<PAGE> 1
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For The Quarter Ended Commission File
October 25, 1997 Number 1-5674
ANGELICA CORPORATION
(Exact name of Registrant as specified in its charter)
MISSOURI 43-0905260
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
424 South Woods Mill Road
CHESTERFIELD, MISSOURI 63017
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code
(314) 854-3800
----------------------------------------------------
Former name, former address and former fiscal year
if changed since last report
Indicate by check mark whether the registrant (1) has filed all reports to
be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes X No
--- ---
The number of shares outstanding of Registrant's Common Stock, par value
$1.00 per share, at November 26, 1997 was 9,152,338 shares.
================================================================================
<PAGE> 2
ANGELICA CORPORATION AND SUBSIDIARIES
INDEX TO FINANCIAL STATEMENTS AND SUPPORTING SCHEDULES
FOR OCTOBER 25, 1997 FORM 10-Q QUARTERLY REPORT
<TABLE>
<CAPTION>
Page Number Reference
----------------------------------------
Quarterly Report
to
Form 10-Q Shareholders
--------- ----------------
<S> <C> <C>
PART I. FINANCIAL INFORMATION:
Consolidated Statements of Income -
Third quarter and Three Quarters Ended
October 25, 1997 and October 26, 1996 3
Consolidated Balance Sheets -
October 25, 1997 and January 25, 1997 4
Consolidated Statements of Cash Flows -
Three Quarters Ended October 25, 1997
and October 26, 1996 5
Notes to Consolidated Financial
Statements 2
Management's Discussion and Analysis
of Operations and Financial Condition 3-4
Exhibit A - Quarterly Report to
Shareholders 5
PART II. OTHER INFORMATION 6-11
</TABLE>
1
<PAGE> 3
ANGELICA CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
QUARTER ENDED OCTOBER 25, 1997
<F1> The accompanying consolidated condensed financial statements are
unaudited, and it is suggested that these consolidated statements be
read in conjunction with the fiscal 1997 Annual Report, including
Notes to Financial Statements. However, it is the opinion of the
Company that all adjustments, consisting only of normal recurring
adjustments, necessary for a fair statement of the results during the
interim period have been included.
<F2> See Index to Financial Statements and Supporting Schedules on page 1.
Those pages of the Angelica Corporation and Subsidiaries Quarterly
Report to Shareholders for the quarter ended October 25, 1997, listed
in such index are incorporated herein by reference. The pages of the
Quarterly Report to Shareholders which are not listed on the index
and therefore not incorporated herein by reference are furnished for
the information of the Commission but are not to be deemed "filed" as
a part of this report. The Quarterly Report to Shareholders referred
to herein is located immediately following page 4 of this report.
<F3> For purposes of the Consolidated Statements of Cash Flows, the Company
considers short-term, highly liquid investments which are readily
convertible into cash, as cash equivalents.
Cash payments for income taxes were $1,306,000 and $2,883,000 in the three
quarters of fiscal 1998 and 1997, respectively; and in these periods
interest payments were $6,413,000 and $6,015,000, respectively.
2
<PAGE> 4
<TABLE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF OPERATIONS
AND FINANCIAL CONDITION
QUARTER ENDED OCTOBER 25, 1997
<CAPTION>
Analysis of Operations
- ----------------------
Third Quarter Ended Three Quarters Ended
-------------------------- --------------------------
October 25, October 26, October 25, October 26,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Sales and Textile Service Revenues
- ----------------------------------
(Dollars in thousands)
Textile Services $ 71,737 $ 64,812 $215,476 $195,330
Manufacturing and Marketing 45,087 44,959 131,017 134,911
Retail Sales 22,156 20,984 62,438 58,116
Intersegment Sales (6,190) (6,505) (19,564) (19,878)
-------- -------- -------- --------
$132,790 $124,250 $389,367 $368,479
======== ======== ======== ========
Gross Profit
- ------------
(Dollars in thousands)
Textile Services $ 12,032 $ 10,229 $ 38,773 $ 35,149
Manufacturing and Marketing 1,929 9,887 17,684 29,033
Retail Sales 12,174 11,542 34,051 31,783
-------- -------- -------- --------
$ 26,135 $ 31,658 $ 90,508 $ 95,965
======== ======== ======== ========
</TABLE>
Combined sales and textile service revenues were up 6.9 percent for the third
quarter ended October 25, 1997, and up 5.7 percent in the three quarters
compared with prior year periods. Excluding acquisitions made over the past
year, combined sales and textile service revenues would have been up 3.1
percent and 2.0 percent, respectively. Restructuring and other charges taken
by the Company in the third quarter totaling $23,247,000 included $8,802,000
for the Textile Services segment (including $1,063,000 reflected in cost of
textile services), $13,034,000 for the Manufacturing and Marketing businesses
(including $7,500,000 reflected in cost of goods sold) and $1,411,000 for
certain corporate costs.
In the Textile Services segment third quarter revenues rose 10.7 percent,
with the increase being the result of acquisitions plus modestly higher price
levels. Third quarter results of this segment were substantially better than
the prior year, having been aided by improved revenues and operating margins.
Third quarter sales of the Manufacturing and Marketing businesses increased
0.3 percent compared with the same quarter last year, and gross profit
decreased due to the other charges mentioned above. In the domestic
operations of this segment, earnings were below last year's third quarter.
The Canadian operations had improved results, and the United Kingdom business
had a modest profit versus a loss a year ago. In the Life
3
<PAGE> 5
Retail Store segment, third quarter sales increased 5.6 percent, as a result
of acquisitions made in the past year and a 2.1 percent increase in
same-store sales. Gross profit of this segment increased at the same rate as
the sales increase.
Selling, general and administrative expenses increased $1,262,000 or 4.9
percent in the third quarter with the majority of the increase being the
result of acquisitions. These expenses decreased as a percent of combined
sales and textile service revenues from 20.6 percent to 20.2 percent in the
third quarter of fiscal 1998. Interest expense of $2,838,000 (net of
capitalization of $111,000 interest during construction) was $421,000 higher
in the quarter as a result of higher debt levels associated with expenditures
for the construction of new plants by the Textile Services segment and for
acquisitions made during the last year.
Financial Condition
- -------------------
The Company had working capital of $127,490,000 and a current ratio of 2.2 to
1 at October 25, 1997, compared with $163,015,000 and 3.3 to 1 at the
beginning of the year. Lower working capital and current ratio were the
result of the incurrence of short-term debt to help finance capital
expenditures and acquisitions. The ratio of long-term debt to
debt-plus-equity was 36.0 percent at the close of the third quarter, compared
with 34.0 percent at the beginning of the year. Excluding the third quarter
fiscal 1998 restructuring and other charges, the ratio would have been 34.2
percent.
Operating activities provided a total cash flow of $19,995,000 in the first
three quarters compared with $17,319,000 in the first three quarters last
year, with most of the difference being due to higher non-cash items plus net
income offset by larger working capital requirements. Uses of cash flow
included $16,170,000 for capital expenditures and $23,125,000 for
acquisitions. Capital expenditures include outlays to complete two new
Textile Services plants to replace existing plants. Financing activities
reflect the issuance of short-term debt of $24,400,000 and $3,000,000 of
debt assumed in acquisition offset by the normal sinking fund payments of
long-term debt and the payment of dividends. Following the end of the third
quarter, sale of the Company's Las Vegas casino laundry and business was
completed, and the cash proceeds of an amount in excess of $20,000,000 were
used to pay down outstanding short-term debt. No material change in the
Company's future aggregate cash requirements is foreseen at the present time
except that the level of capital expenditures is expected to decrease as the
two new Textile Services plants are currently being completed.
Based on the Company's cash generation from operations, as well as its strong
working capital position, current ratio and ratio of long-term debt to
debt-plus-equity, Management believes that internal funds available from
operations plus external funds available from the issuance of additional debt
and/or equity as needed in the future will be sufficient for all planned
operating and capital requirements, including acquisitions.
4
<PAGE> 6
Exhibit A
[Angelica letterhead]
November 18, 1997
Dear Shareholder:
In our August 15 report to you covering Angelica's performance in the first
two quarters and the August 1 change in management, I commented that we intend
to return Angelica to a satisfactory level of financial performance. We
believe that during this year's third quarter, which ended October 25,
definite initial progress has been made toward achieving that goal. Before
the effect of the previously announced restructuring and other charges taken
in the quarter (discussed below), operating profit significantly exceeded
last year's comparable quarter earnings, the first such increase in five
quarters.
Third quarter combined sales and textile service revenues were $132,790,000,
an increase of 6.9 percent over $124,250,000 last year. On an operating
basis, income increased to $2,595,000 compared with $1,824,000 in the same
quarter last year, and earnings per share for the quarter were $.28 versus
$.20, an increase of 40 percent. These results do not reflect the one-time
restructuring and other charges taken at the end of the third quarter
amounting to $23,247,000 pretax and $14,413,000 or $1.57 per share after tax.
Including the restructuring, the third quarter resulted in a net loss of
$11,818,000 compared with net income of $1,824,000 in the prior year period,
and on a per share basis a net loss of $1.29 compared with net income of $.20
last year.
For the first three quarters this year, combined sales and textile service
revenues were $389,367,000 versus $369,479,000 in last year's three quarters,
an increase of 5.7 percent, and on an operating basis earnings per share were
$.64 for the period. Including the restructuring, a net loss of $8,542,000
compared with net income of $7,558,000 in the same period last year, and
results per share for the three quarters reflected a net loss of $.93 versus
net income of $.83 last year.
The restructuring and other charges taken in the quarter included $8,802,000
related to the Textile Services segment, $13,034,000 for the Manufacturing
and Marketing businesses and $1,411,000 for certain corporate costs. The
charges are part of a program to be implemented over the next twelve months
to eliminate through sale or closure certain underperforming or unneeded
facilities and to cover one-time or nonrecurring costs, including severance
payments and reduction of excess and obsolete inventory. The restructuring
plan is expected to further reduce operating costs, enhance customer service
and improve future results. Our estimate of the pretax cost savings which
will result in the next fiscal year from these actions is between $1,000,000
and $1,500,000. Also, only about $2,000,000 of the charges will require cash
outlays for severance pay and other plant disposition costs.
We were especially pleased in the third quarter with the continuation of
improved performance by our Textile Services segment, which scored major
earnings gains over the prior year. Revenues rose 10.7 percent, operating
margins again were improved and customer utilization remained high. Two
newly-constructed large plants began operation in recent weeks -- one in
Ooltewah, Tennessee which replaced a small facility in nearby Collegedale
which could not be expanded, and the other in Edison, New Jersey which is
replacing older plants in Jersey City and Milford, Connecticut. We expect to
gain greater operating efficiencies and important future
<PAGE> 7
contributions from these new plants. Sale of our large Las Vegas plant and
casino laundry business is being completed as this report is being written.
As we previously indicated, results of this non-healthcare business have been
poor, and its disposition was included in the restructuring plan. Proceeds
of the sale, in excess of $20 million, will be used to reduce short-term bank
debt. Other underperforming operations are being carefully examined as a
part of the restructuring, and other opportunities to combine operations are
being considered.
Life Retail Stores had another record quarter with earnings up modestly
compared with the same quarter last year. Total store sales increased 5.6
percent, and same-store sales were up 2.1 percent. The August UPS strike,
while disruptive, had only a minor effect on sales. There appeared to be a
slight softening of sales gains in September and early October. A factor
affecting volume in the quarter was a temporary shortage of professional
shoes delivered by our primary supplier. During the third quarter we
acquired one store, and additional acquisitions are expected in the fourth
quarter. The quarter ended with 292 stores versus 283 a year ago.
We advised you in August that we expected progress in achieving better
results in our Manufacturing and Marketing businesses -- albeit a bit slower.
We are therefore pleased by results during the third quarter, which were
better than we had expected. Although earnings still lagged behind last
year's third quarter results, sales were up slightly, the first quarterly
increase this year. Our Canadian companies both turned in excellent results,
and the United Kingdom business had a modest profit in the quarter versus a
loss in the comparable period a year ago. In the United States, our Image
Apparel business still has many issues before it, and it is addressing them
vigorously under Larry Young's leadership. For the quarter just ended, sales
closed on a stronger note than we have seen for some time, assisted by some
new marketing programs, and earnings were ahead of plan. Image Apparel is
still suffering from the cost of unabsorbed overhead following the closing of
one Missouri plant and reduced plant operations to secure needed inventory
reductions. Production from all sources has been concentrated on bringing
customer inventories into better balance, and customer service, which had
been damaged by the six-month strike at two factories, has been improving
weekly. Management energies are focused on not just returning service to
prior levels, but to reach outstanding performance as viewed by our
customers. The major activities of the Image Apparel business, namely
marketing, merchandising and manufacturing, are all under new leadership this
year, and these functions are being overhauled and re-energized.
Our final quarter of the year should be eventful. We are expecting each of
our businesses to have better results than they did a year ago, and the final
quarter therefore should be much improved over last year. We also believe
that the present course should lead to both better short-term results and
over the long term, much-improved operating results. We thank our
shareholders for their patience and our employees for their very hard work.
Respectfully submitted,
/s/ Leslie F. Loewe
Leslie F. Loewe
Chairman of the Board,
President and Chief Executive Officer
<PAGE> 8
<TABLE>
CONSOLIDATED STATEMENTS OF INCOME
Angelica Corporation and Subsidiaries
Unaudited (Dollars in thousands, except shares and per share amounts)
<CAPTION>
Third Quarter Ended Three Quarters Ended
--------------------------- ---------------------------
October 25, October 26, October 25, October 26,
1997 1996 1997 1996
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Textile service revenues $ 71,737 $ 64,812 $215,476 $195,330
Net sales 61,053 59,438 173,891 173,149
-------- -------- -------- --------
132,790 124,250 389,367 368,479
-------- -------- -------- --------
Cost of textile services<F*> 59,705 54,583 176,703 160,181
Cost of goods sold<F*> 46,950 38,009 122,156 112,333
-------- -------- -------- --------
106,655 92,592 298,859 272,514
-------- -------- -------- --------
Gross profit 26,135 31,658 90,508 95,965
-------- -------- -------- --------
Selling, general and
administrative expenses 26,841 25,579 79,565 74,655
Restructuring charge<F*> 14,684 -- 14,684 --
Interest expense 2,838 2,417 7,957 7,115
Other expense, net 834 720 2,080 2,004
-------- -------- -------- --------
45,197 28,716 104,286 83,774
-------- -------- -------- --------
Income before income taxes (19,062) 2,942 (13,778) 12,191
Provision for income taxes (7,244) 1,118 (5,236) 4,633
-------- -------- -------- --------
Net income $(11,818) $ 1,824 $ (8,542) $ 7,558
======== ======== ======== ========
Net income per share<F*><FDAG> $ (1.29) $ .20 $ (.93) $ .83
======== ======== ======== ========
Dividends per common share $ .24 $ .24 $ .72 $ .72
======== ======== ======== ========
<FN>
<F*> Restructuring and other charges of $23,247 pretax consist of (i) inventory
writedowns of $1,063 included in cost of textile services and $7,500 included
in cost of goods sold, and, (ii) $14,684 in restructuring charge. Effect on
net income per share is a reduction of $1.57.
<FDAG>Based upon weighted average number of common and common equivalent shares
outstanding of 9,154,564 and 9,148,718 for fiscal periods of 1998 and 1997,
respectively.
</TABLE>
<PAGE> 9
<TABLE>
CONSOLIDATED BALANCE SHEETS
Angelica Corporation and Subsidiaries
Unaudited (Dollars in thousands)
<CAPTION>
October 25, 1997 January 25, 1997
---------------- ----------------
<S> <C> <C>
ASSETS
- ------
Current Assets:
Cash and short-term investments $ 2,020 $ 2,122
Receivables, less reserves of $3,957 and $2,645 69,136 66,632
Inventories:
Raw material 25,549 30,961
Work in progress 6,835 6,366
Finished goods 72,573 74,129
-------- --------
104,957 111,456
Linens in service 47,584 47,544
Prepaid expenses 6,852 4,658
Income taxes 4,404 --
-------- --------
Total Current Assets 234,953 232,412
-------- --------
Property and Equipment 233,369 216,893
Less -- reserve for depreciation 110,656 114,063
-------- --------
122,713 102,830
-------- --------
Goodwill 7,654 7,951
Other Acquired Assets 7,922 8,814
Cash Surrender Value of Life Insurance 15,130 14,455
Miscellaneous 7,637 7,642
-------- --------
38,343 38,862
-------- --------
Total Assets $396,009 $374,104
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current Liabilities:
Short-term debt $ 39,800 $ 15,400
Current maturities of long-term debt 3,295 2,689
Accounts payable 23,821 21,551
Accrued expenses 40,547 28,337
Income taxes -- 1,420
-------- --------
Total Current Liabilities 107,463 69,397
-------- --------
Long-Term Debt, less current maturities 97,940 97,417
Other Long-Term Obligations 16,232 18,049
Shareholders' Equity:
Preferred Stock:
Class A, Series 1, $1 stated value,
authorized 100,000 shares, outstanding: none -- --
Class B, authorized 2,500,000 shares, outstanding: none -- --
Common stock, $1 par value, authorized 20,000,000
shares, issued: 9,471,538 9,472 9,472
Capital surplus 4,196 4,196
Retained earnings 170,973 186,438
Translation adjustment (1,880) (1,763)
Common Stock in treasury, at cost: 319,600 and 340,699 (8,387) (9,102)
-------- --------
174,374 189,241
-------- --------
Total Liabilities and Shareholders' Equity $396,009 $374,104
======== ========
</TABLE>
<PAGE> 10
<TABLE>
CONSOLIDATED STATEMENTS OF CASH FLOWS
Angelica Corporation and Subsidiaries
Unaudited (Dollars in thousands)
<CAPTION>
Three Quarters Ended
----------------------------------------
October 25, 1997 October 26, 1996
---------------- ----------------
<S> <C> <C>
Cash flows from operating activities:
Net income $ (8,542) $ 7,558
Non-cash items included in net income:
Depreciation 10,225 9,929
Amortization of acquisition costs 2,771 2,546
Restructuring and other charges 23,247 --
Change in working capital components,
net of businesses acquired (5,228) 785
Other, net (2,478) (3,499)
-------- -------
Net cash provided by operating activities 19,995 17,319
-------- -------
Cash flows from investing activities:
Expenditures for property and equipment, net (16,170) (19,295)
Cost of businesses acquired (23,125) (5,725)
-------- -------
Net cash used in investing activities (39,295) (25,020)
-------- -------
Cash flows from financing activities:
Debt assumed in acquisition 3,000 --
Proceeds from issuance of short-term debt 24,400 7,300
Long-term and short-term debt repayments (1,877) (1,551)
Dividends paid (6,589) (6,589)
Other, net 264 332
-------- -------
Net cash provided by (used in) financing activities 19,198 (508)
-------- -------
Net increase (decrease) in cash
and short-term investments (102) (8,209)
Balance at beginning of year 2,122 11,029
-------- -------
Balance at end of period $ 2,020 $ 2,820
======== =======
</TABLE>
<PAGE> 11
<TABLE>
SUMMARY FINANCIAL POSITION DATA
Angelica Corporation and Subsidiaries
(Dollars in thousands, except ratios, shares and per share amounts)
<CAPTION>
(Unaudited) Year Ended January<F*>
------------------------ ---------------------------------------------------------
October 25, October 26,
1997 1996 1997 1996 1995 1994 1993
----------- ----------- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Working capital $127,490 $167,136 $163,015 $181,043 $150,734 $157,188 $161,129
Current ratio 2.2 to 1 3.9 to 1 3.3 to 1 5.0 to 1 3.2 to 1 4.0 to 1 4.7 to 1
Long-term debt $97,940 $98,552 $97,417 $100,103 $69,683 $72,255 $78,175
Shareholders' equity $174,374 $190,831 $189,241 $189,530 $196,660 $191,993 $189,209
Percent long-term debt to
debt and equity 36.0% 34.1% 34.0% 34.6% 26.2% 27.3% 29.2%
Equity per common share $19.05 $20.90 $20.73 $20.73 $21.57 $21.13 $20.88
Common shares outstanding 9,151,938 9,130,839 9,130,839 9,141,508 9,118,912 9,086,034 9,063,834
<FN>
<F*>As reported in Company's Annual Report.
</TABLE>
<PAGE> 12
PART II. OTHER INFORMATION
ANGELICA CORPORATION AND SUBSIDIARIES
Item 5. Other Information
- --------------------------
Angelica Corporation announced December 1, 1997 the election of Don W. Hubble
as Chairman of the Board, President and Chief Executive Officer effective
January 1, 1998. Hubble, age 58, replaces Leslie F. Loewe, who had held the
same positions on an interim basis since August 1, 1997. Hubble was also
elected a Director, expanding the number of Directors to nine.
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) See Exhibit Index included herein on page 7.
(b) Reports on Form 8-K - There were no reports on Form 8-K filed for the
third quarter ended October 25, 1997.
SIGNATURES
----------
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Angelica Corporation
--------------------
(Registrant)
Date: December 4, 1997 /s/ T. M. Armstrong
-----------------------------------
T. M. Armstrong
Senior Vice President -
Finance and Administration
Chief Financial Officer
(Principal Financial Officer)
/s/ L. Linden Mann
-----------------------------------
L. Linden Mann
Controller
(Principal Accounting Officer)
6
<PAGE> 13
<TABLE>
EXHIBIT INDEX
- -------------
<CAPTION>
Exhibit
Number Exhibit
- ------- -------
<FN>
<F*>Asterisk indicates exhibits filed herewith.
<F**>Management contract or compensatory plan incorporated by
reference from the document listed.
<C> <S>
3.1 Restated Articles of Incorporation of the Company, as currently in
effect. Said Articles were last filed as and are incorporated
herein by reference to Exhibit 3.1 to the Form 10-K for the
fiscal year ended 1/26/91.
3.2 Current By-Laws of the Company, as last amended February 25, 1997.
Said By-Laws were last filed as and are incorporated herein by
reference to Exhibit 3.2 to Form 10-K for fiscal year ended
1/25/97.
4.1 Shareholder Protection Rights Plan. Filed as Registration
Statement on Form 8-A dated August 24, 1988 and incorporated
herein by reference.
4.2 10.3% and 9.76% Senior Notes to insurance company due annually to
2004, together with Note Facility Agreement. Filed as and
incorporated herein by reference to Exhibit 4.2 to the Form
10-K for the fiscal year ended 1/27/90.
4.3 9.15% Senior Notes to insurance companies due December 31, 2001,
together with Note Agreements and First Amendment thereto.
Filed as and incorporated herein by reference to Exhibit 4.3 to
the Form 10-K for the fiscal year ended 2/1/92.
4.4 8.225% Senior Notes to Nationwide Life Insurance Company, American
United Life Insurance Company, Aid Association for Lutherans,
and Modern Woodmen of America due May 1, 2006, together with
Note Agreement. Filed as and incorporated herein by reference
to Exhibit 4.4 to the Form 10-Q for the fiscal quarter ended
July 29, 1995.
4.5 Uncommitted Shelf Agreement dated March 1, 1996 for Senior Notes
to insurance company, together with Amendment Agreement No. 1
to Note Facility Agreement
7
<PAGE> 14
<CAPTION>
Exhibit
Number Exhibit
- ------- -------
<C> <S>
referred to in Exhibit 4.2 above. Filed as and incorporated
herein by reference to Exhibit 4.5 to the Form 10-K for the
fiscal year ended 1/27/96.
4.6 Term Loan Agreement between Angelica Corporation and
The First National Bank of Boston dated as of October 2, 1995.
Filed as and incorporated hereby by reference to Exhibit 4.6 to
the Form 10-K for the fiscal year ended 1/27/96.
Note: No other long-term debt instrument issued by
the Registrant exceeds 10% of the consolidated total
assets of the Registrant and its subsidiaries. In
accordance with Item 601(b) (4) (iii) (A) of Regulation
S-K, the Registrant will furnish to the Commission upon
request copies of long-term debt instruments and
related agreements.
10.1 Angelica Corporation 1994 Performance Plan (as amended 1/31/95) -
Form 10-K for fiscal year ended 1/28/95, Exhibit 10.1.<F**>
10.2 Retirement Benefit Agreement between the Company and Alan D.
Wilson dated August 25, 1987 - Form 10-K for fiscal year ended
1/28/95, Exhibit 10.2.<F**>
10.3 Form of Participation Agreement for the Angelica Corporation
Management Retention and Incentive Plan (filed as Exhibit 10.3
to the Form 10-K for fiscal year ended 1/30/93 and incorporated
herein by reference) with revised schedule setting out
executive officers covered under such agreements and the
"Benefit Multiple" listed for each - Form 10-K for fisal year
ended 1/25/97, Exhibit 10.3.<F**>
10.4 Angelica Corporation Stock Option Plan (As amended November 29,
1994) - Form 10-K for fiscal year ended 1/28/95, Exhibit 10.7.<F**>
10.5 Angelica Corporation Stock Award Plan - Form 10-K for fiscal year
ended 2/1/92, Exhibit 10.<F**>
10.6 Angelica Corporation Retirement Savings Plan, as amended and
restated - Form 10-K for fiscal year ended
8
<PAGE> 15
<CAPTION>
Exhibit
Number Exhibit
- ------- -------
<C> <S>
1/27/90, Exhibit 19.3, incorporating all amendments thereto
through the date of this filing. The last amendment thereto was
filed as Exhibit 10.22 to Form 10-Q for fiscal quarter ended
10/26/96.<F**>
10.7 Supplemental Plan - Form 10-K for fiscal year ended
1/27/90, Exhibit 19.10, incorporating all amendments thereto
through the date of this filing. The last amendment thereto
was filed as Exhibit 10.31 to Form 10-K for fiscal year ended
1/25/97.<F**>
10.8 Incentive Compensation Plan (restated) - Form 10-K for fiscal year
ended 1/27/90, Exhibit 19.11.<F**>
10.9 Deferred Compensation Option Plan for Selected Management
Employees - Form 10-K for fiscal year ended 1/26/91, Exhibit
19.9, incorporating all amendments thereto filed through the
date of this filing. The last amendment thereto was filed as
Exhibit 10.34 to Form 10-K for fiscal year ended 1/25/97.<F**>
10.10 Deferred Compensation Option Plan for Directors - Form 10-K for
fiscal year ended 1/26/91, Exhibit 19.8, incorporating all
amendments thereto filed through the date of this filing.<F**>
10.11 Supplemental and Deferred Compensation Trust - Form 10-K for
fiscal year ended 2/1/92, Exhibit 19.5.<F**>
10.12 Management Retention Trust - Form 10-K for fiscal year ended
2/1/92, Exhibit 19.4.<F**>
10.13 Performance Shares Plan for Selected Senior Management (restated)
- Form 10-K for fiscal year ended 1/26/91, Exhibit 19.3.<F**>
10.14 Management Retention and Incentive Plan (restated) - Form 10-K for
fiscal year ended 1/26/91, Exhibit 19.1.<F**>
10.15 Non-Employee Directors Stock Plan - Form 10-K for fiscal year
ended 1/27/90, Exhibit 10.3, incorporating all amendments thereto
through the date of this filing.<F**>
10.16 Restated Deferred Compensation Plan for Non-Employee Directors -
Form 10-K for fiscal year ended 1/28/84,
9
<PAGE> 16
<CAPTION>
Exhibit
Number Exhibit
- ------- -------
<C> <S>
Exhibit 10 (v), incorporating all amendments thereto through
the date of this filing. The last amendment thereto was filed
as Exhibit 10.25 to Form 10-K for the fiscal year ended
1/28/95.<F**>
10.17 Restated Angelica Corporation Stock Bonus and Incentive Plan
(Incorporating Amendments Adopted Through October 25,
1994) - Form 10-K for fiscal year ended 1/28/95, Exhibit 10.20,
incorporating all amendments thereto through the date of this
filing. The last amendment thereto was filed as Exhibit 10.23
to Form 10-K for the fiscal year ended 1/27/96.<F**>
10.18 Angelica Corporation Pension Plan as Amended and Restated - Form
10-K for fiscal year ended 1/26/91, Exhibit 19.7, incorporating
all amendments thereto through the date of this filing. The
last amendment thereto was filed as Exhibit 10.23 to Form 10-Q
for fiscal quarter ended 7/27/96.<F**>
10.19 Angelica Corporation 1994 Non-Employee Directors Stock Plan,
incorporated by reference to Appendix A of the Company's Proxy
Statement for the Annual Meeting of Shareholders held on May
23, 1995.<F**>
10.20 Specimen form of Stock Option Agreement under the Angelica
Corporation Stock Option Plan - Form 10-K for fiscal year ended
1/27/96, Exhibit 10.20.<F**>
10.21 Form of Stock Option Agreement under the Angelica Corporation 1994
Performance Plan (filed as Exhibit 10.21 to Form 10-K for
fiscal year ended 1/27/96 and incorporated herein by reference)
with four of the Company's executive officers, together with
schedule identifying the officers and setting forth the
material details in which the agreements differ from the form
of agreement that is filed - Form 10-K for fiscal year ended
1/25/97, Exhibit 10.21.<F**>
10.22 Form of Indemnification Agreement between the Company and each of
its directors and executive officers, together with a schedule
identifying the directors and executive officers executing such
agreements - Form 10-K for fiscal year ended 1/25/97, Exhibit
10.22.<F**>
10.23 Employment Agreement between the Company and Lawrence J. Young,
dated September 29, 1997.<F*>
10
<PAGE> 17
<CAPTION>
Exhibit
Number Exhibit
- ------- -------
<C> <S>
10.24 Employment Agreement between the Company and Theodore M.
Armstrong, dated November 27, 1996 - Form 10-K for fiscal year
ended 1/25/97, Exhibit 10.24.<F**>
10.25 Employment Agreement between the Company and Jill Witter, dated
November 27, 1996 - Form 10-K for fiscal year ended 1/25/97,
Exhibit 10.25.<F**>
10.26 Employment Agreement between the Company and L. Linden
Mann, dated November 27, 1996 - Form 10-K for fiscal year ended
1/25/97, Exhibit 10.26.<F**>
10.27 Employment Agreement between the Company and Alan D. Wilson, dated
April 2, 1997 - Form 10-K for fiscal year ended 1/25/97, Exhibit
10.27.<F**>
10.28 Employment Agreement between the Company and Michael E. Burnham,
dated April 8, 1997 - Form 10-K for fiscal year ended 1/25/97,
Exhibit 10.28.<F**>
10.29 Employment Agreement between the Company and Thomas M. Degnan,
dated May 1, 1997 - Form 10-Q for fiscal quarter ended 4/26/97,
Exhibit 10.29.<F**>
27 Financial Data Schedule<F*>
</TABLE>
11
<PAGE> 1
ANGELICA CORPORATION
EMPLOYMENT AGREEMENT
This agreement ("Agreement") has been entered into this 29 day of
----
September, 1997, by and between Angelica Corporation, Missouri corporation
("Company") and Lawrence J. Young, an individual ("Executive").
For and in consideration of the mutual promises herein contained, the
parties hereto agree as follow:
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 2.4(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(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 30% 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 14a-11 of
Regulation 14A promulgated under the Exchange Act) or other actual or
threatened solicitation or proxies or consents by or on behalf of a Person
other than the Board; or
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(iii) Approval by the stockholders of the Company of
reorganization, merger or consolidation, in each case, unless, following such
reorganization, merger or consolidation, (a) more than 50% of, respectively,
the then outstanding shares of common stock or 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, (b) no Person
beneficially owns, directly or indirectly, 30% 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 (c) at least a majority of the
members of the board of directors of 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,
30% 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 of other disposition of assets of the Company.
1.1(f) "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(g) "CODE" shall mean the Internal Revenue code of 1986, as
amended.
1.1(h) "CURRENT TARGET BONUS" Has the meaning set forth in
Section 4.1(a) of this Agreement.
1.1(i) "DATE OF TERMINATION" Has the meaning set forth in
Section 3.6 of this Agreement.
2
<PAGE> 3
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(m) "DISPOSITION OF A MAJOR PART" means:
(i) when used with reference to the stock of the
Operating Line of Business that is or becomes a separate corporation, limited
liability corporation, partnership or other business entity, the sale,
exchange, transfer, distribution or other disposition of the ownership,
either beneficially or of record or both, by the Company of more than 50% of
either (a) the then outstanding shares of common stock (or the equivalent
equity interests) of the Operating Line of Business, or (b) the combined
voting power of the then outstanding voting securities of the Operating Line
of Business entitled to vote generally in the election of the Board or the
equivalent governing body of the Operating Line of Business;
(ii) when used with reference to the merger or
consolidation of the Operating Line of Business that is or becomes a separate
corporation, limited liability corporation, partnership or other business
entity, any such transaction that results in the Company owning, either
beneficially or of record or both, less than 50% of either (a) the then
outstanding shares of common stock (or the equivalent equity interest) of the
Operating Line of Business, or (b) the combined voting power of the then
outstanding voting securities of the Operating Line of business entitled to
vote generally in the election of the Board or the equivalent governing body
of the Operating Line of Business: or
(iii) when used with reference to the assets of the
Operating Line of Business, the sale, exchange, transfer, liquidation,
distribution or other disposition of the assets of the Operating Line of
Business (a) having a fair market value (as determined by the Incumbent
Board) aggregating more than 50% of the aggregate fair market value of all of
the assets of the Operating Line of Business as of the Triggering Transaction
Date, (b) accounting for more than 50% of the aggregate book value (net of
depreciation and amortization) of all of the assets of the Operating Line of
Business, as would be shown on a balance sheet for the Operating Line of
Business, prepared in accordance with generally accepted accounting
principles then in effect, as of the Triggering Transaction Date, or (c)
accounting for more than 50% of the net income of the Operating Line of
Business, as would be shown on an income statement, prepared in accordance
with generally accepted accounting principles then in effect, for the 12
months ending on the last day of the month immediately preceding the month in
which the Triggering Transaction Date occurs.
1.1(m) "EFFECTIVE DATE" Means August 1, 1997.
1.1(n) "EXCHANGE ACT" Means the Securities Exchange Act of
1934, as amended.
1.1(o) "EXCISE TAX" Has the meaning set forth in Section
4.2(g) of this Agreement.
1.1(p) "GOOD REASON" has the meaning set forth in Section 3.4
of this Agreement.
1.1(q) "GROSS-UP PAYMENT" has the meaning set forth in
Section 4.2(g) of this Agreement.
3
<PAGE> 4
1.1(r) "INCENTIVE BONUS" has the meaning set forth in Section
2.4(b) of this Agreement.
1.1(s) "INCUMBENT BOARD" has the meaning set forth in Section
1.1(e) of this Agreement.
1.1(t) "NOTICE OF TERMINATION" has the meaning set forth in
Section 3.5 of this Agreement.
1.1(u) "OPERATING LINE OF BUSINESS" means the following
lines of business of the Company, whether operated as a division or as a
separate subsidiary: uniform and business apparel manufacturing and
marketing, which manufactures and sells uniforms and business apparel to a
wide variety of institutions and businesses in the United States, Canada
and/or the United Kingdom.
1.1(v) "OTHER BENEFITS" has the meaning set forth in Section
4.1(e) of this Agreement.
1.1(w) "OUTSTANDING COMPANY COMMON STOCK" has the meaning
set forth in Section 1.1(f)(i) of this Agreement.
1.1(x) "OUTSTANDING COMPANY VOTING SECURITIES" has the meaning
set forth in Section 1.1(f)(i) of this Agreement.
1.1(y) "PAYMENT" Has the meaning set forth in Section 4.2(g)
of this Agreement.
1.1(z) "PERSON" Means any "person" within the meaning of
Sections 13(d) and 14(d) of the Exchange Act.
1.1(aa) "TERM" Means the period that begins on the Effective
Date and ends on the Date of Termination as defined in Section 3.6 of this
Agreement.
1.1(bb) "TRIGGERING TRANSACTION" Means (i) a Change in
Control of the Company or (ii) a Disposition of a major Part of the Operating
Line of Business.
1.1(cc) "TRIGGERING TRANSACTION DATE" shall mean the date of
the Triggering Transaction.
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.
4
<PAGE> 5
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.
2. TERMS AND CONDITIONS OF EMPLOYMENT.
2.1 PERIOD OF EMPLOYMENT. The Executive shall remain in the
employ of the Company throughout the Term of this Agreement in accordance
with the terms and provisions of this Agreement.
2.2 POSITIONS AND DUTIES.
2.2(a) Throughout the Term of this Agreement, the Executive
shall serve as President of the Operating Line of Business, a division of the
Company, or in a position of equivalent authority, subject to the reasonable
directions of the Board. The Executive shall have such authority and shall
perform such duties as are specified by the Bylaws of the Company for the
office to which he has been appointed hereunder and shall so serve, subject
to the control exercised by the Board and the Chief Executive Officer from
time to time. The Executive shall continue to serve as a member of the Board
of Directors of the Company through his current elected term.
2.2(b) Throughout the Term of this Agreement (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 paragraph for the Executive to (i)
serve on corporate, civic or charitable boards or committees (as approved by
the Chief Executive Officer), (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 in effect
immediately prior to the Effective Date.
2.2(c) It is understood and agreed that nothing contained in
this Agreement shall be deemed to be a guarantee of continued employment or
employment for a specific term.
2.3 SITUS OF EMPLOYMENT. Throughout the Term of this Agreement,
the Executive's services shall be performed at the location where the
Executive was employed immediately prior to the Effective Date, or any office
of the Company or any of its subsidiaries to which Executive shall be
transferred.
2.4 COMPENSATION.
2.4(a) ANNUAL BASE SALARY. For the period from the Effective
Date of the Agreement through December 31, 1997, the Executive shall receive
an annual base salary ("Annual Base Salary") of Two Hundred Sixty Thousand
Dollars ($260,000), which shall be paid in equal or substantially equal
semi-monthly installments. Starting January 1, 1998, the Annual Base Salary
shall be One Hundred Eighty Thousand Dollars ($180,000). During the Term of
this Agreement, the Annual Base Salary payable to the Executive shall be
reviewed at least annually and may be adjusted upward at the discretion of
the Board or the Chief Executive Officer dependent upon the
5
<PAGE> 6
Executive's performance and in accordance with Company policy, provided
however, that it may not be decreased from the levels set out herein prior to
December 31, 1999.
2.4(b) ADDITIONAL COMPENSATION. During the period January
1, 1998 through December 31, 1999, the Executive shall receive additional
compensation in the amount of Forty Thousand Dollars ($40,000) per month.
Such compensation is due and payable, whether or not Executive continues to
be employed by the Company. This compensation is in full settlement of any
and all obligations of the Company to Executive pursuant to the Employment
Agreement dated November 27, 1996.
2.4(c) INCENTIVE BONUSES. In addition to Annual Base Salary,
the Executive shall be awarded the opportunity to earn an incentive bonus on
an annual basis ("Incentive Bonus") under any incentive compensation plan
which is generally available to other similarly situated executives of the
Company. For the Fiscal Year 1998, the Executive shall have a target
Incentive Bonus of $220,000, which shall be calculated based on the Company's
consolidated results. For the Fiscal Year 1999, the Executive shall have a
target Incentive Bonus of $120,000, which shall be calculated based on the
results of Operating Line of Business. During the Term of this Agreement,
the annual target Incentive Bonus which the Executive will have opportunity
to earn shall be reviewed at least annually and may be adjusted at the
discretion of the Board or the Chief Executive Officer dependent upon the
Executive's performance and in accordance with Company policy, provided,
however, that the target Incentive Bonus, as set out herein, may not be
decreased for Fiscal Years 1998 or 1999. Under no circumstances shall the
actual Incentive Bonus paid be less than 50% of the annual target Incentive
Bonus.
2.4(d) INCENTIVE, SAVINGS AND RETIREMENT PLANS. Throughout the
Term of this Agreement, the Executive shall be entitled to
participate in all incentive, savings and retirement plans generally
available to other peer executives of the Company.
2.4(e) WELFARE BENEFIT PLANS. Throughout the Term of this
Agreement (and thereafter), 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 (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 similarly situated executives of the
Company.
2.4(f) SUPPLEMENTAL PLAN. Not withstanding anything to the
contrary within the terms of the Angelica Corporation Supplemental Plan (as
originally effective April 1, 1980 and as amended from time to time,
including a restatement as of January 23, 1990) (the "Supplemental Plan"), it
is agreed that the Executive's Final Average Compensation, as such term is
defined in the Supplemental Plan, shall be Three Hundred Eighty-Five Thousand
and Forty Dollars ($385,040). In all other respects the benefit payable
under the Supplemental Plan shall be calculated in accordance with the terms
of the Supplemental Plan. The Final Average Compensation is only subject to
renegotiation after the expiration of five (5) years following the Effective
Date, however, in no event shall the Final Average Compensation be less than
the amount set out in this Section 2.4(f).
2.4(g) EXPENSES. Throughout the Term of this Agreement, the
Executive shall be
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<PAGE> 7
entitled to receive prompt reimbursement for all reasonable expenses incurred
by the Executive in accordance with the policies, practices and procedures
generally applicable to other similarly situated executives of the Company.
2.4(h) OFFICE AND SUPPORT STAFF. Throughout the Term of
this Agreement, 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, at least equal to those generally provided to other
similarly situated executives of the Company.
2.4(i) VACATION. Throughout the Term of this Agreement, the
Executive shall be entitled to paid vacation in accordance with the plans,
policies, programs and practices generally provided with respect to other
similarly situated executives of the Company. In no event shall such
vacation be less than four (4) weeks.
3. TERMINATION OF EMPLOYMENT.
3.1 DEATH. The Executive's employment shall terminate automatically
upon the Executive's death during the Term of the Agreement.
3.2 DISABILITY. If the Company determines in good faith that the
Disability of the Executive has occurred during the Term of the Agreement
(pursuant to the definition of Disability set forth below), the Company may
give to the Executive written notice in accordance with Section 7.2 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 has been unable 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 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
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 texts as such physician deems
necessary to make any such Disability determination.
3.3 TERMINATION FOR CAUSE. Termination of the Executive's
employment by the Company for " Cause" shall mean termination based upon:
(i) the Executive'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 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 involving moral turpitude, dishonesty or breach of trust;
or (iii) 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) he receives a Notice of Termination from the Company, (ii) he is
given the opportunity, with counsel, to be heard before the Board, and (iii)
the Board finds,
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<PAGE> 8
in its good faith opinion, the Executive was guilty of the conduct set forth in
the Notice of Termination.
3.4 GOOD REASON. Pursuant to Section 4.2, the Executive may
terminate his employment with the Company 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), authority, duties or
responsibilities as contemplated by Section 2.2(a) or any other action by the
Company which results in a material diminution in such position, authority,
duties or responsibilities, excluding for this purpose any action not taken
in bad faith and which is remedied by the Company 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 2.4, (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 2.4, or (iii) the failure by the Company to provide the Executive
with paid vacation to which the Executive is entitled as described in Section
2.4(h).
3.4(c) a material breach by the Company of any provision of this
Agreement;
3.4(d) any purported termination by the Company of the
Executive's employment otherwise than as expressly permitted by this
Agreement; or
3.4(e) within a period ending at the close of business on the
date two (2) years after the Triggering Transaction Date of any Change in
Control, if the Company has failed to comply with and satisfy Section 6.2 on
or after such Triggering Transaction Date.
For purposes of this Section, any good faith determination of "Good
Reason" made by the Executive shall be conclusive.
3.5 NOTICE OF TERMINATION Any termination by the Company for
Cause or Disability, or by the Executive for Good Reason, shall be
communicated by Notice of Termination to the other party, given in accordance
with Section 7.2. 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 3.6 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 Executive 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 Executive or the
Company hereunder or preclude the Executive or the Company from asserting
such fact or circumstance in enforcing the Executive's or the Company's
rights hereunder.
3.6 DATE OF TERMINATION. "Date of Termination" means (i) if the
Executive's
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<PAGE> 9
employment is terminated by the Company for Cause, or by the Executive for Good
Reason, the Date of Termination shall be the date of receipt 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 terminated by the Company other than for Cause, death or
Disability, or by the Executive for other than Good Reason, the Date of
Termination shall be the date of receipt of the Notice of Termination;
provided that if within thirty (30) days after any Notice of Termination is
given, the party receiving such Notice of Termination notifies the other party
that a dispute exists concerning the termination, the Date of Termination shall
be the date on which the dispute is finally determined, either by mutual
written agreement of the parties, or by a final judgment, order or decree of a
court of competent jurisdiction (the time for appeal therefrom having expired
and no appeal having been perfected).
4. CERTAIN BENEFITS UPON TERMINATION.
4.1 BENEFITS UPON TERMINATION NOT IN CONNECTION WITH A TRIGGERING
TRANSACTION. If, prior to a Triggering Transaction during the Term of the
Agreement (except in the event that the Company terminates the Executive's
employment without Cause or the Executive terminates employment with the
Company for Good Reason within the six-month period prior to the earlier of (a)
a Triggering Transaction or (b) the execution of a definitive agreement or
contract that eventually results in a Triggering Transaction, which shall
result in the payment of severance benefits set forth in Section 4.2 of this
Agreement), the Executive's employment is terminated for any reason except
death, the Executive shall be entitled to the payment of the benefits provided
below as of the Date of Termination:
4.1(a) Accrued Obligations. Within thirty (30) days after the
--------------------
Date of Termination, the Company shall pay to the Executive the sum of (i)
the Executive's Annual Base Salary through the Date of Termination to the
extent not previously paid, and (ii) any accrued vacation pay; in each case
to the extent not previously paid (the "Accrued Obligations").
In addition, on the date that Incentive Bonuses are paid to other
peer executives for the year in which the Executive's employment is
terminated, the Executive will be paid an amount equal to the product of the
Current Target bonus multiplied by a fraction, the numerator of which is the
number of days during the fiscal year for which the Incentive Bonus is paid
prior to the Date of Termination and the denominator of which is 365. For
purposes of this Agreement, the term "Current Target Bonus" means the
Incentive Bonus that would have been paid to the Executive for the fiscal
year in which the termination of employment occurred, if the Executive's
employment had not been so terminated and the Executive had earned 100% of
the Incentive Bonus that he could have earned for such year.
4.1(b) Severance Payment. The Company shall pay to the
------------------
Executive as severance pay the following amounts:
4.1(b)(i) Starting on the next regularly scheduled
payday, the Company shall pay to the Executive Twenty-Five Thousand Dollars
($25,000) a month for six (6) months, provided however, that if the operating
profits of the Operating Division for the fiscal year ending in January 2001
(Fiscal Year 2001) have reached or exceeded Ten Million Dollars ($10,000,000),
then in such event the amount payable to Executive pursuant to this Section
4.1(b)(i) in connection with a Date
9
<PAGE> 10
of Termination occuring after the end of Fiscal Year 2001, shall be equal to
two years of the Executive's then current Annual Base Salary; and
4.1(b)(ii) Notwithstanding any other provisions in this
Agreement to the contrary, if the Date of Termination occurs prior to
December 31, 1999, the Company shall, in all events, pay to the Executive or
his estate, in addition to the amount set out in 4.1(b)(i) above, a monthly
amount as follows: Forty Thousand Dollars ($40,000) per month for each month
following Termination, the last such payment to be for the month of December,
1999.
The Company at any time may elect to pay the balance of such severance
payments then remaining in a lump sum, in which case the total of such
payments shall be discounted to present value on the basis of the applicable
Federal short-term monthly rate as determined according to Code Section
1274(d) for the month in which the Executive's Date of Termination occurred.
4.1(c) Medical and Health Benefit Continuation. For a
----------------------------------------
period of the longer of the number of years beginning on the Date of
Termination and terminating on the date that the Executive reaches his
sixty-fifth (65th) birthday, or ten years beginning on the Date of
Termination, or such longer period as any plan, program, practice or policy
may provide, the Company shall continue medical and health benefits to the
Executive (and/or to such members of the Executive's family as are currently
covered pursuant to a Company sponsored medical and health benefit plan on
the Date of Termination) on such terms and conditions substantially similar
to those which would have been provided to them in accordance with the plans,
programs, practices and policies described in Section 2.4(d) if the
Executive's employment had not been terminated, in accordance with the plans,
practices, programs or policies of the Company as those provided generally to
other peer executives and their families; provided, however, that if the
-----------------
Executive becomes reemployed with another employer and is eligible to receive
medical or health benefits under another employer-provided plan, the medical
and health benefits described herein shall be secondary to those provided
under such other plan during such applicable period of eligibility. In the
event Company is able to obtain medical and health care coverage from a third
party for the duration of such coverage period that is at least as good in
all material respects as that described in the immediately preceding sentence
and is acceptable to Executive (which consent shall not be unreasonably
withheld), Executive agrees to accept, in lieu of such Company provided
medical and health benefits, a lump sum cash payment in an amount equal in
value to the entire cost to Executive on an after-tax basis of such alternate
medical and health care coverage.
4.1(d) Stock Bonus and Incentive Plan Shares. To the extent not
--------------------------------------
otherwise provided for under the terms of the Company's Stock Bonus and
Incentive Plan, all "Matching Shares" (as defined in such plan) held by or
for the benefit of the Executive on August 1, 1997 that remain unvested and
restricted at the Date of Termination shall vest and become unrestricted as
of the Date of Termination and all "Elected Shares" (as defined in such
plan) held by or for the benefit of the Executive that are restricted at the
Date of Termination shall become unrestricted as of the Date of Termination.
The Company may, at its option, in lieu of vesting matching Shares, make a
lump sum cash payment to Executive in an amount equal to the fair market
value of such Matching Shares, at close of business on the Date of
Termination. Notwithstanding anything to the contrary herein, the benefit
under this Section 4.1(d) shall be payable only in the event of termination
of employment by the Company, and shall not be payable in the event Executive
elects to terminate his employment.
10
<PAGE> 11
4.1(e) 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.
4.2 BENEFITS UPON TERMINATION IN CONNECTION WITH A TRIGGERING
TRANSACTION. If (a) a Triggering Transaction occurs during the Term of the
Agreement and within two (2) years after the Triggering Transaction Date (i)
the Company shall terminate the Executive's employment without Cause, or (ii)
the Executive shall terminate employment with the Company for Good Reason, or,
alternatively, (b) if one of the above-described termination of employment
occurs within the six-month period prior to the earlier of (i) a Triggering
Transaction or (ii) the execution of a definitive agreement or contract that
eventually results in a Triggering Transaction, then the Executive 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 Triggering Transaction 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
--------------------
Date of Termination, the Company shall pay to the Executive the Accrued
Obligations.
In addition, on the date that Incentive Bonuses are paid to other
peer executives for the year in which the Executive's employment is
terminated, the Executive will be paid an amount equal to the product of the
Current Target bonus multiplied by a fraction, the numerator of which is the
number of days during the fiscal year for which the Incentive Bonus is paid
prior to the Date of Termination and the denominator of which is 365.
4.2(b) Severance Payment.
------------------
4.2(b)(i) Within thirty (30) days after the Entitlement
Date, the Company shall pay to the Executive as severance pay in a lump sum
in cash the following amounts: (1) an amount equal to two times his
then-current Annual Base Salary and Current Target Bonus, provided however,
that in the event the Entitlement Date is on or prior to December 31, 1999,
for purposes of this calculation, the Annual Base Salary shall be deemed to
be One Hundred Eighty Thousand Dollars ($180,000) and the Current Target
Bonus shall be deemed to be One Hundred Twenty Thousand Dollars ($120,000);
and (2) in the event the Entitlement Date is on or prior to December 31,
1999, the amounts set out in Section 4.1(b)(ii).
4.2(b)(ii) In the event a severance amount is payable
pursuant to this Section 4.2(b) on account of a Triggering Transaction, and
the Executive is entitled to a benefit under Article IV of the Angelica
Corporation Management Retention and Incentive Plan (the "Management
Retention Plan") on account of a Change in Control (as defined in the
Management Retention Plan), the Executive shall be entitled to the larger of
the amounts computed pursuant to this Section and the amounts computed
pursuant to the Management Retention Plan without regard to this Section.
11
<PAGE> 12
4.2(c) Stock Options. To the extent not otherwise provided for
--------------
under the terms of the Company's stock option plans or the Executive's stock
option agreements, all stock options held by the Executive that have not
expired in accordance with their respective terms shall vest and become fully
exercisable as of the Entitlement Date.
4.2(d) Stock Bonus and Incentive Plan Shares. To the extent not
--------------------------------------
otherwise provided for under the terms of the Company's Stock Bonus and
Incentive Plan, all "Matching Shares" (as defined in such plan) held by or
for the benefit of the Executive that are unvested and restricted at the Date
of Termination shall vest and become unrestricted as of the Entitlement Date
and all "Elected Shares" (as defined in such plan) held by or for the benefit
of the Executive that are restricted at the Date of Termination shall become
unrestricted as of the Entitlement Date.
4.2(e) Medical and Health Benefit Continuation. For a period of
----------------------------------------
the longer of the number of years beginning on the Date of Termination and
terminating on the date that the Executive reaches his sixty-fifth (65th)
birthday, or ten years beginning on the Date of Termination, or such longer
period as any plan, program, practice or policy may provide, the Company
shall continue medical and health benefits to the Executive (and/or to such
members of the Executive's family as are currently covered pursuant to a
Company sponsored medical and health benefit plan on the Date of Termination)
on such terms and conditions substantially similar to those which would have
been provided to them in accordance with the plans, programs, practices and
policies described in Section 2.4(d) if the Executive's employment had not
been terminated, in accordance with the plans, practices, programs or
policies of the Company as those provided generally to other peer executives
and their families; provided, however, that if the Executive becomes
-----------------
reemployed with another employer and is eligible to receive medical or health
benefits under another employer-provided plan, the medical and health
benefits described herein shall be secondary to those provided under such
other plan during such applicable period of eligibility. In the event
Executive is able to obtain medical and health care coverage from a third
party for the duration of such coverage period that is at least as good in
all material respects as that described in the immediately preceding
sentence, Executive agrees to accept, in lieu of such Company provided
medical and health benefits, a lump sum cash payment in an amount equal in
value to the entire cost to Executive on an after-tax basis of such alternate
medical and health care coverage.
4.2(f) 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.
Any provision in any plan or program of the Company in which Executive
is a participant that precludes Executive from competing with the Company, or
denies Executive entitlement to a benefit in the event Executive does compete
with the Company, shall be null and void.
4.2(g) Excess Parachute Payment. Anything in this Agreement to
-------------------------
the contrary notwithstanding, in the event that it shall be determined that
any payment or distribution by the Company to or for the benefit of Executive
(whether paid or payable or distributed or distributable pursuant to the
terms of this Agreement or otherwise but determined without regard to any
additional payments required under this Section (a "Payment") would be
subject to the excise tax
12
<PAGE> 13
imposed by Code Section 4999 (or any successor provision) or any interest or
penalties are incurred by the Executive with respect to such excise tax (such
excise tax, together with any such interest and penalties, are hereinafter
collectively referred to as the "Excise Tax"), then the Executive shall be
entitled to receive an additional payment ( a "Gross-Up Payment") in an amount
such that after payment by the Executive of all taxes (including any interest
or penalties imposed with respect to such taxes), including, without
limitation, any income taxes (and any interest or penalties imposed with
respect thereto) and Excise Tax imposed upon the Gross-Up Payment, the
Executive retains an amount of the Gross-Up Payment on an after-tax basis equal
to the Excise Tax imposed upon the Payment.
The Executive shall notify the Company in writing of any claim by the
Internal Revenue Service that, if successful, would require the payment by
the Company of the Gross-Up Payment. Such notification shall be given as
soon as practicable but no later than ten business days after the Executive
is informed in writing of such claim by the Internal Revenue Service and the
notification shall apprise the Company of the nature of the claim and the
date on which such claim is required to be paid. The Executive shall not pay
such claim prior to the expiration of a 30-day period following the date on
which the Executive has given such notification to the Company (or such
shorter period ending on the date that any payment of taxes with respect to
such claim is required). If the Company notifies the Executive in writing
prior to the expiration of such period that it desires to contest such claim,
the Executive shall cooperate with the Company in so contesting; provided,
--------
however, that the Company shall bear and pay all costs and expenses
- -------
(including additional interest and penalties) incurred in connection with
such contest, on an after-tax basis to the Executive.
4.2(h) Enhanced Supplemental Retirement Benefits. The benefit
------------------------------------------
payable to the Executive under the Angelica Corporation Supplemental Plan (as
originally effective April 1, 1980 and as amended from time to time,
including a restatement as of January 23, 1990) ( the "Supplemental Plan")
shall be determined on the basis of the years of service with the Company the
Executive would have completed if he had continued to be employed by the
Company until he attained age 65; provided such additional imputed service
shall not exceed five years. The Final Average Compensation shall be
calculated as set out in Section 2.4(e) of this Agreement. Payments shall be
made in accordance with the terms of the Supplemental Plan.
4.3 DEATH. If the Executive's employment is terminated by reason of
the Executive's death during the Employment Period (either prior or
subsequent to a Triggering Transaction), 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), (ii) payment of the amounts set out in Section
4.1(b)(ii), if any, which shall be paid in accordance with the terms of the
Agreement and (iii) the timely payment or provision of Other Benefits (as
defined in Section 4.1(e)), including death benefits pursuant to the terms of
any plan, policy, or arrangement of the Company. In addition, such members
of the Executive's family as are covered by a Company sponsored medical and
health insurance plan on the date of death of the Executive shall be eligible
to receive medical and health benefits under the terms and conditions set out
in Section 4.1(c).
4.4 DISABILITY. If the Executive's employment is terminated by
reason of the Executive's Disability during the Employment Period (either
prior or subsequent to a Triggering Transaction), this Agreement shall
terminate without further obligations to the Executive, other than for (1)
13
<PAGE> 14
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), (2) payment of the Severance set out in 4.1(b)(ii), and
(3) the timely payment or provision of Other Benefits (as defined in Section
4.1(e) including Disability benefits pursuant to the terms of any plan,
policy or arrangement of the Company.
4.5 NON-EXCLUSIVITY OF RIGHTS: SUPERSESSION OF CERTAIN BENEFITS.
Except as provided in this Section 4.5, nothing in this Agreement shall prevent
or limit the Executive's continuing or future participation in any plan,
program, policy or practice provided by the Company and for which the Executive
may qualify, nor shall anything herein limit or otherwise affect such rights as
the Executive may have under any contract or agreement with the Company, except
for the elimination of penalties for competing as provided in Section 4.2(f).
Amounts which are vested benefits of which the Executive is otherwise entitled
to receive under any plan, policy, practice or program of, or any contract or
agreement with, the Company at or subsequent to the Date of Termination, shall
be payable in accordance with such plan, policy, practice or program or
contract or agreement except as explicitly modified by this Agreement.
4.6 PREVIOUS EMPLOYMENT AGREEMENTS. Notwithstanding anything to
the contrary herein, it is agreed and understood that this Agreement is
intended to supersede and replace any and all previously dated employment
agreements between the Executive and the Company, including but not limited
to the Employment Agreement dated November 27, 1996. Such previous
employment agreements are hereby void and of no further effect, and the
Company has no further obligations to Executive pursuant to said previous
employment agreements.
4.7 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 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).
4.8 RESOLUTION OF DISPUTES. If there shall be any dispute between
the Company and the Executive (i) in the event of any termination of the
Executive's employment by the Company, whether such termination was for
Cause, or (ii) in the event of any termination of employment by the
Executive, whether Good Reason existed, then, unless and until there is a
final, nonappealable 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
or 4.2 as though such termination were by the Company without Cause or by the
Executive with Good Reason; provided, however, that the Company shall not be
-----------------
14
<PAGE> 15
required to pay any disputed amounts pursuant to this Section 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.
5. NON-COMPETITION.
5.1 NON-COMPETE AGREEMENT.
5.1(a) It is agreed that during the period beginning on the date
this Agreement terminates and ending one(1) year thereafter, the Executive
shall not, without prior written approval of the Board, become an officer,
employee, agent, partner or director of any business enterprise in
substantial direct competition (as defined in Section 5.1(b)) with the
Company; provided that, if the Executive is terminated by the Company
without Cause or if the Executive terminated his employment for Good Reason,
then he will not be subject to the restrictions of this Section.
5.1(b) For purposes of Section 5.1, a business enterprise with
which the Executive becomes associated as an officer, employee, agent,
partner or director shall be considered in substantial direct competition, if
such entity competes with the Operating Line of Business and is within the
Company's market area as of the date the Employment Period expires.
5.1(c) The above constraint shall not prevent the Executive from
making passive investments, not to exceed five percent (5%), in any
enterprise.
5.2 CONFIDENTIAL INFORMATION. The Executive 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 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). 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,
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.
6. SUCCESSORS.
6.1 SUCCESSORS OF 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. 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
15
<PAGE> 16
Executive to terminate the Agreement at his option on or after the Triggering
Transaction 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.
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
Executive with respect to the occurrence of a Triggering Event that will be
in addition to the benefits required to be paid in the designated
circumstances in connection with the occurrence of a Triggering Transaction.
Such additional incentive circumstances in connection with the occurrence of
a Triggering Transaction. 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
Executive 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 the attention of the Chairman of the Board, or
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 Executive:
--------------------
Lawrence J. Young
15181 Isleview Drive
Chesterfield, MO 63017
Notice to Company:
------------------
Angelica Corporation
424 South Woods Mill road
Chesterfield, Missouri 63017-3406
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.
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 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, including, without limitation, the right of the
16
<PAGE> 17
Executive 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 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.
/s/ Lawrence J. Young
- ---------------------------------- ANGELICA CORPORATION
Lawrence J. Young
By /s/ L. F. Loewe
-----------------------------------
L. F. Loewe
Chairman, President, and CEO
17
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from the
consolidated financial statements for period ended October 25, 1997 and is
qualified in its entirety by reference to such financial statements.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> JAN-31-1998
<PERIOD-START> JAN-26-1997
<PERIOD-END> OCT-25-1997
<CASH> 2,020
<SECURITIES> 0
<RECEIVABLES> 73,093
<ALLOWANCES> (3,957)
<INVENTORY> 152,541
<CURRENT-ASSETS> 234,953
<PP&E> 233,369
<DEPRECIATION> (110,656)
<TOTAL-ASSETS> 396,009
<CURRENT-LIABILITIES> 107,463
<BONDS> 97,940
<COMMON> 9,472
0
0
<OTHER-SE> 164,902
<TOTAL-LIABILITY-AND-EQUITY> 174,374
<SALES> 173,891
<TOTAL-REVENUES> 389,367
<CGS> 122,156
<TOTAL-COSTS> 298,859
<OTHER-EXPENSES> 95,135
<LOSS-PROVISION> 1,194
<INTEREST-EXPENSE> 7,957
<INCOME-PRETAX> (13,778)
<INCOME-TAX> (5,236)
<INCOME-CONTINUING> 0
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (8,542)
<EPS-PRIMARY> (.93)
<EPS-DILUTED> (.93)
</TABLE>
