8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D. C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported):

February 22, 2006

SAFEWAY INC.

(Exact name of registrant as specified in its charter)

Delaware	1-00041	94-3019135
(State or other jurisdiction of Incorporation)	(Commission File Number)	(IRS Employer Identification Number)

5918 Stoneridge Mall Road, Pleasanton, California	94588-3229
(Address of principal executive offices)	(Zip Code)

(925) 467-3000

(Registrant’s telephone number, including area code)

N/A

(Former name or former address, if changed since last report.)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 1.01 Entry into a Material Definitive Agreement

On February 22, 2006, the Executive Compensation Committee of the Safeway Inc. Board of Directors (the “Committee”) adopted the Blackhawk Marketing Services, Inc. 2006 Restricted Stock Plan for Eligible Employees of Safeway Inc. (the “Restricted Stock Plan”) and approved a form of Restricted Stock Award Grant Notice and Restricted Stock Agreement (the “Award Agreement”). The purpose of the Restricted Stock Plan is to provide an additional incentive for employees of Safeway Inc. (“Safeway”) and its subsidiaries to further the growth, development and financial success of Blackhawk Marketing Services, Inc., a subsidiary of Safeway (“Blackhawk”), for the benefit of Safeway and its shareholders. Under the Restricted Stock Plan, the Committee is authorized to award certain eligible employees of Safeway and its subsidiaries shares of restricted common stock in Blackhawk on the terms and conditions set forth in the Plan and the Award Agreement. The Restricted Stock Plan and the Award Agreement provide, among other things, that (a) the Committee shall administer the Restricted Stock Plan, (b) a total of 2.5 million shares of Blackhawk common stock are reserved for grant under the Restricted Stock Plan, (c) any shares of restricted stock granted under the Restricted Stock Plan shall have a purchase price at or above the par value of common stock of Blackhawk ($.001 per share) and (d) the restricted stock is generally nontransferable, subject to certain limited circumstances set forth the Restricted Stock Plan. The number of shares of restricted stock awarded to any participant, the purchase price of the restricted stock and the vesting schedule of any particular award will be established by the Committee and set forth in an individual’s Award Agreement.

A copy of the Restricted Stock Plan and the Award Agreement are attached hereto as Exhibits 10.1 and 10.2.

Item 9.01. Financial Statements and Exhibits.

(c) Exhibits.

10.1	Blackhawk Marketing Services, Inc. 2006 Restricted Stock Plan for Eligible Employees of Safeway Inc.
10.2	Form of Restricted Stock Award Grant Notice and Restricted Stock Agreement

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	SAFEWAY INC.
	(Registrant)
Date: February 27, 2006	By:	/s/ Robert A. Gordon
	Name:	Robert A. Gordon
	Title:	Senior Vice President, Secretary & General Counsel

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EXHIBIT INDEX

Exhibit No.
10.1	Blackhawk Marketing Services, Inc. 2006 Restricted Stock Plan for Eligible Employees of Safeway Inc.
10.2	Form of Restricted Stock Award Grant Notice and Restricted Stock Agreement

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EX-10.1

Exhibit 10.1

BLACKHAWK MARKETING SERVICES, INC.

2006 RESTRICTED STOCK PLAN

FOR ELIGIBLE EMPLOYEES OF SAFEWAY INC.

BLACKHAWK MARKETING SERVICES, INC.

2006 RESTRICTED STOCK PLAN

FOR ELIGIBLE EMPLOYEES OF SAFEWAY INC.

Table of Contents

		Page
ARTICLE I. DEFINITIONS		1
1.1.	ADMINISTRATOR	1
1.2.	AWARD	1
1.3.	AWARD AGREEMENT	1
1.4.	BLACKHAWK	1
1.5.	BOARD	1
1.6.	CODE	1
1.7.	COMMITTEE	1
1.8.	COMMON STOCK	1
1.9.	COMPANY	1
1.10.	EMPLOYEE	2
1.11.	EXCHANGE ACT	2
1.12.	FAIR MARKET VALUE	2
1.13.	HOLDER	2
1.14.	PLAN	2
1.15.	RESTRICTED STOCK	2
1.16.	SECURITIES ACT	2
1.17.	SUBSIDIARY	2
1.18.	STOCKHOLDERS’ AGREEMENT	2
1.19.	TERMINATION OF EMPLOYMENT	2
ARTICLE II. SHARES SUBJECT TO PLAN		3
2.1.	SHARES SUBJECT TO PLAN	3
2.2.	ADD-BACK OF CERTAIN SHARES	3
ARTICLE III. AWARD OF RESTRICTED STOCK		3
3.1.	ELIGIBILITY	3
3.2.	AWARD OF RESTRICTED STOCK	3
3.3.	AWARD AGREEMENT	3
3.4.	RESTRICTION	3
3.5.	REPURCHASE OF RESTRICTED STOCK	4
3.6.	STOCKHOLDERS’ AGREEMENT	4
3.7.	CONDITIONS TO ISSUANCE OF STOCK CERTIFICATES	4
3.8.	INVESTMENT INTENT	5
3.9.	ESCROW	5
3.10.	RIGHTS AS STOCKHOLDERS	5
3.11.	LEGEND	5
3.12.	SECTION 83(B) ELECTION	5
ARTICLE IV. ADMINISTRATION		6
4.1.	ADMINISTRATOR	6
4.2.	POWERS OF THE ADMINISTRATOR	6
4.3.	MAJORITY RULE; UNANIMOUS WRITTEN CONSENT	7
4.4.	COMPENSATION; PROFESSIONAL ASSISTANCE; GOOD FAITH ACTIONS	7

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BLACKHAWK MARKETING SERVICES, INC.

2006 RESTRICTED STOCK PLAN

FOR ELIGIBLE EMPLOYEES OF SAFEWAY INC.

Table of Contents

		Page
ARTICLE V. MISCELLANEOUS PROVISIONS		8
5.1.	NOT TRANSFERABLE.	8
5.2.	AMENDMENT, SUSPENSION OR TERMINATION OF THE PLAN	8
5.3.	CHANGES IN COMMON STOCK OR ASSETS OF THE COMPANY, ACQUISITION OR LIQUIDATION OF THE COMPANY AND OTHER CORPORATE EVENTS	8
5.4.	TAX WITHHOLDING	10
5.5.	AT-WILL EMPLOYMENT	10
5.6.	EFFECT OF PLAN UPON OPTIONS AND COMPENSATION PLANS	10
5.7.	COMPLIANCE WITH LAWS	10
5.8.	TITLES	11
5.9.	GOVERNING LAW	11

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BLACKHAWK MARKETING SERVICES, INC.

2006 RESTRICTED STOCK PLAN

FOR ELIGIBLE EMPLOYEES OF SAFEWAY INC.

Safeway Inc., a Delaware corporation (the “Company”), adopted this Blackhawk Marketing Services, Inc. 2006 Restricted Stock Plan for Eligible Employees of Safeway Inc. (the “Plan”) for the benefit of its eligible Employees (as defined herein), effective as of February 22, 2006 (the “Effective Date”). The purpose of the Plan is to provide an additional incentive for Employees (as defined below) to further the growth, development and financial success of Blackhawk (and thereby further the growth, development and financial success of the Company) by personally benefiting through the ownership of Blackhawk stock.

ARTICLE I.

DEFINITIONS

Wherever the following terms are used in the Plan they shall have the meanings specified below, unless the context clearly indicates otherwise.

1.1. Administrator. “Administrator” shall mean the Executive Compensation Committee, except that, if a Committee is appointed under Section 4.1, the term “Administrator” shall mean the Committee as to those duties, powers and responsibilities specifically conferred upon the Committee.

1.2. Award. “Award” shall mean a Restricted Stock award granted under the Plan.

1.3. 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.

1.4. Blackhawk. “Blackhawk” shall mean Blackhawk Marketing Services, Inc., an Arizona corporation.

1.5. Board. “Board” shall mean the Board of Directors of the Company.

1.6. Code. “Code” shall mean the Internal Revenue Code of 1986, as amended.

1.7. Committee. “Committee” shall mean the Executive Compensation Committee or a subcommittee of the Board appointed as provided in Section 4.1.

1.8. Common Stock. “Common Stock” shall mean the common stock of Blackhawk, par value $0.001 per share.

1.9. Company. “Company” shall mean Safeway Inc., a Delaware corporation.

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1.10. 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.

1.11. Exchange Act. “Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

1.12. Executive Compensation Committee. “Executive Compensation Committee” shall mean the Executive Compensation Committee of the Board.

1.13. Fair Market Value. “Fair Market Value” shall have the meaning assigned to such term in the Stockholders’ Agreement.

1.14. Holder. “Holder” shall mean a person who has been granted an Award.

1.15. Plan. “Plan” shall mean the Blackhawk Marketing Services, Inc. 2006 Restricted Stock Plan for Eligible Employees of Safeway Inc.

1.16. Restricted Stock. “Restricted Stock” shall mean Common Stock granted pursuant to the Plan.

1.17. Securities Act. “Securities Act” shall mean the Securities Act of 1933, as amended.

1.18. 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.

1.19. Stockholders’ Agreement. “Stockholders’ Agreement” shall mean that certain Stockholders’ Agreement dated as of February 24, 2006, by and among Blackhawk, the Company and certain stockholders of Blackhawk, as amended from time to time.

1.20. Termination of Employment. “Termination of Employment” shall mean the time when the employee-employer relationship between a Holder and the Company or any Subsidiary is terminated for any reason, with or without cause, including, but not by way of limitation, a termination by resignation, discharge, death, disability or retirement; but excluding (a) terminations where there is a simultaneous reemployment or continuing employment of a Holder by the Company or any Subsidiary, and (b) at the discretion of the Administrator, terminations which result in a temporary severance of the employee-employer relationship. The Administrator, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Employment, including, but not by way of limitation, all questions of whether a particular leave of absence constitutes a Termination of Employment.

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ARTICLE II.

SHARES SUBJECT TO PLAN

2.1. Shares Subject to Plan. The shares of stock subject to Awards shall be shares of Blackhawk common stock, par value $0.001 per share. The aggregate number of such shares which may be transferred pursuant to Awards under the Plan shall not exceed Two Million Five Hundred Thousand (2,500,000). The shares of Common Stock to be transferred in connection with an Award shall consist of shares of issued and outstanding Common Stock held by the Company.

2.2. Add-back of Certain Shares. Shares of Common Stock which are delivered by the Holder in payment of the tax withholding with respect to any Award may again be granted hereunder, subject to the limitations of Section 2.1. If any shares of Restricted Stock are repurchased by the Company pursuant to Section 3.5, such shares may again be granted hereunder, subject to the limitations of Section 2.1.

ARTICLE III.

AWARD OF RESTRICTED STOCK

3.1. Eligibility. Restricted Stock may be granted to any Employee who the Administrator determines should receive such an Award.

3.2. Award of Restricted Stock

(a) The Administrator may from time to time, in its absolute discretion:

(i) Select from among the Employees (including Employees who have previously received other Awards under the Plan) such of them as in its opinion should be granted Restricted Stock; and

(ii) Determine the purchase price, if any, and other terms and conditions applicable to such Restricted Stock, consistent with the Plan.

(b) The Administrator shall establish the purchase price, if any, and form of payment for Restricted Stock; provided, however, that such purchase price shall be no less than the par value of the Common Stock to be purchased, unless otherwise permitted by applicable state law. In all cases, legal consideration shall be required for each issuance of Restricted Stock.

3.3. Award Agreement. Each Award shall be evidenced by an Award Agreement. The Award Agreement evidencing an Award shall contain such terms, provisions and conditions not inconsistent with the Plan as may be determined by the Administrator in its discretion.

3.4. Restriction. All shares of Restricted Stock (including any shares received by holders thereof with respect to shares of Restricted Stock as a result of stock dividends, stock splits or any other form of recapitalization) shall, in the terms of each individual Award Agreement, be

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subject to such restrictions as the Administrator shall provide, which restrictions may include, without limitation, restrictions concerning voting rights and transferability and restrictions based on duration of employment with the Company or any Subsidiary, Blackhawk performance, Company performance and individual performance; provided, however, that, by action taken after the Restricted Stock is transferred to a Holder, the Administrator may, on such terms and conditions as it may determine to be appropriate, remove any or all of the restrictions imposed by the terms of the Award Agreement. Restricted Stock may not be sold or encumbered until all restrictions are terminated or expire.

3.5. Repurchase of Restricted Stock. The Administrator may provide in the terms of each individual Award Agreement that the Company shall have the right to repurchase from the Holder the Restricted Stock then subject to restrictions under the Award Agreement at the time of such Holder’s Termination of Employment, at a price per share equal to the lesser of (i) the price paid by the Holder for such Restricted Stock or (ii) the then current Fair Market Value of such Restricted Stock, as determined by the Administrator in good faith. The repurchase price for any such shares of Restricted Stock shall be paid in cash (or cash equivalent).

3.6. Stockholders’ Agreement. Except as otherwise provided by the Administrator, all shares of Restricted Stock shall be subject to the Stockholders’ Agreement. As a condition of acquiring Restricted Stock, the Administrator may require a Holder to execute, deliver and deposit with the Secretary of the Company, or such other person designated by the Administrator, the Stockholders’ Agreement.

3.7. Conditions to Issuance of Stock Certificates. The Company shall not be required to issue or deliver any certificate or certificates for shares of Common Stock transferred to a Holder pursuant to an Award prior to fulfillment of all of the following conditions:

(a) The receipt by the Company of full payment for such shares, including payment of any applicable withholding tax; or

(b) Holder’s execution of such documentation (if any) as the Administrator may deem necessary or advisable to evidence Holder’s agreement to be bound by the terms of the Stockholders’ Agreement with respect to the such shares.

(c) The admission of such shares to listing on all stock exchanges on which such class of stock is then listed (if any);

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

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

(f) The lapse of such reasonable period of time (as may be established by the

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Administrator from time to time for reasons of administrative convenience) following execution of an Award Agreement and such other documentation as the Administrator may require consistent with the terms of the Plan (including, without limitation, any investment representation letter required pursuant to Section 3.8).

3.8. Investment Intent. As a condition of acquiring Common Stock under the Plan, the Administrator may require a Holder to give written assurances satisfactory to the Company as to (i) the Holder’s knowledge and experience in financial and business matters, (ii) the Holder’s capability of evaluating, alone or together with a professional advisor employed by the Holder, the merits and risks of acquiring such Common Stock, and (iii) the Holder’s investment intent (and intent to acquire the Common Stock for the Holder’s own account and not with any present intention of selling or otherwise distributing the Common Stock). In the event the services of a professional advisor are necessary to provide the foregoing written assurances, the professional advisor shall be unaffiliated with Blackhawk or any of its affiliates or the Company or any of its affiliates, and shall be knowledgeable and experienced in financial and business matters. The Holder alone shall be responsible for the cost of employing any professional advisor. The requirements of this Section 3.8 shall be inoperative if the shares to be transferred to the Holder have been registered under a then currently effective registration statement under the Securities Act, or as to any particular requirement, a determination is made by counsel for the Company that such requirement need not be met in the circumstances under the then applicable securities laws.

3.9. Escrow. The Secretary of the Company or such other escrow holder as the Administrator may appoint shall retain physical custody of each certificate representing Restricted Stock until all of the restrictions imposed under the Award Agreement with respect to the shares evidenced by such certificate expire or shall have been removed.

3.10. Rights as Stockholders. Subject to Section 3.4, upon delivery of the shares of Restricted Stock to the Holder, or to the escrow holder pursuant to Section 3.9, as applicable, the Holder shall have, unless otherwise provided by the Administrator, all the rights of a stockholder with respect to said shares, subject to the restrictions, if any, in his or her Award Agreement and the Stockholders’ Agreement, including the right to receive all dividends and other distributions paid or made with respect to the shares; provided, however, that in the discretion of the Administrator, any dividends or other distributions with respect to the Common Stock shall be subject to the restrictions imposed pursuant to Sections 3.4 and 3.5.

3.11. Legend. In order to enforce the restrictions imposed upon shares of Restricted Stock hereunder, the Administrator shall cause a legend or legends to be placed on certificates representing all shares of Restricted Stock that are still subject to restrictions under Award Agreements, which legend or legends shall make appropriate reference to the conditions imposed thereby.

3.12. Section 83(b) Election. If a Holder makes an election under Section 83(b) of the Code, or any successor section thereto, to be taxed with respect to the Restricted Stock as of the date of transfer of the Restricted Stock rather than as of the date or dates upon which the Holder would otherwise be taxable under Section 83(a) of the Code, the Holder shall deliver a copy of such

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election to the Company immediately after filing such election with the Internal Revenue Service.

ARTICLE IV.

ADMINISTRATION

4.1. Administrator. The Plan shall initially be administered by the Executive Compensation Committee; provided, however, that the Board, in its absolute discretion, may at any time and from time to time terminate the administrative authority of the Executive Compensation Committee and exercise any and all rights and duties of the Executive Compensation Committee under the Plan. The Executive Compensation Committee may delegate administration of the Plan to a committee or committees of one or more members of the Board, and the term “Committee” shall apply to any person or persons to whom such authority has been delegated. If administration is delegated to a Committee, the Committee shall have, in connection with the administration of the Plan, the powers theretofore possessed by the Executive Compensation Committee, including the power to delegate to a subcommittee any of the administrative powers the Committee is authorized to exercise (and references in this Plan to the Executive Compensation Committee shall thereafter be to the Committee or subcommittee), subject, however, to such resolutions, not inconsistent with the provisions of the Plan, as may be adopted from time to time by the Executive Compensation Committee. Within the scope of such authority, the Executive Compensation Committee or the Committee may delegate to a committee of one or more members of the Board the authority to grant Awards under the Plan to eligible Employees. Appointment of Committee members shall be effective upon acceptance of appointment. Committee members may resign at any time by delivering written notice to the Board. Vacancies in the Executive Compensation Committee may only be filled by the Board.

4.2. Powers of the Administrator. Subject to the provisions of the Plan and the specific duties delegated to any Committee, and subject to the approval of any relevant authorities, the Administrator shall have the authority in its discretion:

(a) to determine the Fair Market Value of the Common Stock for all purposes of the Plan or any Award granted hereunder;

(b) to select the Employee to whom Awards may from time to time be granted hereunder;

(c) to determine the number of shares of Common Stock to be covered by each Award granted hereunder, subject to the limitations of Section 2.1 above;

(d) to approve forms of agreement for use under the Plan;

(e) to determine the terms and conditions of any Awards granted hereunder (such terms and conditions include, but are not limited to, the purchase price to be paid, the time or times when Award may vest (which may be based on performance criteria), any vesting acceleration or waiver of forfeiture restrictions, and any restriction or limitation regarding any

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Award or the Common Stock relating thereto, based in each case on such factors as the Administrator, in its discretion, shall determine);

(f) to prescribe, amend and rescind rules and regulations relating to the Plan;

(g) to allow Holders to satisfy withholding tax obligations by electing to have the Company withhold shares of Common Stock otherwise subject to an Award, or to allow the repurchase of shares of Common Stock by the Company, having a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such obligations based on the minimum amount required to be withheld using the statutory withholding rates for federal, state, local and foreign income tax and payroll tax purposes that are applicable to such supplemental taxable income. The Fair Market Value of the shares of Common Stock to be withheld or repurchased shall be determined on the date that the amount of tax to be withheld is to be determined. All elections by Holders to have shares of Common Stock withheld or repurchased for this purpose shall be made in such form and under such conditions as the Administrator may deem necessary or advisable;

(h) to amend the Plan or any Award granted under the Plan as provided in Section 5.2; and

(i) to construe and interpret the terms of the Plan and Awards granted pursuant to the Plan and to exercise such powers and perform such acts as the Administrator deems necessary or desirable to promote the best interests of the Company which are not in conflict with the provisions of the Plan.

4.3. Majority Rule; Unanimous Written Consent. The Administrator shall act by a majority of its members in attendance at a meeting at which a quorum is present or by a memorandum or other written instrument signed by all members of the Board or Committee, as applicable.

4.4. Compensation; Professional Assistance; Good Faith Actions. Members of the Board or Committee shall receive such compensation, if any, for their services as members as may be determined by the Board. All expenses and liabilities which members of the Board or Committee incur in connection with the administration of the Plan shall be borne by the Company. The Administrator may employ attorneys, consultants, accountants, appraisers, brokers, or other persons. The Administrator, the Company and the Company’s officers and members of the Board shall be entitled to rely upon the advice, opinions or valuations of any such persons. All actions taken and all interpretations and determinations made by the Committee or the Board in good faith shall be final and binding upon all Holders, the Company and all other interested persons. No members of the Committee or Board shall be personally liable for any action, determination or interpretation made in good faith with respect to the Plan or Awards, and all members of the Committee and the Board shall be fully protected by the Company in respect of any such action, determination or interpretation.

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ARTICLE V.

MISCELLANEOUS PROVISIONS

5.1. Not Transferable.

(a) No Award under the Plan, or the shares underlying such Award, may be sold, pledged, assigned, hypothecated, transferred or disposed of in any manner other than by will or the laws of descent and distribution, unless and until the shares underlying such Award have been issued, and all restrictions applicable to such shares have lapsed. No Award or interest or right therein shall be liable for the debts, contracts or engagements of the Holder or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such 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 disposition thereof shall be null and void and of no effect, except to the extent that such disposition is permitted by the preceding sentence.

5.2. Amendment, Suspension or Termination of the Plan. Except as otherwise provided in this Section 5.2, the Plan may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Executive Compensation Committee or the Board. No amendment, suspension or termination of the Plan shall, without the consent of the Holder alter or impair any rights or obligations under any Award theretofore granted, unless the Award itself otherwise expressly so provides. No Awards may be granted during any period of suspension or after termination of the Plan, and in no event may any Awards be granted under the Plan after the expiration of ten years from the date the Plan is adopted by the Executive Compensation Committee.

5.3. Changes in Common Stock or Assets of Blackhawk, Acquisition or Liquidation of the Blackhawk and Other Corporate Events.

(a) In the event that the Administrator determines that any dividend or other distribution (whether in the form of cash, Common Stock, other securities, or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer, exchange or other disposition of all or substantially all of the assets of Blackhawk, or exchange of Common Stock or other securities of Blackhawk, issuance of warrants or other rights to purchase Common Stock or other securities of Blackhawk, or other similar corporate transaction or event, in the Administrator’s discretion, affects the Common Stock such that an adjustment is determined by the Administrator to be appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to an Award, then the Administrator shall, in such manner as it may deem equitable, adjust any or all of

(i) the number and kind of shares of Common Stock (or other securities or property) with respect to which Awards may be granted (including, but not limited to,

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adjustments of the limitation in Section 2.1 on the maximum number and kind of shares which may be issued); and

(ii) the number and kind of shares of Common Stock (or other securities or property) subject to outstanding Awards.

(b) In the event of any transaction or event described in Section 5.3(a) or any unusual or nonrecurring transactions or events affecting the Company, any affiliate of the Company, or the financial statements of the Company or any affiliate, or of changes in applicable laws, regulations, or accounting principles, the Administrator, in its discretion, and on such terms and conditions as it deems appropriate, either by the terms of the Award or by action taken prior to the occurrence of such transaction or event and either automatically or upon the Holder’s request, is hereby authorized to take any one or more of the following actions whenever the Administrator determines that such action is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan or with respect to any Award under the Plan, to facilitate such transactions or events, or to give effect to such changes in laws, regulations or principles:

(i) To provide for either the purchase of any such Award or shares of Common Stock issued thereunder for an amount of cash equal to the amount that could have been attained upon the realization of the Holder’s rights had such Award been fully vested or the replacement of such Award with other rights or property selected by the Administrator in its discretion;

(ii) To provide that some or all shares of Restricted Stock may cease to be subject to repurchase under Section 3.5, or such other restrictions as may be imposed under Section 3.4, after such event;

(iii) To provide that the Award cannot vest after such event;

(iv) To provide that the Company’s repurchase rights may be assigned to the successor or survivor corporation, or a parent or subsidiary thereof, or otherwise continued in effect;

(v) To provide that such Award shall be substituted for by similar awards covering the stock of the successor or survivor corporation, or a parent or subsidiary thereof, with appropriate adjustments as to the number and kind of shares and prices; and

(vi) To make adjustments in the number and kind of shares of Common Stock (or other securities or property) subject to outstanding Awards, or Awards which may be granted in the future.

(c) The Administrator may, in its discretion, include such further provisions and limitations in any Award, agreement or certificate, as it may deem equitable and in the best interests of the Company.

(d) The existence of the Plan, the Award Agreement and the Awards granted hereunder shall not affect or restrict in any way the right or power of the Company or Blackhawk

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or the stockholders of the Company or Blackhawk to make or authorize any adjustment, recapitalization, reorganization or other change in capital structure or business of the Company or Blackhawk, any merger or consolidation of the Company or Blackhawk, any issue of stock or of options, warrants or rights to purchase stock or of bonds, debentures, preferred or prior preference stocks whose rights are superior to or affect the Common Stock or the rights thereof or which are convertible into or exchangeable for Common Stock, or the dissolution or liquidation of the Company or Blackhawk, or any sale or transfer of all or any part of its assets or business, or any other corporate act or proceeding, whether of a similar character or otherwise.

5.4. Tax Withholding. The Company shall be entitled to require payment in cash or deduction from other compensation payable to each Holder of any sums required by federal, state or local tax law to be withheld with respect to the grant, transfer or vesting of any Award or shares of Restricted Stock subject thereto. The Administrator may in its discretion and in satisfaction of the foregoing requirement allow such Holder to elect to have the Company withhold shares of Common Stock otherwise issuable under such Award (or allow the return of shares of Common Stock) having a Fair Market Value equal to the sums required to be withheld. Notwithstanding any other provision of the Plan, the number of shares of Common Stock which may be withheld with respect to the transfer, vesting, or payment of any Award (or which may be repurchased from the Holder of such Award within six months after such shares of Common Stock were acquired by the Holder from the Company) in order to satisfy the Holder’s federal, state and local income tax and payroll tax liabilities with respect to the transfer, vesting, or payment of the Award shall be limited to the number of shares which have a Fair Market Value on the date of withholding or repurchase equal to the aggregate amount of such liabilities based on the minimum statutory withholding rates for federal, state and local income tax and payroll tax purposes that are applicable to such supplemental taxable income.

5.5. At-Will Employment. Nothing in the Plan or in any Award Agreement hereunder shall confer upon any Holder any right to continue in the employ of the Company or any Subsidiary, or as a director of the Company, or shall interfere with or restrict in any way the rights of the Company or any Subsidiary, which rights are hereby expressly reserved, to discharge any Holder at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written agreement between the Holder and the Company or any Subsidiary.

5.6. Effect of Plan Upon Options and Compensation Plans. The adoption of the Plan shall not affect any other compensation or incentive plans in effect for the Company or any Subsidiary. Nothing in the Plan shall be construed to limit the right of the Company (a) to establish any other forms of incentives or compensation for Employees or other service providers of the Company or any Subsidiary or (b) to grant or assume options or other rights or awards in connection with any proper corporate purpose including but not by way of limitation, the grant or assumption of options in connection with the acquisition by purchase, lease, merger, consolidation or otherwise, of the business, stock or assets of any corporation, partnership, limited liability company, firm or association.

5.7. Compliance with Laws. The Plan, the granting and vesting of Awards under the Plan and the transfer and delivery of shares of Common Stock and the payment of money under the Plan or under Awards granted hereunder are subject to compliance with all applicable federal and

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state laws, rules and regulations and to such approvals by any listing, regulatory or governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Any securities delivered under the Plan shall be subject to such restrictions, and the person acquiring such securities shall, if requested by the Company, provide such assurances and representations to the Company as the Company may deem necessary or desirable to assure compliance with all applicable legal requirements. To the extent permitted by applicable law, the Plan and Awards granted hereunder shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

5.8. Titles. Titles are provided herein for convenience only and are not to serve as a basis for interpretation or construction of the Plan.

5.9. Governing Law. The Plan and any agreements hereunder shall be administered, interpreted and enforced under the internal laws of the State of Arizona without regard to conflicts of laws thereof.

* * *

I hereby certify that the foregoing Plan was duly adopted by the Compensation Committee of the Board of Directors of Safeway Inc. on February 22, 2006.

Executed on this 24 day of February, 2006

Safeway Inc.
By:	/S/    ROBERT A. GORDON
Title:	Senior Vice President, Secretary and General Counsel

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EX-10.2

Exhibit 10.2

BLACKHAWK MARKETING SERVICES, INC.

2006 RESTRICTED STOCK PLAN

FOR ELIGIBLE EMPLOYEES OF SAFEWAY INC.

RESTRICTED STOCK AWARD GRANT NOTICE AND

RESTRICTED STOCK AGREEMENT

Safeway Inc., a Delaware corporation (the “Company”), pursuant to its Blackhawk Marketing Services, Inc. 2006 Restricted Stock Plan for Eligible Employees of Safeway Inc. (the “Plan”), hereby grants to the individual listed below (“Employee”), the right to purchase the number of shares of common stock, par value $0.001 per share, of Blackhawk Marketing Services, Inc., an Arizona corporation (“Blackhawk”), set forth below (the “Restricted Shares”) at the purchase price set forth below. This restricted stock award is subject to all of the terms and conditions as set forth herein and in the Restricted Stock Agreement attached hereto as Exhibit “A” (the “Restricted Stock 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 Restricted Stock Agreement.

Employee:
Grant Date:
Purchase Price per Share:
Total Number of Restricted Shares:
Vesting Schedule:	As of the Grant Date,         % of the Restricted Shares shall not be subject to the Restrictions (as defined in the Restricted Stock Agreement). As of the Grant Date,         % of the Restricted Shares shall be subject to the Restrictions. Subject to the terms and conditions of the Plan, this Grant Notice and the Restricted Stock Agreement, the Restrictions shall lapse as to:
	(i)           % of the Restricted Shares on January 31, 200  , (ii)          % of the Restricted Shares on January 31, 200  , (iii)         % of the Restricted Shares on January 31, 200  , and (iv)         % of the Restricted Shares on January 31, 200  .
	In no event, however, shall the Restrictions lapse as to any additional Restricted Shares after Employee’s Termination of Employment.

By his or her signature and the Company’s signature below, Employee agrees to be bound by the terms and conditions of the Plan, the Restricted Stock Agreement and this Grant Notice. Employee has reviewed the Plan, the Restricted Stock Agreement, 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 the Plan, the Restricted Stock Agreement and this Grant Notice. Employee hereby agrees to accept as binding, conclusive and final all

decisions or interpretations of the Administrator of the Plan upon any questions arising under the Plan, the Restricted Stock Agreement or the Grant Notice. If Employee is married, his or her spouse has signed the Consent of Spouse attached to this Grant Notice as Exhibit “E”.

SAFEWAY INC.:		EMPLOYEE:
By:		By:
Print Name:
Title:
Address:	5918 Stoneridge Mall Road Pleasanton, CA 94588	Address:	5918 Stoneridge Mall Road Pleasanton, CA 94588

Attachments:     Restricted Stock Agreement (Exhibit A)

    Stockholders’ Agreement (Exhibit B)

    Assignment Separation from Certificate (Exhibit C)

    Joint Escrow Instructions (Exhibit D)

    Consent of Spouse (Exhibit E)

    Form of Internal Revenue Code Section 83(b) Election and Instructions (Exhibit F)

        - Election under Internal Revenue Code Section 83(b) (Attachment 1 to Exhibit F)

        - Sample Cover Letter to Internal Revenue Service (Attachment 2 to Exhibit F)

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EXHIBIT A

TO RESTRICTED STOCK AWARD GRANT NOTICE

RESTRICTED STOCK AGREEMENT

THIS RESTRICTED STOCK AGREEMENT (the “Agreement”), effective as of the Grant Date (the “Grant Date”) set forth in the Restricted Stock Award Grant Notice (the “Grant Notice”), is made by and between Safeway Inc., a Delaware corporation (the “Company”), and Employee:

WHEREAS, the Company wishes to carry out the Plan (as defined below) (the terms of which are hereby incorporated by reference and made a part of this Agreement); and

WHEREAS, the Administrator of the Plan has determined that it would be to the advantage and best interest of the Company to transfer the Restricted Shares provided for herein to Employee as an inducement to enter into or remain in the service of the Company or its Subsidiaries and as an incentive for increased efforts during such service, and other good and valuable consideration provided for herein, and has advised the Company thereof and instructed the undersigned officer to transfer said Restricted Shares;

WHEREAS, as a condition to the purchase of the Restricted Shares, Employee has agreed to enter into this Agreement and that certain Stockholders’ Agreement, dated as of                         , by and among the Company, Blackhawk, Employee and certain other stockholders of Blackhawk (as amended from time to time, the “Stockholders’ Agreement”), each of which sets forth the rights and obligations of the parties thereto with respect to the Restricted Shares to be transferred hereunder.

NOW, THEREFORE, in consideration of the mutual covenants herein contained and other good and valuable consideration, receipt of which is hereby acknowledged, the parties hereto do hereby agree as follows:

ARTICLE I.

DEFINITIONS

Whenever the following terms are used in this Agreement they shall have the meaning specified below unless the context clearly indicates to the contrary. The masculine pronoun shall include the feminine and neuter, and the singular the plural, where the context so indicates. All capitalized terms used herein without definition shall have the meaning ascribed to such terms in the Plan and the Grant Notice.

Section 1.1 - Administrator.

“Administrator” shall mean the Executive Compensation Committee, except that, if a Committee is appointed under Section 4.1 of the Plan, the term “Administrator” shall mean the Committee as to those duties, powers and responsibilities specifically conferred upon the Committee.

Section 1.2 - Blackhawk.

“Blackhawk” shall mean Blackhawk Marketing Services, Inc., an Arizona corporation.

Section 1.3 - Board.

“Board” shall mean the Board of Directors of the Company.

Section 1.4 - Code.

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

Section 1.5 - Committee.

“Committee” shall mean the Executive Compensation Committee or a subcommittee of the Board appointed as provided in Section 4.1 of the Plan.

Section 1.6 - Common Stock.

“Common Stock” shall mean common stock, par value $0.001 per share, of Blackhawk.

Section 1.7 - Company.

“Company” shall mean Safeway Inc., a Delaware corporation.

Section 1.8 - Dispose or Disposition.

“Dispose” or “Disposition” means to directly or indirectly, voluntarily or involuntarily, sell, exchange, transfer, alienate, convey, negotiate, pledge, hypothecate, encumber or assign or in any other way dispose of any shares.

Section 1.9 - Exchange Act.

“Exchange Act” shall mean the Securities Exchange Act of 1934, as amended.

Section 1.10 - Fair Market Value.

“Fair Market Value” shall have the meaning assigned to such term in the Stockholders’ Agreement.

Section 1.11 - Plan.

“Plan” shall mean the Blackhawk Marketing Services, Inc. 2006 Restricted Stock Plan for Eligible Employees of Safeway.

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Section 1.12 - Restrictions.

“Restrictions” shall mean the Repurchase Option and the restrictions on sale or other transfer of the Restricted Shares and other restrictions as set forth in Article III.

Section 1.13 - Secretary.

“Secretary” shall mean the Secretary of the Company.

Section 1.14 - Securities Act.

“Securities Act” shall mean the Securities Act of 1933, as amended.

Section 1.15 - 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 50 percent or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.

Section 1.16 - Termination of Employment.

“Termination of Employment” shall mean the time when the employee-employer relationship between Employee and the Company or any Subsidiary is terminated for any reason, with or without cause, including, but not by way of limitation, a termination by resignation, discharge, death, disability or retirement; but excluding (a) terminations where there is a simultaneous reemployment or continuing employment of Employee by the Company or any Subsidiary, and (b) at the discretion of the Administrator, terminations which result in a temporary severance of the employee-employer relationship. The Administrator, in its absolute discretion, shall determine the effect of all matters and questions relating to Termination of Employment, including, but not by way of limitation, all questions regarding the nature and reasons for a Termination of Employment, and all questions of whether particular leaves of absence constitute a Termination of Employment.

ARTICLE II.

AWARD OF RESTRICTED STOCK

Section 2.1 - Award of Restricted Stock.

In consideration of the recitals, Employee’s agreement to remain in the employ of the Company or a Subsidiary, and for other good and valuable consideration, effective as of the Grant Date, the Company agrees to and does hereby transfer to Employee the number of shares of Common Stock set forth in the Grant Notice upon the terms and conditions set forth in the Plan, the Grant Notice, and this Agreement.

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Section 2.2 - Purchase Price.

The purchase price of the Restricted Shares shall be as set forth in the Grant Notice without commission or other charge, now due and payable by Employee in cash or by check, receipt of which is acknowledged.

Section 2.3 - Consideration to the Company.

As partial consideration for the Company’s transfer of the Restricted Shares to Employee, Employee agrees to render faithful and efficient services to the Company or a Subsidiary, with such duties and responsibilities as the Company shall from time to time prescribe. Nothing in this Agreement, the Grant Notice, the Plan or the Stockholders’ Agreement shall confer upon Employee any right to continue in the employ of the Company or any Subsidiary, or shall interfere with or restrict in any way the rights of the Company and any Subsidiary, which rights are hereby expressly reserved, to discharge Employee at any time for any reason whatsoever, with or without cause, except to the extent expressly provided otherwise in a written employment agreement between Employee and the Company or any Subsidiary.

Section 2.4 - Stockholders’ Agreement.

The Restricted Shares to be transferred hereunder shall be subject to the Stockholders’ Agreement. As a condition to the transfer of the Restricted Shares, Employee shall execute, deliver and deposit with the Secretary of the Company, or such other person designated by the Company, the Stockholders’ Agreement attached as Exhibit “B” to the Grant Notice.

Section 2.5 - Adjustments in Restricted Shares.

The Administrator may adjust the Restricted Shares in accordance with the provisions of Section 5.3 of the Plan.

SECTION 2.6 - Employee’s Representations and Warranties.

In connection with the acquisition of the Restricted Shares, Employee represents and warrants to the Company and agrees and acknowledges, that:

(a) Employee is acquiring the Restricted Shares for his or her own account, for investment purposes only and not with a present view toward the distribution thereof or with any present intention of distributing or reselling any such Restricted Shares in violation of the Securities Act or any state securities laws and that, irrespective of any other provisions of this Agreement or the Stockholders’ Agreement, any Disposition of the Restricted Shares by Employee shall be made only in compliance with all applicable federal and state securities laws, including, without limitation, the Securities Act.

(b) The Restricted Shares are not registered under the Securities Act and must be held by Employee until the Restricted Shares are registered under the Securities Act or an exemption from such registration is available; neither the Company nor Blackhawk shall (subject to Section 8 of the Stockholders’ Agreement) have any obligation to take any action that may be necessary to make available any exemption from registration under the Securities Act; and “stop

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transfer” directions prohibiting Dispositions in violation of the foregoing provisions of this Section 2.6(b) shall be given to the party responsible for recording Dispositions of the Restricted Shares.

(c) Employee is familiar with Rule 144 (“Rule 144”) under the Securities Act which establishes guidelines governing, among other things, the resale of “restricted securities” (such as the Restricted Shares). Rule 144 is not presently available for Dispositions of the Restricted Shares.

(d) Employee has had the opportunity to ask questions and receive answers concerning the terms and conditions of the offering of the Restricted Shares. Employee has had full access to such information and materials concerning Blackhawk as Employee has requested. Either the Company or Blackhawk has answered all inquiries that Employee has made to the Company or Blackhawk relating to Blackhawk or the sale of the Restricted Shares.

(e) Employee has such knowledge and experience in financial and business matters such that Employee is capable of evaluating the merits and risks of investment in the Restricted Shares and of making an informed investment decision with respect thereto or has consulted with advisors who possess such knowledge and experience.

(f) Employee is able to bear the economic risk of his or her investment in the Restricted Shares for an indefinite period of time because the Restricted Shares have not been registered under the Securities Act and, therefore, cannot be sold unless subsequently registered under the Securities Act or unless an exemption from such registration is available.

(g) Employee is an “accredited investor” as that term is defined under the Securities Act and the rules and regulations promulgated thereunder.

ARTICLE III.

RESTRICTIONS

Section 3.1 - Repurchase of Restricted Shares.

(a) In the event of Employee’s Termination of Employment, the Company shall have the right and option, but not obligation, to purchase from Employee, or Employee’s personal representative, as the case may be, any or all of the Restricted Shares which are subject to such right and option as of the date of the Termination of Employment, at the lesser of (i) the per share purchase price paid by Employee for such Restricted Shares, or (ii) the then current Fair Market Value of such Restricted Shares. Such right and option shall be referred to herein as the “Repurchase Option.” The Company shall have the right to assign at any time the Repurchase Option, whether or not the Repurchase Option is then exercisable, to one or more persons as may be selected by the Company.

(b) The Company (or any assignee thereof) may exercise the Repurchase Option by delivering personally or by registered mail, to Employee (or Employee’s legal representative), within ninety (90) days of the Termination of Employment, a notice in writing indicating the Company’s (or such assignee’s) intention to exercise the Repurchase Option and

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setting forth a date for closing not later than thirty (30) days from the mailing of such notice. The closing shall take place at the Company’s (or such assignee’s) office. At the closing, the holder of the certificates for the Restricted Shares being transferred shall deliver the stock certificate or certificates evidencing the Restricted Shares, and the Company (or such assignee) shall deliver the purchase price therefor to Employee (or Employee’s legal representative).

(c) Payment of the purchase price for the Restricted Shares purchased by the Company (or an assignee of the Repurchase Option) upon the exercise of the Repurchase Option shall, at the option of the Company (or any such assignee), be made in cash, by check or cash equivalent, in immediately available funds. At its option, the Company (or such assignee) may elect to make payment for such Restricted Shares by wire transfer of immediately available funds to a bank located in the United States and selected by Employee (or Employee’s legal representative). The Company (or such assignee) shall avail itself of this option by a notice in writing to Employee (or such Employee’s legal representative) stating the Company (or such assignee) is ready to pay by wire transfer, and waiving the closing at the Company’s (or such assignee’s) office, and requesting Employee (or Employee’s legal representative) to provide the name and address of the bank to which such wire transfer shall be made.

(d) If the Company (or an assignee of the Repurchase Option) does not elect to exercise the Repurchase Option conferred above by giving the requisite notice within ninety (90) days following the date of the Termination of Employment, the Repurchase Option shall terminate. Following the termination of the Repurchase Option, the Restricted Shares will remain subject to the Stockholders’ Agreement.

Section 3.2 - Transferability of the Restricted Shares; Escrow.

(a) Except as provided herein, Employee (and Employee’s legal representative) shall not Dispose of the Restricted Shares subject to the Repurchase Option, or any interest or right with respect thereto. Neither the Restricted Shares subject to the Repurchase Option nor any interest or right therein or part thereof shall be liable for the debts, contracts, or engagements of Employee or his or her successors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance, assignment or any other means whether such 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 disposition thereof shall be null and void and of no effect.

(b) Employee hereby authorizes and directs the Secretary of the Company, or such other person designated by the Company, to transfer the Restricted Shares as to which the Repurchase Option has been exercised pursuant to Section 3.1 from Employee (or Employee’s legal representative) to the Company (or the assignee of the Repurchase Option).

(c) To ensure the availability for delivery of Employee’s Restricted Shares upon repurchase by the Company (or the assignee of the Repurchase Option) pursuant to the Repurchase Option under Section 3.1, Employee hereby appoints the Secretary of the Company, or any other person designated by the Company as escrow agent, as Employee’s attorney-in-fact to sell, assign and transfer unto the Company (or such assignee), such Restricted Shares, if any, purchased by the Company (or such assignee) pursuant to the Repurchase Option and shall, upon execution of the Grant Notice, execute, deliver and deposit with the Secretary of the Company,

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or such other person designated by the Company, the share certificate(s) representing the Restricted Shares, together with the Assignment Separate from Certificate duly endorsed in blank, attached as Exhibit “C” to the Grant Notice, and the Joint Escrow Instructions of the Company and Employee attached as Exhibit “D” to the Grant Notice. The Restricted Shares and Assignment Separate from Certificate shall be held by the Secretary (or other escrow agent) in escrow, pursuant to Joint Escrow Instructions, until the Company (or such assignee) exercises the Repurchase Option as provided in Section 3.1, until such Restricted Shares (or portion thereof) are no longer subject to the Restrictions, or until such time as this Agreement no longer is in effect. As a further condition to the Company’s obligations under this Agreement, the spouse of Employee, if any, shall execute and deliver to the Company the Consent of Spouse attached as Exhibit “E” to the Grant Notice. At such time as the Restrictions lapse as to some or all of the Restricted Shares, the Secretary (or other escrow agent) shall promptly deliver to Employee (or Employee’s legal representative) the certificate or certificates representing the Restricted Shares that are no longer subject to the Restrictions in the Secretary’s (or other escrow agent’s) possession belonging to Employee, and at such time as there are no longer any Restricted Shares that are subject to the Restrictions, the Secretary (or other escrow agent) shall promptly deliver to Employee (or Employee’s legal representative) the certificate or certificates representing any remaining Restricted Shares in the escrow agent’s possession belonging to Employee, and the Secretary (or other escrow agent) shall be discharged of all further obligations hereunder.

(d) The Secretary, or other escrow agent, shall not be liable for any act he or she may do or omit to do with respect to holding the Restricted Shares in escrow and while acting in good faith and in the exercise of his or her judgment.

Section 3.3 - Legend.

(a) Except as provided in Section 3.3(b), the share certificate evidencing the Restricted Shares transferred hereunder shall be endorsed with the following legends (in addition to any legend required under applicable state securities laws):

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND REPURCHASE RIGHTS HELD BY SAFEWAY INC. OR ITS ASSIGNEE(S) AS SET FORTH IN A RESTRICTED STOCK AGREEMENT BETWEEN SAFEWAY INC. AND THE STOCKHOLDER, A COPY OF WHICH IS ON FILE WITH THE SECRETARY OF THE COMPANY. SUCH TRANSFER RESTRICTIONS AND REPURCHASE RIGHTS ARE BINDING ON TRANSFEREES OF THESE SHARES.

THE SECURITIES EVIDENCED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE “ACT”), AND APPLICABLE STATE SECURITIES LAWS AND MAY NOT BE SOLD OR TRANSFERRED UNLESS (X) THE SALE OR TRANSFER IS COVERED BY AN EFFECTIVE REGISTRATION STATEMENT UNDER THE ACT AND COMPLIES WITH APPLICABLE STATE SECURITIES LAWS, (Y) THE SALE OR TRANSFER IS IN COMPLIANCE WITH RULE 144 UNDER THE ACT AND COMPLIES WITH APPLICABLE STATE SECURITIES LAWS OR (Z) THE COMPANY RECEIVES AN OPINION OF COUNSEL (WHICH COUNSEL AND

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OPINION ARE REASONABLY SATISFACTORY TO THE COMPANY) STATING THAT THE SALE OR TRANSFER IS EXEMPT FROM THE REGISTRATION AND PROSPECTUS DELIVERY REQUIREMENTS OF THE ACT AND APPLICABLE STATE SECURITIES LAWS.

THE SECURITIES REPRESENTED BY THIS CERTIFICATE ARE SUBJECT TO CERTAIN RESTRICTIONS ON TRANSFER AND OTHER RESTRICTIONS SET FORTH IN A STOCKHOLDERS’ AGREEMENT BY AND AMONG SAFEWAY INC., THE COMPANY, THE STOCKHOLDER AND CERTAIN HOLDERS OF COMMON STOCK OF THE COMPANY. SUCH TRANSFER RESTRICTIONS AND REPURCHASE RIGHTS ARE BINDING ON TRANSFEREES OF THESE SHARES. A COPY OF SUCH AGREEMENT AS IN EFFECT FROM TIME TO TIME MAY BE OBTAINED WITHOUT CHARGE UPON WRITTEN REQUEST TO THE SECRETARY OF THE COMPANY.

(b) The share certificate evidencing the Restricted Shares that are not subject to Restrictions as of the Grant Date shall not be endorsed with the legend provided for in Section 3.3(a) relating to the Repurchase Option and any other Restrictions.

Section 3.4 - Lapse of Restrictions.

(a) Subject to the terms and conditions of the Plan, the Restrictions applicable to the Restricted Shares shall lapse in accordance with the Vesting Schedule set forth on the Grant Notice.

(b) Upon the lapse of the Restrictions on the Restricted Shares (or portion thereof), the Company and the escrow agent shall cause new certificates to be issued with respect to such Restricted Shares and delivered to Employee or his or her legal representative, free from the legend provided for in Section 3.3(a) relating to the Repurchase Option and any other Restrictions. At such time, the Company shall also deliver all other securities and property held in escrow pursuant to Sections 3.2 and 3.5 in respect of the number of shares of Common Stock as to which the Restrictions have then lapsed. Notwithstanding the foregoing, no such new certificate shall be delivered to Employee or his or her legal representative unless and until Employee or his or her legal representative shall have paid to the Company in cash the full amount of all federal and state withholding or other employment taxes applicable to the taxable income and wages of Employee resulting from the award of the Restricted Shares or the lapse of the Restrictions.

(c) Notwithstanding anything to the contrary in this Section 3.4, following the lapse of the Restrictions, the Restricted Shares will remain subject to the Stockholders’ Agreement.

Section 3.5 - Restrictions on Distributions, etc.

In the event of any dividend or other distribution (including ordinary cash dividends, and whether in the form of Common Stock, other securities, or other property), recapitalization, reclassification, stock split, reverse stock split, reorganization, merger, consolidation, split-off, spin-off, combination, repurchase, liquidation, dissolution, or sale, transfer,

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exchange or other disposition of all or substantially all of the assets of Blackhawk, or exchange of Common Stock or other securities of Blackhawk, or issuance of warrants or other rights to purchase Common Stock or other securities of Blackhawk, or other similar transaction or event, then any new or additional or different shares or securities or property (including cash) which is paid, issued, exchanged or distributed in respect of Restricted Shares then subject to Restrictions shall be considered to be Restricted Shares and shall be subject to all of the Restrictions, unless the Administrator shall, in its discretion, otherwise provide.

ARTICLE IV.

MISCELLANEOUS

Section 4.1 - Administration.

The Administrator shall have the power to interpret the Plan, the Grant Notice and this Agreement and to 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. All actions taken and all interpretations and determinations made by the Administrator in good faith shall be final and binding upon Employee, 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 or the Restricted Shares.

Section 4.2 - Conditions to Delivery of Stock Certificates.

The Restricted Shares to be delivered shall be issued and outstanding shares of Common Stock held by the Company. Such shares shall be fully paid and nonassessable. The Company shall not be required to transfer or deliver any certificate or certificates for Restricted Shares or other stock pursuant to this Agreement prior to fulfillment of all of the following conditions:

(a) The receipt by the Company of full payment for such shares, including payment of any applicable withholding tax in accordance with Section 4.5 below;

(b) Employee’s execution and delivery of the Stockholders’ Agreement with respect to such shares;

(c) The admission of such shares to listing on all stock exchanges on which such class of stock is then listed, if applicable;

(d) The completion of any registration or other qualification of such shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or of any other governmental regulatory body, if applicable, or the receipt of further representations from Employee as to investment intent or completion of other actions necessary to perfect exemptions, as the Administrator shall, in its absolute discretion, deem necessary or advisable;

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

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(f) The lapse of such reasonable period of time as the Administrator may from time to time establish for reasons of administrative convenience.

Section 4.3 - Rights as Stockholder.

Except as otherwise provided herein (including in Section 3.5) and subject to the Stockholders’ Agreement, upon the delivery of Restricted Shares to the Secretary or such other escrow holder as the Administrator may appoint, Employee shall have all the rights of a stockholder with respect to the Restricted Shares, including the right to vote the Restricted Shares and the right to receive all dividends or other distributions paid or made with respect to the Restricted Shares, subject to Section 3.5.

Section 4.4 - Section 83(b) Election.

On the Grant Date, Employee shall make an election under Section 83(b) of the Code to be taxed with respect to the Restricted Shares (other than any Restricted Shares that are not subject to Restrictions as of the Grant Date) as of the date of transfer of the Restricted Shares rather than as of the date on which Employee would otherwise be taxed under Section 83(a) of the Code. Employee shall deliver a copy of such election to the Company, and shall pay to the Company in cash the full amount of all federal and state withholding or other employment taxes applicable to the taxable income and wages of Employee resulting from such election, immediately after filing such election.

Instructions and a form of election under Section 83(b) of the Code are attached as Exhibit “F” to the Grant Notice. Employee acknowledges that it is Employee’s responsibility to consult with his or her personal tax advisor as to whether or not to make such an election.

EMPLOYEE ACKNOWLEDGES THAT IT IS EMPLOYEE’S SOLE RESPONSIBILITY AND NOT THE COMPANY’S TO FILE TIMELY AN ELECTION UNDER SECTION 83(B) OF THE CODE, EVEN IF EMPLOYEE REQUESTS THE COMPANY OR ITS REPRESENTATIVE TO MAKE THIS FILING ON EMPLOYEE’S BEHALF. EMPLOYEE FURTHER ACKNOWLEDGES THAT EMPLOYEE AND HIS OR HER PERSONAL TAX ADVISOR, AND NOT THE COMPANY, ARE RESPONSIBLE FOR ASSURING THAT ANY SUCH ELECTION COMPLIES WITH THE REQUIREMENTS OF SECTION 83(B) OF THE CODE.

Section 4.5 – No Representations.

No representation is being made by the Company or any Subsidiary regarding the present or future value of the Restricted Shares, and no person has been authorized by the Company or any Subsidiary to make any representation regarding the present or future value of the Restricted Shares.

Section 4.6 – Tax Withholding.

(a) The Company shall be entitled to require payment of any sums required by federal, state or local tax law to be withheld with respect to the transfer of the Restricted Shares or the lapse of the Restrictions with respect to the Restricted Shares, or any other taxable event

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related thereto. The Company may permit Employee to make such payment in one or more of the forms specified below:

(i) by cash or check made payable to the Company;

(ii) by the deduction of such amount from other compensation payable to Employee;

(iii) by tendering Restricted Shares which are not subject to the Restrictions and which have a then current Fair Market Value not greater than the amount necessary to satisfy the Company’s withholding obligation based on the minimum statutory withholding rates for federal, state and local income tax and payroll tax purposes; or

(iv) in any combination of the foregoing.

(b) In the event Employee fails to provide timely payment of all sums required by the Company pursuant to Section 4.6(a), the Company shall have the right and option, but not obligation, to treat such failure as an election by Employee to provide all or any portion of such required payment by means of tendering Restricted Shares in accordance with Section 4.6(a)(iii) above.

Section 4.7 - Notices.

Any notice to be given by Employee under the terms of this Agreement shall be addressed to the Secretary or his or her office. Any notice to be given to Employee shall be addressed to him at the address given beneath his or her signature on the Grant Notice and shall be marked “Personal and Confidential”. By a notice given pursuant to this Section, either party may hereafter designate a different address for notices to be given to such party. Any notice which is required to be given to Employee shall, if Employee is then deceased, be given to Employee’s personal representative if such representative has previously informed the Company of his or her status and address by written notice under this Section. Any notice shall be deemed duly given when 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.

Section 4.8 - Titles.

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

Section 4.9 - Construction.

This Agreement shall be administered, interpreted and enforced under the internal laws of the state of Arizona (without giving effect to the conflicts of law principles thereof).

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Section 4.10 - Conformity to Securities Laws.

Employee acknowledges that the Plan and this Agreement are intended to conform to the extent necessary with all provisions of all applicable federal and state laws, rules and regulations (including, but not limited to the Securities Act and the Exchange Act and any and all regulations and rules promulgated by the Securities and Exchange Commission thereunder) and to such rules, regulations and other requirements of any listing, regulatory or other governmental authority as may, in the opinion of counsel for the Company, be necessary or advisable in connection therewith. Notwithstanding anything herein to the contrary, the Plan and this Agreement shall be administered, and the Restricted Shares are granted, only in such a manner as to conform to such laws, rules and regulations. To the extent permitted by applicable law, the Plan, this Agreement and the Restricted Shares shall be deemed amended to the extent necessary to conform to such laws, rules and regulations.

Section 4.11 - Amendments.

This Agreement and the Plan may be amended without the consent of Employee provided that such amendment would not impair any rights of Employee under this Agreement. No amendment of this Agreement shall, without the consent of Employee, impair any rights of Employee under this Agreement.

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