Safeway Inc. and GroceryWorks.com announced today that the companies have signed a definitive agreement creating a strategic alliance between the two companies. Under the terms of the agreement, GroceryWorks will be Safeway's exclusive online grocery channel. A subsidiary of Safeway has invested $10 million in GroceryWorks and assigned a long-term product purchase agreement and received preferred stock in GroceryWorks, convertible into 50% of GroceryWorks' fully diluted common stock. The Safeway subsidiary is expected to invest an additional $20 million in GroceryWorks in the near future. Separately, Safeway also announced they have decided not to invest in Mainstreet USA Corporation. Safeway Inc. is a Fortune 50 company and one of the largest food and drug retailers in North America based on sales. The company operates 1,663 stores in the United States and Canada and has annualized sales exceeding $31 billion. The company's stock is traded on the New York Stock Exchange under the symbol SWY. GroceryWorks, an Internet home fulfillment company, is headquartered in Dallas and maintains distribution centers in Dallas, Fort Worth and Houston, Texas. Through its unique fulfillment model, GroceryWorks is able to deliver high quality food and groceries -- including fresh produce, meat and poultry and other perishables -- with same-day convenience, excellent customer service and comparable pricing. The company currently has more than 400 employees, including personal shoppers and delivery team members.