SHARE APPRECIATION RIGHTS PLAN

OF

CANADA SAFEWAY LIMITED

Safeway Inc., a Delaware corporation, previously adopted the Stock Option and Incentive Plan for Key Employees of Safeway Inc. for the benefit of its eligible employees (the "Prior Plan"). The Prior Plan has previously been amended from time to time, and was amended and restated in its entirety and consolidated with other plans in order to constitute an equity participation plan entitled" The 1999 Amended and Restated Equity Participation Plan of Safeway Inc." (as amended May 15, 2003 and as otherwise in effect from time to time, the "Safeway Equity Participation Plan"). Safeway Inc. adopted the Safeway Equity Participation Plan, effective upon approval by the stockholders of Safeway Inc., as provided in the Safeway Equity Participation Plan, for the benefit of its eligible employees, consultants and directors.

Canada Safeway Limited, an Alberta corporation, previously adopted the Share Appreciation Rights Plan of Canada Safeway Limited (as in effect from time to time, the "Plan") under which Canada Safeway Limited could, from time to time, upon and subject to the terms and conditions in the Plan, grant to certain employees of Canada Safeway Limited and its subsidiary corporations who were also granted "Options" (as defined herein) under the Safeway Equity Participation Plan (or the Prior Plan), certain Share Appreciation Rights as described in the Plan. The Plan is herein amended and restated in its entirety effective as of December 3, 2001 and, as so amended and restated, is entitled" The 2001 Amended and Restated Share Appreciation Rights Plan of Canada Safeway Limited."

The purposes of the Plan are as follows:

(1) to further the growth, development and financial success of Canada Safeway Limited by providing additional incentives to certain of the employees of Canada Safeway Limited and its subsidiary corporations who have been or will be given responsibility for the management or administration of the business affairs of Canada Safeway Limited and its subsidiary corporations; and

(2) to enable Canada Safeway Limited and its subsidiary corporations to obtain and retain the services of the type of professional, technical and managerial employees considered essential to the long-range success of Canada Safeway Limited.

THE 2001 AMENDED AND RESTATED
SHARE APPRECIATION RIGHTS PLAN 
OF 
CANADA SAFEWAY LIMITED

ARTICLE I
DEFINITIONS

1.1 General. Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise. The terms used in the Plan that are not otherwise defined herein shall have the meanings set forth in the Safeway Equity Participation Plan. In the event that a term defined herein is also defined in the Safeway Equity Participation Plan, the meaning set forth in the Safeway Equity Participation Plan shall govern.

1.2 Award. "Award" shall mean a Stock Appreciation Right, which may be granted under the Plan.

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

1.4 Canada Safeway. "Canada Safeway" shall mean Canada Safeway Limited, an Alberta corporation.

1.5 Canadian Securities Laws. "Canadian Securities Laws" shall mean all applicable securities and corporate laws, rules, regulations, notices, instruments and policies in force in Canada.

1.6 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 replacement thereof in the future, but excluding any preferred stock and any warrants, options or other rights to purchase Common Stock.

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