EXHIBIT 10.4

 

GUARANTY

 

This GUARANTY (this “Guaranty”), dated as of January 15, 2016, by the entities
signatory hereto (collectively, the “New Guarantors” and each a “New Guarantor”)
in favor of (i) Bank of America, N.A., a national banking association, as agent
(hereinafter, in such capacity, “Agent”) for itself and the other financial
institutions (hereinafter, collectively, the “Lenders”) which from time to time
are or may become parties to that certain Second Amended and Restated Loan and
Security Agreement dated as of March 21, 2011 (as amended, amended and restated,
supplemented or otherwise modified and in effect from time to time, the “Loan
Agreement”), by and among The Bon-Ton Department Stores, Inc., a Pennsylvania
corporation (“Bon-Ton”), Carson Pirie Scott II, Inc., a Florida corporation
(“CPS II”), Bon-Ton Distribution, LLC, an Illinois limited liability company
(“Distribution”), McRIL, LLC, a Virginia limited liability company (“McRIL” and
together with Bon-Ton, CPS II, Distribution and any other person from time to
time a borrower thereunder, collectively, the “Borrowers”), each of other
Obligors party thereto, the Lenders, Agent, and the other agents and arrangers
from time to time party thereto, (ii) each of the Lenders and (iii) each of the
other Secured Parties (as defined in the Loan Agreement).

 

WHEREAS, the Borrowers, the Guarantors and the New Guarantors are members of a
group of related entities, the success of any one of which is dependent in part
on the success of the other members of such group;

 

WHEREAS, each New Guarantor expects to receive substantial direct and indirect
benefits from the extensions of credit to the Borrowers by the Lenders pursuant
to the Loan Agreement (which benefits are hereby acknowledged);

 

WHEREAS, pursuant to the Loan Agreement, the Obligors have covenanted to cause
each New Guarantor to execute and deliver to Agent, for the benefit of the
Secured Parties, a guaranty substantially in the form hereof; and

 

WHEREAS, each New Guarantor wishes to guarantee the payment and performance of
the Obligations (as defined in the Loan Agreement) to Agent, the Lenders and the
other Secured Parties as provided herein.

 

NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency
of which is hereby acknowledged, and in order to induce the Lenders and Agent to
continue to make loans and otherwise extend credit to the Borrowers, the New
Guarantors hereby agree with the Lenders, Agent and the other Secured Parties as
follows:

 

1.        Definitions. The term “Obligations” and all other capitalized terms
used herein without definition shall have the respective meanings provided
therefor in the Loan Agreement.

 

2.        Guaranty of Payment and Performance. Each of the New Guarantors hereby
guarantees to Agent, for the benefit of the Secured Parties, the full and
punctual payment when due (whether at stated maturity, by required pre-payment,
by acceleration or otherwise), as well as the performance, of all of the
Obligations including all such which would become due but for the operation of
the automatic stay pursuant to §362(a) of the Bankruptcy Code and the operation
of §§502(b) and 506(b) of the Bankruptcy Code. This Guaranty is an absolute,
unconditional and continuing guaranty of the full and punctual payment and
performance of all of the Obligations and not of their collectibility only and
is in no way conditioned upon any requirement that Agent or any other Secured
Party first attempt to collect any of the Obligations from any Borrower or any
other Obligor or resort to any collateral security or other means of obtaining
payment. Payments by the New Guarantors hereunder may be required by Agent on

 

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any number of occasions. All payments by the New Guarantors hereunder shall be
made to Agent, in the manner and at the place of payment specified therefor in
the Loan Agreement, for the account of the Secured Parties.

 

3.        New Guarantors’ Agreement to Pay Enforcement Costs, etc. Each New
Guarantor further agrees, as the principal obligor and not as a guarantor only,
to pay to Agent, on demand, all reasonable and documented out-of-pocket costs,
expenses or advances (including court costs and legal expenses) incurred or
expended by Agent or any other Secured Party which constitute a part of the
Obligations, this Guaranty and the enforcement thereof, together with interest
on amounts recoverable under this Section 3 from the time when such amounts
become due until payment, whether before or after judgment, at the rate of
interest for overdue principal set forth in the Loan Agreement, provided that if
such interest exceeds the maximum amount permitted to be paid under Applicable
Law, then such interest shall be reduced to such maximum permitted amount.

 

4.         Waivers by Guarantors; Lender’s Freedom to Act. Each New Guarantor
agrees that the Obligations will be paid and performed strictly in accordance
with their respective terms, regardless of any law, regulation or order now or
hereafter in effect in any jurisdiction affecting any of such terms or the
rights of Agent or any other Secured Party with respect thereto. Each New
Guarantor waives promptness, diligence, presentment, demand, protest, notice of
acceptance, notice of any Obligations incurred and all other notices of any
kind, all defenses which may be available by virtue of any valuation, stay,
moratorium law or other similar law now or hereafter in effect, any right to
require the marshalling of assets of any Obligor or any other entity or other
person primarily or secondarily liable with respect to any of the Obligations,
and all suretyship defenses generally. Without limiting the generality of the
foregoing, each New Guarantor agrees to the provisions of any instrument
evidencing, securing or otherwise executed in connection with any Obligation and
agrees that the obligations of such New Guarantor hereunder shall not be
released or discharged, in whole or in part, or otherwise affected by (i) the
failure of Agent or any Secured Party to assert any claim or demand or to
enforce any right or remedy against any Obligor or any other entity or other
person primarily or secondarily liable with respect to any of the Obligations;
(ii) any extensions, compromise, refinancing, consolidation or renewals of any
Obligation; (iii) any change in the time, place or manner of payment of any of
the Obligations or any rescissions, waivers, compromise, refinancing,
consolidation or other amendments or modifications of any of the terms or
provisions of the Loan Agreement, the Notes, the other Loan Documents or any
other agreement evidencing, securing or otherwise executed in connection with
any of the Obligations; (iv) the addition, substitution or release of any entity
or other person primarily or secondarily liable for any Obligation; (v) the
adequacy of any rights which Agent or any other Secured Party may have against
any collateral security or other means of obtaining repayment of any of the
Obligations; (vi) the impairment of any collateral securing any of the
Obligations, including without limitation the failure to perfect or preserve any
rights which Agent or any other Secured Party might have in such collateral
security or the substitution, exchange, surrender, release, loss or destruction
of any such collateral security; or (vii) any other act or omission which might
in any manner or to any extent vary the risk of such New Guarantor or otherwise
operate as a release or discharge of such New Guarantor, all of which may be
done without notice to such New Guarantor.  To the fullest extent permitted by
law, each New Guarantor hereby expressly waives any and all rights or defenses
arising by reason of (A) any “one action” or “anti-deficiency” law which would
otherwise prevent Agent or any other Secured Party from bringing any action,
including any claim for a deficiency, or exercising any other right or remedy
(including any right of set-off), against such New Guarantor before or after
Agent’s or such other Secured Party’s commencement or completion of any
foreclosure action, whether judicially, by exercise of power of sale or
otherwise, or (B) any other law which in any other way would otherwise require
any election of remedies by Agent or any other Secured Party.

 

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5.         Unenforceability of Obligations Against Any Obligor. If for any
reason any Obligor has no legal existence or is under no legal obligation to
discharge any of the Obligations, or if any of the Obligations have become
irrecoverable from any Obligor by reason of such Obligor’s insolvency,
bankruptcy or reorganization or by other operation of law or for any other
reason, this Guaranty shall nevertheless be binding on each New Guarantor to the
same extent as if such New Guarantor at all times had been the principal obligor
on all such Obligations. In the event that acceleration of the time for payment
of any of the Obligations is stayed upon the insolvency, bankruptcy or
reorganization of any Obligor, or for any other reason, all such amounts
otherwise subject to acceleration under the terms of the Loan Agreement, the
Notes, the other Loan Documents or any other agreement evidencing, securing or
otherwise executed in connection with any Obligation shall be immediately due
and payable by each New Guarantor.

 

6.         Subrogation; Subordination.

 

6.1.                       Waiver of Rights Against the Borrowers. Until the
final payment and performance in full of all of the Obligations (other than
contingent indemnification Obligations with respect to which no claim has been
asserted in writing), each New Guarantor shall not exercise, and each New
Guarantor hereby waives, any rights against each Obligor arising as a result of
payment by such New Guarantor hereunder, by way of subrogation, reimbursement,
restitution, contribution or otherwise, and will not prove any claim in
competition with Agent or any other Secured Party in respect of any payment
hereunder in any bankruptcy, insolvency or reorganization case or proceedings of
any nature; each New Guarantor will not claim any setoff, recoupment or
counterclaim against any Obligor in respect of any liability of such New
Guarantor to any Obligor; and each New Guarantor waives any benefit of and any
right to participate in any collateral security which may be held by Agent or
any other Secured Party.

 

6.2.                       Subordination. The payment of any amounts due with
respect to any indebtedness of any Obligor for money borrowed or credit received
now or hereafter owed to any New Guarantor is hereby subordinated to the prior
payment in full of all of the Obligations (other than contingent indemnification
Obligations with respect to which no claim has been asserted in writing). Each
New Guarantor agrees that, after the occurrence of, and during the continuance
of, any Default or Event of Default under the Loan Agreement such New Guarantor
will not demand, sue for or otherwise attempt to collect any such indebtedness
of any Obligor to such New Guarantor until all of the Obligations (other than
contingent indemnification Obligations with respect to which no claim has been
asserted in writing) shall have been paid in full. If, notwithstanding the
foregoing sentence, any New Guarantor shall collect, enforce or receive any
amounts in respect of such indebtedness while any Obligations are still
outstanding, such amounts shall be collected, enforced and received by such New
Guarantor as trustee for the Secured Parties and be paid over to Agent, for the
benefit of the Secured Parties, on account of the Obligations without affecting
in any manner the liability of such New Guarantor under the other provisions of
this Guaranty.

 

6.3.                       Provisions Supplemental. The provisions of this
Section 6 shall be supplemental to and not in derogation of any rights and
remedies of the Secured Parties under any separate subordination agreement which
Agent may at any time and from time to time enter into with any Guarantor for
the benefit of the Secured Parties.

 

7.         Security; Setoff. Regardless of the adequacy of any collateral
security or other means of obtaining payment of any of the Obligations, each of
the Agent and the other Secured Parties is hereby authorized at any time during
an Event of Default, without notice to the New Guarantors (any such notice being
expressly waived by each New Guarantor) and to the fullest extent permitted by
law, to set off and apply such deposits and other sums against the accrued

 

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and unpaid obligations of each New Guarantor under this Guaranty, whether or not
the Agent or such other Secured Party shall have made any demand under this
Guaranty.

 

8.         Further Assurances. Each New Guarantor agrees that it will from time
to time, at the written request of Agent, do all such things and execute all
such documents as Agent may consider necessary to give full effect to this
Guaranty and to perfect and preserve the rights and powers of the Secured
Parties hereunder. Each New Guarantor acknowledges and confirms that such New
Guarantor itself has established its own adequate means of obtaining from each
Borrower on a continuing basis all information desired by such New Guarantor
concerning the financial condition of such Borrower and that such New Guarantor
will look to the Borrowers and not to Agent or any other Secured Party in order
for such New Guarantor to keep adequately informed of changes in the Borrowers’
financial condition.

 

9.         Termination; Reinstatement. This Guaranty shall remain in full force
and effect until the payment in full, in cash, of all accrued and unpaid
principal, interest and fees, and any other Obligations (other than contingent
indemnification Obligations with respect to which no claim has been asserted in
writing), the payment of any appropriate collateral deposits in connection with
other Obligations and the occurrence of the Commitment Termination Date. This
Guaranty shall continue to be effective or be reinstated if at any time any
payment made or value received with respect to any Obligation is rescinded or
must otherwise be returned by Agent or any other Secured Party upon the
insolvency, bankruptcy or reorganization of any Obligor, or otherwise, all as
though such payment had not been made or value received.

 

10.  Successors and Assigns. This Guaranty shall be binding upon each New
Guarantor, its successors and assigns, and shall inure to the benefit of Agent
and the other Secured Parties and their respective successors, transferees and
permitted assigns. Without limiting the generality of the foregoing sentence,
each Secured Party may, as and to the extent permitted in the Loan Agreement,
assign or otherwise transfer the Loan Agreement, the Notes, the other Loan
Documents or any other agreement or note held by it evidencing, securing or
otherwise executed in connection with the Obligations, or sell participations in
any interest therein, to any other entity or other person, and such other entity
or other person shall thereupon become vested, to the extent set forth in the
agreement evidencing such assignment, transfer or participation, with all the
rights in respect thereof granted to such Secured Party herein, all in
accordance with Section 13.2 of the Loan Agreement.  No New Guarantor may assign
any of its obligations hereunder.

 

11.  Amendments and Waivers. No amendment or waiver of any provision of this
Guaranty nor consent to any departure by any New Guarantor therefrom shall be
effective unless the same shall be in writing and signed by Agent with the
consent of the Required Lenders and each New Guarantor. No failure on the part
of Agent or any other Secured Party to exercise, and no delay in exercising, any
right hereunder shall operate as a waiver thereof; nor shall any single or
partial exercise of any right hereunder preclude any other or further exercise
thereof or the exercise of any other right.

 

12.       Notices. All notices, requests and other communications by or to a
party hereto shall be made in accordance with Section 14.3 of the Loan
Agreement.

 

13.       Governing Law; Consent to Forum. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS, UNLESS OTHERWISE SPECIFIED, SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF NEW YORK, INCLUDING, WITHOUT LIMITATION, NEW YORK GENERAL OBLIGATIONS
LAW SECTIONS 5-1401 AND 5-1402 (BUT GIVING EFFECT TO FEDERAL LAWS RELATING TO
NATIONAL BANKS). EACH NEW GUARANTOR HEREBY CONSENTS TO THE

 

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NON-EXCLUSIVE JURISDICTION OF ANY FEDERAL COURT SITTING IN OR WITH JURISDICTION
OVER THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY STATE COURT OF THE STATE OF
NEW YORK SITTING IN THE COUNTY OF MANHATTAN, IN ANY PROCEEDING OR DISPUTE
RELATING IN ANY WAY TO ANY LOAN DOCUMENTS, AND AGREES THAT ANY SUCH PROCEEDING
SHALL BE BROUGHT BY IT SOLELY IN ANY SUCH COURT. EACH NEW GUARANTOR IRREVOCABLY
WAIVES ALL CLAIMS, OBJECTIONS AND DEFENSES THAT IT MAY HAVE REGARDING SUCH
COURT’S PERSONAL OR SUBJECT MATTER JURISDICTION, VENUE OR INCONVENIENT FORUM.
Nothing herein shall limit the right of Agent or any other Secured Party to
bring proceedings against any Obligor in any other court. Nothing in this
Agreement shall be deemed to preclude enforcement by Agent of any judgment or
order obtained in any forum or jurisdiction.

 

14.       Waiver of Jury Trial. To the fullest extent permitted by Applicable
Law, each New Guarantor waives (a) the right to trial by jury (which Agent
hereby also waives) in any proceeding, claim or counterclaim of any kind
relating in any way to this Guaranty; (b) presentment, demand, protest, notice
of presentment, default, nonpayment, maturity, release, compromise, settlement,
extension or renewal of any commercial paper, accounts, contract rights,
documents, instruments, chattel paper and guaranties at any time held by Agent
on which a Borrower may in any way be liable, and hereby ratifies anything Agent
may do in this regard; (c) notice prior to taking possession or control of any
Collateral; (d) any bond or security that might be required by a court prior to
allowing Agent to exercise any rights or remedies; (e) the benefit of all
valuation, appraisement and exemption laws; (f) any claim against Agent or any
other Secured Party, on any theory of liability, for special, indirect,
consequential, exemplary or punitive damages (as opposed to direct or actual
damages) in any way relating to any Enforcement Action, Obligations, Loan
Documents or transactions relating thereto; and (g) notice of acceptance hereof.
Each New Guarantor acknowledges that Agent and the other Secured Parties are
relying upon the foregoing in their dealings with Borrowers and Guarantors. Each
New Guarantor has reviewed the foregoing waivers with its legal counsel and has
knowingly and voluntarily waived its jury trial and other rights following
consultation with legal counsel. In the event of litigation, this Guaranty may
be filed as a written consent to a trial by the court.

 

16.        Miscellaneous. This Guaranty constitutes the entire agreement of the
New Guarantors with respect to the matters set forth herein. The rights and
remedies herein provided are cumulative and not exclusive of any remedies
provided by law or any other agreement, and this Guaranty shall be in addition
to any other guaranty of or collateral security for any of the Obligations. The
invalidity or unenforceability of any one or more sections of this Guaranty
shall not affect the validity or enforceability of its remaining provisions.
Captions are for the ease of reference only and shall not affect the meaning of
the relevant provisions. The meanings of all defined terms used in this Guaranty
shall be equally applicable to the singular and plural forms of the terms
defined. Delivery by telecopier or by electronic .pdf copy of an executed
counterpart of a signature page to this Guaranty shall be effective as delivery
of an original executed counterpart of this Guaranty.

 

17.        Contribution. To the extent any New Guarantor makes a payment
hereunder in excess of the aggregate amount of the benefit received by such New
Guarantor in respect of the extensions of credit under the Loan Agreement (the
“Benefit Amount”), then such New Guarantor, after the payment in full, in cash,
of all of the Obligations, shall be entitled to recover from each other
guarantor of the Obligations such excess payment, pro rata, in accordance with
the ratio of the Benefit Amount received by each such other guarantor to the
total Benefit Amount received by all guarantors of the Obligations, and the
right to such recovery shall be deemed to be an asset and property of such New
Guarantor so funding; provided, that all such

 

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rights to recovery shall be subordinated and junior in right of payment to the
final and undefeasible payment in full in cash of all of the Obligations (other
than contingent indemnification Obligations with respect to which no claim has
been asserted in writing).

 

[SIGNATURE PAGES FOLLOW]

 

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IN WITNESS WHEREOF, each New Guarantor has caused this Guaranty to be executed
and delivered as of the date first above written.

 

 

BONSTORES HOLDINGS ONE, LLC

 

 

 

By:

/s/ J. Gregory Yawman

 

Name:

J. Gregory Yawman

 

Title:

Vice President — Secretary and General

 

 

Counsel

 

 

 

Address:

2801 East Market Street

 

 

York, PA 17402

 

Attn:

General Counsel

 

Telecopy:

 

 

 

BONSTORES REALTY ONE, LLC

 

 

 

By:

/s/ J. Gregory Yawman

 

Name:

J. Gregory Yawman

 

Title:

Vice President — Secretary and General

 

 

Counsel

 

 

 

 

Address:

2801 East Market Street

 

 

York, PA 17402

 

Attn:

General Counsel

 

Telecopy:

 

 

 

 

 

 

 

 

BONSTORES HOLDINGS TWO, LLC

 

 

 

By:

/s/ J. Gregory Yawman

 

Name:

J. Gregory Yawman

 

Title:

Vice President — Secretary and General

 

 

Counsel

 

 

 

 

Address:

2801 East Market Street

 

 

York, PA 17402

 

Attn:

General Counsel

 

Telecopy:

 

 

 

 

 

BONSTORES REALTY TWO, LLC

 

 

 

By:

/s/ J. Gregory Yawman

 

Name:

J. Gregory Yawman

 

Title:

Vice President — Secretary and General

 

 

Counsel

 

 

 

 

Address:

2801 East Market Street

 

 

York, PA 17402

 

Attn:

General Counsel

 

Telecopy:

 

 

[Bon Ton — Signature Page to Guaranty]

 

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BANK OF AMERICA, N.A.,

 

as Agent

 

 

 

 

 

By:

/s/ Andrew Cerussi

 

Name:

Andrew Cerussi

 

Title:

Director

 

 

 

Address:

100 Federal Street

 

 

Boston, MA 02110

 

Attn:

Andrew Cerussi

 

Telecopy:

617-310-2686

 

[Bon Ton —Signature Page to Guaranty]

 

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