Exhibit 10.2
(RODMAN & RENSHAW) [v35352v3535200.gif]
November 6, 2007
CONFIDENTIAL
Hythiam, Inc.
11150 Santa Monica Boulevard
Suite 1500
Los Angeles CA 90025
Attn: Terren S. Peizer, Chairman & CEO
Dear Terren:
     This letter (the “Agreement”) constitutes the agreement between Rodman &
Renshaw, LLC (“R&R” or the “Placement Agent”) and Hythiam, Inc. (the “Company”),
that R&R shall serve as a placement agent for the Company, on a “reasonable best
efforts” basis, in connection with the proposed placement (the “Placement”) of
registered securities (the “Securities”) of the Company, including shares (the
“Shares”) of the Company’s common stock, par value $0.0001 per share (the
“Common Stock”) and warrants to purchase shares of Common Stock. The terms of
such Placement and the Securities shall be mutually agreed upon by the Company
and the purchasers (each, a “Purchaser” and collectively, the “Purchasers”) and
nothing herein constitutes that R&R would have the power or authority to bind
the Company or any Purchaser or an obligation for the Company to issue any
Securities or complete the Placement. This Agreement and the documents executed
and delivered by the Company and the Purchasers in connection with the Placement
shall be collectively referred to herein as the “Transaction Documents.” The
date of the closing of the Placement shall be referred to herein as the “Closing
Date.” The Company expressly acknowledges and agrees that R&R’s obligations
hereunder are on a reasonable best efforts basis only and that the execution of
this Agreement does not constitute a commitment by R&R to purchase the
Securities and does not ensure the successful placement of the Securities or any
portion thereof or the success of R&R with respect to securing any other
financing on behalf of the Company.
SECTION 1. Compensation and other Fees.

  a)   As compensation for the services provided by R&R hereunder, the Company
agrees to pay to R&R:

  (A)   a cash fee payable immediately upon the closing of the Placement of
$1,295,000.00, and     (B)   if there is any financing of equity or debt or
other capital raising activity of the Company (a “Financing”) within 18 months
after the expiration or termination of this Agreement with any investors that
were introduced to the Company by R&R pursuant to this Agreement, a cash fee
payable immediately upon the closing of any portion of any Financing and equal
to 7% of the aggregate gross proceeds raised in such Financing from such
investors.

  b)   The Company also agrees to reimburse R&R’s reasonable and customary
expenses, including legal fees (with supporting invoices/receipts) up to a
maximum of $35,000. Such reimbursement shall be payable immediately upon (but
only in the event of) the closing of the Placement.

1270 Avenue of the Americas, 16th Floor, New York, NY 10020 o Tel:: 212 356 0500
Fax: 212 581 5690
www.rodmanandrenshaw.com o Member: FINRA, SIPC

 

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Hythiam, Inc
November 6, 2007
Page 2

SECTION 2. REGISTRATION STATEMENT.
The Company represents and warrants to, and agrees with, the Placement Agent
that:
     (A) The Company has filed with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form S-3 (Registration File
No. 333-145906) under the Securities Act of 1933, as amended (the “Securities
Act”), which became effective on October 5, 2007, for the registration under the
Securities Act of the Shares. At the time of such filing, the Company met the
requirements of Form S-3 under the Securities Act. Such registration statement
meets the requirements set forth in Rule 415(a)(1)(x) under the Securities Act
and complies with said Rule. The Company will file with the Commission pursuant
to Rule 424(b) under the Securities Act, and the rules and regulations (the
“Rules and Regulations”) of the Commission promulgated thereunder, a supplement
to the form of prospectus included in such registration statement relating to
the placement of the Shares and the plan of distribution thereof and has advised
the Placement Agent of all further information (financial and other) with
respect to the Company required to be set forth therein. Such registration
statement, including the exhibits thereto, as amended at the date of this
Agreement, is hereinafter called the “Registration Statement”; such prospectus
in the form in which it appears in the Registration Statement is hereinafter
called the “Base Prospectus”; and the supplemented form of prospectus, in the
form in which it will be filed with the Commission pursuant to Rule 424(b)
(including the Base Prospectus as so supplemented) is hereinafter called the
“Prospectus Supplement.” Any reference in this Agreement to the Registration
Statement, the Base Prospectus or the Prospectus Supplement shall be deemed to
refer to and include the documents incorporated by reference therein (the
“Incorporated Documents”) pursuant to Item 12 of Form S-3 which were filed under
the Securities Exchange Act of 1934, as amended (the “Exchange Act”), on or
before the date of this Agreement, or the issue date of the Base Prospectus or
the Prospectus Supplement, as the case may be; and any reference in this
Agreement to the terms “amend,” “amendment” or “supplement” with respect to the
Registration Statement, the Base Prospectus or the Prospectus Supplement shall
be deemed to refer to and include the filing of any document under the Exchange
Act after the date of this Agreement, or the issue date of the Base Prospectus
or the Prospectus Supplement, as the case may be, deemed to be incorporated
therein by reference. All references in this Agreement to financial statements
and schedules and other information which is “contained,” “included,”
“described,” “referenced,” “set forth” or “stated” in the Registration
Statement, the Base Prospectus or the Prospectus Supplement (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement, the Base
Prospectus or the Prospectus Supplement, as the case may be. No stop order
suspending the effectiveness of the Registration Statement or the use of the
Base Prospectus or the Prospectus Supplement has been issued, and no proceeding
for any such purpose is pending or has been initiated or, to the Company’s
knowledge, is threatened by the Commission. For purposes of this Agreement,
“free writing prospectus” has the meaning set forth in Rule 405 under the
Securities Act and the “Time of Sale Prospectus” means the preliminary
prospectus, if any, together with the free writing prospectuses, if any, used in
connection with the Placement, including any documents incorporated by reference
therein.
     (B) The Registration Statement (and any further documents to be filed with
the Commission) contains all exhibits and schedules as required by the
Securities Act. Each of the Registration Statement and any post-effective
amendment thereto, at the time it became effective, complied in all material
respects with the Securities Act and the Exchange Act and the applicable Rules
and Regulations and did not and, as amended or supplemented, if applicable, will
not, contain any untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading. The Base Prospectus, the Time of Sale Prospectus, if any, and
the Prospectus Supplement, each as of its respective date, comply in all
material respects with the Securities Act and the Exchange Act and the
applicable Rules and Regulations. Each of the Base Prospectus, the Time of Sale
Prospectus, if any, and the Prospectus Supplement, as amended or supplemented,
did not and will not contain as of the date thereof any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements therein, in light of the circumstances under which they were made,
not misleading. The Incorporated Documents, when they were filed with the
Commission, conformed in all material respects to the requirements of the
Exchange Act and the applicable Rules and Regulations, and none of such
documents,

 

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Hythiam, Inc
November 6, 2007
Page 3

when they were filed with the Commission, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein (with respect to Incorporated Documents incorporated by
reference in the Base Prospectus or Prospectus Supplement), in light of the
circumstances under which they were made not misleading; and any further
documents so filed and incorporated by reference in the Base Prospectus, the
Time of Sale Prospectus, if any, or Prospectus Supplement, when such documents
are filed with the Commission, will conform in all material respects to the
requirements of the Exchange Act and the applicable Rules and Regulations, as
applicable, and will not contain any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading. No post-effective
amendment to the Registration Statement reflecting any facts or events arising
after the date thereof which represent, individually or in the aggregate, a
fundamental change in the information set forth therein is required to be filed
with the Commission. There are no documents required to be filed with the
Commission in connection with the transaction contemplated hereby that (x) have
not been filed as required pursuant to the Securities Act or (y) will not be
filed within the requisite time period. There are no contracts or other
documents required to be described in the Base Prospectus, the Time of Sale
Prospectus, if any, or Prospectus Supplement, or to be filed as exhibits or
schedules to the Registration Statement, which have not been described or filed
as required.
     (C) The Company is eligible to use free writing prospectuses in connection
with the Placement pursuant to Rules 164 and 433 under the Securities Act. Any
free writing prospectus that the Company is required to file pursuant to Rule
433(d) under the Securities Act has been, or will be, filed with the Commission
in accordance with the requirements of the Securities Act and the applicable
rules and regulations of the Commission thereunder. Each free writing prospectus
that the Company has filed, or is required to file, pursuant to Rule 433(d)
under the Securities Act or that was prepared by or behalf of or used by the
Company complies or will comply in all material respects with the requirements
of the Securities Act and the applicable rules and regulations of the Commission
thereunder. The Company will not, without the prior consent of the Placement
Agent, prepare, use or refer to, any free writing prospectus.
     (D) The Company has delivered, or will as promptly as practicable deliver,
to the Placement Agent complete conformed copies of the Registration Statement
and of each consent and certificate of experts, as applicable, filed as a part
thereof, and conformed copies of the Registration Statement (without exhibits),
the Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus
Supplement, as amended or supplemented, in such quantities and at such places as
the Placement Agent reasonably requests. Neither the Company nor any of its
directors and officers has distributed and none of them will distribute, prior
to the Closing Date, any offering material in connection with the offering and
sale of the Shares other than the Base Prospectus, the Time of Sale Prospectus,
if any, the Prospectus Supplement, the Registration Statement, copies of the
documents incorporated by reference therein and any other materials permitted by
the Securities Act.
SECTION 3. REPRESENTATIONS AND WARRANTIES. Except as set forth under the
corresponding section of the Disclosure Schedules which Disclosure Schedules
shall be deemed a part hereof, the Company hereby makes the representations and
warranties set forth below to the Placement Agent.
     (A) Organization and Qualification. The Company is an entity duly
incorporated or otherwise organized, validly existing and in good standing under
the laws of the jurisdiction of its incorporation , with the requisite power and
authority to own and use its properties and assets and to carry on its business
as currently conducted.
     (B) Authorization; Enforcement. The Company has the requisite corporate
power and authority to enter into and to consummate the transactions
contemplated by each of the Transaction Documents and otherwise to carry out its
obligations hereunder and thereunder. The execution and delivery of each of the
Transaction

 

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Hythiam, Inc
November 6, 2007
Page 4

Documents by the Company and the consummation by it of the transactions
contemplated thereby have been duly authorized by all necessary action on the
part of the Company and no further action is required by the Company, its board
of directors or its stockholders in connection therewith other than in
connection with the “Required Approvals” (as defined in subsection 3(D) below).
Each Transaction Document has been (or upon delivery will have been) duly
executed by the Company and, when delivered in accordance with the terms hereof
and thereof, will constitute the valid and binding obligation of the Company
enforceable against the Company in accordance with its terms except (i) as
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors’ rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief or other equitable remedies.
     (C) No Conflicts. The execution, delivery and performance of the
Transaction Documents by the Company, the issuance and sale of the Securities
and the consummation by the Company of the other transactions contemplated
hereby and thereby do not and will not (i) conflict with or violate any
provision of the Company’s or any Subsidiary’s certificate or articles of
incorporation, bylaws or other organizational or charter documents, or
(ii) conflict with, or constitute a default (or an event that with notice or
lapse of time or both would become a default) under, result in the creation of
any Lien upon any of the properties or assets of the Company or any Subsidiary,
or give to others any rights of termination, amendment, acceleration or
cancellation (with or without notice, lapse of time or both) of, any agreement,
credit facility, debt or other instrument (evidencing a Company or Subsidiary
debt or otherwise) or other understanding to which the Company or any Subsidiary
is a party or by which any property or asset of the Company or any Subsidiary is
bound or affected, or (iii) subject to the Required Approvals, conflict with or
result in a violation of any law, rule, regulation, order, judgment, injunction,
decree or other restriction of any court or governmental authority to which the
Company or a Subsidiary is subject (including federal and state securities laws
and regulations), or by which any property or asset of the Company or a
Subsidiary is bound or affected; except in the case of each of clauses (ii) and
(iii), such as could not have or reasonably be expected to result in a Material
Adverse Effect.
     (D) Filings, Consents and Approvals. The Company is not required to obtain
any consent, waiver, authorization or order of, give any notice to, or make any
filing or registration with, any court or other federal, state, local or other
governmental authority or other “Person” (defined as an individual or
corporation, partnership, trust, incorporated or unincorporated association,
joint venture, limited liability company, joint stock company, government (or an
agency or subdivision thereof) or other entity of any kind, including, without
limitation, any Trading Market) in connection with the execution, delivery and
performance by the Company of the Transaction Documents, other than such filings
as are required to be made under applicable Federal and state securities laws
(collectively, the “Required Approvals”).
     (E) Approvals. The issuance and listing on the NASDAQ Global Market of the
Shares requires no further approvals, including but not limited to, the approval
of shareholders.
     (F) FINRA Affiliations. There are no affiliations with any Financial
Industry Regulatory Authority (FINRA) member firm among the Company’s officers,
directors or, to the knowledge of the Company, any five percent (5%) or greater
stockholder of the Company, except as set forth in the Base Prospectus.
     (G) Incorporation by Reference. Each of the representations and warranties
(together with any related disclosure schedules thereto) made in that certain
Securities Purchase Agreement dated as of November 6, 2007, between the Company,
and each purchaser identified on the signature pages thereto to the purchasers
thereunder is hereby incorporated herein by reference (as though fully restated
herein) and is hereby made to, and in favor of, R&R.
SECTION 4. INDEMNIFICATION. The Company agrees to the indemnification and other
agreements set forth in the Indemnification Provisions (the “Indemnification”)
attached hereto as Addendum A, the

 

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Hythiam, Inc
November 6, 2007
Page 5

provisions of which are incorporated herein by reference and shall survive the
termination or expiration of this Agreement.
SECTION 5. ENGAGEMENT TERM. R&R’s engagement hereunder will be for the period of
50 days. The engagement may be terminated by either the Company or R&R at any
time upon 10 days’ written notice. Notwithstanding anything to the contrary
contained herein, the provisions concerning confidentiality, indemnification,
contribution and the Company’s obligations to pay fees and reimburse expenses
contained herein and the Company’s obligations contained in the Indemnification
Provisions will survive any expiration or termination of this Agreement. R&R
agrees not to use any confidential information concerning the Company provided
to them by the Company for any purposes other than those contemplated under this
Agreement.
SECTION 6. R&R INFORMATION. The Company agrees that any information or advice
rendered by R&R in connection with this engagement is for the confidential use
of the Company only in their evaluation of the Placement and, except as
otherwise required by law, the Company will not disclose or otherwise refer to
the advice or information in any manner without R&R’s prior written consent.
SECTION 7. NO FIDUCIARY RELATIONSHIP. This Agreement does not create, and shall
not be construed as creating rights enforceable by any person or entity not a
party hereto, except those entitled hereto by virtue of the Indemnification
Provisions hereof. The Company acknowledges and agrees that R&R is not and shall
not be construed as a fiduciary of the Company and shall have no duties or
liabilities to the equity holders or the creditors of the Company or any other
person by virtue of this Agreement or the retention of R&R hereunder, all of
which are hereby expressly waived.
SECTION 8. CLOSING. The obligations of the Placement Agent and the Purchasers,
and the closing of the sale of the Securities hereunder are subject to the
accuracy, when made and on the Closing Date, of the representations and
warranties on the part of the Company and its Subsidiaries contained herein, to
the accuracy of the statements of the Company and its Subsidiaries made in any
certificates pursuant to the provisions hereof, to the performance by the
Company and its Subsidiaries of their obligations hereunder, and to each of the
following additional terms and conditions:
     (A) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been initiated or threatened by the Commission, and any request for additional
information on the part of the Commission (to be included in the Registration
Statement, the Base Prospectus or the Prospectus Supplement or otherwise) shall
have been complied with to the reasonable satisfaction of the Placement Agent.
Any filings required to be made by the Company in shall have been timely filed
with the Commission.
     (B) The Placement Agent shall not have discovered and disclosed to the
Company on or prior to the Closing Date that the Registration Statement, the
Base Prospectus or the Prospectus Supplement or any amendment or supplement
thereto contains an untrue statement of a fact which, in the opinion of counsel
for the Placement Agent, is material or omits to state any fact which, in the
opinion of such counsel, is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
     (C) All corporate proceedings and other legal matters incident to the
authorization, form, execution, delivery and validity of each of this Agreement,
the Securities, the Registration Statement, the Base Prospectus and the
Prospectus Supplement and all other legal matters relating to this Agreement and
the transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Placement Agent, and the Company shall have
furnished to such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.

 

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Hythiam, Inc
November 6, 2007
Page 6

     (D) The Placement Agent shall have received from outside counsel to the
Company such counsel’s written opinion, addressed to the Placement Agent and the
Purchasers dated as of the Closing Date, in form and substance reasonably
satisfactory to the Placement Agent, which opinion shall include a “10b-5”
representation from such counsel.
     (E) Neither the Company nor any of its Subsidiaries shall have sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Base Prospectus, any loss or interference with
its business from fire, explosion, flood, terrorist act or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth in or
contemplated by the Base Prospectus and (ii) since such date there shall not
have been any change in the capital stock or long-term debt of the Company or
any of its Subsidiaries or any change, or any development involving a
prospective change, in or affecting the business, general affairs, management,
financial position, stockholders’ equity, results of operations or prospects of
the Company and its Subsidiaries, otherwise than as set forth in or contemplated
by the Base Prospectus, the Time of Sale Prospectus, if any, and the Prospectus
Supplement, the effect of which, in any such case described in clause (i) or
(ii), is, in the judgment of the Placement Agent, so material and adverse as to
make it impracticable or inadvisable to proceed with the sale or delivery of the
Securities on the terms and in the manner contemplated by the Base Prospectus,
the Time of Sale Prospectus, if any, and the Prospectus Supplement.
     (F) The Common Stock is registered under the Exchange Act and, as of the
Closing Date, the Shares shall be listed and admitted and authorized for trading
on the NASDAQ Global Market, and satisfactory evidence of such actions shall
have been provided to the Placement Agent. The Company shall have taken no
action designed to, or likely to have the effect of terminating the registration
of the Common Stock under the Exchange Act or delisting or suspending from
trading the Common Stock from NASDAQ Global Market, nor has the Company received
any information suggesting that the Commission or NASDAQ Global Market is
contemplating terminating such registration or listing.
     (G) Subsequent to the execution and delivery of this Agreement, there shall
not have occurred any of the following: (i) trading in securities generally on
the New York Stock Exchange, the NASDAQ Global Select Market, the NASDAQ Global
Market, the NASDAQ Capital Market or the American Stock Exchange or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
or maximum prices or maximum ranges for prices shall have been established on
any such exchange or such market by the Commission, by such exchange or by any
other regulatory body or governmental authority having jurisdiction, (ii) a
banking moratorium shall have been declared by federal or state authorities or a
material disruption has occurred in commercial banking or securities settlement
or clearance services in the United States, (iii) the United States shall have
become engaged in hostilities in which it is not currently engaged, the subject
of an act of terrorism, there shall have been an escalation in hostilities
involving the United States, or there shall have been a declaration of a
national emergency or war by the United States, or (iv) there shall have
occurred any other calamity or crisis or any change in general economic,
political or financial conditions in the United States or elsewhere, if the
effect of any such event in clause (iii) or (iv) makes it, in the sole judgment
of the Placement Agent, impracticable or inadvisable to proceed with the sale or
delivery of the Securities on the terms and in the manner contemplated by the
Base Prospectus and the Prospectus Supplement.
     (H) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any governmental agency or
body which would, as of the Closing Date, prevent the issuance or sale of the
Securities or materially and adversely affect or potentially and adversely
affect the business or operations of the Company; and no injunction, restraining
order or order of any other nature by any federal or state court of competent
jurisdiction shall have been issued as of the Closing Date which would prevent
the issuance or sale of the Securities or materially and adversely affect or
potentially and adversely affect the business or operations of the Company.

 

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Hythiam, Inc
November 6, 2007
Page 7

     (I) The Company shall have prepared and filed with the Commission a Current
Report on Form 8-K with respect to the Placement, including as an exhibit
thereto this Agreement.
     (J) The Company shall have entered into subscription agreements with each
of the Purchasers and such agreements shall be in full force and effect and
shall contain representations and warranties of the Company as agreed between
the Company and the Purchasers.
     (K) The FINRA shall have raised no objection to the fairness and
reasonableness of the terms and arrangements of this Agreement. In addition, the
Company shall, if requested by the Placement Agent, make or authorize Placement
Agent’s counsel to make on the Company’s behalf, an Issuer Filing with the
Financial Industry Regulatory Authority, Inc. Corporate Financing Department
pursuant to NASD Rule 2710 with respect to the Registration Statement and pay
all filing fees required in connection therewith.
     (L) Prior to the Closing Date, the Company shall have furnished to the
Placement Agent such further information, certificates and documents as the
Placement Agent may reasonably request.
     All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Placement Agent.
SECTION 9. Governing Law. This Agreement will be governed by, and construed in
accordance with, the laws of the State of New York applicable to agreements made
and to be performed entirely in such State. This Agreement may not be assigned
by either party without the prior written consent of the other party. This
Agreement shall be binding upon and inure to the benefit of the parties hereto,
and their respective successors and permitted assigns. Any right to trial by
jury with respect to any dispute arising under this Agreement or any transaction
or conduct in connection herewith is waived. Each party hereto hereby
irrevocably waives personal service of process and consents to process being
served in any such suit, action or proceeding by delivering a copy thereof via
overnight delivery (with evidence of delivery) to such party at the address in
effect for notices to it under this Agreement and agrees that such service shall
constitute good and sufficient service of process and notice thereof. Nothing
contained herein shall be deemed to limit in any way any right to serve process
in any manner permitted by law. If either party shall commence an action or
proceeding to enforce any provisions of a Transaction Document, then the
prevailing party in such action or proceeding shall be reimbursed by the other
party for its attorneys fees and other costs and expenses incurred with the
investigation, preparation and prosecution of such action or proceeding.
SECTION 10. Entire Agreement/Misc. This Agreement (including the attached
Indemnification Provisions) embodies the entire agreement and understanding
between the parties hereto and supersedes all prior agreements and
understandings relating to the subject matter hereof. If any provision of this
Agreement is determined to be invalid or unenforceable in any respect, such
determination will not affect such provision in any other respect or any other
provision of this Agreement, which will remain in full force and effect. This
Agreement may not be amended or otherwise modified or waived except by an
instrument in writing signed by both R&R and the Company. The representations,
warranties, agreements and covenants contained herein shall survive the closing
of the Placement and delivery and/or exercise of the Securities, as applicable.
This Agreement may be executed in two or more counterparts, all of which when
taken together shall be considered one and the same agreement and shall become
effective when counterparts have been signed by each party and delivered to the
other party, it being understood that both parties need not sign the same
counterpart. In the event that any signature is delivered by facsimile
transmission or a .pdf format file, such electronic signature shall create a
valid and binding obligation of the party executing (or on whose behalf such
signature is executed) with the same force and effect as if such facsimile or
.pdf signature page were an original thereof.

 

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Hythiam, Inc
November 6, 2007
Page 8

SECTION 11. Notices. Any and all notices or other communications or deliveries
required or permitted to be provided hereunder shall be in writing and shall be
deemed given and effective on the earliest of (a) the date of transmission, if
such notice or communication is delivered via facsimile at the facsimile number
specified on the signature pages attached hereto prior to 6:30 p.m. (New York
City time) on a business day, (b) the next business day after the date of
transmission, if such notice or communication is delivered via facsimile at the
facsimile number on the signature pages attached hereto on a day that is not a
business day or later than 6:30 p.m. (New York City time) on any business day,
(c) the business day following the date of mailing, if sent by U.S. nationally
recognized overnight courier service, or (d) upon actual receipt by the party to
whom such notice is required to be given. The address for such notices and
communications shall be as set forth on the signature pages hereto.
[Remainder of page intentionally left blank. Signature page follows]

 

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Hythiam, Inc
November 6, 2007
Page 9

Please confirm that the foregoing correctly sets forth our agreement by signing
and returning to R&R the enclosed copy of this Agreement.

            Very truly yours,

RODMAN & RENSHAW, LLC
      By:   /s/ John Borer         Name:   John Borer        Title:   Senior
Managing Director        Address for notice:
1270 Avenue of the Americas, 16th Floor
New York, NY 10020
                       

Accepted and Agreed to as of
the date first written above:
HYTHIAM, INC.

         
By:
  /s/ Chuck Timpe    
 
       
 
  Name: Chuck Timpe
Title: Chief Financial Officer    

     
Address for notice:
  With a copy (which will not constitute notice) to:
11150 Santa Monica Boulevard
  Dreier Stein & Kahan LLP
Suite 1500
  1620 26th Street, North Tower, 6th Floor
Los Angeles, CA 90025
  Santa Monica, CA 90404
Attn: Terren S. Peizer, Chairman & CEO
  Attn: John C. Kirkland, Esq.

 

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Hythiam, Inc.
Indemnification Provisions
November 6, 2007

ADDENDUM A
INDEMNIFICATION PROVISIONS
     In connection with the engagement of Rodman & Renshaw, LLC (“R&R”) by
Hythiam, Inc. (the “Company”) pursuant to a letter agreement dated November 6,
2007, between the Company and R&R, as it may be amended from time to time in
writing (the “Agreement”), the Company hereby agrees as follows:

1.   To the extent permitted by law, the Company will indemnify R&R and its
affiliates, stockholders, directors, officers, employees and controlling persons
(within the meaning of Section 15 of the Securities Act of 1933, as amended, or
Section 20 of the Securities Exchange Act of 1934) against all losses, claims,
damages, expenses and liabilities, as the same are incurred (including the
reasonable fees and expenses of counsel), relating to or arising out of its
activities hereunder or pursuant to the Agreement, except to the extent that any
losses, claims, damages, expenses or liabilities (or actions in respect thereof)
are found in a final judgment (not subject to appeal) by a court of law to have
resulted primarily and directly from R&R’s willful misconduct or gross
negligence in performing the services described herein.

2.   Promptly after receipt by R&R of notice of any claim or the commencement of
any action or proceeding with respect to which R&R is entitled to indemnity
hereunder, R&R will promptly notify the Company in writing of such claim or of
the commencement of such action or proceeding, and the Company will assume the
defense of such action or proceeding and will employ counsel reasonably
satisfactory to R&R (Dreier Stein & Kahan LLP being deemed satisfactory) and
will pay the fees and expenses of such counsel. Notwithstanding the preceding
sentence, R&R will be entitled to employ counsel reasonably satisfactory to
Company (Feldman Weinstein LLP being deemed satisfactory) separate from counsel
for the Company and from any other party in such action if counsel for R&R
reasonably determines that it would be inappropriate under the applicable rules
of professional responsibility for the same counsel to represent both the
Company and R&R. In such event, the reasonable fees and disbursements of no more
than one such separate counsel will be paid by the Company. The Company will
have the exclusive right to settle the claim or proceeding provided that the
Company will not settle any such claim, action or proceeding without the prior
written consent of R&R, which will not be unreasonably withheld.

3.   The Company agrees to notify R&R promptly of the assertion against it or
any other person of any claim or the commencement of any action or proceeding
relating to a transaction contemplated by the Agreement.

4.   If for any reason the foregoing indemnity is unavailable to R&R or
insufficient to hold R&R harmless, then the Company shall contribute to the
amount paid or payable by R&R as a result of such losses, claims, damages or
liabilities in such proportion as is appropriate to reflect not only the
relative benefits received by the Company on the one hand and R&R on the other,
but also the relative fault of the Company on the one hand and R&R on the other
that resulted in such losses, claims, damages or liabilities, as well as any
relevant equitable considerations. The amounts paid or payable by a party in
respect of losses, claims, damages and liabilities referred to above shall be
deemed to include any legal or other fees and expenses incurred in defending any
litigation, proceeding or other action or claim. Notwithstanding the provisions
hereof, R&R’s share of the liability hereunder shall not be in excess of the
amount of fees actually received, or to be received, by R&R under the Agreement
(excluding any amounts received as reimbursement of expenses incurred by R&R).

1270 Avenue of the Americas, 16th Floor, New York, NY 10020 o Tel:: 212 356 0500
Fax: 212 581 5690
www.rodmanandrenshaw.com o Member: FINRA, SIPC

 

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Hythiam, Inc.
November 6, 2007
Indemnification Provisions

5.   These Indemnification Provisions shall remain in full force and effect
whether or not the transaction contemplated by the Agreement is completed and
shall survive the termination of the Agreement, and shall be in addition to any
liability that the Company might otherwise have to any indemnified party under
the Agreement or otherwise.

            RODMAN & RENSHAW, LLC
      By:   /s/ John Borer         Name:   John Borer        Title:   Senior
Managing Director     

Accepted and Agreed to as of
the date first written above:
HYTHIAM, INC.

         
By:
  /s/ Chuck Timpe    
 
       
 
  Name: Chuck Timpe
Title: Chief Financial Officer