DEFERRED COMPENSATION PLAN FOR SAFEWAY NON-EMPLOYEE DIRECTORS II (Amended and Restated Effective January 1, 2009)

(a)

The name of this plan is the “Deferred Compensation Plan for Safeway Non-Employee Directors II” (the “Plan”). Its purpose is to provide non-employee Directors of the Company with increased flexibility in timing the receipt of board service fees and to assist the Company in attracting and retaining qualified individuals to serve as Directors. The Plan is effective as of January 1, 2005, and amended and restated as of January 1, 2009. Between January 1, 2005 and December 31, 2008, the Plan operated in good faith compliance with the guidance issued under Internal Revenue Code Section 409A.

(b)

The Plan is the successor plan to the Deferred Compensation Plan for Safeway Non-Employee Directors (the “Prior Plan”). Effective December 31, 2004, the Prior Plan was frozen and no new deferrals will be made under it; provided, however, that any deferrals made under the Prior Plan before January 1, 2005 will continue to be governed by the terms and conditions of the Prior Plan as in effect on December 31, 2004 or on the date of any later amendment, provided that such amendment is not a material modification of the Prior Plan under Section 409A of the Code and regulations promulgated thereunder.

(c)

Any deferrals made under the Prior Plan after December 31, 2004 are deemed to have been made under the Plan and all such deferrals are governed by the terms and conditions of the Plan as it may be amended from time to time.

(d)

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

(a)

“Annual Fee” means the base annual fee payable to a Director for the Director’s service as a member of the Board, as determined by the Board from time to time, exclusive of any other fees, including, but not limited to, annual fees for committee membership.

(b)

“Automatic Deferral” means the automatic deferral as described in Section 3.1 below.

(c)

“Board” means the Board of Directors of the Company.

(d)

“Closing Price” means the closing price of the Company’s Common Stock as reported in The Wall Street Journal .

(e)

“Code” means the Internal Revenue Code of 1986, as amended.

(f)

“Common Stock” means the Common Stock, par value $.01 per share, of Safeway Inc.

(g)

“Company” means Safeway Inc.

(h)

“Compensation” means all remuneration paid to a Director for services as a Director other than reimbursement for expenses and shall include, but not be limited to, Annual Fees and fees for committee membership.

(i)

“Director” means any individual serving on the Board who is not an employee of the Company or any of its direct or indirect subsidiaries.

(j)

“Elective Deferral” means a Participant’s elective deferral as described in Section 3.2 below.

(k)

“Participant” means a Director who receives Compensation from the Company in any Plan Year.

(l)

“Plan Administrator” means a committee consisting of one or more senior executives of the Company designated by the Chief Executive Officer of the Company.

(m)

“Plan” means the Deferred Compensation Plan for Safeway Non-Employee Directors II, effective as of January 1, 2005, and as amended thereafter.

(n)

“Plan Year” means the calendar year.

(o)

“Prior Plan” means Deferred Compensation Plan for Safeway Non-Employee Directors.

(p)

“Separation from Service” or “Separates from Service” means termination of a Director’s service as a non-employee member of the Board consistent with Code Section 409A and the regulations promulgated thereunder.

(a)

Prior to the fourth calendar quarter of the 2007 Plan Year, payment of 50% of a Director’s Compensation for each Plan Year shall automatically be deferred under the Plan.

(b)

Beginning with the fourth calendar quarter of the 2007 Plan Year and for each calendar quarter of a Plan Year thereafter, $5,000 of a Director’s Compensation, and 50% of the balance of the Director’s Compensation for such calendar quarter shall automatically be deferred under the Plan; provided, however, that effective January 1, 2009, any increase in a Director’s then current Annual Fee, shall be automatically deferred under the Plan, quarterly, in substantially equal amounts. Such increase shall become effective in the first calendar quarter of the Plan Year following the Plan Year in which the Board approved the increase in the Director’s Annual Fee.

(a)

At the time the Participant elects to defer Compensation in accordance with Section 3.2, the Participant may elect that Compensation deferred pursuant to an Elective Deferral will be paid in January of a specified year in the future that is at least twelve months from the last day of the Plan Year in which the deferred Compensation is earned; provided, however, that if the Participant Separates from Service prior to such specified year, the Participant’s account will be paid within 90 days following the Participant’s Separation from Service.

(b)

Compensation deferred pursuant to an Automatic Deferral is payable only upon the Participant’s Separation from Service.

(c)

A Participant who makes a special distribution election pursuant to Section 3.3(a) above may elect to amend such an election to further defer the payment, provided that such election is made in writing and delivered to the Plan Administrator at least twelve months in advance of the originally scheduled special distribution date and the new distribution date elected by the Participant is at least five years from the originally scheduled special distribution date.