NOW AVAILABLE AT

http://suppliers.safeway.com/canada/
CANADA SAFEWAY SUPPLIER HANDBOOK Copyright © 2003 – 2011 Canada Safeway Limited. All Rights Reserved.

TO SAFEWAY SUPPLIERS,

I am pleased to present to you Canada Safeway’s revised Supplier Handbook. This handbook has been designed to provide you with all the necessary forms to initiate business with Canada Safeway Limited. The handbook outlines what your responsibilities are, as well as what your expectations of Safeway should be. Please take the time to familiarize yourself with this handbook, as it provides the blueprint for our combined success.

Sincerely,

CANADA SAFEWAY LIMITED
Bill Sexsmith Vice President, Sales

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TABLE OF CONTENTS
WHO IS SAFEWAY ................................................................................................................................................ 4 RETAIL MARKETING SOLUTIONS CANADA, INC. (RMS) ................................................................................. 5 THE CATEGORY SHELF AND MANAGEMENT PROGRAM............................................................................... 5 SECTION 1.............................................................................................................................................................. 6 NEW ITEM PRESENTATIONS ........................................................................................................................... 6 VENDOR RESPONSIBILITIES ........................................................................................................................... 6 CHANGES TO EXISTING PRODUCTS.............................................................................................................. 6 GS1 CANADA IMAGE & VALIDATION SERVICES (I&V) .................................................................................. 7 CANADA SAFEWAY LIMITED UPC POLICY STATEMENT FOR VENDORS .................................................. 8 PRODUCT RECOVERY CENTRE (PRC)......................................................................................................... 11 PRODUCT RECALL / PRODUCT WITHDRAWAL ........................................................................................... 12 GIFT AND GRATUITY POLICY ........................................................................................................................ 13 WAREHOUSE RECEIVING AND BUYING PROCEDURES ............................................................................ 14 CANADA SAFEWAY CROSS-DOCK GUIDELINES/PROCEDURES .............................................................. 15 COLDLOGIC CROSS-DOCK GUIDELINES/PROCEDURES........................................................................... 19 DSD VENDOR REQUIREMENTS..................................................................................................................... 24 SECTION 2............................................................................................................................................................ 34 SCHEMATIC DEVELOPMENT AND NEW ITEM PLACEMENT ...................................................................... 34 SECTION 3............................................................................................................................................................ 35 ONGOING SHELF MAINTENANCE ................................................................................................................. 35 MANUFACTURER’S COUPON PROCEDURE ................................................................................................ 35 WAREHOUSE ACCOUNTS PAYABLE............................................................................................................... 37 INVOICE REQUIREMENTS .............................................................................................................................. 37 PAYMENT POLICIES........................................................................................................................................ 37 REMIT-TO” NAME AND ADDRESS CHANGES............................................................................................... 38 SUPPLIER INQUIRIES AND CORRESPONDENCE........................................................................................ 38 CANADA SAFEWAY LIMITED ACCOUNTS PAYABLE CONTACTS .............................................................. 38 ATTACHMENTS ................................................................................................................................................... 39 New Vendor Set-Up Form ................................................................................................................................. 40 Continuing Commodity Guarantee & Indemnity Agreement ............................................................................. 41 New Item Presentation Form - Part 1 ................................................................................................................ 42 New Item Presentation Form - Part 2 ................................................................................................................ 43 New Item Presentation Form Prepack Information Supplement ....................................................................... 44 New Item Presentation Form - Part 3 ................................................................................................................ 45 Notice of Cost Change/Deal Change (Long Term & Non-Promoted) ............................................................... 46 Business Plan .................................................................................................................................................... 47 Vendor Import Worksheet.................................................................................................................................. 48 New Item Recommendation Sheet.................................................................................................................... 49

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WHO IS SAFEWAY
Safeway Inc. is a Fortune 500 company and one of the largest food and drug retailers in North America. The company operates approximately 1,700 stores in the Western, Southwestern, Rocky Mountain and Mid-Atlantic regions of the United States and in Western Canada. Our subsidiaries include The Von’s Companies in Southern California and Nevada, Carrs in Alaska, Randall’s and Tom Thumb in Texas, Dominick’s in Chicago, Genuardi’s Family Markets in Eastern U.S. and Canada Safeway Limited in Canada. The Canadian division operates in British Columbia, Alberta, Manitoba, Saskatchewan and Western Ontario. As used herein, the word “Safeway” should be understood to mean each and all of such companies, as appropriate. Safeway also holds a 49% interest in Casa Ley, S.A. de C.V., a retailer in food and general merchandise in Western Mexico, and more than 50% of e-retailer Groceryworks.com. In support of its stores, Safeway has an extensive network of distribution, manufacturing and food processing facilities.

MANUFACTURING AND WHOLESALE OPERATIONS
The principal function of manufacturing operations is to purchase, manufacture and process private label merchandise sold in stores operated by the company. Manufacturing and processing facilities include: milk plants, bread baking plants, ice cream plants, cheese and meat packaging plants, soft drink bottling plants, fruit and vegetable processing plants, and a pet food plant. In addition, the company operates laboratory facilities for quality assurance and research and development in certain of its plants and at its U.S. manufacturing headquarters in Walnut Creek, California.

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RETAIL MARKETING SOLUTIONS CANADA, INC. (RMS)
RETAIL MARKETING SOLUTIONS CANADA, INC. (RMS) is a privately owned corporation, dedicated to Safeway, and organized to meet the merchandising needs of Canada Safeway Limited. RMS consists of three teams: • The Merchandising Services Department working out of the Safeway Corporate office in Calgary. This group is responsible for schematics, store layouts, category analysis, the Safeway Vendor Program and SCOP (Safeway Category Optimization Process) Implementation. The second group consists of over 60 Retail Coordinators who oversee retail execution of item placement and shelf maintenance in all Safeway stores across Canada. They are responsible for MEDS audits, "First to Market" audits, schematic verification, out of stock audits, Corporate Brand audits, and execution of the Vendor Program. Retail Coordinators call on every Canada Safeway store at minimum twice per month, including remote areas. The third group includes Canada Safeway’s Direct Connect Program, providing consumer brand members the following services: 1) Direct access and support from an expanded Canada Safeway Consumer Brands organization including business planning meetings, business reviews and opportunities to present products and capabilities. 2) Enhanced retail execution support through biweekly audits, new item speed-to-market planning and schematic compliance programs as determined by Canada Safeway’s Consumer Brands Category Development team. 3) Growth of consumer brands, category planning, collaboration, performance metrics, diagnostics and insights, distribution voids, out of stocks, promotional execution- fixtures/POS and custom audits. 4) SRS (Store Reporting System) Access to enhanced information, including an expanded web-based supplier portal. This supplier portal will provide an array of sales data tools, forecasting and supply chain tools and other category sales, marketing information, planograms and promotional calendar.

•

•

THE CATEGORY SHELF AND MANAGEMENT PROGRAM
The Canada Safeway Supplier Handbook is designed to streamline and integrate the processes involved in new item introductions, discontinued items, schematic development, category reviews and retail implementation. The Merchandising, Store Stocking and Retail Operations departments, as well as the manufacturing partners will work together as a team to get new items on the shelf as quickly as possible, and to greatly improve schematic integrity. The handbook is divided into four main subjects: New Item Presentation Agenda includes requirements and instructions for completing New Item Presentations (see Attachments). These templates are to be used by SCOP (Safeway Category Optimization Process) Manufacturer Partners and Non-SCOP vendors. This section also explains processes for any changes to existing products, GS1 Canada, and our policies regarding UPCs, Product Recall, Product Withdrawal, Product Recovery Centre, Warehouse Receiving and our Direct Store Delivery requirements. This section describes our goals for schematic development and provides a map of the new item process and procedures from the presentation of the item to the Category Manager, to the integration to the Safeway Intranet, the area where stores view schematics. The Ongoing Maintenance section describes the processes for retail execution of new items and subsequent schematic implementation including ongoing shelf maintenance and manufacturer's coupon program. Provides templates and information necessary to do business with Canada Safeway.

Section 1

Section 2

Section 3

Attachments

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SECTION 1
NEW ITEM PRESENTATIONS
Policy: Category Managers will review new item presentations on an as-needed basis. All new item decisions will be made in a timely manner to ensure Speed-To-Market. 1. Grocery and GM/HBC Category Managers will review new item presentations on an as-needed basis. Category Managers will schedule new item appointments as needed. 2. Category Managers may opt for the vendor to send the information to his/her office as opposed to scheduling an appointment, particularly for items that are line extensions. 3. The New Item templates (see below) must be filled out by the vendor prior to the appointment and are used for discussion during the appointment. o New item presentation (if a display, page 3 must be completed) o New item worksheet o New item recommendation 4. All new item presentations must be accompanied by six (6) product samples for each item. Samples can be empty but must have scannable UPCs. 5. The CCG (Continuing Commodity Guarantee) and New Vendor Set Up form are for new vendors only. Please ensure “Traffic Warehouse and Buyer Procedures” are reviewed and can be adhered to prior to presenting. 6. Once the Category Manager has made a decision to accept or reject the new item, the vendor will be notified by phone or email within two business days of the complete presentation. 7. If the decision is to accept a new item, the Category Manager will request a completed Business Plan and Vendor Import Worksheet(s) to discuss/implement promotional activity to support the product(s).

VENDOR RESPONSIBILITIES o o o o Vendors are to have all the templates populated and provide the samples noted above. Any questions or clarifications that are required on this process should be directed to the appropriate Category Manager. These templates are the minimum requirements. Providing the Category Managers with additional information would benefit the vendor. All information must be accurate and legible.

CHANGES TO EXISTING PRODUCTS
1. Any changes to existing products, including packaging changes, must be reported to the Category Manager and the appropriate RMS analyst. 2. Items having changed must be sent to ECCnet I & D (Image & Data) office in Calgary to ensure product dimension accuracy. Please also make sure that your product information is kept current within the ECCnet Registry (catalogue). Failure to ensure any of the above may result in administrative costs being charged against you. 3. Merchandising Services will be responsible to make the necessary planogram adjustments if a product undergoes changes in its size, and/or case pack. Please note that if store relines become necessary due to item size changes, vendors may be charged for any consequential shelf reline costs.

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GS1 CANADA IMAGE & VALIDATION SERVICES (I&V)
Policy: All vendors must register their products with the GS1 Canada Image & Validation services (I&V). 1. All vendors must send samples of their items to the GS1 Canada Image & Validation services (I&V) office in Calgary, including the appropriate completion of all forms. This will eliminate the duplication of dimensioning and imaging efforts. 2. Complete product information must be available at the time of schematic development in order to ensure that planograms are completed in a timely and efficient manner. As such, please ensure that all your new items or all items having gone through size change(s) are registered as soon as possible. In the case of new items, these should be registered with prior to your meeting with the Category Manager. 3. Safeway will register items not registered by the vendor. A substantial processing fee will be applied and charged back to the vendor. 4. GS1 Canada may be contacted at (403) 291-2235. GS1 Canada provides e-commerce advancement tools such as a national product registry, data synchronization services, image and dimension capture and bar code verification. Canada Safeway believes that GS1 Canada is an important industry initiative and has been a long time supporter of this initiative, together with Canadian trade associations such as the Canadian Association of Chain Drug Stores, the Food and Consumer Products Manufacturers Council and the Retail Council of Canada. Canada Safeway will receive tremendous value from GS1 Canada through reduced invoicing errors, faster new product introductions and supply chain efficiencies because our data is synchronized with your own. This includes: 1. More productive sales representative/category management relationships 2. Elimination of order and invoice discrepancies due to inaccurate master data 3. Faster introduction of new products 4. Dispute resolution time reduced 5. Enabling of other value-added e-commerce applications In addition, your participation in GS1 Canada will synchronize your data to other major retailers supporting GS1 Canada. A sample of the GS1 Canada community includes London Drugs, Shoppers Drug Mart and The Great Atlantic & Pacific Company (A&P). Please be advised that beginning in March 2002, all NEW product listings to Canada Safeway must go through GS1 Canada. • • • • • All products should be registered with a confirmation from GS1 Canada prior to the New Item Presentation The analyst will provide a sample to GS1 Canada to verify whether the product has been registered or not Once all registered SKU's have been verified, GS1 Canada will use the supplied samples for images and dimensions of all SKU's that have not been registered Any products that have not been registered with GS1 Canada will be debited to the supplier accordingly If you have any questions call GS1 Canada at 1-800-567-7084 x38 or email ECCnetIandV@gs1ca.org

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CANADA SAFEWAY LIMITED UPC POLICY STATEMENT FOR VENDORS
PLEASE BE SURE TO READ THE FOLLOWING UPC POLICY STATEMENT. FAILURE TO COMPLY WITH THE FOLLOWING COULD RESULT IN ADMINISTRATIVE CHARGE(S) AND/OR HAVING YOUR PRODUCT(S) DE-LISTED: PURPOSE To minimize checkout times, increase consumer confidence, reduce store labor and improve scan data and all of the applications, current and proposed, that rely on it. OVERALL POLICY All products for sale by Canada Safeway Limited should be marked with a UPC symbol that meets the standards for quality set by the GS1 Canada and published in the PCCC's "UPC Implementation Guide: How to Develop and Maintain a Top Quality UPC," a copy of which can be obtained by calling 1-800-567-7084 Ext. 240. THE UPC FOR ALL NEW AND EXISTING ITEMS MUST MEET A MINIMUM ANSI RATING OF "C". UPC REQUIREMENTS The following conditions must be met at all times for any item sold at Canada Safeway Limited: • • All items must have a Universal Product Code bar code symbol version "A" or "E" that meets the GS1 Canada's published standards for readability (see "Equipment"). Merchandise must scan properly and must meet the GS1 Canada's specifications for: o o o o o o o • • Symbol size and height (truncation and magnification) Print quality Print contrast Location Quiet zone requirements Symbol direction Package over-wrap interference

Canada Safeway Limited must be notified by fax or mail of any UPC changes before the item is shipped to either our warehouses or stores. This notification must be sent to the appropriate Category Manager. Category Managers must be notified, in writing, of any changes to package contents that do NOT necessitate a change to the UPC but that result in conflict with existing shelf label descriptions and price per unit information. A UPC symbol must scan as a number that matches the human readable numbers below the bar code. Merchandise with improper or "unknown" UPC codes may not be shipped in substitution of another item. UPC codes may not be used on an item if the UPC is currently assigned to a different SKU (ex. bonus pack items cannot use the same UPC as the regular item) or if it has been previously assigned to another item within the last four years. Direct Store Delivery (DSD) merchandise received in any store must have already been authorized for sale at that store by the appropriate Category Manager. This authorization is only made if the UPC follows the set standards and requirements. Multi-pack items must have a unique UPC number on the outside package wholly unrelated to the UPC numbers on the individual items contained within. The symbols on the individual items inside the multipack must be positioned so that they cannot be scanned.

• • •

•

•

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• •

There can be no on-pack coupon bar codes that could be inadvertently scanned instead of the item's UPC. There should be no truncation unless absolutely necessary due to package size and placed in the correct location. NEW ITEMS – SCAN VERIFICATION

1. For each new item, the vendor must provide a UPC evaluation report that indicates that the item has a minimum ANSI rating of at least a "C". These reports can be obtained by the vendor through such UPC evaluation services as GS1 Canada I&V, etc. (see UPC Verification/Evaluation Companies below). 2. If the vendor does not provide a UPC evaluation report, Canada Safeway will scan the item using a verifier. The verifier will indicate the ANSI rating for the item. THE VENDOR WILL BE DEBITED $250.00 PER ITEM for this service (whether the item passes or fails). Unlike the other UPC verification services mentioned above, Canada Safeway will only indicate what the ANSI rating is for the item. We will not provide a detailed analysis of the item's UPC or make suggestions on how the UPC can be improved. This is a matter for the vendor to discuss with its printer. ITEMS WITH BAR CODES THAT FAIL ANY PORTION OF THE DIAGNOSTIC TESTING WILL NOT BE LISTED. Internal Note: Standards maintenance will stamp the New Item Presentation form of the items we scan. Otherwise, the 3rd party UPC evaluation report should be attached to the New Item Presentation form. EXISTING ITEMS – SCAN VERIFICATION Currently, Canada Safeway runs a report each week that identifies items with UPC problems at store level. When an item appears on this report, the vendor will be notified of the problem and will be expected to have the problem corrected within 3 months. As proof that the UPC problem has been resolved, we will require that you forward us a copy of a UPC evaluation report from a UPC evaluation company which states that the item now has an ANSI rating of "C" or higher. NOTE: FAILURE TO HAVE THE PROBLEM CORRECTED WITHIN THIS TIME FRAME WILL RESULT IN THE ITEM BEING DE-LISTED. COST RECOVERY AND ADMINISTRATIVE CHARGES While it is impossible to cover all the potential problems relating to UPC's, the vendor is hereby advised that Canada Safeway will seek to recover costs and/or levy administrative charge(s) in all instances where the vendor has provided Canada Safeway with incorrect information regarding the UPC of a new or existing item. The vendor can also expect Canada Safeway to seek and recover costs and/or levy administrative charge(s) in all instances where the vendor has shipped to Canada Safeway items that have substandard and/or wrong UPC's printed on the packaging. The amount of recovery costs and administrative charge(s) will be determined on an individual basis at the discretion of the Director in charge of the area in which the item is classified. Generally, these recovery costs and administrative charge(s) will be applied on a quarterly basis until the problem has been resolved.

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The amount of the recovery costs and administrative charge(s) for each quarter will be based on a combination of the total dollar amount of orders placed that quarter and item movement for that quarter. EQUIPMENT The bar code verifier must be able to test for "C" grade or better bar codes, based on the new American National Standards Institute (ANSI) verification parameters, using 660nm visible red light and a 6 mil aperture. Some examples of verifiers that meet these standards would be the BCS Laserchek 2911, RJS Inspector model 3 or 4 and the Photographic Sciences Quick Check 500.

UPC VERIFICATION / EVALUATION

GS1 Canada
Toronto Office 1500 Don Mills Road, Suite 800, Toronto, Ontario, M3B 3K4 P 416.510.8039 P 1.800.567.7084 F 416.510.1916 E info@gs1ca.org Montreal Office 7780 Metropolitain Boulevard East Montreal, QC H1K 1A1 P 514.355.8929 P 1.800.567.7084 ext. 38 F 514.356.3235 E ECCnetIandV@gs1ca.org Calgary Office 720 - 28th Street N.E. Suite #110 Calgary, Alberta, T2A 6R3 P 403.291.2235 E ECCnetIandVcalgary@gs1ca.org

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PRODUCT RECOVERY CENTRE (PRC)
Damages Policy: Safeway is a signatory to the RCC (Retail Council of Canada) and FCPC “ECR Protocol” on damaged goods. As such, we return Authorized Damaged Goods to a third party Product Recovery Centre (PRC). Suppliers will be charged for the cost of damaged goods plus the protocol handling fee. For store level damage, a handling fee of $0.43 will be charged for each grocery or variety item. For warehouse damage, a handling fee of $0.34 will be charged for each grocery or variety item. 1. Only Grocery, Variety and Frozen warehouse delivered resale items can be returned to the PRC (exceptions noted below). 2. In order to be classified as “damaged”, returned products must be unable to be sold for at least one of the following reasons: a) b) c) d) e) Broken Ripped Leaking Missing Label Soiled f) Dented g) Crushed h) Underfilled i) Contaminated

3. The following items will not be returned to the PRC under any circumstances and cannot be authorized by your Representatives. a) b) c) d) e) f) Undamaged items Direct Delivery products Over-The-Counter drugs Refrigerated products Outdated products Product Recalls

Discontinued 1. Items discontinued through the SCOP process will have their retails adjusted to promote sell through. Safeway will negotiate with all manufacturers separately on this issue. Any retail inventory of a SCOP discontinued item remaining at the time of the shelf set reline will be returned to the PRC for credit by the Re-line team. 2. PRC handling fees will not be applied to SCOP discontinued items returned to the PRC. 3. Any listed products which are not included in planograms for smaller stores will be transferred to a larger store. Such items will not be returned to the PRC.

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PRODUCT RECALL / PRODUCT WITHDRAWAL
PRODUCT RECALL: A Product Recall is initiated when the consumption or use of a product may be life threatening or represent a health hazard to the consumer. The Canadian Food Inspection Agency (CFIA) will assign a classification depending on the degree of health risk: Class 1 Recall: “is a situation in which there is a reasonable probability that the use of, or exposure to, a volatile product will cause serious adverse health consequences or death”. Class 2 Recall: “is a situation in which the use of, or exposure to, a volatile product may cause temporary adverse health consequences or where the probability of serious adverse health consequences is remote”. Class 3 Recall: “is a situation in which the use of, or exposure to, a volatile product is unlikely to cause any adverse health consequences”. If the potential for a food safety hazard exists, the manufacturer should, with the input of legal counsel, consider its obligation to contact the CFIA. A manufacturer must also immediately notify its retail customers to ensure product is removed from store shelves immediately. Manufacturers should immediately notify the Safeway Buyer or Category Manager. In the event of a Product Recall, all Safeway stores receive an urgent internal e-mail note and attachment which provides full details of the product(s), the reason for the Product Recall, and the Store Disposition Instructions. In addition, each store receives a faxed message and a phone call via the Safeway security department phone tree chain message system to ensure the recalled product is removed from the store shelves immediately. A product recall constitutes an emergency situation at Safeway. As product is handled and secured as per the e-mail note and attachment, a confirmation is relayed back to the head office to ensure follow-through. More information on how to develop a Recall plan is available on the CFIA website: http://www.inspection.gc.ca/english/fssa/recarapp/rap/igguide.shtml.

PRODUCT WITHDRAWAL: A product withdrawal may be initiated when a product does not meet certain quality standards. A product withdrawal is not considered a Product Recall. In the event of a product withdrawal, all Safeway stores receive an internal e-mail note and attachment with specific instruction(s) on how to handle the “withdrawal” of the product, the reason for the withdrawal and Store Disposition Instructions. A product withdrawal will most likely involve a quality issue with the product - not a Health Hazard. A product withdrawal is not an emergency situation.

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GIFT AND GRATUITY POLICY
Policy: Safeway’s Code of Business Conduct (“Safeway’s Code”) contains strict provisions governing relations with suppliers. Safeway employees generally may not accept gifts, discounts, loans, services or gratuities. The only exceptions to this policy are for gadgets, such as desk calendars, memo pads, paperweights and similar items of nominal value, which bear an advertising message or name of the supplier. Safeway’s Code does not permit lavish or extravagant entertainment of our employees. Safeway employees may accept only moderate meals or entertainment from suppliers in the course of company business. We ask that you do not put our employees in the position of having to refuse gifts, gratuities or entertainment. Safeway appreciates your cooperation.

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CORPORATE CUSTOMS AND TRAFFIC DEPARTMENT
Effective August 27, 2001

Revised March 1, 2011 CANADA SAFEWAY LIMITED WAREHOUSE RECEIVING AND BUYING PROCEDURES
The following is a list of our current warehouse and buying procedures: 1. Buyer will verify minimum Order Quantity and place orders based on Canada Safeway’s minimum order requirements. 2. All Products will be purchased in Canada Safeway’s warehouse pallet patterns (not the vendor’s pallet configuration). 3. All orders must be segregated by item code and delivered on the appropriate pallet in Canada Safeway’s pallet pattern. The vendor’s carrier will not be allowed to use Safeway’s receiving dock to sort or segregate product except for the Calgary Storcare Facility (Vendor is responsible for all swamper/lumper costs). Non compliance will result in penalties. 4. All orders must have the packing list available prior to the carrier backing into the Bay. 5. Vendors are considered to be the Importer of Record into Canada unless other arrangements are made. 6. Vendors are required to provide both FOB Ship Point Pricing and Delivered Pricing and/or freight allowance in order to determine whether the vendor should be part of the Safeway Customer Pick Up Program. 7. All shipments are to be delivered on CHEP or CPC Pallets (no others will be accepted). Vendors are responsible for retrieving their own CPC Pallets from the warehouse. 8. All appointments must be booked on line using One Network™ 9. Penalties: No Shows for booked appointments $500.00 Flat to a Maximum of $2000.00. (Plus a new appt will need to be booked) $200.00 per hour or portion thereof to a Maximum of $2000.00 $200.00 per hour or portion thereof $50.00 per purchase order

Late for booked appointments Carrier uses our dock for swamping Booking Appointments Manually

Please contact the appropriate buyer, if you have any questions or concerns. Your assistance is greatly appreciated. CANADA SAFEWAY LIMITED Dale T. Hughes, CCS Director Corporate Customs and Traffic DTH/dh 1020 - 64th Avenue N. E., Calgary, Alberta T2E 7V8
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CORPORATE CUSTOMS AND TRAFFIC DEPARTMENT
Effective April 15, 2009

Canada Safeway Cross-Dock Guidelines/Procedures
Please be advised that the pricing structure for shipments being cross-docked through our Distribution Centres (for enclosure with store deliveries) will change to the following rates effective April 15, 2009.

50 Mile Radius of Distribution Point Minimum $ 10.00 CWT $ 1.50 Max per Pallet $ 25.00

51 to 200 Miles Radius of Distribution Point Minimum $ 15.00 CWT $ 3.00 Max per Pallet $ 50.00

201 to 500 Miles Radius of Distribution Point Minimum $ 20.00 CWT $ 4.50 Max per Pallet $ 75.00

501 to 850 Miles Radius of Distribution Point Minimum $ 25.00 CWT $ 6.00 Max per Pallet $100.00

851 Miles and over Radius of Distribution Point Minimum $ 50.00 CWT $ 10.00 Max per Pallet $175.00

All charges are based on a single store delivery and will be billed back every four weeks, as a deduction from our remittance. These rates offer exceptional value when compared to shipping on a common carrier. This service is not available at our Summit Logistics facility in Vancouver. In addition, please review the following attachments: Attachment #1: A copy of our revised Cross-Dock Receiving and Shipping Guidelines/Procedures. Attachment #2: An acknowledgment and sign-off form to be signed and faxed back to our office. Attachment #3: A shipping recap, which we will require duplicate copies, for orders delivered to us for enclosure. NOTE: It’s important that you have Attachment #2 signed and returned to us via fax. If you wish to discuss any concerns or issues with respect to these changes in our procedures, you may contact the writer at (403) 730-3713.

Your assistance is greatly appreciated. CANADA SAFEWAY LIMITED

Dale T. Hughes
Dale T. Hughes, CCS Director Corporate Customs and Traffic DTH/dh
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Attachment #1

Canada Safeway Cross-Dock Guidelines/Procedures
Vendor Guidelines, Procedures and Responsibilities
1. 2. For the purpose of transportation planning, we require a recap containing all shipping information be presented to the receiver at time of delivery. The number of pieces and the weight must be completed (Attachment #3) Invoice must accompany all goods. The invoice must be attached to the product for the store. All case counts will be verified by our receiver and the carrier, and noted on the shipping recap (Attachment #3). All vendor products will be classed as enclosures. All cases must be clearly marked with the store number. Vendors must arrange to have the product sorted by store number at the time of delivery. Vendors’ orders will be shipped with Safeway commodities. No hazardous goods will be allowed. Vendors ship all products at their “OWN RISK”; we will not accept responsibility for lost or damaged goods. Retail claim pickups will be issued/forwarded directly to the vendor. We ship mixed loads at a temperature of 38 degrees F and frozen products at –15 degrees F. We will not accept shipments of refrigerated goods (chilled or frozen) if they are not delivered to us in an appropriately refrigerated vehicle; or if we are not capable of maintaining the correct temperature protection, upon their delivery, to our facility. We will not transport any vendor products back from Safeway stores. This includes recalls. It is the vendor’s responsibility to recover this product. We reserve the right to refuse any shipments if we feel that the care and quality of the goods may be compromised in any way.

3. 4. 5. 6. 7.

8. 9.

10. This agreement is subject to change. Appropriate notice will be given. 11. Safety vests and CSA approved Green Triangle safety shoes/boots must be worn at all times.

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Attachment #2
Please sign and return this acknowledgment, in order for us to handle your shipments.

Fax To: (403)-730-3913 Attention: Lloyd Saar

Canada Safeway Cross-Dock Guidelines/Procedures
We are aware of your published guidelines on the practice of shipping product to your distribution center, for inclusion with outbound store orders, and we accept the conditions under which you offer this service.

Vendor Company Name:

___________________________________________________________

Vendor Representative Name:

___________________________________________________________

Signature:

____________________________________________________________

Date:

____________________________________________________________

Vendor Address & Phone #:

____________________________________________________________

____________________________________________________________

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Attachment #3

Canada Safeway Limited
CROSS-DOCK VENDORS SHIPPING RECAP SUPPLIERS NAME: _____________________________________________________ DATE: ______________________________________________________________________ STORE # # PIECES WGT/LBS. INVOICE # $ VALUE # of PALLETS

RECEIVED: __________________________________________________________________________

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March 1, 2011

Dear Vendor:

Re: Canada Safeway Limited Vancouver DSD Cross-Dock Due to the upcoming warehouse change, ColdLogic will be handling the DSD Cross-Dock for Canada Safeway Store Enclosure Deliveries. If you choose to use other avenues to deliver the Canada Safeway Enclosure to the stores we understand. Effective Monday January 17, 2011, ColdLogic will receive DSD Cross-Dock for Canada Safeway Store Enclosure deliveries at the following address: Cold Logic 9385 200th Street Langley, BC V1M3A7 Please review the attached information and return the Sign-Off Form before we begin receiving your enclosures for Canada Safeway Limited. If you wish to discuss any concerns or issues with respect to this information please call (604) 8818302

Thank you,

Mike Porter General Manager ColdLogic 604-881-8302

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Effective January 16, 2011

ColdLogic Cross-Dock Pricing Structure
Please be advised that the pricing structure for shipments being cross-docked through our Distribution Centre’s (for enclosure with store deliveries) will change to the following rates effective January 16, 2011.

50 Mile Radius of Distribution Point Minimum $ 10.00 CWT $ 1.50 Max per Pallet $ 25.00

51 to 200 Miles Radius of Distribution Point Minimum $ 15.00 CWT $ 3.00 Max per Pallet $ 50.00

201 to 500 Miles Radius of Distribution Point Minimum $ 20.00 CWT $ 4.50 Max per Pallet $ 75.00

501 to 850 Miles Radius of Distribution Point Minimum $ 25.00 CWT $ 6.00 Max per Pallet $100.00

851 Miles and over Radius of Distribution Point Minimum $ 50.00 CWT $ 10.00 Max per Pallet $175.00

All charges are based on a single store delivery and will be billed back every four weeks, as a deduction from our remittance. These rates offer exceptional value when compared to shipping on a common carrier. In addition, please review the following attachments: Attachment #1: A copy of our revised Cross-Dock Guidelines/Procedures Attachment #2: An acknowledgment and sign-off form to be signed and faxed back to our office Attachment #3: A shipping recap, which we will require duplicate copies, for orders delivered to us for enclosure NOTE: It is important that you have Attachment #2 signed and returned to us via fax.

Your assistance is greatly appreciated.

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Attachment #1

ColdLogic Cross-Dock Guidelines/Procedures
Vendor Guidelines, Procedures and Responsibilities
1. 2. For the purpose of transportation planning, we require a recap containing all shipping information be presented to the receiver at time of delivery. The number of pieces and the weight must be completed (Attachment #3) Invoice must accompany all goods. The invoice must be attached to the product for the store. All case counts will be verified by our receiver and the carrier, and noted on the shipping recap (Attachment #3). All vendor products will be classed as enclosures. All cases must be clearly marked with the store number. Vendors must arrange to have the product sorted by store number at the time of delivery. Vendors’ orders will be shipped with Safeway commodities. No hazardous goods will be allowed. Vendors ship all products at their “OWN RISK”; we will not accept responsibility for lost or damaged goods. Retail claim pickups will be issued/forwarded directly to the vendor. We ship mixed loads at a temperature of 38 degrees F and frozen products at –15 degrees F. We will not accept shipments of refrigerated goods (chilled or frozen) if they are not delivered to us in an appropriately refrigerated vehicle; or if we are not capable of maintaining the correct temperature protection, upon their delivery, to our facility. We will not transport any vendor products back from Safeway stores. This includes recalls. It is the vendor’s responsibility to recover this product. We reserve the right to refuse any shipments if we feel that the care and quality of the goods may be compromised in any way.

3. 4. 5. 6. 7.

8. 9.

10. This agreement is subject to change. Appropriate notice will be given. 11. Safety vests and CSA approved Green Triangle safety shoes/boots must be worn at all times. 12. Receiving Days and Hours for DSD: • Sunday, Tuesday & Thursday - 6:00 pm to 9:00 pm. • DSD items will be shipped to the store on the next delivery. • Example receive at ColdLogic on Sunday, ship to store on the next planned delivery schedule.

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Attachment #2

SIGN-OFF FORM
Please sign and return this acknowledgment, in order for us to handle your shipments.

FAX TO: (604)-881-2579 Attention: General Manager – Mike Porter ColdLogic Cross-Dock Guidelines/Procedures
We are aware of your published guidelines on the practice of shipping product to your distribution center, for inclusion with outbound store orders, and we accept the conditions under which you offer this service.

Vendor Company Name:

Vendor Address:

Vendor Representative Name: ___________________________________________

Phone #: ________________________________________________

Signature:

Date:

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Attachment #3

COLDLOGIC
CROSS-DOCK VENDORS SHIPPING RECAP SUPPLIERS NAME: _____________________________________________________ DATE: ______________________________________________________________________ STORE # # PIECES WGT/LBS. INVOICE # $ VALUE # of PALLETS

RECEIVED: __________________________________________________________________________

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DSD VENDOR REQUIREMENTS
Back Door Receiving (BDR) System

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Dear Vendor/Supplier:
DSD Vendor Requirements Back Door Receiving (BDR) System
All DSD Vendors must be aware of the Back Door Receiving System (BDR) which affects the way we receive, process, and pay all Direct Store Delivery (DSD) vendors. There are factors involved in this system that will impact your company directly. Enclosed you will find an overview of Safeway’s BDR policies and receiving methods. Please ensure your Accounts Receivable Department receives a copy of this handbook, as there is valuable information contained within that will help resolve most payment related issues. If you have any questions or concerns, please do not hesitate to contact: Brad Monette BDR Coordinator, Canada Phone: (403) 730-3682 Email: brad.monette@safeway.com

Sincerely,

CANADA SAFEWAY LIMITED

Brad Monette BDR Coordinator, Canada

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An invoice must accompany all deliveries
Invoices must be formatted to include the following information:
• • • • • • Company Name GST Registration # Company “Remit To” address Safeway Store number Package count (eg: 5 cases) Each item listed with: o UPC o Description o **Pack (**smallest deliverable unit) – This must be invoiced as it’s set up in Safeway Host. (i.e. if the item is set up in host as cases, it must be invoiced as cases) o Size o Quantity o Cost (must include applicable levies and freight, must be rounded to two decimal places) o Allowance (must be rounded to two decimal places) o GST status by line item (flagged as taxable or exempt) o Bottle Deposit (if applicable) – by line item, do not include in cost. We require invoices to show the following Totals: o Total Quantity o Subtotal HST/GST o Subtotal PST o Subtotal Bottle Deposit o Total Cost Displayers o Should be listed as a 1-count item. o Must be invoiced separately. Invoices must not include charges for pallet, shell or shipping case deposits. Any additional charges (eg: freight, fuel, etc) must be included in the cost of goods. UPC scan sheets must not be provided to stores. Stores have been advised to refuse unauthorized scan sheets and to report drivers/vendors who try to present them.

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Separation of Invoices
We will require that separate invoices be created for each scenario:
• • • • • Deliveries Returns Displayers Department – If your company delivers to more than one department (eg: deli and grocery), a separate invoice must be provided for each. Usage Type – If you deliver more than one usage type, a separate invoice must be provided for each: o Resale Merchandise – Goods purchase for resale to the public. o Materials or Ingredients – Goods purchased to make a greater product at store level (eg: ingredients for in-store made beverages or baked goods, helium for balloons, etc). o Wrapping Supplies – Supplies purchased for resale, which leave the store with the merchandise (eg: wrapping paper, bags, cups, straws, etc). o Other Supplies – Supplies purchased for use/consumption at store level, not for resale. Distributor Type – If you deliver more than one distributor type, a separate invoice must be provided for each: o Product Line Vendor (items which have scannable UPCs). o Catalog Vendor (items which do not have scannable UPCs, such as bulk or random weight). Items with no charge – Any items coming into the store for which you require a proof of delivery but maintain no cost.

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•

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Electronic DSD Receiving Methods
Vendors who have been certified for an electronic receiving method always have BDR check-in priority.
• DEX (Direct EXchange) o Standardized UCS 894/895 EDI transmission by which electronic invoices are transferred from the vendor’s handheld computer to the Safeway store computer. o Store receiver reviews quantities on their handheld computer and then returns electronic verification to the vendor’s handheld for final closure. Two copies of the BDR invoice are then printed. o The vendor takes their copy of the BDR invoice as proof of payment. o A copy is transmitted electronically to Accounts Payable and payment is made automatically based on terms. o Safeway’s BDR/EDI system is USC 4010 & 5010 compatible. NEX (Network Exchange) o Standardized UCS 894/895 EDI transmission by which electronic invoices are sent from the vendor’s computer system to Safeway’s host system. The Safeway host system processes the EDI file and sends the invoices to the individual store BDR systems. o Once the delivery is made, the NEX invoice is opened by the store receiver on their handheld computer and quantities are reviewed, then an electronic verification is sent back to the vendor’s computer system. Two copies of the BDR invoice are then printed. o The vendor takes their copy of the BDR invoice as proof of payment. (Note: There are other options available to obtain BDR invoices, see Payment Discrepancy Resolution) o A copy is transmitted electronically to Accounts Payable and payment is made automatically based on terms. SBT (Scan-Based Trading) o Scan-Based Trading utilizes point-of-sale (POS) scan data to drive product replenishment, promotion and settlement between Safeway and their trading partners. o By using daily POS data to pay for product, electronic communication technology and new store-level operating practices to eliminate the BDR check-in process, Scan-Based Trading can deliver efficiencies and drive costs down for SBT partners. o There are many additional benefits for suppliers who choose Scan-Based Trading including expanded delivery times, daily POS scan data (which details item sales, costs, and quantities sold on a store by store basis via USC 852 EDI transmission), reduction in administrative costs and unnecessary paper work and handling, improved terms potential for payment settlement and electronic payment settlement, and balanced production and shipping based on accurate demand forecasts, all of which provides a competitive advantage over other DSD suppliers. o Sales increases of anywhere from 3% to 8% on average in controlled stores done on SBT test pilots. o Supplier has the ability to use the POS data feed to improve forecasting and micro marketing of their DSD product lines. The POS data feed will also help to reduce retailer out of stocks.

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•

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Manual DSD Receiving Methods
All vendors who are not pursuing electronic receiving methods will fall into one or more of the following receiving types:
• Receiver Scan Detail o Most common method of receiving used for common carriers, cross docks, drop shipments and direct delivery vendors who are not pursuing DEX or NEX. o For direct delivery vendors (vendors who ship to stores using their own drivers and trucks), the store receiver scans each UPC and enters quantities while the driver is present. Once final quantities are agreed upon, the invoice is closed and two copies of the BDR invoice are printed. Drivers are encouraged to retain their copy of the BDR invoice as proof of delivery. o For common carriers, the store receiver signs for the number of packages received “Subject to BDR” (the product within the boxes is subject to inspection). Receiver then creates a BDR invoice by scanning each UPC and entering quantities. Once complete, two copies of the BDR invoice are printed. o The vendor takes their copy of the BDR invoice as proof of payment. (Note: There are other options available to obtain BDR invoices, see Payment Discrepancy Resolution) o A copy of the BDR invoice is transmitted electronically to Accounts Payable and payment is made automatically based on terms. Receiver Scan Totals-Only o This type of receiving will only be used for items that do not have UPCs to scan and for random weight items. o Quantities will be verified by the store receiver, however, only total quantity, cost and GST (when applicable) will be entered into the system. o Two copies of the totals-only BDR invoice are then printed. o The vendor takes their copy of the BDR invoice as proof of payment. (Note: There are other options available to obtain BDR invoices, see Payment Discrepancy Resolution) o A copy of the BDR invoice is transmitted electronically to Accounts Payable and payment is made automatically based on terms. Vendor Scan o Store Optional: Depending on the location, the store receiver may require direct delivery vendors to create an electronic invoice for transmission to the Safeway store computer. o Safeway will provide handheld hardware at these stores, which will enable the vendor to create an electronic invoice and transmit it electronically to BDR. o Store receiver reviews quantities on their handheld computer. Once final quantities are agreed upon, the invoice is closed and two copies of the BDR invoice are then printed. o The vendor takes their copy of the BDR invoice as proof of payment. o A copy is transmitted electronically to Accounts Payable and payment is made automatically based on terms.

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•

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Back Door Receiving Policies
• Designated receiving hours: This window is set for the hours from 7AM – 12 Noon. All DSD deliveries will be restricted to this time frame. It is the responsibility of all vendors using a third party method of delivery to ensure that deliveries are made within this window. All deliveries and returns must be made to the back door. All deliveries must be made to the Inventory Control Clerk (ICC): An employee will be designated solely for the purpose of receiving DSD items through the back door during the receiving hours of 7AM – 12 Noon, Monday through Saturday. All items being delivered or returned must be processed through the Back Door Receiving System: Returns will be processed first and removed from the store before any delivered items are brought in, or processed. UPC scan sheets must not be provided to stores, only consumer UPCs are to be scanned. Stores have been advised to report drivers/vendors trying to present scan sheets. All products must be staged: The Vendor must stage product so that the product is in order with the invoice to facilitate verification of UPC and item count by the ICC. Quantity verification includes sealed and non sealed cases: The Vendor will be required to open all non factory sealed cases so that the ICC can audit quantity, quality and consumer UPC. Unauthorized Items: The BDR system will report back to Merchandising when a Vendor attempts to deliver an unauthorized item into a store. o The vendor will be required to take all unauthorized items back to the delivery truck. o The vendor will be required to contact the Merchandising if the item should be authorized. o Special request items authorized by Merchandising will be received, but need to be invoiced separately. Costs: All costs must be rounded to two decimal places. The BDR system will review both the costs from the vendor invoice and the Safeway host system. The lower of these two costs will then be applied as a final cost to be paid to the vendor. The ICC is NOT responsible for costs in the system. Any concerns regarding costs should be directed to the Merchandising Department of Canada Safeway Limited at (403) 730-3500. Store generated electronic invoicing of all returns and deliveries: Vendors will be required to provide an invoice with each delivery. The BDR system will produce two copies of an electronic invoice; one copy will remain at store level, one copy will be returned to the driver as proof of delivery. The vendor must retain a copy as proof of delivery. At the end of the day the system will transmit the invoices of all products received or returned electronically to Accounts Payable. Payment will be made automatically based on terms. Cross docks through ColdLogic or Safeway Distribution Centers: BDR stickers have been made available at both ColdLogic in BC and Macdonald Warehouses. All merchandise delivered through these warehouses must be easily identifiable with these stickers attached.

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•

• • •

•

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•

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The following information must remain current in the Canada Safeway Limited system at all times:
• • • • • • UPC - Consumer UPC is required for scanning items into the BDR system where applicable (random weight or bulk items will not require UPC). Item description Pack (smallest deliverable unit) Size Cost – All costs must be rounded to two decimal places. Payment is made on the lower cost between the Safeway BDR system and the vendor invoice at time of delivery. Allowance - Current and future allowance deals must have a NOTICE OF PROMOTION FORM submitted to MERCHANDISING six (6) weeks prior to the first delivery and twelve (12) weeks prior to promotions.

We require that this information be maintained by the vendor in order to ensure that Canada Safeway Limited will continue to receive, process and generate payment for the items delivered by your company. If you have any concerns, please contact the Canada Safeway Merchandising Department.

Failure by the vendor to contact the merchandising department to ensure that this information is correct at all times will result in the items not being received at the store, and payment not being made.

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PAYMENT DISCREPANCY RESOLUTION
It is up to the vendor to identify the reason for the discrepancy and follow the proper line of communication in order to resolve the discrepancy. **
** A copy of the BDR invoice will be given to the vendor at the time of delivery. All vendors who are delivering via third party or cross-dock are required to make arrangements with the store to receive a copy of the BDR invoice. There are 3 additional options available to all vendors to obtain their copy of the BDR invoice. 1) Providing a self addressed stamped envelope with each delivery to be mailed back to the vendor. 2) Arranging with the ICC at the store to have a file set up into which the invoices will be put. A vendor representative must pick up these invoices within a three-month period. 3) Contact Canada Safeway’s DSD Accounts Payable Section Manager at (403) 730-3721 to discuss receiving BDR invoices via email. Please note that there is a cost associated with this email service.

Unauthorized Items • • Vendors are instructed to remove all unauthorized items from the store at the time of delivery. Payment will not be initiated for these items. Where the items are delivered by a third party, it is the responsibility of the vendor to make the necessary arrangements to remove all unauthorized product from our stores in a timely fashion. Canada Safeway Limited will not pay for unauthorized product, nor will we be responsible for the security of these items.

Contact the ICC at the store • Only if the payment discrepancy is due to quantity (eg: Vendor invoice shows 12 items invoiced and the Safeway generated invoice shows payment for 10 items).

Contact the Merchandising Department • If the payment discrepancy is due to pack size, tax, deposit, cost or allowance. The Canada Safeway merchandising department can be reached through the main switchboard at (403) 730-3500.

Contact Accounting • • If the vendor has a copy of the BDR invoice but has not received payment, please contact Canada Safeway’s DSD Accounts Payable Section Manager at (403) 730-3721. Additional reasons to contact accounting (based on vendor review of the BDR invoice): o Vendor Total entry error (see sample BDR invoice on next page) o Vendor GST Total entry error (see sample) o Delivery (payment) processed as a return (credit) or vise versa

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BDR Delivery Invoice (Sample)
REPORT #: RPT0001 DATE PREPARED: 10/31/07 TIME PREPARED: 10:00:00 *1 INVOICE #..: D 58546 VENDOR NAME: PR –ABC COMPANY LTD. VENDOR/GST #...: 123456901/999999999 DEPT #.....: 313 UPC / Item # ------------0001234512345 0005432154321 0001234554321 Totals: Store Final: ...... Vendor Final: ...... Invoice Status: Open *13 ***** 1) 2) 3) 4) 5) 6) 7) 8) 9) 10) End of Invoice **** Description -----------------------------SAMPLE ITEM – DISPLAY 24 330 ML SAMPLE ITEM #2 24 330 ML SAMPLE ITEM #3 24 500 ML Quantity -------13.0000 13.0000 Misc Debits -----------Canada Safeway Ltd Electronic Invoice (Paper Copy) DATE..: METHOD: COD...: Dept ---313 313 313 *2 10/31/07 Receiver Scan N *4 Quantity ----------1.0000 C 4.0000 C 8.0000 C STORE: 471234 *3 PAGE: 1 ADDRESS...: 123 45 ST NW CITY/STATE: CALGARY, AB ZIP CODE..: A1A 1A1 PST NUMBER: USER......: ICC1 *6 Allowance Ext. Cost GST Tax --------- ---------- ------0.0000 17.5400 0.00 0.0000 72.0800 0.00 0.0000 191.8400 0.00 Invoice Adj -----------267.3600 *10 Final Cost -----------29.7000 29.7000 *11

*5

*7 PST Tax ------0.00 0.00 0.00 Deposit --------1.20 4.80 9.60

Pack Qty/Cost -------------24/ 17.5400 24/ 18.0200 24/ 23.9800 PST Tax ------*9

Misc Credits -------------

GST Tax -------

Deposit ------15.60 *12

*8 Invoice not closed at store

Invoice Type (D = Delivery, R = Return) & Invoice Number Date of Scan 2-digit Division # + 4-digit Store # (Divisions: 47=AB, 51=BC, 52=SMO) Quantity received, displayed as CASES (C) or EACHES (E) Item pack size + cost per pack (if Pack Qty is blank, the item is setup as an EACH) Item Allowance Deposit by item (NOTE: CRF/levies are not included in the deposit amount, they are to be included in the cost. If levies are not included in cost, submit a cost change form to the Category Manager). Total invoiced quantity (NOTE: Vendor Final Quantity is a user-input field and may not always match the total quantity shown on the vendor invoice). GST Amount (NOTE: Vendor Final GST is a user-input field, if it has been entered incorrectly and has caused a payment issue, contact Safeway Accounts Payable). Invoice Adjustment – This value has different meaning for deliveries vs. returns a. FOR DELIVERIES: Invoice Adjustment + Store Final Cost = original Store Final Cost (this example: 267.36 + 29.70 = 297.06) i. If Vendor Final Cost is less than original Store Final Cost, Store Final Cost is reduced to match, and the “Invoice Adj” is the amount of this reduction. ii. If the Vendor Final Cost is greater than the Store Final Cost, there will be no “Invoice Adj”, the Store Final Cost will be paid. iii. If there is an “Invoice Adj” AND the invoice has been short paid, this usually indicates a “Vendor Total Cost” entry error (NOTE: all “Vendor Final” values are user-entry fields. For short payments due to an incorrect Vendor Final Cost, contact accounts payable). b. FOR RETURNS: Store Final Cost – Invoice Adjustment = original Store Final Cost i. If the Vendor Final Cost is more than the original Store Final Cost (i.e. vendor’s credit invoice is for more credit than calculated by the BDR scan) the Store Final Cost is increased to match, and the “Invoice Adj” is the amount of this increase. 11) Store Final Cost is the payable amount. This value is dependant on items scanned, quantities, unit costs, allowances, deposits, GST and finally, Vendor Final Cost. NOTE: If the Vendor Final Cost is not the correct invoice total, there may be payment issues (see #10 above). In this example the Vendor Final Cost should have been $297.06, but was mis-keyed as $29.70, so the Store Final Cost was reduced by $267.36 to match). 12) Total Deposit as calculated by Safeway. There is no user-entry for “Vendor Final Deposit” so if short payments are due to incorrect deposits, this must be brought up with Safeway Merchandising. 13) Invoice Status: OPEN or CLOSED a. OPEN indicates that the invoice was not finished and does not guarantee payment. b. CLOSED indicates that the invoice was completed and guarantees payment. If payment is not received within terms, provide this CLOSED copy to accounts payable and payment will be made.

IMPORTANT: Vendors should make arrangements to receive their copy of the BDR invoice for their own records as this is proof of delivery and is necessary to investigate payment issues. If the vendor does not have the BDR invoice and is missing payment, they will be required to provide a signed Proof of Delivery. Payment inquiries where no POD is provided will not be investigated.

SECTION 2
SCHEMATIC DEVELOPMENT AND NEW ITEM PLACEMENT
Policy: Safeway is responsible for the development of all schematics and shall endeavor to attain the highest level of schematic integrity. 1. New schematics shall be created/updated whenever new items are introduced into the section or at the time that a Category Review takes place. At the time of a Category Review, item placement and selection will be evaluated. 2. SCOP (Safeway Category Optimization Process) Vendor Partners, Category Managers, and the Merchandising Services Department will work as a team to develop schematics. 3. Schematics will be developed: a. based on the final decisions regarding new and discontinued items as authorized by the Category Manager, b. using the most current data, and c. will be consistent across all categories. 4. Planograms are physically created, updated and maintained by the Safeway Merchandising Services Department at the Canada Safeway Corporate Office. Retail Marketing Solutions is responsible for the following: a. b. c. d. e. the planogram development process flow, maintenance of planogram databases, Corporate brands merchandising, the integrity of all planograms, and retail implementation tracking.

5. All schematics will be produced by the Merchandising Services Department using Apollo Software. 6. Finalized schematics will be signed off by the Category Manager and the Merchandising Services Manager. 7. New items will be placed in the section with a high priority placed on ease of cutting the new item in. Wide ranging schematic changes will not be made to accommodate new items. The Category Manager will arrange to meet with the appropriate Merchandising Services Analyst to review any proposed major changes to the stocking section. 8. The Merchandising Services Department will test schematic changes at a “set” store and will ensure that the schematic is viable. 9. The stores will use schematics that are available on the Safeway Intranet for new item placement, and will be assigned the responsibility of making sure they are cut in to the section. 10. Safeway reserves the right to charge manufacturers for category relines and any other costs associated with the reline.

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SECTION 3
ONGOING SHELF MAINTENANCE
Policy: Shelf Maintenance is the responsibility of each individual Store Manager. 1. It is of the utmost importance that new items are integrated into the schematics on a timely basis as part of providing superior service to our customers, and to realize the greatest benefit during the new item introduction period. 2. RMS Analysts incorporate new items into the schematics. All necessary changes and adjustments are also made by the RMS Analysts. 3. RMS Retail Merchandisers shall monitor schematic integrity at store level. 4. RMS Retail Merchandisers will be in every store every second week to ensure schematic integrity. 5. RMS Retail Merchandisers will ensure that follow through is happening on any items that may have been missed on first visit.

MANUFACTURER’S COUPON PROCEDURE
Due to the large number and variety of manufacturers’ coupons, Canada Safeway has granted News Marketing Canada the exclusive right to attach coupons to the shelf in its stores. News Marketing Canada offers a range of products including the following:

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News America Marketing likewise offers additional products such as SmartSource Floortalk, Carts, and demonstrations. For more information please contact: Terry Powell News America Marketing Phone: (206) 529-1097 As a result of this program, only approved News America Marketing coupons are to be placed on Safeway shelves. Vendors will be charged for any unauthorized coupons found in our stores. Thank you for your cooperation.

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CANADA SAFEWAY LIMITED’S WAREHOUSE ACCOUNTS PAYABLE
INVOICE REQUIREMENTS
Warehouse Accounts Payable Department handles invoice payment for orders with a 6 (six) digit PO number shipped to a Macdonalds Consolidated facility. EDI 810/880 Invoice transactions are the preferred process for invoicing. For more details on our EDI policies and procedures including a listing of some of the EDI providers that Canada Safeway exchanges data with, please visit http://suppliers.safeway.com/canada/edi_can/edi_can.asp To ensure prompt payment of your invoices, you should comply with the following rules: 1. 2. 3. 4. 5. 6. Multiple warehouse deliveries may not be combined on one purchase order Multiple purchase orders may not be combined on a single invoice. Items with extended terms must be invoiced separately. Supplier should not invoice prior to delivery. Supplier may invoice only for the product(s) actually shipped. All packaged goods are required to have valid UPCs on the invoice.

PAYMENT POLICIES
Payment Due Date Calculation The invoice due date will be calculated based on the Receipt of Goods or the Invoice Date (which ever is later) and based upon the most favorable of the purchase order or the invoice terms. Safeway will not send cheques via overnight services. Shipping Discrepancies Invoice deductions will be taken for quantity variances caused by shipment/picking error, shortages, and damaged merchandise. Such deductions will be taken for shortages and damages discovered at the time of warehouse receipt and for shortages and damages discovered later in the receiving process, as may occur in the event of backhauls and droptrailer programs where inspection is not feasible or permitted at the time of receipt. Other Deductions Safeway reserves the right to deduct from outstanding supplier payables for allowances, pricing errors, bill backs, returns, post audits, coupon redemption bill backs, and other receivables. Safeway also reserves the right to demand payment by cheque on balances past due.

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“REMIT-TO” NAME AND ADDRESS CHANGES
“Remit To” address changes must be communicated in writing with a copy of supplier’s invoice reflecting the new “remit to” address. No changes can be made to Safeway’s data file until written notification has been received. Failure to provide this information may result in delayed payments. If ownership of your company changes and the new owner is not an approved Safeway supplier, your company will be treated as a new supplier. This means that your company will be required to complete the new vendor and item set-up process, and obtain Safeway approval, to retain its “approved-supplier” status. The Continuing Commodity Guaranty and Indemnity Agreement (CCG) is mandatory for new suppliers. These documents must be presented to the Category Manager at the time of the appointment. The CCG should have the “original” signature; copies will not be accepted. Important Note: Delay in providing the required documentation for new vendors may cause payments to be delayed.

SUPPLIER INQUIRIES AND CORRESPONDENCE
Supplier inquiries regarding Accounts Payable transactions, balances, and discrepancies should be directed to the Warehouse Accounts Payable Department. However, suppliers may find our Vendor Self Serve Payment Inquiry Website to be the quickest and most efficient way to answer many of their inquiries. Please go to http://safeway.firstvendor.apexanalytix.com and for both the User ID and Password type in CAN plus the vendor number that is listed on a cheque from Canada Safeway (example CAN12345). Click on the submit button, do not hit enter. You will then be taken to the User Agreement page which you will have to accept (at the bottom). Supplier correspondence on open invoices should be initiated within six months of the initial invoice date and should reference the relevant invoice(s) by number along with the PO number that the invoice is referring to.

CANADA SAFEWAY LIMITED ACCOUNTS PAYABLE CONTACTS
Warehouse Accounts Payable Mailing Address: Macdonalds Consolidated PO Box 2095, Station M Calgary, Alberta T2P 2M4 Phone: (403) 730-3500 Fax: (403) 730-3991 or 3992 Email: CanWhse.vendor.inquiries@safeway.com Direct Store Delivery Accounts Payable Mailing Address: Canada Safeway Limited PO Box 865, Station M Calgary, Alberta T2P 2J6 Phone: (403) 730-3500 Fax: (403) 730-3993 Email: CanDSD.vendor.inquiries@safeway.com

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ATTACHMENTS
(Available Electronically from the Category Managers or Downloadable from http://suppliers.safeway.com/canada/)

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CONTINUING COMMODITY GUARANTEE AND INDEMNITY AGREEMENT
1. In consideration of the purchase, from time to time, of articles of food, produce, drugs, or other merchandise, products or commodities (“Goods”) from the undersigned (hereinafter called "Seller"), by Canada Safeway Limited and/or any other corporation which is now or hereafter becomes affiliated with or a subsidiary of Canada Safeway Limited (hereinafter called "Buyer"), the Seller: (a) Does hereby warrant and guarantee that, as of the date of delivery, the Goods included in each and every delivery hereafter made by Seller to, or on the order of Buyer, were manufactured and processed in strict compliance with the Buyer's purchase specifications and are on the date of delivery of merchantable and good quality, free from defects and not adulterated or misbranded or mislabelled within the meaning of the Food and Drugs Act or Regulations, the Consumer Packaging and Labelling Act or under any other pure food and drug or health laws, safety or environmental laws, regulations or ordinances of any province or other government authority which are applicable to such shipment or delivery; (b) Does hereby represent and warrant that it has, or immediately prior to delivery shall have, title to the Goods and all rights necessary to transfer such rights and title to Buyer free of any lien, pledge, hypothecation or other encumbrance, including but not limited to all patent, copyright, trademark, service mark, and trade secret (collectively, “Intellectual Property”) rights required or appropriate for its manufacture of Goods, sale of Goods to Buyer, and use or sale of Goods, as contemplated, by Buyer; (c) Does hereby agree to indemnify, defend and save the Buyer harmless from and against any and all claims, charges, actions and proceedings brought against the Goods and/or Buyer for or on account of any alleged adulteration, misbranding of or other law violations pertaining to such Goods, and/or any breach or alleged breach by Seller of the warranties set above for which Seller is responsible and liable hereunder, including without limitation any losses, liabilities, penalties, fines, fees and loss expenses, if any, incurred by Buyer as a result thereof; (d) Does hereby agree to indemnify, defend and save the Buyer harmless from and against any and all claims, demands, actions and causes of action which are hereafter made or brought against the Buyer by any person for the recovery of loss or damages for the injury, illness and/or death of any person or animal or other loss or damages which is caused or alleged to have been caused by (i) the handling, delivery, consumption or use by such person or animal of any Goods shipped or delivered by Seller to Buyer or (ii) any work performed by Seller on Buyer’s premises, including, but without limitation, any judgment rendered against or settlement paid by or on behalf of Buyer in any such action and the reasonable legal fees and costs, if any, incurred by or on behalf of Buyer in connection therewith. (e) Does hereby agree that, in the event that the Goods, or any of them, violate or infringe upon the Intellectual Property rights of a third party, Seller shall obtain for Buyer all rights necessary for Buyer to lawfully continue using or selling the Goods as contemplated (or shall obtain for Buyer the opinion of a solicitor acceptable to Buyer that such use or sale is lawful), and shall repurchase from Buyer, at Buyer’s cost, Goods that Buyer cannot reasonably and lawfully sell or use as contemplated due to such infringement or violation. 2. This guarantee is executed by Seller upon and subject to the condition that Seller does not guarantee against any such Goods becoming adulterated or misbranded after delivery to Buyer, by reason of causes beyond Seller's control (provided, that any adulteration or misbranding which is found to exist after such delivery and which is caused by any defect in the processing or packing of such Goods by the processor or packer thereof or by the defective condition of any raw materials used in the processing or packing of such Goods or by any defect in the container in which the Goods are packed shall be regarded as having existed at the time of such shipment or delivery for the purposes of subparagraph no. 1(a) hereof), and in those cases in which Goods are shipped under Buyer's brand labels, Seller's responsibility for misbranding shall be limited only to that resulting from the failure of the Goods to conform to the purchase specifications or label furnished by Buyer, provided that Seller shall not be responsible for such misbranding if Buyer insists upon the use of Buyer's brand label after Seller has notified Buyer, in writing, of any defects of the label giving rise to any such liability. 3. Any guarantee previously given by Seller to Buyer which relates to the subject matter hereof is hereby revoked. This guarantee shall not be deemed to be modified or otherwise affected by any subsequent agreement entered into by Seller and Buyer unless specific reference to this guarantee is made in such subsequent agreement. This guarantee shall continue in effect with respect to all Goods purchased or ordered by Buyer from Seller prior to the receipt of written notice of its revocation by Canada Safeway Limited at its office at 1020 - 64th Avenue N.E. Calgary, Alberta, or such other address as may be designated in writing. Notice of the acceptance of this guarantee is hereby waived by Seller. (Please observe instructions below)

Dated:

__________________________ , 20________. (Type or Print Name of Seller)

Per:

(Title)

Address of Seller:

(Street and Number)

(City)

(Province)

Postal Code)

Instructions: 1. If Seller is an individual, sign individual name as the proprietor and give trade-name, if any. 2. If Seller is a partnership, one general partner must sign in the partnership name. 3. If Seller is a corporation, an officer must sign and show title. 4. In all cases, the guarantee must be dated and the seller's address filled in.

Nov. 2011

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