<PAGE>

                                                                    EXHIBIT 10.2

                           CHANGE IN EMPLOYMENT STATUS
                                       AND
                        SETTLEMENT AGREEMENT AND RELEASE

        This Change in Employment Status and Settlement Agreement and Release
(hereinafter the "Agreement") is entered into this 29th day of June, 2001, by
and between William R. Hughes ("Hughes") and Endocare, Inc., a Delaware
corporation (the "Company"), in order to memorialize the terms of settlement
reached by the parties hereto effective as of May 14, 2001, with respect to the
following facts:

                                    RECITALS

        A. Since on or about July, 1997, Hughes has been employed by the Company
as the Company's Chief Financial Officer. On or about May 14, 2001, the Company
informed Hughes that the Company desired to terminate Hughes as the Company's
Chief Financial Officer. On or about May 14, 2001, Hughes desired to terminate
his employment with the Company as its Chief Financial Officer in order to
pursue other interests.

        B. Both Hughes and the Company agreed that effective as of 25, 2001,
Hughes employment status with the Company in the capacity as Chief Financial
Officer would be terminated, but that Hughes would remain as an employee of the
Company for a 9-month period beginning May 14, 2001, and terminating on February
15, 2002, in order to assist the Company in the transition to a new Chief
Financial Officer and to otherwise provide assistance to the Company's Chief
Executive Officer, Paul Mikus ("Mikus"), with respect to such Company projects
as Mikus may from time to time determine.

        C. The Company and Hughes desire to enter into this Agreement in order
to provide for the assistance and cooperation by Hughes with the Company in
transitioning Hughes' duties as Chief Financial Officer to other personnel at
the Company

        D. The Company and Hughes further agreed to the terms and conditions of
Hughes' continued employment by the Company, and desire by this Agreement to
memorialize their respective understandings and to provide other terms and
conditions that shall govern Hughes continued employment by the Company as
hereinafter more particularly set forth.

        NOW, THEREFORE, in consideration of the mutual releases hereinafter
provided for, the sufficiency of which is hereby acknowledged, and the parties'
mutual rights, benefits, and obligations as more particularly set forth below,
the parties hereby agree as follows:

        A. SETTLEMENT TERMS; CHANGE IN EMPLOYMENT STATUS

        1. Termination of Status as Chief Financial Officer; Acceptance of New
Employment Position. Effective as of 25, 2001, Hughes acknowledges and agrees
that his status as Chief Financial Officer of the Company terminated, and that
he shall not serve in that capacity from and after that date. Effective as of
May 14, 2001, and continuing through February 15, 2002, the Company and Hughes
hereby acknowledge and agree that Hughes has been employed



<PAGE>

by the Company, and thereafter shall be employed by the Company through February
15, 2002, in the capacity of Transition Facilitator. Effective as of close of
business on February 15, 2002, and without the necessity of any further notice
of any nature whatsoever, Hughes shall no longer be an employee of the Company
in any capacity whatsoever. The terms of Hughes' employment as Transition
Facilitator are as follows:

                (a) Compensation. In consideration of the release set forth in
paragraph 4, below, and as compensation for services to be rendered by Hughes as
Transition Facilitator, Hughes will receive a total amount of $164,900.00 from
the Company, payable as follows: (i) $127,500.00 in continued wages from Company
for the period between May 14, 2001 and February 15, 2002 in accordance with the
Company's normal payroll practices, less all applicable withholding, taxes and
other customary payroll deductions; any wages paid to Hughes during this period,
but before this Agreement is executed, will be applied to satisfy this payment
owed to Hughes by Company (i.e. these wages are not intended to supplement any
wages Hughes will receive during the period between May 14, 2001 and the date
the parties execute this Agreement), and (ii) two additional payments in the
amount of $18,700.00 each on July 1, 2001 and September 1, 2001.

                (b) Discretionary Bonus. In addition to the compensation payable
to Hughes pursuant to Section A.1(a) above, Hughes will be eligible to receive
the same discretionary bonus payment in the second fiscal quarter of 2001 that
he would otherwise have received under Company's discretionary bonus program had
he remained as the Company's Chief Financial Officer if the Company achieves its
Revenue and Profitability Objectives (which are set forth in the Company 2001
Company Objectives which is attached hereto as Exhibit A). Said discretionary
bonus shall be equal to or less than $5,100.00.

                (c) No Additional Payments or Benefits To Hughes. Until
expiration of his employment status as Transition Facilitator on February 15,
2002, Hughes will continue to receive the same medical, dental, life, and
disability insurance benefits which he received from the Company while serving
as the Company's Chief Financial Officer. Hughes understands, acknowledges and
agrees that he will not be eligible for, nor shall he be entitled to participate
in, any other employee benefit program established or adopted by the Company,
including without limitation bonuses, leaves of absence, the Company's 401(k)
plan, or other compensation or benefit program. Hughes and the Company expressly
acknowledge and agree that following the execution of this Agreement, Hughes is,
and shall continue to be until termination of his employment as Transition
Facilitator on February 15, 2002, an "Employee" of the Company within the
meaning of Section 2(k) of that certain Endocare, Inc. 1995 Stock Plan (the
"Company Stock Plan"), and shall have retained, and will retain through February
15, 2002, his "Continuous Status as an Employee" within the meaning of Section
2(h) of the Stock Plan. The Company and Hughes further understand, acknowledge
and agree that those certain stock options granted by the Company to Hughes in
accordance with those certain Stock Option Agreements, dated August 18, 1997,
July 2, 1998, and January 6, 1999, shall continue to vest in accordance with the
terms thereof through and until August 14, 2001, only, and that any right or
entitlement to further or continued vesting thereunder shall cease and terminate
on August 14, 2001, notwithstanding anything to the contrary set forth in the
Stock Option Plan or Hughes' Stock Option Agreements.



                                       2
<PAGE>

                (d) Duties and Responsibilities. During Hughes tenure of
employment as Transition Facilitator, Hughes shall report solely to Mikus and
shall perform only those duties and services reasonably requested or approved by
Mikus. During Hughes tenure as Transition Facilitator, Hughes will be permitted
to utilize his laptop computer and will have access to and use of his Company
voicemail and e-mail. Hughes acknowledges and agrees, however, when his
employment with the Company ceases on February 15, 2002, or earlier as permitted
by Section A8, below, Hughes will return his laptop and will no longer have
access to his Company voicemail and e-mail.

        2. No Other Compensation or Benefits. The payments paid and benefits
made available to Hughes pursuant to Section 1, above, and each subsection
thereof, are in lieu of any other compensation, perquisites or other benefits,
including leaves of absence, that the Company may provide to its other employees
from time to time or which the Company has provided to others at any time prior
to the date hereof (including, but not limited to, outplacement services,
bonuses, rights to cash payments arising from the Company's stock options and
incentive stock grants), other than benefits previously provided in which Hughes
may have a vested right solely as a consequence of his employment by the Company
prior to such date, and Hughes hereby waives his rights to any termination or
severance payments and any such other compensation, perquisites or benefits that
he might otherwise be entitled to receive pursuant to Company policy or
practice, as they may change from time to time.

        3. Attorney's Fees. Company and Hughes agree and understand that each
party shall bear their own attorney's fees and expenses that they may incur, or
have incurred, in connection with the negotiation, review and execution of this
Agreement.

        4. Mutual Releases

                (a). Hughes' Release of Company. In consideration of his
employment by the Company as Transition Facilitator and of the payments and
benefits being extended to Hughes as provided herein, to which Hughes would not
otherwise be entitled, Hughes is fully and forever releasing and discharging the
Company, its officers, directors, employees, insurance companies, and agents
from any claims, and covenanting not to sue or otherwise institute any legal
proceeding against the Company, its officers, directors, employees, or agents
with respect to any matter arising out of or relating to Hughes' employment or
any other relationship with the Company, including, without limitation, claims
as a shareholder as a result of exercising any Options or in connection with the
Option Shares, of wrongful discharge, breach of contract, breach of the covenant
of good faith and fair dealing, fraud, violation of public policy, defamation,
physical injury, emotional distress, claims under Title VII of the 1964 Civil
Rights Act, as amended, the California Fair Employment and Housing Act, the
Equal Pay Act of 1963, the California Labor Code, including but not limited to,
Sections 970 and 1197.5, claims under the Age Discrimination in Employment Act,
the Federal and State Family and Medical Leave Acts, wrongful discharge claims
and claims for tort, misrepresentation, invasion of privacy and breach of
contract Hughes may have that are based on Hughes' relationship with the Company
at any time prior to the date of execution of this Agreement, or on any other
event occurring prior to the date of this Agreement and any other laws and
regulations relating to employment discrimination. Hughes is not presently aware
of any injuries he has suffered which may be



                                       3
<PAGE>

compensable under the Workers' Compensation Act and releases all claims under
the Workers' Compensation Act.

        In addition, and in further consideration of the foregoing, Hughes
hereby expressly waives any and all rights and benefits conferred upon his by
the provisions of Section 1542 of the Civil Code of the State of California,
which states as follows:

               A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
               WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
               EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
               RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
               MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
               DEBTOR.

        HUGHES SPECIFICALLY WAIVES AND RELEASES THE COMPANY AND ITS RELATED AND
AFFILIATED ENTITIES FROM ALL CLAIMS HUGHES MAY HAVE AS OF THE DATE HE SIGNS THIS
AGREEMENT REGARDING CLAIMS OR RIGHTS ARISING UNDER THE AGE DISCRIMINATION IN
EMPLOYMENT ACT OF 1967, AS AMENDED, 29 U.S.C. Section 621 ("ADEA"). HUGHES
FURTHER AGREES: (A) THAT HIS WAIVER OF RIGHTS UNDER THIS RELEASE IS KNOWING AND
VOLUNTARY AND IN COMPLIANCE WITH THE OLDER WORKER'S BENEFIT PROTECTION ACT OF
1990; (B) THAT HE UNDERSTANDS THE TERMS OF THIS RELEASE; (C) THAT THE PAYMENTS
AND BENEFITS CALLED FOR IN THIS AGREEMENT WOULD NOT BE PROVIDED TO ANY EMPLOYEE
TERMINATING HIS/HER EMPLOYMENT WITH THE COMPANY AND ITS RELATED AND AFFILIATED
ENTITIES THAT DID NOT SIGN A SIMILAR RELEASE, AND ARE IN EXCHANGE NOT ONLY FOR
SERVICES TO BE RENDERED BY HUGHES HEREUNDER BUT ALSO FOR THE SIGNING OF THIS
RELEASE; (D) THAT HE HAS BEEN ADVISED IN WRITING BY THE COMPANY AND ITS RELATED
AND AFFILIATED ENTITIES TO CONSULT WITH AN ATTORNEY PRIOR TO EXECUTING THIS
RELEASE; (E) THAT THE COMPANY AND ITS RELATED AND AFFILIATED ENTITIES HAVE GIVEN
HUGHES A PERIOD OF AT LEAST TWENTY-ONE (21) DAYS WITHIN WHICH TO CONSIDER THIS
RELEASE AND HUGHES HAS CHOSEN TO WAIVE HIS 21 DAY CONSIDERATION PERIOD; (F) THAT
HUGHES REALIZES THAT FOLLOWING HIS EXECUTION OF THIS AGREEMENT HE HAS SEVEN (7)
DAYS IN WHICH TO REVOKE HIS RELEASE BY WRITTEN NOTICE TO THE UNDERSIGNED, (G)
THAT THIS ENTIRE AGREEMENT SHALL BE VOID AND OF NO FORCE AND EFFECT IF HUGHES
CHOOSES TO SO REVOKE, AND IF HUGHES CHOOSES NOT TO SO REVOKE, THAT THIS
AGREEMENT AND RELEASE THEN BECOME EFFECTIVE AND ENFORCEABLE, AND (H) HUGHES DOES
NOT RELEASE OR WAIVE ANY RIGHT OR CLAIM WHICH HE MAY HAVE UNDER THE AGE
DISCRIMINATION IN EMPLOYMENT ACT, AS AMENDED BY THE OLDER WORKERS BENEFITS
PROTECTION ACT, WHICH ARISES AFTER THE DATE OF EXECUTION OF THIS AGREEMENT;
PROVIDED THAT HUGHES ACKNOWLEDGES AND AGREES THAT ANY CLAIM UNDER THE AGE
DISCRIMINATION IN EMPLOYMENT ACT RELATING TO THE SEPARATION FROM



                                       4
<PAGE>

EMPLOYMENT WITH THE COMPANY OR COMPENSATION OR EMPLOYEE BENEFITS ISSUES HAS
ARISEN PRIOR TO THE EXECUTION OF THIS AGREEMENT.

        Nothing in this Agreement shall be construed to limit or otherwise
change Hughes' indemnification and coverage rights to be covered by the Company
for any acts performed within the course and scope of his employment during the
pendency of his employment with the Company.

                (b). Company's Release of Hughes.

        Except as to such rights or claims which may arise out of theft,
embezzlement, or criminal misconduct by Hughes prior to this Agreement or during
the period of Hughes employment by the Company as Transition Facilitator between
May 14, 2001 and February 14, 2002, the Company is hereby fully and forever
releasing and discharging Hughes and covenanting not to sue or otherwise
institute any legal proceeding against him with respect to any matter arising
out of or relating to his employment or any other relationship with the Company.

        In addition, and in farther consideration of the foregoing, the Company
hereby expressly waives any and all rights and benefits conferred upon his by
the provisions of Section 1542 of the Civil Code of the State of California,
which states as follows:

               A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS
               WHICH THE CREDITOR DOES NOT KNOW OR SUSPECT TO
               EXIST IN HIS FAVOR AT THE TIME OF EXECUTING THE
               RELEASE, WHICH IF KNOWN BY HIM MUST HAVE
               MATERIALLY AFFECTED HIS SETTLEMENT WITH THE
               DEBTOR.

        5. Confidentiality.

        (a) Confidentiality of Company Proprietary Information. Hughes
acknowledges that in connection with his employment with, the Company, he has
had access to, received or assisted in the development of, proprietary and
confidential information concerning, the present and proposed business of the
Company. This information includes, without limitation or designation as such,
business strategies, sales and marketing plans and activities, the terms of
contracts, customer relationships, financial information and projections,
budgets, pricing information, and other information, which is not generally
known to the public. Hughes acknowledges and agrees that all such information
is, and will at all times remain, the sole and exclusive property of the
Company. Hughes acknowledges and agrees that he will hold such information in
confidence and not disclose any of such information to any third party.
Notwithstanding the foregoing, this Agreement does not alter, modify or impact
the confidentiality provisions and the restrictive covenants set forth in the
Employee Invention and Confidentiality Agreement between the parties signed by
Hughes on July 20, 1997, nor does it affect Hughes' obligation to strictly
comply with the provisions contained therein.



                                       5
<PAGE>

        (b) Confidentiality of Settlement and this Agreement. The Company and
Hughes agree that they will not, without compulsion of legal process, and after
written notice to the other party, disclose to others the fact or terms of this
Agreement except as necessary to their consultants, tax advisors or other
necessary parties. It is agreed between the parties that if Hughes is asked by
any person about the terms of any settlement reached with the Company, he will
respond by stating, in sum and substance, that he does not want to discuss the
subject. Further, it is agreed between the parties that (i) the Company is
permitted to issue a press release announcing Hughes' resignation' from the
Company as its Chief Financial Officer, and (ii) that Hughes is entitled to
review and reasonably approve that portion of any such press release that refers
to Hughes or his employment relationship with the Company.

        6. Non-Disparagement. Company and Hughes agree to refrain from making
any representations or statements, whether written or oral, to any person or
entity, including but not limited to investors, analysts, customers or
competitors of the Company which reflect any opinion, judgment, observation or
representation which is intended to disparage or otherwise reflect negatively on
the other party and in the case of the Company on its officers, directors or
employees.

        7. Non-Solicitation. Hughes agrees that, for a period of one (1) year
following the execution of this Agreement, he will not, without the prior
written approval of the Company's Chief Executive Officer, directly or
indirectly, through any other individual or entity, solicit, entice or induce
any employee of the Company, to cease his or her employment with the Company,
and he will not approach any such employee for any such Purpose or authorize the
taking of any such action by any other individual or entity.

        8. Hughes' Right to Terminate Transition Facilitator Employment
Position. The parties hereto understand, acknowledge and agree that any time
after the date of this Agreement Hughes may voluntarily elect to terminate his
employment relationship with the Company and that at that time Company will no
longer be obligated (and Hughes will have waived his rights to) any and all of
the compensation otherwise payable to Hughes from and after the date of such
voluntary termination.

        B. MISCELLANEOUS

        1. References Regarding Hughes' Employment With the Company. The Company
agrees that it will instruct its Human Resources Department that any prospective
employment inquiries regarding Hughes should be answered only with information
concerning (i) the beginning and ending dates of his employment with the
Company; (ii) a description of his position with the Company during his tenure
as an employee; and (iii) his rate of pay as an employee of the Company at the
end of his employment tenure. Hughes agrees to direct all references to contact
Holly Williams in the Company's Human Resources Department.

        2. Agreement Not To Seek Re-Employment. Hughes agrees not to seek
re-employment with Company or any of its divisions, subsidiaries, affiliates,
successors, etc.



                                       6
<PAGE>

        3. Binding on Successors and Heirs. This Agreement is binding upon and
for the benefit of the Company and its successors and assigns and Hughes and his
heirs.

        4. Negotiation. This Agreement is the product of arms length
negotiations and contains all the terms and conditions agreed upon by the
parties regarding the subject of Hughes' employment with the Company. This
Agreement shall be deemed jointly negotiated and drafted.

        5. Careful Consideration after Advice. The parties hereto each hereby
acknowledges that it has read this Agreement carefully and understands the
Release set forth in Section A.4 and that it is agreeing to it voluntarily and
without coercion. The parties each further acknowledges that it was given
sufficient time within which to consider the Release and was given the
opportunity to consult with an attorney of its own choosing concerning the
Release, that each party has done so, that each party has been represented by
counsel in connection with the negotiations leading up to this Agreement, and
that the waivers each party has made herein are knowing, conscious and with full
appreciation that it is forever foreclosed from pursuing any of the rights so
waived.

        6. Severability. If any provision or portion of this Agreement is held
by a court of competent jurisdiction to be invalid or unenforceable, the
remaining provisions shall nevertheless continue in full force without being
impaired or invalidated in any pay; provided, however, that there shall be
deemed to be made in any such invalid or unenforceable provision or portion such
minor changes, and only such minor changes, as are necessary to make it valid
and enforceable.

        7. Entire Agreement. This Agreement sets forth the entire agreement and
understanding between Hughes and the Company with respect to the subject matter
hereof and supersedes all prior contracts, agreements, arrangements,
communications, promises, discussions, negotiations, representations and
warranties between the Company and Hughes, whether oral or written, relating to
Hughes' employment with the Company; provided that the Employee Invention and
Confidentiality Agreement executed on July 20, 1997, and that certain
Termination Certificate to be executed by Hughes upon expiration of his
employment by the Company as Transition Facilitator, shall remain in full force
and effect, as applicable, following the date hereof. In the event that there
are any inconsistencies between the terms of this Agreement and any other
agreement, the terms of this Agreement shall constitute an amendment to, and
shall supersede for all purposes, the relevant provision of that document.

        8. Governing Law. The laws of the State of California shall govern this
Agreement.

        9. Binding Arbitration. Any controversy or claim arising out of or
relating to the Agreement, or the breach thereof, shall be settled by binding
arbitration to be held in the County of Orange, in the State of California
before a mutually agreed upon arbitrator and according to the AAA rules of
arbitration.





                                       7
<PAGE>
        IN WITNESS WHEREOF, the parties have executed this Agreement on the
dates indicated below.

ENDOCARE, INC.


By:         /s/ Holly Williams
    ----------------------------------------
    Holly Williams, General Counsel


Dated:      7/3/01
      --------------------------------------


By:         /s/ William Hughes
    ----------------------------------------
    William Hughes


Dated:      7/3/01
      --------------------------------------



                                       8
<PAGE>

APPROVED AS TO FORM AND CONTENT:

Charles, Kane & Dye, LLP


        /s/ Stephen Kane
------------------------------------
By: Stephen Kane, Attorney
for William R. Hughes


        /s/ Holly Williams
------------------------------------
Holly Williams
General Counsel of Endocare, Inc.



                                       9