Exhibit
      10.33





**ANGELICA
      CORPORATION**





**EMPLOYMENT
      AGREEMENT**








This
      agreement (this “Agreement”) has been entered into this 23rd day of November,
      2005, by and between Angelica Corporation, a Missouri corporation (the
“Company”), and W. Russell Watson, an individual (the “Employee”).





**WHEREAS,** the
      Board of Directors of the Company has determined that it is in the best
      interests of the Company and its stockholders to retain the Employee in the
      employ of the Company as Senior Vice President, East Business Unit of the
      Company’s Textile Services business operations as of the Effective Date (as
      defined below); and





**WHEREAS,** this
      Agreement contains the terms and conditions that have been negotiated by the
      Company and the Employee as an inducement to the Employee to continue in the
      employment of the Company and as an incentive to reinforce and encourage the
      continued attention and dedication of the Employee to the Company and its
      business throughout the Employment Period (as defined below), even in the face
      of a potential Change in Control;





**NOW
      THEREFORE,** in
      consideration of the mutual promises herein contained, the parties hereby agree
      as follows:




**Section
      1:** **Definitions
      and Construction.**





1.1 ****  **Definitions.** For
      purposes of this Agreement, the following words and phrases, whether or not
      capitalized, shall have the meanings specified below, unless the context plainly
      requires a different meaning.




1.1(a)  **“Accrued
      Obligations”** has the
      meaning set forth in Section 4.1(a) of this Agreement.




1.1(b)  **“Annual
      Bonus”** has the
      meaning set forth in Section 2.4(b) of this Agreement.





1.1(c)  **“Annual
      Base Salary”** has
      the
      meaning set forth in Section 2.4(a) of this Agreement.





1.1(d)  **“Board”** means
      the Board of Directors of the Company.





1.1(e)  **“Cause”** has
      the
      meaning set forth in Section 3.3 of this Agreement.




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1.1(f)  **“Change
      in Control”** means:





(i)  The
      acquisition by any individual, entity or group, or a Person (within the meaning
      of Section 13(d)(3) or 14(d)(2) of the Exchange Act) of ownership of 25% or
      more
      of either (a) the then outstanding shares of common stock of the Company
      (the “Outstanding Company Common Stock”) or (b) the combined voting power
      of the then outstanding voting securities of the Company entitled to vote
      generally in the election of directors (the “Outstanding Company Voting
      Securities”); or





(ii)  Individuals
      who, as of the date hereof, constitute the Board (the “Incumbent Board”) cease
      for any reason to constitute at least a majority of the Board; provided,
      however, that any individual becoming a director subsequent to the date hereof
      whose election, or nomination for election, by the Company's stockholders was
      approved by a vote of at least a majority of the directors then comprising
      the
      Incumbent Board shall be considered as though such individual were a member
      of
      the Incumbent Board, but excluding, as a member of the Incumbent Board, any
      such
      individual whose initial assumption of office occurs as a result of either
      an
      actual or threatened election contest (as such terms are used in Rule l4a-11
      of
      Regulation l4A promulgated under the Exchange Act) or other actual or threatened
      solicitation of proxies or consents by or on behalf of a Person other than
      the
      Board; or





(iii)  Approval
      by the stockholders of the Company of a reorganization, merger or consolidation,
      in each case, unless, following such reorganization, merger or consolidation,
      (1) more than 50% of, respectively, the then outstanding shares of common
      stock of the corporation resulting from such reorganization, merger or
      consolidation and the combined voting power of the then outstanding voting
      securities of such corporation entitled to vote generally in the election of
      directors is then beneficially owned, directly or indirectly, by all or
      substantially all of the individuals and entities who were the beneficial
      owners, respectively, of the Outstanding Company Common Stock and Outstanding
      Company Voting Securities immediately prior to such reorganization, merger
      or
      consolidation in substantially the same proportions as their ownership,
      immediately prior to such reorganization, merger or consolidation, of the
      Outstanding Company Common Stock and Outstanding Company Voting Securities,
      as
      the case may be, (2) no Person beneficially owns, directly or indirectly,
      25% or more of, respectively, the then outstanding shares of common stock of
      the
      corporation resulting from such reorganization, merger or consolidation or
      the
      combined voting power of the then outstanding voting securities of such
      corporation, entitled to vote generally in the election of directors, and
      (3) at least a majority of the members of the board of directors
      of





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the
      corporation resulting from such reorganization, merger or consolidation were
      members of the Incumbent Board at the time of the execution of the initial
      agreement providing for such reorganization, merger or consolidation;
      or




(iv)  Approval
      by the stockholders of the Company of (a) a complete liquidation or
      dissolution of the Company or (b) the sale or other disposition of all or
      substantially all of the assets of the Company, other than to a corporation,
      with respect to which following such sale or other disposition, (1) more
      than 50% of, respectively, the then outstanding shares of common stock of such
      corporation and the combined voting power of the then outstanding voting
      securities of such corporation entitled to vote generally in the election of
      directors is then beneficially owned, directly or indirectly, by all or
      substantially all of the individuals and entities who were the beneficial
      owners, respectively, of the Outstanding Company Common Stock and Outstanding
      Company Voting Securities immediately prior to such sale or other disposition
      in
      substantially the same proportion as their ownership, immediately prior to
      such
      sale or other disposition, of the Outstanding Company Common Stock and
      Outstanding Company Voting Securities, as the case may be, (2) no Person
      beneficially owns, directly or indirectly, 25% or more of, respectively, the
      then outstanding shares of common stock of such corporation and the combined
      voting power of the then outstanding voting securities of such corporation
      entitled to vote generally in the election of directors and (3) at least a
      majority of the members of the board of directors of such corporation were
      members of the Incumbent Board at the time of the execution of the initial
      agreement or action of the Board providing for such sale or other disposition
      of
      assets of the Company.





1.1(g)  **“Change
      in Control Date”** means
      the date that a Change in Control first occurs.





1.1(h)  **“Company”** has
      the
      meaning set forth in the first paragraph of this Agreement and, with regard
      to
      successors, in Section 6.2 of this Agreement.





1.1(i)  **“Date
      of Termination”** has the
      meaning set forth in Section 3.8 of this Agreement.





1.1(j)  **“Disability”** has the
      meaning set forth in Section 3.2 of this Agreement.





1.1(k)  **“Disability
      Effective Date”** has
      the
      meaning set forth in Section 3.2 of this Agreement.





1.1(l)  **“Effective
      Date”** means
      the date of this Agreement.




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1.1(m)  **“Employment
      Period”** means
      the period beginning on the Effective Date and ending on the Date of
      Termination.





1.1(n)  **“Exchange
      Act”** means
      the Securities Exchange Act of 1934, as amended.





1.1(o)  **“Good
      Reason”** has
      the
      meaning set forth in Section 3.4 of this Agreement.





1.1(p)  **“Incumbent
      Board”** has
      the
      meaning set forth in Section 1.1(f)(ii) of this Agreement.





1.1(q)  **“Notice
      of Termination”** has the
      meaning set forth in Section 3.7 of this Agreement.





1.1(r)  **“Other
      Benefits”** has
      the
      meaning set forth in Section 4.3 of this Agreement.





1.1(s)  **“Outstanding
      Company Common Stock”** has
      the
      meaning set forth in Section 1.1(f)(i) of this Agreement.





1.1(t)  **“Outstanding
      Company Voting Securities”** has the
      meaning set forth in Section 1.1(f)(i) of this Agreement.





1.1(u)  **“Person”** means
      any “person” within the meaning of Sections 13(d) and 14(d) of the Exchange
      Act.





1.2  **Gender
      and Number.** When
      appropriate, pronouns in this Agreement used in the masculine gender include
      the
      feminine gender, words in the singular include the plural, and words in the
      plural include the singular.





1.3  **Headings.** All
      headings in this Agreement are included solely for ease of reference and do
      not
      bear on the interpretation of the text. Accordingly, as used in this Agreement,
      the terms “Article” and “Section” mean the text that accompanies the specified
      Article or Section of the Agreement.





1.4  **Applicable
      Law.** This
      Agreement shall be governed by and construed in accordance with the laws of
      the
      State of Missouri, without reference to its conflict of law
      principles.





**Section
      2:**  **Terms
      and Conditions of Employment.**





2.1  **Period
      of Employment; Term of Agreement.** The
      Employee shall remain in the employ of the Company throughout the Employment
      Period in accordance with the terms and provisions of this Agreement. Either
      party to this Agreement may terminate the Employment Period (and the Employee’s
      employment with the Company) at any time by giving the other party a Notice
      of




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Termination,
      subject only to the obligation of the Company to pay the benefits to the
      Employee as specified in Section 4 of this Agreement. The term of this Agreement
      shall begin as of the Effective Date and shall end on the Date of Termination.





2.2  **Positions
      and Duties.**





2.2(a)  Throughout
      the Employment Period, the Employee shall serve as Senior Vice President, East
      Business Unit of the Company’s Textile Services business, subject to the
      reasonable directions of the principal executive officer of the Textile Services
      business and the principal executive officer of the Company. The Employee shall
      have such authority and shall perform such duties as shall be specified by
      the
      principal executive officer of the Textile Services business and the principal
      executive officer of the Company from time to time.





2.2(b)  Throughout
      the Employment Period (but excluding any periods of vacation and sick leave
      to
      which the Employee is entitled), the Employee shall devote reasonable attention
      and time during normal business hours to the business and affairs of the Company
      and shall use his reasonable best efforts to perform faithfully and efficiently
      such responsibilities as are assigned to him under or in accordance with this
      Agreement; provided that, it shall not be a violation of this Section 2.2(b)
      for
      the Employee to (i) serve on corporate, civic or charitable boards or
      committees, (ii) deliver lectures or fulfill speaking engagements, or
      (iii) manage personal investments, so long as such activities do not
      significantly interfere with the performance of the Employee's responsibilities
      as an employee of the Company in accordance with this Agreement or violate
      the
      Company's conflict of interest policy as is in effect at such times.





2.3  **Situs
      of Employment.** Throughout the Employment Period, the Employee's services shall be performed
      at
      the Company’s divisional headquarters offices located in the greater Atlanta,
      Georgia metropolitan area.





2.4  **Compensation.**





2.4(a)  **Annual
      Base Salary.** The
      Employee will initially receive an annual base salary (“Annual Base Salary”) of
      One Hundred Seventy Thousand Dollars ($170,000.00), which shall be paid in
      equal
      or substantially equal semi-monthly installments. During the Employment Period,
      the Annual Base Salary payable to the Employee shall be reviewed at least once
      annually and shall be increased at the discretion of the Company but shall
      not
      be reduced without the consent of the Employee.




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2.4(b)  **Annual
      Incentive Bonuses.** In
      addition to Annual Base Salary, the Employee will be entitled to earn an
      incentive bonus on an annual basis (the “Annual Bonus”) during the Employment
      Period. The Board will set, on or before the 90 th day of
      such fiscal year, the criteria which will be required to be achieved by the
      Employee during the fiscal year to earn all or a specified percentage of his
      Annual Bonus. The maximum Annual Bonus that the Employee may earn is 60%, and
      the target bonus is 30%, of the Employee’s salary paid during the fiscal year.
      If a Change in Control occurs, the Employee will receive a lump-sum payment
      on
      or before the Change in Control Date equal to the Employee’s maximum Annual
      Bonus, prorated with the numerator being the number of months in the fiscal
      year
      to the Change in Control Date (including the month in which the Change in
      Control occurs as a full month) and the denominator being 12. This payment
      will
      be in lieu of any right of the Employee to receive an Annual Bonus for the
      fiscal year in which the Change in Control occurs.





2.4(c)  **Long-Term
      Incentive Plan Awards.** The
      Employee will be entitled to earn long-term incentive bonus awards payable
      in
      accordance with a plan established by the Board or the Compensation and
      Organization Committee (the “Long-Term Bonus”). The Employee will be eligible to
      earn a Long-Term Bonus during the Employment Period on the basis of the
      achievement of performance goals during a three-year performance period. The
      Board will set, on or before the 90 th day of
      such fiscal year, the performance goals to be achieved during the performance
      period that is then commencing in order for the Employee to earn all or a
      specified portion of his Long-Term Bonus. The Long-Term Bonus amount that may
      be
      earned by the Employee will be set at 35% of the Employee’s then-current Annual
      Base Salary.





2.4(d)  **Savings
      and Deferred Compensation Plans.** Throughout the Employment Period, the Employee shall be entitled to participate
      in all savings, deferred compensation and retirement plans generally available
      to other peer officers of the Company, including the Company’s 401(k)
      Plan.





2.4(e)  **Welfare
      Benefit Plans.** Throughout the Employment Period, the Employee and/or the Employee's family,
      as
      the case may be, shall be eligible for participation in and shall receive all
      benefits under welfare benefit plans, practices, policies and programs provided
      by the Company (including, without limitation, medical, prescription, dental,
      disability, salary continuance, employee life, group life, accidental death
      and
      travel accident insurance plans and programs) to the extent generally available
      to other peer employees of the Company.





2.4(f)  **Business
      Expenses.** Throughout the Employment Period, the Employee shall be entitled to receive
      prompt reimbursement for all reasonable business expenses incurred by the
      Employee in the conduct of the business of the Company (including travel and
      entertainment expenses) in accordance with the policies, practices
      and




6


procedures
      generally applicable within the Company.





2.4(g)  **Office
      and Furnishings.** Throughout the Employment Period, the Employee shall be entitled to an office
      or
      offices of a size and with furnishings and other appointments commensurate
      with
      his office, duties and responsibilities with the Company.





2.4(h)  **Vacation.** Throughout the Employment Period, the Employee shall be entitled to paid
      vacation equal to three (3) weeks per year.





**Section
      3:**  **Termination
      of Employment.**





3.1  **Death.** The
      Employee's employment shall terminate automatically upon the Employee's death
      during the Employment Period.





3.2  **Disability.** If the
      Company determines in good faith that the Disability of the Employee has
      occurred during the Employment Period (pursuant to the definition of Disability
      set forth below), the Company may give to the Employee written notice in
      accordance with Section 7.2 of its intention to terminate the Employee's
      employment. In such event, the Employee's employment with the Company shall
      terminate effective on the thirtieth (30th) day after receipt of such notice
      by
      the Employee (the “Disability Effective Date”), provided that, within the thirty
      (30) days after such receipt, the Employee shall not have returned to full-time
      performance of the Employee's duties. For purposes of this Agreement,
“Disability” shall mean that the Employee has been unable to perform the
      services required of the Employee under this Agreement on a full-time basis
      for
      a period of one hundred eighty (180) consecutive regular business days by reason
      of a physical and/or mental condition. “Disability” shall be deemed to exist
      when certified by a physician selected by the Company and acceptable to the
      Employee or the Employee's legal representative (such agreement as to
      acceptability not to be withheld unreasonably). The Employee will submit to
      such
      medical or psychiatric examinations and tests as such physician deems necessary
      to make any such Disability determination.





3.3  **Termination
      for Cause.** The
      Company may terminate the Employee's employment during the Employment Period
      for
“Cause,” which shall mean termination based upon: (a) the Employee's
      willful and continued failure to substantially perform his duties with the
      Company (other than as a result of incapacity due to physical or mental
      condition), after a written demand for substantial performance is delivered
      to
      the Employee by the Company, which specifically identifies the manner in which
      the Employee has not substantially performed his duties, (b) the Employee's
      commission of an act constituting a criminal offense involving moral turpitude,
      dishonesty, or breach of trust, or (c) the Employee's material breach of any
      provision of this Agreement. For purposes of this Section 3.3, no act or failure
      to act on the Employee's part shall be considered “willful” unless done or
      omitted to be done without good faith on the part of the Employee and without
      the Employee’s reasonable belief that the act or omission was in the best
      interest of the Company.





3.4  **Good
      Reason.** The
      Employee may terminate his employment with the Company during




7




the
      Employment Period for “Good Reason,” which shall mean:





3.4(a)  the
      assignment to the Employee of any duties inconsistent in any respect with the
      Employee's position (including status, offices, titles and reporting
      requirements), authority, duties or responsibilities as contemplated by Section
      2.2(a) or any other action by the Company which results in a diminution in
      such
      position, authority, duties or responsibilities, excluding for this purpose
      any
      action not taken in bad faith by the Company and which the Company remedies
      promptly after receipt of notice thereof given by the Employee;





3.4(b)  (i)
      the
      failure by the Company to continue in effect any benefit or compensation plan,
      stock ownership plan, life insurance plan, health and accident plan or
      disability plan to which the Employee is entitled as specified in Section 2.4,
      provided that the Company may amend, modify or replace any such plan or plans
      as
      long as the Employee is entitled to benefits under the amended, modified or
      replaced plan or plans that are substantially similar to those of the plan
      or
      plans so amended, modified or replaced, (ii) the taking of any action by the
      Company which would adversely affect the Employee's participation in, or
      materially reduce the Employee's benefits under, any plans described in Section
      2.4, or deprive the Employee of any benefits enjoyed by the Employee as
      described in Section 2.4(f) and (g), or (iii) the failure by the Company to
      provide the Employee with paid vacation to which the Employee is entitled as
      described in Section 2.4(h);





3.4(c)  the
      Company's requiring the Employee to be based at any office or location other
      than that described in Section 2.3;





3.4(d)  a
      material breach by the Company of any provision of this Agreement;





3.4(e)  any
      purported termination by the Company of the Employee's employment otherwise
      than
      as expressly permitted by this Agreement; or





3.4(f)  in
      connection with a Change in Control, the failure of a successor of the Company
      to expressly assume and agree to perform this Agreement pursuant to the
      provisions of Section 6.2 of this Agreement prior to the Change in Control
      Date;
      provided, however, that a termination of employment by the Employee: (A)
      subsequent to an express assumption and agreement to perform this Agreement
      by
      such successor on or after the Change in Control Date, or (B) subsequent to
      a
      date that is two years after a Change in Control Date, shall not be deemed
      to be
      for “Good Reason” under this subsection.




8


For
      purposes of this Section, any good faith determination of “Good Reason” made by
      the Employee shall be conclusive unless and until such determination is
      overturned by a court of competent jurisdiction.





3.5  **Voluntary
      Termination by the Employee.** The
      Employee may voluntarily terminate his employment with the Company for any
      reason or for no reason at any time during the Employment Period.





3.6  **Termination
      by the Company without Cause.** The
      Company may terminate the Employee’s employment with the Company for any reason
      or for no reason, without citing Cause, at any time during the Employment
      Period, subject to the provisions of Section 4 of this Agreement.





3.7  **Notice
      of Termination.** Any
      termination by the Company or by the Employee shall be communicated by Notice
      of
      Termination given in accordance with Section 7.2 to the other party. For
      purposes of this Agreement, a “Notice of Termination” means a written notice
      which (i) indicates the specific termination provision in this Agreement
      relied upon, (ii) to the extent applicable, sets forth in reasonable detail
      the facts and circumstances claimed to provide a basis for termination of the
      Employee's employment under the provision so indicated, and (iii) if the
      Date of Termination (as defined in Section 3.8 hereof) is other than the date
      of
      receipt of such notice, specifies the Date of Termination. The failure by the
      Employee or the Company to set forth in the Notice of Termination any fact
      or
      circumstance which contributes to a showing of Good Reason or Cause shall not
      waive any right of the Employee or the Company hereunder or preclude the
      Employee or the Company from asserting such fact or circumstance in enforcing
      the Employee's or the Company's rights hereunder.





3.8  **Date
      of Termination.** “Date
      of
      Termination” means (i) if the Employee's employment is terminated by the
      Company for Cause or any other reason, the date of receipt by the Employee
      of
      the Notice of Termination or any later date specified therein, as the case
      may
      be, (ii) if the Employee's employment is terminated by reason of death or
      Disability, the date of death of the Employee or the Disability Effective Date,
      as the case may be, or (iii) if the Employee's employment is terminated by
      the Employee for Good Reason, the date specified in the Notice of Termination
      which date shall not be more than thirty (30) or less than fifteen (15) days
      after the receipt of such notice; or (iv) if the Employee’s employment is
      terminated by the Employee voluntarily (either prior to or after a Change in
      Control Date), the date that is specified in the Notice of Termination.





**Section
      4:**  **Certain
      Benefits Upon Termination.**





4.1  **Termination
      Without Cause or For Good Reason Not in Connection with a Change in Control.** If,
      prior
      to a Change in Control Date during the Employment Period (except in the event
      that one of the following terminations of employment occurs within the six-month
      period prior to the earlier of (a) a Change in Control Date or (b) the execution
      of a definitive agreement or contract that eventually results in a Change in
      Control, which shall result in the payment of severance benefits set forth
      in
      Section 4.2 of this Agreement), (i) the Company shall terminate the Employee's
      employment without Cause, or




9




(ii)
      the
      Employee shall terminate his employment for Good Reason, the Employee shall
      be
      entitled to the payment of the benefits provided below:





4.1(a)  **Accrued
      Obligations** .
      Within
      thirty (30) days after the Date of Termination, the Company shall pay to the
      Employee the sum of (i) the Employee's Annual Base Salary through the Date
      of
      Termination to the extent not previously paid, (ii) the accrued benefit payable
      to the Employee under any compensation plan, program or arrangement in which
      the
      Employee is a participant subject to the computation of benefits provisions
      of
      such plan, program or arrangement, and (iii) any accrued vacation pay; in each
      case to the extent not previously paid (the “Accrued Obligations”).





4.1(b)  **Annual
      Base Salary Continuation** .
      For a
      period of twelve (12) months beginning in the month immediately subsequent
      to
      the month in which the Date of Termination occurs, the Company shall pay to
      the
      Employee, on a semi-monthly basis consistent with its then-existing payroll
      practices, an amount equal to one/twenty-fourth (1/24 th )
      of the
      Employee’s then-current Annual Base Salary; provided, however, that during
      months seven (7) through twelve (12) of such period, the amount of such payments
      shall be reduced by the amounts, if any, earned by the Employee during such
      months as a result of self-employment and/or employment with another employer.
      As a condition of payment during months seven through twelve, the Employee
      agrees to provide the Company with verification, reasonably acceptable to the
      Company, substantiating the amounts of any such earnings or the Employee’s lack
      of other employment, as the case may be. The Company at any time may elect
      to
      pay the balance of such payments then remaining in a lump sum, without
      discount.





4.2  **Benefits
      Upon Termination without Cause or for Good Reason in Connection with a Change
      in
      Control.** If
      (a) a
      Change in Control occurs during the Employment Period and within two (2) years
      after the Change in Control Date (i) the Company shall terminate the Employee's
      employment without Cause, or (ii) the Employee shall terminate employment with
      the Company for Good Reason, **or** ,
      alternatively, (b) if one of the above-described terminations of employment
      occurs within the six-month period prior to the earlier of (i) a Change in
      Control Date or (ii) the execution of a definitive agreement or contract that
      eventually results in a Change in Control, then the Employee shall become
      entitled to the payment of the benefits as provided below as of either (y)
      the
      Date of Termination, in the case where the sequence of the requisite events
      is
      as set forth in subsection (a) above or (z) the Change in Control Date, in
      the
      case where the sequence of the requisite events occurred as set forth in
      subsection (b) above (the relevant date for purposes of entitlement to the
      benefits as set forth in this Section 4.2 is hereinafter referred to as the
      “Entitlement Date”):




4.2(a)  **Accrued
      Obligations** .
      Within
      thirty (30) days after the Entitlement Date, the Company shall pay to the
      Employee the Accrued Obligations.





4.2(b)  **Severance
      Amount** .
      Within
      thirty (30) days after the Entitlement Date, the Company shall pay to the
      Employee as severance pay in a lump sum, in cash, an amount




10




equal
      to
      one (1) times an amount equal to the Employee’s then-current Annual Base
      Salary.




4.2(c)  **Stock
      Options and Restricted Stock** .
      To the
      extent not otherwise provided for under the terms of the Company's stock-based
      compensation plans or the Employee's award or grant agreements, all stock
      options and restricted stock held by the Employee that have not expired in
      accordance with their respective terms shall fully vest as of the Entitlement
      Date.




4.3  **Death.** If the
      Employee's employment is terminated by reason of the Employee's death during
      the
      Employment Period (either prior or subsequent to the Change in Control Date),
      this Agreement shall terminate without further obligations to the Employee's
      legal representatives under this Agreement, other than for (i) payment of
      Accrued Obligations (which shall be paid to the Employee's estate or
      beneficiary, as applicable, in a lump sum in cash within thirty (30) days of
      the
      Date of Termination) and (ii) the timely payment or provision of such other
      benefits required to be paid or provided by the Company to the Employee or
      the
      Employee’s family under any plan, program, policy, practice, contract or
      agreement of the Company generally provided to other peer employees and their
      families (“Other Benefits”), including all such benefits payable in the event of
      death.





4.4  **Disability.** If the
      Employee's employment is terminated by reason of the Employee's Disability
      during the Employment Period (either prior or subsequent to a Change in
      Control), this Agreement shall terminate without further obligations to the
      Employee, other than for (i) payment of Accrued Obligations (which shall be
      paid to the Employee in a lump sum in cash within thirty (30) days of the Date
      of Termination) and (ii) the timely payment or provision of Other Benefits
      including all such benefits payable in the event of Disability.





4.5  **Termination
      for Any Other Reasons.** If the
      Employee's employment shall be terminated for Cause or by the Employee
      voluntarily (either prior or subsequent to a Change in Control Date), this
      Agreement shall terminate without further obligations to the Employee other
      than
      the obligation to pay to the Employee the Accrued Obligations. In such case,
      all
      of the Employee’s Accrued Obligations shall be paid to the Employee in a lump
      sum in cash within thirty (30) days of the Date of Termination.





4.6  **Entire
      Agreement; Prior Agreements and Benefits under Other Plans
      Superceded.** This
      Agreement is the entire agreement of the parties on the subject matter contained
      herein and shall supercede all prior agreements, arrangements and understandings
      that the Employee and the Company may have had with respect to the Employee’s
      employment with the Company and the payment of benefits by the Company to the
      Employee in the event of a termination of the Employee’s employment, either
      prior to or in conjunction with a Change in Control, including that certain
      Employment Agreement dated the 30 th day of
      September, 2004. The benefits payable pursuant to this Agreement are in lieu
      of
      and in substitution for any termination benefits payable by the Company in
      conjunction with any other plan, program, policy, practice, contract or
      agreement that the Company may have had either in the past, currently or in
      the
      future.





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4.7  **Full
      Settlement.** The
      parties agree that the Company's obligation to make the payments provided for
      in
      this Agreement and otherwise to perform its obligations hereunder are intended
      to be in full settlement of all claims that the Employee may have against the
      Company with respect to the termination of the Employee’s employment with the
      Company and the Employee may be required to execute and deliver an agreement
      to
      this effect prior to receipt of any payments under this Agreement. The payments
      to be made by the Company or any other obligation that the Company is required
      to perform pursuant to this Agreement shall not be affected by any set-off,
      counterclaim, recoupment, defense or other claim, right or action which the
      Company may have against the Employee or others. In no event shall the Employee
      be obligated to seek other employment or take any other action by way of
      mitigation of the amounts payable to the Employee under any of the provisions
      of
      this Agreement and, except as provided in Section 4.1(b), such amounts shall
      not
      be reduced whether or not the Employee obtains other employment. To the extent
      the Employee prevails in any contest with respect to the validity or
      enforceability of, or liability under, any provision of this Agreement or any
      guarantee of performance thereof (including as a result of any contest by the
      Employee regarding the amount of any payment pursuant to this Agreement), the
      Company agrees to pay promptly, to the full extent permitted by law, all legal
      fees and expenses which the Employee may reasonably incur as a result of any
      such contest, plus in each case interest on any delayed payment at the
      applicable Federal rate provided for in Code Section 7872(f)(2)(A).





4.8  **Resolution
      of Disputes.** If there
      shall be any dispute between the Company and the Employee (i) as to whether
      any
      termination of the Employee's employment was for Cause, or (ii) as to
      whether any termination of the Employee’s employment for Good Reason was made in
      good faith, then, unless and until there is a final, non-appealable judgment
      by
      a court of competent jurisdiction declaring that such termination was for Cause
      or that the determination by the Employee of the existence of Good Reason was
      not made in good faith, the Company shall pay all amounts, and provide all
      benefits, to the Employee and/or the Employee's family or other beneficiaries,
      as the case may be, that the Company would be required to pay or provide
      pursuant to Section 4.1 or 4.2 as though such termination was without Cause
      or
      for Good Reason, as the case may be; provided, however, that the Company shall
      not be required to pay any disputed amounts pursuant to this Section 4.8 except
      upon receipt of an undertaking by or on behalf of the Employee to repay all
      such
      amounts to which the Employee is ultimately adjudged by such court not to be
      entitled.





**Section
      5:**  **Non-Competition.**





5.1  **Non-Compete
      Agreement.**





5.1(a)  During
      the period beginning on the Date of Termination and ending one (1) year
      thereafter, the Employee shall not, without prior written approval of the
      principal executive officer of the Company, become a partner, officer, director,
      stockholder, advisor, employee, consultant, agent, salesman or otherwise of
      any
      business enterprise in substantial direct competition (as defined in Section
      5.1(b)) with the Company or any of its subsidiaries in the United States or
      in
      any other country in which the Company does




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business
      on the Date of Termination; provided that, if the Employee’s employment is
      terminated for Good Reason, then the Employee will not be subject to the
      restrictions of this Section 5.1(a). This restriction will not limit the
      Employee’s right to invest in five percent (5%) or less of the outstanding
      capital stock or other equity securities of any corporation, the stock or
      securities of which are publicly traded on a national stock
      exchange.





5.1(b)  For
      purposes of Section 5.1, a business enterprise with which the Employee becomes
      associated shall be considered in substantial direct competition, if such entity
      competes with the Company or its subsidiaries in any business in which the
      Company or any of its subsidiaries is engaged and is within the Company's or
      the
      subsidiary’s market area as of the Date of Termination.





5.1(c)  During
      the period beginning on the date the Employment Period terminates and ending
      one
      (1) year thereafter, the Employee shall not directly or indirectly solicit
      the
      employment of, recruit, employ, hire, cause to be employed or hired, entice
      away
      or establish a business relationship with, (i) any then current employee of
      the
      Company or any of its subsidiaries or (ii) any person who was employed by the
      Company or any of its subsidiaries during the six (6) months immediately prior
      to the date that the Employee first solicits such person.





5.2  **Confidential
      Information.** The
      Employee shall hold in a fiduciary capacity for the benefit of the Company
      all
      secret or confidential information, knowledge or data relating to the Company
      or
      any of its affiliated companies, and their respective businesses, which shall
      have been obtained by the Employee during the Employee's employment by the
      Company and which shall not be or become public knowledge (other than by acts
      by
      the Employee or representatives of the Employee in violation of this Agreement).
      After termination of the Employee's employment with the Company, the Employee
      shall not, without the prior written consent of the Company, or as may otherwise
      be required by law or legal process, communicate or divulge any such
      information, knowledge or data to anyone other than the Company and those
      designated by it. In no event shall an asserted violation of the provisions
      of
      this Section constitute a basis for deferring or withholding any amounts
      otherwise payable to the Employee under this Agreement.





**Section
      6:**  **Successors.**





6.1  **Successors
      of Employee** . **** This
      Agreement is personal to the Employee and, without the prior written consent
      of
      the Company, the rights (but not the obligations) shall not be assignable by
      the
      Employee otherwise than by will or the laws of descent and distribution. This
      Agreement shall inure to the benefit of and be enforceable by the Employee's
      legal representatives.





6.2  **Successors
      of Company.** The
      Company will require any successor (whether direct or indirect, by purchase,
      merger, consolidation or otherwise) to all or substantially all of the business
      and/or assets of the Company to assume expressly and agree to perform this
      Agreement in the same manner and




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to
      the
      same extent that the Company would be required to perform it if no such
      succession had taken place. Failure of the Company to obtain such agreement
      prior to the effectiveness of any such succession shall be a breach of this
      Agreement and shall entitle the Employee to terminate this Agreement at his
      option on or after the Change in Control Date for Good Reason. As used in this
      Agreement, “Company” shall mean the Company as hereinbefore defined and any
      successor to its business and/or assets which assumes and agrees to perform
      this
      Agreement by operation of law, or otherwise.





**Section
      7:** **Miscellaneous.**





7.1  **Other
      Agreements.** The
      Board
      may, from time to time in the future, provide other incentive programs and
      bonus
      arrangements to the Employee with respect to the occurrence of a Change in
      Control that will be in addition to the benefits required to be paid in the
      designated circumstances in connection with the occurrence of a Change in
      Control. Such additional incentive programs and/or bonus arrangements will
      affect or abrogate the benefits to be paid under this Agreement only in the
      manner and to the extent explicitly agreed to by the Employee in any such
      subsequent program or arrangement.





7.2  **Notice.** For
      purposes of this Agreement, notices and all other communications provided for
      in
      the Agreement shall be in writing and shall be deemed to have been duly given
      when delivered or mailed by certified or registered mail, return receipt
      requested, postage prepaid, addressed to the respective addresses as set forth
      below; provided that all notices to the Company shall be directed to such other
      address as one party may have furnished to the other in writing in accordance
      herewith, except that notice of change of address shall be effective only upon
      receipt.





Notice
      to
      Employee:





W.
      Russell Watson


4290
      Woodward Way


Cumming,
      Georgia 30041




Notice
      to
      Company:




Angelica
      Corporation


424
      South
      Woods Mill Road


Chesterfield,
      Missouri 63017-3406


Attention:
      General Counsel





7.3  **Validity.** The
      invalidity or unenforceability of any provision of this Agreement shall not
      affect the validity or enforceability of any other provision of this
      Agreement.




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7.4  **Withholding.** The
      Company may withhold from any amounts payable under this Agreement such Federal,
      state or local taxes as shall be required to be withheld pursuant to any
      applicable law or regulation.





7.5  **Waiver.** The
      Employee's or the Company's failure to insist upon strict compliance with any
      provision hereof or any other provision of this Agreement or the failure to
      assert any right the Employee or the Company may have hereunder, including,
      without limitation, the right of the Employee to terminate employment for Good
      Reason pursuant to Section 3.4 shall not be deemed to be a waiver of such
      provision or right or any other provision or right of this
      Agreement.




**IN
      WITNESS WHEREOF,** the
      Employee and, the Company, pursuant to the authorization from its Board, have
      caused this Agreement to be executed in its name on its behalf, all as of the
      day and year first above written.








“Employee”











/s/
      W.
      R.
      Watson


W.
      Russell Watson





“Company”





ANGELICA
      CORPORATION











By /s/
      Stephen M.
      O’Hara


Name:
      Stephen M. O’Hara


Title:
      CEO






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