**Exhibit 10.36**

 

**SEPARATION ANDCONSULTING AGREEMENT AND GENERAL RELEASE**

 

This Separationand Consulting Agreement and General Release (hereafter “Agreement”) is enteredinto as of this 3rd day of February, 2006, between Russell D. Phillips, Jr.(the “Executive”), and Alliance Imaging, Inc. (the “Company”), effective eight days after the Executive’ssignature (the “Effective Date”), unless he revokes his acceptance as providedin Paragraph 6(c), below.

 

WHEREAS, the Executivewas the General Counsel of the Company, pursuant to an Employment Agreemententered into as of April 29, 1998 (the “Employment Agreement”);

 

WHEREAS, the Executivetendered his resignation, and the Company accepted such resignation effectiveas of February 3, 2006 (the “Resignation Date”);

 

WHEREAS, the Executivewas granted options to purchase common stock of the Company in the amounts andat the strike prices reflected on Exhibit A hereto;

 

WHEREAS, the Companywishes to secure certain consulting services from the Executive following theResignation Date, and the Executive is willing to provide such services,pursuant to terms set forth in this Agreement;

 

WHEREAS, the Company andthe Executive now wish to document the termination of their employmentrelationship and fully and finally to resolve all matters between them;

 

THEREFORE, in exchangefor the good and valuable consideration set forth herein, the adequacy of whichis specifically acknowledged, the Executive and the Company hereby agree asfollows:

 

# 1.                                       Resignation of Employment. The Executive hereby confirms his resignation of all positions that theExecutive held as an officer of the Company and all subsidiaries of theCompany, all positions that the Executive held on the Board of Directors of theCompany and on the Boards of Directors of any of the Company’s subsidiaries,all positions held with respect to employee benefit plans of the Company andits subsidiaries (including membership on the Administrative Committee of theCompany’s 401(k) plan) and all Board of Directors and similar positions withthe Company’s and its subsidiaries’ joint venture entities (whetherconsolidated or unconsolidated); and the Company, on behalf of itself and suchother entities, confirms its acceptance of such resignations, effective as ofthe Resignation Date.  The Executivefurther confirms his resignation of his employment with the Company effective onthe Resignation Date.

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2.                                       Payment of Accrued Wages and Expenses.  Onor before the Resignation Date, the Company shall pay to the Executive an amountequal to all accrued wages through the Resignation Date, including accruedvacation, less applicable withholding.

 

3.                                       Consulting Services. For the period commencing on the Resignation Date and ending December 31,2006 (the “Consulting Period”), the Executive shall make himself available

 

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to the Company, asthe Company may request, pursuant to the terms of this Paragraph 3, as aconsultant.

 

(a)                                  The Executive shall provide up to five (5) hoursper month of consulting services, consisting of responding by telephone, atsuch times as do not interfere with the Executive’s other work duties, tofactual questions and questions related to legal advice previously provided bythe Executive to the Company (the “Consulting Services”).  The Company shall not request that theExecutive provide any new legal advice. Any consulting services in excess of five (5) hours per month shallbe provided at a rate of $250 (two hundred fifty dollars) per hour, at suchdates and times as are mutually agreed upon by the Executive and the Company.

 

(b)                                 Consulting Services may be requested byonly the following Company officers:  (i) theChairman and Chief Executive Officer, (ii) the President and ChiefOperating Officer, (iii) the interim General Counsel or General Counsel, (iv) theChief Financial Officer, and (v) the Controller.

 

4.                                       Payments to the Executive. In consideration of the Executive’s services as a consultant, for therelease provided by the Executive herein, and in full satisfaction of all claimsthat the Executive may have for bonus compensation for the year ending December 31,2005, the Company shall pay to the Executive $75,000 (seventy-five thousanddollars), less all required taxes and other withholding authorized by theExecutive, in three equal installments of $25,000 (twenty-five thousanddollars).  The first installment shall bepaid no later than five (5) days following the Effective Date.  The second installment shall be paid three (3) monthsafter payment of the initial installment. The final installment shall be paid six (6) months after payment ofthe initial installment.  In addition,the Company shall reimburse the Executive within five (5) days followinghis submission of an invoice for legal services in connection with hisseparation from the Company and this Agreement; *provided*,that the Company’s reimbursement obligation pursuant to this sentence shall becapped at $5,000.

 

5.                                       StockOptions.  By grants dated March 1,1999, November 2, 1999, January 16, 2002, January 15, 2003, January 5,2004 and January 3, 2005, the Executive was granted options to purchase207,000 (two hundred seven thousand) shares of Company common stock.  As of the Resignation Date, the Executivewill be vested in options to purchase 146,000 (one hundred forty-six thousandshares) of Company common stock (the “Vested Options”), at the strike pricesset forth in the Notices of Grant, the applicable Stock Option Agreements, and Exhibit Ato this Agreement.  The Executive shallhave 90 (ninety) days following the Resignation Date in which to exercise hisVested Options.  All Vested Options notexercised within 90 (ninety) days of the Resignation Date, and all optionsgranted to the Executive, but not vested as of the Resignation Date, shallexpire by their terms.  Except asexpressly provided herein, the Executive’s rights with respect to the stockoptions granted to him shall be governed by the terms of the application StockOptions Agreements and Stock Option Plans. The Executive covenants that his sale of shares of Company common stockshall be made in accordance with all applicable federal and state securitieslaws.

 

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6.                                       GeneralRelease of Claims by the Executive.

 

(a)                                  The Executive, on behalf of himself and hisexecutors, heirs, administrators, representatives and assigns, hereby agrees torelease and forever discharge the Company and all predecessors, successors andtheir respective parent corporations, affiliates, related, and/or subsidiaryentities, and all of their past and present investors, directors, shareholders,officers, general or limited partners, employees, attorneys, agents andrepresentatives, and employee benefit plans in which the Executive is or hasbeen a participant by virtue of his employment by the Company, from any and allclaims, debts, demands, accounts, judgments, rights, causes of action,equitable relief, damages, costs, charges, complaints, obligations, promises,agreements, controversies, suits, expenses, compensation, responsibility andliability of every kind and character whatsoever (including attorneys’ fees andcosts), whether in law or equity, known or unknown, asserted or unasserted,suspected or unsuspected (collectively, “Claims”), which the Executive has ormay have had against such entities based on any events or circumstances arisingor occurring on or prior to the date hereof or on or prior to the ResignationDate, arising directly or indirectly out of, relating to, or in any other wayinvolving in any manner whatsoever the Executive’s employment by the Company orthe separation thereof, and any and all claims arising under federal, state, orlocal laws relating to employment, including without limitation claims ofwrongful discharge, breach of express or implied contract, fraud,misrepresentation, defamation, or liability in tort, claims of any kind thatmay be brought in any court or administrative agency, any claims arising underTitle VII of the Civil Rights Act of 1964, the Age Discrimination in EmploymentAct, the Americans with Disabilities Act, the Older Workers Benefit ProtectionAct, the Fair Labor Standards Act, the Employee Retirement Income Security Act,the Family and Medical Leave Act, and similar state or local statutes,ordinances, and regulations.

 

Notwithstanding the generality of the foregoing, theExecutive does not release the following claims and rights:

 

(1)                                  Claims for unemployment compensation or anystate disability insurance benefits pursuant to the terms of applicable statelaw;

 

(2)                                  Claims to continued participation in certainof the Company’s group benefit plans pursuant to the terms and conditions ofthe federal law known as COBRA;

 

(3)                                  Claims to any benefit entitlements vested asthe date of separation of employment, pursuant to written terms of any Companyemployee benefit plan;

 

(4)                                  The Executive’s right to bring to theattention of the Equal Employment Opportunity Commission claims ofdiscrimination; provided, however, that the Executive does release his right tosecure any damages for alleged discriminatory treatment; and

 

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(5)                                  Claims for breach of the Company’sobligations under this Agreement.

 

(6)                                  Claims for director and officerindemnification and insurance coverage pursuant to the Company’s and itssubsidiaries’ charter documents, the indemnification agreement between theCompany and the Executive, and coverage under all applicable policies ofdirector and officer liability insurance.

 

(b)                                 THE EXECUTIVE ACKNOWLEDGES THAT HE HAS BEENADVISED OF AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIA CIVIL CODE SECTION 1542,WHICH PROVIDES AS FOLLOWS:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICHTHE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIMEOF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLYAFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

 

BEING AWARE OF SAID CODE SECTION, THEEXECUTIVE HEREBY EXPRESSLY WAIVES ANY RIGHTS HE MAY HAVE THEREUNDER, ASWELL AS UNDER ANY OTHER STATUTES OR COMMON LAW PRINCIPLES OF SIMILAR EFFECT.

 

(c)                                  The Executive agrees and expresslyacknowledges that this Agreement includes a waiver and release of all claimswhich he has or may have under the Age Discrimination in Employment Act of 1967,as amended, 29 U.S.C. § 621, etseq. (“ADEA”).  The following terms and conditions apply toand are part of the waiver and release of the ADEA claims under this Agreement:

 

(1)                                  This Paragraph 6(c), and this Agreement arewritten in a manner calculated to be understood by him.

 

(2)                                  The waiver and release of claims under theADEA contained in this Agreement does not cover rights or claims that may ariseafter the date on which he signs this Agreement.

 

(3)                                  This Agreement provides for consideration inaddition to anything of value to which he is already entitled.

 

(4)                                  The Executive has been advised to consult anattorney before signing this Agreement.

 

(5)                                  The Executive has been granted twenty-one(21) days after he is presented with this Agreement to decide whether or not tosign this Agreement.  If he executes thisAgreement prior to the expiration of such

 

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period, he does so voluntarily and after having hadthe opportunity to consult with an attorney, and hereby waives the remainder ofthe twenty-one (21) day period.

 

(6)                                  The Executive has the right to revoke thisgeneral release within seven (7) days of signing this Agreement.  In the event this general release is revoked,this Agreement will be null and void in its entirety, and he will not receiveany of the benefits of this Agreement.

 

IfExecutive wishes to revoke this agreement, Executive shall deliver writtennotice stating his intent to revoke this Agreement to Paul Viviano, Chairmanand Chief Executive Officer, on or before 5:00 p.m. on the seventh (7th)day after the date on which he signs this Agreement.

 

7.                                       Company’sRelease of Claims.

 

(a) The Company, on behalf of itself and allpredecessors, successors and, with respect to derivative claims or other claimsthat may be brought for the benefit of or through the Company only, on behalfof all parent corporations, affiliates, related, and/or subsidiary entities,and all of their past and present investors, shareholders, general or limitedpartners, attorneys, agents and representatives, voluntarily releases anddischarges the Executive and his heirs, successors, administrators,representatives and assigns from all Claims which it or they may have againstthe Executive as the result of his employment or the resignation of hisemployment or service in any other capacities at the request of the Company orits subsidiaries.  Notwithstanding theforegoing, nothing herein shall release or discharge any Claim by the Company orany such other entity against the Executive, or the right of the Company tobring any action, legal or otherwise, against the Executive as a result of anyfailure by him to perform his obligations under this Agreement, or as a resultof any illegal acts or acts constituting fraud or intentional misconduct.

 

(b) THE COMPANY ACKNOWLEDGESTHAT IT HAS BEEN ADVISED OF AND IS FAMILIAR WITH THE PROVISIONS OF CALIFORNIACIVIL CODE SECTION 1542, WHICH PROVIDES AS FOLLOWS:

 

“A GENERAL RELEASE DOES NOT EXTEND TO CLAIMS WHICHTHE CREDITOR DOES NOT KNOW OR SUSPECT TO EXIST IN HIS OR HER FAVOR AT THE TIMEOF EXECUTING THE RELEASE, WHICH IF KNOWN BY HIM OR HER MUST HAVE MATERIALLYAFFECTED HIS OR HER SETTLEMENT WITH THE DEBTOR.”

 

BEING AWARE OF SAID CODE SECTION, THE COMPANY HEREBY EXPRESSLY WAIVES ANYRIGHTS IT MAY HAVE THEREUNDER, AS WELL AS UNDER ANY OTHER STATUTES ORCOMMON LAW PRINCIPLES OF SIMILAR EFFECT.

 

8.                                       Nondisparagement. The Executive agrees that neither he nor anyone acting by, through,under or in concert with him shall disparage or otherwise communicate negativestatements or opinions about the Company, its Board members, officers,employees or business.

 

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The Company agreesthat neither its Board members nor officers shall disparage or otherwisecommunicate negative statements or opinions about the Executive.  The Company’s Chief Executive Officer agreesto provide upon request mutually agreeable written references.

 

# 9.                                       Cooperation. The Executive agrees to give reasonable cooperation, at the Company’srequest, in any pending or future litigation or arbitration brought against theCompany and in any investigation the Company or any government agency mayconduct (it being understood that time devoted to cooperation pursuant to thisParagraph 9 shall count against the obligation to provide consulting servicespursuant to Paragraph 3(a)).  Followingthe expiration of the Consulting Period, any time devoted to cooperation shallbe provided at the rate of $250 (two hundred fifty dollars) per hour, and atsuch times and dates as are mutually agreed upon by the Executive and theCompany. The Company shall reimburse the Executive for all expenses reasonablyincurred by him in compliance with this Paragraph 9.  Notwithstanding the foregoing, the Companyshall have no obligation to pay the Executive for time spent and expensesincurred by the Executive in any pending or future litigation, arbitration orinvestigation where the Executive is a co-defendant or party to the arbitrationor litigation, or a target of the investigation.

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10.                                 Executive’s Representations and Warranties.  TheExecutive represents and warrants that:

 

(a)                                  During the course of the Executive’semployment, he did not sustain any injuries for which he might be entitled tocompensation pursuant to California’s Workers Compensation law;

 

(b)                                 The Executive has not made any disparagingcomments about the Company, nor will he do so in the future; and

 

(c)                                  The Executive has not initiated anyadversarial proceedings of any kind against the Company or against any otherperson or entity released herein, nor will he do so in the future (with respectto matters that are within the scope of the release provided in Paragraph 6(a)),except as specifically allowed by this Agreement.

 

# 11.                                 Confidential Information; Return ofCompany Property.

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## (a)                                  The Executive hereby expressly confirms hisobligations to the Company to maintain the confidentiality of the Company’strade secrets and other proprietary information.

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## (b)                                 The Executive shall deliver to the Companywithin 5 (five) business days of the Resignation Date all originals and copiesof correspondence, drawings, manuals, letters, notes, notebooks, reports,programs, plans, proposals, financial documents, or any other documentsconcerning the Company’s customers, business plans, marketing strategies,products, processes or business of any kind and/or which contain proprietaryinformation or trade secrets which are in the possession or control of theExecutive or his agents or representatives.

 

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## (c)                                  The Executive shall return to the Companywithin 5 (five) business days of the Resignation Date all equipment of theCompany in his possession or control, except that the Executive may retain theCompany computer, and any ancillary Company equipment currently installed atthe Executive’s home.

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# 12.                                 Taxes.  To the extentany taxes may be payable by the Executive for the benefits provided to him bythis Agreement beyond those withheld by the Company, the Executive agrees topay them himself and to indemnify and hold the Company and the other entitiesreleased herein harmless for any tax claims or penalties, and associatedattorneys’ fees and costs, resulting from any failure by him to make requiredpayments.

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# 13.                                 In the Event of a Claimed Breach. All controversies, claims and disputes arising out of or relating tothis Agreement, including without limitation any alleged violation of itsterms, shall be resolved by final and binding arbitration before a single neutralarbitrator in Los Angeles, California, in accordance with the EmploymentDispute Resolution Rules of the American Arbitration Association (“AAA”).The arbitration shall be commenced by filing a demand for arbitration with theAAA within 14 (fourteen) days after the filing party has given notice of suchbreach to the other party.  Thearbitrator shall award the prevailing party attorneys’ fees and expert fees, ifany.  Notwithstanding the foregoing, itis acknowledged that it will be impossible to measure in money the damages thatwould be suffered if the parties fail to comply with any of the obligationsimposed on them under Paragraph 11(a) hereof, and that in the event of anysuch failure, an aggrieved person will be irreparably damaged and will not havean adequate remedy at law.  Any suchperson shall, therefore, be entitled to injunctive relief, including specificperformance, to enforce such obligations, and if any action shall be brought inequity to enforce any of the provisions of Paragraph 11(a) of thisAgreement, none of the parties hereto shall raise the defense that there is anadequate remedy at law.

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# 14.                                 Choice of Law. This Agreement shall in all respects be governed and construed inaccordance with the laws of the State of California, including all matters ofconstruction, validity and performance, without regard to conflicts of lawprinciples.

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15.                                 Notices.  All notices, demands or othercommunications regarding this Agreement shall be in writing and shall besufficiently given if either personally delivered or sent by facsimile orovernight courier, addressed to the party receiving notice at the last addressand facsimile number provided to the sending party.

 

# 16.                                 Severability. Except as otherwise specified below, should any portion of thisAgreement be found void or unenforceable for any reason by a court of competentjurisdiction, the parties intend that such provision be limited or modified soas to make it enforceable, and if such provision cannot be modified to beenforceable, the unenforceable portion shall be deemed severed from theremaining portions of this Agreement, which shall otherwise remain in fullforce and effect.  If any portion of thisAgreement is so found to be void or unenforceable for any reason in regard toany one or more persons, entities, or subject matters, such portion shallremain in full force and effect with respect to all other persons, entities,and subject matters.  This paragraphshall not operate, however, to sever the Executive’s obligation to provide thebinding release to all entities intended to be released hereunder.

 

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# 17.                                 Understanding and Authority. The parties understand and agree that all terms of this Agreement arecontractual and are not a mere recital, and represent and warrant that they arecompetent to covenant and agree as herein provided.

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18.                                 Integration Clause. This Agreement contains the entire agreement of the parties with regardto the separation of the Executive’s employment, and supersedes any prioragreements as to that matter. This Agreement may not be changed or modified, inwhole or in part, except by an instrument in writing signed by the Executive andthe Chief Executive Officer.

 

 19.                              Execution in Counterparts. This Agreement may be executed in counterparts with the same force andeffectiveness as though executed in a single document.

 

The parties havecarefully read this Agreement in its entirety; fully understand and agree toits terms and provisions; and intend and agree that it is final and binding onall parties.

 

IN WITNESS WHEREOF, andintending to be legally bound, the parties have executed the foregoing on thedates shown below.

 
| RUSSELL D.  PHILLIPS, JR.         | COMPANY                                      |
|-----------------------------------|----------------------------------------------|
|                              |                                         |
| /s/ Russell D. Phillips, Jr. |                                         | /s/ Paul Viviano |   |
|                              | By: Paul Viviano                             |
|                              |                                         |
|                              | Title: Chairman  and Chief Executive Officer |
|                              |                                         |
| Date                              | January 26, 2006                        |   | Date | January 26, 2006 |   |
|                                   |                                              |  |  |  |  |  |  |

 

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**EXHIBIT A**

 

**AllianceImaging, Inc.**

**OptionsOutstanding and Vested for Russell D. Phillips, Jr.**

**As of February 3,2006**

 
| **Grant** | ** ** | **Options**     | ** ** | **Options** | ** ** | **Exercise** | ** ** |
|-----------|------------|-----------------|------------|-------------|------------|--------------|------------|
| **Date**  | ** ** | **Outstanding** | ** ** | **Vested**  | ** ** | **Price**    | ** ** |
|      |       |            |       |        |       |         |       |
| 3/1/99    |       | 42,500          |       | 42,500      |       | $            | 2.20       |   |
|      |       |            |       |        |       |         |       |
| 11/2/99   |       | 49,500          |       | 49,500      |       | $            | 5.60       |   |
|      |       |            |       |        |       |         |       |
| 1/16/02   |       | 35,000          |       | 28,000      |       | $            | 10.65      |   |
|      |       |            |       |        |       |         |       |
| 1/15/03   |       | 40,000          |       | 20,000      |       | $            | 5.19       |   |
|      |       |            |       |        |       |         |       |
| 1/5/04    |       | 20,000          |       | 5,000       |       | $            | 3.67       |   |
|      |       |            |       |        |       |         |       |
| 1/3/05    |       | 20,000          |       | 1,000       |       | $            | 12.35      |   |
|      |       |            |       |        |       |         |       |
|      | ** ** | **207,000**     | ** ** | **146,000** |       |         |       |

 

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