Document:

exhibit_10-13.htm

    EXHIBIT
10.13

    

    TECHNOLOGY
LICENSE AND ADMINISTRATIVE SERVICES AGREEMENT

    

    The terms
of this Technology License and Administrative Services Agreement (this or the
“Agreement”) are agreed
to by and between [organization], a [state] [professional association] (“Group”), and Hythiam, Inc., a
Delaware corporation (“Hythiam”) (each, a “Party” and, collectively, the
“Parties”).

    

    
      	 
      	 
      	 
      	 
      	 
      	 
      
	
              Agreement
      Effective Date: _____________________________

            	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
              Term
      of Agreement:  The term of this Agreement shall commence on the
      Effective Date and continue until the _____ anniversary of the Effective
      Date, unless earlier terminated as set forth in Section 10 (the
      “Term”).

            
	 
      	 
      	 
      	 
      	 
      	 
      
	
              [Organization]

            	 
      	
              Hythiam,
      Inc.

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
              By:

            	 
      	 
      	
              By:

            	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
              Name:

            	 
      	 
      	
              Name:

            	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
              Title:

            	 
      	 
      	
              Title:

            	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
              Date:

            	 
      	 
      	
              Date:

            	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
              Address:

            	 
      	 
      	
              Address:

            	
              11150
      Santa Monica Blvd. #1500

            	 
      
	 
      	 
      	 
      	 
      	
              Los
      Angeles, CA 90025

            	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
              Contact:

            	 
      	 
      	
              Contact:

            	 
      	 
      
	
              Phone:

            	 
      	 
      	
              Phone:

            	 
      	 
      
	
              E-mail:

            	 
      	 
      	
              E-mail:

            	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      
	
              Attachments:  Schedule
      A; Schedule B: Authorized Users; Schedule C: Business Associate/Data Use
      Agreement; Schedule D: PROMETA® Treatment Program; Schedule E: Provider
      Use Agreement

            

    

    

    

    AGREEMENT
TERMS

    

    
      	
              1  

            	
              PURPOSES

            

    

    

    Hythiam
provides through its proprietary treatment program  for treatment of
substance abuse (“Program”), its Data Collection
and Data Reporting (as defined in Section 4.2), its
Administrative System (as defined in Section 4.4) and other associated Hythiam
Intellectual Property (as defined in Section 7.5) and
other Services (as defined in Section 4) a process
for use by health care providers in screening, diagnosing and treating patients
with or suspected of addiction to or dependence on alcohol or psycho-stimulants,
including cocaine, crack cocaine and methamphetamine, and related conditions
(collectively, the “Licensed
Technology”).  Group desires to be able to offer to patients
presenting to Group’s medical offices located at:

    

    
      	
              (a)  

            	
              ________

            

    

    ________

    

    (each a
“Facility”), and third
party payers services that include use of the Licensed
Technology.

    
      
         

      

      
        1

        
          

        

      

      
         

      

    

    
      	
              2  

            	
              AUTHORITY
      AND RELATIONSHIP OF THE PARTIES

            

    

    

    Group and
Hythiam are and shall remain independent contractors throughout the
Term.  Nothing in this Agreement shall be construed to constitute
Group and Hythiam as partners, joint venturers, agents or anything other than
independent contractors.

    

    
      	
              3  

            	
              HYTHIAM
      LICENSE

            

    

    

    
      	
              3.1  

            	
              Grant
      of License Rights to Group

            

    

    

    Subject
to the terms and conditions of this Agreement, Hythiam hereby grants to Group,
and Group hereby accepts, a limited non-transferable, restricted, non-exclusive,
revocable, commercial license to operate and use the Licensed Technology
identified generally in more detail on Schedule A at a
Facility for the purposes set forth on Schedule A without
the right to sublicense the foregoing rights (the “Hythiam
License”).  Group acknowledges that: (i) this Agreement does
not transfer any interest in the ownership or title of any portion of the
Licensed Technology; and (ii) Group does not own any portion of the Licensed
Technology.

     

    
      	
              3.2  

            	
              Term
      of License

            

    

    

    The
Hythiam License shall terminate in total simultaneously with the expiration or
earlier termination for any reason of this Agreement; provided that Group may
complete any Episode of Treatment (as defined in Schedule A) that it has
commenced with a patient as of the date of any termination.

    

    
      	
              3.3  

            	
              License
      Restrictions

            

    

    

    Group may
use all or any part of the Licensed Technology only for the purposes set forth
in this Agreement and only at a Facility. Without limiting the generality of the
foregoing, Group shall not, nor shall it permit any third party to: (a) copy,
modify, market, reproduce, sell or distribute the Licensed Technology other than
as actually necessary and then only in strict accordance with this Agreement for
delivery of patient care services and billing third parties for reimbursement of
those services; (b) make the Licensed Technology or Services available to any
individual or entity other than Group Personnel or Group Physicians (as those
terms are defined in Section 4.1) who are
then Authorized Users (as defined in paragraph 3 of Schedule A) and who
have been informed by Group of, and are bound by, the terms and conditions of
this Agreement; (c) modify or create derivative works based upon the Licensed
Technology; (d) rent, lease, grant a security interest in, or otherwise transfer
or attempt to transfer any rights in or to the Licensed Technology; or (e)
remove, alter or deface any legends, restrictions, product identification,
copyright, trademark or other proprietary notices from the Licensed
Technology.

    

    
      	
              3.4  

            	
              Group
      Obligations

            

    

    

    3.4.1           GROUP
SHALL (A) KEEP THE LICENSED TECHNOLOGY FREE AND CLEAR OF ANY AND ALL CLAIMS,
LIENS AND ENCUMBRANCES INCURRED OR CAUSED BY GROUP, (B) NOTIFY HYTHIAM PROMPTLY
IF AND WHEN IT BECOMES AWARE OF ANY USE OR DISCLOSURE OF ALL OR PART OF THE
LICENSED TECHNOLOGY NOT AUTHORIZED BY THIS AGREEMENT AND (C) BE RESPONSIBLE FOR
ALL THE COST AND ALL LIABILITY OR RISK OF LOSS ASSOCIATED WITH THE USE BY GROUP
OF THE LICENSED TECHNOLOGY AS CONTEMPLATED BY AND IN THIS AGREEMENT ARISING FROM
THE ACTION OR FAILURE TO ACT OF GROUP.  THE RIGHTS SET FORTH IN THIS
SECTION 3
REPRESENT GROUP’S ONLY RIGHTS WITH RESPECT TO THE USE OF ALL OR ANY PORTION OF
THE LICENSED TECHNOLOGY.  ANY USE OF ALL OR ANY PORTION OF THE
LICENSED TECHNOLOGY OUTSIDE THE SCOPE OF SUCH RIGHTS IS STRICTLY
PROHIBITED.

    

    

    
      
         

      

      
        2

        
          

        

      

      
         

      

    

    
      	
              4  

            	
              HYTHIAM
      SERVICES

            

    

    

    
      	
              4.1  

            	
              Provision
      of Licensed Technology

            

    

     

    Hythiam
will deliver to Group the Licensed Technology as set forth on Schedule
A.  Only Group’s physician employees or contractors (“Group Physicians”) and its
non-physician employees (collectively, “Group Personnel”) who at the
time are Authorized Users shall have access to or use the Licensed Technology,
and only in accordance with this Agreement.  In addition, at all times
during the Term: (a) all Group Physicians shall be admitted to active medical
staff privileges without significant limitation by a hospital whose service area
overlaps that of Group; (b) at least one Group Physician shall be currently
certified in addiction medicine by the American Society of Addiction Medicine or
the American Academy of Addiction Psychiatry or recognized (in the reasonable
judgment of Hythiam) as an expert in addiction medicine by his or her peers, and
such physician shall assume an active supervisory role in the delivery of
treatments utilizing the Licensed Technology, and (c) Group shall identify an
overnight custody for patients during treatment through a relationship with a
hospital or residential treatment center of recognized quality and reputation
(in the reasonable judgment of Hythiam) for patients requiring in-patient
medical care during treatment; provided, that Group shall choose when to admit
or not admit patients and maintain complete control over its clinical
judgment.

     

    
      	
              4.2  

            	
              Data
      Collection and Reporting

            

    

     

    Hythiam
has developed proprietary business processes that it uses to process and report
data generated from the use of the Licensed Technology (“Data Reports”).  As
part of the Services, Hythiam may, subject to its obligation to fully comply
with the terms of Schedule C setting forth its obligations with regard to
Protected Health Information (“PHI”) as a business associate,
as those terms are defined under the Health Insurance Portability and
Accountability Act of 1986, as amended and its implementing rules and
regulations (collectively, “HIPAA”), collect encounter,
treatment and outcomes data on behalf of Group, including follow-up patient
surveys, in which event it will provide, or arrange for the provision of, Data
Reports to Group for treatment performed by or on behalf of Group using the
Licensed Technology, all as set forth in more detail on Schedule A (“Data Collection and
Reporting”).

     

    
      	
              4.3  

            	
              Marketing
      Services

            

    

     

    Hythiam
will perform marketing services to promote use of the Licensed Technology as set
forth in more detail below.  Hythiam has and will continue to maintain
a consumer website, public relations initiatives, advocacy development, a
publication strategy, a national call center and brand development and promotion
activities.  As to the activities of Group involving the Licensed
Technology, Group shall assist with marketing efforts. Group shall at no
additional cost to Hythiam and in compliance with Laws (as defined in Section 15.12) and
Group’s professional judgment, refer to the PROMETA® Treatment
Program in its
institutional advertising and other promotional programs, including classified
telephone directory and other print advertising, Group’s website and
presentations to referring physicians, and ensure that any such references enjoy
equal billing with Group’s other substance abuse care and treatment services.
Group shall be responsible for the cost of production and distribution of
marketing materials using the Hythiam templates.  Any references to
the PrometaTM Treatment Program or use of other Hythiam marks that is different
from that provided specifically to Group in Hythiam marketing materials or
templates shall be approved in advance in writing by
Hythiam.  Notwithstanding the foregoing, Group shall be solely
responsible for compliance of its marketing and promotional activities with
Laws.

     

    
      	
              4.4  

            	
              Administrative
      System Services

            

    

     

    Group has reviewed Hythiam’s Practice
Management Program, a comprehensive proprietary medical office practice
management guide available to Hythiam’s licensees and their respective office
staffs (“Administrative
System”), which sets forth the tools, processes, and suggested forms and
procedures for aligning Group’s practice goals with its patient treatment
goals.  Group has determined

    
      
         

      

      
        3

        
          

        

      

      
         

      

    

    that it
desires to implement the Administrative System and finds it consistent with its
practice goals and philosophy.  Hythiam shall provide the
Administrative Systrem to Group for Group’s implementation and use pursuant to
this Agreement,   Hythiam will provide Group’s administrative
staff with training and education on how to implement and utilize the
Administrative System.

     

    
      	
              4.5  

            	
              Continuing
      Care Services

            

    

     

    Group
shall be responsible for, and Hythiam shall, on behalf of Group, pay for,
Continuing Care for Group’s patients treated using the Licensed Technology, in
each case, as set forth in more detail in paragraph 6 of Schedule A (“Continuing Care
Services”).

     

    
      	
              4.6  

            	
              Education
      Services

            

    

     

    As part
of the Services, Hythiam will provide education and training to Group Personnel
and Group Physicians who are or are in process of becoming Authorized Users as
reasonably necessary concerning the implementation and use of the Licensed
Technology (“Education
Services”).  These Education Services shall be informational
only and will not reduce or limit in any way Group’s responsibility for clinical
services provided using the Licensed Technology as set forth in Section 6.2 and
elsewhere in this Agreement.  The costs of any travel or lodging
incurred by Group Personnel or Group Physicians to attend education or training
seminars shall be paid by Group.  In addition, Hythiam reserves the
right (a) to seek reimbursement from Group for any change fees and similar costs
incurred by it in the event that a training session is rescheduled at Group’s
request and (b) to charge Group at the rate of $______ per day plus reasonable
expenses in the event that more than two training sessions are required or
requested by Group in any period of 12 consecutive months during the
Term.

     

    
      	
              4.7  

            	
              Performance
      Standards

            

    

     

    Hythiam
will provide the Licensed Technology as set forth in Section 4.1, the Data
Collection and Reporting as set forth in Section 4.2, the
Marketing Services as set forth in Section 4.3, the
Appointment Services as set forth in Section 4.4,
Continuing Care Services as set forth in Section 4.5, and the
Education Services as set forth in Section 4.6
(collectively, “Services”) in a competent and
timely manner and in compliance with Laws.

     

    
      	
              4.8  

            	
              Hythiam
      Authorized Personnel

            

    

     

    Group
acknowledges and agrees that in order to provide the Data Collection and
Reporting and the Educational Services, Hythiam authorized personnel will
require access to patient treatment sessions.  Group agrees to allow
and facilitate this access, including the use of Group’s reasonable efforts to
obtain any and all necessary patient authorizations or
consents.  Group shall require all Group Personnel to cooperate with
the Hythiam Authorized Personnel with respect to the delivery of
Services.

     

    
      	
              4.9  

            	
              Space;
      Ancillary and Support Services

            

    

     

    Group
agrees that it will provide treatment using the Licensed Technology to patients
in a non-discriminatory manner, available on a regular work week basis, which
may, in the discretion of Group and dependent on patient demand, include some
weekend coverage, in a setting which is at least comparable to that in which it
generally provides similar patient care services, and with the provision of
ancillary (e.g.,
laboratory, radiology, blood banking) and support (e.g., housekeeping, pharmacy,
dietary, security) services as reasonably necessary and in accordance with
standards of timeliness and quality consistent with its provision of other
patient care services.

     

    In
addition, Group shall provide, subject to availability, appropriate office space
on-site for Hythiam personnel who are involved in providing Services upon
advance notice of Hythiam personnel’s desire to use such office space while
providing Services.

     

    
      
         

      

      
        4

        
          

        

      

      
         

      

    

    
      	
              4.10  

            	
              Billing
      and Collection Services

            

    

     

    Group
agrees to provide or arrange for the provision of billing and collection
services for treatment provided by Group using the Licensed Technology and to
provide those services in a non-discriminatory manner with the timeliness and
quality of those services consistent with Group’s billing and collection
provided for its other patient care services.

     

    
      	
              4.11  

            	
              Group
      Liaison

            

    

     

    Group
shall appoint a Group representative who will be reasonably available to, and
coordinate and consult with, the Hythiam Authorized Representative to facilitate
the provision of the Services.

     

    
      	
              5  

            	
              FINANCIAL
      TERMS

            

    

    

    
      	
              5.1  

            	
              License
      and Service Fees; Continuing Care
Fees

            

    

     

    5.1.1           During
the Term of this Agreement, Group shall timely remit the License and Service
Fees and Continuing Care Fees as set forth in paragraph 7 of Schedule A, according
to the terms set forth in Section 5.2 of this
Agreement.  During the Term, the Fees may be modified only by mutual
agreement of the Parties, except that Hythiam may at its discretion lower any
Fee (and thereafter raise it to no more than the original amount) effective 30
days after receipt by Group of notice from Hythiam to such effect
..  Any and all services requested by Group and provided by Hythiam
other than those set forth in Section 4 shall be
subject to additional fees to be agreed upon in writing by the
Parties.

     

    5.1.2           Group
shall also pay to Hythiam a one-time Administrative Service Fee of $_______.
Payments of $_______ will be made by check or wire transfer to Hythiam in the
amount if $_______ on or before the Effective Date, as a condition precedent to
this Agreement becoming of force and effect, and $_______ on or before ___ days
after the completion of clinical training of Group by Hythiam for use of the
Licensed Technology. This fee shall cover the start-up costs incurred by Hythiam
for site initiation, preparation of standard operating procedures, facility
manuals, training and education of site personnel in the use of the Licensed
Technology, including travel expenses and miscellaneous other start-up costs
unique to this Agreement.  Any failure by Group to make the second
$_______ payment in a timely manner shall automatically and immediately suspend
Group’s right to use the Licensed Technology and shall be deemed a default of a
material obligation of this Agreement by Group pursuant to Section 10.2.3 and
10.3 (i).

     

    
      	
              5.2  

            	
              Payment
      and Reporting Terms

            

    

     

    Group
will deliver to Hythiam within three business days following the end of every
calendar month during the Term, (i) a report identifying the number and type
(e.g., alcohol) of
patients treated using the Licensed Technology during the monthly period covered
by the report, the total fees charged to such patients, and the amounts
collected to date with respect to those patients; and (ii) a check payable to
Hythiam in the amount of the Fees (computed as provided in this Section 5.2 and Schedule A). Within
ten days after month end Hythiam will invoice Group for any unpaid License and
Service Fees and Continuing Care Fees that are due under this Agreement and
Group will pay any undisputed invoices within ten days after receipt by
Group.  Hythiam shall have the right to charge and collect a late fee
on any amounts that are delinquent in accordance with the terms of this
Agreement. Notwithstanding any other provision of this Agreement and subject to
the terms of the Continuing Care Services set forth in Schedule A, Hythiam
in no event or circumstance is or shall be responsible for any costs of, or
related to, patient care provided by Group, or extended or unanticipated care
required for patients treated using the Licensed Technology.

     

    
      
         

      

      
        5

        
          

        

      

      
         

      

    

    
      	
              5.3  

            	
              Reconciliation

            

    

     

    To
facilitate payment and compliance with the terms of this Agreement, the Parties
will meet as needed upon ten days’ written notice (which, for purposes of this
Section 5.3,
may take the form of email) by either party, for purposes of reconciling
payments and fees.  In preparation for this meeting, each Party will
provide reasonable access to its books and records regarding any and all detail
reasonably necessary to reconcile payments and ensure that Hythiam receives the
Fees in compliance with this Agreement.  In addition, Group will
investigate and resolve promptly and thoroughly any evidence that all or any
part of the Licensed Technology is being used in cases that are not reported for
purposes of this Section
5.  Any such unreported uses of the Licensed Technology shall
be included by Group in the next monthly report contemplated by Section
5.2.

     

    
      	
              5.4  

            	
              Payer
      Contracts

            

    

     

    Group and
Hythiam each will use best efforts to identify opportunities to include
reimbursement for treatment utilizing the Licensed Technology in, and will use
commercially reasonable efforts to negotiate amendments to, Group’s existing
payer contracts (and to identify prospects and negotiate all future payer
contracts) to arrange for inclusion of coverage for treatment utilizing the
Licensed Technology, including contracts with HMOs, PPOs, other managed care
companies, insurers, employers, unions, employee assistance programs or vendors,
behavioral health programs or vendors or other third-party payers.

     

    
      	
              6  

            	
              GOVERNING
      TERMS AND OBLIGATIONS

            

    

    

    
      	
              6.1  

            	
              Use
      of Licensed Technology

            

    

     

    Group
agrees that its use of the Licensed Technology will be in strict accordance with
the procedures provided by Hythiam and will comply with Laws and third party
payer requirements.  Hythiam reserves the right, upon five (5)
business days notice and during normal business hours and in strict compliance
with HIPAA and Laws, to inspect (or retain a third party to inspect) the patient
medical records of individuals who have undergone treatment utilizing the
Licensed Technology to test Group’s compliance with the foregoing restrictions
on use.  In addition, Hythiam reserves the right, upon five (5)
business days notice and during normal business hours, to inspect (or retain a
third party to inspect) financial and administrative records, including
appointment books, purchase requisitions and other administrative records,
supply orders, and patient correspondence, to ensure contract compliance and
accuracy in reporting.

     

    Only
Group Personnel or Group Physicians who have received education and training on
the use of the Licensed Technology may use the Licensed Technology, and Group
will ensure (and provide Hythiam with evidence satisfactory to Hythiam) that all
Group Personnel or Group Physicians who use any or all of the Licensed
Technology on its behalf are bound by the applicable terms of this Agreement and
will have and maintain, all training, licenses, approvals, certification,
equipment and information necessary for them to safely and properly use the
Licensed Technology. Group will report promptly to Hythiam any knowledge it
acquires that the Licensed Technology is being used in a manner not in strict
accordance with this Section 6.1, or
otherwise with this Agreement.  Notwithstanding the foregoing, this
Section 6.1 is
not intended to restrict or limit in any way each Group Physician’s
responsibility to exercise his or her clinical judgment in treating patients,
but instead to protect Hythiam’s interest in and to its Licensed Technology and
the integrity of that Licensed Technology.

     

    
      	
              6.2  

            	
              Clinical
      Activities

            

    

     

    The
Licensed Technology is provided by Hythiam to Group and, by extension, Group
Personnel and Group Physicians as additional points of information and not, in
whole or in part, as medical advice, diagnosis or treatment
recommendations.  The Parties acknowledge and agree that Hythiam in
performing its obligations under this Agreement is providing access to
technology and technology

    
      
         

      

      
        6

        
          

        

      

      
         

      

    

    services
only and will not be delivering patient care and will not be sponsoring or
performing human subjects research.  Group, as between the Parties,
and Group Physicians, as appropriate consistent with Laws, control and are fully
responsible for any and all patient care, Continuing Care or research activity
delivered by Group, Group Personnel or Group Physicians using the Licensed
Technology.  Group Personnel and Group Physicians shall at all times
exercise their independent professional judgment when treating patients,
providing Continuing Care, referring to other providers or performing research
using the Licensed Technology.

    

    
      	
              6.3  

            	
              Group
      Charges

            

    

     

    Group
shall notify Hythiam of Group’s charges for provision of care using the Licensed
Technology as determined by Group pursuant to Section 8 of Schedule
A.  Group agrees that its intent is to provide clinical
services utilizing the Licensed Technology at commercially reasonable market
rates.  Accordingly, if and when Group revises its charges for
clinical care utilizing the Licensed Technology, Group will provide advance
notice to Hythiam and will consider in good faith any recommendations provided
by Hythiam with respect to the relationship of those charges to market
rates.  Notwithstanding the foregoing, Group is solely responsible for
setting its charges for clinical services or research activities performed using
the Licensed Technology or Services and for the compliance of those charges with
applicable Laws.

     

    
      	
              6.4  

            	
              Billing
      and Collections

            

    

     

    In
billing any charges to patients or third-party payers that include clinical
services or research activities performed using the Licensed Technology or
Services, Group shall comply with the provisions of 18 U.S.C. Section 1347, with
Medicare/Medicaid and other Federal Health Care Program billing requirements,
and with the False Claims Act, 31 U.S.C. Section 3729, et seq., and any and all
other applicable Laws.

     

    
      	
              6.5  

            	
              Subject
      Data

            

    

     

    Hythiam
acknowledges and agrees that, as between the Parties, all patient medical
records shall be the property of Group.  Group agrees that Hythiam
shall have access at all times to all patient records for patients provided care
using the Licensed Technology ; provided that this access shall be in compliance
with all Laws, including HIPAA.  In addition, Group shall provide to
Hythiam for prompt downloading and/or processing in an agreed upon format all
patient data collected or maintained by Group, Group Personnel or Group
Physicians with respect to each individual provided care using all or part of
the Licensed Technology (“Subject
Data”).  The Business Associate/Data Use Agreement attached to
this Agreement as Schedule C shall
govern the use and disclosure by Hythiam of the Subject Data.

     

    
      	
              6.6  

            	
              Patient
      Consents; Regulatory Approvals

            

    

     

    Group
shall be solely responsible for obtaining any and all necessary patient consents
or authorizations, and any and all approvals or licenses from regulatory bodies
or other authorities, that are required by Laws or Group policy for Hythiam’s
delivery of the Services, Group’s use of the Licensed Technology, and the
provision of the Subject Data to Hythiam, all in accordance with this Agreement,
including any authorizations or consents necessary for disclosure of data to
Hythiam by Continuing Care providers.  Without limiting Group’
obligations in the foregoing sentence, Group shall provide Hythiam advance
written notice if it determines it needs any regulatory approvals or licenses
for its use of Licensed Technology.

     

    
      	
              6.7  

            	
              Government
      or Payer Submissions

            

    

     

    Hythiam
shall assist Group in the preparation of, and Group shall consult Hythiam far
enough in advance to allow for Hythiam’s substantive input concerning, all
reports, statements, declarations, and the

    
      
         

      

      
        7

        
          

        

      

      
         

      

    

    like
required to be made to governmental entities or third-party payers (including
cost, payment and reimbursement requests and reports) with respect to patient
care provided by Group or Group Physicians using the Licensed
Technology.  Group shall cooperate in making any such submissions,
which will not be prepared according to any policies or methodologies that
discriminate against care provided using the Licensed Technology, and shall file
the same.  Notwithstanding the foregoing, Group shall notify Hythiam
prior to submission of any reimbursement requests to governmental payers for
care using the Licensed Technology.  This Section 6.7 does not
limit Group’ sole responsibility for the content of these submissions for
reimbursement, nor does it create any responsibility on the part of Hythiam for
that content, but instead is intended only as protection against Group’
discretionary discrimination against care provided using the Licensed
Technology.

     

    
      	
              6.8  

            	
              Cooperation
      in Connection with Audits

            

    

     

    Group and
Hythiam agree to reasonably cooperate with each other in any mandated or
required external audits of Group’s or Hythiam’s operations by governmental
entities and other unrelated third parties.  Such cooperation shall
include notifying the other Party within one week of receipt of any such audit
notice and making available to the other Party reasonably relevant books and
records.

     

    
      	
              6.9  

            	
              Environmental
      Compliance

            

    

     

    Group
shall be responsible for obtaining and maintaining all material permits,
licenses and authorizations under, and shall comply in all material respects
with, all environmental laws and regulations with respect to Group’s
property.  As between the Parties, Group will be the generator of all
hazardous materials (including but not limited to chemical and radioactive
substances and waste) used at any treatment locations as may be authorized
hereunder and shall handle all hazardous materials, if any, in compliance with
all legal requirements and Group’s policies and procedures.

     

    
      	
              6.10  

            	
              Compensation
      of Staff Employed by Hythiam.

            

    

     

    Hythiam
shall be solely responsible for compensating all personnel employed by
Hythiam.  Group shall have no liability for the payment of wages,
fees, payroll taxes, employee benefits and other expenses of Hythiam staff,
except or unless as provided in this Agreement.

     

    
      	
              6.11  

            	
              Compensation
      of Personnel Employed by Group.

            

    

     

    Group
shall be solely responsible for compensating all Group Personnel and Group
Physicians.  Hythiam shall have no liability for the payment of wages,
fees, payroll taxes and other expenses of such staff, except or unless as
provided in this Agreement.

     

    
      	
              7  

            	
              INTELLECTUAL
      PROPERTY RIGHTS

            

    

    

    
      	
              7.1  

            	
              Reservation
      of Rights

            

    

     

    All
rights and licenses of any kind in the Licensed Technology and Services not
expressly granted in this Agreement are reserved exclusively to
Hythiam.  There shall be no licenses by implication to Group, any
Group Personnel, or any Group Physician under this Agreement, and Group agrees
not to attack or contest, in any way or in any forum, the validity,
enforceability, or Hythiam’s ownership of, or rights in, the Licensed Technology
and Services, to the maximum extent permitted by Law.

     

    
      	
              7.2  

            	
              Preexisting
      Intellectual Property

            

    

     

    Except as
expressly provided for in this Agreement, Hythiam and Group shall each retain
all Intellectual Property that they owned prior to the Effective Date, and this
Agreement shall not be interpreted or construed to grant a Party any rights,
title, interest or license in the other Party’s preexisting Intellectual
Property.

    
      
         

      

      
        8

        
          

        

      

      
         

      

    

    
      	
              7.3  

            	
              Hythiam
      Ownership

            

    

     

    To the
best knowledge of Hythiam, Hythiam’s predecessors in interest developed the
Licensed Technology independently, and use of the Licensed Technology by Group
in compliance with the terms hereof will not infringe upon the proprietary
rights of any third party.

     

    Group acknowledges
and agrees that, as between Hythiam and Group, all right, title and interest in
and to the Licensed Technology shall be solely and exclusively owned by
Hythiam.  If Group creates, conceives, develops, invents or reduces to
practice any inventions (whether or not patentable), documented records of
invention or patent disclosures, derivative works, continuations,
continuations-in-part, enhancements, trade secrets, know-how, show-how,
discoveries, improvements, innovations, ideas, industrial models, processes,
methods, formulae, compositions, findings, research and development information,
data, databases, content, electronic data files, training manuals, user guides,
manufacturing, engineering and technical drawings, manufacturing and production
processes and techniques, software and computer programs (in object code and
source code), business information and plans, technical knowledge and
information, maintenance information, mask works, integrated circuit
topographies, confidential information, and all other items with similar
characteristics, arising out of or related to the Licensed Technology
(collectively, the “Licensee
Modifications”), Group agrees to assign, and hereby irrevocably assigns,
all of Group’ right, title and interest in and to the Licensee Modifications to
Hythiam, including any Intellectual Property rights; provided, however, that Group
shall not during the Term be charged any additional fees for its use of such
Licensee Modifications to the extent that such Modifications become part of the
PROMETA®
Treatment Program whose use by Group as part of the Licensed Technology is
subject to this Agreement.  Group agrees to take or cause to be taken
such further actions, to execute, deliver and file or cause to be executed,
delivered and filed such further instruments, documents and agreements, and will
obtain such consents or waivers, as may be necessary or as may be reasonably
requested in order to fully effectuate the purposes, terms and conditions of
this agreement at Hythiam’s cost.  Group further agrees to ensure that
all Group Personnel and/or Group Physicians who are involved in any way with the
Licensee Modifications agree (i) to assign and do assign all of their right,
title and interest in the Licensee Modifications, including, without limitation,
all Intellectual Property related thereto, to Group (who in turn shall assign
and hereby assigns the same to Hythiam as set forth in this Section 7.3) and/or
to assign all such rights directly to Hythiam; and (ii) to waive all moral
rights and agree to never assert any moral rights in the Licensee
Modifications.  Group agrees that for purposes of this Agreement the
term “moral rights” means any rights of paternity or integrity, including any
right to claim authorship of a copyrightable work, to object to a modification
of such copyrightable work, and any similar right existing under the judicial or
statutory law of any country in the world or under any treaty, regardless of
whether or not such right is denominated or generally referred to as a “moral
right.”  Group hereby waives and agrees never to assert any moral
rights that Group may have in any Licensee Modifications, and Group hereby
further agrees to obtain waivers from Group Personnel and/or Group Physicians to
any moral rights that they may have in any Licensee
Modifications.  Hythiam shall be solely entitled to and shall be
solely responsible for, at its sole expense, filing, having filed, prosecuting,
having prosecuted, maintaining and having maintained all patents and patent
applications, as applicable, relating to the Licensee
Modifications.  Notwithstanding the foregoing, Group shall be solely
responsible at its sole expense, for compliance with any and all Laws,
regulations, policies, procedures and guidelines relating to Group’s use of the
Licensed Technology.  The Parties acknowledge and agree that upon
creation and assignment to Hythiam, the Licensee Modifications shall
automatically without further action by either Party become part of the Licensed
Technology.  Group will promptly disclose and deliver to Hythiam all
Licensee Modifications.

     

    
      	
              7.4  

            	
              Use
      of Trademarks

            

    

     

    Each
Party recognizes that the name, logo and trademarks of the other Party represent
valuable assets of such entity and that substantial recognition and goodwill are
associated with such assets.  Each Party hereby agrees that neither it
nor any of its affiliates shall use the name, logo or any other trademarks of
the other Party without the prior written consent of the other party, which will
not be unreasonably withheld or delayed.  No Party will acquire any
right, interest or license in any trademark or service mark of the other Party
by virtue of this Agreement.  Where possible, Group will approve the
use

    
      
         

      

      
        9

        
          

        

      

      
         

      

    

    of its
name in documents for broad dissemination such that Hythiam, once securing
approval for use in a brochure or other document, will not need to secure
approval for each use of the brochure or document; provided, however, that after
termination of this Agreement: (a) the Parties shall reasonably promptly cease
referring to the other Party in their respective marketing materials; and (b)
neither Party shall comment for publication on the circumstances of termination
except as required for compliance with Laws, including but not limited to the
U.S. securities laws.

    

    
      	
              7.5  

            	
              Intellectual
      Property

            

    

     

    For
purposes of this Agreement, “Intellectual Property” shall
mean all intellectual property and proprietary rights worldwide (whether or not
registered or registrable, patented or patentable) including patents (including
U.S. Patent Nos. 6,103,734 and 7,186711 B2 and any and all other patent
applications or filings), copyrights, trademark rights, trade secret rights,
know-how, show-how, discoveries, improvements, moral rights, semiconductor chip
rights, and rights in ideas, inventions, innovations, Confidential Information,
industrial models, processes, methods, formulae, compositions, findings,
research and development information, databases, industrial designs, content,
electronic data files, training manuals, user guides, drawings, techniques,
software, computer programs (in object code and source code), business
information, business plans, technical knowledge, technical information,
maintenance information, brochures, labels, mask works, integrated circuit
topographies, and all other items with similar characteristics, along with all
other similar rights and all applications, registrations, divisionals,
continuations, continuations-in-part, re-examinations, extensions, reissues and
foreign counterparts and documented records of invention or patent disclosures
or the like in and to any and all of the foregoing.  Intellectual
Property shall not include the Subject Data, but will include (i) any
de-identified information or database created using the Subject Data, (ii) the
underlying formats and designs of any reports or other materials containing all
or any part of the Subject Data, and (iii) other information or other materials
created, derived, developed, improved or otherwise obtained by or on behalf of a
Party directly or indirectly using the Subject Data.

    

    
      	
              8  

            	
              INDEMNIFICATION
      AND INSURANCE

            

    

    

    
      	
              8.1  

            	
              Hythiam
      Indemnification of Group

            

    

     

    Group
shall not be liable to Hythiam or its affiliates or any of their respective
officers, directors, employees or other agents for, and Hythiam shall indemnify,
defend and hold harmless Group and its directors, officers, employees and agents
(collectively, the “Group
Indemnitees”) from and against, any and all liabilities, losses, suits,
claims, costs, expenses (including reasonable attorneys fees and disbursements),
interest, penalties, fines, judgments and actual or direct damages of any kind
whatsoever (collectively, “Losses”) to the extent and
proportion that such Losses relate to or arise from (i) negligent acts or
omissions or willful misconduct of Hythiam or any of the Hythiam Indemnitees (as
that term is defined in Section 8.2); or (ii)
breach of this Agreement by Hythiam or any of the Hythiam
Indemnitees.

     

    
      	
              8.2  

            	
              Group
      Indemnification of Hythiam

            

    

     

    Hythiam
shall not be liable to Group or its affiliates or any of their respective
officers, directors, employees or other agents for, and Group shall indemnify,
defend and hold harmless Hythiam and its directors, officers, employees and
agents (collectively, the “Hythiam Indemnitees”) from
and against any and all Losses to the extent and proportion that such Losses
relate to or arise from (i) negligent acts or omissions or willful misconduct of
Group or any of the Group Indemnitees; or (ii) breach of this Agreement by Group
or any of the Group Indemnitees.

     

    
      	
              8.3  

            	
              Procedures
      for Indemnification

            

    

     

    Each
Party shall provide prompt written notice to the other Party upon learning of
any occurrence or event that may result in an obligation of the other Party
under this Section
8; provided that the omission by a Party to give notice of a claim as
provided in this Section 8.3 shall not
relieve the other Party of its obligations under this Section 8 except to
the extent that (i) the omission results in a failure of actual

    
      
         

      

      
        10

        
          

        

      

      
         

      

    

    notice to
the other Party and (ii) the other Party suffers damages as a result of the
failure to give notice of the claim.  The other Party shall have the
right to maintain control of the defense and all negotiations for settlement of
any claims or demands under this Section 8; provided,
however, the other Party shall not settle any claims or demands without the
prior written consent of the Party giving notice (which shall not be
unreasonably withheld).  The Party giving notice shall have the right
to monitor and participate in any resolution or litigation of any such claim at
its own expense, and, if requested, the Party giving notice shall provide to the
other Party all reasonable documents and assistance relating to such
claim.  Notwithstanding the foregoing, neither Party shall be required
to take any action under this Section 8.3 (except
for the initial giving of notice) that materially prejudices its
rights.

    

    
      	
              8.4  

            	
              Group
      Insurance

            

    

     

    Group
shall secure and maintain, with a commercial insurance company approved to do
business in the State of _________________ comprehensive general liability
insurance with coverage limits of not less than $1,000,000 per occurrence and
$3,000,000 per annual aggregate, and shall require each Group Physician to
secure and maintain (to the extent not covered by Group’s insurance),
professional liability insurance covering Group or such Group Physician, as the
case may be, with coverage limits of not less than $1,000,000 per occurrence and
$3,000,000 per annual aggregate:

     

    
      	
              8.5  

            	
              Hythiam
      Insurance

            

    

     

    Hythiam
shall secure and maintain with a commercial insurance company approved to do
business in the State of California Errors & Omissions insurance with
coverage limits of not less than $1,000,000 per occurrence and $3,000,000 per
annual aggregate and general liability insurance with coverage limits of not
less than $1,000,000 per occurrence and $3,000,000 per annual
aggregate.

     

    
      	
              8.6  

            	
              Certificates
      of Insurance

            

    

     

    Each
Party shall provide to the other Party within ten days of its request
certificates of insurance to document the insurance coverages provided by Section 8.4 or Section 8.5, as
applicable, and shall notify the other Party promptly of any material change in
this coverage.

     

    
      	
              9  

            	
              CONFIDENTIALITY
      AND NON-DISCLOSURE

            

    

    

    
      	
              9.1  

            	
              Confidential
      Information

            

    

     

    Group
acknowledges and agrees that the Licensed Technology constitutes valuable trade
secrets and confidential information of Hythiam.  Group agrees that it
shall take, and shall ensure that Group Personnel and Group Physicians shall
take, all reasonable steps to preserve and protect the confidentiality of such
trade secrets and confidential information.  Such trade secrets and
information shall be deemed “Confidential Information” of
Hythiam.  In addition, the terms of this Agreement and all other
proprietary business information that Group, Group Personnel or Group Physicians
have received or receive from Hythiam or obtain as a result of use of the
Confidential Information shall be deemed Confidential Information of Hythiam,
and all proprietary business information that Hythiam or its personnel have
received or receive or obtain from Group as a result of performing Services
under this Agreement shall be deemed to be Confidential information of
Group.

     

    
      	
              9.2  

            	
              Non-Disclosure

            

    

     

    Each
Party agrees to maintain as confidential the Confidential Information of the
other Party and further agrees not to disclose such Confidential Information
other than as specifically permitted by this Agreement.  At no time
shall either Party use, or allow others to use or have access to, the other
Party’s Confidential Information for any purpose other than performance of
obligations or exercise of rights under and in accordance with this Agreement or
disclose the Confidential Information to any third party
without

    
      
         

      

      
        11

        
          

        

      

      
         

      

    

    the prior
written consent of the other Party, which may be withheld in its sole
discretion, and then only after the party to whom such disclosure will be made
has agreed in writing to comply with and be bound by the applicable terms of
this Agreement, including but not limited to this Section
9.  In the event of any legal action or proceeding or asserted
requirement under Laws requesting or demanding disclosure by a Party of all or
any part of the Confidential Information of the other Party, such Party shall
immediately notify the other Party in writing of such request or demand, the
terms and circumstances surrounding such request or demand, and the documents
requested or demanded so that the other Party may seek an appropriate protective
order or take other protective measures and/or waive such Party’s compliance
with the provisions of this Section
9.  If in the absence of a protective order or a waiver under
this Section 9
from the other Party, if such Party, in the reasonable opinion of its legal
counsel, is compelled to disclose any such Confidential Information or otherwise
stand liable for contempt or suffer other substantial penalty, such Party may
disclose such Confidential Information as so required without liability under
this Section 9;
provided, however, that
such Party:  (a) shall give the other Party written notice of the
Confidential Information to be so disclosed as far in advance of its disclosure
as is practicable; (b) shall furnish only that portion of the Confidential
Information which in the reasonable opinion of counsel is legally required; and
(c) shall cooperate with the other Party (at the other Party’s expense) to
obtain an order or other reliable assurance that confidential treatment will be
accorded to such Confidential Information.

    

    
      	
              9.3  

            	
              Disclosure
      to Patients

            

    

     

    Notwithstanding any provision to the
contrary in this Section 9 or
otherwise in this Agreement, nothing in this Agreement is intended to or shall
restrict any Group treating physician’s ability to disclose fully to patients
the details of treatment with the Licensed Technology or to provide any and all
relevant information necessary to obtain any patient’s informed consent to that
treatment, and Group agrees to provide patients with informed
consent  in accordance with the requirements of controlling law and
ethical guidelines as set forth in the American Medical Association’s Opinion Of
The Council On Ethical And Judicial Affairs CEJA Opinion 2-I-06
E-8.08.

    

    
      	
              10  

            	
              TERMINATION

            

    

    

    This
Agreement may be terminated prior to the expiration of the Term for Cause (as
defined in this Section 10), which
cause shall constitute an “Event of
Default.”  A termination for Cause must be effected by giving
written notice to the defaulting Party describing the Event of Default with
reasonable specificity and shall be subject to the cure periods set forth in
this Section
10.  In the event of termination of this Agreement for any
reason, each Party shall take all reasonable action and refrain from taking any
action to the extent necessary to mitigate that Party’s damages arising from or
related to the termination.

     

    
      	
              10.1  

            	
              Termination
      by Group

            

    

     

    Group
shall have Cause for termination of this Agreement under the following
circumstances:

     

    10.1.1                      If
Hythiam shall apply for or consent to the appointment of a receiver, trustee or
liquidator of all or substantially all of its assets, file a voluntary petition
in bankruptcy or admit in writing the inability to pay its debts as they become
due, have a petition for involuntary bankruptcy filed against it and such
petition is not dismissed within 30 days, make a general assignment for the
benefit of creditors, or take advantage of any insolvency Law, subject to a
30-day cure period after written notice of termination by Group;

     

    10.1.2                      If
Group presents reasonable evidence that continuation of this Agreement will
result directly in a sustained lack of profitability to Group, subject to 30
days’ advance written notice to Hythiam and no cure period;

     

    10.1.3                      If
any executive officer of Hythiam shall be convicted of a felony or of a
misdemeanor involving moral turpitude, notwithstanding an appeal of such
conviction may be pending (any such

    
      
         

      

      
        12

        
          

        

      

      
         

      

    

    conviction
to be promptly reported to Group), in each case, subject to Hythiam’s receipt of
notice to such effect from Group; or

    

    10.1.5                      If
Hythiam materially defaults in its performance of any of its material
obligations under this Agreement, subject to a 30-day cure period.

     

    
      	
              10.2  

            	
              Termination
      by Hythiam

            

    

     

    Hythiam
shall have Cause for termination of this Agreement under the following
circumstances:

     

    10.2.1                      If
Group shall apply for or consent to the appointment of a receiver, trustee or
liquidator of all or substantially all of its assets, file a voluntary petition
in bankruptcy or admit in writing the inability to pay its debts as they become
due, have a petition for involuntary bankruptcy filed against it and such
petition is not dismissed within 30 days, make a general assignment for the
benefit of creditors or take advantage of any insolvency Law, subject to a
30-day cure period after written notice of termination by Hythiam;

     

    10.2.2                      If
Hythiam presents reasonable evidence that continuation of the Agreement will
result directly in a sustained lack of profitability to Hythiam subject to 30
days’ advance written notice to Group and no cure period; provided, however, that this
requirement is for the preservation and protection of the Licensed Technology
and nothing in this Agreement shall be deemed to require Group to provide
treatments to any patients utilizing the Licensed Technology if and for so long
as, in the professional judgment of Group, such treatments would not be
beneficial to such patients.

     

    10.2.3                      If
Group materially defaults in its performance of any of its material obligations
under this Agreement subject to a 30-day cure period,;or

     

    10.2.4                      If
any executive officer (as to Group) or any Authorized User (as to such user)
shall be convicted of a felony or of a misdemeanor involving moral turpitude,
notwithstanding an appeal of such conviction may be pending, or shall have his
or her license to practice medicine or other pertinent professional credential
suspended, revoked or significantly qualified (any such events to be promptly
reported to Hythiam), in each case, subject to Group’s receipt of notice to such
effect from Hythiam.

     

    10.2.5                      In
addition, Hythiam may terminate this Agreement in its discretion at any time,
effective upon Group’s receipt of notice to such effect, in the
event:

     

    (a)           that
License and Service Fees paid hereunder with respect to any period of 12
consecutive months during the Term aggregate less than $________;
or

     

    (b)           that
appropriate Group Personnel and at least one Group Physician have not completed
the training referred to in Section 4.6 within the 30-day period commencing on
the Effective Date.

     

    
      	
              10.3  

            	
              Opportunity
      to Cure

            

    

     

    Following
the occurrence of an Event of Default (other than (i) the payment of money for
which a 10 calendar day period following notice is the only cure period, or (ii)
a default, the effects of which are not susceptible to being cured, and for
which no cure period shall be available), after receipt of written notice with
respect to such default, the defaulting Party shall have the applicable cure
period set forth in Section 10.1 or Section 10.2 to cure
such Event of Default prior to termination of this Agreement pursuant to the
provisions of this Section
10.3.  If the default is not cured within the period provided
for under this Section
10.3, the Party giving notice of default, may, at its option, terminate
this Agreement or exercise any other remedy at law or in equity consistent with
this Agreement.

     

    
      
         

      

      
        13

        
          

        

      

      
         

      

    

    
      	
              10.4  

            	
              Force
      Majeure

            

    

     

    Notwithstanding
anything in other sections of this Agreement to the contrary, the time for
performance by Hythiam or Group of its obligations under this Agreement
(including any cure period under Section 10.3) shall
be extended, at the performing Party’s option, by a period equal to any period
of delay for which performance in the customary manner shall be prevented,
hindered, or delayed by any extraordinary event not within the control or caused
by the fault of that Party, including, but not limited to, court orders;
governmental requirements; acts or failure to act of the other Party; unknown,
undisclosed or concealed conditions; strikes; lockouts; fire; explosions; theft;
floods; riot; civil commotions; war; acts of terrorism; malicious mischief;
earthquake; materials shortages (on commercially reasonable terms) and/or acts
of God; and/or other conditions generally constituting an event of “Force
Majeure.” Notwithstanding anything in this Agreement to the contrary, neither
Group nor Hythiam shall be deemed to be in default of this Agreement to the
extent it is prevented, hindered or delayed from performing any of its
obligations under this Agreement by an event of Force Majeure.

     

    
      	
              10.5  

            	
              Notice
      Obligation

            

    

     

    Each
Party shall notify the other Party at least 72 hours in advance of taking any
action or filing any documents whatsoever that reasonably could trigger the
Event of Default set forth in Section 10.1.1 or
Section
10.2.1.

     

    
      	
              11  

            	
              DISCLAIMER
      OF WARRANTIES

            

    

    

    GROUP
ACKNOWLEDGES AND AGREES THAT THE LICENSED TECHNOLOGY AND SERVICES PROVIDED,
BEING LOANED OR LICENSED TO GROUP ARE PROVIDED ON AN “AS IS” AND “AS AVAILABLE”
BASIS WITH NO WARRANTY OF ANY KIND.  WITH RESPECT TO THIS AGREEMENT
HYTHIAM MAKES NO WARRANTIES, EXPRESS OR IMPLIED, INCLUDING WITHOUT LIMITATION,
ANY IMPLIED WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE,
DATA ACCURACY, SYSTEM INTEGRATION, OR (EXCEPT AS PROVIDED IN SECTION 7.2)
NON-INFRINGEMENT, REGARDING THE LICENSED TECHNOLOGY OR ANY OTHER MATERIALS OR
INFORMATION PROVIDED UNDER THIS AGREEMENT.  ADDITIONALLY, WITH RESPECT
TO THIS AGREEMENT HYTHIAM MAKES NO REPRESENTATIONS OF ANY KIND, EXPRESS OR
IMPLIED, REGARDING THE SAFETY OR EFFICACY OF THE LICENSED TECHNOLOGY, THAT THE
LICENSED TECHNOLOGY WILL OPERATE IN A MANNER THAT IS UNINTERRUPTED OR
ERROR-FREE, OR REGARDING ANY OTHER SUBJECT MATTER OF THIS
AGREEMENT.

     

    
      	
              12  

            	
              LIMITATION
      OF LIABILITY

            

    

    

    SUBJECT
TO SECTION 8,
HYTHIAM ASSUMES NO LIABILITY OR RESPONSIBILITY FOR HOW GROUP, ANY GROUP
PERSONNEL OR ANY GROUP PHYSICIAN USES THE LICENSED TECHNOLOGY FOR OR IN
CONNECTION WITH ANY DIAGNOSIS OR TREATMENT MADE OR PROVIDED IN CONNECTION WITH
OR RELIANCE ON THE LICENSED TECHNOLOGY, OR FOR INJURY TO PERSONS OR PROPERTY
ARISING FROM THE USE OF THE LICENSED TECHNOLOGY.  NOTWITHSTANDING ANY
OTHER PROVISION OF THIS AGREEMENT, IN NO EVENT SHALL EITHER PARTY HAVE ANY
LIABILITY TO THE OTHER PARTY FOR ANY INDIRECT, SPECIAL, CONSEQUENTIAL, PUNITIVE
OR EXEMPLARY DAMAGES OF ANY KIND, INCLUDING LOST REVENUES OR LOST PROFITS, LOSS
OF BUSINESS OR GOODWILL OR LOSS OF DATA, IN ANY WAY ARISING OUT OF, RELATED TO
OR IN CONNECTION WITH THIS AGREEMENT, EVEN IF SUCH PARTY HAS BEEN ADVISED OR
OTHERWISE HAS REASON TO KNOW OR KNOWS OF THE POSSIBILITY OF SUCH DAMAGES. GROUP
FURTHER AGREES THAT IN NO EVENT WILL THE TOTAL AGGREGATE LIABILITY OF HYTHIAM TO
GROUP FOR ANY CLAIMS, LOSSES, OR DAMAGES ARISING UNDER THIS AGREEMENT, WHETHER
IN CONTRACT, TORT, PRODUCT LIABILITY, OR OTHERWISE, EXCEED THE LESSER OF FEES
PAID BY GROUP TO HYTHIAM UNDER THIS AGREEMENT DURING THE 12-MONTH PERIOD
PRECEDING THE EVENT GIVING RISE TO LIABILITY or $_________.

    
      
         

      

      
        14

        
          

        

      

      
         

      

    

    
      	
              13  

            	
              DEBARMENT
      OR EXCLUSION

            

    

    

    Each
Party hereby represents and warrants that neither it, nor its principals,
officers, employees or agents providing services under this Agreement, is and at
no time has been excluded from participation in any federally funded health care
program, including Medicare or Medicaid.  Each Party hereby agrees to
immediately notify the other Party of any threatened, proposed, or actual
exclusion from any federally funded health care program, including Medicare and
Medicaid.  In the event that either Party is excluded from
participation in any federally funded health care program during the Term of
this Agreement, or if at any time after the Effective Date of this Agreement it
is determined that the excluded Party is in breach of this Section, this
Agreement shall, as of the effective date of such exclusion or breach,
automatically terminate.

     

    
      	
              14  

            	
              GOVERNMENT
      ACCESS

            

    

    

    The
Parties shall comply with the provisions of Section 1861(v)(1)(l) of the Social
Security Act and shall make available, upon written request of the Comptroller
General of the United States or the Secretary of the United States Department of
Health and Human Services or any of their duly authorized representatives, any
books, documents and records that are necessary to verify the nature and extent
of the costs incurred by either Party under this Agreement.  In
addition, each Party shall cooperate with the other Party and provide reasonable
access to books and records pertaining to this Agreement and the performance of
its obligations to the extent reasonably necessary for compliance with any
governmental agency review or audit of the other Party.

     

    
      	
              15  

            	
              MISCELLANEOUS

            

    

    

    
      	
              15.1  

            	
              Assignment

            

    

     

    Except as
expressly provided in this Agreement, neither this Agreement nor any right or
obligation under this Agreement is assignable 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, provided, however, that
either Party may assign its rights and obligations under this Agreement to its
parent, a subsidiary or other controlled affiliate or to any successor entity
without the consent of the other Party by providing the other Party with notice
of such permitted assignment.

     

    
      	
              15.2  

            	
              Complete
      Agreement

            

    

     

    This
Agreement, including any and all Schedules and attachments listed on the first
page of this Agreement, which are hereby incorporated by reference into this
Agreement, constitutes the complete and integrated understanding of the Parties
with respect to the subject matter of this Agreement and supersedes all prior
understandings and agreements, whether written or oral, with respect to the same
subject matter.

     

    
      	
              15.3  

            	
              Amendment

            

    

     

    This
Agreement may only be amended by a written agreement duly signed by persons
authorized to sign agreements on behalf of each Party.

     

    
      	
              15.4  

            	
              Notices

            

    

     

    All
notices, demands, requests, or other communications which may be or are required
to be given or made by any Party to the other Party pursuant to this Agreement
shall be in writing and shall be hand delivered, mailed by first-class
registered or certified mail, return receipt requested, postage prepaid, or
delivered by overnight air courier addressed as provided on the first page of
this Agreement.  Each notice, demand, request, or communication which
shall be given or made in the manner described in this Section 15.4 shall be
deemed sufficiently given or made for all purposes at such time as it
is

    
      
         

      

      
        15

        
          

        

      

      
         

      

    

    delivered
to the addressee (with the return receipt, the delivery receipt, or the
affidavit of messenger being deemed conclusive but not exclusive evidence of
such delivery) or at such time as delivery is refused by the addressee upon
presentation.

     

    
      	
              15.5  

            	
              Governing
      Law and Jurisdiction

            

    

     

    Subject
to Section
15.10, the interpretation and construction of this Agreement, to the
extent the particular issue is controlled by state Law, shall be governed by and
construed in accordance with the Laws (but not including choice of law
provisions) of the State of California.

     

    
      	
              15.6  

            	
              Waivers
      and Remedies

            

    

     

    The
failure by a Party to insist on strict adherence by the other Party to any term
of this Agreement shall not operate or be construed as a waiver by that Party of
the right to exercise any right or remedy that it may possess under this
Agreement, nor be construed as a bar to the exercise of such right or remedy by
such Party with respect to such failure or upon the occurrence of any subsequent
breach or violation.  Any waiver must be in writing and signed by the
Party to be charged.

     

    
      	
              15.7  

            	
              Headings;
      Certain Rules of Construction

            

    

     

    The
headings in this Agreement are intended solely for convenience of reference and
shall be given no effect in the construction or interpretation of this
Agreement.  The terms “including” or “include” shall mean “including,
without limitation,” or “include, without limitation,” as the case may
be.  References to “Sections” shall be to
Sections of this Agreement unless otherwise specifically
provided.  Any of the terms defined in this Agreement may, unless the
context otherwise requires, be used in the singular or the plural, depending on
the reference.

     

    
      	
              15.8  

            	
              Counterparts

            

    

     

    To
facilitate execution, this Agreement may be executed in as many counterparts as
may be required.  It shall not be necessary that the signature of or
on behalf of each Party appears on each counterpart, but it 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 a single
agreement.  A facsimile copy or other reliable reproduction of this
Agreement shall be deemed an original.

     

    
      	
              15.9  

            	
              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.

     

    
      	
              15.10  

            	
              Dispute
      Resolution

            

    

     

    Any claim or controversy arising out of
or in connection with this Agreement shall be subject to binding arbitration by
a single arbitrator in accordance with the existing Commercial Arbitration Rules
of Practice and Procedures of ADR Services, Inc., Adjudicate West or the
American Arbitration Association as the filing Party determines.  Any
arbitration shall occur in the City of Los Angeles,
California.  Nothing shall prohibit a Party from seeking equitable
relief in a court of law to maintain the status quo while an arbitration is
pending.  The Parties agree that the arbitrator shall not have the
right to award punitive damages or to certify a class action.  In the
event of a breach of any Party’s obligation to consummate this Agreement or
breach of any covenant by any Party to this Agreement, the non-breaching Party
shall be entitled to request enforcement of this Agreement by the arbitrator,
and the arbitrator shall be entitled to enforce this Agreement, as to such
matters by injunctive relief and by specific performance, such relief to be
without the necessity of posting a bond, cash or otherwise (unless required by
applicable Law).  In the event of litigation or arbitration by either
party for breaches to this Agreement then the prevailing party

    
      
         

      

      
        16

        
          

        

      

      
         

      

    

    shall pay
all costs (including, without limitation, attorneys' fees and court costs)
incurred by the other party in enforcing this Agreement or seeking to recover
damages for the breach.

    

    
      	
              15.11  

            	
              Expenses

            

    

     

    Except as
otherwise expressly provided in this Agreement, each Party shall bear its own
expenses (including those of its accountants, advisers or other agents or
representatives) incident to the preparation, negotiation, execution and
delivery of this Agreement and the performance of its obligations
hereunder.

     

    
      	
              15.12  

            	
              Severability

            

    

     

    The
Parties to this Agreement acknowledge and agree that it is their intent and
understanding that this Agreement complies with all applicable federal, state
and local laws, rules, regulations, court decisions and governmental
restrictions (collectively “Laws”), and that at all times
they intend to be in compliance with Laws.  Should any term or
provision of this Agreement be deemed invalid or void or unenforceable either in
its entirety or in a particular application because it is in conflict with or
violates any Law, the remainder of this Agreement shall nonetheless remain in
full force and effect and, if the subject term or provision is deemed to be
invalid, void or unenforceable only with respect to a particular application,
such term or provision shall remain in full force and effect with respect to all
other applications.  In addition, the Parties agree to amend this
Agreement to bring this Agreement in compliance with said
Law.  Notwithstanding the foregoing, if the Law is deemed by either
Party to be so materially adverse that, in either Party’s reasonable judgment,
the Agreement cannot or should not be so modified; then after discussion and
determination by the Parties that it is so materially adverse, the Parties agree
that, as a part of the consideration of this Agreement, they will declare this
Agreement null and void and, except for the sections specifically surviving
termination, of no further force and effect; provided, however, if either
Party intends to enforce such declaration of termination but the other Party
opposes termination (the “Opposing Party”), then the
Opposing Party  may veto such termination so long as the Opposing
Party pays for the cost to comply with the Law at issue (if compliance may be
achieved by the payment of money alone), in which event this Agreement shall
continue in full force and effect; and provided, further, however,
that this Section 15.12 shall
not be construed as providing either Party a basis for terminating this
Agreement if the material adverse effect results solely from a change in
reimbursement levels as a result of a change in Law.

     

    
      	
              15.13  

            	
              Survivability

            

    

     

    Notwithstanding
anything to the contrary set forth in this Agreement, Sections 3, 5.2, 5.3, 6, 7,
8, 9, 11, 12 and 15 shall survive the termination of this
Agreement.

     

    

    
      	
              1  

            	 

    

    
      
         

      

      
        17

        
          

        

      

      
         

      

    

    SCHEDULE
A

    

    

    1.           Description
of Licensed Technology to be Provided to Group:

    

    Any and all outpatient Hythiam
treatment Programs  provided by Hythiam during the Term to Group for,
or related to, a medically supervised treatment program for alcohol or addictive
psycho-stimulants, including:  Hythiam’s PROMETA® Treatment
Program for Alcohol; PROMETA®
Treatment Program for Stimulant Dependence; and PROMETA®
Treatment Program for Combination Stimulant and Alcohol Dependence, in each
case, as set forth in detail on Schedule D to the
Agreement, along with all necessary Intellectual Property, Confidential
Information, Services and other materials and information provided by Hythiam to
Group, including all Licensee Modifications, as reasonably necessary to comply
with and an administer said treatment programs.

    

    

    2.           Authorized
Purposes for Use of Licensed Technology:

    

    The Licensed Technology shall be used
for provision of substance abuse and/or addiction treatment related to alcohol
and/or psycho-stimulants on an outpatient basis (unless, in the Group
Physician’s clinical discretion, the patient requires an inpatient level of
care), and only in accordance with the terms of the Agreement.

    

    

    3.           Authorization
to be Provided by Hythiam:

    

    Hythiam will designate each individual
authorized to use the Licensed Technology upon the execution by qualified
individuals of the provider use agreement attached as Schedule E (each an “Authorized User”).  Notwithstanding
the foregoing, execution by Authorized Users of that agreement with Hythiam
shall not eliminate or limit in any way Group’s obligations as set forth in the
Agreement with respect to disclosure and use to and by Group Personnel or Group
Physicians of the Licensed Technology.  The list of Authorized Users
is set forth on Schedule B, as
amended from time to time.  Unless a shorter period is specified in
writing by Hythiam, during the Term, each Authorized User must undergo
reauthorization at least every 24 months.  Any Group Personnel or
Group Physicians who are not reauthorized within the 24-month period must
immediately cease any and all use of the Licensed Technology at the end of such
period.  Notwithstanding the foregoing, all Group Personnel and Group
Physicians must immediately cease any and all use of the Licensed Technology
upon termination of the Agreement for any reason.  Designation of an
individual by Hythiam as an Authorized User is in no way an evaluation or
certification by Hythiam of that individual’s ability or fitness to deliver
patient care services, but instead is only a mechanism for protection of
Hythiam’s Intellectual Property and other rights in and to the Licensed
Technology.

    

    

    4.           Terms
for Provision by Group of Subject Data to Hythiam:

    

    Group will provide Hythiam access to
its files and records to the extent reasonably necessary for Hythiam to access
and make use of the Subject Data in compliance with Laws and the
Agreement.  Group also, in accordance with Section 6.6, shall,
to the fullest extent allowed by Laws, obtain all consents or authorizations
necessary for Hythiam to be able to collect from Continuing Care providers, and
to authorize Continuing Care providers to disclose to Hythiam, patient data with
respect to Group patients treated using the Licensed Technology for a period of
up to two (2) years following that Group treatment.  In addition, at
Hythiam’s request and expense, Group shall cooperate with Hythiam in enabling
the interface of Group’s information system with Hythiam’s information system to
the extent reasonably necessary to facilitate Hythiam’s access to the Subject
Data, subject to compliance of the interface with applicable
Laws.

    
      
         

      

      
        18

        
          

        

      

      
         

      

    

    5. Terms
for Provision by Hythiam of Data Collection and Reporting to Group:

    

    Any data collection and reporting
services or data aggregation services provided to Group will be provided in
accordance with the business associate terms set forth in Schedule
C.  Hythiam, in its sole discretion, will determine the type,
extent and content of the data collected and the reports prepared, if any, for
each patient.  Data Reports provided by Hythiam to Group may include
one or more of the following reports:  Patient outcome reports and
Group satisfaction surveys at completion of treatment.  The list
and/or scope of data aggregation reports may be modified or expanded upon
agreement of the Parties, including for additional
fees.  Notwithstanding any other provision of this Agreement, Group
may share the Data Reports internally for its own internal business
purposes.

    

    Hythiam’s data collection services may
include, at Hythiam’s discretion, but are not necessarily limited to, interviews
with patients and administration on certain questionnaires.  Hythiam
will provide any of the data collection services that involve direct patient
contact only on behalf of Group and only in strict accordance with programs,
procedures and questionnaires provided by or approved by Group in advance unless
otherwise authorized by the patient in accordance with applicable
Law.  Hythiam shall not provide under any circumstances any medical
advice, diagnosis or treatment services to patients.  To the extent
that Hythiam collects post-treatment data directly from patients for its own
behalf, with authorization by the patient, Hythiam will make copies of such data
reports available to Group at Group’s request.  Nothing in this
paragraph 5 or elsewhere in this Agreement shall limit in any way Group’s
obligations under Section 6.6 to obtain
all patient consents or authorizations required for Hythiam to collect Subject
Data, including from Continuing Care (as defined in paragraph 6 of this Schedule A)
providers, for up to two (2) years following treatment, if Hythiam in its sole
discretion determines this data collection is appropriate for provision of the
Services.

    

    

    6.           Terms
for Administration of Continuing Care Services:

    

    The term “Continuing Care”, as used in
this Agreement, refers to a program of follow-up care provided to a patient
treated using the Licensed Technology where services are provided by a certified
or licensed health care provider (which may be Group).

    

    On behalf
of Group, and in consideration for Group’s payment to Hythiam (as provided in
Section 5.2) of
the applicable Continuing Care Service Fee (as defined in paragraph 7 of this
Schedule A),
Hythiam shall pay up to an amount equal to the Continuing Care Service Fee to
the Continuing Care provider, as designated by Group (and which may be Group),
for Continuing Care provided to each and any patient treated using the Licensed
Technology against properly submitted claims from such provider (and, in the
case of claims submitted by Group for Continuing Care provided by Group, shall
pay such claims promptly upon receipt of the associated invoices), provided that within 30 days
after receiving treatment, the patient enrolls in an appropriate Continuing Care
program and supplies appropriate documentation within 120 days after receiving
initial treatment.  Such documentation can be a bill from the
therapist providing Continuing Care, an Eligibility of Benefits from insurance
company, or other such documentation.  Any unused expired Continuing
Care funds less administrative costs will be donated by Hythiam to End
Dependence.  Notwithstanding the foregoing, Hythiam does not and shall
not endorse or recommend any specific provider and is not and shall not be
responsible or accountable in any way for the care provided by any Continuing
Care provider.

    

    Hythiam,
at its discretion and for its own behalf, with appropriate patient
authorization, may collect data for a period of up to two years following
treatment concerning the recovery follow-up treatment for Group patients
provided treatment using the Licensed Technology.  Subject to patient
authorization, Hythiam will make available to Group copies of the resulting data
reports at Group’s request.

    

    
      
         

      

      
        19

        
          

        

      

      
         

      

    

    7.           License
and Service Fees; Continuing Care Service Fee:

    

    License and Service
Fees:  Group shall pay Hythiam the following “License and Service Fees” for
each patient treated using the Licensed Technology:

    

    · Each
Episode of Treatment for alcohol
dependency                                     $_______

    · Each
Episode of Treatment for psycho-stimulant
dependency                   $_______

    

    Excluded
Patients:  The License and Service Fees set forth in this
paragraph 7 are for treatment of private pay patients only and
not for
treatment of patients reimbursed, on a primary or secondary basis, by Medicare
or Medicaid or any other governmental payer or funding source.  Before
treating any such excluded patient, Group will advise Hythiam of its desire so
to do, whereupon the Parties will meet and attempt in good faith to negotiate
appropriate fees for such treatments and will advise the patient in advance of
the non-covered status of the treatment and obtain an appropriate waiver
therefrom.  If and when treatment using the Licensed Technology
becomes a covered benefit for any class of commercially insured patients or for
patients reimbursed, on a primary or secondary basis, by Medicare or Medicaid or
any other governmental payer or funding source, the Parties will meet and
attempt in good faith to negotiate appropriate fees for such treatments and
(with reference to Section 5.2 of the
Agreement) the terms of payment of such fees  Absent such agreement,
as regards commercially insured patients, any such patients treated by Group
using the Licensed Technology will be taken fully into account in computing
Hythiam’s Fees as set forth in this paragraph 7.

    

    The
License and Service Fees set forth in this paragraph 7 do not include any
Continuing Care or other costs for any services other than those set forth in
Section 4 or
for any services required or requested as a result of any extended stays or
complications, the total cost for which, as between the Parties, is the
responsibility of Group.

    

    Continuing Care Service
Fee:  Subject to paragraph 6 of this Schedule A, Group
shall pay Hythiam a “Continuing
Care Service Fee” in the amount of $_______ with respect to each Episode
of Treatment.

    

    For
purposes of this paragraph 7, the date of initiation of an Episode of Treatment
by a patient will determine the period (see Section 5.2 of the
Agreement) in which such patient was treated.  Except as set forth in
paragraph 9 of this Schedule A, any
treatment provided to any patient by, at or on behalf of Group using all or any
part of the Licensed Technology shall be included in the calculation of the
License and Service Fee with respect to such patient.

    

    8.           Group
Charges

    

    Any Group charges for extended stays,
complications or follow-on care or treatment shall be in accordance with Group’s
normal and customary charges.  Hythiam shall have no responsibility
for payment of any Group costs or charges for any reason.

    

    For purposes of this Agreement, an
Episode of Treatment shall include:

    

    
      	
              ·  

            	
              Alcohol
      dependency - three administrations of the Hythiam PROMETA® Treatment
      Program for alcohol provided during a consecutive three-day treatment
      period.

            

    

    
      	
              ·  

            	
              Psycho-stimulant
      dependency or poly-addictions - five administrations of the Hythiam PROMETA® Treatment
      Program for cocaine, crack cocaine or methamphetamine provided during a
      consecutive three-day initial treatment period plus a follow-up treatment
      three weeks later for two consecutive
days.

            

    

    

    
      
         

      

      
        20

        
          

        

      

      
         

      

    

    

    SCHEDULE
B

    

    Authorized
Users of Licensed Technology

    

    1.

    2.

    

    

    

    

    

    

    

    

    

    

    
      
         

      

      
        21

        
          

        

      

      
         

      

    

    SCHEDULE
C

    

     

    
      BUSINESS
ASSOCIATE AND DATA USE AGREEMENT

      

    

    

    [COVERED
ENTITY]

    AND

    HYTHIAM,
INC.

    
      

    

    This
Business Associate Agreement (“B.A. Agreement”), effective
as of ___________, 200_ (“Effective Date”), is entered
into by and between [Name of
Covered Entity] (“Covered Entity”) and Hythiam,
Inc. (“Hythiam”) (each a
“Party” and collectively
the “Parties”).

    

    
      	
              1.  

            	
              BACKGROUND
      AND PURPOSE.  The Parties
      have entered or are entering into an agreement for the provision by
      Hythiam to Covered Entity of a marketing license and certain services
      related to Hythiam’s proprietary PROMETA®
      Treatment Program (“Agreement”).  Performance
      of the Agreement may involve Protected Health Information (as defined in
      45 C.F.R. §160.103) (“PHI”) subject to the
      federal privacy and security regulations issued pursuant to the Health
      Insurance Portability and Accountability Act (“HIPAA”) and codified at
      45 C.F.R. parts 160 and 164 (“Privacy and Security
      Rule”).  The purpose of this B.A. Agreement is to provide
      for the protections necessary to allow for Covered Entity’s compliance
      with the Privacy and Security Rule.

            

    

    

    
      	
              2.  

            	
              DEFINITIONS.  Unless
      otherwise defined in this B.A. Agreement, all capitalized terms used in
      this B.A. Agreement have the meanings ascribed in HIPAA and/or the Privacy
      and Security Rule.

            

    

    

    
      	
              3.  

            	
              OBLIGATIONS OF THE
      PARTIES WITH RESPECT TO PHI.

            

    

    

    
      	
              3.1  

            	
              Uses and Disclosures
      of PHI by Hythiam.  Except as otherwise specified in this
      B.A. Agreement, Hythiam may make any and all uses and disclosures of PHI
      necessary to perform its obligations under the Agreement.  In
      addition, unless otherwise limited in this B.A. Agreement, Hythiam may (a)
      use the PHI in its possession for its proper management and administration
      and to carry out the legal responsibilities of Hythiam; (b) disclose the
      Minimum Necessary information in its possession to a third party for the
      purpose of Hythiam’s proper management and administration or to carry out
      the legal responsibilities of Hythiam, provided, that such disclosure is
      required by law or Hythiam obtains reasonable assurances in writing from
      the third party regarding the confidential handling of such PHI as
      required under the Privacy and Security Rule; (c) provide Data Aggregation
      services relating to the health care operations of the Covered Entity; (d)
      use the PHI to create a Limited Data Set (“LDS”), the use and
      disclosure of which shall be governed by the Data Use Agreement set forth
      in 5 of this B.A. Agreement and by the Privacy and Security Rule; and (e)
      de-identify any and all PHI obtained by Hythiam under this B.A. Agreement,
      and use such de-identified data, all in accordance with the
      de-identification requirements of the Privacy and Security
      Rule.

            

    

     

    
      	
              3.2  

            	
              Obligations of
      Hythiam.  With regard to its use and/or disclosure of PHI
      that is not in an LDS, Hythiam agrees
to:

            

    

     

    
      	
              a.  

            	
              not
      use or further disclose the PHI other than as permitted or required by
      this B.A. Agreement or as Required By
Law;

            

    

    

    
      	
              b.  

            	
              use
      appropriate safeguards to prevent use or disclosure of PHI other than as
      permitted in Section 3.2(a);

            

    

    

    
      	
              c.  

            	
              report
      to Covered Entity in writing any use or disclosure of PHI not permitted in
      Section
      3.2(a) and any Security Incident involving electronic PHI of which
      Hythiam becomes aware

            

    

    
      
         

      

      
        22

        
          

        

      

      
         

      

    

    and, to
the extent practicable, minimize harmful effects of that use or disclosure or
Security Incident, provided that any Security Incident involving an actual
security breach shall be reported promptly and a log of all other Security
Incidents shall be reported every sixty (60) days;

    

    
      	
              d.  

            	
              ensure
      that any agents and subcontractors to which Hythiam provides PHI agree in
      writing to the same restrictions and conditions that apply to Hythiam with
      respect to such PHI;

            

    

    

    
      	
              e.  

            	
              make
      available within fifteen (15) days after request by the Covered Entity PHI
      necessary for Covered Entity to respond to an Individuals’ request for
      access to PHI about them in the event that the PHI in Hythiam’s possession
      constitutes a Designated Record
Set;

            

    

     

    
      	
              f.  

            	
              make available PHI for
      amendment and incorporate within ten (10) days after request by Covered
      Entity any amendments to the PHI in accordance with the Privacy Rule in
      the event that the PHI in Hythiam’s possession constitutes a Designated
      Record Set;

            

    

     

    
      	
              g.  

            	
              document
      such disclosures of PHI as would be required for Covered Entity to respond
      to a request by an Individual for an accounting of disclosures in
      accordance with 45 CFR § 164.528 and provide, within 20 days after Covered
      Entity requests the information in writing, an accounting of any
      disclosures of PHI for up to the six-year period preceding the date of the
      request for an accounting that includes the date of the disclosure, the
      name and address of the person or entity to whom the PHI was disclosed, a
      brief description of the PHI disclosed and a brief statement of the
      purpose of the disclosure and an explanation of the basis for the
      disclosure;

            

    

    

    
      	
              h.  

            	
              make
      its internal practices, books and records relating to the use and
      disclosure of PHI available to the Secretary of HHS within a reasonable
      timeframe as required by the Secretary for purposes Section of determining
      Covered Entity’s compliance with the Privacy Rule;
  and

            

    

    

    
      	
              i.  

            	
              return
      to Covered Entity or destroy, within ninety (90) days of the termination
      of this B.A. Agreement, the PHI in its possession as a result of the
      Agreement and retain no copies, if it is feasible to do so.  If
      Hythiam in its reasonable discretion determines that return or destruction
      is infeasible, Hythiam agrees to extend all protections contained in this
      B.A. Agreement to Hythiam’s use and/or disclosure of any retained PHI, and
      to limit any further uses and/or disclosures to the purposes that make the
      return or destruction of the PHI infeasible.  Notwithstanding
      the foregoing, this 3.2(i) shall not apply to any PHI in an LDS, the use
      and disclosure of which shall be governed by Section 5 of
      this B.A. Agreement.

            

    

    

    
      	
              j.  

            	
              Hythiam
      agrees to implement administrative, physical and technical safeguards that
      reasonably and appropriately protect the confidentiality, integrity and
      availability of any electronic PHI that it creates, receives, maintains or
      transmits to or on behalf of Covered Entity, as required by the Security
      Regulations as set forth at 45 C.F.R. Parts 160 and
      164.  Hythiam specifically agrees to employ multiple security
      mechanisms to ensure the confidentiality, integrity and availability of
      the electronic data which is exchanged with Covered Entity, including but
      not limited to authentication controls, authorization controls, audit
      controls and encryption, as requested by Covered
      Entity.  Hythiam further agrees to ensure that any agent,
      including a subcontractor to whom it provides such information, will
      implement reasonable and appropriate safeguards to protect
    it.

            

    

    

    
      	
              3.3  

            	
              Obligations of Covered
      Entity.  Covered Entity agrees to timely notify Hythiam
      in writing of any arrangements between Covered Entity and the individual
      that is the subject of PHI that may impact in any manner the use and/or
      disclosure of that PHI by Hythiam under this B.A.
    Agreement.

            

    

     

    
      
         

      

      
        23

        
          

        

      

      
         

      

    

    
      	
              3.4  

            	
              Effect of Changes to
      the Privacy and Security Rule.  To the extent that any
      relevant provision of the Privacy and Security Rule is materially amended
      in a manner that changes the obligations of Business Associates or Covered
      Entities that are embodied in the terms of this B.A. Agreement, the
      Parties agree to negotiate in good faith appropriate amendment(s) to this
      B.A. Agreement to give effect to these revised obligations.  If
      the Parties in good faith are unable to agree to appropriate amendment(s)
      satisfactory to both Parties by the required compliance date, either Party
      may terminate this B.A. Agreement and the Agreement upon fifteen (15) days
      prior written notice to the other
Party.

            

    

     

    
      	
              4.  

            	
              TERMINATION
      BY COVERED ENTITY.  With
      respect to the Agreement, upon Covered Entity’s knowledge of a material
      breach of the terms of this B.A. Agreement by Hythiam, Covered Entity
      shall provide Hythiam written notice of that breach in
      sufficient detail to enable Hythiam to understand the specific nature of
      that breach and afford Hythiam an opportunity to cure the breach to the
      extent cure is possible in Covered Entity’s reasonable
      discretion.  If Hythiam fails to cure the breach within a
      reasonable time specified by Covered Entity (in any event not less than
      ten (10) days and if Hythiam is making reasonable efforts to cure, Covered
      Entity may extend the cure period to allow for that cure), or if cure is
      not possible, Covered Entity may terminate this B.A. Agreement as well as
      terminate those portions, but only those portions, of the Agreement that,
      by their express terms or in practice, require or permit Hythiam access to
      PHI and only to the extent of that requirement or
      permission.  In such instance, the remaining provisions of the
      Agreement that do not, by their express terms or in practice, require or
      permit Hythiam access to PHI shall remain in full force and effect,
      including any and all of Covered Entity’s payment and performance
      obligations (to the extent any such performance obligations do not require
      Hythiam access to PHI); provided that, notwithstanding the foregoing,
      Covered Entity shall be entitled to terminate the Agreement in its
      entirety if and to the extent that the overall intent and purpose of the
      Agreement (i) is directly and materially related to and dependent upon
      Hythiam access to PHI, and (ii) would be frustrated if Covered Entity were
      not permitted to terminate the Agreement.  In addition, if
      Covered Entity, in its sole discretion, determines that Hythiam can
      perform the Agreement with information that has been de-identified under
      the Privacy Rule or with an LDS, the Agreement will remain in full force
      and effect, except with respect to, and only with respect to, those
      provisions that require or permit Hythiam access to PHI that is not in an
      LDS, which provisions shall be deemed modified to provide Hythiam access
      to PHI that has been de-identified under the Privacy and Security Rule and
      access to PHI in an LDS.

            

    

    

    
      	
              5.  

            	
              DATA USE
      AGREEMENT.

            

    

    

    
      	
              5.1  

            	
              Preparation of the
      LDS.  Hythiam may prepare an LDS in accordance with the
      Privacy and Security Rule and specifically the standards set forth at 45
      C.F.R § 164.513(e)(2)

            

    

    

    
      	
              5.2  

            	
              Minimum Necessary
      Data.  In preparing the LDS, Hythiam will include only
      those data fields which are the minimum necessary to accomplish the
      purposes set forth in Section 5.3 of
      this B.A. Agreement.

            

    

    

    
      	
              5.3  

            	
              Permitted Uses and
      Disclosures of the LDS.  Hythiam may only use the LDS for
      its Research and Public Health activities, for the Health Care Operations
      of Covered Entity, and as Required By Law.  Hythiam may only
      disclose the LDS for the same purposes in accordance with the Privacy and
      Security Rule.

            

    

    

    
      	
              5.4  

            	
              Responsibilities of
      Hythiam.  With regard to its use and/or disclosure of the
      LDS, Hythiam agrees to:

            

    

    

    
      	
              a.  

            	
              not
      use or further disclose the LDS other than as permitted by Section 5.3 of
      this B.A. Agreement;

            

    

    

    
      	
              b.  

            	
              use
      appropriate safeguards to prevent use or disclosure of the LDS other than
      as permitted by Section 5.3 of
      this B.A. Agreement;

            

    

    

    
      
         

      

      
        24

        
          

        

      

      
         

      

    

    
      	
              c.  

            	
              report
      to Covered Entity in writing any use or disclosure of the LDS that is not
      permitted by Section 5.3 of
      this B.A. Agreement of which Hythiam’s management becomes aware and, to
      the extent practicable, minimize harmful effects of that use or
      disclosure;

            

    

    

    
      	
              d.  

            	
              ensure
      that any agents, subcontractors, or other third parties to which Hythiam
      provides the LDS agree in writing to the same restrictions and conditions
      that apply to Hythiam with respect to such LDS;
  and

            

    

    

    
      	
              e.  

            	
              not
      use the information in the LDS to identify or contact individuals who are
      the data subjects.

            

    

    

    

    
      	
              6.  

            	
              MISCELLANEOUS.

            

    

    

    
      	
              6.1  

            	
              Agreement.  This
      B.A. Agreement is hereby incorporated into and made a part of the
      Agreement.  The terms of this B.A. Agreement shall prevail in
      the case of any conflict with the terms of the Agreement to the extent and
      only to the extent necessary to allow Covered Entity to comply with the
      Privacy and Security Rule.

            

    

    

    
      	
              6.2  

            	
              Survival.  With
      respect to the Agreement, Sections 1, 2, 3.2,
      3.3, 3.4, 4.and 6 of this B.A.
      Agreement shall survive termination of this B.A. Agreement and continue
      indefinitely solely with respect to PHI Hythiam retains in accordance with
      Section 3.2.i.  With respect to the Agreement, Section 5 of
      this B.A. Agreement shall survive termination of this B.A. Agreement and
      continue indefinitely solely with respect to any LDS that Hythiam
      possesses.

            

    

    

    NO THIRD PARTY
BENEFICIARIES.  NOTHING IN THIS B.A. AGREEMENT SHALL CONFER
UPON ANY PERSON OTHER THAN THE PARTIES AND THEIR RESPECTIVE SUCCESSORS OR
ASSIGNS, ANY RIGHTS, REMEDIES, OBLIGATIONS, OR LIABILITIES
WHATSOEVER.

    

    
      	
              [NAME OF COVERED ENTITY]

            	 
      	
              HYTHIAM,
      INC.

            
	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      
	
              By:

            	 
      	 
      	
              By:

            	 
      
	 
      	 
      	 
      	 
      	 
      
	
              Name:

            	 
      	 
      	
              Name:

            	 
      
	 
      	 
      	 
      	 
      	 
      
	
              Title:

            	 
      	 
      	
              Title:

            	 
      
	 
      	 
      	 
      	 
      	 
      
	
              Date:

            	 
      	 
      	
              Date:

            	 
      

    

    

    

    
      
         

      

      
        25

        
          

        

      

      
         

      

    

    SCHEDULE
D

    

    PROMETA®
Treatment Program

    

    

    [To be
supplied by Hythiam.]

    
      
         

      

      
        26

        
          

        

      

      
         

      

    

    

    SCHEDULE
E

    PROVIDER
LICENSE TO USE AGREEMENT

    

    CONFIDENTIALITY,
NON-DISCLOSURE AND TECHNOLOGY AGREEMENT

    PROVIDERS

    

    This
License to Use Agreement (“Agreement”), dated and effective ________________,
200_, (“Effective Date”)
is made by and between Hythiam,
Inc. and its subsidiaries ("Hythiam"), and
______________________ (“Provider”) (each a “Party” and collectively the
“Parties”).

    

    [Provider, who is a physician on the
staff of (for hospitals only)] OR [Provider, who is a physician and an owner,
principal or employee of (for medical groups)] OR [Provider, who is practicing
at ____________________________________ (FOR INDIVIDUAL PHYSICIANS)] (“Licensee”), represents that he
or she wishes to gain access to certain proprietary technology, including but
not limited to Hythiam’s PROMETA®
Treatment Program and related intellectual property, business and financial
strategies and other information owned by Hythiam and licensed to Licensee
(“Licensed Technology”)
for use in providing substance abuse treatment to Licensee
patients.  Under the terms and conditions of that Technology License
and Services Agreement entered into between Hythiam and Licensee dated
_________________, 200_, (“License Agreement”), one
condition of Hythiam’s authorization of disclosure by Licensee of the Licensed
Technology to any of its staff providers is the execution by the provider of a
confidentiality and proprietary information agreement.

    

    Accordingly, Hythiam and Provider
hereby agree as follows:

    

    1. The term
“Licensed Technology” shall include any and all information, oral or written,
provided to Provider (i) relating to Hythiam’s proprietary PROMETA®
treatment Program or associated technology or any and all Hythiam intellectual
property, including any patents, patent applications, copyrights, trade secrets,
methods, data, processes, formulas, instrumentation, dosages, techniques,
know-how, software, manuals, marketing materials, policies, procedures,
customers, consultants, licensors, licensees, enhancements or improvements; or
(ii) relating to Hythiam products or services, systems, finances, methods of
operation, strategy, business plans, prospective or existing contracts or other
business arrangements.  Provider hereby acknowledges that Hythiam, if
and when authorizing the disclosure of all or any part of the Licensed
Technology to Provider, is doing so in reliance upon the promises and
obligations of Provider contained in this Agreement and on the continuing
condition that Provider complies with those promises and
obligations.

    

    2. Provider
will not, directly or indirectly, without the written consent of Hythiam (a) use
any portion of the Licensed Technology for any purpose whatsoever other than as
required to provide substance abuse treatment to Licensee’s patients in strict
accordance with the procedures set forth in the Licensed Technology and in
accordance with the terms and conditions of the License Agreement; (b) disclose
any portion of the Licensed Technology whatsoever to any persons or entities
other than only to Licensee employees or other physicians on Licensee’s staff
who are at the time of the disclosure authorized by Licensee and Hythiam to have
access to the Licensed Technology (collectively “Authorized Personnel”) and
only to the extent each reasonably needs to have access to the Licensed
Technology for purposes of providing patient care on behalf of Licensee; (c)
modify, create or use derivative works based upon the Licensed Technology; or
(d) remove, alter or deface any legends, restrictions, product identification,
copyright, trademark or other proprietary noticed from the Licensed
Technology.  Without in any way limiting the foregoing, Provider shall
take all measures necessary, including employing reasonable safeguards, to
prevent any unauthorized use or disclosure of the Licensed
Technology.

     

    Provider
hereby acknowledges and agrees to cooperate with Hythiam and to satisfy the
terms of Section 5.3 of the Hythiam License Agreement, including, without
limitation, making Provider financial and clinical (to the extent permitted by
law) records available to Hythiam for review.

    

    
      
         

      

      
        27

        
          

        

      

      
         

      

    

    3. The
Licensed Technology shall remain the property of Hythiam and shall include any
intellectual property within the scope of, or that enhances, the Licensed
Technology, whether or not made by Provider, including without limitation any
adaptations, modifications, enhancements or changes (“Improvements”).  The
Improvements shall be considered included in the definition of Licensed
Technology for purposes of this Agreement, and Provider hereby assigns any and
all right, title and interest in all Improvements to Hythiam.  Hythiam
shall have the right to apply for copyrights, patents (including utility and
design patents), or other protection for such Improvements, and to enforce its
rights in such Improvements, anywhere in the world under its own name and at its
own expense.  Provider agrees to take all actions and execute all
documents at Hythiam's expense and as Hythiam may reasonably request, to
effectuate Hythiam's ownership of any such Improvements.  At Hythiam’s
request at anytime, Provider shall return promptly or destroy the Licensed
Technology, together with all copies, extracts, reproductions or any other
materials, including electronically transmitted information, containing,
reflecting or based on all or any part of the Licensed Technology made by
Provider or by anyone to whom such information has been made available by
Provider.  Upon request, Provider promptly shall provide Hythiam a
written certificate confirming the return or destruction as required in this
Section 3.

    

    4. Execution
of this Agreement is only one condition of access to the Licensed Technology and
does not constitute agreement by Hythiam to authorize access to the Licensed
Technology for Provider or obligate Hythiam in any way to provide that access,
but only sets forth the terms and conditions for that access, when and if it is
authorized and/or provided.  Authorization by Hythiam for Provider to
have access to the Licensed Technology does not obligate Hythiam in any way to
maintain or renew that authorization, which authorization may be withdrawn in
Hythiam’s sole discretion.  Withdrawal or nonrenewal of authorization
by Hythiam for Provider to have access to the Licensed Technology will in no way
relieve Provider of any of his or her obligations under this Agreement, which
shall continue in full force and effect.  In addition, no license or
other interest in whole or in part in the Licensed Technology shall be deemed to
have been granted under this Agreement to Provider or to any other party to whom
such information is provided.  HYTHIAM MAKES NO REPRESENTATION,
WARRANTY OR ASSURANCE OF ANY NATURE, EXPRESS OR IMPLIED, WITH RESPECT TO THE
LICENSED TECHNOLOGY or otherwise as to its accuracy or completeness, its
merchantability, sufficiency or fitness for any purpose or the absence of
infringement on rights of other parties.

    

    5. Provider
acknowledges the unique and important nature of the Licensed Technology and that
it may be impossible to measure the damages that would result from breach of
this Agreement.  In addition to any other remedies that Hythiam may
have at law or in equity, it shall have the right to apply for preliminary and
permanent injunctive relief to secure specific performance of any and all
obligations under this Agreement and to prevent a breach or threatened breach of
the provisions of this Agreement without, in any case, proof of actual
damages.  Provider hereby waives any requirement for the posting of
any security or bond in connection with Hythiam’s pursuit of the remedies set
forth in this Section 5.

    

    6. Notwithstanding
any other provision of this Agreement, upon disclosure of all or any part of the
Licensed Technology to Provider, (i) the Licensed Technology is provided to
Provider as additional points of information and not, in whole or in part, as
medical advice, diagnosis or treatment recommendations; (ii) Provider
acknowledges and agrees that Hythiam in authorizing access to the Licensed
Technology will not be delivering patient care and will not be sponsoring or
performing human subjects research; (iii) as between the Parties, Provider is in
control and is fully responsible for any and all patient care, Continuing Care
and/or research activity delivered by or on behalf of Provider using the
Licensed Technology; and (iii) Provider shall at all times exercise his or her
independent medical judgment when treating patients, arranging for Continuing
Care or referring to other providers, or performing research using the Licensed
Technology.

    

    7. In the
event of any legal action or proceeding or asserted requirement under applicable
law or government regulations requesting or demanding disclosure by Provider of
all or any part of the Licensed Technology, Provider shall immediately notify
Hythiam in writing of such request or demand, the terms and circumstances
surrounding such request or demand, and the documents requested or demanded so
that Hythiam may seek an appropriate protective order or take
other

    
      
         

      

      
        28

        
          

        

      

      
         

      

    

    protective
measures and/or consent to Provider’s disclosure of the requested
information.  Provider shall, upon the request of Hythiam, cooperate
with Hythiam in contesting such request or demand (at the expense of Hythiam),
including, without limitation, consulting with Hythiam as to the advisability of
taking legally available steps to resist or narrow such request or
demand.  If in the absence of a protective order or a waiver under
this Agreement from Hythiam, Provider, in the reasonable opinion of Provider’s
legal counsel, is compelled to disclose any such Licensed Technology or
otherwise stand liable for contempt or suffer other substantial penalty,
Provider may disclose such Licensed Technology as so required without liability
under this Agreement; provided, however, that
Provider (a) shall give Hythiam written notice of the Licensed Technology
to be so disclosed as far in advance of its disclosure as is practicable,
(b) shall furnish only that portion of the Licensed Technology which in the
reasonable opinion of Provider’s counsel is legally required, and (c) shall
cooperate with Hythiam (at Hythiam’s expense) to obtain an order or other
reliable assurance that confidential treatment will be accorded to such Licensed
Technology.

    

    8. Hythiam
shall not be liable to Provider and Provider shall indemnify, defend and hold
harmless Hythiam and its directors, officers, employees and agents from and
against any and all liabilities, losses, suits, claims, costs, expenses
(including reasonable attorneys fees and disbursements), interest, penalties,
fines, judgments and actual or direct damages of any kind whatsoever
(collectively “Losses”)
to the extent and proportion that such Losses relate to or arise from (i) use by
Provider of the Licensed Technology; or (ii) breach of this Agreement by
Provider.

    

    9. No
amendment, modification or discharge of, consent or waiver under, this Agreement
shall be valid or binding unless set forth in writing and duly executed by both
Parties.  No delay or failure at any time on the part of Hythiam in
exercising any right, power or privilege under this Agreement, or in enforcing
any provision of this Agreement, shall impair any such right, power or privilege
or be construed as a waiver of such provision, or be construed as a waiver of or
acquiescence in any default, or shall affect the right of Hythiam thereafter to
enforce each and every provision of this Agreement in accordance with its
terms.

    

    10. This
Agreement shall be binding upon and inure to the benefit of, and shall be
enforceable only by, the Parties and their respective successors and permitted
assigns, provided
that Provider may not and shall not assign or otherwise transfer all or
any part of his or her rights or obligations under this Agreement.

    

    11. Provider
represents and warrants that he or she has the authority to enter into this
Agreement and that the obligations assumed are not in conflict with or otherwise
violate or breach any other agreement to which he or she is a
party.

    

    12. All
notices or other communications required or permitted to be made or given under
this Agreement shall be deemed so made or given when hand-delivered or sent in
writing by registered or certified mail, postage prepaid and return-receipt
requested, or by a nationally-recognized courier service guaranteeing next-day
delivery, charges prepaid, and properly addressed to the other Party as set
forth below or at such other address as may be specified by a Party by written
notice similarly sent or delivered by facsimile.

    

    If to
Hythiam:

    

    Name:
_____________________________

    Title:
______________________________

    11150
Santa Monica Blvd., Suite 1500

    Los
Angeles, CA  90025

    (310) 444-4300 phone

    (310) 444-5300 fax

    

    
      
         

      

      
        29

        
          

        

      

      
         

      

    

    If to
Provider:

    

    Name:
_____________________________

    Addr:
______________________________

    __________________________________

    __________________________________

    Phone:
_____________________________

    Fax:
_______________________________

    

    13. In the
event that any provision of this Agreement is held by a court of competent
jurisdiction (or other valid legal forum) to be invalid or unenforceable, such
provision shall be stricken from this Agreement, without affecting the
enforceability of the remaining provisions of this Agreement, it being intended
that all rights and obligations of the Parties under this Agreement shall be
enforceable to the fullest extent permitted by law.

    

    14. This
Agreement constitutes the entire agreement between the Parties with respect to
the use, protection and disclosure of the Licensed Technology, and it supersedes
all prior oral or written agreements, commitments, or understandings with
respect to such matter.

    

    15. This
Agreement may be signed in counterparts, none of which need contain the
signature of all the Parties and each of which shall be deemed to be an
original.  An exact facsimile, photocopy or other reproduction of this
Agreement shall be deemed an original.

    

    16. This
Agreement shall be governed by and construed in accordance with the laws of the
State of California, exclusive of any conflict-of-law provisions, and the
Parties hereby submit to the jurisdiction of the State and federal courts within
the State of California.

    

    

    
      
        
          
            
              	
                      HYTHIAM,
      INC.

                    	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      By:

                    	 
      	 
      	
                      Date:

                    	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Title:

                    	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      PROVIDER

                    	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	      
                      Printed
      Name:

                    	
                       

                    	 
      	 
      	 
      	 
      
	 
      	 
      	 
      	 
      	 
      	 
      	 
      
	
                      Signature:

                    	 
      	 
      	
                      Date:

                    	 
      

            

          

        

      

    

    

     

    
30exhibit_10-14.htm

    EXHIBIT
10.14

    

    AMENDMENT
NO. 2 TO

    CONSULTING
SERVICES AGREEMENT

    

    This
Second Amendment to Consulting Services Agreement ("Second Amendment") is dated
January 16, 2008 and effective as of February 1, 2008 (“Second Amendment Effective Date”), to
Consulting Services Agreement dated September 15, 2005 and First Amendment
thereto dated and Effective January 1, 2007 (Consulting Services Agreement and
First Amendment thereto are collectively referred to herein as the “Agreement”), between Hythiam,
Inc., a Delaware corporation (“Hythiam”) and David E. Smith,
& Associates, a California professional corporation (“Consultant”).

    

    The
parties desire to further amend the Agreement to provide for a change in
Consultant's compensation effective February 1, 2008.

    

    Accordingly,
the Parties agree as follows:

    

    1. Modification of
Agreement.  The Agreement is hereby amended by replacing the
previously amended amount $4,167 in Section 3, to $2,500, and compensation for 1⁄2
day or full day Services of Consultant authorized by Hythiam all as provided
with the following:

     

    “Compensation.  Effective
as of the Second Amendment Effective Date, and during the Term thereafter (as
defined in Section 5 of this Agreement) Hythiam will compensate Consultant with
a fee payable on or about the 15th of each
month in arrears in respect of the monthly period just ended, as
follows:  a) a fixed monthly fee of $2,500; and b) for any additional
Services requested of Consultant under this Agreement and authorized in advance
in writing by Hythiam, $800 per each 1⁄2 day of such authorized Service and $1,600
for each full day of such authorized Service.  Consultant acknowledges
that such fee or fees will constitute payment in full for all Services rendered
and the performance by Consultant of all of its other obligations
hereunder.”

    

    2. Defined
Terms.  Capitalized terms that are used and not otherwise
defined in this Amendment have the respective meanings ascribed thereto in the
Agreement.

    

    3. Continuing
Effectiveness.  Except as amended by this Second Amendment, the
Agreement, as modified hereby, remains in full force and effect in accordance
with all other of the respective terms and conditions thereof.

    

    IN
WITNESS WHEREOF, the Parties have executed this Amendment, in each case, by its
duly appointed officer empowered so to act, all as of the date first above
written.

    

    
      	
              David
      E. Smith & Associates

            	 
      	
              Hythiam,
      Inc.

            
	 
      	 
      	 
      	 
      
	
              /s/
      DAVID E. SMITH, M.D.

            	 
      	
              By:

            	
              /s/
      ANTHONY LAMACCHIA

            
	
              David
      E. Smith, M.D.

            	 
      	 
      	
              Anthony
      LaMacchia

            
	
              President

            	 
      	 
      	
              Senior
      Executive Vice
President

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