Safeway (SWY)

11.6 Collateral Account Agreement; Subsidiary Borrower Guaranty.

Each Lender hereby further authorizes Administrative Agent, on behalf of and for the benefit of Lenders, to accept the Subsidiary Borrower Guaranty and, as secured party on behalf of and for the benefit of Agents and Lenders, to enter into a collateral account agreement as contemplated by Section 10 of this Agreement, and agrees to be bound by the terms of any such collateral account agreement. Anything contained in any of the Loan Documents to the contrary notwithstanding, each Lender agrees that no Lender shall have any right individually to realize upon any of the collateral under any such collateral account agreement or to enforce the Subsidiary Borrower Guaranty, it being understood and agreed that all rights and remedies under the Subsidiary Borrower Guaranty and any such collateral account agreement may be exercised solely by Administrative Agent for the benefit of Agents and Lenders in accordance with the terms thereof. Administrative Agent will not release Company from its obligations under the Subsidiary Borrower Guaranty and will not release any collateral under any such collateral account agreement without the prior written consent of all Lenders.

Company hereby unconditionally guaranties the due and punctual payment of all obligations of Canada Safeway arising under this Agreement, any Notes, any Acceptances and any other Loan Documents, in each case when due, whether by required prepayment, declaration, demand or otherwise (including amounts which would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a) or operation of any stay under applicable Canadian law) (the “Subsidiary Borrower Obligations”), and agrees to pay any and all costs and expenses (including fees and disbursements of counsel) incurred by any Agent or Lender in enforcing any rights under this guaranty. For purposes of this Section 12, the obligations of Company under this Section 12, as

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they may be amended, modified or supplemented from time to time, are referred to as its “Subsidiary Borrower Guaranty.”

Company agrees that the Subsidiary Borrower Obligations may be extended or renewed, in whole or in part, without notice or further assent from it, and that it will remain bound upon this Subsidiary Borrower Guaranty notwithstanding any extension, renewal or other alteration of any such Subsidiary Borrower Obligation or any other Obligation.

Company waives presentation of, demand of and protest of any Subsidiary Borrower Obligation and also waives notice of protest for nonpayment. The obligations of Company under this Subsidiary Borrower Guaranty shall be valid and enforceable and shall not be subject to any limitation, impairment, or discharge for any reason (other than payment in full of the Subsidiary Borrower Obligations) and Company hereby irrevocably waives any defenses it may now or hereafter have in any way relating thereto, including, without limitation, the occurrence of any of the following, whether or not Company shall have had notice or knowledge of any of them:

(a) the failure of any Domestic Lender, Canadian Lender or any other Lender to assert any claim or demand or to enforce any right or remedy against Canada Safeway, Company or any other Person under the provisions of this Agreement, this Subsidiary Borrower Guaranty or any other Loan Document,

(b) any extension or renewal of any provision of any thereof,

(c) any rescission, waiver, amendment or modification of any of the terms or provisions of this Agreement or any other Loan Document (other than this Section 12, it being agreed and understood that any waiver, amendment or modification of this Section 12 shall be limited exactly as written and shall not, except as expressly written, affect the obligations of Company under this Subsidiary Borrower Guaranty),

(d) the failure to perfect any security interest in, or the release of, any of the security held by any Agent or any Lender for the Subsidiary Borrower Obligations hereby guarantied or any of them or held by any Agent, any Lender or any other Person for any of the Obligations or any of them, or

(e) the failure of any Lender to exercise any right or remedy against any other guarantor of the Subsidiary Borrower Obligations or the Obligations.

Company further agrees that this Subsidiary Borrower Guaranty constitutes a guaranty of payment when due and not of collection and waives any right to require that any resort be had by any Agent or Lender to any of the security held for payment of the Subsidiary Borrower Obligations or to any balance of any deposit account or credit on the books of any Agent or Lender in favor of Company, Canada Safeway or any other Person.

The obligations of Company under this Subsidiary Borrower Guaranty shall not be subject to any reduction, limitation, impairment or termination for any reason, including,

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without limitation, any claim of waiver, release, surrender, alteration or compromise of any of the Subsidiary Borrower Obligations, and shall not be subject to any defense or set-off, counterclaim, recoupment or termination whatsoever by reason of the invalidity, illegality or unenforceability of any of the Subsidiary Borrower Obligations, discharge of Canada Safeway from any of the Subsidiary Borrower Obligations in a bankruptcy or similar proceeding, or otherwise. Without limiting the generality of the foregoing, the obligations of Company under this Subsidiary Borrower Guaranty shall not be discharged or impaired or otherwise affected by the failure of any Agent or Lender to assert any claim or demand or to enforce any remedy under this Agreement or any document or instrument executed by Canada Safeway in connection therewith, by any waiver or modification of any thereof, by any default, failure or delay, willful or otherwise, in the performance of the Subsidiary Borrower Obligations, or by any other act or thing or omission or delay to do any other act or thing which may or might in any manner or to any extent vary the risk of Company or which would otherwise operate as a discharge of Company as a matter of law or equity.

Company further agrees that this Subsidiary Borrower Guaranty shall continue to be effective or be reinstated, as the case may be, if at any time payment, or any part thereof, of principal of or interest on any Subsidiary Borrower Obligation is rescinded or must otherwise be restored by any Agent or Lender upon the bankruptcy or reorganization of Canada Safeway, any other Person or otherwise.

Company further agrees, in furtherance of the foregoing and not in limitation of any other right which any Agent or Lender may have at law or in equity against Company by virtue hereof, upon the failure of Canada Safeway to pay any of the Subsidiary Borrower Obligations when and as the same shall become due, whether by required prepayment, declaration, demand or otherwise (including amounts which would become due but for the operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11 U.S.C. § 362(a) or operation of any stay under applicable Canadian law), Company will forthwith pay, or cause to be paid, in cash, to Administrative Agent for the ratable benefit of Lenders an amount equal to the sum of the unpaid principal amount of such Subsidiary Borrower Obligations then due as aforesaid, accrued and unpaid interest on such Subsidiary Borrower Obligations (including, without limitation, interest which, but for the filing of a petition in bankruptcy with respect to Company, would accrue on such Subsidiary Borrower Obligations) and all other Subsidiary Borrower Obligations then owed to Agents and Lenders as aforesaid.

Upon payment by Company of any sum to Administrative Agent for the ratable benefit of Agents and Lenders as provided above so long as any of the Subsidiary Borrower Obligations shall remain outstanding hereunder, all rights of Company against Canada Safeway arising as a result thereof, by way of right of subrogation or otherwise, shall in all respects be subordinate and junior in right of payment to the prior indefeasible payment in full of all the Subsidiary Borrower Obligations to Agents and Lenders.

This Subsidiary Borrower Guaranty shall be binding upon Company and its successors and assigns and shall inure to the benefit of the successors and assigns of Agents and Lenders and, in the event of any transfer and assignment of rights by an Agent or Lender, the

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rights and privileges herein conferred upon such Agent or Lender shall automatically extend to and be vested in such transferee or assignee, all subject to the terms and conditions hereof.

Notwithstanding any provisions of subsection 5.1 to the contrary, all sums payable by Company under this Subsidiary Borrower Guaranty shall be paid free and clear of and (except to the extent required by law) without any deduction or withholding on account of any Tax (other than any Excluded Tax) imposed, levied, collected, withheld or assessed by or within the United States of America or any political subdivision in or of the United States of America or any other jurisdiction from or to which a payment is made by or on behalf of Company or by any federation or organization of which the United States of America or any such jurisdiction is a member at the time of payment. If Company is required by law to make any deduction or withholding on account of any such Tax from any sum paid or payable by Company to any Agent or any Lender hereunder with respect to any of the Subsidiary Borrower Obligations and such deduction or withholding would not have been required if Canada Safeway were to have paid such Subsidiary Borrower Obligation, Company agrees, as a separate obligation, to pay such additional amounts to such Agent or Lender, as the case may be, so that the sum payable by Company in respect of which the relevant deduction, withholding or payment is required shall be increased to the extent necessary to ensure that, after the making of that deduction, withholding or payment, such Agent or Lender, as the case may be, receives on the due date of such payment on an after-tax basis a net sum equal to what it would have received had no such deduction, withholding or payment been required or made.