exv10w11



 





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


 









 







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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