EXHIBIT 10.28

SUPERIOR COURT OF THE STATE OF CALIFORNIA
 
FOR THE COUNTY OF LOS ANGELES, CENTRAL DISTRICT
 

 
THE TRINITY GROUP-I, INC.
 
Plaintiff,
 
v.
 
HYTHIAM, INC.
 
Defendant.
 
 
Case No.  BC430266
 
The Hon. Michael L. Stern, Dept. 62
 
ORDER FOR SETTLEMENT OF CLAIMS
 
 
Complaint Filed:                                January 21, 2010
Trial Date:                      None Set
 
 
 

The Joint Ex Parte Application to Approve Stipulation For Settlement of Claims
jointly filed by Plaintiff The Trinity Group-I, Inc. (“Trinity”) and Defendant
Hythiam, Inc. (“Hythiam”), came for hearing on February__, 2010 at 8:30 a.m. in
Department 62 of the above-entitled court, the Honorable Michael L. Stern
presiding.

The Court having reviewed the parties’ Joint Ex Parte Application to Approve
Stipulation For Settlement of Claims against Defendant Hythiam in the
above-captioned matter, having been presented with a Stipulation for Settlement
of Claims (the “Stipulation”), a copy of which is attached as Exhibit “A” to the
Joint Ex Parte Application, and after a hearing upon the fairness, adequacy and
reasonableness of the terms and conditions of the issuance of Hythiam’s shares
of common stock to Trinity in exchange for the extinguishment of the Ingenix
Claims, IT IS THEREFORE ORDERED AS FOLLOWS :

1.           The Stipulation is approved in its entirety;

2.           In full and final settlement of the claims against Hythiam in the
amount of $230,031.26 which Trinity purchased from Ingenix Consulting, said
claims arising out of services rendered by Ingenix to Hythiam, Hythiam will
issue and deliver to Trinity 445,000 shares of its common stock.  The Ingenix
Claims are hereby dismissed from this action with prejudice, provided that the
court shall retain jurisdiction with regard to the Ingenix Claims to enforce the
terms of this Order, as set forth in paragraph 6 below. The remaining claims on
this action are dismissed without prejudice.

3.           No later than the first business day following the date that
Hythiam receives notice that the Order has been entered, Hythiam shall (i)
transmit by facsimile and overnight delivery an irrevocable and unconditional
instruction to Hythiam’s stock transfer agent, to immediately credit 445,000
shares of Hythiam’s common stock (the “Settlement Shares”) to Trinity’s or its
designee’s balance account with The Depository Trust Company (DTC) through the
Fast Automated Securities Transfer (FAST) Program of DTC’s Deposit/Withdrawal
Agent Commission (DWAC) system, without any restriction on transfer, time being
of the essence and (ii) cause its legal counsel to issue an opinion to Hythiam’s
transfer agent that the Settlements Shares may be so transferred.
 
 
 
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4.           On the day after the 20th consecutive trading day immediately
following the date that the Settlement Shares have been credited to the DTC
account designated by Trinity, Hythiam shall so instruct its transfer agent to
immediately credit to Trinity additional shares, if any, in the event that the
number of VWAP Shares exceeds the total number of Settlement Shares that were
initially issued. In such case, Hythiam will issue to Trinity additional shares
of Hythiam’s common stock equal to the difference between the number of VWAP
Shares and the total number of Settlement Shares initially issued, provided that
the total number of shares issued to Trinity pursuant to the Order shall not
exceed 1.0% of the total number of outstanding shares of Hythiam.   The number
of VWAP Shares is equal to $160,000 divided by 80% of the volume weighted
average price (the “VWAP”) of Hythiam’s common stock over the 20-day trading
period immediately following the date on which the Settlement Shares are
initially issued.  In the event that the number of VWAP Shares is less than the
number of Settlement Shares initially issued, then Trinity will return to
Hythiam for cancellation that number of shares as equals the difference between
the number of VWAP Shares and the number of Settlement Shares initially issued.

5.           For so long as Trinity or any of its affiliates holds any shares of
common stock of Hythiam, neither Trinity nor any of its affiliates will: (i)
vote any shares of Common Stock owned or controlled by it, or solicit any
proxies or seek to advise or influence any person with respect to any voting
securities of the Company; or (ii) engage or participate in any actions, plans
or proposals which relate to or would result in (a) Trinity or any of its
affiliates acquiring additional securities of the Company, alone or together
with any other person, which would result in Trinity and its affiliates
collectively beneficially owning or controlling more than 9.99% of the total
outstanding Common Stock or other voting securities of the Company, (b) an
extraordinary corporate transaction, such as a merger, reorganization or
liquidation, involving the Company or any of its subsidiaries, (c) a sale or
transfer of a material amount of assets of the Company or any of its
subsidiaries, (d) any change in the present board of directors or management of
the Company, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board, (e) any material
change in the present capitalization or dividend policy of the Company, (f) any
other material change in the Company’s business or corporate structure,
including but not limited to, if the Company is a registered closed-end
investment company, any plans or proposals to make any changes in its investment
policy for which a vote is required by Section 13 of the Investment Company Act
of 1940, (g) changes in the Company’s charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Company by any Person, (h) causing a class of securities of the
Company to be delisted from a national securities exchange or to cease to be
authorized to be quoted in an inter-dealer quotation system of a registered
national securities association, (i) causing a class of equity securities of the
Company becoming eligible for termination of registration pursuant to Section
12(g)(4) of the Act, or (j) taking any action, intention, plan or arrangement
similar to any of those enumerated above.  The provisions of this paragraph may
not be modified or waived without further order of the Court.

6.           The Stipulation and this Order may be enforced by any party to the
Stipulation by a motion under California Code of Civil Procedure section 664.6,
or by any procedure permitted by law in the Superior Court of Los Angeles
County.  Pursuant to the Stipulation, each party thereto further waives any
statement of decision and the right to appeal from this Order after entry. Each
party shall bear its own attorney’s fees and costs with regard to this
Stipulation and Order.

IT IS SO ORDERED.

Dated:  February 3, 2010
/s/ MICHAEL L. STERN  
 
Michael L. Stern 
 
Judge of the Superior Court

 

 
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