Exhibit 10.1

ASSET PURCHASE AGREEMENT

by and among

HPI DIRECT, INC.,

RICHARD J. SOSEBEE,

KIRBY P. SIMS, JR.,

FREDERICK L. HILL, III ,

and

SUPERIOR UNIFORM GROUP, INC.

Dated as of July 1, 2013  

TABLE OF CONTENTS

ARTICLE I DEFINED TERMS		1
Section 1.1	Definitions	1
ARTICLE II PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES; CLOSING		8
Section 2.1	Purchase and Sale of the Assets	8
Section 2.2	Excluded Assets	10
Section 2.3	Assumed Liabilities	10
Section 2.4	Excluded Liabilities	11
Section 2.5	Consideration for the Assets	13
Section 2.6	Closing	13
Section 2.7	Working Capital Adjustment	15
Section 2.8	Earn-Out	18
Section 2.9	Delivery of Restricted Buyer Shares	22
Section 2.10	Purchase Price Adjustment	22
Section 2.11	Non-Assignable Assets	22
Section 2.12	Withholding Tax	23
ARTICLE III REPRESENTATIONS AND WARRANTIES		23
Section 3.1	Representations and Warranties of the Seller and Shareholder	23
Section 3.2	Representations and Warranties of the Buyer	37
ARTICLE IV COVENANTS		37
Section 4.1	Employees	37
Section 4.2	Restrictive Covenants	39
Section 4.3	Further Assurances	41
Section 4.4	Publicity	42
Section 4.5	Allocation of Purchase Price	42
Section 4.6	Transfer Taxes	42
Section 4.7	Proration	42
Section 4.8	Transition	42
ARTICLE V INDEMNIFICATION		43
Section 5.1	Survival	43
Section 5.2	Indemnification of the Buyer Parties	44
Section 5.3	Indemnification of the Seller and Shareholders	44
Section 5.4	Provisions Released to Indemnification of the Buyer Parties	44
Section 5.5	Indemnification Procedures	45
Section 5.6	Payments	47
Section 5.7	Set-Off	47
Section 5.8	Tax Treatment of Indemnification Payments	47
Section 5.9	Cumulative Remedies	47
ARTICLE VI ADDITIONAL OPERATIVE PROVISIONS		47
Section 6.1	Assignment; Binding Effect	47
Section 6.2	Choice of Law	48
Section 6.3	Arbitration	48
Section 6.4	Consent to Jurisdiction and Service of Process; Waiver of Jury Trial	49
Section 6.5	Notices	49
Section 6.6	Headings	50
Section 6.7	Fees and Expenses	50
Section 6.8	Entire Agreement	51

Section 6.9	Interpretation	51
Section 6.10	Waiver and Amendment	52
Section 6.11	Third-party Beneficiaries	52
Section 6.12	Severability	52
Section 6.13	Counterparts; Facsimile   Signatures	52
Section 6.14	Specific Performance	52

 

ASSET PURCHASE AGREEMENT

This ASSET PURCHASE AGREEMENT is made and entered into as of July 1 , 2013, by and among HPI DIRECT, INC. , a Georgia corporation (the “ Seller ”), RICHARD J. SOSEBEE , KIRBY P. SIMS, JR. , and FREDERICK L. HILL , III (each a “ Shareholder ” and collectively the “ Shareholders ”), and SUPERIOR UNIFORM GROUP, INC. , a Florida corporation (“ Buyer ”).

Background

Seller owns and operates the Business under the names “HPI Direct” and “UniformZoom” . Buyer desires to purchase, and Seller desires to sell, substantially all of the assets used by Seller in the Business , on the terms and conditions of this Agreement .

The Shareholders collectively own all of the capital stock of Seller , and will substantially benefit from the transactions contemplated by this Agreement .

Operative Terms

The parties agree as follows:

ARTICLE I

DEFINED TERMS

Section 1.1      Definitions . For purposes of this Agreement , the following capitalized terms have the meanings assigned to them in this Section 1.1 .

“ Action ” means any action, claim, complaint, litigation, mediation, audit by a Governmental Entity , investigation, petition, suit, arbitration, order or other proceeding, whether civil or criminal, at law or in equity by or before any Governmental Entity or arbitration tribunal.

“ Affiliate ” means, with respect to a specified Person , another Person that directly, or indirectly through one or more intermediaries, controls, or is controlled by, or is under common control with, such specified Person . A Person shall be deemed to control another Person if such first Person possesses, directly or indirectly, the power to direct, or cause the direction of, the management and policies of such other Person , whether through the ownership of voting securities, by contract or otherwise, and such control will be presumed if any Person owns 10% or more of the voting capital stock or other ownership interests , directly or indirectly, of any other Person .

“ Agreement ” means this Asset Purchase Agreement, as the same may be amended or supplemented in accordance with its terms, together with all exhibits and schedules attached hereto .

“ Balance Sheet ” means the unaudited balance sheet of the Seller as of the Balance Sheet Date .

“ Balance Sheet Date ” means May 31 , 2013.

“ Business ” means the business of designing, manufacturing, marketing, selling and distributing uniforms and corporate apparel and accessories, promotional products and accessories, and related goods and services.

“ Business Day ” means any day other than a Saturday , Sunday , or any other day on which banks are permitted or required to be closed in Tampa , Florida.

“ CERCLA ” means the Comprehensive Environmental Response, Compensation, and Liability Act of 1980 , as amended by the Superfund Amendments and Reauthorization Act of 1986 , 42 U.S.C. §§ 9601 et seq.

“ COBRA Obligations ” means any obligation or Liability, whenever arising of the Buyer or any of its Affiliates or any group health plan sponsored, maintained, contributed to, or with respect to which any of such Persons or group health plans have any Liability, related to the Seller’s employees or other service providers including each “M&A Qualified Beneficiary,” and each “Qualified Beneficiary” with respect to any of the foregoing Persons, in connection with their loss of group health plan coverage or any “qualifying event” within the meaning of Treasury Regulation Section 54.4980B-9, Q&A-6(a) with respect to any of the Company Plans including any Liability arising in connection with Treasury Regulation Section 54.4980B-9, Q&A-8(c).

“ Code ” means the Internal Revenue Code of 1986 , as amended.

“ Company Plan ” means (i) each “employee benefit plan ” of the Seller within the meaning of Section 3(3) of ERISA ; (ii) any of the following types of plans, programs or arrangements sponsored or contributed to by the Seller or with respect to which the Seller has any Liability : severance plan, incentive or bonus plan, deferred compensation plan, retention plan, change in control plan, profit sharing plan, retirement plan, welfare plan, vacation or paid-time-off benefit or plan, stock purchase, stock option or equity incentive plan; and (iii) any other employee benefit plan, program or arrangement that is maintained, sponsored or contributed to by the Seller or with respect to which the Seller has any Liability .

“ Confidential Information ” means all information of a confidential or proprietary nature (whether or not specifically labeled or identified as “confidential”), in any form or medium, that relates to the business , products, financial condition, services or research or development of the Seller or their suppliers, distributors, customers, employees, independent contractors or other business relations. Confidential Information of the Seller includes , but is not limited to, the following: (i) internal business and financial information of the Seller (including information relating to strategic and staffing plans and practices, business , finances, training, marketing, promotional and sales plans and practices, cost, rate and pricing structures and accounting and business methods); (ii) identities of, individual requirements of, specific contractual arrangements with, and information about, the current, former and prospective suppliers, distributors, customers, employees, independent contractors or other business relations of the Seller and their confidential information; and (iii) trade secrets, know-how, compilations of data and analyses, techniques, systems, formulae, research, records , reports, manuals, documentation, models, data and data bases relating thereto. Confidential Information shall not include: (a) any information that is generally available to the public immediately prior to the time of disclosure unless such is so available due to the actions of a party to this Agreement; (b) information which is independently developed; and (c) information which is disclosed to a party by a third party not itself subject to any obligation of confidentiality in respect of such information.

“ Contract ” means any oral or written arrangement, contract, agreement , commitment, franchise, indenture, lease or sublease, purchase order , license, note, bond or mortgage, including any amendments, modifications, supplements and other changes thereto.

“ Disclosure Schedule ” means the disclosure schedule referred to in and delivered to the Buyer pursuant to this Agreement and incorporated herein by reference. The Disclosure Schedule shall be considered a “Schedule ” to this Agreement .

“ Encumbrance ” means any lien (statutory or otherwise), encumbrance, easement, covenant, security interest, option, pledge, Tax , proxy, voting agreement , mortgage, deed of trust, hypothecation, preference, priority, charge, conditional sale or restriction on transfer of title or voting, whether imposed by agreement , understanding, law , equity or otherwise.

“ Environmental Claim ” means any Action , Order , Encumbrance , fine, penalty, or, as to each, any settlement or judgment arising therefrom, by or from any Person alleging Liability of whatever kind or nature (including liability or responsibility for the costs of enforcement proceedings, investigations, cleanup, governmental response, removal or remediation, natural resources damages, property damages, personal injuries, medical monitoring, penalties, contribution, indemnification and injunctive relief) arising out of, based on or resulting from: (a) the presence, Release of, or exposure to, any Hazardous Materials ; or (b) any actual or alleged non-compliance with any Environmental Law or term or condition of any Environmental Permit .

“ Environmental Law ” means any Law to the extent relating to the protection of the environment, the release of any Hazardous Materials into the environment, the generation, management, transportation, storage, treatment and disposal of Hazardous Materials, or the pollution of air, soil, groundwater or surface water (including the Clean Air Act, the Toxic Substance Control Act, the Clean Water Act, the CERCLA, the Resource Conservation and Recovery Act, and the Occupational Safety and Health Act, all as amended, or their state counterparts or analogues).

“ Environmental Notice ” means any written directive, notice of violation or infraction, or notice respecting any Environmental Claim relating to actual or alleged non-compliance with any Environmental Law or any term or condition of any Environmental Permit .

“ Environmental Permit ” means any Permit , letter, clearance, consent, waiver, closure, exemption, decision or other action required under or issued, granted, given, authorized by or made pursuant to any Environmental Law .

“ ERISA ” means the Employee Retirement Income Security Act of 1974 , as amended, and the related regulations and published interpretations.

“ Excluded Inventory ” means (a) all inventory that is (i) damaged or otherwise not good and merchantable, (ii) not of usable or saleable quality in the ordinary course of business , or (iii) not covered by an enforceable Contract with a customer, and (b) all inventory that is in transit to the Seller as of the Effective Time except to the extent that (i) such inventory is fully-paid for by the Seller prior to the Effective Time, meaning that no additional amount is required to be paid after the Effective Time in order to acquire such inventory, or (ii) the amount of any such required post-Effective Time payment is accrued as a current liability of the Seller that is reflected on the Final Closing Balance Sheet and included in the Closing Working Capital calculation. Notwithstanding the foregoing, any inventory that is expressly listed on Part 3.1(x)(i) of the Disclosure Schedule shall not be considered Excluded Inventory and shall be an Asset.

“ Financial Statements ” means, collectively, (i) the reviewed (but not audited) balance sheets and related statements of income, changes in shareholders ’ equity and cash flows of the Seller as of and for the fiscal years ended December 31, 2010, 2011 and 2012, including in each case, any notes thereto, and (ii) the Balance Sheet and the related unaudited statement of income as of and for the 5 -month interim period ended on the Balance Sheet Date , including in each case, any notes thereto.

“ GAAP ” means generally accepted accounting principles in the United States , as in effect from time to time, consistently applied.

“ Governmental Entity ” means (i) any United States or foreign governmental authority, including any national, federal, territorial, state, commonwealth, province, territory, county, municipal, district, or local governmental jurisdiction of any nature (including any governmental department, division, agency, bureau, office, branch, court, commission, tribunal, or other governmental instrumentality) or any political or other subdivision or part of any of the foregoing; or (ii) any self-regulatory, accreditation or certification entities, or quasi-governmental authority of any nature, or any entity contracting with any of the foregoing, exercising, or entitled or purporting to exercise, any administrative, executive, judicial, legislative, police, regulatory, or taxing authority or power.

“ Hazardous Materials ” means any hazardous or toxic materials, substances, chemicals, products, derivatives, compounds, mixtures, solids, liquids, gases or wastes, including any petroleum or petroleum product, radon, radioactive materials or wasters, asbestos, lead, urea formaldehyde form insulation, or derivative thereof and any pollutants or contaminants, each, whether naturally occurring or manmade, that is hazardous, toxic or otherwise as defined in any Environmental Law .

“ Indebtedness ” means, with respect to any Person at any particular time, without duplication: (i) obligations for borrowed money or in respect of loans or advances, (ii) obligations evidenced by any note, debenture, or other similar instrument or debt security; (iii) obligations of any other Person guaranteed in any manner by such Person ; (iv) obligations under swaps, hedges, interest rate protection agreements or similar instruments; (v) obligations in respect of letters of credit and bankers’ acceptances, or performance or other bonds, issued for the account of such Person ; (vi) obligations arising from cash/book overdrafts, but less any deposits in transit; (vii) obligations for the deferred purchase price of property or services or the acquisition of a business or portion thereof or insurance premium financing, in each case, whether contingent or otherwise, as obligor or otherwise; (viii) obligations created or arising under any conditional sale or other title retention agreement with respect to acquired property; (ix) obligations, contingent or otherwise, arising from deferred compensation arrangements; (x) obligations arising from the redemption of equity or other securities; (xi) obligations under any capitalized leases relating to personal property; (xii) obligations secured by an Encumbrance on any of such Person’s assets, other than a Permitted Encumbrance; and (xiii) all accrued interest, prepayment premiums, penalties, expenses or other amounts due related to any of the foregoing.

“ Intellectual Property ” means all of the following in any jurisdiction throughout the world: (i) all inventions (whether patentable or unpatentable and whether or not reduced to practice), discoveries, all improvements thereto and all patents, patent applications and patent disclosures, together with all divisional, provisionals, reissuances, continuations, continuations-in-part, revisions, extensions and reexaminations thereof; (ii) all trademarks, service marks, trade dress, logos, slogans, trade names, corporate names, Internet domain names and rights in telephone numbers, together with all translations, adaptations, derivations and combinations thereof (and including all goodwill associated therewith) and all applications, registrations and renewals in connection therewith; (iii) all works of authorship, expressions, designs and design registrations, whether or not copyrightable, all copyrightable works and copyrights, and all applications, registrations and renewals in connection therewith; (iv) all mask works and all applications, registrations and renewals in connection therewith; (v) all trade secrets and confidential business information (including lists of current, former and prospective suppliers and customers, pricing and cost information and business and marketing plans and proposals) and know-how (“ Trade Secrets ”); (vi) all computer software and systems (including source code , executable code , data, databases, specifications and related documentation) (“ Software ”); (vii) all advertising, marketing and promotional materials, including website content; (viii) all other proprietary rights; and (ix) all copies and tangible embodiments thereof (in whatever form or medium); and (x) claims and causes of action, with respect to any of the foregoing, whether accruing before, on or after the date hereof, including all rights to and claims for damages, restitution and injunctive relief for past, present and future infringement, dilution, misappropriation, violation, misuse, breach or default, with the right but no obligation to sue for such legal and equitable relief and to collect, or otherwise recover, any such damages .

“ Knowledge ” means, with respect to the Seller , the actual knowledge of any Shareholder or any other management level employee of the Seller , and such additional knowledge as such individuals would reasonably be expected to obtain after a reasonable investigation of the matter in question or in the normal performance of their duties. For this purpose, “reasonable investigation ” means, at a minimum, (i) review of files and other information in the possession of the Seller , and (ii) inquiry of other management-level employees of Seller who have responsibilities pertinent to such inquiry or who have access to information in the possession of Seller pertinent to such inquiry, and the “management level employees” included in the Knowledge group are those employees set forth on Schedule 1.2 .

“ Law ” means any domestic or foreign federal, state, territorial or local law (statutory, common or otherwise), statute, constitution, treaty, convention, ordinance, code , rule, regulation, administrative interpretation, Order , or other similar requirement enacted, adopted, promulgated or applied by a Governmental Entity .

“ Liability ” means any liability or obligation of any kind, character or description, whether known or unknown, absolute or contingent, accrued or unaccrued, liquidated or unliquidated, secured or unsecured, joint or several, due or to become due, vested or unvested, executory, determined, determinable or otherwise, and all of the foregoing shall be included in the definition of “Liability ” regardless of whether or not it is: (i) required to be accrued, reserved against or otherwise reflected on financial statements prepared in accordance with GAAP or any other accounting method or standard, or (ii) disclosed or required to be disclosed on any Schedule to this Agreement .

“ Losses ” means all demands, claims, assessments, losses, damages, diminution in value, costs, defense costs, expenses, Liabilities , judgments, awards, fines, interest, sanctions, penalties, charges (including any amounts paid in settlement), including reasonable costs, fees and expenses of attorneys, accountants and other representatives of a Person incurring or suffering such Damages or seeking to investigate, mitigate or avoid same. In no event shall Losses include punitive, exemplary, treble or other special damages regardless of legal theory unless they are part of a Third-Party Claim.

“ Material Adverse Effect ” means any change, effect, event, occurrence or development that occurred before the Closing Date individually or in the aggregate, and has been or reasonably would be expected to be materially adverse to (i) the assets , properties, Business , condition (financial or otherwise), prospects or results of operations of the Seller, (ii) the ability of the Seller to consummate the transactions contemplated by this Agreement and the other Transaction Documents, or (iii) the ability of the Buyer to conduct the operation of the Business as currently conducted by Seller following the Closing. However, the following results shall not be considered in determining whether there has been a Material Adverse Effect: (x) a customer of Seller puts a request for its required Business services out to bid, or otherwise solicits bid proposals from third parties to provide Business services, in each case after Closing and provided that Seller has not been notified of the customer’s plans to take the applicable action, or (y) a customer of Seller terminates its contract with Seller or Buyer as a result of the transactions contemplated by this Agreement, provided that Seller does not have specific Knowledge before Closing that the applicable customer would terminate its contract if Buyer acquired Seller.

“ Order ” means any award, decision, injunction, judgment, order, writ, decree, ruling, subpoena, or verdict entered, issued, made, or rendered by any court, administrative agency, or other Governmental Entity or by any arbitrator .

“ Permits ” means all permits, licenses, franchises, approvals, consents, grants, authorizations, registrations, certificates, variances and similar rights obtained, or required to be obtained, from Governmental Entities .

“ Permitted Encumbrance ” means (a) liens for Taxes not yet due and payable or for Taxes that Seller is contesting in good faith through appropriate proceedings in a timely manner, in each case for which adequate reserves have been established and shown on the Financial Statements, (b) liens of landlords, carriers, warehousemen, workmen, repairmen, mechanics, materialmen and similar liens arising in the ordinary course of business and not incurred in connection with the borrowing of money and (c) the operating leases set forth on Schedule 2.1(e)(iii) .

“ Person ” means any individual, association (incorporated or unincorporated), corporation, partnership (of any designation - limited partnership, general partnership, limited liability partnership, or otherwise), limited liability company, trust, or any other entity or organization, public or private, including a Governmental Entity .

“ Real Property Purchase Documents ” means the Purchase Agreement and Escrow Instructions by and between TAA Investments, LLC, a Georgia limited liability company, and the Buyer, and the deed and other closing documents and instruments delivered thereunder.

“ Records ” means (i) all records, files, books and operating data, invoices, databases, manuals and other materials, whether in print, electronic or other media, customer lists, sales data and information, supplier lists, mailing lists, active and inactive customer Contracts , lead boxes, contents of lead boxes and other prospect materials, Confidential Information , equipment maintenance records, books of account, correspondence, financial, sales, market and credit information and reports, drawings, patterns, slogans, market research and other research materials and contract documents; and (ii) all personnel files and records, including any benefit information, relating to any Transferred Employee .

“ Release ” means any actual or threatened release, spilling, leaking, pumping, pouring, emitting, emptying, discharging, injecting, escaping, leaching, dumping, abandonment, disposing or allowing to escape or migrate into or through the environment (including ambient air (indoor or outdoor), surface water, groundwater, land surface or subsurface strata or within any building, structure, facility or fixture).

“ Restricted Buyer Shares ” means the number of shares of the Buyer’s Common Stock, par value $0.001 per share, determined in accordance with the following formula (and rounded up or down to the nearest whole share): (a) $2,300,000, divided by (b) the average closing price of the Buyer’s Common Stock, as reported by NASDAQ, over the last twenty (20) trading days before the Closing Date. The Restricted Shares shall not be registered under the Securities Act of 1933, as amended, or under any state securities laws.

“ Shareholders’ Agreement ” means the Second Amended and Restated Shareholders’ Agreement, dated October 10, 2007, among Seller and the Shareholders, as amended by the Amendment to Second Amended and Restated Shareholders’ Agreement, dated November 1, 2011, among Seller and the Shareholders.

“ Tax ” means any (i) foreign, federal, state, or local income, sales, use, excise, franchise, alternative minimum, add-on minimum, profits, real and personal property (tangible and intangible), gross receipts, net proceeds, documentary, turnover, license, premium, windfall profits, capital stock, production, business and occupation, disability, employment, payroll, unemployment, stamp, customs, severance, withholding, social security, Medicare, disability, value added, environmental, transfer, or estimated tax or any similar tax or other tax, duty, fee, assessment or charge of any kind whatsoever imposed by any taxing authority, including any interest, addition or penalties imposed in respect of the foregoing, (ii) Liability of the Seller for the payment of any amounts of the type described in clause (i) above arising as a result of being (or ceasing to be) a member of any consolidated, affiliated, combined or unitary group (or being included (or required to be included) in any Tax Return relating thereto), and (iii) Liability of the Seller for the payment of any amounts of the type described in clause (i) above as a result of any express or implied obligation to indemnify or otherwise assume or succeed to the Liability of any other Person , whether imposed by Law , Contract , or otherwise.

“ Tax Return ” means any return, report, declaration, information return, claim for refund, or other document (including any related or supporting schedules, statements or information) filed or required to be filed in connection with the determination, assessment or collection of any Tax or the administration of any Laws relating to any Tax .

“ Transaction Documents ” means this Agreement , the Bill of Sale , the Escrow Agreement, the Real Property Purchase Documents , the License Assignment and Assumption Agreements, the Intellectual Property Assignments, and the Restricted Stock Agreements . The Employment Agreements and the Consulting Agreement are not Transaction Documents .

Additional terms defined in the body of this Agreement shall have the meaning given herein , including the following:

ARTICLE II

PURCHASE AND SALE OF ASSETS; ASSUMPTION OF LIABILITIES; CLOSING

Section 2.1      Purchase and Sale of the Assets . Subject to the terms and conditions of this Agreement , at the Closing , the Seller shall sell, transfer, convey, assign and deliver to the Buyer , and the Buyer shall purchase and acquire from the Seller , free and clear of all Encumbrances (other than Permitted Encumbrances) , all right, title and interest in, to and under all of the assets , properties and rights of the Seller of every kind and nature used in or relating to the Business , wherever located, and whether or not reflected on the books of the Seller , but excluding the Excluded Assets (collectively, the “ Assets ”), including the Seller ’s right, title and interest in, to and under the following:

(a)     all inventory, including inventories of raw materials, work-in-process and finished goods, and including all inventory in transit, along with all related packaging and other supplies, but in each case excluding all Excluded Inventory;

(b)     all accounts receivable (both billed and unbilled, and including balances owed and post-dated checks), notes receivable, negotiable instruments and chattel paper arising from the operation of the Business ;

(c)     all vehicles, furniture, fixtures, signs, equipment (including computers, desks, telephones, telephone systems, fax machines and other office equipment, and all related computer software), machinery and other tangible personal property, together with all spare parts, tools, accessories and related supplies, including all such property located at the Leased Facilities , and including all of the assets listed on the fixed asset list attached as Schedule 2.1(c) ;