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Exhibit 10.4
 

(Angelica Letterhead)

November 22, 2006

Mr. John Olbrych
P.O. Box 155
Brownsville, Vermont 05037

Dear Jack:

On behalf of the Company, and subject to ratification of the Compensation
Committee’s approval by Angelica’s Board of Directors, I’m pleased to confirm
the offer of employment as Chief Administrative Officer of Angelica Corporation.
You will also be nominated for election by Angelica’s Board of Directors to the
office of Senior Vice President. We expect to present the offer for ratification
by the Board at the Board’s next meeting, which is currently scheduled for
December 8, 2006. Your nomination for election as Senior Vice President will be
presented at that time as well. In your position, you will report directly to
the Chief Executive Officer.

The following is intended to summarize the other principal terms of this offer.

 
1.
Annual Base Salary - Your starting annual base salary will be $250,000.
Following the conclusion of the Company’s current fiscal year, your annual base
salary will be reviewed at least annually thereafter.

 
2.
Short Term Incentive Compensation - Beginning with FY ‘07, you will participate
in the Company’s short term incentive compensation program. You will be eligible
to earn, annually, short-term incentive compensation of 0% to 100% of your
annual base salary (with a target bonus of 50%). The short term incentive
compensation program is based upon performance criteria that are established at
the beginning of each fiscal year.

 
3.
Long Term Incentive Program (LTIP) - Beginning with the FY ‘07 program, you will
be eligible to participate in the Company’s Long Term Incentive Program. Under
the LTIP, the Board of Directors has discretion to grant shares of restricted
stock to program participants. The number of shares granted to each participant
is based upon a percentage of the participant’s annual base salary and the
market share price as of the date of the grant. You will participate in the LTIP
at 50% of your annual base salary.
 

 

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4.
Stock Option Grant - You will receive an initial, non-qualified stock option
grant for a total of 75,000 shares of the Company’s stock. These options, which
will be granted pursuant to the Company’s 1999 Performance Plan, will be granted
as of your Employment Start Date (the “Grant Date”), and, unless earlier
forfeited or exercised, will expire ten (10) years following the Grant Date. The
options will be priced, and will vest, as follows:

 
Pricing:

 
o
25,000 options will be priced at the average market share price as of the Grant
Date;

 
o
25,000 options will be priced at 110% of the average market share price as of
the Grant Date; and

 
o
25,000 options will be priced at 120% of the average market share price as of
the Grant Date.

Vesting:

 
o
25% of each set of options (i.e. 6,250 of each set for a total of 18,750) will
vest six (6) months following the Grant Date;

 
o
An additional 25% of each set of options will vest eighteen (18) months
following the Grant Date;

 
o
An additional 25% of each set of options will vest thirty (30) months following
the Grant Date; and

 
o
The final 25% of each set of options will vest forty-two (42) months following
the Grant Date.

If your employment terminates for any reason, all options that have not yet
vested, shall immediately be forfeited to the Company.

 
5.
Benefit Plans - You will be eligible to participate in the Company’s other
health and welfare benefit plans and programs in accordance with their terms. If
your employment terminates for any reason other than cause, you may continue
your participation in the Company’s healthcare insurance program for a period of
up to one (1) year, on the same terms and to the same extent to which you
participated in that program immediately prior to your termination. During the
continuation period, the Company will continue to be responsible for the
Company’s share of the premium.

 
6.
Temporary Living Expenses - During the three (3) month period following your
Employment Start Date, the Company will reimburse you for reasonable and
customary expenses incurred for room and board while in the Atlanta metropolitan
area. In addition, the Company will reimburse you for up to ten (10) personal,
round trip flights between Vermont and Atlanta, incurred at any time following
your Employment Start Date.

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7.
Relocation Expenses - The Company will reimburse you for reasonable and
customary expenses relating to one move of your household belongings, from your
then current residence in Vermont to the Atlanta metropolitan area, completed at
any time during the two (2) year period following your Employment Start Date. In
addition, upon your purchase or lease of housing in the Atlanta area, the
Company will pay you a lump sum amount equal to one-month’s base salary, grossed
up for taxes, for associated expenses.

 
8.
Miscellaneous - During your employment, the Company will reimburse you for the
cost of maintaining a membership in one airline club of your choosing. In
addition, until the current lease expires for the 2006 Lexus automobile
maintained by the Company in Atlanta, you will have full use of that vehicle
while in the Atlanta area. All associated costs will be paid or reimbursed by
the Company. The current lease is scheduled to expire June 30, 2008.

 
9.
Employment Start Date - Your employment will begin Monday, November 27, 2006
(the “Employment Start Date”).

 
10.
Employment Agreement - Upon receiving your signed acceptance of this offer we
will prepare a written employment agreement for your consideration that will
include the material terms summarized above, as well as other customary
provisions relating to confidentiality, non-competition, etc. As agreed, and as
part of this offer, the Employment Agreement will provide that, in the event
your employment terminates for any reason other than cause, and subject to the
execution of a customary settlement agreement and release, you will continue to
be paid for a period of one (1) year following termination payments equal to
your then current base salary.

 
If you have any questions, or would like to discuss any of the above, please
feel free to call me. Otherwise, I ask that you sign and return a copy of this
letter to me at your earliest convenience. Since you plan to be in the St. Louis
office on Monday of next week, you may return a signed copy at that time if
that’s more convenient.

I look forward to working with you, Jack.

Sincerely,

/s/ Stephen M. O’Hara
ACCEPTED AND AGREED

/s/ John Olbrych                               
John Olbrych
 
 
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