OPTION AGREEMENT

THIS AGREEMENT, made as of this 19th day of July 2000, between David Casterline
whose  principle  place of  business is 111 N  Sepulveda  Boulevard,  Suite 250,
Manhattan  Beach,  CA 90266 and Oak Tree Medical Systems Inc, 2797 Ocean Parkway
Brooklyn, NY 11235 ("the Company").

                              W I T N E S S E T H:

         WHEREAS,  the  Board of  Directors  of the  Company  believes  that the
interests  of the Company  will be advanced  by  granting  an  incentive  to the
Optionee  by  providing  him with the  opportunity  to  purchase  shares  of the
Company's  Common Stock,  par value $.01 per share  ("Common  Stock"),  on terms
which will give him a more direct and continuing  interest in the future success
of the Company's business;

         NOW,  THEREFORE,  in  consideration of the foregoing and other good and
valuable consideration, the parties agree as follows:

     1. Grant of Options. Subject to all terms and conditions of this Agreement,
the Company hereby grants to the Optionee the right and option (the "Option") to
purchase  all or any part of an  aggregate  of Two  hundred  and fifty  thousand
(250,000)  shares.  The first 100,000  registered  cashless options will have an
exercise price of $0.60.  The next 50,000 options will have an exercise price at
$2.25 and an  additional  50,000  options with an exercise  price of $3.00.  The
final  50,000  options  will have an  exercise  price of $6.00  per  share  thus
totaling 250,000 registered cashless options.

     2.  Expiration.  The Options may not be  exercised  after July 1, 2001 (the
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"Expiration  Date").

     3. Exercise of Option. The Option may be exercised, in whole or in part, at
any time prior to the Expiration Date or the earlier  termination of the Option.
If the Option is not exercised to the maximum  extent  permissible,  it shall be
exercisable, in whole or in part, with respect to all Shares not so purchased at
any time prior to the Expiration Date or the earlier termination of the Option.

     4. Payment of Purchase Price Upon  Exercise.  The Option granted under this
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Agreement may be exercised in whole or in part by the  Optionee's  delivering or
mailing  to the  Company at its  principal  office,  or such other  place as the
Company may  designate,  written notice of exercise duly signed by the Optionee.
Such exercise shall be effective upon


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(a) receipt of such  written  notice by the Company  and (b)  cashless  exercise
based upon the price on the date of notice of intent to exercise such options.

     5.  Issuance and Delivery.  The  Optionee's  written  notice to the Company
shall  state the  number of Shares  with  respect  to which the  Option is being
exercised  and specify a date,  not less than five (5) or more than fifteen (15)
days after the date of the mailing of such  notice,  on which the Shares will be
taken  and  payment  made  therefore.  On the date  specified  in the  notice of
exercise,  the Company shall deliver, or cause to be delivered,  to the Optionee
(or his personal representative,  as the case may be) stock certificates for the
number of Shares with  respect to which the Option is being  exercised,  against
receipt of payment  therefore.  Certificates  evidencing  the Shares issued upon
exercise of the Option may contain such legends reflecting any restrictions upon
transfer  of the Shares  evidenced  thereby as in the  opinion of counsel to the
Company  may  be  necessary   for  the  lawful  and  proper   issuance  of  such
certificates. Delivery of the Shares may be made at the office of the Company or
at the office of a transfer agent appointed for the transfer of shares of Common
Stock.

     6. Transferability.  The Option shall not be transferable otherwise than by
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will or by the  laws of  descent  and  distribution.  The  Option  shall  not be
subject, in whole or in part, to attachment, execution or levy of any kind.

     7.  No  Rights  as a  Shareholder.  Neither  the  Optionee  nor  his  legal
representative  shall  be,  nor  have  any of the  rights  or  privileges  of, a
shareholder  of the  Company in respect of any of the  Shares,  unless and until
certificates  representing  such Shares shall have been issued and  delivered to
the Optionee (or his legal representative).

     8.  Adjustment.  (a) In case,  prior to the  expiration  of the  Option  by
exercise or by its terms, the Company shall issue any shares of its Common Stock
as a stock  dividend or  subdivide  the number of  outstanding  shares of Common
Stock  into a greater  number of  shares,  then,  in either of such  cases,  the
purchase  price per share of the Shares  issuable upon exercise of the Option in
effect  at the time of such  action  shall be  proportionately  reduced  and the
number of  Shares  at that time  purchasable  pursuant  to the  Option  shall be
proportionately  increased;  and  conversely,  in the  event the  Company  shall
contract the number of  outstanding  shares of Common  Stock by  combining  such
shares into a smaller  number of shares,  then, in such case, the purchase price
per share of the Shares  issuable  upon  exercise of the Option in effect at the
time of such action shall be proportionately  increased and the number of Shares
at that time purchasable pursuant to Option shall be proportionately  decreased.
Any  dividend  paid or  distributed  upon the Common Stock in stock of any other
class of securities  convertible into shares of Common Stock shall be treated as
a dividend  paid in Common  Stock to the extent that shares of Common  Stock are
issuable upon the conversion thereof.



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           (b) In case, prior to the expiration of this Option by exercise or by
its  terms,  there  shall  be a  recapitalization,  whether  by  reorganization,
reclassification or otherwise of the capital of the Company, or the Company or a
successor  corporation  shall be  consolidated  or merge  with or convey  all or
substantially all of its or of any successor  corporation's  property and assets
to any other  corporation or corporations  (any such corporation  being included
within  the  meaning  of the term  "successor  corporation"  in the event of any
consolidation  or merger  of any such  corporation  with,  or the sale of all or
substantially   all  of  the  property  of  any  such  corporation  to,  another
corporation or corporations), in exchange for stock or securities of a successor
corporation,  the Optionee shall  thereafter have the right to purchase upon the
terms and conditions  and during the time  specified in this Option,  in lieu of
the Shares  theretofore  purchasable upon the exercise of this Option,  the kind
and  amount  of  shares  of stock  and  other  securities  receivable  upon such
recapitalization  or  consolidation,  merger  or  conveyance  by a holder of the
number of shares  of Common  Stock  which  the  Optionee  might  have  purchased
immediately  prior  to  such   recapitalization  or  consolidation,   merger  or
conveyance.

     9. Sale of the Company. (a) Notwithstanding any provision in this
Agreement to the contrary,  in the event of a Sale of the Company (as defined in
paragraph  (b) below),  the Option,  at the  election of the  Company,  shall be
terminated  and the  Optionee  shall  receive  an  amount  in cash  equal to the
difference  between the purchase price in effect at the time of such Sale of the
Company and the Fair Market  Value (as  defined in  paragraph  (b) below) of the
Shares subject to the then remaining unexercised portion of the Option.

             (b) For purposes of this Section 9 the  following  terms shall have
the indicated meanings:

                  (i) "Sale of the  Company"  means a Change of  Control  of the
Company (as defined in clause (ii) below) or a sale of all or substantially  all
of the  assets of the  Company  in a single  transaction  or a series of related
transactions.

                  (ii) "Fair Market Value" per share on any given date means the
average of the closing prices of the sales of the Common Stock on all securities
exchanges on which such stock may at the time be listed,  or, if there have been
no sales on any such  exchange  on any day,  the  average of the highest bid and
lowest asked prices on all such  exchanges at the end of such day, or, if on any
day the Common Stock is not so listed, the average of the representative bid and
asked prices  quoted on the NASDAQ Stock Market as of 4:00 P.M.,  New York time,
or, if on any day the Common Stock is not quoted on the NASDAQ Stock Market, the
average of the highest bid and lowest  asked  prices on such day in the domestic
over-the-counter   market  as  reported  by  the  National   Quotation   Bureau,
Incorporated,  or any similar successor organization.  If at any time the Common
Stock is not  listed  or  quoted,  the Fair  Market  Value  per  share  shall be
determined  by the Board of Directors of the Company in good faith based on such
factors as the members  thereof,  in the  exercise of their  business  judgment,
consider relevant.



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     10.  Compliance with Law and Regulations.  The Option and the obligation of
the  Company  to sell and  deliver  Shares  hereunder  shall be  subject  to all
applicable  federal and state laws,  rules and regulations and to such approvals
by any governmental or regulatory  agency as may be required.  The Company shall
not be required to issue or deliver any certificates for Shares prior to (i) the
listing of such Shares on any stock  exchange on which the Common Stock may then
be listed and (ii) the completion of any  registration or  qualification of such
Shares  under  any  federal  or  state  law,  or any rule or  regulation  of any
government  body which the Board of Directors of the Company shall,  in its sole
discretion, determine to be necessary or advisable. Moreover, the Option may not
be exercised if its exercise or the receipt of Shares pursuant thereto, would be
contrary to applicable law.

     11.  Investment  Representation.  The Board of Directors of the Company may
require the  Optionee to furnish to the  Company,  prior to the  issuance of any
Shares upon the exercise of any Option,  an agreement (in such form as the Board
of  Directors  may  specify) in which the  Optionee  represents  that the Shares
acquired by the Optionee upon exercise are being acquired for investment and not
with a view to the sale or distribution thereof.

     12.  Continued  Services.  Neither this  Agreement  nor any Option  granted
hereunder  shall  confer  upon the  Optionee  any  right to  continue  to render
services  to the  Company  or any  subsidiary  of the  Company,  or limit in any
respect the right of the Company,  the Board of Directors of the Company, or any
subsidiary of the Company to terminate the services of the Optionee at any time.

     13. Notices.  Any notice  hereunder to the Company shall be addressed to it
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at its offices. Attention Simon Boltuch, 2797 Ocean Parkway Brooklyn, NY 11235

     14. Governing Law. This Agreement shall be interpreted,  and the rights and
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liabilities of the parties hereto  determined,  in accordance  with the internal
laws of the State of New York, without regard to the conflicts of law principles
thereof.

     15.  Counterparts.  This Agreement may be executed in two counterparts each
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of which shall constitute one and the same instrument.


         IN WITNESS  WHEREOF,  the undersigned  have signed this Agreement as of
the date and year first above written.

Oak Tree Medical Systems, Inc.                           David Casterline


By: /s/ Simon Boltuch                       By:      /s/ David Casterline
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      Simon Boltuch, CFO                                 David Casterline