Stock Option Grant Notice – Safeway Inc.

SAFEWAY INC.

2011 EQUITY AND INCENTIVE AWARD PLAN

STOCK OPTION GRANT NOTICE

Safeway Inc., a Delaware corporation, (the
“Company“), pursuant to its 2011 Equity and Incentive
Award Plan, as amended from time to time (the
“Plan“), hereby grants to the holder listed below
(“Participant“), an option to purchase the number of
shares of Common Stock set forth below (the
“Option“). This Option is subject to all of the terms
and conditions set forth herein and in the Stock Option Agreement attached
hereto as Exhibit A (the “Stock Option
Agreement“) and the Plan, each of which are incorporated herein by
reference. Unless otherwise defined herein, the terms defined in the Plan shall
have the same defined meanings in this Grant Notice and the Stock Option
Agreement.

Participant:		[ ]
Grant Date:		[ ]
Exercise Price per Share:		$[ ]
Total Exercise Price:		$ [ ]
Total Number of Shares Subject to the Option:		[ ] shares
Expiration Date:		[ ]
Vesting Schedule:		[To be specified in individual agreements]

Type of Option: ¨ Incentive Stock Option ¨ Non-Qualified
Stock Option

By his or her signature and the Company153s signature below, Participant agrees
to be bound by the terms and conditions of the Plan, the Stock Option Agreement
and this Grant Notice. Participant has reviewed the Stock Option Agreement, the
Plan and this Grant Notice in their entirety, has had an opportunity to obtain
the advice of counsel prior to executing this Grant Notice and fully understands
all provisions of this Grant Notice, the Stock Option Agreement and the Plan.
Participant hereby agrees to accept as binding, conclusive and final all
decisions or interpretations of the Administrator upon any questions arising
under the Plan, this Grant Notice or the Stock Option Agreement.

SAFEWAY INC.:						PARTICIPANT:
By:						By:
Print Name:						Print Name:
Title:
Address:						Address:

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EXHIBIT A

TO STOCK OPTION GRANT NOTICE

STOCK OPTION AGREEMENT : NON CANADIAN PARTICIPANTS

Pursuant to the Stock Option Grant Notice (the “Grant
Notice“) to which this Stock Option Agreement (this
“Agreement“) is attached, Safeway Inc., a Delaware
corporation (the “Company“), has granted to
Participant an option (the “Option“) to purchase the
number of shares of the Company153s Common Stock, par value $0.01 per share
(“Stock“), specified in the Grant Notice, upon the
terms and conditions set forth in the Safeway Inc. 2011 Equity and Incentive
Award Plan, as such plan may be amended from time to time (the
“Plan“), the Grant Notice and this Agreement.

ARTICLE I

GENERAL

1.1 Defined Terms. Wherever the following terms are used in this
Agreement they shall have the meanings specified below, unless the context
clearly indicates otherwise. Capitalized terms not specifically defined herein
shall have the meanings specified in the Grant Notice or, if not defined
therein, the Plan.

“Demotion” shall mean the demotion of Participant
to a position within the Company or a Subsidiary which is not then eligible for
grants of stock options or to a position that is eligible for stock option
grants at a lower level than the level for which Participant was eligible on the
Grant Date. Notwithstanding the foregoing, the Chief Executive Officer of the
Company may make adjustments, in his discretion, to the foregoing definition in
the event of the transfer, illness or disability of Participant, the occurrence
of a force majeure event (including without limitation acts of God, strikes or
labor disturbances) affecting Participant153s position or other similar
circumstances.

“Retirement Date” shall mean the date Participant
attains the age of 55.

1.2 Incorporation of Terms of Plan. The Option is subject to the terms
and conditions of the Plan which are incorporated herein by reference.

ARTICLE II

GRANT OF OPTION

2.1 Grant of Option. In consideration of Participant153s agreement to
remain in the service or employ of the Company or a Subsidiary and for other
good and valuable consideration, effective as of the “Grant Date” set forth in
the Grant Notice (the “Grant Date“), the Company
irrevocably grants to Participant an Option to purchase any part or all of an
aggregate of the number of shares of Stock set forth in the Grant Notice, upon
the terms and conditions set forth in the Plan, the Grant Notice and this
Agreement, subject to adjustment as provided in Section 11.3 of the Plan. Unless
designated as an Incentive Stock Option in the Grant Notice, the Option shall be
a Non-Qualified Stock Option.

2.2 Exercise Price. The exercise price of the shares of Stock subject
to the Option shall be as set forth in the Grant Notice, without commission or
other charge; provided, however, that the exercise price per
share of Stock subject to the Option shall not be less than 100% of the Fair
Market Value of a share of Stock on the Grant Date. Notwithstanding the
foregoing, if this Option is designated as an

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Incentive Stock Option and Participant owns (within the meaning of Section
424(d) of the Code) more than 10% of the total combined voting power of all
classes of stock of the Company or any Subsidiary Corporation or “parent
corporation” of the Company (as defined in Section 424(e) of the Code), the
exercise price per share of Stock subject to the Option shall not be less than
110% of the Fair Market Value of a share of Stock on the Grant Date (or the date
the Option is modified, extended or renewed for purposes of Section 424(h) of
the Code).

2.3 Consideration to the Company; No Employment Rights. In
consideration of the grant of the Option by the Company, Participant agrees to
render faithful and efficient services to the Company or any Subsidiary. Nothing
in the Plan or this Agreement shall confer upon Participant any right to
continue in the employ or service of the Company or any Subsidiary or shall
interfere with or restrict in any way the rights of the Company and its
Subsidiaries, which rights are hereby expressly reserved, to discharge or
terminate the services of Participant at any time for any reason whatsoever,
with or without cause, except to the extent expressly provided otherwise in a
written agreement between the Company or a Subsidiary and Participant.

ARTICLE III

PERIOD OF EXERCISABILITY

3.1 Commencement of Exercisability.

(a) Subject to Sections 3.2, 3.3 and 3.4, the Option shall become vested and
exercisable in such amounts and at such times as are set forth in the Grant
Notice.

(b) No portion of the Option which has not become vested and exercisable at
the date of Participant153s Termination of Employment, Termination of Directorship
or Termination of Consultancy, as applicable, shall thereafter become vested and
exercisable, except as may be otherwise provided by the Administrator or as set
forth in a written agreement between the Company and Participant. No portion of
the Option which has not become vested and exercisable at the date of
Participant153s Demotion shall thereafter become vested and exercisable.
Notwithstanding the foregoing, in the event of Participant153s Demotion to a
position that is eligible for stock option grants at a lower level than the
level for which Participant was eligible on the Grant Date (the
“New Position“), the immediately preceding sentence
shall apply only to that part (if any) of the portion of the Option which has
not become vested and exercisable which exceeds the minimum number of stock
options to which the New Position is eligible.

3.2 Duration of Exercisability. The installments provided for in the
vesting schedule set forth in the Grant Notice are cumulative. Each such
installment which becomes vested and exercisable pursuant to the vesting
schedule set forth in the Grant Notice shall remain vested and exercisable until
it becomes unexercisable under Section 3.3.

3.3 Expiration of Option. The Option may not be exercised to any
extent by anyone after the first to occur of the following events:

(a) The expiration of ten years following the Grant Date;

(b) If this Option is designated as an Incentive Stock Option and Participant
owned (within the meaning of Section 424(d) of the Code), at the time the Option
was granted, more than 10% of the total combined voting power of all classes of
stock of the Company or any Subsidiary Corporation or any “parent corporation”
of the Company (as defined in Section 424(e) of the Code), the expiration of
five years from the Grant Date;

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(c) The expiration of three months following the date of Participant153s
Termination of Employment, Termination of Directorship or Termination of
Consultancy, as applicable, unless such termination occurs on or after the
Retirement Date or by reason of Participant153s death, Participant153s “permanent
and total disability” (within the meaning of Section 22(e)(3) of the Code) or
Participant153s engagement in willful misconduct that injures the Company or any
of its Subsidiaries;

(d) The expiration of 12 months following the date of Participant153s
Termination of Employment, Termination of Directorship or Termination of
Consultancy, as applicable, on or after the Retirement Date or by reason of
Participant153s death or Participant153s “permanent and total disability” (within
the meaning of Section 22(e)(3) of the Code);

(e) The date of Participant153s Termination of Employment, Termination of
Directorship or Termination of Consultancy by the Company or any Parent or
Subsidiary by reason of Participant153s engagement in willful misconduct that
injures the Company or any of its Subsidiaries; or

Participant acknowledges that an Incentive Stock Option exercised more than
three months after Participant153s Termination of Employment, other than by reason
of death or Participant153s “permanent and total disability” (within the meaning
of Section 22(e)(3) of the Code), will be taxed as a Non-Qualified Stock Option.

3.4 Acceleration of Exercisability. Immediately prior to the
occurrence of a Change in Control, the Option shall vest and become exercisable
as to all shares of Stock covered thereby, notwithstanding that the Option may
not yet have become fully vested and exercisable under Section 3.1(a).

3.5 Special Tax Consequences. Participant acknowledges that, to the
extent that the aggregate Fair Market Value (determined as of the time the
Option is granted) of all shares of Stock with respect to which Incentive Stock
Options, including the Option, are exercisable for the first time by Participant
in any calendar year exceeds $100,000, the Option and such other options shall
be Non-Qualified Stock Options to the extent necessary to comply with the
limitations imposed by Section 422(d) of the Code. Participant further
acknowledges that the rule set forth in the preceding sentence shall be applied
by taking the Option and other “incentive stock options” into account in the
order in which they were granted, as determined under Section 422(d) of the Code
and the Treasury Regulations thereunder.

ARTICLE IV

EXERCISE OF OPTION

4.1 Person Eligible to Exercise. Except as provided in Sections 5.2(b)
and 5.2(c), during the lifetime of Participant, only Participant may exercise
the Option or any portion thereof. After the death of Participant, any
exercisable portion of the Option may, prior to the time when the Option becomes
unexercisable under Section 3.3, be exercised by Participant153s personal
representative or by any person empowered to do so under the deceased
Participant153s will or under the then applicable laws of descent and
distribution.

4.2 Partial Exercise. Any exercisable portion of the Option or the
entire Option, if then wholly exercisable, may be exercised in whole or in part
at any time prior to the time when the Option or portion thereof becomes
unexercisable under Section 3.3; provided, however, that each
partial exercise shall be for not less than 100 shares (or, if less, the maximum
number of shares for which the Option is vested and exercisable at such time)
and shall be for whole shares only.

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4.3 Manner of Exercise. The Option, or any exercisable portion
thereof, may be exercised solely by delivery to the Secretary of the Company or
the Secretary153s office of all of the following prior to the time when the Option
or such portion thereof becomes unexercisable under Section 3.3:

(a) Written evidence of exercise of the Option or any portion thereof by
Participant or any other person then entitled to exercise the Option or portion
thereof, in such form or forms deemed acceptable by the Company (including an
exercise notification confirmation statement provided by a broker), stating that
the Option or portion thereof is thereby exercised, such written evidence
complying with all applicable rules established by the Administrator;

(b) The receipt by the Company of full payment for the shares with respect to
which the Option or portion thereof is exercised, including payment of any
applicable withholding tax, which may be in one or more of the forms of
consideration permitted under Section 4.4;

(c) Such representations and documents as the Administrator, in its
discretion, deems necessary or advisable to effect compliance with all
applicable provisions of the Securities Act and any other federal, state or
foreign securities laws or regulations. The Administrator may, in its
discretion, also take whatever additional actions it deems appropriate to effect
such compliance including, without limitation, placing legends on share
certificates and issuing stop-transfer orders to transfer agents and registrars;
and

(d) In the event the Option or portion thereof shall be exercised pursuant to
Section 4.1 by any person or persons other than Participant, appropriate proof
of the right of such person or persons to exercise the Option.

4.4 Method of Payment. Payment of the exercise price shall be by any
of the following, or a combination thereof, at the election of Participant:

(a) cash;

(b) check;

(c) to the extent permitted under applicable laws, delivery of a notice that
Participant has placed a market sell order with a broker with respect to shares
of Stock then issuable upon exercise of the Option, and that the broker has been
directed to pay a sufficient portion of the net proceeds of the sale to the
Company in satisfaction of the aggregate exercise price; provided, that
payment of such proceeds is then made to the Company upon settlement of such
sale;

(d) with the consent of the Administrator, through the delivery of shares of
Stock which have been owned by Participant for at least six months, duly
endorsed for transfer to the Company with a Fair Market Value on the date of
exercise equal to the aggregate exercise price of the Option or exercised
portion thereof; or

(e) any combination of the foregoing.

4.5 Conditions to Issuance of Shares. The shares of Stock deliverable
upon the exercise of the Option, or any portion thereof, may be either
previously authorized but unissued shares or issued shares which have then been
reacquired by the Company. Such shares shall be fully paid and nonassessable.
The Company shall not be required to issue or deliver any shares of Stock
purchased upon the exercise of the Option or portion thereof prior to
fulfillment of all of the following conditions:

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(a) The admission of such shares to listing on all stock exchanges on which
such Stock is then listed;

(b) The completion of any registration or other qualification of such shares
under any federal, state or foreign law or under rulings or regulations
promulgated by the Securities and Exchange Commission or any other governmental
regulatory body, which the Administrator shall, in its discretion, deem
necessary or advisable;

(c) The obtaining of any approval or other clearance from any federal, state
or foreign governmental agency which the Administrator shall, in its discretion,
determine to be necessary or advisable;

(d) The receipt by the Company of full payment for such shares, including
payment of any applicable withholding tax, which may be in one or more of the
forms of consideration permitted under Section 4.4;

(e) Unless a Registration Statement under the Securities Act is in effect
with respect to the shares of Stock to be issued, the receipt of a written
representation of Participant that the shares of Stock are being acquired by
Participant for investment and with no present intention of selling or
transferring them and that Participant will not sell or otherwise transfer the
shares except in compliance with all applicable securities laws; and

(f) The lapse of such reasonable period of time following the exercise of the
Option and the satisfaction of all other conditions to issuance as the
Administrator may from time to time establish for reasons of administrative
convenience.

4.6 Rights as Stockholder. The holder of the Option shall not be, nor
have any of the rights or privileges of, a stockholder of the Company in respect
of any shares purchasable upon the exercise of any part of the Option unless and
until such shares shall have been issued by the Company to such holder (as
evidenced by the appropriate entry on the books of the Company or of a duly
authorized transfer agent of the Company). No adjustment will be made for a
dividend or other right for which the record date is prior to the date the
shares are issued, except as provided in Section 11.3 of the Plan.

ARTICLE V

OTHER PROVISIONS

5.1 Administration. The Administrator shall have the power to (a)
interpret the Plan and this Agreement, (b) adopt such rules for the
administration, interpretation and application of the Plan as are consistent
therewith and to interpret, amend or revoke any such rules and (c) amend this
Agreement, subject to Section 5.9. All actions taken and all interpretations and
determinations made by the Administrator in good faith shall be binding,
conclusive and final upon Participant, the Company and all other interested
persons. No member of the Administrator shall be personally liable for any
action, determination or interpretation made in good faith with respect to the
Plan, this Agreement or the Option. In its discretion, the Board may at any time
and from time to time exercise any and all rights and duties of the
Administrator under the Plan except with respect to matters which under Rule
16b-3 or Section 162(m) of the Code, or any regulations or rules issued
thereunder, are required to be determined in the discretion of the
Administrator.

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5.2 Option Not Transferable.

(a) Subject to Section 5.2(b), the Option may not be sold, pledged, assigned
or transferred in any manner other than by will or the laws of descent and
distribution. Neither the Option nor any interest or right therein or part
thereof shall be liable for the debts, contracts or engagements of Participant
or Participant153s successors in interest or shall be subject to sale or other
disposition by transfer, alienation, anticipation, pledge, encumbrance,
assignment or any other means whether such sale or other disposition be
voluntary or involuntary or by operation of law by judgment, levy, attachment,
garnishment or any other legal or equitable proceedings (including bankruptcy),
and any attempted sale or other disposition thereof shall be null and void and
of no effect, except to the extent that such sale or other disposition is
permitted by the preceding sentence.

(b) Notwithstanding any other provision in this Agreement, with the consent
of the Administrator and to the extent the Option is not intended to qualify as
an Incentive Stock Option, the Option may be transferred to one or more
Permitted Transferees, subject to the terms and conditions set forth in Section
11.1(b) of the Plan.

(c) Unless transferred to a Permitted Transferee in accordance with Section
5.2(b), during the lifetime of Participant, only Participant may exercise the
Option or any portion thereof. Subject to such conditions and procedures as the
Administrator may require, a Permitted Transferee may exercise the Option or any
portion thereof during Participant153s lifetime. After the death of Participant,
any exercisable portion of the Option may, prior to the time when the Option
becomes unexercisable under Section 3.3, be exercised by Participant153s personal
representative or by any person empowered to do so under the deceased
Participant153s will or under the then applicable laws of descent and
distribution.

5.3 Restrictive Legends and Stop-Transfer Orders.

(a) The share certificate or certificates evidencing the shares of Stock
purchased hereunder shall be endorsed with any legends that may be required by
any applicable federal, state or foreign securities laws.

(b) Participant agrees that, in order to ensure compliance with the
restrictions referred to herein, the Company may issue appropriate “stop
transfer” instructions to its transfer agent, if any, and that, if the Company
transfers its own securities, it may make appropriate notations to the same
effect in its own records.

(c) The Company shall not be required: (i) to transfer on its books any
shares of Stock that have been sold or otherwise transferred in violation of any
of the provisions of this Agreement, or (ii) to treat as owner of such shares of
Stock or to accord the right to vote or pay dividends to any purchaser or other
transferee to whom such shares shall have been so transferred.

5.4 Shares to Be Reserved. The Company shall at all times during the
term of the Option reserve and keep available such number of shares of Stock as
will be sufficient to satisfy the requirements of this Agreement.

5.5 Notices. Any notice to be given under the terms of this Agreement
to the Company shall be addressed to the Company in care of the Secretary of the
Company at the address for the Company appearing on the Grant Notice, and any
notice to be given to Participant shall be addressed to Participant at the
address appearing for the Participant on the Grant Notice or at the last known
address for Participant contained in the Company153s records. By a notice given
pursuant to this Section 5.5, either party may thereafter designate a different
address for notices to be given to that party. Any notice which

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is required to be given to Participant shall, if Participant is then
deceased, be given to the person entitled to exercise Participant153s Option
pursuant to Section 4.1 by written notice under this Section 5.5. Any notice
shall be deemed duly given when sent via email or enclosed in a properly sealed
envelope or wrapper addressed as aforesaid, deposited (with postage prepaid) in
a post office or branch post office regularly maintained by the United States
Postal Service.

5.6 Titles. Titles are provided herein for convenience only and are
not to serve as a basis for interpretation or construction of this Agreement.

5.7 Governing Law; Severability. This Agreement shall be administered,
interpreted and enforced under the laws of the State of Delaware, without regard
to the conflicts of laws principles thereof. Should any provision of this
Agreement be determined by a court of law to be illegal or unenforceable, the
other provisions shall nevertheless remain effective and shall remain
enforceable.

5.8 Conformity to Securities Laws. Participant acknowledges that the
Plan is intended to conform to the extent necessary with all applicable federal,
state and foreign securities laws (including the Securities Act and the Exchange
Act) and any and all regulations and rules promulgated thereunder by the
Securities and Exchange Commission or any other governmental regulatory body.
Notwithstanding anything herein to the contrary, the Plan shall be administered,
and the Option is granted and may be exercised, only in such a manner as to
conform to such laws, rules and regulations. To the extent permitted by
applicable law, the Plan and this Agreement shall be deemed amended to the
extent necessary to conform to such laws, rules and regulations.

5.9 Amendments. This Agreement may not be modified, amended or
terminated, except by an instrument in writing, signed by a duly authorized
representative of the Company and, to the extent any such modification,
amendment or termination may adversely affect the rights of Participant or such
other person as may be permitted to exercise the Option pursuant to Section 4.1,
by Participant or such other person, except as otherwise provided under the
terms of the Plan.

5.10 Successors and Assigns. The Company may assign any of its rights
under this Agreement to single or multiple assignees, and this Agreement shall
inure to the benefit of the successors and assigns of the Company. Subject to
the restrictions on transfer herein set forth in Section 5.2, this Agreement
shall be binding upon Participant and Participant153s heirs, executors,
administrators, successors and assigns.

5.11 Notification of Disposition. If this Option is designated as an
Incentive Stock Option, Participant shall give prompt notice to the Company of
any disposition or other transfer of any shares of Stock acquired under this
Agreement if such disposition or transfer is made (a) within two years from the
Grant Date or (b) within one year after the transfer of such shares to
Participant. Such notice shall specify the date of such disposition or other
transfer and the amount realized, in cash, other property, assumption of
indebtedness or other consideration, by Participant in such disposition or other
transfer.

5.12 Limitations Applicable to Section 16 Persons. Notwithstanding any
other provision of the Plan or this Agreement, if Participant is subject to
Section 16 of the Exchange Act, the Plan, the Option and this Agreement shall be
subject to any additional limitations set forth in any applicable exemptive rule
under Section 16 of the Exchange Act (including any amendment to Rule 16b-3 of
the Exchange Act) that are requirements for the application of such exemptive
rule. To the extent permitted by applicable law, this Agreement shall be deemed
amended to the extent necessary to conform to such applicable exemptive rule.

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5.13 Entire Agreement. The Plan, the Grant Notice (including all
Exhibits thereto) and this Agreement constitute the entire agreement of the
parties and supersede in their entirety all prior undertakings and agreements of
the Company and Participant with respect to the subject matter hereof, except to
the extent expressly provided otherwise in a written agreement between the
Company or a Subsidiary and Participant.

5.14 Section 409A. This Option is not intended to constitute
“nonqualified deferred compensation” within the meaning of Section 409A of the
Code (together with any Department of Treasury regulations and other
interpretive guidance issued thereunder, including without limitation any such
regulations or other guidance that may be issued after the date hereof,
“Section 409A“). However, notwithstanding any other
provision of the Plan, the Grant Notice or this Agreement, if at any time the
Administrator determines that the Option (or any portion thereof) may be subject
to Section 409A, the Administrator shall have the right in its sole discretion
(without any obligation to do so or to indemnify Participant or any other person
for failure to do so) to adopt such amendments to the Plan, the Grant Notice or
this Agreement, or adopt other policies and procedures (including amendments,
policies and procedures with retroactive effect), or take any other actions, as
the Administrator determines are necessary or appropriate either for the Option
to be exempt from the application of Section 409A or to comply with the
requirements of Section 409A.

5.15 Limitation on Participant153s Rights. Participation in the Plan
confers no rights or interests other than as herein provided. This Agreement
creates only a contractual obligation on the part of the Company as to amounts
payable and shall not be construed as creating a trust. Neither the Plan nor any
underlying program, in and of itself, has any assets. Participant shall have
only the rights of a general unsecured creditor of the Company with respect to
amounts credited and benefits payable, if any, with respect to the Option, and
rights no greater than the right to receive the Stock as a general unsecured
creditor with respect to options, as and when exercised pursuant to the terms
hereof.

5.16 Claw-Back Policy. The Option shall be subject to any claw-back
policy implemented by the Company, in accordance with Section 11.7(b) of the
Plan.

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