NOTE

- Long-Term Debt:

	December 31,		December 31,
	2016		2015
Term loan payable to Fifth Third Bank, maturing March 8, 2021	$	39,643,000	$	-

Note payable to Fifth Third Bank, pursuant to revolving credit agreement, maturing March 8, 2021	$	2,540,000	$	2,200,000

Term loan payable to Fifth Third Bank, paid March 8, 2016	$	-	$	21,750,000
	$	42,183,000	$	23,950,000

Less:
Payments due within one year included in current liabilities	$	5,893,000	$	2,750,000

Debt issuance costs	$	63,000	$	69,000
Long-term debt less current maturities	$	36,227,000	$	21,131,000

Effective

July

2013,

the Company entered into an amended and restated

-year credit agreement with Fifth Third Bank that made available to the Company up to

$15,000,000

on a revolving credit basis (the “Initial Credit Facility”) in addition to a

$30,000,000

term loan utilized to finance the acquisition of substantially all of the assets of HPI Direct, Inc.

Effective

March

2016,

the Company entered into an amended and restated

-year credit agreement with Fifth Third Bank (the “Amended Credit Agreement”) that increased its revolving credit facility from

$15,000,000

$20,000,000

(the “Amended Credit Facility”) and refinanced its then-existing term loan with a new

$45,000,000

term loan to help finance the acquisition of substantially all of the assets of BAMKO, Inc. Interest is payable on the new term loan at LIBOR plus

0.85%

(1.57%

December

31,

2016)

and on the revolving credit facility at LIBOR (rounded up to the next

1/8

1%)

plus

0.85%

(1.60%

December

31,

2016).

Both loans are based upon the

one

-month LIBOR rate for U.S. dollar based borrowings. The Company pays a commitment fee of

0.10%

per annum on the average unused portion of the commitment under the Amended Credit Facility. The available balance under the Amended Credit Facility is reduced by outstanding letters of credit. As of

December

31,

2016,

there was $-

- outstanding under letters of credit. In order to reduce interest rate risk on its debt, the Company entered into an interest rate swap agreement with Fifth Third Bank, N.A. in

July

2013

that was designed to effectively convert or hedge the variable interest rate on a portion of its borrowings to achieve a net fixed rate of

2.53%

per annum, beginning

July

2014

with a notional amount of

$14,250,000.

The notional amount of the interest rate swap is reduced by the scheduled amortization of the principal balance of the original term loan of

$187,500

per month through

July

2015

and

$250,000

per month through

June

2018

with the remaining notional balance of

$3,250,000

to be eliminated on

July

2018.

Effective at the inception of the new term loan, the fixed rate on the notional amount was reduced to

2.43%.

Under the terms of the interest rate swap, the Company receives variable interest rate payments and makes fixed interest rate payments on an amount equal to the notional amount at that time. Changes in the fair value of the interest rate swap designated as the hedging instrument that effectively offset the variability of cash flows associated with the variable-rate, long-term debt obligation are reported in OCI, net of related income tax effects. As a result of the acquisition of substantially all of the assets of BAMKO, Inc. on

March

2016,

the original term loan associated with this hedge was paid in full and replaced with the new

$45,000,000

term loan discussed above. At that time, the Company undesignated the original term loan as the hedged instrument and elected the new term loan as the designated hedged instrument. The negative fair value at that time of the interest rate swap of

$152,000

is being amortized as an expense over the remaining life of the swap agreement. At

December

31,

2016,

the interest rate swap had a negative fair value of

$50,000,

which is presented within other current liabilities within the consolidated balance sheet. Approximately

$55,000

of this cumulative loss has been recognized in earnings in the year ended

December

31,

2016.

The remaining balance net of tax benefit of

$21,000,

since the inception of the hedge in

July

2013

has been recorded within the OCI through

December

31,

2016.

The remaining scheduled amortization for the term loan is as follows:

2017

$5,893,000,

2018

through

2020

$6,429,000

per year;

2021

$14,463,000.

The term loan does not include a prepayment penalty. In connection with the Amended Credit Agreement, the Company incurred approximately

$70,000

of debt issuance costs, which primarily consisted of legal fees. These costs are being amortized over the life of the Amended Credit Agreement and are recorded as additional interest expense.

The Company’s obligations under the Amended Credit Agreement are secured by substantially all of the operating assets of Superior Uniform Group, Inc. and are guaranteed by all domestic subsidiaries of Superior Uniform Group, Inc. The agreement contains restrictive provisions concerning a maximum funded senior indebtedness to EBITDA ratio as defined in the agreement

(3.5:1),

a maximum funded indebtedness to EBITDA ratio as defined in the agreement

(4.0:1)

and fixed charge coverage ratio

(1.25:1).

The Company is in full compliance with all terms, conditions and covenants of the Amended Credit Agreement.