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                                                                     EXHIBIT 4.1
















                             THE 2001 RESTATEMENT OF
                            THE VONS COMPANIES, INC.
                       PHARMACISTS' 401(k) PLAN AND TRUST



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                                TABLE OF CONTENTS

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TABLE OF CONTENTS..............................................................ii


ARTICLE I. DEFINITIONS..........................................................2

        Section 1.1   General...................................................2

        Section 1.2   Accounts..................................................2

        Section 1.3   Active Participant........................................2

        Section 1.4   Administrator.............................................2

        Section 1.5   Annual Addition...........................................3

        Section 1.6   Beneficiary...............................................3

        Section 1.7   Board  ...................................................4

        Section 1.8   Break in Service..........................................5

        Section 1.9   Code   ...................................................5

        Section 1.10  Committee.................................................5

        Section 1.11  Company...................................................5

        Section 1.12  Company Affiliate.........................................5

        Section 1.13  Compensation..............................................5

        Section 1.14  Contribution Percentage...................................6

        Section 1.15  Deferral Percentage.......................................6

        Section 1.16  401(k) Contribution.......................................7

        Section 1.17  Direct Rollover...........................................7

        Section 1.18  Disability Retirement.....................................7

        Section 1.19  Disability Retirement Date................................7

        Section 1.20  Distributee...............................................7

        Section 1.21  Effective Date............................................7

        Section 1.22  Eligible Employee.........................................7

        Section 1.23  Eligible Retirement Plan..................................8

        Section 1.24  Eligible Rollover Distribution............................8

        Section 1.25  Employee..................................................8

        Section 1.26  ERISA  ...................................................9

        Section 1.27  Five Percent Owner........................................9

        Section 1.28  Forfeiting Break in Service...............................9

        Section 1.29  Hardship..................................................9

        Section 1.30  Highly Compensated Employee..............................10

        Section 1.31  Hour of Service..........................................11

        Section 1.32  Inactive Participant.....................................12

        Section 1.33  Investment Fund..........................................13

        Section 1.34  Leveling Method..........................................13

        Section 1.35  Matching Contribution....................................13

        Section 1.36  Military Leave...........................................13
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        Section 1.37  Nonhighly Compensated Employee...........................13

        Section 1.38  Normal Retirement........................................14

        Section 1.39  Normal Retirement Date...................................14

        Section 1.40  Participant..............................................14

        Section 1.41  Payday ..................................................14

        Section 1.42  Plan ....................................................14

        Section 1.43  Plan Representative......................................14

        Section 1.44  Plan Year................................................14

        Section 1.45  Project Employee.........................................14

        Section 1.46  Quarterly Date...........................................14

        Section 1.47  Rules of the Plan........................................14

        Section 1.48  Safeway Stock............................................15

        Section 1.49  Separation from the Service..............................15

        Section 1.50  Spousal Consent..........................................15

        Section 1.51  Spouse; Surviving Spouse.................................15

        Section 1.52  Statutory Compensation...................................16

        Section 1.53  Trust Fund...............................................16

        Section 1.54  Trustee..................................................16

        Section 1.55  Union ...................................................16

        Section 1.56  Valuation Date...........................................17

        Section 1.57  Year of Vesting Service..................................17

ARTICLE II. ELIGIBILITY........................................................18

        Section 2.1   Requirements for Participation...........................18

        Section 2.2   Inactive Status..........................................18


ARTICLE III. CONTRIBUTIONS.....................................................19

        Section 3.1   Contributions in General.................................19

        Section 3.2   Maximum Annual Contribution..............................19

        Section 3.3   401(k) Contributions.....................................19

        Section 3.4   Matching Contributions...................................21

        Section 3.5   Limitation on 401(k) Contributions.......................21

        Section 3.6   Limitation on Matching Contributions.....................23

        Section 3.7   Alternative Use Limitation Test..........................24

        Section 3.8   Limitation on Annual Additions; Treatment of Otherwise
                        Excessive Allocations..................................25

        Section 3.9   Reemployment Rights after Qualified Military Service.....26


ARTICLE IV. ROLLOVERS AND TRANSFERS............................................29

        Section 4.1   Rollovers and Transfers..................................29


ARTICLE V. INVESTMENT OF ACCOUNTS..............................................31

        Section 5.1   Investment Options.......................................31
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        Section 5.2   Default Investment Fund..................................31


ARTICLE VI. VALUATION OF THE TRUST FUND AND ACCOUNTS...........................33

        Section 6.1   Individual Participant Accounting........................33

        Section 6.2   Valuation Date Accounting and Investment Cycle...........33

        Section 6.3   Accounting for Investment Funds..........................33

        Section 6.4   Payment of Fees and Expenses.............................33

        Section 6.5   Participant Statements...................................34

        Section 6.6   Accounts for QDRO Beneficiaries..........................34

        Section 6.7   Determination of Values..................................34

        Section 6.8   Allocation of Values.....................................35

        Section 6.9   Applicability of Account Values..........................35


ARTICLE VII. VESTING...........................................................36

        Section 7.1   Vesting of Accounts......................................36

        Section 7.2   Forfeitures..............................................37

        Section 7.3   Restoration of Forfeitures...............................37


ARTICLE VIII. IN-SERVICE WITHDRAWALS...........................................39

        Section 8.1   In-Service Withdrawal Approval...........................39

        Section 8.2   Payment Form and Medium..................................39

        Section 8.3   Source and Timing of In-Service Withdrawal Funding.......39

        Section 8.4   Hardship Withdrawals.....................................39

        Section 8.5   Age 59-1/2 Withdrawal....................................40

        Section 8.6   Age 70-1/2 Withdrawal....................................40

        Section 8.7   Fees   ..................................................40


ARTICLE IX. LOANS..............................................................41

        Section 9.1   Participant Loans Permitted..............................41

        Section 9.2   Loan Application, Note and Security......................41

        Section 9.3   Loan Approval............................................41

        Section 9.4   Loan Funding Limits......................................41

        Section 9.5   Maximum Number of Loans..................................41

        Section 9.6   Source and Timing of Loan Funding........................42

        Section 9.7   Interest Rate............................................42

        Section 9.8   Repayment................................................42

        Section 9.9   Repayment Hierarchy......................................42

        Section 9.10  Repayment Suspension.....................................42

        Section 9.11  Loan Default.............................................43

        Section 9.12  Call Feature.............................................43

        Section 9.13  Loan Administration......................................43

ARTICLE X. EMPLOYMENT AFTER NORMAL RETIREMENT DATE.............................45
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        Section 10.1  Continuation of Employment...............................45

        Section 10.2  Continuation of Participation............................45

        Section 10.3  Required Minimum Distributions...........................45


ARTICLE XI. DISTRIBUTIONS......................................................46

        Section 11.1  Rights Upon Normal or Disability Retirement or
                        Separation from the Service............................46

        Section 11.2  Distribution of Accounts.................................46

        Section 11.3  Distribution on Death....................................48

        Section 11.4  Determination of Value of Accounts.......................48


ARTICLE XII. TOP HEAVY PROVISIONS..............................................49

        Section 12.1  Top Heavy Determination..................................49

        Section 12.2  Minimum Benefits.........................................51

        Section 12.3  Vesting..................................................52


ARTICLE XIII. ADMINISTRATIVE PROVISIONS........................................54

        Section 13.1  Duties and Powers of the Administrator...................54

        Section 13.2  Committee................................................55

        Section 13.3  Committee Operating Rules................................55

        Section 13.4  Inspection of Records....................................55

        Section 13.5  Claims Procedure.........................................56

        Section 13.6  Conflicting Claims.......................................57

        Section 13.7  Payments.................................................57

        Section 13.8  Effect of Delay or Failure to Ascertain Amount
                        Distributable or to Locate Distributee.................58

        Section 13.9  Service of Process.......................................58

        Section 13.10 Limitations Upon Powers of the Administrator.............58

        Section 13.11 Assignments, etc., Prohibited; Distributions Pursuant
                        to Qualified Domestic Relations Orders; Certain
                        Offsets of Accounts....................................58

        Section 13.12 Corrective of Administrative Error;
                        Special Contribution...................................59


ARTICLE XIV. TERMINATION, DISCONTINUANCE, AMENDMENT, MERGER, ADOPTION OF PLAN..60

        Section 14.1  Termination of Plan; Discontinuance of Contributions.....60

        Section 14.2  Amendment of Plan........................................60

        Section 14.3  Retroactive Effect of Plan Amendment.....................61

        Section 14.4  Consolidation or Merger; Adoption of Plan by Other
                        Companies..............................................61


ARTICLE XV. MANAGEMENT OF INVESTMENTS..........................................63

        Section 15.1  Trust Agreement..........................................63

        Section 15.2  Investment Funds.........................................63
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        Section 15.3  Authority to Hold Cash...................................63

        Section 15.4  Trustee to Act Upon Instructions.........................64

        Section 15.5  Administrator Has Right to Vote Registered Investment
                        Company Shares.........................................64

        Section 15.6  Custom Fund Investment Management........................64

        Section 15.7  Authority to Segregate Assets............................65

        Section 15.8  Maximum Permitted Investment in Safeway Stock............65

        Section 15.9  Participants Have Right to Vote and Tender Safeway
                        Stock..................................................65

        Section 15.10 Registration and Disclosure for Safeway Stock............65


ARTICLE XVI. TRUST ADMINISTRATION..............................................66

        Section 16.1  Trustee to Construe Trust................................66

        Section 16.2  Trustee To Act As Owner of Trust Assets..................67

        Section 16.3  United States Indicia of Ownership.......................67

        Section 16.4  Tax Withholding and Payment..............................67

        Section 16.5  Trustee Duties and Limitations...........................68

        Section 16.6  Trust Accounting.........................................68

        Section 16.7  Valuation of Certain Assets..............................68

        Section 16.8  Legal Counsel............................................69

        Section 16.9  Fees and Expenses........................................69

        Section 16.10 Indemnification by the Company...........................69

        Section 16.11 Replacement of the Trustee...............................70

        Section 16.12 Final Settlement and Accounting of Trustee...............70

        Section 16.13 Final Accounting.........................................70

        Section 16.14 Administrator Approval...................................70


ARTICLE XVII. MISCELLANEOUS PROVISIONS.........................................71

        Section 17.1  Identification of Fiduciaries............................71

        Section 17.2  Allocation of Fiduciary Responsibilities.................71

        Section 17.3  Limitation on Rights of Employees........................72

        Section 17.4  Governing Law............................................72

        Section 17.5  Gender and Plurals.......................................72

        Section 17.6  Titles ..................................................72

        Section 17.7  References...............................................72

        Section 17.8  Use of Trust Funds.......................................72
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                            THE VONS COMPANIES, INC.
                       PHARMACISTS' 401(k) PLAN AND TRUST

      The Vons Companies, Inc. (the "Company"), a Michigan corporation,
established The Vons Companies, Inc. Pharmacists' 401(k) Plan (the "Plan") for
the exclusive benefit of its eligible employees on December 13, 1991, effective
as of January 1, 1991. The Plan has been amended several times and was amended
and restated effective January 1, 1998. The Plan is now amended and restated in
its entirety.

      In order to comply with amendments to the Internal Revenue Code mandated
by the Uniformed Services Employment and Reemployment Rights Act of 1994, the
Uruguay Round Agreements Act (GATT), the Small Business Job Protection Act of
1996, the Taxpayer Relief Act of 1997 and the IRS Restructuring and Reform Act
of 1998, to comply with the collective bargaining agreement, to permit
investment in qualifying employer securities (as defined in Section 407 of
ERISA) and to make certain other changes, this amendment and restatement to the
Plan is hereby adopted. This amendment to the Plan constitutes a complete
amendment, restatement and continuation of the Plan.

      In general, the provisions of this restatement are effective as of July 1,
2001, except as otherwise provided in the Plan or required to comply with
applicable law or the applicable collective bargaining agreement with the United
Food and Commercial Workers Local Numbers 135, 324, 770, 1036, 1167, 1428 and
1442. Except as otherwise specifically provided herein or required by law, the
provisions of this amended and restated Plan relating to eligibility for
participation, eligibility for benefits, amount of benefits, manner of benefit
payments and timing of benefit payments shall only apply to an Employee who
terminates employment on or after July 1, 2001. Any Employee who terminated
employment prior to July 1, 2001, shall have his eligibility for benefits and
the amount and form of benefits, if any, determined in accordance with the
provisions of the Plan in effect on the date his employment terminated except as
otherwise required by law.

      The Plan is a profit-sharing plan with a cash or deferred arrangement
intended to comply with the provisions of Sections 401(a), 401(k) and 401(m) of
the Code.



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                                   ARTICLE I.
                                   DEFINITIONS

      Section 1.1 General. Whenever any of the following terms is used in the
Plan with the first letter or letters capitalized, it shall have the meaning
specified below unless the context clearly indicates to the contrary.

      Section 1.2 Accounts. "Accounts" means the following Accounts which may be
maintained under this Plan for a Participant:

            (a)   401(k) Account means the separate Account, if any, maintained
for each Participant to which shall be credited such Participant's 401(k)
Contributions made pursuant to Section 3.3, related earnings and loan repayments
and from which shall be debited allocable expenses, investment losses, loans,
distributions and withdrawals.

            (b)   Matching Account means the separate Account, if any,
maintained for each Participant to which shall be credited such Participant's
share of the Company's Matching Contributions made pursuant to Section 3.4,
related earnings and loan repayments and from which shall be debited allocable
expenses, investment losses, loans, distributions and withdrawals.

            (c)   Rollover Account means the separate Account, if any,
maintained for each Participant to which shall be credited such Participant's
Rollover Contributions made pursuant to Section 4.1, related earnings and loan
repayments and from which shall be debited allocable expenses, investment
losses, loans, distributions and withdrawals.

            (d)   Qualified Account means the separate Account, if any,
maintained for each Participant to which shall be credited such Participant's
share of contributions pursuant to Section 3.5(b) and Section 3.6(b), related
earnings and loan repayments and from which shall be debited allocable expenses,
investment losses, loans, distributions and withdrawals.

In addition, such other Accounts may be established and maintained as the
Administrator may deem appropriate, such as, but not limited to, segregated
accounts, noninterest-bearing forfeiture accounts and the like.

Section 1.3 Active Participant. "Active Participant" means a Participant who is
an Eligible Employee.

Section 1.4 Administrator. "Administrator" means The Vons Companies, Inc.,
acting through such individuals or committees as appointed by the Board.

Section 1.5 Annual Addition. "Annual Addition" of a Participant for the Plan
Year in question means the sum of



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            (a)   Company contributions, forfeitures, voluntary after-tax
contributions (excluding any excess amounts distributed to him pursuant to
Section 3.8) allocated to his Accounts under the Plan for that Plan Year,

            (b)   401(k) Contributions allocated to his 401(k) Account for that
Plan Year (excluding any excess amounts which are distributed to him pursuant to
Section 3.5),

            (c)   Company contributions, forfeitures and Participant
contributions allocated to his accounts under all other qualified defined
contribution plans, if any, of the Company and any Company Affiliate for that
Plan Year, and

            (d)   Except for purposes of Section 3.8(a)(i), the sum of any

                  (i)   Company contributions allocated to an individual medical
      account (as defined in Code Section 415(l)(2)) which is maintained under a
      qualified pension or annuity plan, and

                  (ii)  Company contributions allocated to the separate account
      of a Key Employee (as defined in Section 12.1(b)(iii)) for the purpose of
      providing post-retirement medical benefits.

            If, in a particular Plan Year, the Company contributes an amount to
a Participant's Accounts because of an erroneous forfeiture in a prior Plan Year
or because of an erroneous failure to allocate amounts in a prior Plan Year, the
contribution shall not be considered an Annual Addition with respect to the
Participant for that particular Plan Year but shall be considered an Annual
Addition for the Plan Year to which it relates. If the amount so contributed in
the particular Plan Year takes into account actual investment gains attributable
to the period subsequent to the Plan Year to which the contribution relates, the
portion of the total contribution which consists of such gains shall not be
considered as an Annual Addition for any Plan Year.

Section 1.6 Beneficiary.

            (a)   Definition. "Beneficiary" means any person or entity
designated by a Participant in the form approved by the Administrator to receive
benefits payable as a result of the Participant's participation in the Plan
after the Participant's death.

            (b)   Special Rule for Married Participants. Each married
Participant will be deemed to have selected his Spouse as his Beneficiary unless
the Participant's Spouse has given Spousal Consent in the form provided by the
Administrator. Spousal Consent will not be required if the Participant states on
the applicable form provided for that purpose by the Administrator and notarized
that:

                  (i)   the Participant is able to establish to the satisfaction
      of the Administrator that he has no Spouse; or

                  (ii)  the Participant's Spouse cannot be located; or



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                  (iii) there are other circumstances under which consent of the
      Spouse is not required in accordance with applicable U.S. Treasury or
      Department of Labor regulations.

            (c)   Special Rule if No Designation in Effect. If no valid
designation is in effect upon the death of the Participant or if the designated
Beneficiary has predeceased the Participant, the Beneficiary shall be the person
or persons who shall survive the Participant in the first of the following
classes of preferences:

                  (i)   Participant's surviving spouse; if none then

                  (ii)  Participant's surviving children, including adopted
      children, in equal shares, per stirpes (by right of representation); if
      none then

                  (iii) Participant's surviving parents; if none then

                  (iv)  Participant's surviving brothers and sisters; if none
      then

                  (v)   the executor or administrator of the Participant's
      estate.

            (d)   Dissolution of Marriage. Upon the dissolution of marriage of a
Participant, any designation of the Participant's former spouse as a Beneficiary
shall be treated as through the Participant's former spouse had predeceased the
Participant unless (i) the Participant executes another Beneficiary designation
that complies with this Section and clearly names such former spouse as a
Beneficiary, or (ii) a court order presented to the Administrator prior to
distribution being made on behalf of the Participant explicitly requires the
Participant to maintain the former spouse as the Beneficiary. In any case in
which the Participant's former spouse is treated under the Participant's
Beneficiary designation as having predeceased the Participant, no heirs or other
beneficiaries of the former spouse shall receive benefits from the Plan as a
Beneficiary if the Participant except as provided otherwise in the Participant's
Beneficiary designation.

Section 1.7 Board. "Board" means the Board of Directors of The Vons Companies,
Inc.

Section 1.8 Break in Service. "Break in Service" of an Employee or former
Employee means the twelve consecutive month period beginning on the date of his
first Hour of Service or any Plan Year beginning thereafter during which he did
not have more than 500 Hours of Service.

Section 1.9 Code. "Code" means the Internal Revenue Code of 1986, as amended.

Section 1.10 Committee. "Committee" means the person or persons designated by
the Administrator to function in accordance with the Rules of the Plan.

Section 1.11 Company. "Company" means The Vons Companies, Inc., any other
company or entity which subsequently adopts the Plan as a whole or as to any one
or more divisions and any successor company which continues the Plan.



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<PAGE>   11

Section 1.12 Company Affiliate. "Company Affiliate" means any employer which, at
the time of reference, was, with the Company, a member of a controlled group of
corporations or trades or businesses under common control, or a member of an
affiliated service group, as determined under regulations issued by the
Secretary of the Treasury or his delegate under Code Sections 414(b), (c), (m)
and 415(h) and any other entity required to be aggregated with the Company
pursuant to regulations issued under Code Section 414(o).

Section 1.13 Compensation.

            (a)   "Compensation" of a Participant for any Plan Year means all
compensation paid during the Plan Year as straight time, vacation, overtime,
sick pay and bonus/incentive awards including amounts excluded from taxable
income by reason of Code Sections 125, 402(a)(8), 402(h) or 403(b).

            (b)   Solely for the purposes of Sections 1.14 and 1.15, the
Administrator may elect for any Plan Year to exclude from Compensation amounts
deferred under Section 3.3 and under Code Section 125 (cafeteria plans) or to
apply any alternate definition of Compensation that satisfies the requirements
of Code Section 414(s) and the regulations thereunder.

            (c)   For all purposes of the Plan, Compensation and Statutory
Compensation in excess of $150,000 (adjusted for increases in the cost of living
as described in Code Section 401(a)(17)) shall be disregarded.

Section 1.14   Contribution Percentage.

            (a)   "Contribution Percentage" for a Plan Year means, with respect
to eligible Participants who are in the Highly Compensated Group and to eligible
Participants who are in the Nonhighly Compensated Group, the average obtained,
as to each such Participant, by dividing:

                  (i)   the sum of (A) the amount of Matching Contributions
      allocated to his Matching Account for the Plan Year, (B) any qualified
      matching contributions for that Plan Year if elected by the Administrator
      under Section 3.6(b), and (C) allocations to his 401(k) Account to the
      extent that the Administrator elects to take such allocations into
      account, by

                  (ii)  his Compensation for that portion of the Plan Year
      during which he was eligible to receive allocations to his Matching
      Account.

            (b)   For purposes of this Section, all plans required to be taken
into account under Code Section 401(m)(2)(B) shall be treated as a single plan.

            (c)   The Administrator may elect to expand the Compensation of a
Participant taken into account for purposes of subsection (a)(ii) to such
amounts received by him for that entire Plan Years provided that such
determination is applied uniformly to all Participants for the year in question.



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Section 1.15 Deferral Percentage.

            (a)   "Deferral Percentage" for a Plan Year means, with respect to
eligible Participants who are in the Highly Compensated Group and to eligible
Participants who are in the Nonhighly Compensated Group, the average obtained as
to each such Participant, by dividing:

                  (i)   the sum of (A) the amount, if any, credited to his
      401(k) Account for that Plan Year in question under this Plan and any
      other plans which are aggregated with this Plan under Code Section
      401(k)(3)(A) (including any excess amounts described in Code Section
      402(g) if he is a Highly Compensated Employee but excluding any excess
      amounts distributed to him pursuant to Section 3.8(b)) and (B) to the
      extent elected by the Administrator under Section 3.5(b), amounts credited
      to his Qualified Account for that Plan Year, by

                  (ii)  his Compensation for that portion of the Plan Year
      during which he was eligible to defer Compensation to his 401(k) Account.

            (b)   The Administrator may elect to expand the Compensation of a
Participant taken into account for purposes of subsection (a)(ii) to such
amounts received by him for that entire Plan Year provided that such
determination is applied uniformly to all Participants for the year in question.

Section 1.16 401(k) Contribution. "401(k) Contribution" of a Participant means
an amount contributed by the Company to the Plan for him under Section 3.3.

Section 1.17 Direct Rollover. "Direct Rollover" means a payment by the Plan to
an Eligible Retirement Plan designated by a Distributee.

Section 1.18 Disability Retirement. "Disability Retirement" of a Participant
means his Separation from the Service due to the Participant's total and
permanent incapacity of engaging in any employment for the Company for physical
or mental reasons, provided that a written application for such treatment has
been filed with the Company on behalf of such Participant and that the
disability is certified to the Company by a licensed physician whom it approves.

Section 1.19 Disability Retirement Date. "Disability Retirement Date" of a
Participant means the date (prior to his Normal Retirement Date) fixed by the
Administrator for his Disability Retirement.

Section 1.20 Distributee. "Distributee" means a Participant, Surviving Spouse or
an alternate payee under a qualified domestic relations order, as defined in
Code Section 414(p).

Section 1.21 Effective Date. "Effective Date" means July 1, 2001, unless stated
otherwise, which is the date upon which the provisions of this document become
effective. In general, the provisions of this document only apply to
Participants who are Employees on or after the Effective Date. However,
investment and distribution provisions apply to all Participants with Account
balances to be invested or distributed after the Effective Date.



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Section 1.22 Eligible Employee. An "Eligible Employee" means a pharmacist
Employee whose employment with the Company is governed by a collective
bargaining agreement with the Union but shall not include an Employee who is:

            (a)   effective July 1, 1999, a Project Employee, or

            (b)   a non-resident alien with no U.S. source income.

Section 1.23 Eligible Retirement Plan. "Eligible Retirement Plan" means an
individual retirement account (described in Code Section 408(a)), an individual
retirement annuity (described in Code Section 408(b)), an annuity plan
(described in Code Section 403(a), or a qualified trust (described in Code
Section 401(a)), that will accept a Distributee's Eligible Rollover
Distribution. However, in the case of an Eligible Rollover Distribution to a
Distributee who is a Surviving Spouse of a Participant, an "Eligible Retirement
Plan" means only an individual retirement account or an individual retirement
annuity.

Section 1.24 Eligible Rollover Distribution.

            (a)   Except as provided in subsection (b), "Eligible Rollover
Distribution" means any distribution of all or any portion of a Participant's
Accounts to a Distributee.

            (b)   "Eligible Rollover Distribution" shall not mean any
distribution

                  (i)   that is one of a series of substantially equal periodic
      payments (not less frequently than annually) made for the life (or life
      expectancy) of the Distributee or the joint lives (or joint life
      expectancies) of the Distributee and the Distributee's Beneficiary,

                  (ii)  that is paid for a specified period of ten years or
      more,

                  (iii) that is part of a series of distributions during a
      calendar year to the extent that such distributions are expected to total
      less than $200 or a total lump sum distribution which is equal to less
      than $200, as described in Treas. Reg. Sec. 1.401(a)(31) -- 1, Q&A11,

                  (iv)  effective January 1, 1999, that is a Hardship withdrawal
      from his 401(k) Account,

                  (v)   to the extent such distribution is required under Code
      Section 401(a)(9), or

                  (vi)  to the extent such distribution is not includable in
      gross income (determined without regard to the exclusion for net
      unrealized appreciation with respect to employer securities).

Section 1.25 Employee. "Employee" means any person who renders services to the
Company or a Company Affiliate in the status of an employee as the term is
defined in Code



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Section 3121(d). However, the term does not include any person whose services
with the Company are performed pursuant to a contract or that purports to treat
the individual as an independent contractor even if such individual is later
determined (by judicial action or otherwise) to have been a common law employee
of the Company rather than an independent contractor. Except as provided in
Section 1.30(b) and Section 1.31, "Employee" shall not include leased employees
treated as Employees of the Company or a Company Affiliate pursuant to Code
Sections 414(n) and 414(o).

Section 1.26 ERISA. "ERISA" means the Employee Retirement Income Security Act of
1974, as amended.

Section 1.27 Five Percent Owner. "Five Percent Owner" means any person who owns
more than 5% of the Company or any Company Affiliate as defined in Code Section
416.

Section 1.28 Forfeiting Break in Service. "Forfeiting Break in Service" means
five consecutive one-year Breaks in Service.

Section 1.29 Hardship.

            (a)   "Hardship" of a Participant as determined by the Administrator
in its discretion on the basis of all relevant facts and circumstances and in
accordance with the following nondiscriminatory and objective standards,
uniformly interpreted and consistently applied, and without regard to the
existence of other resources which are reasonably available to the Participant,
means any one or more of the following:

                  (i)   Unreimbursed expenses for medical care described in Code
      Section 213(d) previously incurred by him, his spouse, or his dependent
      (as described in Code Section 152) or necessary for him, his spouse or his
      dependent to obtain medical care;

                  (ii)  Costs directly related to the purchase (excluding
      mortgage payments) of a principal residence for him;

                  (iii) Payment of tuition and related educational fees for the
      next twelve months of post-secondary education for him, his spouse,
      children, or his dependents;

                  (iv)  Payments necessary to prevent his eviction from his
      principal residence, or foreclosure on the mortgage of his principal
      residence; or

                  (v)   Any other event identified by the Commissioner of
      Internal Revenue in revenue rulings, notices and/or other documents of
      general applicability for inclusion in the foregoing list.

            (b)   A financial need shall not fail to qualify as immediate and
heavy merely because such need was reasonably foreseeable by the Participant or
voluntarily incurred.

Section 1.30 Highly Compensated Employee.



                                       8
<PAGE>   15

            (a)   Effective January 1, 1997, for any current Plan Year, a
"Highly Compensated Employee" means any Employee who

                  (i)   in the previous Plan Year had Statutory Compensation in
      excess of $80,000 (as adjusted) and was in the group consisting of the top
      twenty percent of Employees when ranked by Statutory Compensation for the
      Plan Year in question (determined after excluding the Employees described
      in Code Sections 414(q)(5) and 414(q)(8)), or

                  (ii)  was a Five Percent Owner at any time during the previous
      Plan Year or the current Plan Year, or

                  (iii) is a former Employee who during the Plan Year in which
      he separated from the Service or during any Plan Year ending on or after
      his fifty-fifth birthday, was a highly compensated employee, as defined in
      Code Section 414(q)(6) and the regulations thereunder.

            (b)   For purposes of this Section, "Statutory Compensation" shall
include Compensation deferral amounts and other amounts required to be taken
into account pursuant to Code Section 414(q)(4), and "Employee" shall include
leased Employees treated as Employees of the Company pursuant to Code Section
414(n) or 414(o).

            (c)   Each Highly Compensated Employee is a member of the "Highly
Compensated Group."

            (d)   Effective January 1, 1997, all references to family
aggregation are eliminated.



                                       9
<PAGE>   16

Section 1.31 Hour of Service.

            (a)   "Hour of Service" of an Employee (including a leased Employee
pursuant to Code Sections 414(n) and (o)) means the following:

                  (i)   Each hour for which he is paid or entitled to payment by
      the Company or a Company Affiliate for the performance of services.

                  (ii)  Each hour in or attributable to a period of time during
      which he performs no duties (irrespective of whether he has had a
      Separation from the Service) due to a vacation, holiday, illness,
      incapacity (including disability), layoff, jury duty, military duty or a
      leave of absence for which he is so paid or so entitled to payment by the
      Company or a Company Affiliate, whether direct or indirect; provided,
      however, that

                        (A)   no more than 501 Hours of Service shall be
                              credited under this paragraph to an Employee on
                              account of any such period; and

                        (B)   no such hours shall be credited to an Employee if
                              attributable to payments made or due under a plan
                              maintained solely for the purpose of complying
                              with applicable workers' compensation,
                              unemployment compensation or disability insurance
                              laws or to a payment which solely reimburses the
                              Employee for medical or medically related expenses
                              incurred by him.


Each hour for which he is entitled to back pay, irrespective of mitigation of
      damages, whether awarded or agreed to by the Company or a Company
      Affiliate; provided, however, no more than 501 Hours of Service shall be
      credited under this paragraph to an Employee on account of any such
      period.

            (b)   (i) Solely for the purposes of Section 1.8 (Break in Service),
an Hour of Service shall also include each hour in or attributable to a Plan
Year during which the Employee performs no duties for the Company or a Company
Affiliate (irrespective of whether he has had a Separation from the Service) due
to an absence from work

                        (A)   by reason of pregnancy of the Employee,

                        (B)   by reason of the birth of a child of the Employee,

                        (C)   by reason of the placement of a child with the
                              Employee in connection with the adoption of such
                              child by the Employee, or

                        (D)   for purposes of caring for such child for a period
                              beginning immediately following such birth or
                              placement,



                                       10
<PAGE>   17

subject, however, to the provisions of paragraphs (ii), (iii) and (iv) below.

                  (ii)  The hours described in paragraph (i) are

                        (A)   the Hours of Service which otherwise would
                              normally have been credited to the Employee but
                              for such absence or

                        (B)   in any case in which the Plan is unable to
                              determine such hours, eight Hours of Service per
                              day of such absence,

provided, however, that the total number of hours treated as Hours of Service
under paragraph (i) by reason of any such pregnancy or placement shall not
exceed 501.

                  (iii) The hours described in paragraph (ii) shall be treated
      as Hours of Service under paragraph (i)

                        (A)   only in the Plan Year in which the absence from
                              work for such reason or purpose begins if the
                              Employee would be prevented from incurring a Break
                              in Service in such Plan Year solely because of the
                              provisions of paragraphs (i) and (ii), or

                        (B)   in any other case, in the immediately following
                              Plan Year.

                  (iv)  No credit for hours referred to in paragraphs (i), (ii)
      and (iii) shall be given unless the Employee furnishes to the
      Administrator such timely information as the Administrator may reasonably
      require to establish

                        (A)   that the absence from work is for a reason or
                              purpose referred to in paragraph (i), and

                        (B)   the number of days for which there was such an
                              absence.

            (c)   Hours of Service under subsections (a)(ii) and (a)(iii) shall
be calculated in accordance with 29 C.F.R. Section 2530.200b-2(b). Each Hour of
Service shall be attributed to the Plan Year or initial eligibility year in
which it occurs except to the extent that the Company, in accordance with 29
C.F.R. Section 2530.200b-2(c), credits such Hour to another computation period
under a reasonable method consistently applied.

Section 1.32 Inactive Participant. "Inactive Participant" means an individual
who is no longer an Eligible Employee, as described in Section 2.2.

Section 1.33 Investment Fund. "Investment Fund" means one of the investment
funds of the Trust Fund, including the option to invest in Safeway Stock, which
is authorized by the Administrator at the time of reference as provided in
Article V. The Investment Funds to be offered to Participants and Beneficiaries
are set forth in Appendix A.



                                       11
<PAGE>   18

Section 1.34 Leveling Method. "Leveling Method" means the method of allocating
the dollar amount of the excess contributions (within the meaning of Treas. Reg.
Sec. 1.401(k)-1(g)(7)) under Section 3.5 or excess aggregate contributions
(within the meaning of Treas. Reg. Sec. 1.401(m)-1(f)(8)) under Section 3.6 as
described in this Section. Under this method, the total of excess contributions
(or excess aggregate contributions) to be distributed is allocated among the
Highly Compensated Employees so that the allocations described in Section
1.15(a) (or 1.14(a), as applicable) of the Highly Compensated Employees with the
highest amount of such allocations are reduced. This reduction will be
accomplished so that either (a) the total of such reductions (together with all
prior reductions hereunder for the applicable Plan Year) equals the total of
such excess contributions (or excess aggregate contributions) or (b) such Highly
Compensated Employee's remaining such allocations equals the allocations of the
Highly Compensated Employee with the next highest amount of such allocations.
This process is repeated with respect to the applicable Highly Compensated
Employees until the total of such reductions attributable to all such Highly
Compensated Employees is equal to the total of such excess contributions (or
excess aggregate contributions).

Section 1.35 Matching Contribution. "Matching Contribution" of a Participant
means the amount contributed by the Company to the Plan for him under Section
3.4.

Section 1.36 Military Leave. Any Employee who leaves the Company or a Company
Affiliate directly to perform service in the Armed Forces of the United States
or in the United States Public Health Service under conditions entitling him to
reemployment rights, as provided in the laws of the United States, shall, solely
for purposes of the Plan and irrespective of whether he is compensated by the
Company or a Company Affiliate during such period of service, be on Military
Leave. An Employee's Military Leave shall expire if such Employee voluntarily
resigns from the Company or such Company Affiliate during such period of service
or if he fails to make application for reemployment within the period specified
by such laws for the preservation of his reemployment rights.

Section 1.37 Nonhighly Compensated Employee. "Nonhighly Compensated Employee"
means for a Plan Year each Employee of the Company or a Company Affiliate who is
not a Highly Compensated Employee as determined under Code Section 414(q) and
Treas. Reg. Sec. 1.401(k)-1 and 1.401(m)-1. Each Nonhighly Compensated Employee
is a member of the "Nonhighly Compensated Group."

Section 1.38 Normal Retirement. "Normal Retirement" of an Active Participant
means his Separation from the Service on or after his Normal Retirement Date
(except by death).

Section 1.39 Normal Retirement Date. "Normal Retirement Date" the means later of
a Participant's 65th birthday or his fifth anniversary of Plan participation.

Section 1.40 Participant. "Participant" means any person who has satisfied the
requirements for and has begun participating in the Plan as provided in Article
II. In certain contexts, "Participant" may include former Participants who have
incurred a Separation from the Service but who have an Account under the Plan.



                                       12
<PAGE>   19

Section 1.41 Payday. "Payday" of a Participant means the regular and recurring
established day for payment of Compensation to Employees in his classification
or position.

Section 1.42 Plan. "Plan" means The Vons Companies, Inc. Pharmacists' 401(k)
Plan.

Section 1.43 Plan Representative. "Plan Representative" means any person or
persons designated by the Administrator to function in accordance with the Rules
of the Plan.

Section 1.44 Plan Year. "Plan Year" shall be the calendar year.

Section 1.45 Project Employee. "Project Employee" means any employee classified
as a project employee by the Company in the administration of the Company's
human resources policies.

Section 1.46 Quarterly Date. "Quarterly Date" means January 1, April 1, July 1
or October 1.

Section 1.47 Rules of the Plan. "Rules of the Plan" means the rules adopted by
the Administrator for the administration, interpretation or application of the
Plan.

Section 1.48 Safeway Stock. "Safeway Stock" means shares of common stock of
Safeway, Inc., par value $0.01 per share.

Section 1.49 Separation from the Service.

            (a)   "Separation from the Service" means an Employee's resignation
from or discharge by the Company or a Company Affiliate, death, Normal
Retirement or Disability Retirement but not his transfer of employment among the
Company and Company Affiliates.

            (b)   A leave of absence or sick leave authorized by the Company or
a Company Affiliate in accordance with established policies, a vacation period,
a temporary layoff for lack of work or a Military Leave shall not constitute a
Separation from the Service; provided, however, that

                  (i)   continuation upon a temporary layoff for lack of work
      for a period in excess of twelve months shall be considered a discharge
      effective as of the commencement of the twelfth month of such period, and

                  (ii)  failure to return to work upon expiration of any leave
      of absence, sick leave, or vacation or within three days after recall from
      a temporary layoff for lack of work, or before expiration of a Military
      Leave shall be considered a resignation effective as of the commencement
      of any such leave of absence, sick leave, vacation, temporary layoff or
      Military Leave.

Section 1.50 Spousal Consent. "Spousal Consent" to an election, designation or
other action of a Participant means the written consent of the Spouse of the
Participant, witnessed by a Plan Representative or a notary public, which
acknowledges the effect of such election on the rights of the Spouse. In the
case of consent to a Beneficiary designation, it also acknowledges that



                                       13
<PAGE>   20

such designation cannot be changed without further Spousal Consent unless the
prior Spousal Consent expressly permits such changes without the necessity of
additional Spousal Consent. Spousal Consent shall be deemed to have been
obtained if it is established to the satisfaction of the Plan Representative
that it cannot actually be obtained because there is no Spouse, or because the
Spouse could not be located, or because of such other circumstances as the
Secretary of the Treasury by regulation may prescribe. Any Spousal Consent shall
be effective only with respect to the Spouse who provided it.

Section 1.51 Spouse; Surviving Spouse. "Spouse" or "Surviving Spouse" of a
Participant means the spouse to whom he was married on the relevant date.
However, to the extent required by a qualified domestic relations order issued
in accordance with Code Section 414(p), a former Spouse shall be treated as a
Surviving Spouse.

Section 1.52 Statutory Compensation. "Statutory Compensation" of a Participant
for any Plan Year means his total taxable remuneration received from the Company
and all Company Affiliates in that Plan Year for services rendered as an
Employee,

            (a)   effective January 1, 1998, including any elective deferral as
defined in Code Section 402(g)(3) and any amounts not includable in gross income
by reason of Code Section 125 (cafeteria plan) or Code Section 457 (deferred
compensation plan of state and local governments and tax-exempt organizations),
and

            (b)   excluding

                  (i)   Company and Company Affiliate contributions to a
      deferred compensation plan (to the extent includable in the Participant's
      gross income solely by reason of Code Section 415) or to a simplified
      employee pension plan (to the extent deductible by the Participant) and
      any distribution from a deferred compensation plan (other than an
      unfunded, non-qualified plan),

                  (ii)  amounts realized from the exercise of a non-qualified
      stock option or taxable by reason of restricted property becoming freely
      tradable or free of a substantial risk of forfeiture, as described in Code
      Section 83,

                  (iii) amounts realized from the sale, exchange or other
      disposition of stock acquired under a qualified stock option and

                  (iv)  other amounts which receive special tax benefits such as
      Company or Company Affiliate contributions toward the purchase of an
      annuity contract described in Code Section 403(b) (whether or not
      excludable from the Participant's gross income).

Section 1.53 Trust Fund. "Trust Fund" means the fund established under this
Trust Agreement by contributions made by the Company and Participants, pursuant
to the Plan and from which any distributions under the Plan are to be made.

Section 1.54 Trustee. "Trustee" means Wells Fargo Bank, National Association,
and any successor trustee or trustees of the Trust Fund under this Trust
Agreement.



                                       14
<PAGE>   21

Section 1.55 Union. "Union" means the United Food and Commercial Workers' Local
Numbers 135, 324, 770, 1036, 1167, 1428 and 1442.

Section 1.56 Valuation Date. "Valuation Date" means each day the Investment
Funds are valued.

Section 1.57 Year of Vesting Service. "Year of Vesting Service" means a Plan
Year during which an Employee is credited with at least 800 Hours of Service,
subject to the following rules:

            (a)   Plan Years following a Forfeiting Break in Service shall be
disregarded for purposes of determining the Participant's vested percentage of
his Account prior to the Forfeiting Break in Service.

            (b)   In the case of a Participant who is entitled to no vested
percentage of his Account at the time he incurs a Forfeiting Break in Service,
Plan Years prior to such Forfeiting Break in Service shall be disregarded in
calculating the number of the Participant's Years of Vesting Service for
purposes of determining the vested percentage of his Matching Account after such
Forfeiting Break in Service if the number of the Participant's consecutive one
year Breaks in Service equals or exceeds the number of the Participant's Years
of Vesting Service prior to the Forfeiting Break in Service.

            (c)   No Years of Vesting Service shall be credited for Hours of
Service credited prior to the Plan's original January 1, 1991 effective date.



                                       15
<PAGE>   22

                                   ARTICLE II.
                                   ELIGIBILITY

Section 2.1 Requirements for Participation.

            (a)   Effective July 1, 2001 and except as provided in subsections
(b) and (c), each Eligible Employee shall become a Participant as soon as
practicable after the date he attains age 21 and satisfies the service
requirements to become a "non-probationary pharmacist". Prior to July 1, 2001
and except as provided in subsections (b) and (c), each Eligible Employee shall
become a Participant on the Quarterly Date coinciding with or following the date
he attains age 21 and satisfies the service requirements to become a
"non-probationary pharmacist". For this purpose, a non-probationary pharmacist
is (i) any full-time pharmacist who has been an Employee in that capacity for at
least 45 days and (ii) any part-time pharmacist who either (A) has been an
Employee for at least 60 days or (B) has worked at least 261 hours (including
straight-time, overtime and Sunday hours) as an Employee in that capacity.

            (b)   Any Participant whose participation terminates shall again
become a Participant effective following his first subsequent Hour of Service as
an Eligible Employee.

            (c)   A former Employee who was not an Eligible Employee on the date
on which he first met all other eligibility requirements shall become a
Participant effective following his first subsequent Hour of Service as an
Eligible Employee.

            (d)   The Participant shall enroll in the Plan as described in the
Rules of the Plan.

Section 2.2 Inactive Status.

            (a)   An Active Participant who transferred directly to a different
position or classification at the Company or a Company Affiliate and is no
longer an Eligible Employee shall immediately cease to be an Active Participant
and shall become an Inactive Participant.

            (b)   All provisions of the Plan shall otherwise continue to apply
to an Inactive Participant except that he shall not make 401(k) Contributions,
share in the Matching Contributions or share in allocations under Section 3.8
while he is an Inactive Participant.

            (c)   If an Inactive Participant is retransferred to a position or
classification with the Company as an Eligible Employee, he shall immediately
become an Active Participant, may again make 401(k) Contributions, share in the
Matching Contributions and share in allocations under Section 3.8.



                                       16
<PAGE>   23

                                  ARTICLE III.
                                  CONTRIBUTIONS

Section 3.1 Contributions in General. Contributions are to be made to the Trust
by the Company and may be made by the Participants as provided in the Plan. The
Trustee shall have no duty to require any contributions to be made to it or to
determine whether contributions delivered to it hereunder comply with the
provisions of this Plan or any resolutions, rules, regulations or policies of
the Company providing for such contributions.

Section 3.2 Maximum Annual Contribution. Except for contributions described in
Section 13.12, the Company's contribution for any Plan Year shall not exceed the
maximum amount deductible by the Company for any taxable year ending with or
within such Plan Year under Code Section 404(a)(3)(A).

Section 3.3 401(k) Contributions.

            (a)   Types and Amounts.

                  (i)   Each Participant who enters into a payroll reduction
      agreement may elect, in accordance with the Rules of the Plan, to
      contribute a 401(k) Contribution by payroll reduction an amount equal to a
      designated whole percentage of his Compensation. Effective July 1, 2001,
      Participants may designate from 1% to 25% of Compensation as 401(k)
      Contributions. Effective from April 1, 2000 to June 30, 2001, Participants
      may designate from 1% to 18% of Compensation as 401(k) Contributions.

                  (ii)  Such amount shall be based on the Participant's payroll
      reduction agreement shall be in the form acceptable to the Administrator
      (including internet, intranet, telephonic or other methods) and deducted
      for each Payday in such Plan Year in which it is in effect. Deductions
      shall be effective on the first Payday as soon as administratively
      feasible. Participants' elections will automatically apply to increases or
      decreases in Compensation.

                  (iii) In no event shall the aggregate of such deferrals under
      this Section for any calendar year exceed the annual limit under Code
      Section 402(g) as adjusted by the Secretary of the Treasury for that
      calendar year.

                  (iv)  The Administrator may authorize a suspension or
      reduction of 401(k) Contributions as it deems necessary to satisfy Section
      3.5.

            (b)   Commencement, Resumption or Change of 401(k) Contributions. As
permitted under the Rules of the Plan:

                  (i)   Effective July 1, 2001, a Participant may increase,
      decrease or completely discontinue his 401(k) Contributions made pursuant
      to this Section in the frequency and manner determined by the
      Administrator (including internet, intranet,



                                       17
<PAGE>   24

      telephonic or other methods). Prior to July 1, 2001, a Participant may
      increase, decrease or completely discontinue his 401(k) Contributions made
      pursuant to this Section as of the first day of any payroll period
      coinciding with or following a Quarterly Date in the frequency and manner
      determined by the Administrator.

                  (ii)  Effective July 1, 2001, a Participant who has
      discontinued his 401(k) Contributions may recommence making them in the
      frequency and manner determined by the Administrator (including internet,
      intranet, telephonic or other methods). Prior to July 1, 2001, a
      Participant who has discontinued his 401(k) Contributions may recommence
      making them as of the first day of the next payroll period coinciding with
      or following a Quarterly Date in the frequency and manner determined by
      the Administrator.

                  (iii) Notwithstanding the foregoing, all 401(k) Contributions
      shall automatically cease as of the date on which the Participant ceases
      to be an Eligible Employee.

            (c)   Deposit in Trust. Effective February 3, 1997, each
Participant's 401(k) Contributions shall be transmitted to the Trustee as soon
as practicable after the end of each Payday but in no event more than 15
business days after the end of the month in which they were withheld.

            (d)   Allocation of 401(k) Contributions. Each Participant's 401(k)
Contributions shall be credited to his 401(k) Account in accordance with Article
VI.

            (e)   Vesting of 401(k) Account. A Participant shall always be 100%
vested in his 401(k) Account.

            (f)   Return of Excess Deferred Compensation. If a Participant makes
deferrals to this Plan and any other cash or deferred arrangement for a calendar
year which exceed the limit under Code Section 402(g) for such year, the
Participant shall notify the Administrator of the amount of such excess
deferrals made under this Plan by the March 1 of the next calendar year. The
amount of such excess deferrals (and any income thereon earned to the earlier of
the date of distribution or the last day of the Plan Year in which such
contribution was made computed in a consistent and reasonable manner in
accordance with Code Section 401(a)(4)) shall be distributed to the Participant
by the April 15 of the next calendar year. If a Participant has made excess
deferrals to this Plan the Participant shall be deemed to have given the notice
referred to above, and the excess contributions (and any income thereon) shall
be distributed to the Participant by such April 15. Any such distribution shall
not be subject to any Spousal Consent, nor shall it be treated as a withdrawal
or distribution subject to the provisions of Article VIII or XI.

Section 3.4 Matching Contributions.

            (a)   Amount. For each Participant who makes 401(k) Contributions
during a Plan Year and is employed by the Company on the last day of the Plan
Year, the Company will contribute to the Plan an amount equal to the lesser of:



                                       18
<PAGE>   25

                  (i)   50% of the Participant's 401(k) Contributions for the
      Plan Year,

                  (ii)  $1,000, or

                  (iii) for any Participant who works less than 1800
      straight-time hours (including vacation hours) in the Plan Year, $1,000
      multiplied by a fraction (not to exceed one), the numerator of which is
      the number of straight-time hours worked (including vacation hours) by the
      Participant during the Plan Year and the denominator of which is 2,080.

            (b)   Allocation to Matching Account. All Matching Contributions
will be credited to the Participant's Matching Account in accordance with
Article VI.

            (c)   Deposit in Trust.

                  (i)   The Matching Contributions shall be transmitted to the
      Trustee and held in the Trust Fund, on or before the date upon which the
      Company's federal income tax return is due (including extensions thereof)
      for its taxable coinciding with the Plan Year in question.

                  (ii)  If the Company makes a contribution after the end of the
      Plan Year for which the contribution is made

                        (A)   the Company shall notify the Trustee in writing
                              that the contribution is made for such Plan Year,

                        (B)   the Company shall claim such payment as a
                              deduction on its federal income tax return for its
                              taxable year coinciding with such Plan Year, and

                        (C)   the Administrator and the Trustee shall treat the
                              payment as a contribution by the Company to the
                              Trust actually made on the last day of such
                              taxable year.

Section 3.5 Limitation on 401(k) Contributions. Effective January 1, 1997, each
Plan Year the Plan must satisfy the requirements of this Section and Sections
3.6 and 3.7. The Administrator shall determine if these requirements are
satisfied pursuant to Treas. Reg. Sec. 1.401(k)-1 and subsequent Internal
Revenue Service guidance issued under the applicable provisions of the Code, the
provisions of which are incorporated by reference.

            (a)   For each Plan Year, the Deferral Percentage of the Highly
Compensated Group shall be

                  (i)   not more than 125 percent of, or

                  (ii)  not more than two percentage points higher than, and not
      more than twice, the Deferral Percentage for such Plan Year of the
      Nonhighly Compensated



                                       19
<PAGE>   26

      Group for the preceding Plan Year (the "Prior Year Testing Method"), or
      such other amount as may be required by Treasury regulations under Code
      Section 401(m)(9).

      Instead of applying the Prior Year Testing Method, the Administrator may
elect to apply the Deferral Percentage for the Nonhighly Compensated Group for
the current Plan Year ("Current Year Testing Method") as permitted by Internal
Revenue Service Notice 98-1 (or any successor thereto). If the Administrator
makes this election, the Current Year Testing Method will apply for all
subsequent Plan Years (until changed by the Administrator) and will be set forth
in an exhibit to the Plan.

            (b)   In order to achieve the result described in subsection (a),
the following actions shall be taken, as provided under Code Section 401(k), the
regulations thereunder and the Rules of the Plan, in the order selected by the
Administrator and to the extent necessary:

                  (i)   The Administrator shall make the election provided in
      Section 1.13(b).

                  (ii)  Amounts otherwise to be credited under Section 3.4 to
      Matching Accounts for such Plan Year shall be credited instead to
      Qualified Accounts of the Participants in question.

                  (iii) To the extent permitted by Code Section 401(a)(4) and
      Treas. Reg. Sec. 1.401(k)-1(b)(5) (which are incorporated herein by this
      reference), the Company may make an additional contribution (a "Qualified
      Nonelective Contribution") to the Qualified Accounts of select
      Participants.

                  (iv)  Prior to the end of the following Plan Year, the amount
      of excess contributions within the meaning of Treas. Reg. Sec.
      1.401(k)-1(g)(7) (and any income thereon earned to the earlier of the date
      of distribution or the last day of the Plan Year in which such
      contribution was made computed in a consistent and reasonable manner in
      accordance with Section 5.1 and Code Section 401(a)(4)) for Participants
      who were Highly Compensated Employees for the Plan Year shall be allocated
      according to the Leveling Method and distributed to the Highly Compensated
      Employees in question. Such distribution shall not be subject to any
      Spousal Consent requirements or treated as a withdrawal or distribution
      subject to Article VIII or XI.

            (c)   The amount of any distributions under subsection (b) shall be
determined after the maximum deferrals under Section 3.3(a) and the distribution
of such deferrals pursuant to Section 3.3(f).

Section 3.6 Limitation on Matching Contributions. Effective January 1, 1997,
each Plan Year the Plan must satisfy the requirements of this Section and
Sections 3.5 and 3.7. The Administrator shall determine if these requirements
are satisfied pursuant to Treas. Reg. Sec. 1.401(m)-1 and subsequent Internal
Revenue Service guidance issued under the applicable provisions of the Code, the
provisions of which are incorporated by reference.



                                       20
<PAGE>   27

            (a)   For each Plan Year, the Contribution Percentage of the Highly
Compensated Group, shall be

                  (i)   not more than 125 percent of, or

                  (ii)  (to the extent allowed by regulations under Code Section
      401(m)(9)) not more than two percentage points higher than, and not more
      than twice,

the Contribution Percentage for such Plan Year of Nonhighly Compensated
Participants for the preceding Plan Year (the "Prior Year Testing Method"), or
such other amount as may be required by Treasury regulations under Code Section
401(m)(9).

      Instead of applying the Prior Year Testing Method, the Administrator may
elect to apply the Contribution Percentage for the Nonhighly Compensated Group
for the current Plan Year ("Current Year Testing Method") as permitted by
Internal Revenue Service Notice 98-1 (or any successor thereto). If the
Administrator makes this election, the Current Year Testing Method will apply
for all subsequent Plan Years (until changed by the Administrator) and will be
set forth in an exhibit to the Plan.

            (b)   In order to achieve the result described in subsection (a), as
of the end of each Plan Year, the Administrator shall take or cause to be taken
any of the following actions, in the order selected by the Administrator (but
after application of Section 3.5) and to the extent necessary:

                  (i)   The Administrator shall make the election provided in
      Section 1.13(b).

                  (ii)  Allocations to 401(k) Accounts shall be taken into
      account for purposes of calculating the Contribution Percentage.

                  (iii) Allocations to Matching Accounts that are not vested
      will be forfeited.

                  (iv)  To the extent permitted by Code Section 401(a)(4) and
      Treas. Reg. Sec. 1.401(m)-1(b)(5) (which are incorporated herein by this
      reference), the Company may make an additional contribution ("Qualified
      Matching Contribution") to the Qualified Accounts of select Participants.

                  (v)   Prior to the end of the following Plan Year, the amount
      of excess aggregate contributions within the meaning of Treas. Reg. Sec.
      1.401(m)-1(f)(8) (and any income thereon earned to the earlier of the date
      of distribution or the last day of the Plan Year in which such
      contribution was made computed in a consistent and reasonable manner in
      accordance with Section 5.1 and Code Section 401(a)(4)) for Participants
      who were Highly Compensated Employees for the Plan Year shall be allocated
      according to the Leveling Method. In conformity with Treas. Reg. Sec.
      1.401(m)-1(e)(4)), this amount shall then be distributed to the Highly
      Compensated Employees in question.



                                       21
<PAGE>   28

      Amounts distributed under the foregoing shall not be subject to Spousal
      Consent requirements or treated as a withdrawal or distribution under
      Article VIII or XI.

Section 3.7 Alternative Use Limitation Test. In addition to the requirements of
Sections 3.5 and 3.6 for any Plan Year, the Plan must satisfy the requirements
of this Section.

            (a)   Multiple Use Test. The sum of the Deferral Percentage and the
Contribution Percentage of the Highly Compensated Group for the Plan Year may
not exceed the greater of:

                  (i)   The sum of

                        (A)   1.25 times the greater of

                              (I)   the Deferral Percentage of the Nonhighly
                                    Compensated Group for the preceding Plan
                                    Year; or

                              (II)  the Contribution Percentage of the Nonhighly
                                    Compensated Group for the preceding Plan
                                    Year; and

                        (B)   two percentage points plus the lesser of (A) or
                              (B) next above, but in no event in excess of twice
                              the lesser of (A) or (B) above; or

                  (ii)  The sum of:

                        (A)   1.25 times the lesser of:

                        (B)   (I)   the Deferral Percentage of the Nonhighly
                                    Compensated Group for the preceding Plan
                                    Year; or

                              (II)  the Contribution Percentage of the Nonhighly
                                    Compensated Group for the preceding Plan
                                    Year; and

                        (C)   two percentage points plus the lesser of (A) or
                              (B) next above, but in no event in excess of twice
                              the lesser of (A) or (B) above.

            (b)   Adjustments. If the requirements of subsection (a) are not
satisfied, the amount of such excess will be an excess contribution or excess
aggregate contribution, as determined in the discretion of the Administrator,
and the corresponding contribution will be reduced and distributed to Highly
Compensated Employees in the manner described in the applicable provisions of
Sections 3.5 and 3.6. The Deferral Percentage and the Contribution Percentage of
the Highly Compensated Group will be determined after any corrective



                                       22
<PAGE>   29

distributions of excess contributions or excess aggregate contributions under
Sections 3.5 and 3.6.

Section 3.8 Limitation on Annual Additions; Treatment of Otherwise Excessive
Allocations.

            (a)   In any Plan Year (which shall be the Plan's "limitation year"
within the meaning of Treas. Reg. Sec. 1.415-2(b)), the Annual Addition of a
Participant shall not exceed the lesser of

                  (i)   25% of such Participant's Statutory Compensation for
      such Plan Year, or

                  (ii)  (A)   $35,000 for Plan Years beginning on or after
                              January 1, 2001

                        (B)   $30,000 for Plan Years beginning prior to January
                              1, 2001.

            (b)   If the Annual Addition of a Participant would exceed the
limits of subsection (a) as a result of an allocation of forfeitures, a
reasonable error in estimating a Participant's Statutory Compensation, a
reasonable error in determining the amount of a Participant's elective deferrals
or under other limited facts and circumstances found justifiable by the
Commissioner of Internal Revenue, the Administrator shall, to the extent
necessary to eliminate such excess (and in the following order):

                  (i)   refund or refuse to accept any part or all of the
      Participant's 401(k) Contributions to be allocated to his 401(k) Account
      in the Limitation Year which are ineligible for a Matching Contribution;

                  (ii)  refund or refuse to accept any part or all of the
      Participant's 401(k) Contributions to be allocated to his 401(k) Account
      in the Limitation Year which are eligible for a Matching Contribution
      under Section 3.4, and reduce the corresponding Matching Contribution
      related thereto;

                  (iii) his allocation of Company contributions for such Plan
      Year to his Qualified Account.

Excess amounts attributable to Company contributions will be held in a suspense
account and recontributed for the applicable Account of the Participant in the
first Plan Year in which allowed under subsection (a) or otherwise held in
suspense hereunder and applied to the applicable Account of the Participant in
the first Plan Year in which allowed under subsection (a). The balance, if any,
of such reduction shall be allocated to the Matching Accounts of persons who are
Active Participants at the end of the Plan Year in proportion to their
Compensation received while Active Participants in such Plan Year. If any
Participant's Annual Addition would, due to such special allocation, exceed the
limit of subsection (a), the excess shall be reallocated by a second special
allocation, and so on as necessary to allocate such amounts within the limits of
subsection (a). Any amounts which cannot be so allocated because of the
limitations of subsection (a), shall be held in suspense and shall be allocated
and



                                       23
<PAGE>   30

reallocated in succeeding Plan Years, in the order of time, prior to the
allocation of any Company contributions.

            (c)   In the event the Plan is terminated while excess amounts are
then held in suspense under subsection (b), such excess amounts shall be
allocated and reallocated as provided in subsection (b), as of the day before
the date of the termination as if such day were the last day of such Plan Year.
Any amounts which cannot then be so allocated because of the limits of
subsection (a) shall revert to the Company.

            (d)   All references to the requirements of Code Section 415(e)
(combined plan limit) are eliminated effective January 1, 2000.

Section 3.9 Reemployment Rights after Qualified Military Service.

            (a)   Effective December 12, 1994 solely for purposes of this
Section, the following definitions shall apply:

                  (i)   "Qualified Military Service" means any service in the
      uniformed services (as defined in chapter 43 of title 38, United States
      Code) by any individual if such individual is entitled to reemployment
      rights under such chapter with respect to such service.

                  (ii)  "Compensation" means

                        (A)   Compensation the Employee would have received
                              during his period of Qualified Military Service if
                              the Employee were not in Qualified Military
                              Service, determined based on the rate of pay the
                              Employee would have received from the Company but
                              for absence during his period of Qualified
                              Military Service, or

                        (B)   if the Compensation the Employee would have
                              received during his period of Qualified Military
                              Service was not reasonably certain, the Employee's
                              average Compensation from the Company during the
                              12-month period immediately preceding the
                              Qualified Military Service (or, if less, the
                              period of employment immediately preceding the
                              Qualified Military Service).

            (b)   A Participant who leaves the Company as a result of Qualified
Military Service and returns to employment with the Company may elect during the
period described in subsection (c) to make additional 401(k) Contributions under
the Plan in the amount determined under subsection (d) or such lesser amount, as
elected by the Participant.

            (c)   The period determined under this subsection shall be the
period which begins on the date of the Employee's reemployment with the Company
after his Qualified Military Service that extends until the lesser of



                                       24
<PAGE>   31
                  (i)   the product of 3 and the period of Qualified Military
      Service, and

                  (ii)  5 years.

            (d)   The amount described in this subsection is the maximum amount
of 401(k) Contributions that the Participant would have been permitted to make
in accordance with the limitations described in subsection (f)(i) during the
Participant's period of Qualified Military Service if the Participant had
continued to be employed by the Company during such period and received
Compensation. Proper adjustment shall be made for any contributions actually
made during the Participant's period of Qualified Military Service.

            (e)   If the Participant elects to make 401(k) Contributions under
subsection (b), the Company shall make such a matching contribution to his
Matching Account with respect to such deferrals as would have been required
under the Plan had such deferrals actually been made during the period of such
Qualified Military Service.

            (f)   If any deferral or contribution is made by a Participant or
the Company pursuant to this Section,

                  (i)   such deferral or contribution shall not be subject to
      any otherwise applicable limitation contained in Code Section 402(g),
      404(a) or 415 and shall not be taken into account in applying such
      limitations to other deferrals or benefits under the Plan or any other
      plan, with respect to the Plan Year in which the deferral is made,

                  (ii)  such deferral or contribution shall be subject to the
      limitations described in paragraph (i) with respect to the Plan Year to
      which the deferral or contribution relates in accordance with the rules
      prescribed by the Secretary of the Treasury,

                  (iii) the Plan shall not be treated as failing to meet the
      requirements of Code Section 401(a)(4), 401(k)(3), 401(k)(11), 401(k)(12),
      401(m), 410(b) or 416 by reason of the making of (or the right to make)
      such deferral or contribution.

            (g)   The Company shall not credit earnings on any deferral or
contribution made under this Section before such deferral or contribution is
actually made.

            (h)   A Participant reemployed under subsection (b) shall be treated
as not incurring a Break in Service by reason of his period of Qualified
Military Service.



                                       25

<PAGE>   32
                                   ARTICLE IV.
                             ROLLOVERS AND TRANSFERS

Section 4.1 Rollovers and Transfers.

            (a)   An Eligible Employee may make a contribution to his Rollover
Account if such contribution meets the requirements of this Section and is in
accordance with the Rules of the Plan. The Administrator may require the
Eligible Employee to supply information sufficient to determine if his
contribution meets the requirements of this Section. If the Administrator
determines that such contribution does not meet the requirements of this
Section, the contribution shall not be permitted.

            (b)   Such contribution will meet the requirements of this Section
if

                  (i)   it is made by such Eligible Employee to the Trust in
      cash in a lump sum, and

                  (ii)  the amount contributed by such Eligible Employee
      consists of

                        (A)   an Eligible Rollover Distribution as defined in
                              Code Section 402(a)(5) from

                              (I)   a qualified trust meeting the requirements
                                    of Code Section 402(a)(5), or

                              (II)  an employee annuity plan meeting the
                                    requirements of Code Section 403(a)(1), or

                        (B)   a tax-free rollover distribution from an
                              individual retirement account or an individual
                              retirement annuity which in turn consisted
                              entirely of an Eligible Rollover Distribution (as
                              defined in Code Section 402(c)(4) from a qualified
                              trust under Code Section 401(a) or an annuity plan
                              under which the Eligible Employee was an employee
                              within the meaning of Code Section 401(c)(1) at
                              the time contributions were made on his behalf
                              under the plan) together with any earnings
                              thereon, and which otherwise meets the
                              requirements of Code Section 408(d)(3).

            (c)   In addition, such contribution will meet the requirements of
this Section if

                  (i)   the contribution is made within 60 days following the
      day on which the Eligible Employee received the distribution from a
      qualified trust, annuity plan or individual retirement account or annuity,



                                       26

<PAGE>   33

                  (ii)  such distribution was solely in the form of cash, and

                  (iii) such distribution constituted an Eligible Rollover
      Distribution within the meaning of Code Section 402(c)(4), no part of
      which consists of employee contributions.

            (d)   The Plan shall also accept a direct rollover from a plan
qualified under Code Section 401(a) of an amount that if paid to an Eligible
Employee instead of the Plan would have constituted an Eligible Rollover
Distribution within the meaning of Code Section 401(a)(31). This transferred
amount shall be credited to an Eligible Employee's Rollover Account.

            (e)   The Administrator may, in its discretion, permit the Plan to
accept a direct transfer from a qualified trust (described in Code Section
401(a)) of an Eligible Employee's benefits under such trust. Benefits
transferred on behalf of an Eligible Employee to the Plan under this Section
shall be credited to the Eligible Employee's transfer account or such other
Accounts as are designated by the Administrator. The Administrator shall not
accept any plan-to-plan transfer under this Section if such transfer would
require the Plan to provide optional forms of benefit not otherwise provided by
the Plan as required by Code Section 411(d)(6).

            (f)   The Administrator may require the Eligible Employee to supply
information sufficient to determine if his contribution meets the requirements
of this Section. If the Administrator determines that such contribution does not
meet the requirements of this Section, the contribution shall not be permitted.

            (g)   If the Administrator accepts a contribution or transfer
pursuant to this Section and later determines that it was improper to do so, in
whole or in part, the Plan shall refund the necessary amount to the Eligible
Employee.

            (h)   An Eligible Employee who makes an contribution to his Rollover
Account pursuant to this Section prior to the date that he satisfies the
eligibility requirements described in Article II shall generally be treated as a
Participant for purposes of the Plan provisions relating to the maintenance,
valuation, investment and distribution of Accounts. However such Eligible
Employee shall not be treated as a Participant for purposes of eligibility to
make 401(k) Contributions, to receive an allocation of any Company contributions
or to take a Plan loan prior to the date he actually becomes a Participant in
the Plan.



                                       27
<PAGE>   34

                                   ARTICLE V.
                             INVESTMENT OF ACCOUNTS

Section 5.1 Investment Options.

            (a)   Investment Direction. As permitted under the Rules of the
Plan, a Participant and a Beneficiary of a deceased Participant may elect to
have his Accounts held and invested under any of the Investment Funds or to
change any prior investment election.

            (b)   Investment Elections. Any investment election under subsection
(a) shall remain in effect until revoked or modified by the Participant or
Beneficiary. If Accounts are invested in more than one Investment Fund, changes
in proportions due to investment results shall not require any automatic
transfer of values between Investment Funds. Once the Administrator has
determined that the investment elections have been properly made under the Plan,
it shall promptly transmit those directions to the Trustee.

            (c)   Available Investment Funds. A list of the Investment Funds
offered under the Plan is set forth in Appendix A and may be changed from time
to time without the necessity of amending this Plan and Trust document. The
Administrator may set a maximum percentage of the total election that a
Participant or Beneficiary may direct into any specific Investment Fund as set
forth in Appendix A.

            (d)   Manner of Making Investment Elections. The Administrator will
establish the manner (writing, internet, intranet, telephonic, electronic or
other methods) and advance notice required for making investment elections under
Section 5.1.

            (e)   Timing. Purchases and sales of assets in the Investment Funds
as required under this Section shall be made within a reasonable time after the
election made in subsection (a), and Accounts shall be adjusted to reflect
amounts actually realized or paid in such transactions.

            (f)   ERISA Section 404(c). The Plan is a plan which is described in
ERISA Section 404(c) under which each Participant or Beneficiary shall exercise
control over the assets in his Accounts and shall be provided the opportunity to
choose, from a broad range of investments, the manner in which the assets in his
Accounts are invested. The Participant or Beneficiary shall not be deemed to be
a fiduciary by reason of his exercise of control, and no person who is otherwise
a fiduciary shall be liable for any loss or by reason of any breach which
results from such exercise of control, whether by the Participant's or
Beneficiary's affirmative direction or failure to direct an investment. In
addition, no account shall bear any loss or have any responsibility or liability
for any investment directed by any other Participant or Beneficiary with respect
to his Accounts.

Section 5.2 Default Investment Fund. If a Participant or Beneficiary fails or
declines to make an effective investment election, the Participant's or
Beneficiary's Accounts shall be held in one or more default Investment Funds as
directed by the Administrator.



                                       28
<PAGE>   35

                                   ARTICLE VI.
                    VALUATION OF THE TRUST FUND AND ACCOUNTS

Section 6.1 Individual Participant Accounting. The Administrator shall maintain
an individual set of Accounts for each Participant in order to reflect
transactions both by type of contribution and investment medium. Financial
transactions shall be accounted for at the individual Account level by posting
each transaction to the appropriate Account of each affected Participant.
Participant Account values shall be maintained in shares for the Investment
Funds. At any point in time, the Account value shall be determined using the
most recent Valuation Date values provided by the Trustee.

Section 6.2 Valuation Date Accounting and Investment Cycle. Participant Account
values shall be determined as of each Valuation Date. For any transaction to be
processed as of a Valuation Date, the Trustee must receive instructions for the
transaction by the date specified by the Trustee, and such instructions shall
apply to amounts held in the Account on that date. Financial transactions of the
Investment Funds shall be posted to Participants' Accounts as of the Valuation
Date, based upon the Valuation Date values provided by the Trustee, and settled
on the Trustee's next business date.

Section 6.3 Accounting for Investment Funds. Investments in each Investment Fund
(other than Safeway Stock) shall be accounted for in units or other methods
approved by the Administrator. Safeway Stock investments shall be accounted for
based on share accounting. The Trustee is responsible for determining the share
values of each Investment Fund as of each Valuation Date. To the extent an
Investment Fund is comprised of collective investment funds of the Trustee, or
any other fiduciary to the Plan, the share values shall be determined in
accordance with the rules governing such collective investment funds, which are
incorporated herein by reference. All other share values shall be determined by
the Trustee. The share value of each Investment Fund shall be based on the fair
market value of its underlying assets.

Section 6.4 Payment of Fees and Expenses. Except to the extent Plan fees and
expenses related to Account maintenance, transaction and Investment Fund
management and maintenance are paid by the Company, such fees and expenses shall
be paid as set forth below. The Company may pay a lower portion of the fees and
expenses allocable to the Accounts of Participants who are no longer Employees
or who are not Beneficiaries, unless doing so would result in impermissible
discrimination.

            (a)   Account Maintenance. Account maintenance fees and expenses may
include, but are not limited to, administrative, Trustee, government annual
report preparation, audit, legal, nondiscrimination testing, and fees for any
other special services. Account maintenance fees at may be charged at the
Investment Fund level in the manner described in (c) below or charged to
Participants on a per Participant basis provided that no fee shall reduce a
Participant's Account balance below zero.



                                       29
<PAGE>   36

            (b)   Transaction. Transaction fees and expenses may include, but
are not limited to, withdrawal, distribution and loan fees. Transaction fees
shall be charged to the Participant's Account involved in the transaction
provided that no fee shall reduce a Participant's Account balance below zero.
There is no limit on the number of Investment Fund election changes, and no fees
are assessed on Investment Fund election changes by a Participant or
Beneficiary. However, a fee (determined by the Administrator) may be charged
with respect to each purchase and sale of Safeway Stock.

            (c)   Investment Fund Management and Maintenance. Management and
maintenance fees and expenses related to the Investment Funds shall be charged
at the Investment Fund level and reflected in the net gain or loss of each
Investment Fund.

            The Trustee shall have the authority to pay from the Trust any such
fees and expenses that remain unpaid by the Company for 60 days.

Section 6.5 Participant Statements. The Administrator shall provide Participants
with statements of their Accounts as soon after the end of each quarter of the
Plan Year as is administratively feasible.

Section 6.6 Accounts for QDRO Beneficiaries. A separate Account shall be
established for an alternate payee entitled to any portion of a Participant's
Account under a QDRO as of the date and in accordance with the directions
specified in the QDRO. In addition, a separate Account may be established during
the period of time the Administrator, a court of competent jurisdiction or other
appropriate person is determining whether a domestic relations order qualifies
as a QDRO. Such a separate Account shall be valued and accounted for in the same
manner as any other Account.

            (a)   Distributions Pursuant to QDROs. If a QDRO so provides, the
portion of a Participant's Account payable to an alternate payee may be
distributed, in a form as permissible under Section 11.2, to the alternate payee
at the time specified in the QDRO, regardless of whether the Participant is
entitled to a distribution from the Plan at such time.

            (b)   Investment Direction. Where a separate Account has been
established on behalf of an alternate payee and has not yet been distributed,
the alternate payee may direct the investment of such Account in the same manner
as if he were a Participant.

Section 6.7 Determination of Values. As of each Valuation Date, the
Administrator shall determine the fair market value of each asset in each
Investment Fund in compliance with the principles of Section 3(26) of ERISA and
regulations issued pursuant thereto, based upon information reasonably available
to it including data from, but not limited to, newspapers and financial
publications of general circulation, statistical and valuation services, records
of securities exchanges, appraisals by qualified persons, transactions and bona
fide offers in assets of the type in question and other information customarily
used in the valuation of property for purposes of the Code. The value of any
real property held in the Trust Fund determined as of the end of any Plan Year
shall be considered to remain unchanged until the end of the following Plan
Year. With respect to securities for which there is a generally recognized
market, the published



                                       30
<PAGE>   37

selling prices on or nearest to such valuation date shall establish the fair
market value of such security. Fair market value so determined shall be
conclusive for all purposes of the Plan and Trust.

Section 6.8 Allocation of Values. As of each Valuation Date, the Administrator
shall allocate the gains or losses of each Investment Fund since the last
preceding Valuation Date to Participant's Accounts in the same proportion that
the value of the Participant's Accounts invested in the Investment Fund in
question bears to the total value of all Participants' Accounts invested in the
Investment Fund. Such determinations shall be made without taking into account
deferrals of Compensation or Company contributions attributable to the last
Valuation Date or allocations of forfeitures for the Plan Year; provided,
however, that gains and losses shall not be allocated with respect to amounts
being held in suspense under Section 3.8(b).

Section 6.9 Applicability of Account Values. The value of an Account, as
determined as of a given date under this Article, plus any amounts subsequently
credited thereto and less any amounts withdrawn, distributed or transferred to
suspense, shall remain the value thereof for all purposes of the Plan and Trust
until revalued hereunder.



                                       31
<PAGE>   38

                                  ARTICLE VII.
                                     VESTING

Section 7.1 Vesting of Accounts.

            (a)   401(k), Rollover and Qualified Accounts. Each Participant
shall be 100% vested in his 401(k), Rollover and Qualified Accounts at all
times.

            (b)   Matching Accounts. Except as provided in subsection (c), the
vested portion of a Participant's Matching Account shall be the percentage of
such Account shown on the following table:

<TABLE>
<CAPTION>
                (i)    Years of Vesting Service           Vested Percentage
                       ------------------------           -----------------
                <S>                                       <C>
                              less than 3                         0%
                                   3                              20%
                                   4                              40%
                                   5                              60%
                                   6                              80%
                               7 or more                         100%
</TABLE>

                  (ii)  Effective July 1, 2001, if the Participant who is not
      fully vested in his Matching Account has made an in-service withdrawal
      from his Matching Account, the vested amount of such Account shall be the
      excess of

                        (A)   the product of

                              (I)   his vested percentage as calculated under
                                    paragraph (i), and

                              (II)  the sum of the balance of his Matching
                                    Account and the amount of the withdrawal
                                    over

                        (B)   the amount of the withdrawal.

            (c)   Notwithstanding the above, the interest of a Participant in
his Matching Account shall become fully vested upon the earliest to occur of:

                  (i)   his death while an Employee,

                  (ii)  his Normal Retirement Date, or

                  (iii) his Disability Retirement Date.



                                       32
<PAGE>   39

            (d)   Disposition of Forfeitures. Forfeitures that occur during the
Plan Year shall first be used to the extent necessary to restore the Matching
Accounts of rehired Participants (as provided in Section 7.2). Any remaining
forfeitures may be used to pay administrative expenses or will be included in,
reduce and be considered part of the Company's Matching Contribution for the
Plan Year in which the forfeiture arises.

            (e)   Amendment of Vesting Schedule. Upon any amendment of the
vesting schedule, a Participant with at least three Years of Vesting Service may
elect to have his vested interest calculated pursuant to the vesting schedule
which would have been in effect but for the amendment. However, no election
shall be provided for any Participant whose nonforfeitable percentage under the
Plan as amended at anytime cannot be less than such percentage determined
without regard to such amendment.

Section 7.2 Forfeitures.

            (a)   If a Participant has a Separation from the Service due to
resignation or discharge, the portion of his Matching Account which is not
vested shall be forfeited upon the earlier of his receipt of his distribution
from the Plan under Article XI or his completion of a Forfeiting Break in
Service. Pending application under Section 3.4(b) or Section 3.5(c), Forfeitures
shall be held in suspense and shall not be commingled with amounts held in
suspense under Section 3.8.

            (b)   If a Participant has a Separation from the Service prior to
becoming vested in any portion of his Matching Account, a distribution shall be
deemed to have occurred upon such Separation from the Service for purposes of
subsection (a).

            (c)   If the Participant is subsequently reemployed before he has a
Forfeiting Break In Service, the Participant's vested portion of this account at
any time shall equal P[AB+(R x D)](R x D). For purposes of applying the formula:
P is the vested percentage of the relevant time; AB is the account balance at
the relevant time; D is the amount of any distribution made to the Participant
from the Matching Account; and R is the ratio of the account balance at the
relevant time to the account balance after any such distribution.

Section 7.3 Restoration of Forfeitures. If a Participant whose Matching Account
is not then fully vested

            (a)   has a Separation from the Service,

            (b)   suffers a forfeiture of the portion of such Account which is
not vested,

            (c)   again becomes an Eligible Employee or employed by a Company
Affiliate before he has a Forfeiting Break in Service, and

            (d)   repays to the Plan the full amount, if any, distributed to him
from his Accounts before the end of five consecutive Break in Service Years
commencing after his distribution, or, if earlier, the fifth anniversary of his
reemployment,



                                       33
<PAGE>   40

then the amounts forfeited by such Participant shall be restored to his Matching
Account. The restored amounts will be funded by applying forfeitures pending
reallocation and Company contributions, in that order, as necessary.



                                       34
<PAGE>   41

                                  ARTICLE VIII.
                             IN-SERVICE WITHDRAWALS

Section 8.1 In-Service Withdrawal Approval. A Participant shall apply for any
in-service withdrawal in such manner and with such advance notice as prescribed
by the Administrator. The Administrator is responsible for determining that an
in-service withdrawal request conforms to the requirements described in this
Article and granting such request.

Section 8.2 Payment Form and Medium. The form of payment for an in-service
withdrawal shall be a cash lump sum. However, if all or any portion of an
in-service withdrawal represents an Eligible Rollover Distribution, a
Participant may elect a Direct Rollover.

Section 8.3 Source and Timing of In-Service Withdrawal Funding.

            (a)   An in-service withdrawal to a Participant shall be made solely
from the assets of his own Accounts and will be based on the Account values as
of the Valuation Date the in-service withdrawal is processed. The available
assets shall be determined first by Account type and then by investment type
within each type of Account. Within each Account used for funding an in-service
withdrawal, amounts shall be taken by type of investment in direct proportion to
the market value of the Participant's interest in each Investment Fund as of the
Valuation Date on which the in-service withdrawal is processed.

            (b)   In-service withdrawals will be funded on the date following
the Valuation Date as of which the in-service withdrawal is processed. The
Trustee shall make payment as soon thereafter as administratively feasible.

Section 8.4 Hardship Withdrawals. Effective July 1, 2001, Hardship withdrawals
are not available. Prior to July 1, 2001, an Active Participant may take an
in-service withdrawal from the 401(k) Contributions in his 401(k) Account (but
excluding earnings) on account of Hardship, subject to the following:

            (a)   A Participant's aggregate Hardship withdrawals shall not
exceed the lesser of

                  (i)   the amount which is necessary to satisfy the Hardship
      (including certain amounts necessary to pay federal, state or local income
      taxes or penalties reasonably anticipated to result from the distribution
      as set forth in the Rules of the Plan), or

                  (ii)  the amount which cannot be satisfied from other
      resources which are reasonably available to the Participant.

            (b)   The Participant shall obtain all distributions (other than
Hardship withdrawals), and all nontaxable loans currently available under all
plans maintained by the Company or any Company Affiliate;



                                       35
<PAGE>   42

            (c)   Any other conditions prescribed by the Commissioner of
Internal Revenue through the publication of revenue rulings, notices, and/or
other documents of general applicability, as an alternate method under which a
Hardship distribution will be deemed to be necessary to satisfy an immediate and
heavy financial need.

Section 8.5 Age 59-1/2 Withdrawal. Effective July 1, 2001, an Active Participant
may take a withdrawal from his 401(k) Account, Qualified Account, Rollover
Account and vested Matching Account when he attains age 59-1/2.

Section 8.6 Age 70-1/2 Withdrawal. Effective January 1, 1997, an Active
Participant (other than a Five Percent Owner) who attains age 70-1/2 may take a
withdrawal of his entire vested Accounts.

Section 8.7 Fees. Effective July 1, 2001, the Participant's Accounts may be
charged for actual administrative fees charged by a third-party recordkeeper for
in-service withdrawals. Prior to July 1, 2001, the Participant's 401(k) Account
will be charged for actual administrative fees up to $100 charged by a
third-party recordkeeper for a Hardship withdrawal, and any fees exceeded $100
will be paid by the Company.



                                       36
<PAGE>   43

                                   ARTICLE IX.
                                      LOANS

Section 9.1 Participant Loans Permitted. Effective July 1, 2001, loans to
Participants are permitted pursuant to the terms and conditions set forth in
this Article. However, loans to Project Employees are not permitted. At the
discretion of the Administrator, Participants may be charged a reasonable
administrative fee in connection with obtaining and/or maintaining a Plan loan.

Section 9.2 Loan Application, Note and Security. A Participant shall apply for
any loan in such manner and with such advance notice as prescribed by the
Administrator. All loans shall be evidenced by a promissory note, secured only
by the portion of the Participant's Account from which the loan is made, and the
Plan shall have a lien on this portion of his Account.

Section 9.3 Loan Approval. The Administrator is responsible for determining that
a loan request conforms to the requirements described in this Article and
granting such request.

Section 9.4 Loan Funding Limits. The loan amount must meet all of the following
limits as determined as of the date the loan is processed:

            (a)   Plan Minimum Limit. The minimum amount for any loan is $1,000.

            (b)   Plan Maximum Limit. Subject to the legal limit described in
(c) below, the maximum a Participant may borrow, including the outstanding
balance of existing Plan loans, is 100% of the vested amount of his 401(k)
Account, Qualified Account, Rollover Account and Matching Account.

            (c)   Legal Maximum Limit. The maximum a Participant may borrow,
including the outstanding balance of existing Plan loans, is 50% of the vested
balance of his Accounts, not to exceed $50,000. However, the $50,000 maximum is
reduced by the Participant's highest outstanding loan balance during the 12
month period ending on the day before the date as of which the loan is made. For
purposes of this paragraph, the qualified plans of all Company Affiliates shall
be treated as though they are part of this Plan to the extent it would decrease
the maximum loan amount.

Section 9.5 Maximum Number of Loans. Participants may have only one loan
outstanding at any given time.

Section 9.6 Source and Timing of Loan Funding

            (a)   A loan to a Participant shall be made solely from the assets
of his own Accounts. The available assets shall be determined first by Account
type and then by investment type within each type of Account. The hierarchy for
loan funding by type of Account shall be the order listed in Section 9.4(b).
Within each Account used for funding a loan, amounts shall taken



                                       37
<PAGE>   44

by type of investment in direct proportion to the market value of the
Participant's interest in each Investment Fund as of the Valuation Date on which
the loan is processed.

            (b)   Loans will be funded on the Trustee's next business date
following the Valuation Date as of which the loan is processed, The Trustee
shall make payment to the Participant as soon thereafter as administratively
feasible.

Section 9.7 Interest Rate

            The interest rate charged on Participant loans shall be a fixed
reasonable rate of interest, determined from time to time by the Administrator,
which provides the Plan with a return commensurate with the prevailing interest
rate charged by persons in the business of lending money for loans which would
be made under similar circumstances. The interest rate is determined as set
forth in Appendix B and may be changed from time to time without the necessity
of amending this Plan and Trust document.

Section 9.8 Repayment

            Substantially level amortization shall be required of each loan with
payments made at least monthly, generally through payroll deduction. Loans may
be prepaid in full or in part at any time without penalty. The Participant may
choose the loan repayment period, not to exceed four years, except that the loan
repayment period may be for any period not to exceed 15 years if the purpose of
the loan is to acquire the Participant's principal residence.

Section 9.9 Repayment Hierarchy

            Loan principal payments shall be credited to the Participant's
Accounts in the same order, on a pro rata basis, used to fund the loan. Loan
interest shall be credited to the Participant's Accounts in direct proportion to
the principal payment. Loan payments are credited by investment type based upon
the Participant's current investment election for new contributions.

Section 9.10 Repayment Suspension

            The Administrator may agree to a suspension of loan payments for up
to three months for a Participant who is on a Company-authorized leave of
absence without pay. During the suspension period interest shall continue to
accrue on the outstanding loan balance. At the expiration of the suspension
period all outstanding loan payments and accrued interest thereon shall be due
unless otherwise agreed upon by the Administrator.

Section 9.11 Loan Default

            (a)   A loan is treated as in default if a scheduled loan payment is
not made at the time required. A Participant shall then have a grace period to
cure the default before it becomes final. Such grace period shall be for a
period that does not extend beyond the last day of the calendar quarter
following the calendar quarter in which the scheduled loan payment was due or
such lesser or greater maximum period as may later be authorized by Code Section
72(p).



                                       38
<PAGE>   45

            (b)   In the event a default is not cured within the grace period,
the Administrator may direct the Trustee to report the outstanding principal
balance of the loan and accrued interest thereon as a taxable distribution to
the Participant. As soon as a Plan withdrawal or distribution to such
Participant would otherwise be permitted, the Administrator may instruct the
Trustee to execute upon its security interest in the Participant's Accounts by
distributing the note to the Participant.

Section 9.12 Call Feature

            The Administrator shall provide a reasonable time period for a
Participant to repay his loan in full after his employment with all Company
Affiliates has terminated or if the Plan is terminated. After the expiration of
the reasonable time period, the Administrator shall have the right to call the
Participant's loan and treat the event as a distribution.

Section 9.13 Loan Administration

            (a)   The Administrator shall direct and administer loans made to
Participants pursuant to the Plan and shall have responsibility for such loans
including, without limitation, responsibility for the following: the development
of procedures and documentation for the loans; the acceptance of loan
applications; the preparation and execution of loan documentation; the
disclosure of interest rate information as required by Regulation Z of the
Federal Reserve Board promulgated pursuant to the Truth in Lending Act, 15
U.S.C. Sec. 1601 et seq.; the enforcement of promissory note terms, including,
but not limited to, directing the Trustee to take specified actions; and the
maintenance of accounts and records regarding interest and principal payments on
promissory notes. The Trustee shall not be responsible for reviewing such
documents, records, and procedures, but the Trustee may from time to time
examine such documents, records, and procedures as it deems appropriate.

            (b)   The Trustee appoints the Administrator custodian for the
physical custody and safekeeping of the promissory notes and other documents
evidencing Participant loans.

            (c)   The Trustee shall account for Participant loans in aggregate,
as a single asset of the Trust. Within 30 days of the close of each fiscal year
of the Trust, and within 30 days of the termination of this Agreement, the
Administrator shall file with the Trustee a written account setting forth in the
aggregate all investments, receipts, disbursements, and other transactions
effected by it with respect to Participant loans during such fiscal year or the
period from the close of the last fiscal year to the date of such termination.
The Trustee may rely on such accounting by the Administrator in valuing and
accounting for Trust assets as required by this Trust and shall be under no
liability for accounting for Participant loans or transactions relating to
Participant loans.

            (d)   The Administrator shall direct the Trustee with respect to all
returns and filings required by the Code or applicable State law, as a result of
any Participant loan, including, but not limited to, returns and filings
required by reason of failure by the borrower to make any payments. The Trustee
shall be under no liability for failure to file such returns or reports, unless
as a result of failure to follow the Administrator's direction.



                                       39
<PAGE>   46

                                   ARTICLE X.
                     EMPLOYMENT AFTER NORMAL RETIREMENT DATE

Section 10.1 Continuation of Employment.

            (a)   A Participant may, subject to subsection (b) and Section 17.3,
remain in the employ of the Company or a Company Affiliate after attaining his
Normal Retirement Date.

            (b)   Notwithstanding subsection (a), the Company reserves the right
to require a Participant to retire in accordance with Section 12(c) of the Age
Discrimination in Employment Act of 1967, as amended and applicable state law.

Section 10.2 Continuation of Participation. A Participant retained in the employ
of the Company after his Normal Retirement Date shall continue as an Active
Participant of the Plan.

Section 10.3 Required Minimum Distributions.

            (a)   Not a Five Percent Owner. Effective January 1, 1997 for a
Participant who is not a Five Percent Owner in the calendar year in which he
attains age 70-1/2 distributions shall be made or commence not later than the
later of (i) the April 1 following the calendar year in which his Separation
from the Service occurs, or (ii) the April 1 following the calendar year in
which he attains age 70-1/2.

            (b)   Five Percent Owner. Effective January 1, 1997, a Participant
who is a Five Percent Owner in the calendar year in which he attains age 70-1/2
shall receive or commence the receipt of the entire amount credited to his
Accounts in accordance with Article X on the April 1 following the end of the
calendar year in which he attains age 70-1/2.

            (c)   Notwithstanding the above, all distributions shall satisfy the
minimum distribution incidental death benefit requirements of Proposed Treas.
Reg. Sec. 1.401(a)(9)-2 (or any successor thereto).



                                       40
<PAGE>   47

                                   ARTICLE XI.
                                  DISTRIBUTIONS

Section 11.1 Rights Upon Normal or Disability Retirement or Separation from the
Service. Upon a Participant's Normal or Disability Retirement or Separation from
the Service, he shall be entitled to receive the vested amount credited to his
Accounts in accordance with Section 11.2. Under no circumstances will a
Participant's 401(k) and Qualified Accounts be distributed prior to his
Separation from the Service except as permitted under Code Section 401(k)(d)(10)
or as required by Section 3.3(f), 3.5 or 3.6.

Section 11.2 Distribution of Accounts. Effective July 1, 2001, distribution of
the vested Accounts of a Participant or a Beneficiary of a deceased Participant
shall be made in one of the following forms as elected by the Participant or
Beneficiary:

            (a)   in either (1) a single lump sum or (2) a portion paid in a
lump sum immediately and the remainder paid in a lump sum at a later date, as
follows:

                  (i)   if all of the Accounts are invested in Investment Funds
      other than Safeway Stock, such lump sum payments shall be in cash;

                  (ii)  if all or any portion of such Accounts are invested in
      Safeway Stock but such Participant is less than 100% vested in his
      Matching Account, then such lump sum payments shall be in cash;

                  (iii) if all or any portion of such Accounts are invested in
      Safeway Stock and such Participant or Beneficiary of a deceased
      Participant is 100% vested in his Matching Account, then, at the election
      of such Participant or Beneficiary:

                        (A)   payments shall be entirely in cash, or

                        (B)   payments shall be made:

                              (I)   for the portion of the Accounts that is not
                                    invested in Safeway Stock, in cash; and

                              (II)  for the portion of the Accounts that is
                                    invested in Safeway Stock, in cash or, if
                                    elected, in the form of whole shares of
                                    Safeway Stock and cash in an amount equal to
                                    the value of any fractional share of Safeway
                                    Stock, determined based on its fair market
                                    value as of the date of distribution.

            (b)   in cash installments paid over a period not to exceed the life
expectancy of the Participant and his Beneficiary.



                                       41
<PAGE>   48

            (c)   in a direct rollover to the extent that the payment is an
Eligible Rollover Distribution and the recipient is a Distributee.

Prior to July 1, 2001, distribution of the vested Accounts of a Participant or a
Beneficiary of a deceased Participant shall be made only in a cash lump sum or
direct rollover.

Section 11.3 Small Accounts. The Participant shall select the method by which
his vested Accounts will be distributed to him. Notwithstanding the foregoing,
effective January 1, 1998, if the distributable balance of the Participant's
Accounts is $5,000 or less and the Participant fails to elect a form of
distribution when payable, then the Trustee shall distribute the Participant's
vested Accounts in a lump sum. Additionally, if the distributable balance of the
Participant's Accounts is $200 or less, then the Trustee shall distribute the
Participant's vested Accounts in a lump sum, and the Participant shall have no
right to select the manner in which he will receive his distribution from the
Plan.

Section 11.4 Timing.

            (a)   Distribution of a Participant's vested Accounts will normally
be made or commenced as soon as practicable following the Participant's date of
Separation from the Service, but not later than the 60th day next following the
close of the Plan Year during which the Participant attains age 65 years or, if
later, during which his date of Separation from the Service occurs, except as
otherwise permitted under circumstances described in Treas. Reg. Sec.
1.401(a)-14(d). If the value of the Participant's Accounts is over $5,000, the
Participant (but not his Beneficiary in the event of the Participant's death)
must consent in writing to receive the distribution. However, a Participant may
not elect to defer distribution beyond the date described above.

            (b)   Distributions must commence as required under Section 10.3,
Code Section 401(a)(9) and the regulations thereunder including the minimum
incidental death benefit rules under Prop. Treas. Reg. Sec. 1.401(a)(9)-2.

Section 11.5 Notice. If a distribution is one to which Code Sections 401(a)(11)
and 417 do not apply, distribution of a Participant's Accounts may commence less
than 30 days after the notice required under Treas. Reg. Sec. 1.411(a)-11(c) is
given, provided that

            (a)   the Administrator clearly informs the Participant that he has
a right to a period of at least 30 days after receiving the notice to consider
the decision of whether or not to elect a distribution (and, if applicable, a
particular distribution option), and

            (b)   the Participant, after receiving the notice, affirmatively
elects a distribution.



                                       42
<PAGE>   49

Section 11.6 Distribution on Death

            (a)   If a Participant dies before distribution of his Accounts
commences, then the vested balance of his Accounts shall be paid to his
Beneficiary in one of the available forms, as elected by the Beneficiary.
Payment to a Beneficiary must either: (1) be completed by the end of the
calendar year that contains the fifth anniversary of the Participant's death or
(2) begin by the end of the calendar year that contains the first anniversary of
the Participant's death and be completed within the period of the Beneficiary's
life or life expectancy, except that:

                  (i)   If the surviving Spouse is the Beneficiary, payments
      need not begin until the later of (A) the end of the calendar year that
      includes the first anniversary of the Participant's death or (B) the end
      of the calendar year in which the Participant would have been required to
      commence payments under Section 10.3, and must be completed within the
      Spouse's life or life expectancy; and

                  (ii)  If the Participant and the surviving Spouse who is the
      Beneficiary die (A) before the date on which the Participant would have
      been required to begin payments under Section 10.3 and (B) before payments
      have begun to the Spouse, the Spouse shall be treated as the Participant
      in applying these rules.

            (b)   If payment has commenced prior to the Participant's death,
payment of the Participant's Accounts shall be made in such manner that the
remaining interest is distributed at least as rapidly as under the method being
used as of the date of the Participant's death.

Section 11.7 Determination of Value of Accounts. When a distribution under the
Plan is made, the value of a Participant's Accounts shall be determined as of
the Valuation Date coinciding with or next preceding the Participant's
distribution date (after all adjustments then required or permitted under the
Plan have been made).



                                       43
<PAGE>   50

                                  ARTICLE XII.
                              TOP HEAVY PROVISIONS

Section 12.1 Top Heavy Determination.

            (a)   Solely in the event that this Plan ever becomes Top Heavy, as
defined herein, the provisions of this Article shall apply.

            (b)   Solely for the purposes of this Article, the following
definitions shall be used:

                  (i)   "Aggregation Group" means

                        (A)   each plan of the Company or a Company Affiliate in
                              which a Key Employee is a Participant (including
                              any such plan which has been terminated if such
                              plan was maintained by the Company or Company
                              Affiliate within the last five years ending on the
                              Determination Date for the Plan Year in question)
                              but excluding a plan meeting the requirements of
                              Code Section 401(k)(11); provided, however, that
                              such plan allows only contributions required under
                              Code Section 401(k)(11)), and

                        (B)   each other plan of the Company or a Company
                              Affiliate which enables any plan described in
                              paragraph a to meet the requirements of Code
                              Section 401(a)(4) or 410.

                  (ii)  "Determination Date" means, with respect to any Plan
      Year, the last day of the preceding Plan Year, or in the case of the first
      Plan Year, the last day of such Plan Year.

                  (iii) "Key Employee" means an Employee, a former Employee or
      the Beneficiary of a former Employee, if, in the Plan Year containing the
      Determination Date or in any of the four preceding Plan Years, such
      Employee or former Employee is or was

                        (A)   an officer of the Company or a Company Affiliate
                              whose Statutory Compensation for the Plan Year in
                              question exceeds fifty percent of the amount in
                              effect under Code Section 415(b)(1)(A) (not more
                              than fifty Employees or, if less, the greater of
                              three Employees or ten percent of the Employees
                              shall be treated as officers),

                        (B)   one of the ten Employees owning (or considered as
                              owning within the meaning of Code Section 318)
                              both the largest interest in the Company or a
                              Company Affiliate and more



                                       44
<PAGE>   51

                              than one-half of one percent interest therein and
                              whose Statutory Compensation for the Plan Year in
                              question equals or exceeds the amount in effect
                              under Code Section 415(c)(1)(A); provided,
                              however, if two Employees have the same interest
                              in the Company or a Company Affiliate, the
                              Employee with the greater Statutory Compensation
                              for such Plan Year shall be treated as having the
                              larger interest,

                        (C)   a Five Percent Owner or a one percent owner
                              (within the meaning of Code Section 416(i)(1)(B)
                              and (C)) of the Company or a Company Affiliate
                              whose Statutory Compensation for the Plan Year in
                              question exceeds $150,000.

                  (iv)  "Non-Key Employee" means any Employee who is not a Key
      Employee.

                  (v)   The Plan shall be Top Heavy if, as of any Determination
      Date, the aggregate of the Accounts of Key Employees under all plans in
      the Aggregation Group (or under this Plan and such other plans as the
      Company elects to take into account under Code Section 416(g)(2)(A)(ii))
      exceeds sixty percent of the aggregate of the Accounts for all Key
      Employees and Non-Key Employees. In making this calculation as of a
      Determination Date,

                        (A)   each Account balance as of the most recent
                              valuation date occurring within the Plan Year
                              which includes the Determination Date shall be
                              determined,

                        (B)   an adjustment for contributions due as of the
                              Determination Date shall be determined,

                        (C)   the Account balance of any Employee or former
                              Employee shall be increased by the aggregate
                              distributions made during the five-year period
                              ending on the Determination Date with respect to
                              such Employee or former Employee,

                        (D)   the Account balance of

                              (I)   any Non-Key Employee who was a Key Employee
                                    for any prior Plan Year, and

                              (II)  any former Employee who performed no
                                    services for the Company or a Company
                                    Affiliate during the five-year period ending
                                    on the Determination Date shall be ignored,
                                    and



                                       45
<PAGE>   52

                        (E)   if there have been any rollovers to or from any
                              Account, the balance of such Account shall be
                              adjusted, as required by Code Section
                              416(g)(4)(A).

      Notwithstanding the foregoing, this Plan shall be Top Heavy if, as of any
      Determination Date, it is required by Code Section 416(g) to be included
      in an Aggregation Group which is determined to be a Top Heavy Group.

                  (vi)  "Top Heavy Group" means any Aggregation Group if, as of
      the Determination Date, the sum of

                        (A)   the present value of the cumulative accrued
                              benefits for all Key Employees under all defined
                              benefit plans in such Aggregation Group, and

                        (B)   the aggregate of the accounts of all Key Employees
                              under all defined contribution plans in such
                              Aggregation Group

      exceeds sixty percent of a similar sum determined for all Key Employees
      and Non-Key Employees.

                  (vii) "Statutory Compensation" shall have the meaning set
      forth in Code Section 414(q)(4) for purposes of subsection (b)(iv). For
      purposes of determining the minimum required contribution under subsection
      12.2(b)(ii), "Statutory Compensation" for Key Employees shall include
      contributions to 401(k) Accounts.

Section 12.2 Minimum Benefits.

            (a)   For any Plan Year in which the Plan is Top Heavy, the total
allocation to the Qualified Account or Matching Account of any Employee who is a
Non-Key Employee at the end of such Plan Year and is

                  (i)   entitled to an allocation to such Account under Section
      3.4, or

                  (ii)  not entitled to an allocation under such Sections solely
      because he did not elect to defer Compensation under Section 3.3 of the
      Plan, shall not be less than that determined under subsection (b).

            (b)   The allocation determined under this subsection shall be a
percentage of the Statutory Compensation of such Non-Key Employee which is not
less than the lesser of

                  (i)   three percent, or

                  (ii)  that percentage reflecting the ratio of

                        (A)   the allocations under Section 3.4 to



                                       46
<PAGE>   53

                        (B)   Statutory Compensation

for the Key Employee with respect to whom such ratio is highest for such Plan
Year.

            This Section shall not apply to any Participant to the extent the
Participant is covered under any other plan sponsored by the Company or a
Company Affiliate provided the minimum allocation or benefit requirement
applicable to Top Heavy Plans will be met in the other plan or plans. For the
purposes of determining whether or not the provisions of this Section have been
satisfied, both contributions or benefits under Chapter 2 of the Code (relating
to tax on self-employment income), Chapter 21 of the Code (relating to Federal
Insurance Contributions Act), Title 11 of the Social Security Act, or any other
Federal or state laws and Company contributions made under any salary reduction
or similar arrangement shall be disregarded.

            (c)   An Employee described in subsection (a)(ii) shall be treated
as a Participant hereunder.

Section 12.3 Vesting

            (a)   For any Plan Year in which the Plan is Top Heavy, the vested
percentage of the Matching Account of each Participant who completes an Hour of
Service in such Plan Year shall be the percentage of such Account shown on the
following table:


<TABLE>
<CAPTION>
<S>                                                         <C>
             Years of Vesting Service                       Vested Percentage

                   Less than 2                                      0%
                        2                                          20%
                        3                                          40%
                        4                                          60%
                        5                                          80%
                   6 (or more)                                     100%
</TABLE>

However, the vested percentage of a Participant's Matching Account shall be not
less than the vested percentage determined as of the last day of the last Plan
Year in which the Plan was not Top Heavy.

            (b)   For any Plan Year in which the Plan is not Top Heavy which
follows one or more Plan Years for which the Plan has been Top Heavy, Article
VII shall again become applicable as an amendment to the Plan. Therefore, each
Participant who has had his vested percentage computed under subsection (a) and
who has completed at least three Years of Vesting Service shall be permitted to
elect to have his vested percentage computed in accordance with subsection (a)
for such Plan Year and any subsequent Plan Year in which the Plan is no longer
Top Heavy. Such Participant may make such election within an election period
beginning no later than the first day of the first Plan Year in which the Plan
is no longer Top Heavy and ending no later than the later of



                                       47
<PAGE>   54

                  (i)   the 60th day of such Plan Year, or

                  (ii)  a date which is 60 days after the day the Participant is
      issued written notice of his right to make such election by the
      Administrator.



                                       48
<PAGE>   55

                                  ARTICLE XIII.
                            ADMINISTRATIVE PROVISIONS

Section 13.1 Duties and Powers of the Administrator.

            (a)   The Administrator shall administer the Plan in accordance with
the Plan and ERISA and, in addition to the duties specifically set forth in the
Plan, shall have full discretionary power and authority:

                  (i)    To engage actuaries, attorneys, accountants,
      appraisers, brokers, consultants, administrators, recordkeepers,
      custodians, physicians or other firms or persons and (with its officers,
      directors and employees) to rely upon the reports, advice, opinions or
      valuations of any such persons except as required by law;

                  (ii)   To adopt Rules of the Plan that are not inconsistent
      with the Plan or applicable law and to amend or revoke any such rules;

                  (iii)  To construe and interpret the Plan and the Rules of the
      Plan and to remedy any ambiguities and inconsistencies therein;

                  (iv)   To determine questions of eligibility and vesting of
      Participants;

                  (v)    To determine entitlement to allocations of
      contributions and forfeitures and to distributions of Participants, former
      Participants, Beneficiaries, and all other persons;

                  (vi)   To make findings of fact as necessary to make any
      determinations and decisions in the exercise of such discretionary power
      and authority;

                  (vii)  To appoint claims and review officials to conduct
      claims procedures as provided in Section 13.5;

                  (viii) To compute, certify to and direct the Trustee with
      regard to the amount and kind of benefits payable to Participants and
      their Beneficiaries;

                  (ix)   To authorize all disbursements by the Trustee from the
      Trust;

                  (x)    To maintain all records that may be necessary for the
      administration of the Plan other than those maintained by the Trustee;

                  (xi)   To delegate any power or duty to any firm or person
      engaged under paragraph (i) or to any other person or persons; and

                  (xii)  To select or eliminate Investment Funds.



                                       49
<PAGE>   56

            (b)   Every finding, decision, and determination made by the
Administrator shall, to the full extent permitted by law, be final and binding
upon all parties, except as provided in Section 13.4 or to the extent found by a
court of competent jurisdiction to constitute an abuse of discretion.

            (c)   Notwithstanding anything contained in the Plan to the
contrary, all actions taken by the Administrator shall cause the Plan or the
Trust to be treated as a "domestic trust" under Treas. Reg. Sec. 301.7701, and
no action will be taken by the Administrator, or, if taken, will be valid, which
would cause the Plan or the Trust not to be considered as a domestic trust.

Section 13.2 Committee. The Company, as Administrator of the Plan, has appointed
a Committee to administer the Plan on its behalf. The Company shall provide the
Trustee with the names and specimen signatures of any persons authorized to
serve as Committee members and act as or on its behalf. Any Committee member
appointed by the Company shall serve at the pleasure of the Company but may
resign by written notice to the Company. Committee members shall serve without
compensation from the Plan for such services. Except to the extent that the
Company otherwise provides, any delegation of duties to a Committee shall carry
with it the full discretionary authority of the Administrator to complete such
duties.

Section 13.3 Committee Operating Rules.

            (a)   Actions of Majority. Any act delegated by the Company to the
Committee may be done by a majority of its members. The majority may be
expressed by a vote at a meeting or in writing without a meeting, and a majority
action shall be equivalent to an action of all Committee members.

            (b)   Meetings. The Committee shall hold meetings upon such notice,
place and times as it determines necessary to conduct its functions properly,

            (c)   Reliance by Trustee. The Committee may authorize one or more
of its members to execute documents on its behalf and may authorize one or more
of its members or other individuals who are not members to give written
direction to the Trustee in the performance of its duties. The Committee shall
provide such authorization in writing to the Trustee with the name and specimen
signatures of any person authorized to act on its behalf. The Trustee shall
accept such direction and rely upon it until notified in writing that the
Committee has revoked the authorization to give such direction. The Trustee
shall bear no liability for acting upon such direction and relying upon it until
notified in writing that the Committee has revoked the authorization to give
such direction. The Trustee shall be under no duty to make any investigation or
inquiry about the correctness of such direction or written notice.

Section 13.4 Inspection of Records. Copies of the Plan and any other documents
and records which a Participant is entitled by law to inspect shall be open to
inspection by such Participant or such Participant's duly authorized
representatives at any reasonable business hour at the principal office of the
Company, any Company work site at which at least fifty Employees regularly
perform services and such other locations as the Secretary of Labor may require.

Section 13.5 Claims Procedure.



                                       50
<PAGE>   57
            (a) A claim by a Participant, Beneficiary or any other person shall
be presented to the claims official appointed by the Administrator in writing
within the maximum time permitted by law or under the regulations promulgated by
the Secretary of Labor or his delegate pertaining to claims procedures.

            (b) The claims official shall, within a reasonable time, consider
the claim and shall issue his determination thereon in writing.

            (c) If the claim is granted, the appropriate distribution or payment
shall be made from the Trust Fund or by the Company.

            (d) If the claim is wholly or partially denied, the claims official
shall, within ninety days (or such longer period as may be reasonably
necessary), provide the claimant with written notice of such denial, setting
forth, in a manner calculated to be understood by the claimant

                  (i) the specific reason or reasons for such denial,

                  (ii) specific references to pertinent Plan provisions on which
      the denial is based,

                  (iii) a description of any additional material or information
      necessary for the claimant to perfect the claim and an explanation of why
      such material or information is necessary, and

                  (iv) an explanation of the Plan's claim review procedure.

            (e) The Administrator shall provide each claimant with a reasonable
opportunity to appeal the claims official's denial of a claim to a review
official (appointed by the Administrator in writing) for a full and fair review.
The claimant or his duly authorized representative

                  (i) may request a review upon written application to the
      review official (which shall be filed with it),

                  (ii) may review pertinent documents, and

                  (iii) may submit issues and comments in writing.

            (f) The review official may establish such time limits within which
a claimant may request review of a denied claim as are reasonable in relation to
the nature of the benefit which is the subject of the claim and to other
attendant circumstances but which, in no event, shall be less than 60 days after
receipt by the claimant of written notice of denial of his claim.

            (g) The decision by the review official upon review of a claim shall
be made not later than 60 days after his receipt of the request for review,
unless special circumstances


                                       51
<PAGE>   58

require an extension of time for processing, in which case a decision shall be
rendered as soon as possible, but not later than 120 days after receipt of such
request for review.

            (h) The decision on review shall be in writing and shall include
specific reasons for the decision written in a manner calculated to be
understood by the claimant with specific references to the pertinent Plan
provisions on which the decision is based.

            (i) The claims official and the review official shall have full
discretionary power and authority to construe the Plan and the Rules of the
Plan, to determine questions of eligibility, vesting and entitlements and to
make findings of fact as under Section 13.1 and, to the extent permitted by law,
the decision of the claims official (if no review is properly requested) or the
decision of the review official on review, as the case may be, shall be final
and binding on all parties except to the extent found by a court of competent
jurisdiction to constitute an abuse of discretion.

            (j) Except as otherwise decided by the Administrator, the Committee
will be the claims official and reviewing official for purposes of this Section.

Section 13.6 Conflicting Claims. If the Administrator is confronted with
conflicting claims concerning a Participant's Accounts, the Administrator may
interplead the claimants in an action at law, or in an arbitration conducted in
accordance with the rules of the American Arbitration Association, as the
Administrator shall elect in its sole discretion. In either case, the attorneys'
fees, expenses and costs reasonably incurred by the Administrator in such
proceeding shall be paid from the Participant's Accounts.

Section 13.7 Payments. In the event any amount becomes payable under the Plan to
a minor or a person who, in the sole judgment of the Administrator, is
considered by reason of physical or mental condition to be unable to give a
valid receipt therefor, the Administrator may direct that such payment be made
to any person found by the Administrator, in its sole judgment, to have assumed
the care of such minor or other person. Any payment made pursuant to such
determination shall constitute a full release and discharge of the Trustee, the
Administrator and the Company and their officers, directors, employees, owners,
agents and representatives.

Section 13.8 Effect of Delay or Failure to Ascertain Amount Distributable or to
Locate Distributee.

            (a) If an amount payable under the Plan cannot be ascertained or the
person to whom it is payable has not been ascertained or located within the
stated time limits and reasonable efforts to do so have been made, then
distribution shall be made not later than 60 days after such amount is
determined or such person is ascertained or located, or as prescribed in
subsection (b).

            (b) If, within one year after a Participant has a Separation from
the Service, the Administrator, in the exercise of due diligence, has failed to
locate him (or if such Separation from the Service is by reason of his death,
has failed to locate the Participant's Beneficiary, his entire distributable
interest in the Plan shall be forfeited and applied to pay expenses of the Plan
or to reduce the Company's Matching Contribution under Section 3.4; provided,
however, that if


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<PAGE>   59

the Participant (or in the case of his death, the Participant's Beneficiary)
makes proper claim therefor under Section 13.5, the amount so forfeited shall be
restored to the Participant's Account, applying forfeitures pending application,
Company contributions and unallocated earnings and gains of the Trust Fund, in
that order, as necessary.

Section 13.9 Service of Process. The General Counsel of the Company is hereby
designated as agent of the Plan for the service of legal process.

Section 13.10 Limitations Upon Powers of the Administrator. The Plan shall not
be operated so as to discriminate in favor of Highly Compensated Employees. The
Plan shall be uniformly and consistently interpreted and applied with regard to
all Participants in similar circumstances. The Plan shall be administered,
interpreted and applied fairly and equitably and in accordance with the
specified purposes of the Plan.

Section 13.11 Assignments, etc., Prohibited; Distributions Pursuant to Qualified
Domestic Relations Orders; Certain Offsets of Accounts.

            (a) Except as provided in subsections (b) and (c), no part of the
Trust Fund shall be liable for the debts, contracts or engagements of any
Participant, his Beneficiaries or successors in interest, or be taken in
execution by levy, attachment or garnishment or by any other legal or equitable
proceeding, while in the hands of the Trustee, nor shall any such person have
any right to alienate, anticipate, commute, pledge, encumber or assign any
benefits or payments hereunder in any manner whatsoever, except to designate a
Beneficiary as provided in the Plan.

            (b) Notwithstanding subsection (a) or any other provision of the
Plan to the contrary, upon receipt by the Administrator of a domestic relations
order, as defined in Code Section 414(p), which, but for the time of required
payment to the alternate payee, would be a qualified domestic relations order as
defined in Code Section 414(p), the amount awarded to the alternate payee shall
promptly be paid in the manner specified in such order. However, no such
distribution shall be made prior to the Participant's Separation from the
Service if such distribution could adversely affect the qualified status of the
Plan.

            (c)   (i) Notwithstanding subsection (a) or any other provision of
the Plan to the contrary, effective August 5, 1997, upon receipt by the
Administrator of a judgment, order, decree or settlement agreement described in
paragraph (ii) which expressly provides for an offset against all or part of an
amount ordered or required to be paid to the Plan against a Participant's
Accounts under the Plan, such Participant's Accounts shall be reduced or offset
by the amount specified in such judgment, order, decree or settlement agreement
and such amount shall promptly be paid to the Plan.

                  (ii) The judgment, order, decree or settlement agreement
      described in paragraph (i) must arise from

                        (A) a judgment of conviction for a crime involving the
                            Plan,


                                       53
<PAGE>   60

                        (B) a civil judgment (including a consent order or
                            decree) entered by a court in an action brought in
                            connection with a violation (or alleged violation)
                            of Part 4 of ERISA, or

                        (C) a settlement agreement between the Secretary of
                            Labor or the Pension Benefit Guaranty Corporation
                            and the Participant in connection with a violation
                            (or alleged violation) of Part 4 of ERISA by a
                            fiduciary or any other person.

Section 13.12 Corrective of Administrative Error; Special Contribution.
Notwithstanding any other provision of the Plan to the contrary, the
Administrator shall take any and all appropriate actions to correct errors in
the administration of the Plan, including, without limitation, errors in the
allocation of contributions, forfeitures, and income, expenses, gains and losses
to the Accounts of the Participants or Beneficiaries under the Plan. Such
corrective actions may include debiting or crediting a Participant's or
Beneficiary's Accounts or allocating special contributions made by the Company
to the Plan for purposes of correcting any failure to make contributions on a
timely basis or properly allocate contributions, forfeitures, or income,
expenses, gains and losses. The Administrator shall determine the amount of any
such special contributions required to be made by the Company, which may be made
in such approximate amounts as the Administrator, acting in its sole discretion,
shall determine. In no event shall any corrective action taken by the
Administrator under this Section reduce any Participant's or Beneficiary's
accrued benefit in violation of Section 411(d)(6) of the Code and the Treasury
regulations thereunder.


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<PAGE>   61

                                  ARTICLE XIV.
                          TERMINATION, DISCONTINUANCE,
                       AMENDMENT, MERGER, ADOPTION OF PLAN

Section 14.1 Termination of Plan; Discontinuance of Contributions.

            (a) The Plan is intended as a permanent program but the Company
shall have the right at any time to declare the Plan terminated completely as to
the Company or as to any division, facility or other operational unit thereof
with or without notice to the applicable Participants. Discharge or layoff of
Employees of the Company or any unit thereof without such a declaration shall
not result in a termination or partial termination of the Plan except to the
extent required by law. In the event of any termination or partial termination:

                  (i) an allocation of amounts being held under Section 3.8(b)
      shall be made in accordance with Section 3.8(c).

                  (ii) the Administrator shall direct the Trustee to liquidate
      the necessary portion of the Trust Fund and distribute it, less, to the
      extent permitted by law, a proportionate share of the expenses of
      termination, to the persons entitled thereto in proportion to their
      Accounts.

                  (iii) provided that the Company or a Company Affiliate does
      not maintain another defined contribution plan other than an employee
      stock ownership plan (as defined in Code Section 4975(e)(7)),
      distributions of Participant's Accounts shall be made in one lump sum
      payment.

            (b) Subject to the terms of the collective bargaining agreement with
the Union, the Company shall have the right at any time to discontinue
contributions to the Plan completely as to the Company or as to any covered
location division, facility or other operational unit thereof with or without
notice to the applicable Participants. Failure of the Company to make one or
more substantial contributions to the Plan for any period of three consecutive
Plan Years in each of which the Company realized substantial current earnings,
as shown on its financial reports, shall automatically become a complete
discontinuance of contributions at the end of the third such consecutive Plan
Year. In the event of complete discontinuance of contributions to the Plan, the
Plan and Trust shall otherwise remain in full force and effect except that all
the Matching Accounts shall thereupon become fully vested.

Section 14.2 Amendment of Plan.

            (a) As limited in Section 14.3 of the Plan, complete or partial
amendments or modifications to the Plan (including retroactive amendments to
meet governmental requirements or prerequisites for tax qualification) may be
made from time to time by the Company. However, no amendment shall decrease the
vested percentage any Participant has in his Accounts or his accrued benefit.


                                       55
<PAGE>   62

            (b) Amendments shall be adopted by resolution of the Board of the
Company. Additionally, the General Counsel or Vice President, Human Resources of
the Company shall have the authority to adopt amendments that are necessary (i)
to bring the Plan into conformity with legal requirements or to improve the
administration hereof, provided that no such amendments involve an increase in
cost of benefits provided by this Plan, (ii) to comply with the terms of a
collective bargaining agreement with the Union or (iii) to provide for mergers
of plans of Company Affiliates into the Plan.

Section 14.3 Retroactive Effect of Plan Amendment.

            (a) No Plan amendment, unless it expressly provides otherwise, shall
be applied retroactively to increase the vested percentage of a Participant
whose Separation from the Service preceded the date such amendment became
effective unless and until he again becomes a Participant and additional
contributions are allocated to him.

            (b) No Plan amendment, unless it expressly provides otherwise, shall
be applied retroactively to increase the amount of service credited to any
person for purposes of Plan participation, vesting or any other Plan purpose
with respect to his participation or employment before the date such amendment
became effective.

            (c) Except as provided in subsections (a) and (b), all rights under
the Plan shall be determined under the terms of the Plan as in effect at the
time the determination is made.

Section 14.4 Consolidation or Merger; Adoption of Plan by Other Companies.

            (a) In the event of the consolidation or merger of the Company with
or into any other business entity, or the sale by the Company or its owner of
its assets, the successor will be deemed to continue the Plan. If deemed
appropriate, the successor will execute a proper supplemental agreement to the
Trust Agreement with the Trustee.

            (b) The Plan shall not be merged or consolidated with any other
plan, nor shall its assets or liabilities be transferred to any other plan,
unless each Participant in this Plan would have immediately after the merger,
consolidation or transfer (if the plan in question were then terminated)
accounts which are equal to or greater in amount than his corresponding Accounts
under this Plan had the Plan been terminated immediately before the merger,
consolidation or transfer.

            (c) Any Company Affiliate may, with the approval of the Board, adopt
the Plan as a whole company or as to any one or more divisions by resolution of
its own board of directors or agreement of its partners or members. Such Company
Affiliate shall give written notice of such adoption to the Administrator and to
the Trustee by its duly authorized officers.


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<PAGE>   63

                                   ARTICLE XV.
                            MANAGEMENT OF INVESTMENTS

Section 15.1 Trust Agreement. All Plan assets shall be held by the Trustee in
trust, in accordance with those provisions of this Plan and Trust which relate
to the Trustee, for use in providing Plan benefits and paying Plan expenses not
paid directly by the Company. Plan benefits will be drawn solely from the Trust
and paid by the Trustee as directed by the Administrator. Notwithstanding the
above, the Company may, with the approval of the Trustee, appoint another
trustee to hold and administer Plan assets which do not meet the requirements of
Section 15.2.

Section 15.2 Investment Funds. The Administrator is hereby granted authority to
direct the Trustee to invest Trust assets in one or more Investment Funds. The
number and composition of Investment Funds may be changed from time to time,
without the necessity of amending this Plan and Trust document. The Trustee may
establish reasonable limits on the number of Investment Funds as well as the
acceptable assets for any such Investment Fund. Each of the Investment Funds may
be comprised of any of the following:

            (a) shares of a registered investment company, whether or not the
Trustee or any of its affiliates is an advisor to, or other service provider to,
such company;

            (b) collective investment funds maintained by the Trustee or
qualified investment manager or any other fiduciary to the Plan, which are
available for investment by trusts which are qualified under Code sections
401(a) and 501(a);

            (c) individual equity and fixed income securities which are readily
tradable on the open market;

            (d) guaranteed investment contracts issued by a bank or insurance
company;

            (e) interest bearing deposits of the Trustee; and

            (f) Safeway Stock.

            Any Investment Fund assets invested in a collective investment fund
shall be subject to all the provisions of the instruments establishing and
governing such fund. These instruments, including any subsequent amendments, are
incorporated herein by reference.

Section 15.3 Authority to Hold Cash. The Trustee is authorized to hold that
portion of the Trust Fund as it may deem necessary for ordinary administration
and for the disbursement of funds in cash, without liability for interest, by
depositing the same in any bank (including deposits which bear a reasonable rate
of interest in a bank or similar financial institution supervised by the United
States or a state, even where a bank or financial institution is the Trustee, or
otherwise is a fiduciary of the Plan, including Wells Fargo Bank, National


                                       57
<PAGE>   64

Association), subject to the rules and regulations governing such deposits, and
without regard to the amount of any such deposit.

Section 15.4 Trustee to Act Upon Instructions. The Trustee shall carry out
instructions to invest assets in the Investment Funds as soon as practicable
after such instructions are received from the Administrator on behalf of the
Participants or Beneficiaries. Such instructions shall remain in effect until
changed by the Administrator on behalf of the Participants or Beneficiaries.

Section 15.5 Administrator Has Right to Vote Registered Investment Company
Shares. The Administrator shall be entitled to vote proxies or exercise any
shareholder rights relating to shares held on behalf of the Plan in a registered
investment company. Notwithstanding, the authority to vote proxies and exercise
shareholder rights related to such shares held in a Custom Fund is vested as
provided otherwise in Section 15.6.

Section 15.6 Custom Fund Investment Management. The Administrator may designate
an investment manager for any Investment Fund established as a Custom Fund (a
"Custom Fund"). The investment manager may be the Administrator, Trustee or an
investment manager pursuant to section 3(38) of ERISA. The Administrator shall
advise the Trustee in writing of the appointment of an investment manager and
shall cause the investment manager to acknowledge to the Trustee in writing that
the investment manager is a fiduciary to the Plan.

            A Custom Fund shall be subject to the following:

            (a) Guidelines. Written guidelines shall be established for a Custom
Fund. If a Custom Fund consists solely of collective investment funds or shares
of a registered investment company (and sufficient deposit or money market type
assets to handle the Fund's liquidity and disbursement needs), its underlying
instruments shall constitute the guidelines.

            (b) Authority of Investment Manager. The investment manager of a
Custom Fund shall have the authority to vote or execute proxies, exercise
shareholder rights, manage, acquire, and dispose of Trust assets.
Notwithstanding, if the Company provides for investment in Safeway Stock, the
authority to vote proxies and exercise shareholder rights related to shares of
Safeway Stock held under the Plan and Trust is vested as provided in Section
15.9.

            (c) Custody and Trade Settlement. Unless otherwise expressly agreed
to by the Trustee, the Trustee shall maintain custody of all Custom Fund assets
and be responsible for the settlement of all Custom Fund trades. For purposes of
this Section, shares of a collective investment fund, shares of a registered
investment company and guaranteed investment contracts issued by a bank or
insurance company shall be regarded as the Custom Fund assets instead of the
underlying assets of such instruments.

            (d) Limited Liability of Co-Fiduciaries. Neither the Administrator
nor the Trustee shall be obligated to invest or otherwise manage any Custom Fund
assets for which the Trustee or Administrator is not the investment manager, nor
shall the Administrator or Trustee be liable for acts or omissions with regard
to the investment of such assets except to the extent required by ERISA.


                                       58
<PAGE>   65

Section 15.7 Authority to Segregate Assets. The Company may direct the Trustee
to split an Investment Fund into two or more funds in the event any assets in
the Fund are illiquid or the value is not readily determinable. In the event of
such segregation, the Company shall give instructions to the Trustee on what
value to use for the split-off assets, and the Trustee shall not be responsible
for confirming such value.

Section 15.8 Maximum Permitted Investment in Safeway Stock. If the Company
provides for investment in Safeway Stock, such investment option shall be
comprised solely of Safeway Stock.

Section 15.9 Participants Have Right to Vote and Tender Safeway Stock. Each
Participant or Beneficiary shall be entitled to instruct the Trustee as to the
voting or tendering of any full or partial shares of Safeway Stock held on his
behalf under the Plan. Prior to such voting or tendering of Safeway Stock, each
Participant or Beneficiary shall receive a copy of the proxy solicitation or
other material relating to such vote or tender decision and a blank form for the
Participant or Beneficiary to complete which confidentially instructs the
Trustee to vote or tender such shares in the manner indicated by the
Participants or Beneficiaries. Upon receipt of such instructions, the Trustee
shall act with respect to such shares as instructed. The Administrator shall
instruct the Trustee with respect to how to vote or tender any shares for which
instructions are not received from Participants or Beneficiaries.

Section 15.10 Registration and Disclosure for Safeway Stock. The Administrator
shall be responsible for determining the applicability (and, if applicable,
complying with) the requirements of the Securities Act of 1933, as amended, the
California Corporate Securities Law of 1968, as amended, and any other
applicable blue sky law. The Administrator shall also specify what restrictive
legend or transfer restriction, if any, is required to be set forth on the
certificates for the securities and the procedure to be followed by the Trustee
to effectuate a resale of such securities.







                                       59
<PAGE>   66

                                  ARTICLE XVI.
                              TRUST ADMINISTRATION

Section 16.1 Trustee to Construe Trust.

            (a) The Trustee shall have the discretionary authority to construe
those provisions of the Plan and Trust which relate to the Trustee and to do all
things necessary or convenient to the administration of the Trust, whether or
not such powers are specifically set forth in the Plan and Trust, provided that
the exercise of such authority or power is not otherwise limited by the Plan and
Trust. Actions taken in good faith by the Trustee shall be conclusive and
binding on all interested parties and shall be given the maximum possible
deference allowed by law.

            (b) The Administrator shall have all power over and responsibility
for the management, disposition, and investment of the Trust assets, and the
Trustee shall comply with proper written directions of the Administrator
concerning those assets. The Administrator shall not issue directions in
violation of the terms of the Plan and Trust or prohibited by the fiduciary
responsibility rules of ERISA. Except to any extent required by ERISA or
otherwise provided in this Trust, the Trustee shall have no duty or
responsibility to review, initiate action, or make recommendations regarding
Trust assets and shall retain assets until directed in writing by the
Administrator to dispose of them.

            (c) Notwithstanding the foregoing, the Administrator may appoint an
investment manager or managers to direct, control, or manage the investment of
the Trust assets, as provided in sections 3(38) and 403(a)(2) of ERISA. The
Administrator shall notify the Trustee in writing of the appointment of each
investment manager and cause such investment manager to acknowledge to the
Trustee in writing that the investment manager is a fiduciary with respect to
the Plan. If the foregoing conditions are met, the investment manager shall have
the power to manage, acquire, or dispose of any Trust assets, and the Trustee
shall not be liable for acts or omissions of the investment manager or be under
an obligation to invest or otherwise manage any asset of the Trust which is
subject to the management of such investment manager.

            (d) The Administrator may also delegate all its investment authority
to the Trustee for that part of the Trust under its investment control. Upon
written acceptance of that delegation, the Trustee shall have full power and
authority to invest and reinvest the Trust Fund in investments of any kind. The
Trustee shall be responsible for proper diversification of the assets of the
portion of the Trust Fund subject to its management; however, the Trustee's
responsibility for diversification of such assets shall be subject to and is
limited by the funding policy and investment guidelines issued to it by the
Administrator. In making such investments, the Trustee shall comply with the
funding policy and investment guidelines and with the fiduciary standards of
ERISA, as supplemented, modified, interpreted, and construed by regulations and
rulings of the United States administrative agencies and by decisions of courts
of competent jurisdiction.


                                       60
<PAGE>   67

Section 16.2 Trustee To Act As Owner of Trust Assets. Subject to the specific
conditions and limitations set forth in this Plan and Trust, the Trustee shall
have all the power, authority, rights and privileges of an absolute owner of the
Trust assets and, not in limitation but in amplification of the foregoing, may:

            (a) receive, hold, manage, invest and reinvest, sell, tender,
exchange, dispose of, encumber, hypothecate, pledge, mortgage, lease, grant
options respecting, repair, alter, insure, or distribute any and all property in
the Trust;

            (b) borrow money, participate in reorganizations, pay calls and
assessments, vote or execute proxies, exercise subscription or conversion
privileges, exercise options and register any securities in the Trust in the
name of the nominee, in federal book entry form or in any other form as will
permit title thereto to pass by delivery;

            (c) renew, extend the due date, compromise, arbitrate, adjust,
settle, enforce or foreclose, by judicial proceedings or otherwise, or defend
against the same, any obligations or claims in favor of or against the Trust;
and

            (d) lend, through a collective investment fund, any securities held
in such collective investment fund to brokers, dealers or other borrowers and to
permit such securities to be transferred into the name and custody and be voted
by the borrower or others.

Section 16.3 United States Indicia of Ownership. The Trustee shall not maintain
the indicia of ownership of any Trust assets outside the jurisdiction of the
United States except as authorized by ERISA section 404(b).

Section 16.4 Tax Withholding and Payment.

            (a) Withholding. The Trustee shall calculate and withhold federal
(and, if applicable, state) income taxes with regard to any Eligible Rollover
Distribution that is not paid as a Direct Rollover in accordance with a
Participant's withholding election or as required by law if no election is made
or the election is less than the amount required by law. With regard to any
taxable distribution that is not an Eligible Rollover Distribution, the Trustee
shall calculate and withhold federal (and, if applicable, state) income taxes in
accordance with the Participant's withholding election or as required by law if
no election is made. The Trustee shall have no liability for making any
distribution or transfer pursuant to the direction of the Administrator, or its
designee, (including amounts withheld pursuant to the previous sentence). The
Administrator, or its designee, shall furnish to the Trustee all information
necessary to carry out such withholding, or, if such information is not provided
to the Trustee, the Administrator shall hold the Trustee harmless from and
indemnify it for any liability and related expenses from improper withholding.
The Trustee shall have no liability for making any distribution or transfer
pursuant to the direction of the Administrator, or its designee, (including
amounts withheld pursuant to the previous sentence). The Administrator, or its
designee, shall furnish to the Trustee all information necessary to carry out
such withholding, or, if such information is not provided to the Trustee, the
Administrator shall hold the Trustee harmless from and indemnify it for any
liability and related expenses from improper withholding.


                                       61
<PAGE>   68

            (b) Taxes Due From Investment Funds. The Trustee shall pay from the
Investment Fund any taxes or assessments imposed by any taxing or governmental
authority on such Fund or its income, including related interest and penalties.

Section 16.5 Trustee Duties and Limitations. Unless otherwise agreed to by the
Trustee, the Trustee's duties shall be confined to construing the terms of the
Plan and Trust as they relate to the Trustee, receiving funds on behalf of and
making payments from the Trust, safeguarding and valuing Trust assets, and
investing and reinvesting Trust assets in the Investment Funds as directed by
the Administrator, Participants or Beneficiaries. The Trustee shall have no duty
or authority to ascertain whether contributions are in compliance with the Plan,
to enforce collection or to compute or verify the accuracy or adequacy of any
amount to be paid to it by the Company. The Trustee shall not be liable for the
proper application of any part of the Trust with respect to any disbursement
made at the direction of the Administrator.

Section 16.6 Trust Accounting.

            (a) Annual Report. Within 90 days (or other reasonable period)
following the close of the Plan Year, the Trustee shall provide the
Administrator with an annual accounting of Trust assets and information to
assist the Administrator in meeting ERISA's annual reporting and audit
requirements.

            (b) Periodic Reports. The Trustee shall maintain records and provide
sufficient reporting to allow the Administrator to monitor properly the Trust's
assets and activity.

            (c) Administrator Approval. Approval of any Trustee accounting will
automatically occur 90 days after such accounting has been received by the
Administrator unless the Administrator files a written objection with the
Trustee within such time period. Such approval shall be final as to all matters
and transactions stated or shown therein and binding upon the Administrator.

Section 16.7 Valuation of Certain Assets. If the Trustee determines the Trust
holds any asset which is not readily tradable and listed on a national
securities exchange registered under the Securities Exchange Act of 1934, as
amended, the Trustee may engage a qualified independent appraiser to determine
the fair market value of such property, and the appraisal fees shall be paid
from the Investment Fund containing the asset.

Section 16.8 Legal Counsel. The Trustee may consult with legal counsel of its
choice, including counsel for the Company or counsel of the Trustee, upon any
question or matter arising under this Plan and Trust. When relied upon by the
Trustee, the opinion of such counsel shall be evidence that the Trustee has
acted in good faith.

Section 16.9 Fees and Expenses. The Trustee's fees for its services as Trustee
shall be such as may be mutually agreed upon by the Company and the Trustee.
Trustee fees and all reasonable expenses of counsel and advisors retained by the
Trustee shall be paid in accordance with Section 6.4.

Section 16.10 Indemnification by the Company.


                                       62
<PAGE>   69

            (a) The Company hereby agrees to indemnify all Plan fiduciaries
against any and all liabilities resulting from any action or inaction,
(including a Plan termination in which the Company fails to apply for a
favorable determination from the Internal Revenue Service with respect to the
qualification of the Plan upon its termination), in relation to the Plan or
Trust including (without limitation) expenses reasonably incurred in the defense
of any claim relating to the Plan or its assets, and amounts paid in any
settlement relating to the Plan or its assets, but excluding liability resulting
from actions or in actions made in bad faith, or resulting from the negligence
or willful misconduct of the Trustee. The Company shall have the right, but not
the obligation, to conduct the defense of any action to which this Section
applies. The Plan fiduciaries are not entitled to indemnity from the Plan assets
relating to any such action.

            (b) To the extent permitted under ERISA, the Company shall indemnify
and hold harmless the Trustee, its officers, employees, and agents from and
against all liabilities, losses, expenses, and claims (including reasonable
attorneys' fees and costs of defense) arising out of the (1) acts or omissions
to act with respect to the Plan by persons unrelated to the Trustee ("unrelated
persons"), (2) the Trustee's action or inaction with respect to the Plan
resulting from reasonable reliance on the action or inaction of unrelated
persons, including directions to invest or otherwise deal with Plan assets, or
(3) any violation by any unrelated person of the provisions of ERISA. The
Trustee shall not be entitled to indemnification for any liability arising from
the Trustee's negligence or willful misconduct. Expenses incurred by the Trustee
which it believes to be the subject of indemnification under this Trust shall be
paid by the Company upon the Trustee's request if the Company agrees. However,
if the Company does not agree that such expenses are eligible for
indemnification under this Trust, then only in the event of the final judgment
of a court of competent jurisdiction that the expenses are subject to
indemnification will the Company pay such amounts plus interest thereon at the
legal rate from the date of request to the Trustee.

Section 16.11 Replacement of the Trustee. The Trustee may resign as Trustee
under this Plan and Trust or may be removed by the Company at any time upon at
least 90 days written notice (or less if agreed to by both parties). In such
event, the Company shall appoint a successor trustee by the end of the notice
period. The successor trustee shall then succeed to all the powers and duties of
the Trustee under this Plan and Trust. If no successor trustee has been named by
the end of the notice period, the Company's chief executive officer shall become
the trustee, or if he declines, the Trustee may petition the court for the
appointment of a successor trustee.

Section 16.12 Final Settlement and Accounting of Trustee. As soon as is
administratively feasible after its resignation or removal as Trustee, the
Trustee shall transfer to the successor trustee all property currently held by
the Trust. However, the Trustee is authorized to reserve such sum of money as it
may deem advisable for payment of its accounts and expenses in connection with
the settlement of its accounts or other fees or expenses payable by the Trust.
Any balance remaining after payment of such fees and expenses shall be paid to
the successor trustee.

Section 16.13 Final Accounting. The Trustee shall provide a final accounting to
the Administrator within 90 days of the date Trust assets are transferred to the
successor trustee.


                                       63
<PAGE>   70

Section 16.14 Administrator Approval. Approval of the final accounting will
automatically occur 90 days after such accounting has been received by the
Administrator unless the Administrator files a written objection with the
Trustee within such time period. Such approval shall be final as to all matters
and transactions stated or shown therein and binding upon the Administrator.


















                                       64
<PAGE>   71

                                  ARTICLE XVII.
                            MISCELLANEOUS PROVISIONS

Section 17.1 Identification of Fiduciaries.

            (a) The Administrator (with respect to control and management of
Plan assets and in general), the Company and the Committee shall be named
fiduciaries within the meaning of ERISA and, as permitted or required by law,
shall have exclusive authority and discretion to control and manage the
operation and administration of the Plan within the limits set forth in the
Trust Agreement, subject to proper delegation.

            (b) Such named fiduciaries and every person who exercises any
discretionary authority or discretionary control respecting management of the
Trust Fund or Plan, or exercises any authority or control respecting the
management or disposition of the assets of the Trust Fund or Plan, or renders
investment advice for compensation, direct or indirect, with respect to any
moneys or other property of the Trust Fund or Plan or has authority or
responsibility to do so, or has any discretionary authority or discretionary
responsibility in the administration of the Plan, and any person designated by a
named fiduciary to carry out fiduciary responsibilities under the Plan, shall be
a fiduciary and, as such, shall be subject to provisions of the Plan, the Trust
Agreement, ERISA and other applicable laws governing fiduciaries. Any person may
act in more than one fiduciary capacity.

Section 17.2 Allocation of Fiduciary Responsibilities.

            (a) Fiduciary responsibilities under the Plan are allocated as
follows:

                  (i) The sole power and discretion to manage and control the
      Plan's assets including, but not limited to, the power to acquire and
      dispose of Plan assets, is allocated to the Trustee, except to the extent
      that another fiduciary is appointed in accordance with the Trust Agreement
      with the power to control or manage (including the power to acquire and
      dispose of) assets of the Plan.

                  (ii) The sole duties, responsibilities and powers allocated to
      the Company shall be those expressly retained under the Plan or the Trust
      Agreement.

                  (iii) All fiduciary responsibilities not allocated to the
      Trustee, the Company or any investment manager are hereby allocated to the
      Administrator, subject to delegation in accordance with Section
      13.1(a)(xi).

            (b) Fiduciary responsibilities under the Plan (other than the power
to manage or control the Plan's assets) may be reallocated among those
fiduciaries identified as named fiduciaries in Section 17.1 by amending the
Plan, followed by such fiduciaries' acceptance of, or operation under, such
amended Plan.


                                       65
<PAGE>   72

            (c) No allocation of fiduciary responsibilities under the Plan or
Trust shall cause the Trust to cease being a domestic trust under Treas. Reg.
Sec. 301.7701.

Section 17.3 Limitation on Rights of Employees. The Plan is strictly a voluntary
undertaking on the part of the Company and shall not constitute or be construed
as a contract between the Company and any Employee or consideration for, or an
inducement or condition of, the employment of an Employee. Except as otherwise
required by law, nothing contained in the Plan shall give any Employee the right
to be retained in the service of any Company or to interfere with or restrict
the right of the Company, which is hereby expressly reserved, to discharge or
retire any Employee at any time, with or without notice and with or without
cause and with or without obligation as to any level of severance. Except as
otherwise required by law, inclusion under the Plan will not give any Employee
any right or claim to employment or any benefit hereunder except to the extent
such right has specifically become fixed or vested under the terms of the Plan
and there are funds available therefor in the hands of the Trustee.

Section 17.4 Governing Law. The Plan and Trust shall be interpreted,
administered and enforced in accordance with the Code and ERISA, and the rights
of Participants, Beneficiaries and all other persons shall be determined in
accordance therewith. However, to the extent that state law is applicable, the
laws of the state of California shall apply.

Section 17.5 Gender and Plurals. Where the context so indicates, the masculine
pronoun shall include the feminine, and the singular shall include the plural.

Section 17.6 Titles. Titles are provided herein for convenience only and are not
to serve as a basis for interpretation or construction of the Plan or Trust
Agreement.

Section 17.7 References. Unless the context clearly indicates to the contrary, a
reference to a statute, regulation or document shall be construed as referring
to any subsequently amended, enacted, adopted or executed statute, regulation or
document.

Section 17.8 Use of Trust Funds. Under no circumstances shall any contributions
to the Trust or any part of the Trust Fund be recoverable by the Company from
the Trustee or from any Participant, his Beneficiaries or any other person, or
be used for or diverted to purposes other than for the exclusive purposes of
providing benefits to Participants and their Beneficiaries; provided, however,
that

            (a) the contribution of the Company for any Plan Year is hereby
conditioned upon its being deductible by the Company for its fiscal year in
which such contribution was made and, to the extent disallowed as a deduction
under Code Section 404, such contribution shall be returned by the Trustee to
the Company within one year after the final disallowance of the deduction by the
Internal Revenue Service or the courts; and

            (b) a contribution by the Company or a Participant by a mistake of
fact shall be returned to the Company or to the Participant in question within
one year after payment of the contribution was made.


                                       66
<PAGE>   73

            Executed as of June 29, 2001.


                                        THE VONS COMPANIES, INC.


                                        By:  /s/ Michael J. Boylan
                                           -------------------------------------
                                        Its: VP Safeway - General Counsel
                                            ------------------------------------


                                        TRUSTEE:

                                        WELLS FARGO BANK, NATIONAL ASSOCIATION

                                        By:  /s/ Debra Lageschulte
                                           -------------------------------------
                                        Its: Vice President
                                            ------------------------------------












                                       67
<PAGE>   74

                             THE 2001 RESTATEMENT OF
                            THE VONS COMPANIES, INC.
                       PHARMACISTS' 401(K) PLAN AND TRUST

                          APPENDIX A - INVESTMENT FUNDS


I.      Investment Funds Available

            The Investment Funds offered to Participants and Beneficiaries as of
July 1, 2001 include this set of funds:

        Interest Income Fund
        PIMCO Total Return Fund
        Alliance Growth and Income Fund
        Merrill Lynch S&P 500 Index Fund
        Alliance Premier Growth Fund
        State Street Research Aurora Fund
        TCW Galileo Small Cap Growth Fund
        Pilgrim International Value Fund
        Safeway Stock


II.     Default Investment Fund

            The default Investment Fund is the Interest Income Fund.


III.    Maximum Percentage Restrictions Applicable to Certain Investment Funds

            There are no maximum percentage restrictions applicable to any
Investment Funds.





                                       A-1
<PAGE>   75

                             THE 2001 RESTATEMENT OF
                            THE VONS COMPANIES, INC.
                       PHARMACISTS' 401(K) PLAN AND TRUST

                         APPENDIX B - LOAN INTEREST RATE

            The interest rate charged on Participant loans will be equal to the
sum of 1% plus the prime rate published in The Wall Street Journal on the first
business day of each calendar week.
















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