Document:

Unassociated Document

    
      

    

    Exhibit
      10.32

    
 

    ANGELICA
      CORPORATION

    EMPLOYMENT
      AGREEMENT

    

    

    This
      agreement (‘‘Agreement’’) has been entered into this 27th day of November, 2006,
      by and between Angelica Corporation, a Missouri corporation (the “Company”), and
      John Olbrych, an individual (the “Executive”).

    

    WHEREAS,
      the
      Board of Directors of the Company has determined that it is in the best
      interests of the Company and its stockholders to employ executive as Chief
      Administrative Officer as of the Employment Start Date (as defined below) and,
      additionally, as Senior Vice President 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 Executive as an inducement to the Executive to accept employment
      by the Company;

    

    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
      Base Salary” has
      the
      meaning set forth in Section 2.3(a) of this Agreement.

    

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

    

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

    

    1.1(e) “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(f) “Code”
      shall
      mean the Internal Revenue Code of 1986, as amended.

    

    1.1(g) “Date
      of Termination”
      has the
      meaning set forth in Section 3.6 of this Agreement.

     

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

     

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

    

    
      
        
        

      

      
        
        

        
          

        

      

      
        
        

      

    

    1.1(j) “Effective
      Date”
      means
      December 8, 2006.

    

    1.1(k) “Employment
      Period”
      means
      the period beginning on the Employment Start Date and ending on the Date of
      Termination.

    

    1.1(l) “Employment
      Start Date”
      means
      November 27, 2006.

     

    1.1(m) “Grant
      Date” has
      the
      meaning set forth in section 2.3(d) of this Agreement.

    

    1.1(n) “Long-Term
      Bonus”
      has the
      meaning set forth in Section 2.3(c) of this Agreement.

     

    1.1(o) “Notice
      of Termination”
      has the
      meaning set forth in Section 3.5 of this Agreement.

     

    1.1(p) “Other
      Benefits” has
      the
      meaning set forth in Section 4.1(d) of this Agreement.

     

    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; Venue.
      This
      Agreement is executed, entered into, and accepted in the State of Missouri,
      and
      shall be governed by and construed in accordance with the laws of the State
      of
      Missouri, without reference to its conflict of law principles. In any lawsuit
      to
      enforce or assert rights for a breach of this Agreement, venue shall be proper
      in the St. Louis County Circuit Court, and the federal district court in St.
      Louis, Missouri (if federal jurisdiction exists), and neither party may claim
      that such forum is inconvenient or not the most convenient forum, or that it
      otherwise is not a proper forum to decide the claims asserted. 

    

    Section
      2: Terms
      and Conditions of Employment.

    

    2.1 Period
      of Employment.
      The
      Executive 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 Executive’s
      employment with the Company) at any time by giving the other party a Notice
      of
      Termination, subject only to the obligation of the Company to pay the benefits
      to the Executive as and under the conditions 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 and shall accordingly be for no definite
      term or duration.

    
 

    
      
        
        

      

      
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    2.2 Positions
      and Duties.

     

    2.2(a) From
      and
      after the Employment Start Date, the Executive shall serve as Chief
      Administrative Officer of the Company, and additionally, from and after the
      Effective Date, the Executive shall serve as a Senior Vice President of the
      Company. Throughout the Employment Period, the Executive shall perform his
      duties subject to the reasonable directions of the Chief Executive Officer
      of
      the Company and the Board, and in such capacities shall perform such executive
      and administrative duties as may be assigned to Executive from time to time
      by
      the Chief Executive Officer or the Board. The Executive shall have such
      authority and shall perform such duties as are specified in or contemplated
      by
      the Bylaws of the Company for the offices to which he has been appointed and
      shall so serve subject to the control exercised by the Chief Executive Officer
      of the Company and the Board from time to time. The Executive will comply with
      all policies of the Company in effect from time to time. 

     

    2.2(b) Throughout
      the Employment Period (but excluding any periods of vacation and sick leave
      to
      which the Executive is entitled), the Executive 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 Executive 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
      Executive'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 Compensation.

     

    2.3(a) Annual
      Base Salary.
      The
      Executive will be compensated on a salaried basis at an annual rate of pay
      (“Annual Base Salary”) of Two Hundred Fifty Thousand Dollars ($250,000.00),
      which shall be paid in equal or substantially equal monthly, semi-monthly or
      bi-weekly instalments in accordance with the Company’s payroll practices in
      effect from time to time for executives generally. During the Employment Period,
      the Annual Base Salary shall be reviewed by the Board and/or the Compensation
      and Organization Committee at least annually following the conclusion of the
      current fiscal year (with the first such review taking place not later than
      at
      the conclusion of the Company’s fiscal year 2007), and may be increased at the
      discretion of the Board or the Compensation and Organization Committee of the
      Board. If the Annual Base Salary is increased, then the increased rate of
      compensation shall constitute the Annual Base Salary. The Annual Base Salary
      may
      be reduced with the consent of the Executive. 

     

    2.3(b) Annual
      Short Term Incentive Bonus.
      Beginning with the 2007 fiscal year of the Company, during the Employment
      Period, the Executive will be eligible to participate in the Company’s short
      term incentive compensation program and be eligible to earn under and upon
      the
      terms of that plan an incentive award of up to 100% of Annual Base Salary based
      on performance criteria established by the Board or its Compensation and
      Organization Committee, with a target bonus equal to at least 50% of Annual
      Base
      Salary. 

     

    
      
        
        

      

      
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    2.3(c) Long-Term
      Incentive Plan Awards. Beginning
      with the 2007 fiscal year of the Company, during the Employment Period Executive
      will be eligible to participate in the Company’s Long Term Incentive Program
      (“LTIP”) at fifty percent (50%) of Annual Base Salary in accordance with the
      terms of the LTIP as in effect from time to time (the “Long Term Bonus”) and be
      eligible to earn under and upon the terms of the LTIP as in effect from time
      to
      time a Long Term Bonus based on performance criteria established by the Board
      or
      its Compensation and Organization Committee. 

     

    2.3(d)
       Initial
      Stock Option Grant.
      As of
      the Employment Start Date (the “Grant Date”), Executive shall receive an
      non-qualified stock option grant under and upon the terms of the Company’s 1999
      Performance Plan of a total of 75,000 shares of the Company’s stock. Unless
      earlier forfeited or exercised, these options will expire ten (10) years
      following the Grant Date. These options will be priced as follows: 25,000
      options will be priced at the average market share price as of the Grant Date;
      25,000 options will be priced at 110% of the average market share price as
      of
      the Grant Date; and 25,000 options will be priced at 120% of the average market
      share price as of the Grant Date. These options will vest during the Employment
      Period as follows: (1) 25% of each set of options (i.e. 6,250 of the options
      priced at the average market share price on the Grant Date, 6,250 of the options
      priced at 110% of the average market share price on the Grant Date, and 6,250
      of
      the options priced at 120% of the average market share price on the Grant Date)
      will vest six (6) months following the Grant Date if Executive is employed
      by
      the Company at that time; (2) 25% of each set of options will vest eighteen
      (18)
      months following the Grant Date if Executive is employed by the Company at
      that
      time; (3) 25% of each set of options will vest thirty (30) months following
      the
      Grant Date if Executive is employed by the Company at that time; and (4) 25%
      of
      each set of options will vest forty-two (42) months following the Grant Date
      if
      Executive is employed by the Company at that time. Except as otherwise provided
      in the Company’s 1999 Performance Plan, as amended and restated, if Executive’s
      employment terminates for any reason, all options that have not vested as of
      the
      Date of Termination shall immediately lapse and terminate without pro
      ration.

     

    2.3(e) Savings,
      Deferred Compensation and Retirement Plans. Throughout
      the Employment Period, the Executive shall be entitled to participate in all
      savings, deferred compensation and retirement plans generally available to
      other
      peer executives of the Company, with the exception that the Compensation and
      Organization Committee of the Board has indicated its intention to reassess
      the
      Company’s Supplemental Plan for Selected Management Employees and the Executive
      shall not participate in that plan without an affirmative decision on the part
      of such Committee to include him in that Plan. 

     

    2.3(f) Welfare
      Benefit Plans.
      Throughout the Employment Period (and thereafter, to the extent provided for
      in
      Section 4.1(c) hereof), the Executive and/or the Executive'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 to peer executives generally (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 executives of the Company.

     

    
      
        
        

      

      
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    2.3(g) Business
      Expenses.
      Throughout the Employment Period, the Executive shall be entitled to receive
      prompt reimbursement for all reasonable business expenses incurred by the
      Executive, in accordance with and subject to the policies, practices and
      procedures generally applicable to other peer executives of the Company.

     

    2.3(h) Temporary
      Living Expenses.
      During
      the three (3) month period immediately following Executive’s Employment Start
      Date, the Company will reimburse Executive for the reasonable and customary
      expenses Executive actually incurs for room and board while in the Atlanta,
      Georgia metropolitan area while Executive is employed by the Company. While
      the
      Executive is employed by the Company, the Company also will reimburse Executive
      for the reasonable cost of up to ten (10) personal round trip coach flights
      between Vermont and Atlanta, Georgia, incurred at any time following the
      Executive’s Employment Start Date. 

     

    2.3(i) Relocation
      Expenses. The
      Company will reimburse the Executive for the reasonable and customary expenses
      actually incurred relating to the Executive’s move of the Executive’s household
      belongings from the Executive’s then-current residence in Vermont to the
      Atlanta, Georgia metropolitan area in accordance with and upon the terms of
      the
      Company’s relocation policy, provided this move occurs on or before the second
      anniversary of the Employment Start Date. Upon the Executive’s purchase or lease
      of housing in the Atlanta, Georgia metropolitan area during the Employment
      Period, and provided that the Executive was employed by the Company as of the
      closing date of such purchase or lease and no Notice of Termination was given
      prior to such date, the Company will pay the Executive a lump-sum amount equal
      to one-twelfth (1/12) of the Executive’s then Annual Base Salary (the
“Relocation Payment”). The Company will also make an additional payment (the
“Gross-Up Payment”) to the Executive in an amount required to allow the
      Executive to retain the full amount of the Relocation Payment after payment
      by
      the Executive of all income taxes on the Relocation Payment and the Gross-Up
      Payment. 

     

    2.3(j) Miscellaneous
      Expenses. Throughout
      the Employment Period, the Company will reimburse the Executive for the cost
      of
      maintaining a membership in one airline club of the Executive’s choosing. In
      addition, during the Employment Period, the Company will provide the Executive
      with the use, while in the Atlanta area, of the 2006 Lexus automobile maintained
      by the Company in Atlanta, Georgia beginning on the Executive’s Employment Start
      Date and continuing until the current lease for the 2006 Lexus expires or date
      a
      Notice of Termination is given, whichever first occurs. The current lease is
      scheduled to expire on June 30, 2008. The Company will pay or reimburse the
      Executive for automobile insurance for the vehicle and for the lease payments
      and taxes associated with the lease, excluding costs incurred outside the
      parameters of the lease.

     

    2.3(k) Office
      and Support Staff.
      Throughout the Employment Period, the Executive shall be entitled to an office
      or offices of a size and with furnishings and other appointments, and to
      personal secretarial and other assistance, as are generally provided to other
      peer executives of the Company. 

     

    2.3(l) Vacation.
      Throughout the Employment Period, the Executive shall be entitled to four (4)
      weeks of paid vacation annually and otherwise in accordance with the plans,
      policies, programs and practices as are generally provided to other peer
      executives of the Company.

     

     

    
      
        
        

      

      
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    Section
      3: Termination
      of Employment.

     

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

     

    3.2 Disability.
      If the
      Company determines in good faith that the Disability of the Executive has
      occurred during the Employment Period (pursuant to the definition of Disability
      set forth below), the Company may give to the Executive written notice in
      accordance with Section 7.1 of its intention to terminate the Executive's
      employment. In such event, the Executive's employment with the Company shall
      terminate effective on the thirtieth (30th) day after receipt of such notice
      by
      the Executive (the “Disability Effective Date”), provided that, within the
      thirty (30) days after such receipt, the Executive shall not have returned
      to
      full-time performance of the Executive's duties. For purposes of this Agreement,
      “Disability” shall mean that the Executive is unable with reasonable
      accommodation to perform the services required of the Executive hereunder on
      a
      full-time basis for a period of one hundred eighty (180) consecutive business
      days or more by reason of a physical and/or mental condition or injury.
“Disability” shall be deemed to exist when certified by a physician selected by
      the Company and acceptable to the Executive or the Executive's legal
      representative (such agreement as to acceptability not to be withheld
      unreasonably). The Executive 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 Executive's employment during the Employment Period
      for “Cause,” which shall mean termination based upon: (i) the Executive's
      willful and continued failure or refusal to substantially perform the
      Executive’s 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 Executive by the Company, which specifically
      identifies the manner in which the Executive has not substantially performed
      his
      duties, (ii) the Executive's commission of an act constituting a criminal
      offense that would be classified as a felony under the applicable criminal
      code
      or involving moral turpitude, dishonesty, or breach of trust, (iii) the
      Executive is required to cease being an officer of the Company, or is unable
      to
      perform any of the Executive’s duties under this Agreement, by reason of any
      regulatory requirement or the order or suggestion of any agency or body that
      has
      any supervisory or regulatory authority over the Company; (iv) violation of
      the
      Company’s Code of Conduct, or any policy prohibiting harassment, discrimination,
      disclosure of confidential information, alcohol or drug use, or retaliation;
      (v)
      misappropriation of property of the Company or one of its affiliated businesses,
      breach of fiduciary duty, or material violation of any law or regulation that
      may result in a material financial loss to the Company or damage its reputation,
      or (vi) the Executive's material breach of any provision of this Agreement.
      For
      purposes of this Section, no act or failure to act on the Executive's part
      shall
      be considered “willful” unless done, or omitted to be done, without good faith
      and without reasonable belief that the act or omission was in the best interest
      of the Company. Notwithstanding the foregoing, the Executive shall not be deemed
      to have been terminated for Cause unless and until (i) the Executive receives
      a
      Notice of Termination from the Company, (ii) the Executive is given the
      opportunity, with counsel, to be heard before the Board, and (iii) the Board
      finds, in its good faith opinion, that the Executive was guilty of the conduct
      set forth in the Notice of Termination. 

    

    3.4 Termination
      for Good Reason. The
      Executive may terminate his employment with the Company during the Employment
      Period for “Good Reason,” which shall mean:

     

    
      3.4(a)
        the assignment to the Executive of any duties inconsistent in any respect
        with
        the Executive’s position (including status, offices, titles and reporting
        requirements),

       

      
        
          
          

        

        
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      authority,
        duties or responsibilities as contemplated by Section 2.2(a) or any other
        action
        by the Company which results in the diminution in such position, authority,
        duties or responsibilities, excluding for this purpose any action (i) not
        taken
        in bad faith by the Company and (ii) which the Company remedies promptly
        after
        receipt of notice thereof given by the Executive;

    

    

    
      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 Executive is entitled as specified in Section
        2.3,
        provided that the Company may amend, modify or replace any such plan or plans
        as
        long as the Executive 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 Executive’s participation in, or
        materially reduce the Executive’s benefits under, any plans described in Section
        2.3, or deprive the Executive of any benefits enjoyed by the Executive as
        described in Section 2.3(j) and (k), or (iii) the failure of the Company
        to
        provide the Executive with paid vacation to which the Executive is entitled
        as
        described in Section 2.3(l);

    

    

    
      3.4(c)
        the Company’s requiring the Executive to be based at any office or location
        other than the Company’s office in the Atlanta, Georgia metropolitan
        area;

    

     

    
      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 Executive’s employment otherwise
          than as expressly permitted by this Agreement; and

         

        
          3.4(f)
            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; provided, however, that a termination of employment by the
            Executive
            (A) subsequent to an express assumption and agreement to perform this
            Agreement
            by such successor, or (B) subsequent to a date that is two years after
            the
            succession event, shall not be deemed to be for “Good Reason” under this
            subsection.

           

        

      

    

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

     

    3.5 Voluntary
      Termination by the Executive.
      The
      Executive may voluntarily terminate the Executive’s 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 Executive’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 of the Executive’s employment with the Company for Cause or
      Disability, or voluntary termination by the Executive, shall be communicated
      by
      Notice of Termination from the terminating party to the other party, given
      in
      accordance with Section

     

    
      
        
        

      

      
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    7.1.
      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
      Executive's employment under the provision so indicated, and (iii) if the
      Date of Termination (as defined in Section 3.7 hereof) is other than the date
      of
      receipt of such notice, specifies the termination date (which date shall be
      not
      more than fifteen (15) days after the giving of such notice). The failure by
      the
      Company to set forth in the Notice of Termination any fact or circumstance
      which
      contributes to a showing of Cause shall not waive any right of the Company
      hereunder or preclude the Company from asserting such fact or circumstance
      in
      enforcing the Company's rights hereunder. 

    

    3.8 Date
      of Termination.“Date
      of
      Termination” means (i) if the Executive's employment is terminated by the
      Company for Cause, the Date of Termination shall be the date of receipt by
      the
      Executive of the Notice of Termination or any later date specified therein,
      as
      the case may be, (ii) if the Executive's employment is terminated by reason
      of death or Disability, the Date of Termination shall be the date of death
      of
      the Executive or the Disability Effective Date, as the case may be, or (iii)
      if
      the Executive’s employment is voluntarily terminated by the Executive, the Date
      of Termination shall be a date specified in the Notice of Termination, with
      such
      specified date being not less than ten (10) days after the date of receipt
      by
      the Company of the Notice of Termination, (iv) if the Executive's
      employment is terminated other than for Cause, death, or Disability, the Date
      of
      Termination shall be the date of receipt by the Executive of the Notice of
      Termination.

    

    Section
      4: Certain
      Benefits Upon Termination.

    

    4.1 Termination
      by the Company Other Than For Cause; Termination by the Executive for Good
      Reason. If,
      during the Employment Period, the Company terminates the Executive's employment
      other than for Cause or Disability or if the Executive terminates his employment
      for Good Reason, the Executive 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
      Executive the sum of (1) the Executive's accrued salary through the Date of
      Termination for periods of time prior to the Date of Termination, (2) the
      accrued benefits payable to the Executive under any deferred compensation plan,
      program or arrangement in which the Executive is a participant subject to the
      computation of benefits provisions of such plan, program or arrangement, and
      (3)
      any accrued vacation pay; in each case to the extent not previously paid (the
      “Accrued Obligations”).

     

    4.1(b) Annual
      Base Salary.
      The
      Executive shall be entitled to receive an amount equal to the Annual Base
      Salary, payable as and when described below. This amount (the “Separation
      Payment”) will be paid over a one (1) year time period in the same equal
      monthly, semi monthly or bi-weekly installments at which the Executive had
      been
      paid at the time employment terminated; provided that, to the extent required
      to
      avoid the tax consequences of Section 409A of the Code, and with the consent
      of
      the Executive: (i) the first payment shall cover all payments scheduled to
      be
      made to the Executive during the first six (6) months after the Date of
      Termination; and (ii) the first such payment shall be delayed until the day
      after the six (6) month anniversary of the Date of Termination. The Company
      at
      any time after the six (6) month anniversary of the Date of Termination may
      elect to pay the balance of any remaining payments in a lump sum.

    

    
      
        
        

      

      
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    4.1(c) Medical
      and Health Benefit Continuation.
      With
      respect to the twelve (12) month period immediately following the Date of
      Termination, the Company shall reimburse the Executive, on a monthly basis,
      for
      that portion of the cost incurred by the Executive to continue the Executive’s
      then existing coverage under the Company’s group health insurance plan after the
      Date of Termination equal to the portion paid for by the Company for such
      coverage immediately prior to the Date of Termination, provided the Executive
      timely elects COBRA continuation coverage; provided,
      however,
      that if
      the Executive becomes employed with another employer and is eligible to receive
      medical or health benefits under another employer-provided plan, program,
      practice or policy then this benefit shall cease; and provided
      further
      that to
      the extent necessary to avoid the tax consequences of Section 409A of the Code,
      and with the consent of the Executive, the Company will not make any
      reimbursement payment to the Executive that otherwise would be due prior to
      the
      day after the six (6) month anniversary of the Date of Termination, in which
      case the Company will make a catch up payment for all amounts previously paid
      by
      the Executive that were eligible or reimbursement.
      

     

    4.1(d) Other
      Benefits.
      To the
      extent not previously paid or provided, the Company shall timely pay or provide
      to the Executive and/or the Executive's family any other amounts or benefits
      required to be paid or provided for which the Executive and/or the Executive's
      family is eligible to receive pursuant to this Agreement and under any plan,
      program, policy or practice or contract or agreement of the Company as those
      provided generally to other peer executives and their families (“Other
      Benefits”), provided, however, that to the extent necessary to avoid the tax
      consequences of Section 409A of the Code, any such payments may be delayed
      until
      the first business day following the six (6) month anniversary of the Date
      of
      Termination.

     

    4.2 Termination
      Due to Death.
      If the
      Executive's employment is terminated by reason of the Executive's death during
      the Employment Period, this Agreement shall terminate without further
      obligations to the Executive's legal representatives under this Agreement,
      other
      than for (i) payment of Accrued Obligations (as defined in Section 4.1(a))
      (which shall be paid to the Executive'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 Other Benefits (as defined in Section
      4.1(d)), including death benefits pursuant to the terms of any plan, policy,
      or
      arrangement of the Company.

    

    4.3 Termination
      Due to Disability.
      If the
      Executive's employment is terminated by reason of the Executive's Disability
      during the Employment Period, this Agreement shall terminate without further
      obligations to the Executive, other than for (i) payment of Accrued
      Obligations (as defined in Section 4.1(a)) (which shall be paid to the Executive
      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 (as defined in Section
      4.1(d)) including Disability benefits pursuant to the terms of any plan, policy
      or arrangement of the Company. 

    

    4.4 Termination
      by the Company for Cause or Voluntary Termination by the
      Executive.
      If the
      Executive's employment shall be terminated by the Company for Cause during
      the
      Employment Period or by the Executive for any reason, this Agreement shall
      terminate without further obligations to the Executive, other than for (i)
      payment of the Executive’s Accrued Obligations (as defined in Section 4.1(a))
      (which shall be paid to the Executive 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 (as defined in Section 4.1(d)), as applicable for such
      termination. 

     

    
      
        
        

      

      
        -9-

        
          

        

      

      
        
        

      

    

    4.5 
      Entire Agreement; Prior Agreements and Benefits under Other Plans Superseded.
      This
      Agreement is the entire agreement of the parties on the subject matter contained
      herein and shall supersede all prior agreements, arrangements and understandings
      that the Executive and the Company may have had with respect to the Executive’s
      employment with the Company and the payment of benefits by the Company to the
      Executive in the event of a termination of the Executive’s employment. 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.

    

    4.6
      Full Settlement.
      The
      Company's obligation to make the payments provided for in this Agreement and
      otherwise to perform its obligations hereunder shall not be affected by any
      set-off, counterclaim, recoupment, defense or other claim, right or action
      which
      the Company may have against the Executive or others. In no event shall the
      Executive be obligated to seek other employment or take any other action by
      way
      of mitigation of the amounts payable to the Executive under any of the
      provisions of this Agreement and, except as provided in Section 4.1(c), such
      amounts shall not be reduced whether or not the Executive obtains other
      employment. The Company agrees to pay promptly as incurred, to the full extent
      permitted by law, all legal fees and expenses which the Executive may reasonably
      incur as a result of any contest (regardless of the outcome thereof) by the
      Company, the Executive or others of 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 Executive regarding the
      amount of any payment pursuant to this Agreement), plus in each case interest
      on
      any delayed payment at the applicable Federal rate provided for in Code Section
      7872(f)(2)(A). 

    

    4.7 Resolution
      of Disputes. If
      there
      shall be any dispute between the Company and the Executive (i) as to whether
      any
      termination of the Executive’s employment was for Cause or (ii) as to whether
      any termination of the Executive’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 Executive of the existence of Good Reason was
      not
      made in good faith, the Company shall pay all amounts, and provide all benefits,
      to the Executive and/or the Executive’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 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 4.7 except upon receipt of
      an
      undertaking by or on behalf of the Executive to repay all such amounts to which
      the Executive is ultimately adjudged by such court not to be
      entitled. 

     

    Section
      5: Non-Competition.

    

    5.1 Non-Compete
      Agreement.

    

    5.1(a) During
      the Employment Period and the one (1) year period immediately following the
      Date
      of Termination, the Executive shall not, without prior written approval of
      the
      Board, become a partner, officer, director, stockholder, investor, advisor,
      employee, consultant, agent, 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 conducts business on the Date of Termination, or otherwise engage
      in
      substantial direct competition with the Company

     

    
      
        
        

      

      
        -10-

        
          

        

      

      
        
        

      

    

     

    within
      such area. This restriction will not limit the Executive’s right to invest in
      five percent (5%) or less of the outstanding capital stock or other equity
      securities of any corporation, whose stock or securities are publicly traded
      on
      a national stock exchange.

     

    5.1(b) For
      purposes of Section 5.1, a business enterprise with which the Executive 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 now engaged and is within the Company's
      or
      the subsidiary’s market area as of this date.

     

    5.1(c)
       During
      the one (1) year period immediately following the Date of Termination, the
      Executive shall not directly or indirectly, solicit or recruit for employment,
      any person or persons who are employed by the Company or one of its subsidiaries
      or affiliates, or who were so employed at any time within a period of six (6)
      months immediately prior to the date the Executive’s employment terminated, or
      otherwise interfere with the relationship between any such person and the
      Company; nor will the Executive assist anyone else in recruiting any such
      employee to work for another company or business or discuss with any such person
      his or her leaving the employ of the Company or engaging in a business activity
      in competition with the Company. This provision shall not apply to secretarial,
      clerical, custodial or maintenance employees. 

    

    5.2 Confidential
      Information.
      The
      Executive shall hold in a fiduciary capacity for the benefit of the Company,
      and
      under a relationship of trust and confidence, 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 Executive during the Executive's employment by the Company and which shall
      not be or become public knowledge (other than by acts by the Executive or
      representatives of the Executive in violation of this Agreement). This includes
      but is not limited to internal financial information that is not publicly
      available, business plans and strategies, acquisition and divestiture plans
      and
      strategies, costs, pricing, business proposals, trade secrets, and information
      concerning the needs, purchasing history, concerns, key contacts, requirements
      and credit of customers After termination of the Executive's employment with
      the
      Company, the Executive shall not, without the prior written consent of the
      Company, or as may otherwise be required by law or legal process, use, or
      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 Executive under this
      Agreement.

    

    Section
      6:  Successors.

     

    6.1 Successors
      of the Executive. 
      This
      Agreement is personal to the Executive and, without the prior written consent
      of
      the Company, the rights (but not the obligations) shall not be assignable by
      the
      Executive otherwise than by will or the laws of descent and distribution. This
      Agreement shall inure to the benefit of and be enforceable by the Executive'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 to the same extent that the Company would
      be
      required to perform it if no such succession had taken place. As used in this
      Agreement, “Company” shall mean the Company as hereinbefore defined and
      any

     

    
      
        
        

      

      
        -11-

        
          

        

      

      
        
        

      

    

    successor
      to its business and/or its assets which assumes and agrees to perform this
      Agreement by operation of law, or otherwise. 

    

    Section
      7: Miscellaneous.

    

    7.1 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 personally 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 the Executive:

    

    John
      Olbrych

    84
      Old
      Barn Lane

    Brownsville,
      VT 05037

    

    Notice
      to Company:

    

    Angelica
      Corporation

    424
      South
      Woods Mill Road

    Chesterfield,
      Missouri 63017-3406

    Attention:
      Secretary

    

    7.2 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.

    

    7.3 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.

    

    7.4 Entire
      Agreement; Waiver.
      This
      Agreement contains the entire agreement between the parties concerning the
      subject matter hereof and supersedes all prior oral and written communications
      and agreements between the parties concerning such subject matter. Neither
      this
      Agreement nor any of its terms may be amended, waived, or added to except in
      a
      writing signed by the Company (through a designated and authorized officer
      other
      than the Executive) and the Executive. The Executive'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 Executive
      or
      the Company may have hereunder shall not be deemed to be a waiver of such
      provision or right or any other provision or right of this
      Agreement.

     

    7.5
      Section
      409A Compliance. The
      parties intend that all provisions of this Agreement comply with the
      requirements of Code Section 409A to the extent applicable. No provision of
      this
      Agreement shall be operative to the extent that it will result in the imposition
      of the additional tax described in Code Section 409A(a)(1)(B)(i)(II) and the
      parties agree to revise the Agreement as necessary to comply with Section 409A
      and fulfill the purpose of the voided provision. Nothing in this Agreement
      shall
      be interpreted to permit accelerated payment of nonqualified deferred
      compensation, as defined in Section 409A, or any other payment in violation
      of
      the requirements of such Code Section 409A.

    

    
      
        
        

      

      
        -12-

        
          

        

      

      
        
        

      

    

    IN
      WITNESS WHEREOF, the Executive 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.

    

    

    “Executive”

    

    

    /s/
      J.
      S.
      Olbrych                                   

    
      	 	
              John
                Olbrych

            

    

    

    

    “Company”

     

    ANGELICA
      CORPORATION

    

    

    By
      /s/
      Stephen M.
      O’Hara                   

    Name:
      Stephen M. O’Hara

    Title:
      Chairman & CEO

    

    
      
        
        

      

      
        -13-Unassociated Document

    
      

    

    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.

     

    
      
        
        

      

      
        1

        
          

        

      

      
        
        

      

    

    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

    
 

    
      
        
        

      

      
        2

        
          

        

      

      
        
        

      

    

    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.

     

    
      
        
        

      

      
        3

        
          

        

      

      
        
        

      

    

    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

     

    
      
        
        

      

      
        4

        
          

        

      

      
        
        

      

    

     

    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. 

     

    
      
        
        

      

      
        5

        
          

        

      

      
        
        

      

    

    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 90th
      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 90th
      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

     

    
      
        
        

      

      
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    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 (1/24th)
      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 30th
      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.

    

    
      
        
        

      

      
        11

        
          

        

      

      
        
        

      

    

    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

     

    
      
        
        

      

      
        12

        
          

        

      

      
        
        

      

    

     

    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

     

    
      
        
        

      

      
        13

        
          

        

      

      
        
        

      

    

    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.

     

    
      
        
        

      

      
        14

        
          

        

      

      
        
        

      

    

    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

     

     

    
      
        
        

      

      
        15

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