Safeway (SWY)

DEFERRED COMPENSATION PLAN II

WHEREAS, Safeway Inc., a Delaware corporation (the “Company”) desires to establish the Safeway Executive Deferred Compensation Plan II, effective January 1, 2005 (the “Plan”) to provide supplemental retirement income benefits for a select group of management and highly compensated employees through deferrals of salary and incentive compensation as well as Company contributions;

WHEREAS, this Plan is the successor plan to the Safeway Executive Deferred Compensation Plan, as in effect on December 31, 2004 (the “Prior Plan”);

WHEREAS, effective December 31, 2004, the Prior Plan was frozen and no new contributions or deferrals shall be made to it; provided however, that any vested contributions and deferrals made under the Prior Plan before January 1, 2005 shall continue to be governed by the terms and conditions of the Prior Plan as in effect on December 31, 2004;

WHEREAS, any contributions and deferrals made under the Prior Plan after December 31, 2004 and any contributions that were unvested on December 31, 2004 are deemed to have been made under this Plan; and

WHEREAS, the Plan is intended to comply with the requirements of Section 409A of the Code.

NOW, THEREFORE, effective as of January 1, 2005, the Plan is hereby adopted to read as follows: