Exhibit 10.11
EMPLOYMENT AGREEMENT
          THIS EMPLOYMENT AGREEMENT (“Agreement”) is made and entered into as of
July 26, 2006, by and between Hythiam, Inc., a Delaware corporation
(“Employer”), and Christopher Hassan, an individual (“Employee”).
RECITALS
          A. WHEREAS, Employee has commercial sales and marketing experience and
expertise applicable to employment with Employer to perform as the Senior
Executive Vice President of Marketing and Business Development (“SEVP”) of
Employer, Employer has agreed to employ Employee and Employee has agreed to
enter into such employment, on the terms set forth in this Agreement.
          B. WHEREAS, Employee acknowledges that this Agreement is necessary for
the protection of Employer’s investment in its business, good will, products,
methods of operation, information, and relationships with its customers and
other employees.
          C. WHEREAS, Employer acknowledges that Employee desires definition of
his compensation and benefits, and other terms of his employment.
          NOW, THEREFORE, in consideration thereof and of the covenants and
conditions contained herein, the parties agree as follows:
AGREEMENT
     1. TERM OF AGREEMENT
          1.1 Initial Term. The initial term of this Agreement shall begin on
the date first set forth above, or as soon thereafter as Employee commences
services hereunder (“Commencement Date”) and shall continue until the earlier
of: (a) the date on which it is terminated pursuant to Section 5; or (b) four
(4) years following the Commencement Date (“Initial Term”). At the conclusion of
the Initial Term, Employee shall be employed on an at-will basis, with either
party able to terminate the employment, with or without cause and with or
without notice.
     2. EMPLOYMENT
          2.1 Employment of Employee. Employer agrees to employ Employee to
render services on the terms set forth herein. Employee hereby accepts such
employment on the terms and conditions of this Agreement.
          2.2 Position and Duties. Employee shall serve as Employer’s SEVP,
reporting directly to Employer’s Chief Executive Officer (“CEO”), and shall have
the general powers, duties and responsibilities of management usually vested in
that office in a corporation, including without limitation responsibility for
commercial sales and marketing, and such other powers and

 

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duties as may be prescribed from time to time by the CEO or Employer’s Board of
Directors (“Board”).
          2.3 Standard of Performance. Employee agrees that he will at all times
faithfully and industriously and to the best of Employee’s ability, experience
and talents perform all of the duties that may be required of and from him
pursuant to the terms of this Agreement. Such duties shall be performed at such
place or places as the interests, needs, business and opportunities of Employer
shall require or render advisable.
          2.4 Exclusive Service. Employee shall devote all of his business
energies and abilities and all of his productive time to the performance of his
duties under this Agreement (reasonable absences during holidays and vacations
excepted), and shall not, without the prior written consent of Employer, render
to others any service of any kind (whether or not for compensation) that, in the
opinion of Employer, would materially interfere with the performance of his
duties under this Agreement, and (b) Employee shall not, without the prior
written consent of Employer, maintain any affiliation with, whether as an agent,
consultant, employee, officer, director, trustee or otherwise, nor shall he
directly or indirectly render any services of an advisory nature or otherwise
to, or participate or engage in, any other business activity. Employer
acknowledges that Employee may do charity work and conduct personal business as
long as such activities do not materially interfere with the Employee’s duties
hereunder.
          2.5 Relocation. Employer shall not, without Employee’s consent,
require Employee to permanently relocate outside of Los Angeles, California. If
Employer relocates more than thirty (30) miles outside of Los Angeles, and
Employee elects not to relocate, such action shall be considered a resignation
with Good Reason under Section 5.4. If Employer requests and Employee agrees to
relocate, Employer will pay for reasonable and standard relocation costs of
Employee and Employee’s family, from Los Angeles, California to another location
in the same manner as the relocation to Los Angeles, California covered by
Paragraph 3.4 without regard to the final sentence of such paragraph.
     3. COMPENSATION
          3.1 Compensation. During the term of this Agreement, Employer shall
pay the amounts and provide the benefits described in this Section 3, and
Employee agrees to accept such amounts and benefits in full payment for
Employee’s services under this Agreement.
          3.2 Base Salary. Employer shall pay to Employee a base annual salary
of two hundred seventy-eight thousand eight hundred dollars ($278,800.00)
annually, payable in accordance with Employer’s standard payroll practices, less
applicable withholding. At Employer’s sole discretion, Employee’s base salary
may be increased, but not decreased. Notwithstanding the foregoing, beginning on
the first anniversary of the Commencement Date and annually thereafter, the
Employee’s annual salary then in effect shall be increased by at least the
Consumer Price Index for Los Angeles, CA (or a reasonable proxy thereof).
          3.3 Discretionary Bonus. Except as described in Section 5.1 below,
Employee is eligible to receive an annual bonus in the sole discretion of
Employer. This discretionary bonus will be targeted at fifty percent (50.0%) of
Employee’s base salary, based on achieving

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designated individual goals and milestones and the overall performance and
profitability of Employer. The goals and milestones will be established and
reevaluated on an annual basis by mutual agreement of Employee and the CEO,
subject to review and approval by the Board or its Compensation Committee. In
the first year of this Agreement, the goals and objectives related to the 2006
target bonus shall be established within 45 days of the Commencement Date. The
bonus will be based on a calendar year and shall be paid no later than
April 30th of the following year. The annual bonus for 2006, which shall be
prorated for the portion of the year from Commencement Date, is guaranteed.
          3.4 Relocation Expenses. The Employee is eligible to receive
reimbursement of his reasonable and customary expenses incurred pertaining to
his relocation to Los Angeles which shall include transportation of household
contents and vehicles, commissions and fees associated with the sale of his
current home, normal fees associated with the purchase of a new home, up to 2
points on a new home loan (of which up to one point shall be loan origination
and the total points shall not exceed $35,000 without mutual agreement), a house
hunting trip and up to 2 months of temporary living expenses. Employer shall
reimburse the relocation expenses to Employee in accordance with all applicable
federal and state reporting requirements. Qualified relocation expenses, which
are not taxable to Employee, shall be reimbursed to Employee without any
deduction for applicable tax. Non-qualified relocation expenses which are
taxable to Employee, shall be reimbursed to Employee with an additional amount
reimbursed so that the net reimbursement after the deduction for all applicable
taxes shall equal the amount of the non-qualified, taxable relocation expense.
HR professionals commonly refer to this process as “grossing up” the
reimbursement. It is the intention of this reimbursement provision that 1)
Employer will reimburse Employee for all reasonable relocation expenses incurred
by Employee including the imposition of applicable taxes; and 2) Employee shall
not personally incur any reasonable relocation expense. Failure to remain at the
Employer, other than termination by the Employer, for a period of one (1) year
from receipt of a relocation or temporary housing reimbursement shall result in
the Employee refunding the amount paid to the Employer within thirty (30) days.
          3.5 Equity Incentive Plan. Employee shall be granted options to
purchase four hundred thousand (400,000) shares of Employer’s common stock under
the provisions of Employer’s 2003 Stock Incentive Plan (“Plan”), upon approval
by the Board or its Compensation Committee. To the extent permissible such
options shall be incentive stock options. The options will vest as follows:
twenty percent (20.0%) on the first, second, third, fourth and fifth
anniversaries of the Commencement Date.
          3.6 Fringe Benefits. Upon satisfaction of the applicable eligibility
requirements, Employee shall be provided with group medical and dental insurance
through Employer’s plans, as well as any fringe benefit plan(s) as Employer may
offer from time to time to its personnel. Employee’s spouse and any dependent
children of Employee shall be covered under the Employer’s health care and
dental plans at Employer’s cost. Employer will pay for four hundred thousand
dollars ($400,000.00) of term life insurance for the benefit of Employee,
subject to the standard physical examination that is required by the issuing
insurance company. In addition, Employee will be provided with accidental death
and disability and long-term disability insurance. Employee will also be
eligible to participate in Employer’s 401K plan.

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          3.7 Paid Time Off. Employee shall accrue, on a daily basis, a total of
four (4) workweeks of paid time off (“PTO”) per year following the date of this
Agreement; provided, however, that Employee’s total accrued PTO may not exceed a
total of seven (7) workweeks. This PTO shall not lapse at the end of any
calendar year and shall continue to accrue from year to year. This PTO shall be
in addition to normal Employer holidays, which shall be determined at the
discretion of the Employer from time to time. Any accrued but unused PTO will be
paid to Employee, on a pro rata basis, at the time that his employment is
terminated.
          3.8 Deduction from Compensation. Employer shall deduct and withhold
from all compensation payable to Employee all amounts required to be deducted or
withheld pursuant to any present or future law, ordinance, regulation, order,
writ, judgment, or decree requiring such deduction and withholding.
     4. REIMBURSEMENT OF EXPENSES
          4.1 Travel and Other Expenses. Employer shall pay to or reimburse
Employee for business, travel, promotional, professional continuing education
and licensing costs (to the extent required), professional society membership
fees, seminars and similar expenditures incurred by Employee which Employer
determines are reasonably necessary for the proper discharge of Employee’s
duties under this Agreement and for which Employee submits appropriate receipts
and indicates the amount, date, location and business character in a timely
manner.
          4.2 Liability Insurance. Employer shall provide Employee with officers
and directors’ insurance or other liability insurance, consistent with usual and
reasonable business practices to cover Employee against all insurable events
related to his employment with Employer.
          4.3 Indemnification. Promptly upon written request from Employee,
Employer shall indemnify, defend and hold harmless Employee, to the fullest
extent under applicable law, for all defense costs, judgments, fines,
settlements, losses, costs or expenses (including attorney’s fees, including
fees representing Employee), arising out of Employee’s activities as an agent,
employee, officer or director of Employer, or in any other capacity on behalf of
or at the request of Employer. Such agreement by Employer shall not be deemed to
impair any other obligation of Employer respecting indemnification of Employee
otherwise arising out of this or any other agreement or promise of Employer or
under any statute.
     5. TERMINATION
          5.1 Termination With Good Cause; Resignation Without Good Reason.
Employer may terminate Employee’s employment at any time, with or without notice
or Good Cause (as defined below). If Employer terminates Employee’s employment
with Good Cause, or if Employee resigns without Good Reason (as defined below),
Employer shall pay Employee his salary prorated through the date of termination,
at the rate in effect at the time notice of termination is given, together with
any benefits accrued through the date of termination. Employer shall have no
further obligations to Employee under this Agreement or any other agreement, and
all unvested options will terminate.

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          5.2 Termination Without Good Cause; Resignation with Good Reason.
Employer shall have the right to terminate Employee’s employment under this
Agreement without Good Cause at any time. Employee shall have the right to
terminate his employment with notice and Good Reason. If Employer terminates
Employee’s employment without Good Cause, or Employee resigns for Good Reason:
       (a) Employer shall pay Employee his salary prorated through the date of
termination, at the rate in effect at the time notice of termination is given,
together with any benefits accrued through the date of termination;
       (b) Employer shall pay Employee in a lump sum an amount equal to one
(1) year’s salary (at the rate in effect at the time of termination) plus a
bonus equal to one hundred percent (100.0%) of the targeted bonus;
       (c) All of Employee’s unvested stock options will vest immediately, and
remain exercisable for a period of three (3) years thereafter; and
       (d) In addition to any rights under COBRA, medical benefits shall
continue for a period of one (1) year from the date of termination, provided
that coverage will terminate sooner if Employee becomes eligible for coverage
under another employer’s plan.
          To be eligible for the compensation provided for in Section 5.2(b),
(c) and (d) above, Employee must execute a full and complete mutual release of
any and all claims in the standard form then used by Employer (“Release”).
Employer shall have no further obligations to Employee under this Agreement or
any other agreement.
          5.3 Good Cause. For purposes of this Agreement, a termination shall be
for “Good Cause” if Employee, in the subjective good faith opinion of Employer,
shall:
       (a) Commit an act of fraud, moral turpitude, misappropriation of funds or
embezzlement in connection with his duties;
       (b) Breach Employee’s fiduciary duty to Employer, including, but not
limited to, acts of self-dealing (whether or not for personal profit);
       (c) Materially breach this Agreement, the Confidentiality Agreement
(defined below), or Employer’s written Codes of Ethics as adopted by the Board;
       (d) Willful, reckless or grossly negligent violation of any material
provision of Employer’s written Employee Handbook, or any applicable state or
federal law or regulation;
       (e) Fail or refuse (whether willful, reckless or negligent) to comply
with all relevant and material obligations, assumable and chargeable to an
executive of his corporate rank and responsibilities, under the Sarbanes-Oxley
Act and the regulations of the Securities and Exchange Commission promulgated
thereunder;

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       (f) Fail to or refuse (whether willful, reckless or negligent) to
substantially perform the responsibilities and duties specified herein (other
than a failure caused by temporary disability); provided, however, that no
termination shall occur on that basis unless the Employer first provides the
Employee with written notice to cure; the notice to cure shall reasonably
specify the acts or omissions that constitute the Employee’s failure or refusal
to perform his duties, and the Employee shall have a reasonable opportunity (not
to exceed 10 days after the date of notice to cure) to correct his failure or
refusal to perform his duties; termination shall be effective as of the date of
written notice to cure; or
       (g) Be convicted of, or enter a plea of guilty or no contest to, a felony
or misdemeanor under state or federal law, other than a traffic violation or
misdemeanor not involving dishonesty or moral turpitude.
          5.4 Good Reason. For purposes of this Agreement, a resignation shall
be with “Good Reason” if tendered with ninety (90) days of any of the following
actions by Employer:
       (a) Assignment to Employee of duties materially inconsistent with
Employee’s status as a senior officer of Employer, removal of Employee as a
senior officer, or a substantial reduction in the nature or status of Employee’s
responsibilities;
       (b) Relocation of Employer’s principle executive offices outside of a 30
mile radius of Los Angeles (unless closer to Employee’s residence) without
Employee’s consent, except for reasonably required travel on Employer’s
business;
       (c) Employer’s failure to cause any acquiring or successor entity
following a Change in Control to assume Employer’s obligations under this
Agreement, unless such assumption occurs by operation of law; or
       (d) Material breach of this Agreement by Employer, or failure to timely
pay to Employee any amount due under Section 3 which continues after written
notice and reasonable opportunity to cure (not to exceed ten (10) days after the
date of notice).
          5.5 Effects of Change in Control. Immediately upon a Change in Control
(as defined below) all of Employee’s unvested options shall vest immediately,
and remain exercisable for a period of three (3) years thereafter. Further if
Employee is terminated without Good Cause or resigns for Good Reason during the
first twelve (12) months following a Change in Control, Employee shall be
entitled to receive a lump sum in an amount equal to (i) one and one-half years
of salary (at the rate in effect at the time of termination); and (ii) one and
one-half times the Employee’s full targeted bonus for that year. In addition to
any rights under COBRA, the term for continued fringe benefits under Section 3.6
shall continue for a period of eighteen (18) months from the date of
termination, provided that Medical and Dental coverage will terminate sooner if
Employee becomes eligible for coverage under another employer’s plan. To be
eligible for the compensation provided for in this Section 5.5, Employee must
execute a Release. Employer shall have no further obligations to Employee under
this Agreement.
          5.6 Change in Control. For purposes of this Agreement, a “Change in
Control” shall be defined as:

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       (a) The acquisition of Employer by another entity by means of a
transaction or series of related transactions (including, without limitation,
any reorganization, merger, stock purchase or consolidation); or
       (b) The sale, transfer or other disposition of all or substantially all
of the Employer’s assets.
          5.7 No Change in Control. Notwithstanding the provisions of
Section 5.6, the following shall not constitute a Change in Control:
       (a) If the sole purpose of the transaction is to change the state of the
Employer’s incorporation or to create or eliminate a holding company that will
be owned in substantially the same proportions by the same beneficial owners as
before the transaction;
       (b) If Employer’s stockholders of record as constituted immediately prior
to the transaction will, immediately after the transaction (by virtue of
securities issued as a consideration for Employer’s capital stock or assets or
otherwise), hold more than fifty percent (50.0%) of the combined voting power of
the surviving or acquiring entity’s outstanding securities;
       (c) An underwritten public offering of Employer’s common stock, if
Employer’s stockholders of record as constituted immediately prior to the
offering will, immediately after the offering, continue to hold more than fifty
percent (50.0%) of the combined voting power of Employer’s outstanding
securities;
       (d) The private placement of preferred or common stock, or the issuance
of debt instruments convertible into preferred or common stock, for fair market
value as determined by the Board, provided the acquiring person does not as a
result of the transaction own more than fifty percent (50.0%) of the outstanding
capital stock of Employer, have the right to vote more than fifty percent
(50.0%) of the outstanding voting stock of Employer, or have the right to elect
a majority of the Board; or
       (e) If Employee is a member of a group that acquires control of Employer
in an event that would otherwise be a Change in Control, such event shall not be
deemed a Change in Control and Employee shall have no right to benefits
hereunder as a result of such event; provided, however, that Employee shall not
be deemed a member of any acquiring group solely by virtue of his continued
employment or ownership of stock or stock options following a Change in Control.
          5.8 Death or Disability. To the extent consistent with federal and
state law, Employee’s employment, salary shall terminate on his death or
Disability. “Disability” means any health condition, physical or mental, or
other cause beyond Employee’s control, that prevents him from performing his
duties, even after reasonable accommodation is made by Employer, for a period of
one hundred eighty (180) consecutive days within any three hundred sixty
(360) day period. In the event of termination due to death or Disability,
Employer shall pay Employee (or his legal representative) his salary prorated
through the date of termination, at the rate in effect at the time of
termination, together with any benefits accrued through the date of

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termination. Employer shall have no further obligations to Employee (or
Employee’s legal representative) under this Agreement.
          5.9 Return of Employer Property. Within five (5) days after the
Termination Date, Employee shall return to Employer all products, books,
records, forms, specifications, formulae, data processes, designs, papers and
writings relating to the business of Employer including without limitation
proprietary or licensed computer programs, customer lists and customer data,
and/or copies or duplicates thereof in Employee’s possession or under Employee’s
control. Employee shall not retain any copies or duplicates of such property and
all licenses granted to him by Employer to use computer programs or software
shall be revoked on the Termination Date.
     6. DUTY OF LOYALTY
          6.1 During the term of this Agreement, Employee shall not, without the
prior written consent of Employer, directly or indirectly render services of a
business, professional, or commercial nature to any person or firm, whether for
compensation or otherwise, or engage in any activity directly or indirectly
competitive with or adverse to the business or welfare of Employer, whether
alone, as a partner, or as an officer, director, employee, consultant, or holder
of more than one percent (1.0%) of the capital stock of any other corporation.
Otherwise, Employee may make personal investments in any other business so long
as these investments do not require Employee to participate in the operation of
the companies in which Employee invests.
     7. CONFIDENTIAL INFORMATION
          7.1 Trade Secrets of Employer. Employee, during the term of this
Agreement, will develop, have access to and become acquainted with various trade
secrets which are owned by Employer and/or its affiliates and which are
regularly used in the operation of the businesses of such entities. Employee
shall not disclose such trade secrets, directly or indirectly, or use them in
any way, either during the term of this Agreement or at any time thereafter,
except as required in the course of his employment by Employer. All files,
contracts, manuals, reports, letters, forms, documents, notes, notebooks, lists,
records, documents, customer lists, vendor lists, purchase information, designs,
computer programs and similar items and information, relating to the businesses
of such entities, whether prepared by Employee or otherwise and whether now
existing or prepared at a future time, coming into his possession shall remain
the exclusive property of such entities, and shall not be removed for purposes
other than work-related from the premises where the work of Employer is
conducted, except with the prior written authorization by Employer.
          7.2 Confidential Data of Customers of Employer. Employee, in the
course of his duties, will have access to and become acquainted with financial,
accounting, statistical and personal data of customers of Employer and of their
affiliates. All such data is confidential and shall not be disclosed, directly
or indirectly, or used by Employee in any way, either during the term of this
Agreement (except as required in the course of employment by Employer) or at any
time thereafter.

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               7.3 Inevitable Disclosure. After Employee’s employment has
terminated, Employee shall not accept employment with any addiction treatment
service provider or company providing protocols for the treatment of alcohol or
stimulant addiction (“Direct Competitor”) for a period of one (1) year, where
the new employment is likely to result in the inevitable disclosure of
Employer’s trade secrets or confidential information, or it would be impossible
for Employee to perform his new job without using or disclosing trade secrets or
confidential information.
               7.4 Continuing Effect. The provisions of this Section 7 shall
remain in effect after the Termination Date.
          8. NO SOLICITATION
               8.1 No Solicitation of Employees. Employee agrees that Employee
will not, during Employee’s employment with Employer, and for two (2) years
thereafter, encourage or solicit any other employee of Employer to terminate his
or her employment for any reason, nor will Employee assist others to do so.
               8.2 No Solicitation of Customer. Employee agrees that Employee
will not, during Employee’s employment with Employer, and for two (2) years
thereafter, directly or indirectly call on, or otherwise solicit, business for a
Direct Competitor from any actual customer or potential customer known by
Employee to be targeted by Employer, nor will Employee assist others in doing
so.
          9. INTELLECTUAL PROPERTIES.
               9.1 To the extent permissible under applicable law, all
intellectual properties made or conceived by Employee during the term of this
employment by Employer shall be the right and property solely of Employer,
whether developed independently by Employee or jointly with others. Employee
will sign the Employer’s standard Employee Innovation, Proprietary Information
and Confidentiality Agreement (“Confidentiality Agreement”) prior to or on the
Commencement Date.
          10. OTHER PROVISIONS
               10.1 Compliance With Other Agreements. Employee represents and
warrants to Employer that the execution, delivery and performance of this
Agreement will not conflict with or result in the violation or breach of any
term or provision of any order, judgment, injunction, contract, agreement,
commitment or other arrangement to which Employee is a party or by which he is
bound.
               10.2 Injunctive Relief. Employee acknowledges that the services
to be rendered under this Agreement and the items described in Sections 6, 7, 8
and 9 are of a special, unique and extraordinary character, that it would be
difficult or impossible to replace such services or to compensate Employer in
money damages for a breach of this Agreement. Accordingly, Employee agrees and
consents that if he violates any of the provisions of this Agreement, Employer,
in addition to any other rights and remedies available under this Agreement or
otherwise, shall be entitled to temporary and permanent injunctive relief,
without

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the necessity of proving actual damages and without the necessity of posting any
bond or other undertaking in connection therewith.
               10.3 Attorneys’ Fees. The prevailing party in any suit or other
proceeding brought to enforce, interpret or apply any provisions of this
Agreement, shall be entitled to recover all costs and expenses of the proceeding
and investigation (not limited to court costs), including all attorneys’ fees.
               10.4 Counsel. The parties acknowledge and represent that, prior
to the execution of this Agreement, they have had an opportunity to consult with
their respective counsel concerning the terms and conditions set forth herein.
Additionally, Employee represents that he has had an opportunity to receive
independent legal advice concerning the taxability of any consideration received
under this Agreement. Employee has not relied upon any advice from Employer
and/or its attorneys with respect to the taxability of any consideration
received under this Agreement. Employee further acknowledges that Employer has
not made any representations to him with respect to tax issues.
               10.5 Nondelegable Duties. This is a contract for Employee’s
personal services. The duties of Employee under this Agreement are personal and
may not be delegated or transferred in any manner whatsoever, and shall not be
subject to involuntary alienation, assignment or transfer by Employee during his
life.
               10.6 Governing Law. The validity, construction and performance of
this Agreement shall be governed by the laws, without regard to the laws as to
choice or conflict of laws, of the State of California.
               10.7 Venue. If any dispute arises regarding the application,
interpretation or enforcement of any provision of this Agreement, including
fraud in the inducement, such dispute shall be resolved either in federal or
state court in Los Angeles, California.
               10.8 No Jury. If any dispute arises regarding the application,
interpretation or enforcement of any provision of this Agreement, including
fraud in the inducement, the parties hereby waive their right to a jury trial.
               10.9 No Punitive Damages. If any dispute arises regarding the
application, interpretation or enforcement of any provision of this Agreement,
including fraud in the inducement, the parties hereby waive their right to seek
punitive damages in connection with said dispute.
               10.10 Severability. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions,
and this Agreement shall be construed in all respects as if any invalid or
unenforceable provision were omitted.
               10.11 Binding Effect. The provisions of this Agreement shall bind
and inure to the benefit of the parties and their respective successors and
permitted assigns.

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               10.12 Notice. Any notices or communications required or permitted
by this Agreement shall be deemed sufficiently given if in writing and when
delivered personally or 48 hours after deposit with the United States Postal
Service as registered or certified mail, postage prepaid and addressed as
follows:
                         (a) If to Employer, to the principal office of Employer
in the State of California, marked “Attention: Chief Executive Officer,” with a
copy to John C. Kirkland, Esq., Greenberg Traurig LLP, 2450 Colorado Avenue,
Suite 400E, Santa Monica, California 90404; or
                         (b) If to Employee, to the most recent address for
Employee appearing in Employer’s records.
               10.13 Headings. The Section and other headings contained in this
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
               10.14 Amendment and Waiver. This Agreement may be amended,
modified or supplemented only by a writing executed by each of the parties.
Either party may in writing waive any provision of this Agreement to the extent
such provision is for the benefit of the waiving party. No waiver by either
party of a breach of any provision of this Agreement shall be construed as a
waiver of any subsequent or different breach, and no forbearance by a party to
seek a remedy for noncompliance or breach by the other party shall be construed
as a waiver of any right or remedy with respect to such noncompliance or breach.
               10.15 Entire Agreement. This Agreement is the only agreement and
understanding between the parties pertaining to the subject matter of this
Agreement, and supersedes all prior agreements, summaries of agreements,
descriptions of compensation packages, discussions, negotiations,
understandings, representations or warranties, whether verbal or written,
between the parties pertaining to such subject matter.

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          IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the day and year first above written.

                  EMPLOYEE:            
 
               
 
      /s/ CHRISTOPHER HASSAN
 
   Christopher Hassan            
 
                        EMPLOYER:    
 
                        HYTHIAM, INC.    
 
               
 
      By      /s/ TERREN S. PEIZER
 
    Terren S. Peizer    
 
              Chief Executive Officer    

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