SAFEWAY INC.
EXECUTIVE SEVERANCE PLAN
(AND SUMMARY PLAN DESCRIPTION)
EFFECTIVE FEBRUARY 19, 2014
This Safeway Inc. Executive Severance Plan (this “Plan”) was established
effective as of February 19, 2014 (the “Effective Date”). The purpose of this
Plan is to provide for severance benefits to certain eligible employees of
Safeway Inc. (the “Company”) whose employment with the Company is terminated
under certain circumstances. The Plan is intended to replace each existing offer
letter, employment agreement and severance agreement between the Company and
Covered Employees (as defined below) regarding severance or Change in Control
(as defined below) benefits.
This Plan is an employee welfare benefit plan subject to the Employee Retirement
Income Security Act of 1974, as amended (“ERISA”). This Plan document is also
the summary plan description of this Plan. References in this Plan to “You” or
“Your” are references to an employee of the Company.
1.General Eligibility. The eligible employees in this Plan are employees of the
Company who are employed at the level of Vice President or above (such eligible
employees, the “Covered Employees”). Employees with the designation of
“Assistant Vice President” are not considered to be “Vice Presidents” and are
not considered to be “Covered Employees” under this Plan. Covered Employees
remain eligible for this Plan in the case of sick leave, military leave or any
other leave of absence approved pursuant to the regular leave policy of the
Company.
2.Severance Benefits. If you are a Covered Employee and if, outside of a Change
in Control Period (as defined below), the Company involuntarily terminates your
employment with the Company without Cause or you terminate employment with the
Company for Good Reason, then subject to you delivering to the Company a general
release of all claims against the Company and its affiliates in a form
acceptable to the Company (a “Release”) that becomes effective and irrevocable
within sixty (60) days following the date of such termination, in addition to
any accrued but unpaid salary, wages, vacation and other amounts required by
applicable law, you will receive the following severance payments and benefits
based upon your position or designation:
a.Continued Base Salary. You will receive the continued payment of your Base
Salary during the Severance Period (as defined below) in accordance with the
Company’s standard payroll procedures; provided, however, that the first payment
under this section shall be made on the first payroll date occurring on or
following the sixtieth (60th) day following the date of termination (such
payroll date, the “First Payroll Date”) (with amounts otherwise payable prior to
the First Payroll Date paid on the First Payroll Date without interest thereon).
b.Pro Rata Bonus Payment. Upon attainment of the performance criteria with
respect to your annual cash bonus for the bonus plan year in which the
termination occurs, you will receive a pro-rated portion of the annual bonus
based upon the actual number of days you were employed by the Company during the
fiscal year. The pro-rata bonus payment will be paid in accordance with the
applicable bonus plan administrative rules, in a cash lump sum, at the same time
bonuses are paid to the

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Company’s executives generally (but in no event later than two and one-half
months following the end of the bonus plan year).
c.COBRA Premium Payment.  Subject to the requirements of the Internal Revenue
Code of 1986, as amended (the “Code”), if you validly elect health care
continuation coverage under either (i) the Company’s group health plans pursuant
to the Consolidated Omnibus Budget Reconciliation Act of 1985 (“COBRA”) or (ii)
the Safeway Inc. Welfare Benefits Plan for Retirees, as amended from time to
time (the “Early Retiree Plan”), to the extent that you are eligible to do so,
then the Company shall directly pay or, at its election, reimburse you for the
COBRA premiums, in the case of an election to continue coverage under the
Company’s group health plans pursuant to COBRA, or your required participant
contributions, in the case of an election to continue coverage under the Early
Retiree Plan, for you and your covered dependents until the earlier of the end
of the month during which your Severance Period ends or the date you become
eligible for healthcare under a subsequent employer’s health plan; provided,
however, that if the Company is unable to continue to cover you under its group
health plans without incurring penalties (including without limitation, pursuant
to Section 2716 of the Public Health Service Act), then an amount equal to each
remaining Company subsidy shall thereafter be paid to you in substantially equal
monthly installments over the continuation coverage period (or the remaining
portion thereof).
3.Change in Control Severance Benefits. If you are a Covered Employee and if the
Company involuntarily terminates your employment with the Company without Cause
or you terminate employment with the Company for Good Reason during the
twenty-four (24) month period following a Change in Control (the “Change in
Control Period”), then subject to you delivering to the Company a Release that
becomes effective and irrevocable within sixty (60) days following such
termination of employment, in addition to any accrued but unpaid salary, wages,
vacation and other amounts required by applicable law, and in lieu of benefits
set forth in Section 2 above, you will be eligible to receive the following
severance payments and benefits based upon your position or designation:
a.    Base Salary Severance. You will receive a severance payment equal to your
Base Salary for that number of months in the Severance Period, payable in a
single lump sum, less applicable withholding obligations, within ten (10) days
following the date your Release is no longer subject to revocation.
b.    Bonus Payment. You will receive additional severance amount equal to your
target cash bonus opportunity for the fiscal year of your termination to be paid
to you in a cash lump sum, less applicable withholding obligations, within ten
(10) days following the date your Release is no longer subject to revocation.
c.    COBRA Premium Payment.  Subject to the requirements of the Code, if you
validly elect health care continuation coverage under either (i) the Company’s
group health plans pursuant to COBRA or (ii) the Early Retiree Plan, to the
extent that you are eligible to do so, then the Company shall directly pay or,
at its election, reimburse you for the COBRA premiums, in the case of an
election to continue coverage under the Company’s group health plans pursuant to
COBRA, or your required participant contributions, in the case of an election to
continue coverage under the Early Retiree Plan, for you and your covered
dependents until the earlier of the end of the month during which your Severance
Period ends or the date you become eligible for healthcare under a subsequent
employer’s health plan;

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provided, however, that if the Company is unable to continue to cover you under
its group health plans without incurring penalties (including without
limitation, pursuant to Section 2716 of the Public Health Service Act), then an
amount equal to each remaining Company subsidy shall thereafter be paid to you
in substantially equal monthly installments over the continuation coverage
period (or the remaining portion thereof).
4.Definitions. For the purposes of this Plan, the following terms shall have the
following meanings:
a.    “Base Salary” means the monthly base salary rate in effect immediately
prior to your termination.
b.    “Cause” shall have the meaning ascribed to such term in any written
employment agreement between or among you and the Company and/or any of its
subsidiaries and, if no such written employment agreement shall be in force or
effect, shall mean (a) conviction of, or the entry of a plea of guilty or no
contest to, a felony or any other crime that causes the Company public disgrace
or disrepute, or adversely affects the Company’s operations, financial
performance, or relationship with its customers; (b) misappropriation of funds
or other property of the Company or its affiliates; (c) refusal to perform the
lawful and reasonable directives of your supervisor, the Company’s Chief
Executive Officer or the Board; (d) your failure to perform the duties of your
employment with the Company or any of its subsidiaries which continues for a
period of fourteen (14) days (other than by reason of illness or injury); or (e)
material breach of any agreement with or duty owed to the Company or any of its
affiliates. However, none of the foregoing events or conditions will constitute
Cause unless the Company provides you with written notice of the event or
condition and thirty (30) days to cure such event or condition (if curable) and
the event or condition is not cured within such 30-day period.
c.     “Change in Control” means the occurrence of any of the following events:
(1)any “person” (as defined below) or “group” (as defined in Section 13(d)(3) of
the Securities Exchange Act of 1934,a s amended (the “Exchange Act”), and the
rules thereunder), together with all affiliates of such person or group, shall
become the “beneficial owner” (as determined pursuant to Rule 13d-3 under the
Exchange Act) of securities entitled to vote generally in the election of
directors (“voting securities”) of the Company that represent 25% or more of the
combined voting power of the Company’s then outstanding voting securities, other
than an Exempt Person (as defined below); provided, however, that,
notwithstanding the foregoing, a Change in Control shall not occur under this
subsection (1) by reason of a person or group (together with the affiliates
thereof) becoming the beneficial owner of 25% or more of the outstanding voting
securities of the Company solely as a result of an acquisition of voting
securities by the Company which, by reducing the number of voting securities
outstanding, increases the proportionate number of voting securities
beneficially owned by such person or group (together with the affiliates
thereof) to 25% or more of the voting securities of the Company then
outstanding; and, provided, further, that if a person or group (together with
the affiliates thereof) shall become the beneficial owner of 25% or more of the
voting securities of the Company then outstanding solely as a result of an
acquisition of voting securities by the Company and shall, after such
acquisition by the Company, become the beneficial owner of additional voting
securities of the Company (other than pursuant to a dividend or distribution
paid

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or made by the Company in voting securities or pursuant to a split or
subdivision of the outstanding voting securities), then a Change in Control
shall occur under this subsection (1) unless, upon becoming the beneficial owner
of such additional voting securities, such person or group (together with the
affiliates thereof) does not beneficially own 25% or more of the voting
securities then outstanding;
(2)during any 12-month period beginning on or after the Effective Date,
individuals who, at the beginning of such period, constitute the Board of
Directors of the Company (the “Incumbent Board”) cease for any reason to
constitute at least a majority of the Board; provided, however, that any
individual becoming a director during such 12-month period whose election, or
nomination for election by the Company’s stockholders, was approved by a vote of
at least a majority of the directors then comprising the Incumbent Board shall
be considered as though such individual were a member of the Incumbent Board,
but excluding, for this purpose, any such individual whose initial assumption of
office occurs as a result of an actual or threatened election contest with
respect to the election or removal of directors or other actual or threatened
solicitation of proxies or consents by or on behalf of a person other than the
Board;
(3)the consummation by the Company (whether directly involving the Company or
indirectly involving the Company through one or more intermediaries) of: (x) a
merger, consolidation, reorganization, or business combination or (y) a sale or
other disposition of all or substantially all of the Company’s assets in any
single transaction or series of related transactions or (z) the acquisition of
assets or stock of another entity, in each case, if, as a result of the
transaction, the Company’s voting securities outstanding immediately before the
transaction (or the securities into which such voting securities are converted
as a result of the transaction) fail to represent, directly or indirectly, more
than 50% of the combined voting power of the outstanding voting securities of
the Company (or the person that, as a result of the transaction, controls,
directly or indirectly, the Company or owns, directly or indirectly, all or
substantially all of the Company’s assets or otherwise succeeds to the business
of the Company (the Company or such person, the “Successor Entity”)) immediately
after the transaction; and
(4)the Company’s stockholders approve a liquidation or dissolution of the
Company.
For purposes of subsection (1) above, the calculation of voting power shall be
made as if the date on which the ownership of such person or group is measured
were a record date for a vote of the Company’s stockholders, and for purposes of
subsection (3) above, the calculation of voting power shall be made as if the
date of the consummation of the transaction were a record date for a vote of the
Company’s stockholders. For all purposes of this Plan, any calculation of the
number of securities outstanding at any particular time, including for purposes
of determining the particular percentage of such outstanding voting securities
of which any person or group is the beneficial owner, shall be made in
accordance with the last sentence of Rule 13d-3(d)(1)(i) of the General Rules
and Regulations under the Exchange Act. For purposes of this definition of
“Change in Control,” “person” means any individual, corporation, partnership,
limited liability company, joint venture, trust, unincorporated organization,
association or other entity. For purposes of this definition of “Change in
Control,” “Exempt Person” means any of the following: (a) a trustee or other
fiduciary holding securities under any employee benefit

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plan (or related trust) sponsored or maintained by the Company or any person
controlled by the Company or by any employee benefit plan (or related trust)
sponsored or maintained by the Company or any person controlled by the Company,
(b) the Company or a subsidiary, and (c) a person that is owned, directly or
indirectly, by the stockholders of the Company in substantially the same
proportions as their beneficial ownership of the voting securities of the
Company; provided that no person who is an officer, director or employee of an
Exempt Person shall be deemed, solely by reason of such person’s status or
authority as such, to be the beneficial owner of any securities that are
beneficially owned, including, without limitation, in a fiduciary capacity, by
an Exempt Person or by any other such officer, director or employee of an Exempt
Person.
Notwithstanding the foregoing, if a Change in Control constitutes a payment
event with respect to any payment under this Plan that is subject to Section
409A of the Code, the transaction or event described in subsection (1), (2), (3)
or (4) with respect to such payment (or portion thereof) must also constitute a
“change in control event,” as defined in Treasury Regulation Section
1.409A-3(i)(5) to the extent required by Section 409A.
d.     “Good Reason” shall have the meaning ascribed to such term in any written
employment agreement between or among you and the Company and/or any of its
subsidiaries and, if no such written employment agreement shall be in force or
effect, shall mean the occurrence of any of the following, without your prior
consent: (a) a material, adverse change in your responsibilities, authority or
duties (including as a result of the assignment of duties materially
inconsistent with your position); (b) a material reduction in your base salary;
(c) a material transfer of your principal place of employment to a location more
than fifty (50) miles away from your principal place of employment immediately
prior to the Change in Control; or (d) the Company’s material breach of this
Agreement. However, none of the foregoing events or conditions will constitute
Good Reason unless: (x) you provide the Company with written objection to the
event or condition within ninety (90) days following the occurrence thereof; (y)
the Company does not reverse or otherwise cure the event or condition within
thirty (30) days of receiving that written objection; and (z) you resign your
employment within thirty (30) days following the expiration of that cure period.
e.    “Plan Administrator” means the Board of Directors of the Company (the
“Board”) or any committee designated by the Board to administer the Plan.
f.    “Severance Period” shall mean that period of time commencing upon a
Covered Employee’s termination of employment and ending upon:
(1)    With respect to Covered Employees at the level of Chief Executive
Officer, the second anniversary of the Covered Employee’s termination of
employment;
(2)    With respect to Covered Employees at the level of Executive Vice
President, the eighteen (18) month anniversary of the Covered Employee’s
termination of employment;
(3)    With respect to Covered Employees at the level of Senior Vice President,
the first anniversary of the Covered Employee’s termination of employment; and

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(4)    With respect to Covered Employees at the level of Vice President, the six
(6) month anniversary of the Covered Employee’s termination of employment.
5.Taxes. All payments to be made under this Plan, including premium
reimbursements, will be subject to appropriate tax withholding and other
deductions.
6.Best Pay Provision.
a.    Notwithstanding any other provisions of this Plan, in the event that any
payment or benefit received or to be received by the Covered Employee (whether
pursuant to the terms of this Plan or any other plan, arrangement or agreement)
(all such payments and benefits, including the payments and benefits under
Sections 2 and 3 of this Plan, being hereinafter referred to as the “Total
Payments”) would be subject (in whole or part), to the excise tax imposed under
Section 4999 of the Code (the “Excise Tax”), then, after taking into account any
reduction in the Total Payments provided by reason of Section 280G of the Code
in such other plan, arrangement or agreement, the Total Payments shall be
reduced to the extent necessary so that no portion of the Total Payments is
subject to the Excise Tax but only if (i) the net amount of such Total Payments,
as so reduced (and after subtracting the net amount of federal, state and local
income taxes on such reduced Total Payments and after taking into account the
phase out of itemized deductions and personal exemptions attributable to such
reduced Total Payments) is greater than or equal to (ii) the net amount of such
Total Payments without such reduction (but after subtracting the net amount of
federal, state and local income taxes on such Total Payments and the amount of
Excise Tax to which the Covered Employee would be subject in respect of such
unreduced Total Payments and after taking into account the phase out of itemized
deductions and personal exemptions attributable to such unreduced Total
Payments).  The Total Payments shall be reduced in the following order: (A)
reduction of any cash severance payments otherwise payable to the Covered
Employee that are exempt from Section 409A of the Code, (B) reduction of any
other cash payments or benefits otherwise payable to the Covered Employee that
are exempt from Section 409A of the Code, but excluding any payment attributable
to the acceleration of vesting or payment with respect to any stock option or
other equity award with respect to the Company common stock that are exempt from
Section 409A of the Code, (C) reduction of any other payments or benefits
otherwise payable to the Covered Employee on a pro-rata basis or such other
manner that complies with Section 409A of the Code, but excluding any payment
attributable to the acceleration of vesting and payment with respect to any
stock option or other equity award with respect to the Company common stock that
are exempt from Section 409A of the Code, and (D) reduction of any payments
attributable to the acceleration of vesting or payment with respect to any stock
option or other equity award with respect to the Company common stock that are
exempt from Section 409A of the Code.  The foregoing reductions shall be made in
a manner that results in the maximum economic benefit to the Covered Employee
and, to the extent economically equivalent, in a pro rata manner.
b.    For purposes of determining whether and the extent to which the Total
Payments will be subject to the Excise Tax, (i) no portion of the Total Payments
the receipt or enjoyment of which the Covered Employee shall have waived at such
time and in such manner as not to constitute a “payment” within the meaning of
Section 280G(b) of the Code shall be taken into account, (ii) no portion of the
Total Payments shall be taken into account which, in the written opinion of an
accounting firm or compensation consulting firm with nationally recognized
standing and substantial expertise and experience on Section 280G matters (the
“280G Firm”) selected by the Company, does not constitute a

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“parachute payment” within the meaning of Section 280G(b)(2) of the Code
(including by reason of Section 280G(b)(4)(A) of the Code) and, in calculating
the Excise Tax, no portion of such Total Payments shall be taken into account
which, in the opinion of the 280G Firm, constitutes reasonable compensation for
services actually rendered, within the meaning of Section 280G(b)(4)(B) of the
Code, in excess of the Base Amount (as defined in Section 280G(b)(3) of the
Code) allocable to such reasonable compensation, and (iii) the value of any
non-cash benefit or any deferred payment or benefit included in the Total
Payments shall be determined by the 280G Firm in accordance with the principles
of Sections 280G(d)(3) and (4) of the Code.
c.    The 280G Firm will be directed to submit its determination and detailed
supporting calculations to both the Covered Employee and the Company within
fifteen (15) days after notification from either the Company or the Covered
Employee that the Covered Employee may receive payments which may be “parachute
payments.”  The Covered Employee and the Company will each provide the 280G Firm
access to and copies of any books, records and documents in their possession as
may be reasonably requested by the 280G Firm, and otherwise cooperate with the
280G Firm in connection with the preparation and issuance of the determinations
and calculations contemplated by this Section 6(c).  The fees and expenses of
the 280G Firm for its services in connection with the determinations and
calculations contemplated by this Section 6(c) will be borne by the Company.
7.Amendment of Plan. Prior to the consummation of a Change in Control, the Plan
Administrator shall have the power to amend or terminate this Plan from time to
time in its discretion and for any reason (or no reason); provided that no such
amendment or termination shall be effective with respect to a termination of
employment that occurred prior to the amendment or termination. Notwithstanding
the foregoing, during a Change in Control Period, no amendment or termination of
the Plan shall impair any rights or obligations to any Covered Employee under
this Plan unless such Covered Employee expressly consents to such amendment or
termination.
8.Claims Procedures.
a.    Normally, you do not need to present a formal claim to receive benefits
payable under this Plan.
b.    If any person (the “Claimant”) believes that benefits are being denied
improperly, that this Plan is not being operated properly, that fiduciaries of
this Plan have breached their duties, or that the Claimant’s legal rights are
being violated with respect to this Plan, the Claimant must file a formal claim,
in writing, with the Plan Administrator. This requirement applies to all claims
that any Claimant has with respect to this Plan, including claims against
fiduciaries and former fiduciaries, except to the extent the Plan Administrator
determines, in its sole discretion that it does not have the power to grant all
relief reasonably being sought by the Claimant.
c.    A formal claim must be filed within ninety (90) days after the date the
Claimant first knew or should have known of the facts on which the claim is
based, unless the Plan Administrator in writing consents otherwise. The Plan
Administrator shall provide a Claimant, on request, with a copy of the claims
procedures established under subsection (d).

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d.    The Plan Administrator has adopted procedures for considering claims
(which are set forth in Appendix A), which it may amend from time to time, as it
sees fit. These procedures shall comply with all applicable legal requirements.
These procedures may provide that final and binding arbitration shall be the
ultimate means of contesting a denied claim (even if the Plan Administrator or
its delegates have failed to follow the prescribed procedures with respect to
the claim). The right to receive benefits under this Plan is contingent on a
Claimant using the prescribed claims and arbitration procedures to resolve any
claim.
9.Plan Administration.
a.    The Plan Administrator is responsible for the general administration and
management of this Plan and shall have all powers and duties necessary to
fulfill its responsibilities, including, but not limited to, the discretion to
interpret and apply this Plan and to determine all questions relating to
eligibility for benefits. This Plan shall be interpreted in accordance with its
terms and their intended meanings. However, the Plan Administrator and all Plan
fiduciaries shall have the discretion to interpret or construe ambiguous,
unclear or implied (but omitted) terms in any fashion they deem to be
appropriate in their sole discretion, and to make any findings of fact needed in
the administration of this Plan. The validity of any such interpretation,
construction, decision or finding of fact shall not be given de novo review if
challenged in court, by arbitration, or in any other forum, and shall be upheld
unless clearly arbitrary or capricious.
b.    All actions taken and all determinations made in good faith by the Plan
Administrator or by Plan fiduciaries will be final and binding on all persons
claiming any interest in or under this Plan. To the extent the Plan
Administrator or any Plan fiduciary has been granted discretionary authority
under this Plan, the Plan Administrator’s or Plan fiduciary’s prior exercise of
such authority shall not obligate it to exercise its authority in a like fashion
thereafter.
c.    If, due to errors in drafting, any Plan provision does not accurately
reflect its intended meaning, as demonstrated by consistent interpretations or
other evidence of intent, or as determined by the Plan Administrator in its sole
discretion, the provision shall be considered ambiguous and shall be interpreted
by the Plan Administrator and all Plan fiduciaries in a fashion consistent with
its intent, as determined in the sole discretion of the Plan Administrator. The
Plan Administrator shall amend this Plan retroactively to cure any such
ambiguity.
d.    No Plan fiduciary shall have the authority to answer questions about any
pending or final business decision of the Company or any affiliate that has not
been officially announced, to make disclosures about such matters, or even to
discuss them, and no person shall rely on any unauthorized, unofficial
disclosure. Thus, before a decision is officially announced, no fiduciary is
authorized to tell any employee, for example, that the employee will or will not
be laid off or that the Company will or will not offer exit incentives in the
future. Nothing in this subsection shall preclude any fiduciary from fully
participating in the consideration, making or official announcement of any
business decision.
e.    This Section may not be invoked by any person to require this Plan to be
interpreted in a manner inconsistent with its interpretation by the Plan
Administrator or other Plan fiduciaries.

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10.Funding and Payment of Benefits. This Plan shall be maintained in a manner to
be considered “unfunded” for purposes of ERISA. The Company shall be required to
make payments only as benefits become due and payable. No person shall have any
right, other than the right of an unsecured general creditor against the
Company, with respect to the benefits payable hereunder, or which may be payable
hereunder, to any Covered Employee, surviving spouse or beneficiary hereunder.
If the Company, acting in its sole discretion, establishes a reserve or other
fund associated with this Plan, no person shall have any right to or interest in
any specific amount or asset of such reserve or fund by reason of amounts which
may be payable to such person under this Plan, nor shall such person have any
right to receive any payment under this Plan except as and to the extent
expressly provided in this Plan. The assets in any such reserve or fund shall be
part of the general assets of the Company, subject to the control of the
Company.
11.Plan Application. This Plan shall be the only plan, agreement or arrangement
with respect to which cash severance benefits may be provided to a Covered
Employee upon a termination of a Covered Employee’s employment and supersedes
all prior agreements, arrangements or related communications of the Company
relating to cash separation benefits for the Covered Employees, whether formal
or informal, or written or unwritten. However, if a prior plan or agreement
requires the consent of the employee in order for such prior plan or agreement
to be modified or amended or superseded by this Plan, such consent must be
obtained from such employee in order for this Plan to supersede such prior plan
or agreement. Subject to the foregoing, any benefits under this Plan will be
provided to Covered Employees in lieu of benefits under any other separation
plan or agreement.
12.Successors. Any successor to the Company (whether direct or indirect and
whether by purchase, lease, merger, consolidation, liquidation or otherwise) to
all or substantially all of the Company’s business and/or assets shall assume
the obligations under this Plan and agree expressly to perform any of the
Company’s obligations under this Plan. For all purposes under this Plan, the
term “Company” shall include any successor to the Company’s business and/or
assets which executes and delivers an assumption agreement or which becomes
bound by the terms of the Plan by operation of law. All of your rights hereunder
shall inure to the benefit of, and be enforceable by, your personal or legal
representatives, executors, administrators, successors, heirs, distributees,
devisees and legatees.
13.Limitation On Employee Rights; At-Will Employment. This Plan shall not give
any employee the right to be retained in the service of the Company or interfere
with or restrict the right of the Company to discharge or retire the employee.
All employees of the Company are employed at will.
14.No Third-Party Beneficiaries. This Plan shall not give any rights or remedies
to any person other than Covered Employees and the Company.
15.Governing Law. This Plan is a welfare plan subject to ERISA and it shall be
interpreted, administered, and enforced in accordance with that law. To the
extent that state law is applicable, the statutes and common law of the
jurisdiction in which the Covered Employee resides shall apply, excluding any
that mandate the use of another jurisdiction’s laws.
16.No Assignment of Benefits. The rights of any person to payments or benefits
under this Plan shall not be made subject to option or assignment, either by
voluntary or involuntary assignment or

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by operation of law, including (without limitation) bankruptcy, garnishment,
attachment or other creditor’s process, and any action in violation of this
subsection shall be void.
17.Miscellaneous. Where the context so indicates, the singular will include the
plural and vice versa. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Plan. Unless
the context clearly indicates to the contrary, a reference to a statute or
document shall be construed as referring to any subsequently enacted, adopted or
executed counterpart.
18.Section 409A.
a.    Separation from Service. Notwithstanding anything in this Plan to the
contrary, any compensation or benefits payable under this Plan that constitutes
“nonqualified deferred compensation” (“Deferred Compensation”) within the
meaning of Section 409A of the Code, and which is designated under this Plan as
payable upon your termination of employment shall be payable only upon your
“separation from service” with the Company within the meaning of Section 409A of
the Code (a “Separation from Service”) and, except as provided under Section
18(b) of this Plan, any such compensation or benefits shall not be paid, or, in
the case of installments, shall not commence payment, until the sixtieth (60th)
day following your Separation from Service. Any installment payments that would
have been made to you during the sixty (60) day period immediately following
your Separation from Service but for the preceding sentence shall be paid to you
on the sixtieth (60th) day following your Separation from Service and the
remaining payments shall be made as provided in this Plan.
b.    Specified Employees. Notwithstanding any provision herein to the contrary,
if you are deemed by the Company at the time of your Separation from Service to
be a “specified employee” for purposes of Section 409A(a)(2)(B)(i) of the Code,
to the extent delayed commencement of any portion of the benefits to which you
are entitled under this Plan is required in order to avoid a prohibited
distribution under Section 409A(a)(2)(B)(i) of the Code, such portion of your
benefits shall not be provided to you prior to the earlier of (i) the expiration
of the six-month period measured from the date of your Separation from Service
or (ii) the date of your death. Upon the first business day following the
expiration of the applicable Code Section 409A(a)(2)(B)(i) period, all payments
deferred pursuant to the preceding sentence shall be paid in a lump sum to you
(or your estate or beneficiaries), and any remaining payments due to you under
this Plan shall be paid as otherwise provided herein.
c.    Installments. Your right to receive any installment payments under this
Plan shall be treated as a right to receive a series of separate payments and,
accordingly, each such installment payment shall at all times be considered a
separate and distinct payment as permitted under Treasury Regulation Section
1.409A-2(b)(2)(iii).
d.    General. To the extent applicable, this Plan shall be interpreted in
accordance with, and incorporate the terms and conditions required by, Section
409A of the Code and Department of Treasury regulations and other interpretive
guidance issued thereunder, including without limitation any such regulations or
other guidance that may be issued after the adoption of this Plan.
Notwithstanding any provision of this Plan to the contrary, in the event that
the Company determines that any amounts payable hereunder will be immediately
taxable to you under Section 409A of the Code and related Department of Treasury
guidance, to the extent permitted under Section 409A of the Code, the Company

10

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may, to the extent permitted under Section 409A of the Code (i) cooperate in
good faith to adopt such amendments to this Plan and appropriate policies and
procedures, including amendments and policies with retroactive effect, that they
determine necessary or appropriate to preserve the intended tax treatment of the
benefits provided by this Plan, preserve the economic benefits of this Plan
and/or (ii) take such other actions as mutually determined necessary or
appropriate to exempt the amounts payable hereunder from Section 409A of the
Code or to comply with the requirements of Section 409A of the Code and thereby
avoid the application of penalty taxes under such section. To the extent
applicable, each of the exceptions to Code Section 409A’s prohibition on
acceleration of payments of Deferred Compensation provided under Treasury
Regulation 1.409A-3(j)(4) shall be permitted under the Agreement.

11

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APPENDIX A
Detailed Claims and Arbitration Procedures
1.    Claims Procedure
Initial Claims
All claims shall be presented to the Plan Administrator in writing. Within
ninety (90) days after receiving a claim, a claims official appointed by the
Plan Administrator shall consider the claim and issue his or her determination
thereon in writing. If the Plan Administrator or claims official determines that
an extension of time is necessary, the claims official may extend the
determination period for up to an additional ninety (90) days by giving the
Claimant written notice indicating the special circumstances requiring the
extension of time prior to the termination of the initial ninety (90) day
period. Any claims that the Claimant does not pursue in good faith through the
initial claims stage shall be treated as having been irrevocably waived.
Claims Decisions
If the claim is granted, the benefits or relief the Claimant seeks shall be
provided. If the claim is wholly or partially denied, the claims official shall,
within ninety (90) days (or a longer period, as described above), provide the
Claimant with written notice of the denial, setting forth, in a manner
calculated to be understood by the Claimant: (1) the specific reason or reasons
for the denial; (2) specific references to the provisions on which the denial is
based; (3) a description of any additional material or information necessary for
the Claimant to perfect the claim, together with an explanation of why the
material or information is necessary; and (4) an explanation of the procedures
for appealing denied claims. If the Claimant can establish that the claims
official has failed to respond to the claim in a timely manner, the Claimant may
treat the claim as having been denied by the claims official.
Appeals of Denied Claims
Each Claimant shall have the opportunity to appeal the claims official’s denial
of a claim in writing to an appeals official appointed by the Plan Administrator
(which may be a person, committee, or other entity). A Claimant must appeal a
denied claim within sixty (60) days after receipt of written notice of denial of
the claim, or within sixty (60) days after it was due if the Claimant did not
receive it by its due date. The Claimant shall have the opportunity to submit
written comments, documents, records and other information relating to the
Claimant’s claim. The Claimant (or the Claimant’s duly authorized
representative) shall be provided upon request and free of charge, reasonable
access to, and copies of, all documents, records and other information relevant
to the Claimant’s claim. The appeals official shall take into account during its
review all comments, documents, records and other information submitted by the
Clamant relating to the claim, without regard to whether such information was
submitted or considered in the initial benefits review. Any claims that the
Claimant does not pursue in good faith through the appeals stage, such as by
failing to file a timely appeal request, shall be treated as having been
irrevocably waived.

Appendix A-1

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Appeals Decisions
The decision by the appeals official shall be made not later than sixty (60)
days after the written appeal is received by the Plan Administrator, however, if
the appeals official determines that an extension of time is necessary, the
appeals official may extend the determination period for up to an additional
sixty (60) days by giving the Claimant written notice indicating the special
circumstances requiring the extension of time prior to the termination of the
initial sixty (60) day period. The appeal decision shall be in writing, shall be
set forth in a manner calculated to be understood by the Claimant and shall
include the following: (1) the specific reason or reasons for the denial; (2)
specific references to the provisions on which the denial is based; (3) a
statement that the Claimant is entitled to receive, upon request and free of
charge, reasonable access to, and copies of, all documents, records and other
information relevant to the Claimant’s claim. If a Claimant does not receive the
appeal decision by the date it is due, the Claimant may deem the appeal to have
been denied.
Procedures
The Plan Administrator shall adopt procedures by which initial claims shall be
considered and appeals shall be resolved; different procedures may be
established for different claims. All procedures shall be designed to afford a
Claimant full and fair consideration of his or her claim.
Arbitration of Rejected Appeals
If a Claimant has pursued a claim through the appeal stage of these claims
procedures, the Claimant may contest the actual or deemed denial of that claim
through arbitration, as described below. In no event shall any denied claim be
subject to resolution by any means (such as in a court of law) other than
arbitration in accordance with the following provisions.
2.    Arbitration Procedure
Request for Arbitration
A Claimant must submit a request for arbitration to the Plan Administrator
within sixty (60) days after receipt of the written denial of an appeal (or
within sixty (60) days after he or she should have received the determination).
The Claimant or the Plan Administrator may bring an action in any court of
appropriate jurisdiction to compel arbitration in accordance with these
procedures.
Applicable Arbitration Rules
If the Claimant has entered into a valid arbitration agreement with the Company,
the arbitration shall be conducted in accordance with that agreement. If not,
the rules set forth in the balance of this Appendix shall apply: The arbitration
shall be held under the auspices of the Judicial Arbitration and Mediation
Service (“JAMS”). Except as provided below, the arbitration shall be in
accordance with JAMS’ then-current employment dispute resolution rules. The
Arbitrator shall apply the Federal Rules of Evidence and shall have the
authority to entertain a motion to dismiss or a motion for summary judgment by
any party and shall apply the standards governing such motions under the Federal
Rules of Civil Procedure. The

Appendix A-2

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Federal Arbitration Act shall govern all arbitrations that take place under
these Detailed Claims and Arbitration Procedures (or that are required to take
place under them), and shall govern the interpretation or enforcement of these
Procedures or any arbitration award. To the extent that the Federal Arbitration
Act is inapplicable, California law pertaining to arbitration agreements shall
apply.
Arbitrator
The arbitrator (the “Arbitrator”) shall be an attorney familiar with employee
benefit matters who is licensed to practice law in the state in which the
arbitration is convened. The Arbitrator shall be selected in the following
manner from a list of eleven arbitrators drawn by the sponsoring organization
under whose auspices the arbitration is being conducted and taken from its panel
of labor and employment arbitrators. Each party shall designate all arbitrators
on the list whom they find acceptable; the parties shall then alternately strike
arbitrators from the list of arbitrators acceptable to both parties, with the
party who did not initiate the arbitration striking first. If only one
arbitrator is acceptable to both parties, he or she will be the Arbitrator. If
none of the arbitrators is acceptable to both parties, a new panel of
arbitrators shall be obtained from the sponsoring organization and the selection
process shall be repeated.
Location
The arbitration will take place in or near the city in which the Claimant is or
was last employed by the Company or in which the Plan is principally
administered, whichever is specified by the Plan Administrator, or in such other
location as may be acceptable to both the Claimant and the Plan Administrator.
Authority of Arbitrator
The Arbitrator shall have the authority to resolve any factual or legal claim
relating to the Plan or relating to the interpretation, applicability or
enforceability of these arbitration procedures, including, but not limited to,
any claim that these procedures are void or voidable. The Arbitrator may grant a
Claimant’s claim only if the Arbitrator determines that it is justified because:
(1) the appeals official erred on an issue of law; or (2) the appeals official’s
findings of fact, if applicable, were not supported by substantial evidence. The
arbitration shall be final and binding on all parties.
Limitation on Scope of Arbitration
The Claimant may not present any evidence, facts, arguments or theories at the
arbitration that the Claimant did not pursue in his or her appeal, except in
response to new evidence, facts, arguments or theories presented on behalf of
the other parties to the arbitration. However, an arbitrator may permit a
Claimant to present additional evidence or theories if the Arbitrator determines
that the Claimant was precluded from presenting them during the claim and appeal
procedures due to procedural errors of the Plan Administrator or its delegates.
Administrative Record
The Plan Administrator shall submit to the Arbitrator a certified copy of the
record on which the appeals official’s decision was made.

Appendix A-3

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Experts, Depositions, and Discovery
Except as otherwise permitted by the Arbitrator on a showing of substantial
need, either party may: (1) designate one expert witness; (2) take the
deposition of one individual and the other party’s expert witness; (3) propound
requests for production of documents; and (4) subpoena witnesses and documents
relating to the discovery permitted in this paragraph.
Pre-Hearing Procedures
At least thirty (30) days before the arbitration hearing, the parties must
exchange lists of witnesses, including any expert witnesses, and copies of all
exhibits intended to be used at the hearing. The Arbitrator shall have
jurisdiction to hear and rule on pre-hearing disputes and is authorized to hold
pre-hearing conferences by telephone or in person, as the Arbitrator deems
necessary.
Transcripts
Either party may arrange for a court reporter to provide a stenographic record
of the proceedings at the party’s own cost.
Post-Hearing Procedures
Either party, on request at the close of the hearing, may be given leave to file
a post-hearing brief within the time limits established by the Arbitrator.
Costs and Attorneys’ Fees
The Claimant and the Company shall equally share the fees and costs of the
Arbitrator, except that the Claimant shall not be required to pay any of the
Arbitrator’s fees and costs if such a requirement would make mandatory
arbitration under these procedures unenforceable. On a showing of material
hardship, the Company, in its discretion, may advance all or part of the
Claimant’s share of the fees and costs, in which case the Claimant shall
reimburse the Company out of the proceeds of the arbitration award, if any, that
the Claimant receives. Each party shall pay its own costs and attorneys’ fees,
except as required by applicable law.
Procedure for Collecting Costs from Claimant
Before the arbitration commences, the Claimant must deposit with the Plan
Administrator his or her share of the anticipated fees and costs of the
Arbitrator, as reasonably determined by the Plan Administrator. At least two (2)
weeks before delivering his or her decision, the Arbitrator shall send his or
her final bill for fees and costs to the Plan Administrator for payment. The
Plan Administrator shall apply the amount deposited by the Claimant to pay the
Claimant’s share of the Arbitrator’s fees and costs and return any surplus
deposit. If the Claimant’s deposit is insufficient, the Claimant will be billed
for any remaining amount due. Failure to pay any amount within ten (10) days
after it is billed shall constitute the Claimant’s irrevocable election to
withdraw his or her arbitration request and abandon his or her claim.

Appendix A-4

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Arbitration Award
The Arbitrator shall render an award and opinion in the form typically rendered
in labor arbitrations. Within twenty (20) days after issuance of the
Arbitrator’s award and opinion, either party may file with the Arbitrator a
motion to reconsider, which shall be accompanied by a supporting brief. If such
a motion is filed, the other party shall have twenty (20) days from the date of
the motion to respond, after which the Arbitrator shall reconsider the issues
raised by the motion and either promptly confirm or promptly change his or her
decision. The decision shall then be final and conclusive on the parties.
Arbitrator fees and other costs of a motion for reconsideration shall be borne
by the losing party, unless the Arbitrator orders otherwise. Either party may
bring an action in any court of appropriate jurisdiction to enforce an
arbitration award. A party opposing enforcement of an arbitration award may not
do so in an enforcement proceeding, but must bring a separate action in a court
of competent jurisdiction to set aside the award. In any such action, the
standard of review shall be the same as that applied by an appellate court
reviewing the decision of a trial court in a nonjury trial.
Severability
The invalidity or unenforceability of any part of these arbitration procedures
shall not affect the validity of the rest of the procedures.

Appendix A-5

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APPENDIX B
ADDITIONAL INFORMATION
RIGHTS UNDER ERISA
As a participant in the Plan, you are entitled to certain rights and protections
under ERISA. ERISA provides that all Plan participants will be entitled to:
Receive Information About Your Plan and Benefits
1.    Examine, without charge, at the Company’s headquarters, all documents
governing the Plan including collective bargaining agreements, if any, and
annual reports and Plan descriptions.
2.    Obtain, upon written request to the Plan Administrator, copies of
documents governing the operation of the Plan, including collective bargaining
agreements, if any, and copies of the latest annual report (Form 5500 Series)
and summary plan description. The Plan Administrator may make a reasonable
charge for the copies.
3.    Receive a summary of the Plan’s annual financial report, if any. The Plan
Administrator is required by law to furnish each participant with a copy of this
summary annual report.
Prudent Actions by Plan Fiduciaries
In addition to creating rights for Plan participants, ERISA imposes duties upon
the people who are responsible for the operation of the employee benefit plan.
The people who operate your Plan, called “fiduciaries” of the Plan, have a duty
to do so prudently and in the interest of you and other Plan participants and
beneficiaries. No one, including the Company, your union or any other person,
may fire you or otherwise discriminate against you in any way to prevent you
from obtaining a welfare benefit or exercising your right under ERISA.
Enforce Your Rights
If your claim for a welfare benefit is denied or ignored, in whole or in part,
you have a right to know why this was done, to obtain copies of documents
relating to the decision without charge, and to appeal any denial, all within
certain time schedules. Under ERISA, there are steps you can take to enforce the
above rights. For instance, if you request a copy of plan documents or the
latest annual report from the Plan and do not receive them within thirty (30)
days, you may file suit in a Federal court. In such a case, the court may
require the Plan Administrator to provide the materials and pay you up to $110 a
day until you receive the materials, unless the materials were not sent because
of reasons beyond the control of the Plan Administrator. If you have a claim for
benefits, which is denied or ignored, in whole or in part, you may file suit in
a state or Federal court. In addition, if you disagree with the Plan’s decision
or lack thereof concerning the qualified status of a domestic relations order or
a medical child support order, you may file suit in Federal court. If it should
happen that Plan fiduciaries misuse the Plan’s money, or if you are
discriminated against for asserting your rights, you may seek assistance from
the U.S. Department of Labor, or you may file suit in a federal court. The court
will decide who

Appendix B-1
    

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should pay court costs and legal fees. If you are successful, the court may
order the person you have sued to pay these costs and fees. If you lose, the
court may order you to pay these costs and fees, for example, if it finds your
claim is frivolous.
Assistance with Your Questions
If you have any questions about your Plan, you should contact the Plan
Administrator. If you should have any questions about this statement or about
your rights under ERISA, or if you need assistance in obtaining documents from
the Plan Administrator, you should contact the nearest office of the Employee
Benefits Security Administration, U.S. Department of Labor, listed in your
telephone directory or the Division of Technical Assistance and Inquiries,
Employee Benefits Security Administration, U.S. Department of Labor, 200
Constitution Avenue N. W., Washington, D. C. 20210. You may also obtain certain
publications about your rights and responsibilities under ERISA by calling the
publications hotline of the Employee Benefits Security Administration.
ADMINISTRATIVE INFORMATION
Name of Plan:
Safeway Inc. Executive Change in Control Severance Plan
Plan Administrator and Sponsor:
Board of Directors
Safeway Inc.
5918 Stoneridge Mall Road
Pleasanton, CA 94588-3229
Tel: (925) 467-3000
Fax: (925) 467-3214
Type of Administration:
Self-Administered
Type of Plan:
Severance Pay Employee Welfare Benefit Plan
Employer Identification Number:
94-3019135
Direct Questions Regarding the Plan to:
Board of Directors
Safeway Inc.
5918 Stoneridge Mall Road
Pleasanton, CA 94588-3229
Tel: (925) 467-3000
Fax: (925) 467-3214
Agent for Service of Legal Process:
Secretary
Safeway Inc.
5918 Stoneridge Mall Road
Pleasanton, CA 94588-3229
Tel: (925) 467-3000
Fax: (925) 467-3214
Service of Legal Process may also be made upon the Plan Administrator.
Plan Year End:
December 31

Appendix B-2