<PAGE>

                                                                     EXHIBIT 4.5

                                 ENDOCARE, INC.

                          NOTICE OF STOCK OPTION AWARD

      Grantee's Name and Address:       William J. Nydam
                                        17254 Circa Del Sur
                                        Rancho Santa Fe, CA  92067

      You (the "Grantee") have been granted an option to purchase shares of
Common Stock, subject to the terms and conditions of this Notice of Stock Option
Award (the "Notice") and the Stock Option Award Agreement (the "Option
Agreement") attached hereto, as follows. Unless otherwise defined herein, the
terms defined in the Option Agreement shall have the same defined meanings in
this Notice.

<TABLE>
<CAPTION>
<S>                                  <C>
Award Number

Date of Award                        March 3, 2003

Vesting Commencement Date            March 3, 2003

Exercise Price per Share             $2.25

Total Number of Shares Subject
to the Option (the "Shares")         250,000

Total Exercise Price                 $562,500

Type of Option                       Non-Qualified Stock Option

Expiration Date:                     March 3, 2013

Post-Termination Exercise Period:    Three (3) Months; provided, however, that if the
                                     Company terminates the Grantee's Continuous
                                     Service other than for Cause or if the Grantee
                                     terminates his Continuous Service for Good
                                     Reason, then the Post-Termination Exercise
                                     Period shall be Fifteen (15) Months
</TABLE>

Vesting Schedule:

      Subject to the Grantee's Continuous Service and other limitations set
forth in this Notice and the Option Agreement, the Option may be exercised, in
whole or in part, in accordance with the following schedule:

      -     25% of the Shares subject to the Option shall vest if the Company
            records the sale of $15 million of procedure kits/probes during a
            single calendar quarter. Vesting of the Shares associated with the
            achievement of this performance goal will be effective on the date
            of issuance of the press release containing the financial results
            for the quarter in which this performance goal is achieved.

<PAGE>

      -     25% of the Shares subject to the Option shall vest if the Company
            generates positive cash flow of $1 million from operations during a
            single calendar quarter. Vesting of the Shares associated with the
            achievement of this performance goal will be effective on the date
            of issuance of the press release containing the financial results
            for the quarter in which this performance goal is achieved.

      -     25% of the Shares subject to the Option shall vest if the Company
            generates pretax net income from operations, excluding sales of
            assets and non-operating expenses, of $2.5 million during a single
            calendar quarter. Vesting of the Shares associated with the
            achievement of this performance goal will be effective on the date
            of issuance of the press release containing the financial results
            for the quarter in which this performance goal is achieved.

      -     25% of the Shares subject to the Option shall vest if the Company
            records the sale of 750 procedures or 2000 probes for non-urology
            procedures during a single calendar quarter. Vesting of the Shares
            associated with the achievement of this performance goal will be
            effective on the date of issuance of the press release containing
            the financial results for the quarter in which this performance goal
            is achieved.

      Achievement of the foregoing performance goals shall be determined in
accordance with U.S. Generally Accepted Accounting Principles applied on a
consistent basis.

      Notwithstanding the foregoing, unless the Option terminates prior to the
fifth anniversary of the Vesting Commencement Date, then all remaining unvested
Shares subject to the Option shall automatically become fully vested and
exercisable on the fifth anniversary of the Vesting Commencement Date.

      During any authorized leave of absence, the vesting of the Option as
provided in this schedule shall be suspended after the leave of absence exceeds
a period of ninety (90) days. Vesting of the Option shall resume upon the
Grantee's termination of the leave of absence and return to service to the
Company or a Related Entity. The Vesting Schedule of the Option shall be
extended by the length of the suspension.

      In the event of termination of the Grantee's Continuous Service for Cause,
the Grantee's right to exercise the Option shall terminate concurrently with the
termination of the Grantee's Continuous Service, except as otherwise determined
by the Board.

      In the event of the Grantee's change in status from Employee to Consultant
or from an Employee whose customary employment is 20 hours or more per week to
an Employee whose customary employment is fewer than 20 hours per week, vesting
of the Option shall continue only to the extent determined by the Board as of
such change in status.

      IN WITNESS WHEREOF, the Company and the Grantee have executed this Notice
and agree that the Option is to be governed by the terms and conditions of this
Notice and the Option Agreement.

<PAGE>

                                     Endocare, Inc.,
                                     a Delaware corporation

                                     By: /s/ Paul W. Mikus
                                         ---------------------------------------
                                     Title:  Chairman

THE GRANTEE ACKNOWLEDGES AND AGREES THAT THE SHARES SUBJECT TO THE OPTION SHALL
VEST, IF AT ALL, ONLY DURING THE PERIOD OF THE GRANTEE'S CONTINUOUS SERVICE (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THE OPTION OR ACQUIRING SHARES
HEREUNDER). THE GRANTEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
NOTICE OR THE OPTION AGREEMENT SHALL CONFER UPON THE GRANTEE ANY RIGHT WITH
RESPECT TO FUTURE AWARDS OR CONTINUATION OF THE GRANTEE'S CONTINUOUS SERVICE,
NOR SHALL IT INTERFERE IN ANY WAY WITH THE GRANTEE'S RIGHT OR THE RIGHT OF THE
COMPANY OR RELATED ENTITY TO WHICH THE GRANTEE PROVIDES SERVICES TO TERMINATE
THE GRANTEE'S CONTINUOUS SERVICE, WITH OR WITHOUT CAUSE, AND WITH OR WITHOUT
NOTICE. THE GRANTEE ACKNOWLEDGES THAT UNLESS THE GRANTEE HAS A WRITTEN
EMPLOYMENT AGREEMENT WITH THE COMPANY TO THE CONTRARY, THE GRANTEE'S STATUS IS
AT WILL.

      The Grantee acknowledges receipt of a copy of the Option Agreement, and
represents that he or she is familiar with the terms and provisions thereof, and
hereby accepts the Option subject to all of the terms and provisions hereof and
thereof. The Grantee has reviewed this Notice and the Option Agreement in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this Notice, and fully understands all provisions of this Notice and
the Option Agreement. The Grantee hereby agrees that all disputes arising out of
or relating to this Notice and the Option Agreement shall be resolved in
accordance with Section 15 of the Option Agreement. The Grantee further agrees
to notify the Company upon any change in the residence address indicated in this
Notice.

Dated: 4/23/03                       Signed:      /s/ William Nydam
                                            ------------------------------------
                                                      Grantee

<PAGE>

                                                   AWARD NUMBER:

                                 ENDOCARE, INC.

                          STOCK OPTION AWARD AGREEMENT

      1.    Grant of Option. Endocare, Inc., a Delaware corporation (the
"Company"), hereby grants to the Grantee (the "Grantee") named in the Notice of
Stock Option Award (the "Notice"), an option (the "Option") to purchase the
Total Number of Shares Subject to the Option (the "Shares") set forth in the
Notice, at the Exercise Price per Share set forth in the Notice (the "Exercise
Price") subject to the terms and provisions of this Stock Option Award Agreement
(the "Option Agreement") and the Notice which are incorporated herein by
reference.

      2.    Exercise of Option.

            (a)   Right to Exercise. The Option shall be exercisable during its
term in accordance with the Vesting Schedule set out in the Notice and with the
applicable provisions of this Option Agreement. The Option shall be subject to
the provisions of Section 18 of this Option Agreement relating to the
exercisability or termination of the Option in the event of a Corporate
Transaction. The Grantee shall be subject to reasonable limitations on the
number of requested exercises during any monthly or weekly period as determined
by the Board. In no event shall the Company issue fractional Shares.

            (b)   Method of Exercise. The Option shall be exercisable by
delivery of an exercise notice (a form of which is attached as Exhibit A) or by
such other procedure as specified from time to time by the Board which shall
state the election to exercise the Option, the whole number of Shares in respect
of which the Option is being exercised, and such other provisions as may be
required by the Board. The exercise notice shall be delivered in person, by
certified mail, or by such other method (including electronic transmission) as
determined from time to time by the Board to the Company accompanied by payment
of the Exercise Price. The Option shall be deemed to be exercised upon receipt
by the Company of such notice accompanied by the Exercise Price, which, to the
extent selected, shall be deemed to be satisfied by use of the broker-dealer
sale and remittance procedure to pay the Exercise Price provided in Section
3(d), below.

            (c)   Taxes. No Shares will be delivered to the Grantee or other
person pursuant to the exercise of the Option until the Grantee or other person
has made arrangements acceptable to the Board for the satisfaction of applicable
income tax and employment tax withholding obligations, including, without
limitation, obligations incident to the receipt of Shares. Upon exercise of the
Option, the Company or the Grantee's employer may offset or withhold (from any
amount owed by the Company or the Grantee's employer to the Grantee) or collect
from the Grantee or other person an amount sufficient to satisfy such tax
obligations and/or the employer's withholding obligations.

      3.    Method of Payment. Payment of the Exercise Price shall be made by
any of the following, or a combination thereof, at the election of the Grantee;
provided, however, that such exercise method does not then violate any
Applicable Law and, provided further, that the portion

<PAGE>

of the Exercise Price equal to the par value of the Shares must be paid in cash
or other legal consideration permitted by the Delaware General Corporation Law:

            (a)   cash;

            (b)   check;

            (c)   surrender of Shares or delivery of a properly executed form of
attestation of ownership of Shares as the Board may require (including
withholding of Shares otherwise deliverable upon exercise of the Option) which
have a Fair Market Value on the date of surrender or attestation equal to the
aggregate Exercise Price of the Shares as to which the Option is being exercised
(but only to the extent that such exercise of the Option would not result in an
accounting compensation charge with respect to the Shares used to pay the
exercise price); or

            (d)   payment through a broker-dealer sale and remittance procedure
pursuant to which the Grantee (i) shall provide written instructions to a
Company-designated brokerage firm to effect the immediate sale of some or all of
the purchased Shares and remit to the Company sufficient funds to cover the
aggregate exercise price payable for the purchased Shares and (ii) shall provide
written directives to the Company to deliver the certificates for the purchased
Shares directly to such brokerage firm in order to complete the sale
transaction.

      4.    Restrictions on Exercise. The Option may not be exercised if the
issuance of the Shares subject to the Option upon such exercise would constitute
a violation of any Applicable Laws.

      5.    Termination or Change of Continuous Service. In the event the
Grantee's Continuous Service terminates, other than for Cause, the Grantee may,
but only during the Post-Termination Exercise Period, exercise the portion of
the Option that was vested at the date of such termination (the "Termination
Date"). In the event of termination of the Grantee's Continuous Service for
Cause, the Grantee's right to exercise the Option shall, except as otherwise
determined by the Board, terminate concurrently with the termination of the
Grantee's Continuous Service (also the "Termination Date"). In no event shall
the Option be exercised later than the Expiration Date set forth in the Notice.
In the event of the Grantee's change in status from Employee, Director or
Consultant to any other status of Employee, Director or Consultant, the Option
shall remain in effect and vesting of the Option shall continue only to the
extent determined by the Board as of such change in status. Except as provided
in Sections 6 and 7 below, to the extent that the Option was unvested on the
Termination Date, or if the Grantee does not exercise the vested portion of the
Option within the Post-Termination Exercise Period, the Option shall terminate.

      6.    Disability of Grantee. In the event the Grantee's Continuous Service
terminates as a result of his or her Disability, the Grantee may, but only
within twelve (12) months from the Termination Date (and in no event later than
the Expiration Date), exercise the portion of the Option that was vested on the
Termination Date. To the extent that the Option was unvested on the Termination
Date, or if the Grantee does not exercise the vested portion of the Option
within the time specified herein, the Option shall terminate.

<PAGE>

      7.    Death of Grantee. In the event of the termination of the Grantee's
Continuous Service as a result of his or her death, or in the event of the
Grantee's death during the Post-Termination Exercise Period or during the twelve
(12) month period following the Grantee's termination of Continuous Service as a
result of his or her Disability, the Grantee's estate, or a person who acquired
the right to exercise the Option by bequest or inheritance, may exercise the
portion of the Option that was vested at the date of termination within twelve
(12) months from the date of death (but in no event later than the Expiration
Date). To the extent that the Option was unvested on the date of death, or if
the vested portion of the Option is not exercised within the time specified
herein, the Option shall terminate.

      8.    Transferability of Option. The Option may not be transferred in any
manner other than by will or by the laws of descent and distribution, provided,
however, that the Option may be transferred to members of the Grantee's
Immediate Family to the extent and in the manner authorized by the Board.
Notwithstanding the foregoing, the Grantee may designate a member of the
Grantee's Immediate Family as a beneficiary of the Grantee's Option in the event
of the Grantee's death on a beneficiary designation form provided by the Board.
The terms of the Option shall be binding upon the executors, administrators,
heirs and successors of the Grantee.

      9.    Term of Option. The Option must be exercised no later than the
Expiration Date set forth in the Notice or such earlier date as otherwise
provided herein. After the Expiration Date or such earlier date, the Option
shall be of no further force or effect and may not be exercised.

      10.   Stop-Transfer Notices. In order to ensure compliance with the
restrictions on transfer set forth in this Option Agreement or the Notice, the
Company may issue appropriate "stop transfer" instructions to its transfer
agent, if any, and, if the Company transfers its own securities, it may make
appropriate notations to the same effect in its own records.

      11.   Refusal to Transfer. The Company shall not be required (i) to
transfer on its books any Shares that have been sold or otherwise transferred in
violation of any of the provisions of this Option Agreement or (ii) to treat as
owner of such Shares or to accord the right to vote or pay dividends to any
purchaser or other transferee to whom such Shares shall have been so
transferred.

      12.   Tax Consequences. Set forth below is a brief summary as of the date
of this Option Agreement of some of the federal tax consequences of exercise of
the Option and disposition of the Shares. THIS SUMMARY IS NECESSARILY
INCOMPLETE, AND THE TAX LAWS AND REGULATIONS ARE SUBJECT TO CHANGE. THE GRANTEE
SHOULD CONSULT A TAX ADVISER BEFORE EXERCISING THE OPTION OR DISPOSING OF THE
SHARES.

            (a)   Exercise of Non-Qualified Stock Option. On exercise of a
Non-Qualified Stock Option, the Grantee will be treated as having received
compensation income (taxable at ordinary income tax rates) equal to the excess,
if any, of the Fair Market Value of the Shares on the date of exercise over the
Exercise Price. If the Grantee is an Employee or a former Employee, the Company
will be required to withhold from the Grantee's compensation or collect from the
Grantee and pay to the applicable taxing authorities an amount in cash equal to
a

<PAGE>

percentage of this compensation income at the time of exercise, and may refuse
to honor the exercise and refuse to deliver Shares if such withholding amounts
are not delivered at the time of exercise.

            (b)   Disposition of Shares. If Shares are held for more than one
year, any gain realized on disposition of the Shares will be treated as
long-term capital gain for federal income tax purposes.

      13.   Entire Agreement: Governing Law. The Notice and this Option
Agreement constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede in their entirety all prior undertakings and
agreements of the Company and the Grantee with respect to the subject matter
hereof, and may not be modified adversely to the Grantee's interest except by
means of a writing signed by the Company and the Grantee. Nothing in the Notice
and this Option Agreement (except as expressly provided therein) is intended to
confer any rights or remedies on any persons other than the parties. The Notice
and this Option Agreement are to be construed in accordance with and governed by
the internal laws of the State of California without giving effect to any choice
of law rule that would cause the application of the laws of any jurisdiction
other than the internal laws of the State of California to the rights and duties
of the parties. Should any provision of the Notice or this Option Agreement be
determined by a court of law to be illegal or unenforceable, such provision
shall be enforced to the fullest extent allowed by law and the other provisions
shall nevertheless remain effective and shall remain enforceable.

      14.   Headings. The captions used in the Notice and this Option Agreement
are inserted for convenience and shall not be deemed a part of the Option for
construction or interpretation.

      15.   Dispute Resolution. The provisions of this Section 15 shall be the
exclusive means of resolving disputes arising out of or relating to the Notice
and this Option Agreement. The Company, the Grantee, and the Grantee's assignees
(the "parties") shall attempt in good faith to resolve any disputes arising out
of or relating to the Notice and this Option Agreement by negotiation between
individuals who have authority to settle the controversy. Negotiations shall be
commenced by either party by notice of a written statement of the party's
position and the name and title of the individual who will represent the party.
Within thirty (30) days of the written notification, the parties shall meet at a
mutually acceptable time and place, and thereafter as often as they reasonably
deem necessary, to resolve the dispute. If the dispute has not been resolved by
negotiation, the parties agree that any suit, action, or proceeding arising out
of or relating to the Notice or this Option Agreement shall be brought in the
United States District Court for the Southern District of California (or should
such court lack jurisdiction to hear such action, suit or proceeding, in a
California state court in the County of San Diego) and that the parties shall
submit to the jurisdiction of such court. The parties irrevocably waive, to the
fullest extent permitted by law, any objection the party may have to the laying
of venue for any such suit, action or proceeding brought in such court. THE
PARTIES ALSO EXPRESSLY WAIVE ANY RIGHT THEY HAVE OR MAY HAVE TO A JURY TRIAL OF
ANY SUCH SUIT, ACTION OR PROCEEDING. If any one or more provisions of this
Section 15 shall for any reason be held invalid or unenforceable, it is the
specific intent of the parties that such provisions

<PAGE>

shall be modified to the minimum extent necessary to make it or its application
valid and enforceable.

      16.   Notices. Any notice required or permitted hereunder shall be given
in writing and shall be deemed effectively given upon personal delivery, upon
deposit for delivery by an internationally recognized express mail courier
service or upon deposit in the United States mail by certified mail (if the
parties are within the United States), with postage and fees prepaid, addressed
to the other party at its address as shown in these instruments, or to such
other address as such party may designate in writing from time to time to the
other party.

      17.   Adjustments Upon Changes in Capitalization. Subject to any required
action by the stockholders of the Company, the number of Shares covered by the
Option, the exercise price of the Option, as well as any other terms that the
Board determines require adjustment shall be proportionately adjusted for (i)
any increase or decrease in the number of issued Shares resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Shares, or similar transaction affecting the Shares, (ii) any other increase
or decrease in the number of issued Shares effected without receipt of
consideration by the Company, or (iii) as the Board may determine in its
discretion, any other transaction with respect to Common Stock including a
corporate merger, consolidation, acquisition of property or stock, separation
(including a spin-off or other distribution of stock or property),
reorganization, liquidation (whether partial or complete) or any similar
transaction; provided, however that conversion of any convertible securities of
the Company shall not be deemed to have been "effected without receipt of
consideration." Such adjustment shall be made by the Board and its determination
shall be final, binding and conclusive. Except as the Board determines, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason hereof shall be made with respect to, the number or price of Shares
subject to the Option.

      18.   Corporate Transactions.

            (a)   Termination of Option to Extent Not Assumed in Corporate
Transaction. Effective upon the consummation of a Corporate Transaction, the
Option shall terminate. However, the Option shall not terminate to the extent it
is Assumed in connection with the Corporate Transaction.

            (b)   Acceleration of Option Upon Corporate Transaction. In the
event of a Corporate Transaction, the Option automatically shall become fully
vested and exercisable immediately prior to the specified effective date of such
Corporate Transaction, for all of the Shares at the time represented by the
Option, irrespective of whether the Option is Assumed or Replaced.

      19.   Definitions. As used herein, the following definitions shall apply:

            (a)   "Applicable Laws" means the legal requirements applicable to
Options, if any, under applicable provisions of federal securities laws, state
corporate and securities laws, the Code, the rules of any applicable stock
exchange or national market system, and the rules of any foreign jurisdiction
applicable to Options granted to residents therein.

<PAGE>

            (b)   "Assumed" means that (i) pursuant to a Corporate Transaction
defined in Section 19(j)(i), 19(j)(ii) or 19(j)(iii), the contractual
obligations represented by the Option are expressly assumed (and not simply by
operation of law) by the successor entity or its Parent in connection with the
Corporate Transaction with appropriate adjustments to the number and type of
securities of the successor entity or its Parent subject to the Award and the
exercise or purchase price thereof which preserves the compensation element of
the Award existing at the time of the Corporate Transaction as determined in
accordance with the instruments evidencing the agreement to assume the Award or
(ii) pursuant to a Corporate Transaction defined in Section 19(j)(iv) or
19(j)(v), the Option is expressly affirmed by the Company.

            (c)   "Board" means the Board of Directors of the Company and shall
include any committee of the Board or Officer of the Company to which the Board
has delegated its authority under this Agreement.

            (d)   "Cause" means, with respect to the termination by the Company
or a Related Entity of the Grantee's Continuous Service, that such termination
is for "Cause" as such term is expressly defined in a then-effective written
agreement between the Grantee and the Company or such Related Entity, or in the
absence of such then-effective written agreement and definition, is based on, in
the determination of the Board, the Grantee's: (i) willful misconduct or
dishonesty; (ii) conviction of a felony; (iii) act (or failure to act) in bad
faith and to the Company's detriment; (iv) material breach of any agreement with
the Company; or (v) misconduct that is demonstrably and materially injurious to
the Company, including, without limitation, willful and material failure to
perform his or her duties as an Officer or Employee of the Company or excessive
absenteeism unrelated to illness or vacation.

            (e)   "Code" means the Internal Revenue Code of 1986, as amended.

            (f)   "Common Stock" means the common stock of the Company.

            (g)   "Company" means Endocare, Inc., a Delaware corporation.

            (h)   "Consultant" means any person (other than an Employee or a
Director, solely with respect to rendering services in such person's capacity as
a Director) who is engaged by the Company or any Related Entity to render
consulting or advisory services to the Company or such Related Entity.

            (i)   "Continuous Service" means that the provision of services to
the Company or a Related Entity in any capacity of Employee, Director or
Consultant, is not interrupted or terminated. In jurisdictions requiring notice
in advance of an effective termination as an Employee, Director or Consultant,
Continuous Service shall be deemed terminated upon the actual cessation of
providing services to the Company or a Related Entity notwithstanding any
required notice period that must be fulfilled before a termination as an
Employee, Director or Consultant can be effective under Applicable Laws.
Continuous Service shall not be considered interrupted in the case of (i) any
approved leave of absence, (ii) transfers among the Company, any Related Entity,
or any successor, in any capacity of Employee, Director or Consultant, or (iii)
any change in status as long as the individual remains in the service of the
Company or a Related Entity in any capacity of Employee, Director or Consultant
(except as otherwise

<PAGE>

provided in the Option Agreement). An approved leave of absence shall include
sick leave, military leave, or any other authorized personal leave.

            (j)   "Corporate Transaction" means any of the following
transactions:

                  (i)   a merger or consolidation in which the Company is not
the surviving entity, except for a transaction the principal purpose of which is
to change the state in which the Company is incorporated;

                  (ii)  the sale, transfer or other disposition of all or
substantially all of the assets of the Company (including the capital stock of
the Company's subsidiary corporations);

                  (iii) the complete liquidation or dissolution of the Company;

                  (iv)  any reverse merger or series of related transactions
culminating in a reverse merger (including, but not limited to, a tender offer
followed by a reverse merger) in which the Company is the surviving entity but
in which securities possessing more than fifty percent (50%) of the total
combined voting power of the Company's outstanding securities are transferred to
a person or persons different from those who held such securities immediately
prior to such merger or the initial transaction culminating in such merger but
excluding any such transaction or series of related transactions that the Board
determines shall not be a Corporate Transaction; or

                  (v)   acquisition in a single or series of related
transactions by any person or related group of persons (other than the Company
or by a Company-sponsored employee benefit plan) of beneficial ownership (within
the meaning of Rule 13d-3 of the Exchange Act) of securities possessing more
than fifty percent (50%) of the total combined voting power of the Company's
outstanding securities but excluding any such transaction or series of related
transactions that the Board determines shall not be a Corporate Transaction.

            (k)   "Director" means a member of the Board or the board of
directors of any Related Entity.

            (l)   "Disability" shall have the same meaning as defined under the
long-term disability policy of the Company or the Related Entity to which the
Grantee provides services regardless of whether the Grantee is covered by such
policy. If the Company or the Related Entity to which the Grantee provides
service does not have a long-term disability plan in place, "Disability" means
that the Grantee is unable to carry out the responsibilities and functions of
the position held by the Grantee by reason of any medically determinable
physical or mental impairment for a period of not less than ninety (90)
consecutive days. The Grantee will not be considered to have incurred a
Disability unless he or she furnishes proof of such impairment sufficient to
satisfy the Board in its discretion.

            (m)   "Employee" means any person, including an Officer or Director,
who is in the employ of the Company or any Related Entity, subject to the
control and direction of the Company or any Related Entity as to both the work
to be performed and the manner and method

<PAGE>

of performance. The payment of a director's fee by the Company or a Related
Entity shall not be sufficient to constitute "employment" by the Company.

            (n)   "Exchange Act" means the Securities Exchange Act of 1934, as
amended.

            (o)   "Fair Market Value" means, as of any date, the value of Common
Stock determined as follows:

                  (i)   If the Common Stock is listed on any established stock
exchange or a national market system, including without limitation The Nasdaq
National Market or The Nasdaq SmallCap Market of The Nasdaq Stock Market, its
Fair Market Value shall be the closing sales price for such stock (or the
closing bid, if no sales were reported) as quoted on such exchange or system on
the date of determination (or, if no closing sales price or closing bid was
reported on that date, as applicable, on the last trading date such closing
sales price or closing bid was reported), as reported in The Wall Street Journal
or such other source as the Board deems reliable;

                  (ii)  If the Common Stock is regularly quoted on an automated
quotation system (including the OTC Bulletin Board) or by a recognized
securities dealer, but selling prices are not reported, the Fair Market Value of
a Share of Common Stock shall be the mean between the high bid and low asked
prices for the Common Stock on date of determination (or, if no such prices were
reported on that date, on the last date such prices were reported), as reported
in The Wall Street Journal or such other source as the Board deems reliable; or

                  (iii) In the absence of an established market for the Common
Stock of the type described in (i) and (ii), above, the Fair Market Value
thereof shall be determined by the Board in good faith.

            (p)   "Good Reason" means if the Grantee terminates his Continuous
Service: (i) within the one hundred and eighty (180)-day period immediately
following the six (6)-month anniversary of the date of the occurrence of a
Corporation Transaction; (ii) within six (6) months of the Company's material
reduction of the Grantee's level of responsibility; or (iii) within six (6)
months of the Company's material reduction of the Grantee's base salary, except
for any salary reduction that is generally applicable to the Company's
executives.

            (q)   "Immediate Family" means any child, stepchild, grandchild,
parent, stepparent, grandparent, spouse, former spouse, sibling, niece, nephew,
mother-in-law, father-in-law, son-in law, daughter-in-law, brother-in-law, or
sister-in-law, including adoptive relationships, any person sharing the
Grantee's household (other than a tenant or employee), a trust in which these
persons (or the Grantee) have more than fifty percent (50%) of the beneficial
interest, a foundation in which these persons (or the Grantee) control the
management of assets, and any other entity in which these persons (or the
Grantee) own more than fifty percent (50%) of the voting interests.

            (r)   "Non-Qualified Stock Option" means an Option not intended to
qualify as an incentive stock option within the meaning of Section 422 of the
Code.

<PAGE>

            (s)   "Officer" means a person who is an officer of the Company or a
Related Entity within the meaning of Section 16 of the Exchange Act and the
rules and regulations promulgated thereunder.

            (t)   "Parent" means a "parent corporation," whether now or
hereafter existing, as defined in Section 424(e) of the Code.

            (u)   "Related Entity" means any Parent or Subsidiary of the Company
and any business, corporation, partnership, limited liability company or other
entity in which the Company or a Parent or a Subsidiary of the Company holds a
substantial ownership interest, directly or indirectly.

            (v)   "Replaced" means that (i) pursuant to a Corporate Transaction
defined in Section 19(j)(i), 19(j)(ii) or 19(j)(iii), the Option is replaced
with a comparable stock award or with a cash incentive program of the successor
entity or Parent thereof which preserves the compensation element of such Option
existing at the time of the Corporate Transaction and provides for subsequent
payout in accordance with the same (or a more favorable) vesting schedule
applicable to such Option or (ii) pursuant to a Corporate Transaction defined in
Section 19(j)(iv) or 19(j)(v), the Option is replaced with a comparable stock
award or with a cash incentive program of the Company or Parent thereof which
preserves the compensation element of such Option existing at the time of the
Corporate Transaction and provides for subsequent payout in accordance with the
same (or a more favorable) vesting schedule applicable to such Option. The
determination of Option comparability shall be made by the Board and its
determination shall be final, binding and conclusive.

            (w)   "Share" means a share of the Common Stock.

            (x)   "Subsidiary" means a "subsidiary corporation," whether now or
hereafter existing, as defined in Section 424(f) of the Code.

<PAGE>

                                    EXHIBIT A

                                 EXERCISE NOTICE

Endocare, Inc.
201 Technology Drive
Irvine, CA  92618
Attention: Secretary

      1. Effective as of today, ______________, ___ the undersigned (the
"Grantee") hereby elects to exercise the Grantee's option to purchase
___________ shares of the Common Stock (the "Shares") of Endocare, Inc. (the
"Company") under and pursuant to the Stock Option Award Agreement (the "Option
Agreement") and Notice of Stock Option Award (the "Notice") dated
______________, ________. Unless otherwise defined herein, the terms defined in
the Option Agreement shall have the same defined meanings in this Exercise
Notice.

      2. Representations of the Grantee. The Grantee acknowledges that the
Grantee has received, read and understood the Notice and the Option Agreement
and agrees to abide by and be bound by their terms and conditions.

      3. Rights as Stockholder. Until the stock certificate evidencing such
Shares is issued (as evidenced by the appropriate entry on the books of the
Company or of a duly authorized transfer agent of the Company), no right to vote
or receive dividends or any other rights as a stockholder shall exist with
respect to the Shares, notwithstanding the exercise of the Option. The Company
shall issue (or cause to be issued) such stock certificate promptly after the
Option is exercised. No adjustment will be made for a dividend or other right
for which the record date is prior to the date the stock certificate is issued,
except as provided in Section 17 of the Option Agreement.

      4. Delivery of Payment. The Grantee herewith delivers to the Company the
full Exercise Price for the Shares, which, to the extent selected, shall be
deemed to be satisfied by use of the broker-dealer sale and remittance procedure
to pay the Exercise Price provided in Section 3(d) of the Option Agreement.

      5. Tax Consultation. The Grantee understands that the Grantee may suffer
adverse tax consequences as a result of the Grantee's purchase or disposition of
the Shares. The Grantee represents that the Grantee has consulted with any tax
consultants the Grantee deems advisable in connection with the purchase or
disposition of the Shares and that the Grantee is not relying on the Company for
any tax advice.

      6. Taxes. The Grantee agrees to satisfy all applicable foreign, federal,
state and local income and employment tax withholding obligations and herewith
delivers to the Company the full amount of such obligations or has made
arrangements acceptable to the Company to satisfy such obligations. If the
Company is required to satisfy any foreign, federal, state or local income or
employment tax withholding obligations as a result of such an early disposition,
the Grantee agrees to satisfy the amount of such withholding in a manner that
the Board prescribes.

<PAGE>

      7. Successors and Assigns. The Company may assign any of its rights under
this Exercise Notice to single or multiple assignees, and this agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth, this Exercise Notice shall be
binding upon the Grantee and his or her heirs, executors, administrators,
successors and assigns.

      8. Headings. The captions used in this Exercise Notice are inserted for
convenience and shall not be deemed a part of this agreement for construction or
interpretation.

      9. Dispute Resolution. The provisions of Section 15 of the Option
Agreement shall be the exclusive means of resolving disputes arising out of or
relating to this Exercise Notice.

      10. Governing Law; Severability. This Exercise Notice is to be construed
in accordance with and governed by the internal laws of the State of California
without giving effect to any choice of law rule that would cause the application
of the laws of any jurisdiction other than the internal laws of the State of
California to the rights and duties of the parties. Should any provision of this
Exercise Notice be determined by a court of law to be illegal or unenforceable,
such provision shall be enforced to the fullest extent allowed by law and the
other provisions shall nevertheless remain effective and shall remain
enforceable.

      11. Notices. Any notice required or permitted hereunder shall be given in
writing and shall be deemed effectively given upon personal delivery, upon
deposit for delivery by an internationally recognized express mail courier
service or upon deposit in the United States mail by certified mail (if the
parties are within the United States), with postage and fees prepaid, addressed
to the other party at its address as shown below beneath its signature, or to
such other address as such party may designate in writing from time to time to
the other party.

      12. Further Instruments. The parties agree to execute such further
instruments and to take such further action as may be reasonably necessary to
carry out the purposes and intent of this agreement.

      13. Entire Agreement. The Notice and the Option Agreement are incorporated
herein by reference and together with this Exercise Notice constitute the entire
agreement of the parties with respect to the subject matter hereof and supersede
in their entirety all prior undertakings and agreements of the Company and the
Grantee with respect to the subject matter hereof, and may not be modified
adversely to the Grantee's interest except by means of a writing signed by the
Company and the Grantee. Nothing in the Notice the Option Agreement and this
Exercise Notice (except as expressly provided therein) is intended to confer any
rights or remedies on any persons other than the parties.

<PAGE>

Submitted by:                        Accepted by:

GRANTEE:                             ENDOCARE, INC

                                     By: _______________________________________

__________________________________   Title: ____________________________________
            (signature)

Address:                             Address:

__________________________________   201 Technology Drive
                                     Irvine, CA 92618
__________________________________

<PAGE>
                       ADDENDUM TO STOCK OPTION AGREEMENT

      The following representations, warranties and covenants are hereby
incorporated into, and are hereby made a part of, that certain Stock Option
Agreement (the "Option Agreement") by and between Endocare, Inc. (the "Company")
and WILLIAM J. NYDAM ("Optionee") evidencing the stock option (the "Option")
granted on MARCH 3, 2003 to Optionee under the terms of the Plan. All
capitalized terms in this Addendum not otherwise defined herein shall have the
meanings assigned to them in the Option Agreement.

      The Optionee hereby represents, warrants and covenants to and for the
benefit of the Company, with knowledge that the Company is relying thereon in
issuing the Option to the Optionee, as follows:

      1. The Option and the shares issuable upon exercise of the Option
(collectively, the "Securities") shall be acquired for investment for the
Optionee's own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof. The Optionee has no present
intention of selling, granting any participation in, or otherwise distributing
the same. The Optionee further represents that the Optionee does not have any
contract, undertaking, agreement or arrangement with any person to sell,
transfer or grant participation to such person or to any third person, with
respect to any of the Securities.

      2. The Optionee, by reason of the Optionee's business or financial
experience, is capable of evaluating the merits and risks of the investment in
the Securities and of protecting the Optionee's interests in connection with the
investment in the Securities.

      3. The Optionee has a preexisting personal or business relationship with
the Company or one or more of its officers, directors or controlling persons and
is aware of its (their) character, business acumen, and general business and
financial condition.

      4. The Optionee has not seen or received any advertisement or general
solicitation with respect to the sale of the Securities.

      5. The Optionee has been provided with financial and other written
information about the Company, and has been given the opportunity by the Company
to obtain any information and ask questions concerning the Company, the
Securities, and the Optionee's investment that the Optionee felt necessary. To
the extent requested, Optionee has received satisfactory information and
answers.

                  [REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

<PAGE>

      6. In reaching the decision to invest in the Securities, the Optionee
evaluated such Optionee's financial resources and investment position and the
risks associated with the investment, and acknowledges that such Optionee is
able to bear the economic risks of this investment.

      7. The Optionee agrees to not exercise the Option until the Securities are
registered pursuant to an effective Registration Statement on Form S-8.

OPTIONEE:                            ENDOCARE, INC.

       /s/ William Nydam
----------------------------------
Signature                            By: /s/ Paul W. Mikus
                                         ---------------------------------------
                                         Paul W. Mikus
                                     Title: Chairman