TECHNOLOGY LICENSE AND
ADMINISTRATIVE SERVICES AGREEMENT

The terms of this Technology License and Administrative Services Agreement ("AGREEMENT") are agreed to by and between Lake Chelan Community Hospital ("HOSPITAL") and Hythiam, Inc. ("HYTHIAM") (each a "PARTY" and collectively "THE PARTIES").

AGREEMENT EFFECTIVE DATE: 5-10-04

TERM OF AGREEMENT: The initial term of this Agreement shall commence on the Effective Date and continue until the fifth (5th) anniversary of the Effective Date, unless earlier terminated as set forth in Section 10 ("INITIAL TERM"). The Agreement shall automatically renew for additional one year terms unless earlier terminated by either Party as set forth in Section 10 (each a "RENEWAL TERM"), unless either Party gives the other Party written notice of termination on or before ninety (90) days prior to the end of the Initial Term or any Renewal Term. The term of this Agreement shall be the Initial Term plus any Renewal Terms ("TERM").

ATTACHMENTS:

Schedule A;

Schedule B: Authorized Users;

Schedule C: Business Associate/Data Use Agreement

AGREEMENT TERMS

1 PURPOSES

Hythiam provides through its proprietary protocols for treatment of substance abuse, its Data Collection and Data Reports (as defined in Section 4.2) 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 healthcare providers and others in screening, diagnosing and/or treating patients with or suspected of addiction to cocaine and/or alcohol and related conditions (collectively "LICENSED TECHNOLOGY"). Hospital desires to be able to offer to its patients and third party payers services that include use of the Licensed Technology.

2 AUTHORITY AND RELATIONSHIP OF THE PARTIES

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

3 HYTHIAM LICENSE

3.1 Grant of License Rights to Hospital

Subject to the terms and conditions of this Agreement, Hythiam hereby grants to and Hospital hereby accepts, a limited nontransferable, restricted, non-exclusive, revocable, commercial license to operate and use the Licensed Technology identified generally in more detail on Schedule A at the Hospital location(s) identified on Schedule A for the purposes set forth on Schedule A without the right to sub license the foregoing rights ("HYTHIAM LICENSE"). Hospital acknowledges that (i) this Agreement does not transfer any interest int he ownership or title of any portion of the Licensed Technology; and (ii) Hospital does not own any portion of the Licensed Technology.

3.2 Term of License

The Hythiam License shall terminate simultaneously with the expiration or termination for any reason of this Agreement.

3.3 License Restrictions

Hospital may use all or any part of the Hythiam Licensed Technology only for the purposes set forth in this Agreement. Without limiting the generality of the foregoing, Hospital shall not, nor shall permit any third party to,

(a) copy, modify, market, reproduce, sell or distribute the Hythiam 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 Person, except Hospital Personnel or Staff Physicians (as those terms are defined in Section 4.1) who have been authorized by Hythiam in writing as set forth on Schedule A and who have been informed of by Hospital, 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 transferor 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.

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