Exhibit 10.37

 

Alliance Imaging

2006 Executive Incentive Plan

 

A. Purpose

 

The purpose of the Executive Incentive Plan (“Plan”) is to reward Executives of
Alliance Imaging, Inc. (“Company”) for enhancing the value of the Company by
rewarding the Executive for actions taken to achieve the Company’s value added
targets and by prudent fixed-site investments in imaging centers and radiation
oncology centers.

 

B. Eligible Participants

 

The eligible participants of the Plan are the Company’s Chairman of the Board
and Chief Executive Officer, the President and Chief Operating Officer, and the
Executive Vice President and Chief Financial Officer. The Compensation Committee
of the Company’s Board of Directors (“Compensation Committee”) has sole
discretion of defining the eligible participants of this Plan.

 

Under this Plan, the Executive is eligible to receive the bonus payment earned
for the full year of 2006 provided that the Executive is employed by the Company
for the entirety of 2006. The Executive must be an employee of the Company on
December 31, 2006 to be to be eligible to receive a bonus payment under the
Plan.

 

An Executive who is employed by the Company subsequent to January 1, 2006 will
be eligible for a pro-rated portion of the Value Added component of the Target
Bonus and the Fixed-Site Return on Capital component of the Target Bonus, as
long as the Executive is employed by the Company on or before June 30, 2006 and
is employed by the Company on December 31, 2006.

 

C. Term of the Plan

 

This Plan is effective January 1, 2006, and governs bonus payments to the
Executive for the 2006 calendar year.

 

D. Target Bonus

 

The Target Bonus is the product of the Executive’s base salary multiplied by a
percentage of the Executive’s base salary, as agreed to by the Compensation
Committee. The 2006 Target Bonus as a percentage of base salary is 85% for the
Chairman of the Board and Chief Executive Officer, and 75% for the President and
Chief Operating Officer, and 75% for Executive Vice President, Chief Financial
Officer.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***],
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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The Target Bonus has two (2) components:  (i) Value Added Bonus (75% of Target
Bonus); and (ii) Fixed-Site Return on Capital (25% of Target Bonus).

 

E. Bonus Calculation – Value Added Component

 

The Value Added component of the Bonus constitutes 75% of the Target Bonus. The
Bonus % targets under the Value Added component of the Bonus range from 50% to
175% of the Executives Target Bonus.

 

The minimum threshold for the Executive to earn the Value Added component of the
Bonus is to achieve [***]% of the 2006 [***] budget ($[***]). If this
achievement is met, the Target Bonus % achievement will be based on the Value
Added calculation. The attached Exhibit A entitled “Value Added” sets forth the
Target Bonus % earned by the Executive.

 

The calculation of the Value Added component of the Bonus is [***] less [***]
and [***].

 

[***] is defined as [***] up to a maximum of $[***]. Any adjustments to the
Value Added calculation for [***] or [***] will be approved by the Compensation
Committee of the Board of Directors.

 

The [***] is defined as the Company’s [***] as of December 31, 2005, March 31,
2006, June 30, 2006, September 30, 2006, and December 31, 2006, multiplied by
[***]%. [***] is defined as [***], less [***], less [***].

 

F. Bonus Calculation – [***] Return on Capital Component

 

The [***] Return on Capital component of the bonus constitutes 25% of the Target
Bonus. The [***] Return on Capital component of the Bonus is based on the return
on capital % of the [***] and [***]. The bonus % targets under the [***] Return
on Capital component of the Target Bonus range from 20% to 175% of the
Executive’s Target Bonus. See attached Exhibit B entitled “[***] Return on
Capital” for the Target Bonus % range.

 

The calculation of return on capital is defined as [***] of [***] divided by
[***]. The return on capital for [***] will be measured after 2008, when 50% of
this portion of the bonus will be paid based on the return at that time. The
return on capital will be measured again after 2009, and the total payout for
this portion of the bonus will be determined. Any amount paid the previous year
would be deducted from the final payment. If the calculation of the total payout
is less than the amount paid in the previous year, no additional payment will be
made, but no amount will be owed back to the Company by the Executive.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***],
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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G. Payment Schedule

 

The Company will calculate the Value Added component of the bonus based on full
year 2006 results. The payment of the Value Added component of the bonus will be
made upon the completion of the annual audit of the Company’s financial
statements by its independent auditors.

 

The Return on Capital component of the bonus will be calculated based on the
2008 results of the [***], and calculated a second time based on the 2009
results of the [***]. The payments of the Return on Capital component of the
bonus will be made once the annual audits of the Company’s financial statements
are completed by its independent auditors.

 

At its discretion, the Compensation Committee can authorize Bonus payments prior
to the completion of the annual audits.

 

H. Other Terms and Conditions

 

1.               The Compensation Committee of the Company’s Board of Directors
governs this Plan. If any disagreements arise regarding the interpretation of
the provisions of this Plan, the Compensation Committee has the sole discretion
to interpret the Plan’s provisions.

 

2.               The Compensation Committee has the right to grant discretionary
payments under the Plan at its sole discretion.

 

3.               This Plan sets forth the entire Executive Incentive Plan for
the 2006 calendar year and supersedes all prior and contemporaneous oral and
written agreements, understandings, and representations, if any, with respect to
the components of Executive bonus and/or the calculation and payment of
Executive bonus.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***],
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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EXHIBIT A

Value Added

 

[***]

 

Bonus % Target

 

[***]

 

[***]

 

[***]

 

Value Added

 

[***]

 

0.0

%

[***]

 

[***]

 

[***]

 

 

 

[***]

 

50.0

%

[***]

 

[***]

 

[***]

 

$

(5.0

)

[***]

 

57.1

%

[***]

 

[***]

 

[***]

 

(3.6

)

[***]

 

64.3

%

[***]

 

[***]

 

[***]

 

(2.3

)

[***]

 

71.4

%

[***]

 

[***]

 

[***]

 

(0.9

)

[***]

 

78.6

%

[***]

 

[***]

 

[***]

 

0.5

 

[***]

 

85.7

%

[***]

 

[***]

 

[***]

 

1.9

 

[***]

 

92.9

%

[***]

 

[***]

 

[***]

 

3.3

 

[***]

 

100.0

%

[***]

 

[***]

 

[***]

 

1.6

 

[***]

 

107.1

%

[***]

 

[***]

 

[***]

 

3.0

 

[***]

 

114.3

%

[***]

 

[***]

 

[***]

 

4.4

 

[***]

 

121.4

%

[***]

 

[***]

 

[***]

 

5.9

 

[***]

 

128.6

%

[***]

 

[***]

 

[***]

 

7.3

 

[***]

 

135.7

%

[***]

 

[***]

 

[***]

 

8.7

 

[***]

 

142.9

%

[***]

 

[***]

 

[***]

 

10.2

 

[***]

 

150.0

%

[***]

 

[***]

 

[***]

 

11.6

 

[***]

 

155.0

%

[***]

 

[***]

 

[***]

 

13.0

 

[***]

 

160.0

%

[***]

 

[***]

 

[***]

 

14.5

 

[***]

 

165.0

%

[***]

 

[***]

 

[***]

 

15.9

 

[***]

 

170.0

%

[***]

 

[***]

 

[***]

 

17.3

 

[***]

 

175.0

%

[***]

 

[***]

 

[***]

 

18.8

 

 

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(1)          [***] is defined as [***] up to a maximum of $[***]. Any
adjustments to the value added calculation for [***] or [***] will be approved
by the Compensation Committee of the Board of Directors.

 

(2)          [***] is computed as follows:

 

[***]

 

*Computation will take the [***] at December 31, 2005, March 31, 2006, June 30,
2006, September 30, 2006, and December 31, 2006.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***],
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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EXHIBIT B

[***] Return on Capital

 

(1)
Return on Capital

 

Bonus % Target

 

<11%

 

0

%

11%

 

20

%

12%

 

40

%

13%

 

60

%

14%

 

80

%

15%

 

100

%

16%

 

110

%

17%

 

120

%

18%

 

130

%

19%

 

140

%

20%

 

150

%

21%

 

155

%

22%

 

160

%

23%

 

165

%

24%

 

170

%

25%

 

175

%

 

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(1)          Return on capital is defined as [***] generated by [***] divided by
[***]. Return on capital for these [***] will be measured in 2008 and 2009.

 

Example:  16.2% return on capital = 110% + [(16.2%-16.0%)*(120%-110%)] = 112% of
target bonus.

 

CERTAIN CONFIDENTIAL INFORMATION CONTAINED IN THIS DOCUMENT, MARKED BY [***],
HAS BEEN OMITTED AND FILED SEPARATELY WITH THE SECURITIES AND EXCHANGE
COMMISSION PURSUANT TO RULE 24B-2 OF THE SECURITIES EXCHANGE ACT OF 1934, AS
AMENDED.

 

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