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U. S. Department of Justice(LOGO)United States AttorneyCentral District of
CaliforniaAndrew Stolper
    
    United States CourthouseAssistant United States Attorney
    
    411 W. Fourth Street(714) 338-3536
    
    Santa Ana, California 92701andrew.stolper@usdoj.gov
  
 
 Re:
    
    Endocare, Inc.
   Introduction1.
    
    The USAO, in conjunction with the FBI and United States Postal
Inspection Service
is conducting a criminal investigation (the Investigation) into matters
relating to
Endocares 2001 and 2002 disclosures to investors, including its financial
statements,
press releases, and investor conference calls (Investigated Disclosures).
During the
course of the Investigation, the USAO notified Endocare of its belief that
one or more
Endocare employees or former employees violated federal criminal law in
connection
with the Investigated Disclosures during the course of their employment
beginning in
late 2001 and continuing through 2003 (the relevant time period).2.
    
    Endocare acknowledges that the USAO has developed evidence that
one or more
Endocare employees or former employees violated federal criminal law in
connection
with the Investigated Disclosures during the relevant time period. Endocare
accepts
responsibility for the conduct of these employees during the relevant time
period.




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Endocare does not endorse, ratify or condone criminal conduct and, as set forth
below, has taken steps to prevent such conduct from occurring in the future.Agreement3.
    
    Based upon Endocares acceptance of responsibility in the preceding paragraph and
paragraph 7 below, its adoption of the remedial measures set forth in paragraphs 8-10
below, its commitment to implement and audit such remedial measures and its
commitment to continue to cooperate with the USAO in its investigation and potential
prosecutions of Endocare employees or former employees as set forth in paragraphs
4-6 below, the USAO agrees that it will not prosecute Endocare for any crimes
committed by its employees during the relevant time period relating to the
Investigated Disclosures. This non-prosecution Agreement shall become final and
irrevocable on January 1, 2007. Endocare understands and agrees that if it violates
this Agreement the USAO will no longer be bound by this Agreement and it will be
free to prosecute Endocare for any crimes committed by its employees relating to the
Investigated Disclosures. This Agreement does not provide any protection to any
individual or any entity other than Endocare, and, in particular, this Agreement does
not limit in any way the USAOs ability to prosecute any individual or entity other
than Endocare for any crime.4.
    
    Endocare agrees that it shall truthfully disclose to the USAO all information with
respect to the activities of Endocare, its officers and employees concerning all matters
about which the USAO shall inquire, and shall fully cooperate with the USAO. This
obligation of truthful disclosure includes an obligation upon Endocare to provide to
the USAO, on request, any document, record or other tangible evidence about which
the USAO shall inquire of Endocare. This obligation of truthful disclosure includes
an obligation to provide to the USAO access to Endocares facilities, documents and
employees. This paragraph does not apply to any information protected by the
attorney-client privilege that was created or occurred after
January 1, 2003.5.
    
    Endocare agrees that upon request of the USAO, with respect to any issue relevant to
its Investigation of Endocare, Endocare shall designate knowledgeable employees,
agents or attorneys to provide information and/or materials on Endocares behalf to
the USAO. Endocare agrees that it must at all times give to the USAO complete,
truthful and accurate information.6.
    
    With respect to any information, testimony, document, record or other tangible
evidence relating to Endocare provided to the USAO or a grand jury, Endocare
consents to any and all disclosures to Governmental entities of such materials as the
USAO, in its sole discretion, deems appropriate. With respect to any such materials
that constitute matters occurring before the grand jury within the meaning of
Rule 6(e) of the Federal Rules of Criminal Procedure, Endocare further consents to
a) any order sought by the USAO permitting such disclosure and b) the USAOs exparte or in camera application for such orders.




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7.
    
    Endocare agrees that it will not, through its attorneys, board of directors, agents,
officers or employees make any statement in any SEC filing or press release that
contradicts Endocares acceptance of responsibility as set forth in paragraph 2 above.
Any such contradictory statement by Endocare, its attorneys, board of directors,
agents, officers or employees shall constitute a breach of this Agreement, and
Endocare thereafter would be subject to prosecution as set forth in paragraph 3 of this
Agreement  provided, however, that upon the USAOs notifying Endocare of such
a contradictory statement, Endocare may avoid a breach of this Agreement by
publicly repudiating such statement within 72 hours after notification by the USAO.
This paragraph is not intended to apply, and does not apply, to any statement made by
any person who has been charged by the USAO with a crime relating to the
Investigated Disclosures.8.
    
    The USAO acknowledges that Endocare previously has provided the USAO with
information substantiating the extensive remedial actions it has taken to insure the
integrity of its financial reporting, including separation of the functions of Chief
Operating Officer and Chief Financial Officer so that it now has a dedicated full-time
CFO; appointment of an experienced financial expert as Chair of its Audit
Committee; adoption of a Financial Code of Ethics; implementation of new policies
for recognition and recording of revenues and expenses; implementation of new
policies and procedures for financial reporting and disclosure; and development of an
educational program designed to train employees at all levels on financial reporting
matters.9.
    
    Endocare agrees that as of the date of execution of this agreement that it is, and
thereafter shall remain, in compliance with all SEC rules and regulations.10.
    
    The USAO acknowledges that in anticipation of this non-prosecution agreement,
Endocare changed its officer and director indemnification policies such that Endocare
has the discretion to not advance funds to directors and executive officers for legal
fees and expenses incurred in the defense of any federal criminal indictment pending
against them and that this policy was adopted subject to then existing contractual
obligations Endocare had with its executive officers and directors. Endocare agrees
to maintain its policy of discretionary, rather than compulsory, advancement of legal
fees in the event of federal criminal indictment of its officers and/or directors.11.
    
    Endocare agrees that should the USAO, in its sole discretion, determine that Endocare
has deliberately given false, incomplete, or misleading information under this
Agreement; or has hereafter committed any crime, or has otherwise knowingly,
intentionally and materially violated any provision of this Agreement, Endocare shall,
in the USAOs sole discretion, thereafter be subject to prosecution for any federal
criminal violation of which the USAO has knowledge, including any federal criminal
violation relating to the Investigated Disclosures. Endocare agrees that any such
prosecutions may be premised on information provided by Endocare, including
information provided prior to this Agreement. Moreover, Endocare agrees that any
such prosecutions that are not time-barred by the applicable statute of limitations on
the date of this Agreement may be commenced against Endocare in accordance with




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this Agreement, notwithstanding the expiration of the statute of limitations between the
effective date of this Agreement and January 1, 2007. By this Agreement, Endocare expressly
intends to and does waive any rights in this respect.12.
    
    Endocare further agrees that in the event that the USAO, in its sole discretion,
determines that Endocare has violated any provision of this Agreement: a) all
statements made by or on behalf of Endocare to the USAO, or any testimony given by
Endocare before a grand jury, the SEC, or elsewhere, whether prior or subsequent to
this Agreement, or any leads derived from such statements or testimony, shall be
admissible in evidence in any and all criminal proceedings brought by the USAO
against Endocare and b) Endocare shall not assert any claims under the United States
Constitution, Rule 11(e)(6) of the Federal Rules of Criminal Procedure, Rule 410 of
the Federal Rules of Evidence, or any other federal rule, that statements made by or
on behalf of Endocare prior to or subsequent to this Agreement, or any leads
therefrom, should be suppressed.13.
    
    Endocare agrees that the decision whether conduct or statements of any individual
will be imputed to Endocare for the purpose of determining whether Endocare has
violated any provision of this Agreement shall be in the sole
discretion of the USAO.14.
    
    The USAO and Endocare agree that this Agreement is binding only on USAO and
Endocare.15.
    
    The USAO and Endocare agree that Endocares obligations under this Agreement,
with the exception of those contained in paragraph 4 above, shall expire on January 1,
2007. The USAO and Endocare agree that Endocares obligations contained in
paragraph 4 above shall continue until such time as the USAO informs Endocare that
its Investigation and/or related prosecutions are complete. Should Endocare fail to
comply with its obligations under paragraph 4 after January 1, 2007, after notice of
noncompliance from the USAO, Endocare shall be liable for all expenses, including
attorneys fees, incurred by the USAO to enforce compliance with paragraph 4, as
well as liquidated damages of $2,500 per day.16.
    
    The USAO and Endocare agree that this Agreement constitutes the full and complete
agreement between them and may not be modified except in a writing signed by all
the parties.
 Very truly yours, 
Debra Wong Yang 
United States Attorneyby
    /s/ Andrew StolperAndrew StolperAssistant United States Attorney




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ENDOCARE, INC.By
    
    /s/ Craig DavenportCraig DavenportChairman of the Board of Directors andChief Executive Officer/s/ Dan Marmalefsky, Esq.Dan Marmalefsky, Esq.Counsel to Endocare, Inc./s/ Richard E. Drooyan, Esq.Richard E. Drooyan, Esq.Counsel to the Audit Committee ofEndocares Board of Directors