Safeway (SWY)

B. Mechanics of Issuance.

(i) Notice of Issuance. Whenever Company desires the issuance of a Letter of Credit, it shall deliver to the proposed Issuing Lender (with a copy to Administrative Agent if Administrative Agent is not the proposed Issuing Lender) a Notice of Issuance of Letter of Credit substantially in the form of Exhibit III annexed hereto no later than 12:00 noon (New York time) at least five Business Days, or such shorter period as may be agreed to by any Issuing Lender in any particular instance, in advance of the proposed date of issuance. The Notice of Issuance of Letter of Credit shall specify (a) the Domestic Lender requested to issue the Letter of Credit, (b) whether such Letter of Credit is to be a Commercial Letter of Credit or a Standby Letter of Credit, (c) the proposed date of issuance (which shall be a Business Day), (d) the face amount of the Letter of Credit, (e) whether such Letter of Credit is to be denominated in Dollars or Canadian Dollars, (f) the expiration date of the Letter of Credit, (g) the name and address of the beneficiary, and (h) a summary of the purpose of such Letter of Credit. At least two Business Days prior to the proposed date of issuance, Company shall specify to the Issuing Lender the proposed text of the proposed Letter of Credit or the proposed terms and conditions thereof, including a precise description of any documents and the verbatim text of any certificates to be presented by the beneficiary which, if presented by the beneficiary in substantial compliance with such terms and conditions and on or before the expiration date of the Letter of Credit, would require the Issuing Lender to make payment under the Letter of Credit; provided that the Issuing Lender, in its reasonable judgment, may require changes in the text of the proposed Letter of Credit or any such documents or certificates; and provided, further that no Letter of Credit shall require payment against a conforming draft to be made thereunder on the same business day (under the laws of the jurisdiction in which the office of the Issuing Lender to which such draft is required to be presented is located) that such draft is presented if such presentation is made after 11:00 A.M. (in the time zone of such office of the Issuing Lender) on such business day.

Company shall notify the applicable Issuing Lender (and Administrative Agent, if Administrative Agent is not such Issuing Lender) prior to the issuance of any Letter of Credit in the event that any of the matters to which Company is required to certify in the applicable Notice of Issuance of Letter of Credit is no longer true and correct as of the proposed date of issuance of such Letter of Credit, and upon the issuance of any Letter of Credit, Company shall be deemed to have re-certified, as of the date of such issuance, as to the matters to which Company is required to certify in the applicable Notice of Issuance of Letter of Credit.

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(ii) Determination of Issuing Lender. Upon receipt by a proposed Issuing Lender of a Notice of Issuance of Letter of Credit from Company pursuant to subsection 3.1B(i) requesting the issuance of a Letter of Credit, (a) in the event Deutsche Bank is the proposed Issuing Lender, Deutsche Bank shall be the Issuing Lender with respect to such Letter of Credit, notwithstanding the fact that the Letter of Credit Usage with respect to such Letter of Credit and with respect to all other Letters of Credit issued by Deutsche Bank, when aggregated with Deutsche Bank’s outstanding Loans, may exceed Deutsche Bank’s Domestic Commitment then in effect; and (b) in the event any other Domestic Lender is the proposed Issuing Lender, such Domestic Lender shall promptly notify Company and Administrative Agent whether or not, in its sole discretion, it has elected to issue such Letter of Credit, and (1) if such Domestic Lender so elects to issue such Letter of Credit it shall be the Issuing Lender with respect thereto, notwithstanding the fact that the Letter of Credit Usage with respect to such Letter of Credit and with respect to all other Letters of Credit issued by such Domestic Lender, when aggregated with such Domestic Lender’s outstanding Loans, may exceed such Domestic Lender’s Domestic Commitment then in effect and (2) if such Domestic Lender fails to so promptly notify Company and Administrative Agent or declines to issue such Letter of Credit, Company may request another Domestic Lender to be the Issuing Lender with respect to such Letter of Credit in accordance with the provisions of this subsection 3.1B; provided, that in the event such other Domestic Lender fails to promptly notify Company, Deutsche Bank and Administrative Agent or declines to issue such Letter of Credit, Deutsche Bank shall be the Issuing Lender.

(iii) Issuance of Letter of Credit. Upon satisfaction or waiver (in accordance with subsection 13.6) of the conditions set forth in subsection 6.3, the Issuing Lender shall issue the requested Letter of Credit in accordance with the Issuing Lender’s standard operating procedures.

(iv) Notification to Domestic Lenders. Upon the issuance of any Standby Letter of Credit the applicable Issuing Lender shall promptly notify Administrative Agent of such issuance, which notice shall be accompanied by a copy of such Standby Letter of Credit. Promptly after receipt of such notice, Administrative Agent shall notify each Domestic Lender of the amount of such Domestic Lender’s respective participation in such Standby Letter of Credit, determined in accordance with subsection 3.1C.

(v) Reports to Domestic Lenders Regarding Standby Letters of Credit. Within 15 days after the end of each calendar quarter ending after the Closing Date, so long as any Standby Letter of Credit shall have been outstanding during such calendar quarter, each Issuing Lender shall deliver to Administrative Agent for distribution to each other Domestic Lender a report setting forth for such calendar quarter the daily maximum amount available to be drawn under the Letters of Credit issued by such Issuing Lender that were outstanding during such calendar quarter.

(vi) Reports to Domestic Lenders Regarding Commercial Letters of Credit. In the event that the Issuing Lender of any Commercial Letter of Credit is other than Administrative Agent, such Issuing Lender shall send by facsimile transmission to

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Administrative Agent promptly on the first Business Day of each week the daily maximum amount available for drawing under such Commercial Letter of Credit for the previous week. Administrative Agent shall deliver to each Domestic Lender, upon each calendar month end, a report setting forth for such period the daily maximum amount available for drawing under all Commercial Letters of Credit issued by any Issuing Lender for such period.

C. Domestic Lenders’ Purchase of Participations in Letters of Credit. Immediately upon the issuance of each Letter of Credit, each Domestic Lender shall be deemed to, and hereby agrees to, have irrevocably purchased from the Issuing Lender a participation in such Letter of Credit and drawings thereunder in an amount equal to such Domestic Lender’s Domestic Pro Rata Share of the maximum amount which is or at any time may become available to be drawn thereunder.