exhibit_10-2.htm


    
Exhibit 10.2

    
 

    Consulting
Services Agreement

    


    This
Agreement (“Agreement”)
is made effective as of November 12, 2008 (“Effective Date”), by and
between Hythiam, Inc. 11150 Santa Monica Blvd., Suite 1500, Los Angeles, CA
90025 (“Hythiam” or
“Company”) and Chuck
Timpe (“Consultant”)
(each a “Party” and
collectively “the
Parties”).

    


    Hythiam
desires to have certain consulting services with respect to accounting, SEC
reporting, financial and administrative matters.

    


    Consultant
represents to possess the required background for providing and is willing to
provide any or all of these services to Hythiam as more fully set forth in this
Agreement.

    


    Therefore,
the Parties agree as follows:

    


    1. DESCRIPTION
OF SERVICES.

    Beginning
on the Effective Date, Consultant will no longer serve as Chief Financial
Officer of Company, and will serve only in the capacity of a consultant to
perform the following professional services for Hythiam (collectively, the
"Services"):

    


    
      	
              a.  

            	
              Assist
      Hythiam with accounting, financial reporting and administrative matters as
      requested by Hythiam;

            


    

    
      	
              b.  

            	
              Transition
      of Consultant’s projects and duties of the Chief Financial Officer
      position as necessary to assist in an orderly transition of
      responsibilities of the position;
and

            


    

    
      	
              c.  

            	
              Other
      related consulting services as requested by
  Hythiam

            


    

    


    Throughout
the term of this agreement, Consultant will be available at reasonable times to
meet with Hythiam representatives.

    


    2. PERFORMANCE OF THE
SERVICES.  Consultant
understands that Company’s protection of its reputation and its intellectual
property are of utmost importance to Company.  Consultant will perform
the Services diligently, competently, professionally, in a timely manner, and in
full compliance with all applicable laws, regulations, and industry ethical
standards, and in full compliance with the terms of this
Agreement.  Consultant warrants and represents that execution and
performance of this Agreement by Consultant does not and will not result in any
violation of any laws, rules or regulations.

    


    3. COMPENSATION.  During
the Term (as defined in Section 6) in return
for the Services, Hythiam shall compensate Consultant as follows:

    


    
      	
              a.  

            	
              At
      no fee or additional cost to Hythiam, Consultant shall be reasonably
      available by phone or email throughout the Term to answer questions and to
      otherwise provide assistance to Hythiam for brief durations on an
      as-needed basis, up to periods of one half hour at a time, not to exceed
      two hours per day and ten hours per
month.

            


    

    


    
      	
              b.  

            	
              For
      Services in excess of the Services provided in Section 3a,
      Consultant shall be compensated at the following
  rates:

            


    

    


    
      	
              1.  

            	
              hourly
      rate of $225, up to a maximum of $1,800 per diem for a full
      day

            


    

    
      	
              2.  

            	
              per
      diem rate of $1,000 for travel days if Consultant is requested to travel
      out of town for a minimum of two days to perform
  Services.

            


    

    


    At the election of Hythiam, the
above compensation may be paid in shares of common stock of the Corporation in
lieu of cash as set forth in Section
5.

    


    
      	
              c.  

            	
              Hythiam
      will pay the full cost of COBRA for Consultant and his dependents for the
      period December 1, 2008 through December 31, 2008, after which date
      Consultant shall be responsible for the full cost of COBRA
      coverage.

            


    

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    
      	
              d.  

            	
              Hythiam
      stock options granted to Consultant as an employee of Hythiam will
      continue to vest during the Term, but all incentive stock options (ISOs)
      vested as of the Effective date will convert to non-qualified stock
      options 90 days following termination as an
  employee.

            


    

    


    
      	
              e.  

            	
              Hythiam
      shall extend Consultant’s right to exercise vested options for two years
      following the termination date of this
  Agreement.

            


    

    


    In
addition, in order for Consultant to perform his duties under this Agreement,
Hythiam shall make available to Consultant and continue to service the
blackberry and computer equipment (or equivalent) that Consultant utilized
during his employment with the Company.  Upon termination of this
Agreement, Consultant shall return all Company-owned equipment to Hythiam if so
requested.

    


    4.  EXPENSE
REIMBURSEMENT.  Consultant shall be entitled to reimbursement
from Hythiam for reasonable "out-of-pocket" expenses for travel and other costs
incurred in performance of the Services if approved in advance by Hythiam and
based on valid receipts and other documentation provided by Consultant
sufficient to satisfy IRS standards.  Reasonable travel expenses shall
consist of coach class airfare, business class lodging, and reasonable meals and
ground transportation expenses.  Hythiam must approve in writing
expenses greater than $2,500, in the aggregate.

    


    5.   INVOICE AND
PAYMENT OF COMPENSATION AND EXPENSES.  On or before the 10th day of
each month during the Term, Consultant shall provide to Hythiam an invoice and
required documentation to support any compensation or expense reimbursement due
Consultant for performance of the Services during the prior month. Hythiam will
pay any undisputed invoice received by Hythiam on a timely basis.

    


    Stock-based
compensation.  At Hythiam’s election each billing month during
the Term, Hythiam may, in lieu of the cash compensation payable to Consultant as
set forth in Section
3b, compensate Consultant entirely with shares of common stock of
Hythiam, the number of shares to be determined by dividing the dollar amount due
to Consultant for the preceding month by the average closing share price of
Hythiam’s common stock across all of the trading days of such preceding
month.  Such shares shall be issued from Hythiam’s 2007 Stock
Incentive Plan or an equivalent plan or as otherwise registered with the SEC and
is effective as of the date that such shares are issued to Consultant. If such
shares are not issued within 20 days of the end of such preceding month, such
stock-based compensation election shall no longer be available to Hythiam for
such billing month, and the related compensation for such Services shall be paid
in cash.

    


    6.  TERM/TERMINATION.
This Agreement will commence on the Effective Date and continue until
September 30, 2009. Upon termination of this Agreement, Consultant shall perform
no more Services and shall not imply or represent that he has a relationship
with Hythiam in any way whatsoever.

    


    7.  RELATIONSHIP OF
PARTIES.  It is understood and agreed that during the Term
Consultant and Hythiam are and shall remain independent contractors with respect
to performance of this Agreement.  Nothing in this Agreement shall be
construed to constitute Hythiam and Consultant as employer/employee, partners,
joint venturers, agents or anything other than independent
contractors.  Hythiam will not pay or withhold, and Consultant is not
entitled to, any wages, fees, payroll taxes, or employee benefits, including
health insurance benefits, paid vacation, or any other employee benefit, for the
benefit of Consultant or its employees.

    


    8.  CONFIDENTIALITY
INFORMATION AND INVENTION ASSIGNMENT.  Performance of the
Services is subject to the Confidentiality Information and Invention Assignment
Agreement dated October 2, 2008 and attached as Exhibit A (“Confidentiality
Agreement”).

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    9.  NOTICES.  All
notices required or permitted under this Agreement shall be in writing and shall
be deemed delivered when delivered in person or deposited in the United States
mail, postage prepaid, or sent by a nationally-recognized overnight courier
service, addressed as follows:

    


    Hythiam,
Inc.

    Attn:
Chief Financial Officer

    11150
Santa Monica Blvd. Suite 1500

    Los
Angeles, CA  90025

    310-444-4300

    310-444-5300
fax

    


    Chuck
Timpe

    9652
Claire Avenue

    Northridge,
CA 91324

    818-772-8400

    818-772-8300
fax

    


    Such
address may be changed from time to time by either Party by providing written
notice to the other Party in the manner set forth in this Section
9.

    


    10.           LIMITATION OF LIABILITY.
EXCEPT FOR A BREACH OF THE CONFIDENTIALITY AGREEMENT OR WILLFUL MISCONDUCT, IN
NO EVENT SHALL EITHER BE LIABLE TO THE OTHER FOR ANY INDIRECT, INCIDENTAL,
CONSEQUENTIAL, PUNITIVE, OR SPECIAL DAMAGES, WHETHER BY COMMON LAW OR STATUTE,
ARISING HEREFROM OR RELATED HERETO IN ANY CAUSES OF ACTION OF ANY KIND, EVEN IF
ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. EXCEPT FOR A BREACH OF THE
CONFIDENTIALITY AGREEMENT, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT, CONSULTANT’S
TOTAL LIABILITY TO HYTHIAM FOR EVERY REASON SHALL BE LIMITED TO THE AGGREGATE
AMOUNT OF FEES ACTUALLY PAID BY HYTHIAM TO CONSULTANT PURSUANT
HERETO.

    


    11.  INDEMNITY.
Hythiam shall defend, indemnify, and hold Consultant harmless from all
liabilities, damages, losses, and expenses (including without limitation
reasonable attorney’s fees and court costs) owed to any third party arising from
claims (collectively, “Claims”) against the
other as a result of Consultant’s performance under this Agreement, irrespective
of Consultant’s contributory negligent acts or omissions, except for Claims
arising out of a breach of the Confidentiality Agreement or Consultant’s gross
negligence or willful misconduct.

    


    12.           ENTIRE
AGREEMENT.  This Agreement, including the terms of all
exhibits, which are hereby incorporated fully into this Agreement, contains the
entire agreement of the parties with respect to the Services and there are no
other promises or conditions in any other agreement whether oral or written with
respect to the Services.

    


    13.  AMENDMENT/ASSIGNMENT.  This
Agreement may be modified or amended if, and only if the amendment is made in
writing and is signed by both Parties.  Neither this Agreement nor any
right under this Agreement may be transferred or assigned in whole or in part by
either Party without the prior written consent of the other Party, and any
attempted assignment without such consent shall be null and
void.  Notwithstanding the foregoing, Hythiam may assign this
Agreement in whole or in part to an affiliate or successor entity without
Consultant’s consent.

    


    14.  SEVERABILITY.  If
any provision of this Agreement shall be held to be invalid or unenforceable for
any reason, the remaining provisions shall continue to be valid and
enforceable.  If a court or judicial authority finds that any
provision of this Agreement is invalid or unenforceable, but that by limiting
such provision it would become valid and enforceable, then such provision shall
be deemed to be written, construed, and enforced as so limited but only to the
minimal extent required to make the provision valid and
enforceable.

    


    15.  WAIVER OF CONTRACTUAL
RIGHT.  The failure of either party to enforce any provision of
this Agreement shall not be construed as a waiver or limitation of that Party's
right to subsequently enforce and compel strict compliance with every provision
of this Agreement.

    



    
      
         


      

      
         


        
          

        

      

      
         


      

    


    16.  APPLICABLE
LAW.  This Agreement shall be governed by the laws of the State
of California (without regard to that body of law known as “Conflicts of
Law”).

    


    17.  BENEFITS, BINDING
EFFECT.  This Agreement shall be binding upon and inure to the
benefit of the respective Parties and their permitted assigns and successors in
interest.

    


    18.  SURVIVABILITY.  Notwithstanding
anything to the contrary set forth in this Agreement, Sections 2, 3, 6, 8, 10
through 18, and Exhibit A shall
survive termination of this Agreement for any reason.

    


    In
witness to these terms, each Party has caused this Agreement to be executed
below in its name and on its behalf.

    


    


    Hythiam,
Inc.

    


    /s/ RICHARD A.
ANDERSON_________________     

    Richard
A. Anderson, President and COO 

    


    


    Consultant

    


    /s/ CHUCK
TIMPE__________________________      

    Chuck
Timpe 

    


    


    



    
      
         


      

      
         


        
          

        

      

      
         


      

    



    EXHIBIT
A

    


    Hythiam,
Inc.

    


    CONFIDENTIALITY
INFORMATION AND INVENTION ASSIGNMENT AGREEMENT FOR CONSULTANT

    


    This
CONFIDENTIAL INFORMATION AND INVENTION ASSIGNMENT AGREEMENT (the “Agreement”) is
made between Hythiam, Inc. and its subsidiaries, a Delaware Corporation (“The
Company”), having a principal place of business at 11150 Santa Monica Blvd.,
Suite 1500, Los Angeles, California 90025 and the undersigned consultant, Chuck
Timpe.

    In
consideration of my relationship with the Company (which for purposes of this
Agreement shall be deemed to include any subsidiaries or Affiliates٭
of the Company, the receipt of confidential information while associated with
the Company, and other good and valuable consideration, receipt of which is
hereby acknowledged, I, the undersigned individual, agree that:

    


    1.  Term of
Agreement.  This Agreement shall continue in full force and
effect for the duration of my relationship with the Company and shall continue
thereafter until terminated through a written instrument signed by both
parties.

    


    2.  Confidentiality.

    


    (a)  Definitions.  “Proprietary
Information” is all information and any idea whatever form, tangible or
intangible, pertaining in any manner to the business of the Company, or any of
its Affiliates, or its employees, clients, consultants, or business associates,
which was produced by any employee or consultant of the Company in the course of
his or her employment or consulting relationship or otherwise produced or
acquired by or on behalf of the Company.  All Proprietary Information
not generally known outside of the Company’s organization, and all Proprietary
Information so known only through improper means, shall be deemed “Confidential
Information.”  By example and without limiting the foregoing
definition, Proprietary and Confidential Information shall include, but not be
limited to:

    


    (1)  formulas,
research and development techniques, processes, trade secrets, computer
programs, software, electronic codes, mask works, inventions, innovations,
patents, patent applications, discoveries, improvements, data, know-how,
formats, test results and research projects;

    


    (2)  information
about costs, profits, markets, sales, contracts and lists of customers, and
distributors;

    


    (3)  business,
marketing, and strategic plans;

    


    (4)  forecasts,
unpublished financial information, budgets, projections, and customer
identities, characteristics and agreements; and

    


    (5)  employee
personnel files and compensation information.

    


    (b)  Existence of Confidential
Information.  The Company owns and has developed and compiled,
and will develop and compile, certain trade secrets, proprietary techniques and
other Confidential Information which have great value to its
business.  This Confidential Information includes not only information
disclosed by the Company to me, but also information developed or learned by me
during the course of my relationship with the Company.

    


    (c)  Protection of Confidential
Information.  I will not, directly or indirectly, use, make
available, sell, disclose or otherwise communicate to any third party, other
than in my assigned duties and for the benefit of the Company, any of the
Company’s Confidential Information, either during or after my relationship with
the Company.

    

      

    

      
      ٭  For
purposes of this Agreement, “Affiliate” shall mean any person or entity that
shall directly or indirectly controls, is controlled by, or is under common
control with the Company.

       

    


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    In the
event I desire to publish the results of my work for the Company through
literature or speeches, I will submit such literature or speeches to an
Executive Officer of the company at least 10 days before dissemination of such
information for a determination of whether such disclosure may alter trade
secret status, may be prejudicial to the interests of the Company, or may
constitute an invasion of its privacy.  I agree not to publish,
disclose or otherwise disseminate such information without prior written
approval of an Executive Officer of the Company.  I acknowledge that I
am aware that the unauthorized disclosure of Confidential Information of the
Company may be highly prejudicial to its interests, an invasion of privacy, and
an improper disclosure of trade secrets.

    


    (d)  Delivery of Confidential
Information.  Upon request or when my relationship with the
Company terminates, I will immediately deliver to the Company all copies of any
and all materials and writings received from, created for, or belonging to the
Company including, but not limited to, those which related to or contain
Confidential Information.

    


    (e)  Location and
Reproduction.  I shall maintain at my workplace only such
Confidential Information as I have a current “need to know.”  I shall
return to the appropriate person or location or otherwise properly dispose of
Confidential Information once that need to know no longer exists.  I
shall not make copies of or otherwise reproduce Confidential Information unless
there is a legitimate business need of the Company for
reproduction.

    


    (f)  Prior Actions and
Knowledge.  I represent and warrant that from the time of my
first contact with the Company I held in strict confident all Confidential
Information and have not disclosed any Confidential Information, directly or
indirectly, to anyone outside the Company, or used, copied, published, or
summarized any Confidential Information, except as to the extent otherwise
permitted in this Agreement.

    


    (g)  Third-Party
Information.  I acknowledge that the Company has received and
in the future will receive from third parties their confidential information
subject to a duty on the Company’s part to maintain the confidentiality of such
information and to use it only for certain limited purposes.  I agree
that I will at all times hold all such confidential information in the strictest
confidence and not to disclose or use it, except as necessary to perform my
obligations hereunder and as is consistent with the Company’s agreement with
such third parties.

    


    (h)  Third
Parties.  I represent that my relationship with the Company
does not and will not breach any agreements with or duties to a former employer
or any other third party.  I will not disclose to the Company or use
on its behalf any confidential information belonging to others and I will not
bring onto the premises of the Company any confidential information belonging to
any such party unless consented to in writing by such party.

    


    3.  Proprietary Rights,
Inventions and New Ideas.

    


    (a)  Definition.  The
term “Subject Ideas or Inventions” includes any and all ideas, processes,
trademarks, service marks, inventions, designs, technologies, computer hardware
or software, original works of authorship, formulas, discoveries, patents,
copyrights, copyrightable work products, trade secrets and innovations,
marketing and business ideas, and all improvements, know-how, data, rights, and
claims related to the forgoing that, whether or not patentable, which are
conceived, developed or created which: (1) relate to the Company’s current
or contemplated businesses; (2) related to the Company’s actual or
demonstrably anticipated research or development; (3) result from any work
performed by me for the Company; (4) involve the use of the Company’s
equipment, supplies, facilities or trade secrets; (5) result from or are
suggested by any work done by the Company or at the Company’s request, or any
projects specifically assigned to me; or (6) result from my access to any
of the Company’s memoranda, notes, records, drawings, sketches, models, maps,
customer lists, research results, data, formulae, specifications, inventions,
processes, equipment or other materials (collectively, “Company
Materials”).

    


    (b)  Company
Ownership.  All right, title and interest in an to all Subject
Ideas and Inventions, including but not limited to all registrable and patent
rights which may subsist therein, shall be held and owned solely by the Company,
and where applicable, all Subject Ideas and Inventions shall be considered works
made for hire, I shall mark all Subject Ideas and Inventions with the Company’s
copyright or other proprietary notice as directed by the Company and shall take
all actions deemed necessary by the Company to protect the Company’s rights
therein.  In the event that the Subject Ideas and Inventions shall be
deemed not to constitute works made for hire, or in the event that I should
otherwise, by operation of law, be deemed to retain any rights (whether moral
rights or otherwise) to any Subject Ideas and Inventions, I agree to and hereby
do assign to the Company, without


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    further
consideration, my entire right, title and interest in and to each and every such
Subject Idea and Invention.  I further agree to execute any documents
necessary to facilitate such a transfer.

    


    (c)  Disclosure.  I
agree to disclose promptly to the Company full details of any and all Subject
Ideas and Inventions.

    


    (d)  Maintenance of
Records.  I agree to keep and maintain adequate and current
written records of all Subject Ideas and Inventions and their development made
by me (solely or jointly with others) during the term of my relationship with
the Company.  These records will be in the form of notes, sketches,
drawings, and any other format that may be specified by the
Company.  These records will be available to and remain the sole
property of the Company at all times.

    


    (e)  Determination of Subject
Ideas and Inventions.  I further agree that all information and
records pertaining to any idea, process, trademark, service mark, invention,
technology, computer hardware or software, original work of authorship, design,
formula, discovery, patent, copyright, trade secret, innovation, product, and
all improvements, know-how, rights, and claims related to the foregoing
(“Intellectual Property”), that I do not believe to be a Subject Idea or
Invention, but that is conceived, developed, or reduced to practice by the
Company (alone by me or with others) during my relationship with the Company and
for one (1) year thereafter, shall be disclosed promptly by me to the
Company.  The Company shall examine such information to determine if
in fact the Intellectual Property is a Subject Idea or Invention subject to this
Agreement.

    


    (f)  Access.  Because
of the difficulty of establishing when any Subject Ideas or Inventions are first
conceived by me, or whether it results from my access to Confidential
Information or Company Materials, I agree that any Subject Idea and Invention
shall, among other circumstances, be deemed to have resulted from my access to
Company Materials if: (1) it grew out of or resulted from my work with the
Company or is related to the business of the Company, and (2) it is made,
used, sold, exploited or reduced to practice, or an application for patent,
trademark, copyright or other proprietary protection is filed thereon, by me or
with my significant aid, within one year after termination of my relationship
with the Company.

    


    (g)  Assistance.  I
further agree to assist the Company in every proper way (but at the Company’s
expense) to obtain and from time to time enforce patents, copyrights and other
rights or registrations on said Subject Ideas and Inventions in any and all
countries, and to that end will execute all documents necessary:

    


    (1)  to
apply for, obtain and vest in the name of the Company alone (unless the Company
otherwise directs) letters patent, copyrights or other analogues protection in
any country throughout the world and when so obtained or vested to renew and
restore the same; and

    


    (2)  to
defend any opposition proceedings in respect of such applications and any
opposition proceedings or petitions or applications for revocation of such
letters patent, copyright or other analogous protection, and

    


    (3)  to
cooperate with the Company (but at the Company’s expense) in any enforcement or
infringement proceeding on such letters patent, copyright or other analogues
protection.

    


    (h)  Authorization to
Company.  In the event the Company is unable, after reasonable
effort, to secure my signature on any patent, copyright or other analogous
protection relating to a Subject Idea and Invention, whether because of my
physical or mental incapacity or for any other reason whatsoever, I hereby
irrevocably designate and appoint the Company and its duly authorized officers
and agents as my agent and attorney-in-fact, to act for and on my behalf and
stead to execute and file any such application, applications or other documents
and to do all other lawfully permitted acts to further the prosecution,
issuance, and enforcement of letters patent, copyright or other analogous rights
or protections thereon with the same legal force and effect as if executed by
me.  My obligation to assist the Company in obtaining and enforcing
patents and copyrights for Subject Ideas and Inventions in any and all countries
shall continue beyond the termination of my relationship with the Company, but
the Company shall compensate me at a reasonable rate after such termination for
time actually spent by me at the Company’s request on such
assistance.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    (i)  Acknowledgement.  I
acknowledge that there are not currently existing ideas, processes, inventions,
discoveries, marketing or business ideas or improvements which I desire to
exclude from the operation of this Agreement.  To the best of my
knowledge, there is no other contract to assign inventions, trademarks,
copyrights, ideas, processes, discoveries or other intellectual property that is
now in existence between me and any other person (including any business or
governmental entity).

    


    (j)  No Use of
Name.  I shall not at any time use the Company’s name or any
Company trademark(s) or trade name(s) in any advertising or publicity without
the prior written consent of the Company.

    


    4.  Competitive
Activity.

    


    (a)  Acknowledgement.  I
acknowledge that the pursuit of the activities forbidden by Section 4(b)
below would necessarily involve the use, disclosure or misappropriation of
Confidential Information.

    


    (b)  Prohibited
Activity.  To prevent the above-described disclosure,
misappropriation and breach, I agree that during my relationship and for a
period of one (1) year thereafter, without the Company’s express written
consent, I shall not, directly or indirectly, (i) employ, solicit for
employment, or recommend for employment any person employed by the Company (or
any Affiliate); and (ii) engage in any present or contemplated business
activity that is or may be competitive with the Company (or any Affiliate)in any
state where the Company conducts its business, unless I can prove that any
action taken in contravention of this subsection (ii) was done without use in
any way of Confidential Information.

    


    5.  Representatives and
Warranties.  I represent and warrant (i) that I have no
obligations, legal or otherwise, inconsistent with the terms of this Agreement
or with my undertaking a relationship with the Company; (ii) that the
performance of the services called for by this Agreement do not and will not
violate any applicable law, rule or regulation or any proprietary or other right
of any third party; (iii) that I will not use in the performance of my
responsibilities for the Company any confidential information or trade secrets
of any other person or entity; and (iv) that I have not entered into or
will not enter into any agreement (whether oral or written) in conflict with
this Agreement.

    


    6.  Termination of
Obligations.

    


    (a)  Upon the termination
of my relationship with the Company or promptly upon the Company’s request, I
shall surrender to the Company all equipment, tangible Proprietary Information,
documents, books, notebooks, records, reports, notes, memoranda, drawings,
sketches, models, maps, contracts, lists, computer disks (and other
computer-generated files and data), and any other data and records of any kind,
and copies thereof, created on any medium and furnished to, obtained by, or
prepared by myself in the course of or incident to my relationship with the
Company, that are in my possession or under my control.

    


    (b)  My representations,
warranties, and obligations contained in this Agreement shall survive the
termination of my relationship with the Company.

    


    (c)  Following any
termination of my relationship with the Company, I will fully cooperate with the
Company in all matters relating to my continuing obligations under this
Agreement.

    


    (d)  I hereby grant
consent to notification by the Company to any of my future employers or
companies I consult with about my rights and obligations under this
Agreement.

    


    (e)  Upon termination of
my relationship with the Company, I will execute a Certificate acknowledging
compliance with this Agreement in the form reasonably requested by the
Company.

    


    7.  Injunctive
Relief.  I acknowledge that my failure to carry out any
obligation under this Agreement, or a breach by me of any provision herein, will
constitute immediate and irreparable damage to the Company, which cannot be
fully and adequately compensated in money damages and which will warrant
preliminary and other injunctive relief, an order for specific performance, and
other equitable relief.  I further agree that no bond or other
security shall be


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    required
in obtaining such equitable relief and I hereby consent to the issuance of such
injunction and to the ordering of specific performance.  I also
understand that other action may be taken and remedies enforce against
me.

    


    8.  Modification.  No
modification of this Agreement shall be valid unless made in writing and signed
by both parties.

    


    9.  Binding
Effect.  This Agreement shall be binding upon me, my heirs,
executors, assigns and administrators and is for the benefit of the Company and
its successors and assigns.

    


    10.  Governing
Law.  This Agreement shall be construed in accordance with, and
all actions arising under or in connection therewith shall be governed by, the
internal laws of the State of California (without reference to conflict of law
principles).

    


    11.  Integration.  This
Agreement sets forth the parties’ mutual rights and obligations with respect to
proprietary information, prohibited competition, and intellectual
property.  It is intended to be the final, complete, and executive
statement of the terms of the parties’ agreements regarding these
subjects.  This Agreement supercedes all other prior and
contemporaneous agreements and statements on these subjects, and it may not be
contradicted by evidence of any prior or contemporaneous statements or
agreements.  To the extent that the practices, policies, or procedures
of the Company, now or in the future, apply to myself and are inconsistent with
the terms of this Agreement, the provisions of this Agreement shall control
unless changed in writing.

    


    12.  Not
Employment.  This Agreement is not an employment agreement as I
am an independent consultant.  I understand that the Company may
terminate my association with it at any time, with or without cause, subject to
the terms of any separate written consulting agreement executed by a duly
authorized officer of the Company.

    


    13.  Construction.  This
Agreement shall be construed as a whole, according to its fair meaning, and not
in favor of or against any party.  By way of example and not
limitation, this Agreement shall not be construed against the party responsible
for any language in this Agreement.  The headings of the paragraphs
hereof are inserted for convenience only, and do not constitute part of and
shall not be used to interpret this Agreement.

    


    14.  Attorneys’
Fees.  Should either I or the Company, or any heir, personal
representative, successor or permitted assign of either party, resort to legal
proceedings to enforce this Agreement, the prevailing party (as defined in
California statutory law) in such legal proceeding shall be awarded, in addition
to such other relief as may be granted, attorneys’ fees and costs incurred in
connection with such proceeding.

    


    15.  Severabilty.  If
any term, provision, covenant or condition of this Agreement, or the application
thereof to any person, place or circumstance, shall be held to be invalid,
unenforceable or void, the remainder of this Agreement and such term, provision,
covenant or condition as applied to other persons, places and circumstances
shall remain in full force and effect.

    


    16.  Rights
Cumulative.  The rights and remedies provided by this Agreement
are cumulative, and the exercise of any right or remedy by either the Company or
me (or by that party’s successor), whether pursuant hereto, to any other
agreement, or to law, shall not preclude or waive that party’s right to exercise
any or all other rights and remedies.  This Agreement will inure to
the benefit of the Company and its successors and assigns.

    


    17.  Nonwaiver.  The
failure of either the Company or me, whether purposeful or otherwise, to
exercise in any instance any right, power or privilege under this Agreement or
under law shall not constitute a waiver of any other right, power or privilege,
nor of the same right, power or privilege in any other instance.  Any
waiver by the Company or by me must be in writing and signed by either myself,
if I am seeking to waive any of my rights under this Agreement, or by an officer
of the Company (other than me) or some other person duly authorized by the
Company.

    


    18.  Notices.  Any
notice, request, consent or approval required or permitted to be given under
this Agreement or pursuant to law shall be sufficient if it is in writing, and
if and when it is hand delivered, faxed, or sent by regular mail with postage
prepaid to my residence (as noted in the Company’s records) or to the Company’s
principal office, as the case may be.


    
      
         


      

      
         


        
          

        

      

      
         


      

    


    19.  Agreement to Perform
Necessary Acts.  I agree to perform any further acts and
execute and deliver any documents that may be reasonably necessary to carry out
the provisions of this Agreement.

    


    20.  Assignment.  This
Agreement may not be assigned without the Company’s prior written
consent.

    


    21.  Compliance with
Law.  I agree to abide by all federal, state, and local laws,
ordinances and regulations.

    


    22. Counterparts.  This
Agreement may be executed in one or more counterparts.  It shall not
be necessary that the signature of or on behalf of each party appears on each
counterpart, but shall be sufficient that the signature of or on behalf of each
party appears on one or more of the counterparts. All counterparts shall
collectively constitute one agreement.  A facsimile copy or other
reliable reproduction of this Agreement shall be deemed an
original.

    


    23.  Acknowledgement.  I
acknowledge that I have had the opportunity to consult legal counsel in regard
to this Agreement, that I have read and understand this Agreement, that I am
fully aware of its legal effect, and that I have entered into it freely and
voluntarily and based on my own judgment and not on any representations or
promises other than those contained in this Agreement.

    


    I WITNESS
WHEREOF, the undersigned have executed this Agreement as of the dates set forth
below.

    


    CAUTION:
THIS AGREEMENT CREATES IMPORTANT OBLIGATIONS OF TRUST AND AFFECTS THE
CONSULTANTS RIGHTS TO INVENTIONS AND OTHER INTELLECTUAL PROPERTY THE CONSULTANT
MAY DEVELOP.

    


    Dated:  November
12, 2008

    


    Signed:

    


    /s/ CHUCK
TIMPE____________________

    Chuck
Timpe 

    9652
Claire Avenue

    Northridge,
CA  91324

    818-772-8400

    818-772-8300
fax

    


    


    


    /s/ RICHARD A.
ANDERSON___________

    Richard
A. Anderson 

    President
and Chief Operating Officer

    Hythiam,
Inc.

    310-444-4300

    310-444-5300
fax