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CONFIDENTIAL SETTLEMENT COMMUNICATION PURSUANT TO MEDIATION




ENDOCARE, INC. V. KPMG LLP

MEMORANDUM OF UNDERSTANDING




     This Memorandum of Understanding (“MOU”) contains the principal terms of the settlement (the
“Settlement”) agreed to between Plaintiff and Cross-Defendant Endocare, Inc. (“Endocare”) and
Defendant and Cross-Complainant KPMG LLP (“KPMG”) in Endocare, Inc. v. KPMG LLP, Orange
County Superior Court Case Number 06 CC11414 (the “Action”). This MOU is intended to form the
basis for drafting a Settlement Agreement that shall embody the terms set forth herein as well as
such other terms as are agreed upon by the parties to this MOU.




	 	1.	 	Settlement Amount: KPMG shall pay $950,000 to Endocare to resolve all
claims
asserted against KPMG as well as all claims that Endocare could have asserted
against KPMG in the Action (the “Settlement Amount”) within thirty (30) days of
execution of this MOU.
	 
	 	2.	 	Return of Fees: KPMG shall return to Endocare fees in the amount of
$150,000
within thirty (30) days of execution of this MOU.
	 
	 	3.	 	Restrictions on Use of Settlement Proceeds: No portion of the
Settlement
Amount paid by KPMG shall be used to pay, advance, or reimburse any fees or
costs incurred or to be incurred by Paul Mikus or John Cracchiolo in any criminal
or SEC enforcement action.
	 
	 	4.	 	Dismissals:






	 	a.	 	Within ten (10) days of execution of this MOU, Endocare will file
with the
Orange County Superior Court a Dismissal with prejudice of the claims
against KPMG in the Action.
	 
	 	b.	 	Within ten (10) days of execution of the this MOU, KPMG will file
with
the Orange County Superior Court a Dismissal with prejudice of the
claims against Endocare, Paul Mikus, and John Cracchiolo in the Action.






	 	5.	 	Releases:






	 	a.	 	Endocare, on behalf of itself and all of its officers and
directors, releases
all claims it asserted and which could have been asserted in the Action
against KPMG and/or any of its current or former officers, directors,
agents, partners, principals and employees.
	 
	 	b.	 	Endocare shall use its best efforts in good faith to obtain
signed releases of
KPMG by both Paul Mikus and John Cracchiolo, which releases shall
release all claims which Messrs. Mikus and Cracchiolo could have
asserted in the Action or otherwise against KPMG and/or any of its current
or former officers, directors, agents, partners, principals and employees.
	 
	 	c.	 	KPMG, on behalf of itself and all of its officers and directors, releases all
claims it asserted and which could have been asserted in the Action





 









 





CONFIDENTIAL SETTLEMENT COMMUNICATION PURSUANT TO MEDIATION





	 	 	 	against Endocare and/or any of its current or former employees, officers,
directors, shareholders, and agents, including but not limited to Paul
Mikus and John Cracchiolo.
	 
	 	d.	 	The releases in the Settlement Agreement will be in a form
reasonably acceptable to both Endocare and KPMG, and shall include waivers of
Cal. Civil Code § 1542.






	 	6.	 	No Admission of Liability:






	 	a.	 	KPMG does not admit or concede that any of the claims released by
Endocare have merit and the Settlement, and the provisions contained in
this MOU, shall not be deemed or offered or received in evidence as a
presumption, a concession, or an admission of any fault, liability or
wrongdoing, and, except as required to enforce the Settlement, they shall
not be offered or received in evidence or otherwise used by any person in
these or any other actions or proceedings, whether civil, criminal, or
administrative.
	 
	 	b.	 	Endocare does not admit or concede that any of the claims
released by
KPMG have merit and the Settlement, and the provisions contained in this
MOU, shall not be deemed or offered or received in evidence as a
presumption, a concession, or an admission of any fault, liability or
wrongdoing, and, except as required to enforce the Settlement, they shall
not be offered or received in evidence or otherwise used by any person in
these or any other actions or proceedings, whether civil, criminal, or
administrative.






	 	7.	 	Cooperation in Drafting Settlement Agreement: The terms of the
Settlement are final and conclusive. The parties agree that they will cooperate to
expeditiously prepare and execute a definitive Settlement Agreement. In the event of
disputes regarding the drafting of a Settlement Agreement (and related documents), the
parties agree to submit such disputes to Hon. Robert Altman for prompt binding
arbitration. The parties acknowledge that Judge Altman has received confidential
information from them (and various other parties) to date, and make this designation
notwithstanding that fact. Notwithstanding the foregoing, the terms of this MOU will be
binding on the parties until and unless it is superseded by a subsequent written
agreement. This MOU may be enforced under the provisions of Code of Civil Procedure
Section 664.6 and is not a mere agreement to agree.
	 
	 	8.	 	Confidentiality: Endocare and KPMG agree to maintain absolute
confidentiality regarding this MOU and the Settlement Agreement and not to divulge the
events that led up to this MOU, the terms of this MOU or the Settlement Agreement or
the fact of Settlement to any person except for Endocare’s and KPMG’s attorneys, tax
advisors, or as otherwise required by law, without the prior consent of the other
party. The parties agree that disclosure of this Settlement in any proceeding and/or by
any current or former officer, employee, or agent of Endocare or





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CONFIDENTIAL SETTLEMENT COMMUNICATION PURSUANT TO MEDIATION





	 	 	 	KPMG while testifying would be contrary to the parties’ agreement to maintain
confidentiality and inconsistent with Cal. Evid. Code §§ 1115 et seq. and 1154.
	 
	 	9.	 	Costs and Fees: Each party shall bear its own fees and costs.
	 
	 	10.	 	Authority: Each signatory to this MOU certifies that he or she is
authorized to
execute this MOU and to legally bind the party he or she represents, and that such
party shall be fully bound by the terms hereof upon such signature without further
act, approval, or authorization of such party.





	 	 	 	 	 	 	 	 	 
	Dated:	 	9-11-2007	 	 	 	ENDOCARE, INC.
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Clint Davis
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Clint Davis
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Its
	 	SVP, Legal Affairs & General Counsel
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Dated:	 	9-11-2007	 	 	 	KPMG LLP
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	By:
	 	/s/ Joseph Warganz
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	 	 	Joseph Warganz
	 

	 	 	 	 	 	 	 	 
	 

	 	 	 	 	 	Its
	 	Assistant General Counsel
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	APPROVED AS TO FORM:	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	Dated:	 	9-11-07	 	 	 	CALDWELL LESLIE & PROCTOR, PC
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	/s/ Christopher G. Caldwell
	 	 	 	 	 	 	 
	 	 	 	 	 	 	CHRISTOPHER G. CALDWELL

	 	 	 	 	 	 	Attorneys for Plaintiff and Cross-Defendant Endocare
	 
	 	 	 	 	 	 	 	 
	Dated:	 	9/11/07	 	 	 	SIDLEY AUSTIN LLP
	 

	 	 	 	 	 	 	 	 
	 
	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	/s/ Michael C. Kelley
	 	 	 	 	 	 	 
	 	 	 	 	 	 	MICHAEL C. KELLEY

	 	 	 	 	 	 	Attorneys for Defendant and Cross-Complainant KPMG LLP







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