1.4 Award Agreement. "Award Agreement" shall mean a written agreement executed by an authorized officer of the Company and the Holder which shall contain such terms and conditions with respect to an Award as the Administrator shall determine, consistent with the Plan.

1.5 Award Limit.

(a) With respect to executive officers of the Company and with respect to Employees (other than executive officers of the Company) solely for their year of hire, "Award Limit" shall mean 2,000,000 shares of Common Stock, or as the context may require, options to acquire 2,000,000 shares of Common Stock, as adjusted pursuant to Section 11.3 of the Plan.

(b) With respect to Employees other than executive officers of the Company for each year after their year of hire, "Award Limit" shall mean 800,000shares of Common Stock or, as the context may require, Options to acquire 800,000 shares of Common Stock, as adjusted pursuant to Section 11.3 of the Plan.

(c) With respect to Consultants for each year after the date on which their engagement commences, "Award Limit" shall mean 1,600,000 shares of Common Stock or, as the context may require, Options to acquire 1,600,000 shares of Common Stock, as adjusted pursuant to Section 11.3 of the Plan.

1.6 Board. "Board" shall mean the Board of Directors of the Company.

1.7 Bonus Plan. "Bonus Plan" shall mean collectively the Operating Performance Bonus Plan for Executive Officers of Safeway Inc. and the Operating Performance Bonus Plan for Key Employees of Safeway Inc.

1.8 Change in Control. "Change in Control" shall mean a change in ownership or control of the Company as such term may be defined in any individual's Award Agreement.

1.9 Code. "Code" shall mean the Internal Revenue Code of 1986, as amended.

1.10 Committee. "Committee" shall mean the Section 162 (m) Committee of the Board, or another committee or subcommittee of the Board, appointed as provided in Section 10.1.

1.11 Common Stock. "Common Stock" shall mean the common stock of the Company, par value $0.01 per share, and any equity security of the Company issued or authorized to be issued in the future, but excluding any preferred stock and any warrants, options or other rights to purchase Common Stock.

1.12 Company. "Company" shall mean Safeway Inc., a Delaware corporation.

1.13 Consultant. "Consultant" shall mean any consultant or adviser if:

(a) the consultant or adviser renders bona fide services to the Company;

(b) the services rendered by the consultant or adviser are not in connection with the offer or sale of securities in a capital-raising transaction and do not directly or indirectly promote or maintain a market for the Company's securities; and

(c) the consultant or adviser is a natural person who has contracted directly with the Company to render such services.

1.14 Deferred Stock. "Deferred Stock" shall mean Common Stock awarded under Article VIII of the Plan.

1.15 Director. "Director" shall mean a member of the Board.

1.16 Dividend Equivalent. "Dividend Equivalent" shall mean a right to receive the equivalent value (in Common Stock) of dividends paid on Common Stock, awarded under Article VIII of the Plan.

1.17 DRO. "DRO" shall mean a domestic relations order that would constitute a "qualified domestic relations order" as defined by the Code or Title I of the Employee Retirement Income Security Act of 1974, as amended, if this Plan were subject to regulation under Title I of the Employee Retirement Income Security Act of 1974, as amended.

1.18 Effective Date. "Effective Date" shall mean the date the Plan is approved by the stockholders, as provided in Section 11.5.

1.19 Employee. "Employee" shall mean any officer or other employee (as defined in accordance with Section 3401 (c) of the Code) of the Company, or of any corporation which is a Subsidiary.

1.20 Exchange Act. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended.

1.21 Fair Market Value. "Fair Market Value" of a share of Common Stock as of a given date shall be (a) the closing price of a share of Common Stock on the principal exchange on which shares of Common Stock are then trading, if any (or as reported on any composite index which includes such principal exchange), on such date, or if shares were not traded on such date, then on the next preceding date on which a trade occurred, or (b) if Common Stock is not traded on an exchange but is quoted on NASDAQ or a successor quotation system, the mean between the closing representative bid and asked prices for the Common Stock on such date as reported by NASDAQ or such successor quotation system; or (c) if Common Stock is not publicly traded on an exchange and not quoted on NASDAQ or a successor quotation system, the Fair Market Value of a share of Common Stock as established by the Administrator acting in good faith. In determining the Fair Market Value of the Company's Common Stock under subsection (a) of this Section 1.19, the Administrator may rely on the closing price as reported in the New York Stock Exchange composite transactions published in the Western Edition of the Wall Street Journal.

1.22 Holder. "Holder" shall mean a person who has been granted or awarded an Award.

1.23 Incentive Stock Option. "Incentive Stock Option" shall mean an option which conforms to the applicable provisions of Section 422 of the Code and which is designated as an Incentive Stock Option by the Administrator.

1.24 Independent Director. "Independent Director" shall mean a member of the Board who is not an Employee of the Company.

1.25 Non-Qualified Stock Option. "Non-Qualified Stock Option" shall mean an Option which is not an Incentive Stock Option.

1.26 Option. "Option" shall mean a stock option granted under Article IV of the Plan. An Option granted under the Plan shall, as determined by the Administrator, be either a Non-Qualified Stock Option or an Incentive Stock Option; provided, however, that Options granted to Independent Directors and Consultants shall be Non-Qualified Stock Options.

1.27 Performance Criteria. "Performance Criteria" shall mean the performance goals determined by the Committee, in its discretion and in accordance with Section 162 (m) of the Code.

1.28 Plan. "Plan" shall mean The Amended and Restated 1999 Equity Participation Plan of Safeway Inc.

1.29 Purchase Stock. "Purchase Stock" shall mean Common Stock of the Company issued pursuant to Section 11.4 of the Plan.

1.30 Restricted Stock. "Restricted Stock" shall mean Common Stock awarded under Article VII of the Plan.

1.31 Rule 16 b-3. "Rule 16 b-3" shall mean that certain Rule 16 b-3 under the Exchange Act, as such Rule may be amended from time to time.

1.32 Section 162 (m) Participant. "Section 162 (m) Participant" shall mean any Employee whose compensation for the fiscal year in which the Employee is to receive an Award or a future fiscal year may be subject to the limit on deductible compensation imposed by Section 162 (m) of the Code.

1.33 Securities Act. "Securities Act" shall mean the Securities Act of 1933, as amended.

1.34 Stock Appreciation Right. "Stock Appreciation Right" shall mean a stock appreciation right granted under Article IX of the Plan.

1.35 Stock Payment. "Stock Payment" shall mean (a) a payment in the form of shares of Common Stock, or (b) an option or other right to purchase shares of Common Stock, as part of a deferred compensation arrangement, made in lieu of all or any portion of the compensation, including without limitation, salary, bonuses and commissions, that would otherwise become payable to an Employee or Consultant in cash, awarded under Article VIII of the Plan.

1.36 Subsidiary. "Subsidiary" shall mean any corporation in an unbroken chain of corporations beginning with the Company if each of the corporations other than the last corporation in the unbroken chain then owns stock possessing fifty percent (50%) or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

1.37 Substitute Award. "Substitute Award" shall mean an Option granted under this Plan upon the assumption of, or in substitution for, outstanding equity awards previously granted by a company or other entity in connection with a corporate transaction, such as a merger, combination, consolidation or acquisition of property or stock; provided, however, that in no event shall the term "Substitute Award" be construed to refer to an award made in connection with the cancellation and repricing of an Option.

Termination of Consultancy. "Termination of Consultancy" shall mean the time when the engagement of a Holder as a Consultant to the Company or a Subsidiary is terminated for any reason, with or without cause, including, but not by way of limitation, by resignation, discharge, death or retirement; but excluding terminations where there is a simultaneous commencement of employment with the Company or any Subsidiary. The Administrator, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Consultancy, including, but not by way of limitation, the question of whether a Termination of Consultancy resulted from a discharge for good cause, and all questions......

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