Document:

Unassociated Document

     

    
      September
17, 2009

       

      CONFIDENTIAL

       

      Mr.
Terren S. Peizer

      Chairman
and Chief Executive Officer

      Hythiam
Inc.

      11150
Santa Monica Boulevard

      Suite
1500

      Los
Angeles, CA 90025

       

      Dear Mr.
Peizer:

       

      This
letter (the “Agreement”)
constitutes the agreement between Rodman & Renshaw, LLC (“Rodman” or the “Placement Agent”) and
Hythiam Inc. (the “Company”), that
Rodman shall serve as the exclusive placement agent for the Company, on a
“reasonable best efforts” basis, in connection with the proposed placement (the
“Placement”) of
registered securities (the “Securities”) of the
Company, including shares (the “Shares”) of the
Company’s common stock, par value $0.0001 per share (the “Common Stock”) and
warrants to purchase shares of Common Stock. The terms of such Placement and the
Securities shall be mutually agreed upon by the Company and the purchasers
(each, a “Purchaser” and
collectively, the “Purchasers”) and
nothing herein constitutes that Rodman would have the power or authority to bind
the Company or any Purchaser or an obligation for the Company to issue any
Securities or complete the Placement. This Agreement and the documents executed
and delivered by the Company and the Purchasers in connection with the Placement
shall be collectively referred to herein as the “Transaction
Documents.”  The date of the closing of the Placement shall be
referred to herein as the “Closing
Date.”  The Company expressly acknowledges and agrees that
Rodman’s obligations hereunder are on a reasonable best efforts basis only and
that the execution of this Agreement does not constitute a commitment by Rodman
to purchase the Securities and does not ensure the successful placement of the
Securities or any portion thereof or the success of Rodman with respect to
securing any other financing on behalf of the Company.

       

      SECTION 1. COMPENSATION AND OTHER
FEES.  As
compensation for the services provided by Rodman hereunder, the Company agrees
to pay to Rodman:

       

      (A)           The
fees set forth below with respect to the Placement:

       

      
        	
                 
      

              	
                1.

              	
                A
      cash fee payable immediately upon the closing of the Placement and equal
      to 6% of the aggregate gross proceeds raised in the Placement, excluding
      any proceeds from the exercise of any warrants or options sold in the
      Placement, if any.

              

      

       

      
        	
                 
      

              	
                2.

              	
                Such
      number of warrants (the “Rodman Warrants”) to Rodman or its designees at
      the Closing to purchase shares of Common Stock equal to 6% of the
      aggregate number of Shares sold in the Placement, excluding any Shares
      underlying any convertible Securities or units sold in the
      Placement.  The Rodman Warrants shall have the same terms as the
      warrants (if any) issued to the Purchasers in the Placement except that
      the exercise price shall be 125% of the public offering price per
      share.  The Rodman Warrants shall not have antidilution
      protections or be transferable for six months from the date of the
      Offering except as permitted by Financial Industry Regulatory Authority
      (“FINRA”) Rule 5110, and further, the number of Shares underlying the
      Rodman Warrants shall be reduced if necessary to comply with FINRA rules
      or regulations.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (B)           The
Company also agrees to reimburse Rodman’s expenses (with supporting
invoices/receipts) up to a maximum of .8% of the aggregate gross proceeds raised
in the placement, but in no event more than $30,000. Such reimbursement shall be
payable immediately upon (but only in the event of) the closing of the
Placement.

       

      
        (C)          The
Company has agreed to pay Brean Murray, Carret & Co., as the Company’s
financial advisor, a cash fee equal to 1% of the gross proceeds of the aggregate
gross proceeds raised in the placement. Notwithstanding anything herein to the
contrary, to the extent necessary to keep the maximum compensation including
warrants payable to Rodman and Brean, Murray, Carret & Co., to 8%, Rodman’s
compensation in this offering shall be reduced by such 1% fee payable to Brean,
Murray, Carret & Co.

      

       

      SECTION 2. REGISTRATION
STATEMENT.  The
Company represents and warrants to, and agrees with, the Placement Agent, which
representations and warranties shall be correct as of the date of this
Agreement, except as to any representation or warranty which expressly relates
to an earlier date, which only need be correct as of such earlier date,
that:

       

      (A)           The
Company has filed with the Securities and Exchange Commission (the “Commission”)
a registration statement on Form S-3 (Registration File No. 333-158407) under
the Securities Act of 1933, as amended (the “Securities Act”), which became
effective on  September 11, 2009 , for the registration under the
Securities Act of the Shares. At the time of such filing, the Company met the
requirements of Form S-3 under the Securities Act.  Such registration
statement meets the requirements set forth in Rule 415(a)(1)(x) under the
Securities Act and complies with said Rule. The Company will file with the
Commission pursuant to Rule 424(b) under the Securities Act, and the rules and
regulations (the “Rules and Regulations”) of the Commission promulgated
thereunder, a supplement to the form of prospectus included in such registration
statement relating to the placement of the Shares and the plan of distribution
thereof and has advised the Placement Agent of all further information
(financial and other) with respect to the Company required to be set forth
therein. Such registration statement, including the exhibits thereto, as amended
at the date of this Agreement, is hereinafter called the “Registration
Statement”; such prospectus in the form in which it appears in the Registration
Statement is hereinafter called the “Base Prospectus”; and the supplemented form
of prospectus, in the form in which it will be filed with the Commission
pursuant to Rule 424(b) (including the Base Prospectus as so supplemented) is
hereinafter called the “Prospectus Supplement.” Any reference in this Agreement
to the Registration Statement, the Base Prospectus or the Prospectus Supplement
shall be deemed to refer to and include the documents incorporated by reference
therein (the “Incorporated Documents”) pursuant to Item 12 of Form S-3 which
were filed under the Securities Exchange Act of 1934, as amended (the “Exchange
Act”), on or before the date of this Agreement, or the issue date of the Base
Prospectus or the Prospectus Supplement, as the case may be; and any reference
in this Agreement to the terms “amend,” “amendment” or “supplement” with respect
to the Registration Statement, the Base Prospectus or the Prospectus Supplement
shall be deemed to refer to and include the filing of any document under the
Exchange Act after the date of this Agreement, or the issue date of the Base
Prospectus or the Prospectus Supplement, as the case may be, deemed to be
incorporated therein by reference. All references in this Agreement to financial
statements and schedules and other information which is “contained,” “included,”
“described,” “referenced,” “set forth” or “stated” in the Registration
Statement, the Base Prospectus or the Prospectus Supplement (and all other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is or is deemed
to be incorporated by reference in the Registration Statement, the Base
Prospectus or the Prospectus Supplement, as the case may be.  No stop
order suspending the effectiveness of the Registration Statement or the use of
the Base Prospectus or the Prospectus Supplement has been issued, and no
proceeding for any such purpose is pending or has been initiated or, to the
Company’s knowledge, is threatened by the Commission. For purposes of this
Agreement, “free writing prospectus” has the meaning set forth in Rule 405 under
the Securities Act and the “Time of Sale Prospectus” means the preliminary
prospectus, if any, together with the free writing prospectuses, if any, used in
connection with the Placement, including any documents incorporated by reference
therein.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (B)           The
Registration Statement (and any further documents to be filed with the
Commission) contains all exhibits and schedules as required by the Securities
Act. Each of the Registration Statement and any post-effective amendment
thereto, at the time it became effective, complied in all material respects with
the Securities Act and the Exchange Act and the applicable Rules and Regulations
and did not and, as amended or supplemented, if applicable, will not, contain
any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading. The Base Prospectus, the Time of Sale Prospectus, if any, and the
Prospectus Supplement, each as of its respective date, comply in all material
respects with the Securities Act and the Exchange Act and the applicable Rules
and Regulations. Each of the Base Prospectus, the Time of Sale Prospectus, if
any, and the Prospectus Supplement, as amended or supplemented, did not and will
not contain as of the date thereof any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements therein,
in light of the circumstances under which they were made, not misleading. The
Incorporated Documents, when they were filed with the Commission, conformed in
all material respects to the requirements of the Exchange Act and the applicable
Rules and Regulations, and none of such documents, when they were filed with the
Commission, contained any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein (with respect to
Incorporated Documents incorporated by reference in the Base Prospectus or
Prospectus Supplement), in light of the circumstances under which they were made
not misleading; and any further documents so filed and incorporated by reference
in the Base Prospectus, the Time of Sale Prospectus, if any, or Prospectus
Supplement, when such documents are filed with the Commission, will conform in
all material respects to the requirements of the Exchange Act and the applicable
Rules and Regulations, as applicable, and will not contain any untrue statement
of a material fact or omit to state a material fact necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading. No post-effective amendment to the Registration Statement
reflecting any facts or events arising after the date thereof which represent,
individually or in the aggregate, a fundamental change in the information set
forth therein is required to be filed with the Commission.  There are
no documents required to be filed with the Commission in connection with the
transaction contemplated hereby that (x) have not been filed as required
pursuant to the Securities Act or (y) will not be filed within the requisite
time period. There are no contracts or other documents required to be described
in the Base Prospectus, the Time of Sale Prospectus, if any, or Prospectus
Supplement, or to be filed as exhibits or schedules to the Registration
Statement, which have not been described or filed as required.

       

      (C)           The
Company is eligible to use free writing prospectuses in connection with the
Placement pursuant to Rules 164 and 433 under the Securities Act.  Any
free writing prospectus that the Company is required to file pursuant to Rule
433(d) under the Securities Act has been, or will be, filed with the Commission
in accordance with the requirements of the Securities Act and the applicable
rules and regulations of the Commission thereunder.  Each free writing
prospectus that the Company has filed, or is required to file, pursuant to Rule
433(d) under the Securities Act or that was prepared by or behalf of or used by
the Company complies or will comply in all material respects with the
requirements of the Securities Act and the applicable rules and regulations of
the Commission thereunder.  The Company will not, without the prior
consent of the Placement Agent, prepare, use or refer to, any free writing
prospectus.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (D)           The
Company has delivered, or will as promptly as practicable deliver, to the
Placement Agent complete conformed copies of the Registration Statement and of
each consent and certificate of experts, as applicable, filed as a part thereof,
and conformed copies of the Registration Statement (without exhibits), the Base
Prospectus, the Time of Sale Prospectus, if any, and the Prospectus Supplement,
as amended or supplemented, in such quantities and at such places as the
Placement Agent reasonably requests.  Neither the Company nor any of
its directors and officers has distributed and none of them will distribute,
prior to the Closing Date, any offering material in connection with the offering
and sale of the Shares other than the Base Prospectus, the Time of Sale
Prospectus, if any, the Prospectus Supplement, the Registration Statement,
copies of the documents incorporated by reference therein and any other
materials permitted by the Securities Act.

       

      SECTION 3. REPRESENTATIONS AND
WARRANTIES INCORPORATED BY REFERENCE. 
Each of the representations and warranties (together with any related disclosure
schedules thereto) made in that certain Securities Purchase Agreement dated as
of September __, 2009 (the “Purchase Agreement”), between the Company, and each
purchaser identified on the signature pages thereto to the purchasers thereunder
is hereby incorporated herein by reference (as though fully restated herein) and
is hereby made to, and in favor of, Rodman.

       

      SECTION 4. INDEMNIFICATION.  The
Company agrees to the indemnification and other agreements set forth in the
Indemnification Provisions (the “Indemnification”)
attached hereto as Addendum A, the provisions of which are incorporated herein
by reference and shall survive the termination or expiration of this
Agreement.

       

      SECTION 5. ENGAGEMENT
TERM.  Rodman’s
engagement hereunder will be for the period of 30 days. The engagement may be
terminated by either the Company or Rodman at any time upon 10 days’ written
notice. Notwithstanding anything to the contrary contained herein, the
provisions concerning confidentiality, indemnification, contribution and the
Company’s obligations to pay fees and reimburse expenses contained herein and
the Company’s obligations contained in the Indemnification Provisions will
survive any expiration or termination of this Agreement. The Company's
obligation to pay fees actually earned on closing of the Offering under
Section 1(A) shall survive any expiration or termination of this Agreement. Upon
any termination of this Agreement, the Company's obligation to reimburse Rodman
for out of pocket accountable expenses actually incurred by Rodman and
reimbursable upon closing of the Offering pursuant to Section 1(B), if any are
otherwise due Section 1(B) hereof, will survive any expiration or termination of
this Agreement.  Rodman agrees not to use any confidential information
concerning the Company provided to them by the Company for any purposes other
than those contemplated under this Agreement.

       

      SECTION 6. RODMAN
INFORMATION.  The
Company agrees that any information or advice rendered by Rodman in connection
with this engagement is for the confidential use of the Company only in their
evaluation of the Placement and, except as otherwise required by law, the
Company will not disclose or otherwise refer to the advice or information in any
manner without Rodman’s prior written consent.

       

      SECTION 7. NO FIDUCIARY
RELATIONSHIP.  This
Agreement does not create, and shall not be construed as creating rights
enforceable by any person or entity not a party hereto, except those entitled
hereto by virtue of the Indemnification Provisions hereof.  The
Company acknowledges and agrees that Rodman is not and shall not be construed as
a fiduciary of the Company and shall have no duties or liabilities to the equity
holders or the creditors of the Company or any other person by virtue of this
Agreement or the retention of Rodman hereunder, all of which are hereby
expressly waived.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SECTION 8. CLOSING.  The
obligations of the Placement Agent and the Purchasers, and the closing of the
sale of the Securities hereunder are subject to the accuracy, when made and on
the Closing Date, of the representations and warranties on the part of the
Company and its Subsidiaries contained herein, to the accuracy of the statements
of the Company and its Subsidiaries made in any certificates pursuant to the
provisions hereof, to the performance by the Company and its Subsidiaries of
their obligations hereunder, and to each of the following additional terms and
conditions:

       

      (A)           No
stop order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for that purpose shall have been initiated or
threatened by the Commission, and any request for additional information on the
part of the Commission (to be included in the Registration Statement, the Base
Prospectus or the Prospectus Supplement or otherwise) shall have been complied
with to the reasonable satisfaction of the Placement Agent.

       

      (B)           The
Placement Agent shall not have discovered and disclosed to the Company on or
prior to the Closing Date that the Registration Statement, the Base Prospectus
or the Prospectus Supplement or any amendment or supplement thereto contains an
untrue statement of a fact which, in the opinion of counsel for the Placement
Agent, is material or omits to state any fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to
make the statements therein not misleading.

       

      (C)           All
corporate proceedings and other legal matters incident to the authorization,
form, execution, delivery and validity of each of this Agreement, the
Securities, the Registration Statement, the Base Prospectus and the Prospectus
Supplement and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Placement Agent, and the Company shall have
furnished to such counsel all documents and information that they may reasonably
request to enable them to pass upon such matters.

       

      (D)           The
Placement Agent shall have received from outside counsel to the Company such
counsel’s written opinion, addressed to the Placement Agent and the Purchasers
dated as of the Closing Date, in form and substance reasonably satisfactory to
the Placement Agent.

       

      (E)           Neither
the Company nor any of its Subsidiaries shall have sustained since the date of
the latest audited financial statements included or incorporated by reference in
the Base Prospectus, any loss or interference with its business from fire,
explosion, flood, terrorist act or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth in or contemplated by the Base Prospectus or
the Prospectus Supplement and (ii) since such date there shall not have been any
change in the capital stock or long-term debt of the Company or any of its
Subsidiaries or any change, or any development involving a prospective change,
in or affecting the business, general affairs, management, financial position,
stockholders’ equity, results of operations or prospects of the Company and its
Subsidiaries, otherwise than as set forth in or contemplated by the Base
Prospectus, the effect of which, in any such case described in clause (i) or
(ii), is, in the judgment of the Placement Agent, so material and adverse as to
make it impracticable or inadvisable to proceed with the sale or delivery of the
Securities on the terms and in the manner contemplated by the Base Prospectus,
the Time of Sale Prospectus, if any, and the Prospectus Supplement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (F)           The
Common Stock is registered under the Exchange Act and, as of the Closing Date,
the Shares shall be listed and admitted and authorized for trading on NASDAQ,
and satisfactory evidence of such actions shall have been provided to the
Placement Agent.

       

      (G)           Subsequent
to the execution and delivery of this Agreement, there shall not have occurred
any of the following: (i) trading in securities generally on the New York Stock
Exchange, the Nasdaq National Market or the NYSE Alternext US or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
or maximum prices or maximum ranges for prices shall have been established on
any such exchange or such market by the Commission, by such exchange or by any
other regulatory body or governmental authority having jurisdiction, (ii) a
banking moratorium shall have been declared by federal or state authorities or a
material disruption has occurred in commercial banking or securities settlement
or clearance services in the United States, (iii) the United States shall have
become engaged in hostilities in which it is not currently engaged, the subject
of an act of terrorism, there shall have been an escalation in hostilities
involving the United States, or there shall have been a declaration of a
national emergency or war by the United States, or (iv) there shall have
occurred any other calamity or crisis or any change in general economic,
political or financial conditions in the United States or elsewhere, if the
effect of any such event in clause (iii) or (iv) makes it, in the sole judgment
of the Placement Agent, impracticable or inadvisable to proceed with the sale or
delivery of the Securities on the terms and in the manner contemplated by the
Base Prospectus and the Prospectus Supplement.

       

      (H)           No
action shall have been taken and no statute, rule, regulation or order shall
have been enacted, adopted or issued by any governmental agency or body which
would, as of the Closing Date, prevent the issuance or sale of the Securities or
materially and adversely affect or potentially and adversely affect the business
or operations of the Company; and no injunction, restraining order or order of
any other nature by any federal or state court of competent jurisdiction shall
have been issued as of the Closing Date which would prevent the issuance or sale
of the Securities or materially and adversely affect or potentially and
adversely affect the business or operations of the Company.

       

      (I)           The
Company shall have prepared and filed with the Commission a Current Report on
Form 8-K with respect to the Placement.

       

      (J)           The
Company shall have entered into Purchase Agreements with the Purchasers and such
agreements shall be in full force and effect and shall contain representations
and warranties of the Company as agreed between the Company and the
Purchasers.

       

      (K)           FINRA
shall have raised no objection to the fairness and reasonableness of the terms
and arrangements of this Agreement.  In addition, the Company shall,
if requested by the Placement Agent, make or authorize Placement Agent’s counsel
to make on the Company’s behalf, an Issuer Filing with FINRA pursuant to FINRA
Rule 5110 with respect to the Registration Statement and pay all filing fees
required in connection therewith.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      (L)           Prior
to the Closing Date, the Company shall have furnished to the Placement Agent
such further information, certificates and documents as the Placement Agent may
reasonably request.

       

      All
opinions, letters, evidence and certificates mentioned above or elsewhere in
this Agreement shall be deemed to be in compliance with the provisions hereof
only if they are in form and substance reasonably satisfactory to counsel for
the Placement Agent.

       

      SECTION 9. GOVERNING
LAW.  This
Agreement will be governed by, and construed in accordance with, the laws of the
State of New York applicable to agreements made and to be performed entirely in
such State.  This Agreement may not be assigned by either party
without the prior written consent of the other party.  This Agreement
shall be binding upon and inure to the benefit of the parties hereto, and their
respective successors and permitted assigns. Any right to trial by jury with
respect to any dispute arising under this Agreement or any transaction or
conduct in connection herewith is waived.  Nothing contained herein
shall be deemed to limit in any way any right to serve process in any manner
permitted by law. If either party shall commence an action or proceeding to
enforce any provisions of a Transaction Document, then the prevailing party in
such action or proceeding shall be reimbursed by the other party for its
attorneys fees and other costs and expenses incurred with the investigation,
preparation and prosecution of such action or proceeding.

       

      SECTION 10. ENTIRE
AGREEMENT/MISC.  This
Agreement (including the attached Indemnification Provisions) embodies the
entire agreement and understanding between the parties hereto, and supersedes
all prior agreements and understandings, relating to the subject matter
hereof.  If any provision of this Agreement is determined to be
invalid or unenforceable in any respect, such determination will not affect such
provision in any other respect or any other provision of this Agreement, which
will remain in full force and effect.  This Agreement may not be
amended or otherwise modified or waived except by an instrument in writing
signed by both Rodman and the Company.  The representations,
warranties, agreements and covenants contained herein shall survive the closing
of the Placement and delivery and/or exercise of the Securities, as
applicable.  This Agreement may be executed in two or more
counterparts, all of which when taken together shall be considered one and the
same agreement and shall become effective when counterparts have been signed by
each party and delivered to the other party, it being understood that both
parties need not sign the same counterpart.  In the event that any
signature is delivered by facsimile transmission or a .pdf format file, such
signature shall create a valid and binding obligation of the party executing (or
on whose behalf such signature is executed) with the same force and effect as if
such facsimile or .pdf signature page were an original thereof.

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

      SECTION 12. CONFIDENTIALITY.  Rodman
will keep confidential any material non-public information of the Company or
other non-public information designated by the Company as confidential made
available to Rodman by the Company in connection with its engagement hereunder;
provided that such confidential information shall not include (a) any
information already in the possession of Rodman prior to the date of its
disclosure to Rodman by the Company, (b) any information that is or becomes
generally available to the public by acts other than those of Rodman (or any
affiliate or party that Rodman provides such confidential information to) after
receiving it,  (c) any information which becomes available to Rodman
from a third party who is not bound by a confidentiality obligation to the
Company, or (d) any information that is independently developed by
Rodman without any use of confidential information; and provided further,
that such confidential information may be disclosed (i) to Rodman’ s affiliates,
partners, employees, agents, advisors and representatives in connection with its
engagement hereunder who shall be informed of the confidential nature of the
information and that such information is subject to a confidentiality agreement
and shall agree to be bound by the terms of this Section 12 or similar
confidentiality obligations; (ii) to any Purchaser which has signed a
confidentiality agreement with the Company or any person with the consent of the
Company (which consent, in the case of any disclosure which is not made in
connection with Rodman’ s engagement hereunder, will be in writing); (iii) if
Rodman is requested or required to disclose such information pursuant to law,
judicial or administrative process or regulatory demand or request of any
governmental agency or body having jurisdiction over Rodman; or (iv) if Rodman
shall have been advised by its counsel that such disclosure is necessary in
litigation or any other proceeding in which it or any of its current or former
directors, officers, employees, agents, representatives, affiliates or any
person who controls Rodman is, or is threatened to be made, a
party.  In the event that Rodman is requested or required by law to
disclose any such confidential information under the circumstances referred to
in clause (iii) above or if disclosure is deemed necessary in accordance with
clause (iv) above, Rodman will, to the extent legally permitted, provide the
Company with notice thereof so that the Company may seek a protective order or
other appropriate remedy.  This subparagraph supersedes any prior
agreement between the Company and Rodman respecting
confidentiality.

       

      SECTION 13. FINRA.  Rodman
represents, warrants and agrees that: (a) Rodman is duly registered as a
broker-dealer pursuant to the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder (collectively, the “Exchange
Act”) and is a member in good standing of the FINRA; and (b) during the course
of the Placement, Rodman shall comply with all rules and regulations applicable
to it in connection with the Placement.

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

      
        	 
      	
                Very
      truly yours,

                 

                RODMAN
      & RENSHAW, LLC

                 

                By:
      /s/ David J.
      Horn                              
      

                      Name:
      David J. Horn

                      Title:  
      Chief Finacial Officer

                 

                 

                Address for
      notice:

                1251
      Avenue of the Americas, 20th Floor

                New
      York, NY  10020

                Fax
      (646) 841-1640

                Attention:  General
      Counsel

                 

              
	
                Accepted
      and Agreed to as of

                the
      date first written above:

                 

                HYTHIAM
      INC.

                 

                 

                By:
      /s/ Terren S.
      Peizer                                        
      

                      Terren
      S. Peizer 

                      Chairman
      & Chief Executive Officer

                 

                Address for
      notice:

                11150
      Santa Monica Boulevard

                Suite
      1500

                Los
      Angeles, CA 90025

                 

              	
                 

                 

                 

                 

                 

                 

                 

                 

                With a copy (which
      will not constitute notice) to:

                Luce
      Forward Hamilton & Scripps LLP

                601
      South Figueroa Street

                Suite
      3900

                Los
      Angeles, CA 90017

                Attention:
      John C. Kirkland, Esq.

              

      

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

      

      ADDENDUM
A

       

      INDEMNIFICATION
PROVISIONS

       

      In
connection with the engagement of Rodman & Renshaw, LLC (“Rodman”) by Hythiam
Inc. (the “Company”) pursuant to a letter agreement dated September 17, 2009,
between the Company and Rodman, as it may be amended from time to time in
writing (the “Agreement”), the
Company hereby agrees as follows:

       

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

       

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

       

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

       

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

       

      
        
          
          

        

        
          
          

          
            

          

        

        
          
          

        

      

       

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

       

      
        	 
      	
                RODMAN
      & RENSHAW, LLC

                 

                 

                

                  By:
      /s/ David J.
      Horn                              
      

                        Name:
      David J. Horn

                        Title:  
      Chief Finacial Officer

                

              
	
                Accepted
      and Agreed to as of

                the
      date first written above:

                 

                HYTHIAM
      INC.

                 

                 

                

                  By:
      /s/ Terren S.
      Peizer                                        
      

                        Terren
      S. Peizer 

                        Chairman and
      Chief Executive OfficerUnassociated Document

    
      [BREAN
MURRAY CARRET & CO. LETTERHEAD]

      

      September
16, 2009

      

      STRICTLY
PRIVATE

      AND
CONFIDENTIAL

      

      Mr.
Richard A. Anderson

      President
and Chief Operating Officer

      Hythiam,
Inc.

      1150
Santa Monica Boulevard

      Los
Angeles, CA 90025

      

      Dear Mr.
Anderson:

      

      This is
to acknowledge and confirm the terms of our corporate finance representation
agreement (the “Agreement”) as follows:

      

      1.
Hythiam Inc. (“Hythiam” or the “Company”) hereby engages Brean Murray, Carret
& Co. (“BMC”), and BMC hereby agrees to render services to the Company, as a
non-exclusive corporate finance advisor on the terms and for the services
specified herein. BMC agrees to provide advice to the Company and evaluate
relevant transactions (“Transaction(s)”) the Company may consider during the
term of this Agreement, including but not limited to raising the Company growth
financing via a public or private offering of equity (the
“Offering”)

      

      2. The
term of this engagement (the “Engagement Period”) shall be for a period of
thirty (30) days (the “Term”) commencing with the execution of this Agreement by
the Company (the “Effective Date”).

      

      3. The
Company agrees that should it consummate an Offering during the Term of the
Agreement, the Company shall pay to BMC, or cause BMC to be paid, at the closing
of such Transaction, a cash fee 1% of the gross proceeds raised.

      

      4.
Transaction fees described herein are payable in full, without discount or
reduction, in cash on

      closing
of any Transaction.

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Mr.
Richard A. Anderson

      September
16, 2009

      Page
2

      

      5. The
benefits of this Agreement shall inure to the parties hereto and their
respective successors and assigns, and the obligations and liabilities assumed
in this Agreement shall be binding upon the parties hereto and their respective
successors and assigns. Notwithstanding anything contained herein to the
contrary, the Company shall not assign to an unaffiliated third party any of its
rights or obligations hereunder without the express written consent of
BMC.

      

      6. Any
dispute between the parties to this Agreement shall be settled by arbitration
before the facilities of the Financial Industry Regulatory Authority and will be
conducted pursuant to applicable federal laws, the laws of the State of New
York, without regard to conflicts of laws, and the rules of the selected
arbitral facility. The parties understand that the award of the arbitrators, or
of a majority of them, will be final and that a judgment upon any award rendered
may be entered in any court having jurisdiction.

      

      7. All
notices provided hereunder shall be given in writing and either delivered
personally or by overnight courier service or sent by certified mail, return
receipt requested, if to BMC, to 570 Lexington Avenue, New York, New York 10022,
Attention: Mr. Derek W. Woodworth; and if to the Company, to 11150 Santa Monica
Boulevard, Suite 1500, Los Angeles, CA 90025, Attention: Mr. Richard A.
Anderson.

      

      8. The
Company represents and warrants to BMC that Mr. Richard A. Anderson is the
President and Chief Operating Officer of the Company and is authorized on behalf
of the Company to execute the Agreement and to consummate the potential
transactions described herein, and the execution of this Agreement will not
conflict with or breach the certificate or articles of incorporation or bylaws
of the Company or any agreement to which the Company is a party.

      

      9.
Indemnification is incorporated by reference to Addendum I.

      

      10. The
Agreement sets forth the entire understanding of the parties relating to the
subject matter hereof, and supersedes and cancels any prior communications,
understandings and agreements between the parties. This Agreement cannot be
modified, or changed, nor can any of its provisions be waived, except by written
agreement signed by all parties.

      

      
        
           

        

        
           

          
            

          

        

        
           

        

      

      Mr.
Richard A. Anderson

      September
16, 2009

      Page
3

      

      Please
confirm that the foregoing is in accordance with your understanding by signing
and returning this letter to BMC and keeping a duplicate for your files. This
Agreement shall be effective after your acceptance below and its receipt by BMC
at its address set forth on this letter.

      

      Very
truly yours,

      

      Brean
Murray, Carret & Co.

      Derek W.
Woodworth

      Managing
Director

      

      Agreed
and accepted on the day

      of
September, 2009.

      

      Hythiam,
Inc.

      By:__________________________

      Mr.
Richard A. Anderson

      President
and Chief Operating Officer

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