMENT

         THIS STOCK OPTION AGREEMENT (the "Agreement"), is made as of August 1,
1999 by and between Med-Emerg International, Inc., an Ontario corporation, (the
"Company"), and Dr. Ramesh Zacharias ("Optionee").

                                  R E C I T A L

         Pursuant to the resolutions dated September 27, 1999, the Board of
Directors of the Company has ratified the grant to Optionee of a stock option to
purchase the number of shares of Common Stock of the Company specified in
Paragraph 1 hereof, at the price specified therein, such option to be for the
term and upon the terms and conditions hereinafter stated.

                                A G R E E M E N T

         NOW, THEREFORE, in consideration of the promises and of the
undertakings of the parties hereto contained herein, it is hereby agreed:

         1. Number of Shares; Option Price. Pursuant to said action of the Board
of Directors, the Company hereby grants to Optionee the option ("Option") to
purchase, upon and subject to the terms of the Agreement, 400,000 shares of
Common Stock of the Company ("Shares") at the price of $1.50 per share.

         2. Term. This Option shall expire on July 31, 2004 (the "Expiration
Date") unless such Option shall have been terminated prior to that date in
accordance with the provisions of the Agreement.

         3. Shares Subject to Exercise. Shares subject to exercise shall vest as
follows:

         (A)   50% of the Shares vest and become subject to exercise at the time
               YFMC Healthcare Inc becomes a subsidiary of the Company; and

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         (B)   50% of the Shares vest and become subject to exercise upon the
               completion of an equity financing(s) in the aggregate amount of
               not less than US$10,000,000.

Notwithstanding the foregoing, none of the Shares will be exercisable until
after February 1, 2000. In the event that (i) the Optionee's employment is
terminated by the Company other than for Cause (as defined herein) ("Non-Cause
Termination") or (ii) the Company is subject to a Change of Control Event (as
defined herein) then the vesting of all Shares shall be accelerated and the
Option shall become exercisable with respect to 100% of the Shares and 100% of
the Shares shall vest on the date of such Non-Cause Termination or Change of
Control Event. Each vesting of Shares is an "Installment" and each date Shares
vest is an "Installment Date".

         4. Method and Time of Exercise. The Option may be exercised by written
notice delivered to the Company at its principal executive office stating the
number of Shares with respect to which the Option is being exercised, together
with:

                  (A) a check or money order made payable to the Company in the
amount of the exercise price and any applicable federal, state and local
withholding tax, (as provided under Paragraph 6 hereof); or

                  (B) the tender to the Company of shares of the Company's
Common Stock owned by Optionee having a fair market value not less than the
exercise price, plus the amount of applicable federal, state and local
withholding taxes (as provided under Paragraph 6 hereof); or

                  (C) (i) the surrender of shares of Common Stock then issuable
upon the exercise of the Option, provided the fair market value of such shares
of Common Stock is equal on the date to the exercise price, or such portion
thereof as Optionee elects to pay by surrender of such stock, plus (ii) the
amount of applicable federal, state and local withholding taxes (as provided
under Paragraph 6 hereof).

The Option may not be exercised for fractional shares.

         5. Exercise Period. This Option (to the extent then exercisable) may be
exercised in whole or in part at any time prior to or on the last Installment
Date; provided, however, that if such exercise of this Option would result in
liability for Optionee under Section 16(b) of the Securities Exchange Act of
1934, then such period shall automatically shall be extended until the tenth day
following the last date upon which Optionee has any liability under Section
16(b), but in no event shall the time to exercise the Option be extended further
than the Expiration Date.

<PAGE>

         6. Tax Withholding. As a condition to exercise of this Option, the
Company may require Optionee to pay over to the Company all applicable federal,
state and local taxes which the Company is required to withhold with respect to
the exercise of this Option. At the discretion of the Company and upon the
request of Optionee, the minimum statutory withholding tax requirements may be
satisfied by the withholding of shares of Common Stock of the Company otherwise
issuable to Optionee upon the exercise of this Option.

         7. Nontransferability. This Option may not be assigned or transferred
except by will, qualified domestic relations order or by the laws of descent and
distribution, and may be exercised only by Optionee during his lifetime and
after his death, by his personal representative or by the person entitled
thereto under his will or the laws of intestate succession.

         8. Optionee Not a Shareholder. Optionee shall have no rights as a
shareholder with respect to the Common Stock of the Company covered by this
Option until the date of issuance of a stock certificate or stock certificates
to him upon exercise of this Option. No adjustment will be made for dividends or
other rights for which the record date is prior to the date such stock
certificate or certificates are issued.

         9. No Right to Employment. Nothing in the Option granted hereby shall
interfere with or limit in any way the right of the Company to terminate
Optionee's employment or consulting at any time, nor confer upon Optionee any
right to continue in the employ of, or consult with, the Company.

         10. Restrictions on Sale of Shares. Optionee represents and agrees
that, upon his exercise of this Option, in whole or in part, unless there is in
effect at that time under the Securities Act of 1933 a registration statement
relating to the Shares issued to him, he will acquire the Shares issuable upon
exercise of this Option for the purpose of investment and not with a view to
their resale or further distribution, and that upon each exercise thereof he
shall furnish to the Company a written statement to such effect, satisfactory to
the Company in form and substance. Optionee agrees that any certificates issued
upon exercise of this Option may bear a legend indicating that their
transferability is restricted in accordance with applicable state or federal
securities law. Any person or persons entitled to exercise this Option under the
provisions of Paragraph 7 hereof shall, upon each exercise of this Option under
circumstances in which Optionee would be required to furnish such a written
statement, also furnish to the Company a written statement to the same effect,
satisfactory to the Company in form and substance. Notwithstanding the
foregoing, Optionee shall be entitled to registration rights no less favorable
than, and subject to the terms and conditions of, registration rights granted to
any executive officer of the Company.

         11. Notices. All notices to the Company shall be addressed to the Chief
Financial Officer at the principal executive office of the Company, and all
notices to Optionee shall be addressed to Optionee at the address of Optionee on
file with the Company, or to such other address as either may designate to the
other in writing. A notice shall be deemed to be duly given if and when enclosed
in a properly addressed sealed envelope and mailed (i) certified or registered
mail, postage prepaid, with the United States Postal Service or (ii) with an
overnight courier for next day delivery. In lieu of giving notice by mail as
aforesaid, written notices under this Agreement may be given by personal
delivery to Optionee or to the Chief Financial Officer (as the case may be).

<PAGE>

         12. Definitions. (1) The term "Cause" shall mean (A) the Optionee
engaging in activity in competition with the Company; (B) the commission of a
felony by Optionee; and/or (C) the habitual abuse of alcohol or controlled
substances by Optionee.

               (2) The term "Change of Control Event" shall mean any event
whereby:

                  (A) A person (other than a person who is an officer or a
         Director of Company on the date hereof), including a "Group" as defined
         in Section 13 (d) (3) of the Securities Exchange Act of 1934, becomes,
         or obtains the right to become, the beneficial owner of Company
         securities having 30% or more of the combined voting power of then
         outstanding securities of the Company that may be cast for the election
         of directors of the Company.

               At any time, a majority of the Board nominated slate of
candidates for the Board is not elected;

               The Company consummates a merger in which it is not the surviving
entity;

               Substantially all the Company's assets are sold; or

               Company's stockholders approve the dissolution or liquidation of
the Company.

         IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date and year first above written.

                                               MED-EMERG INTERNATIONAL, INC.

                                               By : /S/ KATHRYN GAMBLE
                                               -----------------------
                                               Name: Kathryn Gamble
                                               Title:   Chief Financial Officer

                                               OPTIONEE

                                               By: /S/ DR. RAMESH ZACHARIAS
                                               ----------------------------
                                               Name: Dr. Ramesh Zacharias
                                               Title:   Chief Executive Officer

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